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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AURORA BIOSCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 8731 33-0669859
(STATE OR JURISDICTION (PRIMARY STANDARD INDUSTRIAL I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER
ORGANIZATION)
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11149 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA 92037
(619) 452-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
TIMOTHY J. RINK
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
AURORA BIOSCIENCES CORPORATION
11149 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA 92037
(619) 452-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
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THOMAS A. COLL, ESQ. JEFFREY S. MARCUS, ESQ.
ERIC J. LOUMEAU, ESQ. TAMARA POWELL TATE, ESQ.
COOLEY GODWARD LLP MORRISON & FOERSTER LLP
4365 EXECUTIVE DRIVE, SUITE 1100 1290 AVENUE OF THE AMERICAS
SAN DIEGO, CA 92121 NEW YORK, NY 10104
(619) 550-6000 (212) 468-8000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- ---------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value............. 3,450,000 $11.00 $37,950,000 $11,500
===============================================================================================================
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(1) Includes 450,000 shares that the Underwriters have the option to purchase
solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act of
1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
MARCH 14, 1997
3,000,000 SHARES
(AURORA LOGO)
COMMON STOCK
------------------------
All of the 3,000,000 shares of Common Stock offered hereby are being sold
by Aurora Biosciences Corporation, a Delaware corporation ("Aurora" or the
"Company"). Prior to this offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price of the Common Stock will be between $9.00 and $11.00 per share.
See "Underwriting" for the factors to be considered in determining the initial
public offering price. Application has been made for quotation of the Common
Stock on the Nasdaq National Market under the symbol ABSC.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share......................... $ $ $
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Total(3).......................... $ $ $
=================================================================================================
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(1) See "Underwriting" for information relating to indemnification of the
Underwriters.
(2) Before deducting expenses of the offering estimated at $600,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
450,000 additional shares of Common Stock solely to cover over-allotments,
if any. To the extent that the option is exercised, the Underwriters will
offer the additional shares at the Price to Public shown above. If the
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1997.
ALEX. BROWN & SONS
INCORPORATED
HAMBRECHT & QUIST
ROBERTSON, STEPHENS & COMPANY
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3
[GRAPHIC DEPICTION OF UHTS SYSTEM]
[Items depicted will be identified by the following labels:]
Genomic Targets
Combinatorial Chemistry Libraries
Automated Storage and Retrieval System
Miniaturized Fluorescent Assays
NanoPlate(TM)
Microfluidics
Fluorescence Detector
Lead Compounds
Informatics
Mammalian Cells
Depicted above is a schematic representation of Aurora's integrated
technology platform designed to take advantage of the great number of targets
being identified through genomics and the large, diverse libraries of compounds
being generated from combinatorial chemistry. Aurora's ultra-high throughput
screening ("UHTS") system is designed to incorporate a store of over 1,000,000
compounds and is expected to screen in excess of 100,000 compounds per day in
miniaturized assays. The UHTS system is expected to be operational in three to
four years.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING THE ENTRY OF STABILIZING BIDS, OR SYNDICATE COVERING
TRANSACTIONS OR THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
NanoPlate(TM) is a trademark of the Company and Packard Instrument Company.
All other trade names or trademarks appearing in this Prospectus are the
property of their respective holders.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus. This Prospectus contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Prospective investors are cautioned that such
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, prospective investors should
specifically consider the various factors identified in this Prospectus,
including the matters set forth under the caption "Risk Factors," which could
cause actual results to differ materially from those indicated by such
forward-looking statements.
THE COMPANY
Aurora Biosciences Corporation ("Aurora" or the "Company") designs and
develops proprietary drug discovery systems, services and technologies to
accelerate and enhance the discovery of new medicines. Aurora is developing an
integrated technology platform comprised of a portfolio of proprietary
fluorescent assay technologies and an ultra-high throughput screening ("UHTS")
system designed to allow assay miniaturization and to overcome many of the
limitations associated with the traditional drug discovery process. The Company
believes that this platform will enable Aurora and its collaborators, which
include Bristol-Myers Squibb ("BMS") and Eli Lilly and Company ("Lilly"), to
take advantage of the opportunities created by recent advances in genomics and
combinatorial chemistry that have generated many new therapeutic targets and an
abundance of new small molecule compounds. Aurora believes its integrated
platform will accelerate the drug discovery process by shortening the time
required to identify high quality lead compounds and to optimize those compounds
into drug development candidates.
The discovery and development of new medicines historically has been an
expensive, time-consuming and often unsuccessful process. Recent developments in
molecular biology and genomics as well as combinatorial chemistry have created
significant opportunities to discover greater numbers of high quality lead
compounds for development into new medicines. The advances in molecular biology
and genomics have resulted in a greater understanding of the molecular and
genetic basis of disease and have led to the identification of many new genes as
potential therapeutic targets for drug discovery. Many companies have used
combinatorial chemistry to quickly create libraries of hundreds of thousands or
even millions of small molecules for screening against established and novel
targets. However, the increasing numbers of targets and compounds have created
severe bottlenecks in the drug discovery process. These bottlenecks result from
the difficulty of quickly analyzing the function and disease relevance of newly
discovered targets, the complexity of incorporating the many different types of
targets into screening assays, and the inability to screen extensive compound
libraries quickly and at a reasonable cost. In order to address these issues,
the Company is integrating advanced technologies to develop superior assays, to
enable analysis of gene function in mammalian cells and to miniaturize and
accelerate compound screening.
Aurora's proprietary fluorescent assay technologies are being used today to
facilitate drug discovery by the Company's collaborators and in the Company's
existing high throughput screening system. Aurora's portfolio of fluorescent
assay technologies is designed to enable screening of compounds against nearly
all major classes of human drug targets, including receptors, ion channels and
enzymes, in most therapeutic areas. The Company's fluorescent assay technologies
are highly sensitive, and are designed to permit more rapid screen development
and the development of miniaturized assays important for cost-effective high
throughput screening. Additionally, many of the Company's screens are being
designed to be performed with living mammalian cells to better model human
disease processes.
The second principal component of Aurora's integrated technology platform
is its UHTS system, which is being designed to screen over 100,000 discrete
compounds per day in miniaturized assays.
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The UHTS system will combine an automated storage and retrieval system,
microfluidic dispensing devices, and NanoPlates in which miniaturized assays are
performed. Specialized fluorescence detectors are designed to record and process
the signals from the NanoPlates, with advanced software and informatics to
capture the resulting data. In developing the UHTS system, the Company is
applying to the drug discovery process technological advances that have already
been deployed successfully in other industrial processes, while adding its own
proprietary innovations. In this regard, the Company has entered into strategic
technology alliances with several technology leaders, including Packard
Instrument Company and Carl Creative Systems, Inc. The Company expects the UHTS
system to be fully integrated and operational within the next three to four
years.
Aurora's goal is to become the leader in the development and
commercialization of technologies that will accelerate and enhance the discovery
of new medicines. The Company seeks to diversify business risk by generating
revenue from multiple collaborators seeking to exploit Aurora's fluorescent
assay technologies and UHTS system in many different drug discovery programs.
The Company expects to generate revenue by developing screens, providing
screening services, developing and providing UHTS systems to syndicate members,
licensing its proprietary technologies, and realizing royalty and milestone
payments from the development and commercialization of drug candidates
identified using Aurora's technologies. To date, the Company has entered into
collaborative agreements with BMS and Lilly to license the Company's fluorescent
assay technologies for their internal discovery research, to collaborate on
screen development and as initial members of a syndicate to co-develop Aurora's
UHTS system. In addition, Aurora has also entered into agreements to develop
screens for or provide screening services to Sequana Therapeutics, Inc., Allelix
Biopharmaceuticals, Inc. and Roche Bioscience. The Company has also entered into
agreements with Alanex Corporation and ArQule, Inc. providing Aurora with
non-exclusive access to certain of their combinatorial chemistry libraries.
The Company was incorporated in California in May 1995 and reincorporated
in Delaware in January 1996. Unless the context otherwise requires, references
in this Prospectus to "Aurora" and the "Company" refer to Aurora Biosciences
Corporation, a Delaware corporation, and, where applicable, to its California
predecessor. The Company's executive offices are located at 11149 North Torrey
Pines Road, La Jolla, California 92037, and its telephone number is (619)
452-5000.
THE OFFERING
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Common Stock offered hereby........................... 3,000,000 shares
Common Stock to be outstanding after the offering..... 15,893,814 shares(1)
Use of proceeds....................................... Working capital and general corporate
purposes, including facilities
expansion and improvements, capital
equipment purchases, enhancement of
internal research and development
capabilities and the acquisition of
chemical libraries. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol................ ABSC
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(1) Based on shares outstanding as of February 28, 1997. Includes an aggregate
of 45,290 shares of Common Stock to be issued upon exercise of outstanding
warrants upon the closing of this offering. Excludes 452,920 shares of
Common Stock issuable upon exercise of outstanding stock options as of
February 28, 1997 at a weighted average exercise price of $1.16 per share
and 1,757,248 shares of Common Stock reserved for future grant under the
Company's 1996 Stock Plan, Employee Stock Purchase Plan and Non-Employee
Directors' Stock Option Plan. See "Capitalization," "Management,"
"Description of Capital Stock" and Notes 6 and 11 of Notes to Financial
Statements.
4
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SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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PERIOD FROM
MAY 8, 1995
(INCEPTION) TO YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
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STATEMENT OF OPERATIONS DATA:
Revenue under collaborative agreements............... $ -- $ 2,217
Expenses:
Research and development.......................... 366 4,396
General and administrative........................ 46 1,275
Interest income, net................................. -- 521
Net loss............................................. (412) (2,933)
Pro forma net loss per share(1)...................... $ (0.14) $ (0.26)
Shares used in computing pro forma net loss per
share(1).......................................... 2,880 11,260
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<CAPTION>
DECEMBER 31, 1996
---------------------------------------
ACTUAL AS ADJUSTED(2)
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BALANCE SHEET DATA:
Cash, cash equivalents and investment securities
available for sale................................... $13,167 $40,467
Total assets........................................... 17,515 44,815
Capital lease obligations, less current portion........ 1,111 1,111
Accumulated deficit.................................... (3,345) (3,345)
Total stockholders' equity............................. 15,184 42,484
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(1) See Note 1 of Notes to Financial Statements for a description of the
computation of the pro forma net loss per share and the number of shares
used in the pro forma net loss per share calculation.
(2) As adjusted to give effect to the sale by the Company of 3,000,000 shares of
Common Stock offered hereby at an assumed initial public offering price of
$10.00 per share and the application of the estimated net proceeds therefrom
and the exercise upon the closing of this offering of warrants to purchase a
total of 45,290 shares of Common Stock. See "Use of Proceeds" and
"Capitalization."
Except as otherwise specified, all information contained in this Prospectus
assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting." Except as otherwise noted, all information in this Prospectus
has been adjusted to give effect to (i) the four-for-five reverse split of the
Common Stock to be effected prior to the effective date of this offering and
(ii) the conversion of all outstanding shares of Preferred Stock into Common
Stock upon the completion of this offering. See "Capitalization" and
"Description of Capital Stock."
5
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus. This Prospectus contains certain
statements of a forward-looking nature relating to future events or the future
financial performance of the Company. Prospective investors are cautioned that
such statements are only predictions and that actual events or results may
differ materially. In evaluating such statements, prospective investors should
specifically consider the various factors identified in this Prospectus,
including the matters set forth below, which could cause actual results to
differ materially from those indicated by such forward-looking statements.
Limited Operating History; History of Operating Losses; Uncertainty of
Future Profitability. The Company was formed in May 1995, has a limited
operating history and is at an early stage of development. To date, the Company
has not yet generated significant revenue from its systems, services or
technologies. For the period ended December 31, 1995 and the year ended December
31, 1996, the Company had net losses of approximately $412,000 and $2.9 million,
respectively. As of December 31, 1996, the Company had an accumulated deficit of
$3.3 million. The Company's expansion of its operations and continued
development of its ultra-high throughput screening ("UHTS") system and
fluorescent assay technologies will require a substantial increase in
expenditures for at least the next several years. The Company currently expects
to continue to incur operating losses at least through 1998. The Company's
ability to achieve profitability will depend in part on its ability to
successfully develop and install its UHTS system, provide screen development and
screening services to pharmaceutical and biotechnology companies, achieve
acceptable performance specifications for its UHTS system and gain industry
acceptance of its systems, services and technologies. Accordingly, the extent of
future losses and the time required to achieve profitability is highly
uncertain. The Company has completed less than two years of operations and is
subject to the risks inherent in the operation of a new business, such as the
difficulties and delays often encountered in the development and production of
new, complex technologies. There can be no assurance that the Company will be
able to address these risks. Payments from corporate collaborators and interest
income are expected to be the only sources of revenue for the foreseeable
future. The Company has not yet generated any revenue from milestones under its
collaborative agreements. Royalties or other revenues from commercial sales of
products based upon any compound identified by using the Company's technologies
are not expected for at least several years, if at all. The time required to
reach or sustain profitability is highly uncertain, and there can be no
assurance that the Company will be able to achieve or maintain profitability.
Moreover, if profitability is achieved, the level of such profitability cannot
be predicted and may vary significantly from quarter to quarter. See "Selected
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
New and Uncertain Technology. The Company's UHTS technology and its methods
of screening molecular targets are new and unproven approaches to the
identification of lead compounds with therapeutic potential. The Company intends
to use its UHTS system and fluorescent assay technologies to rapidly identify
for itself and its collaborators as many compounds with commercial potential as
possible. Historically, because of the highly proprietary nature of such
activities, the importance of these activities to drug discovery and development
efforts and the desire to obtain maximum patent and other proprietary protection
on the results of their programs, pharmaceutical and biotechnology companies
have conducted molecular target screening and lead compound identification
within their own internal research departments. The Company's ability to succeed
will be dependent, in part, upon the willingness of potential collaborators to
use the Company's systems, services and technologies as a tool in the discovery
and development of compounds with commercial potential.
The Company's fluorescent assay technologies are novel for use in the drug
discovery process and have never been utilized in the discovery of any compound
that has been commercialized. The
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Company has not yet completed the development of a screen for any collaborator.
There can be no assurance that the Company's fluorescent assay technologies will
result in the successful development of broadly applicable screens for
collaborators or lead compounds that will be safe or efficacious. Furthermore,
there can be no assurance that the Company can develop, validate or consistently
reproduce its biochemical and cell-based assays or reagents or substrates
required for their use in volumes sufficient to fulfill the requirements of its
collaborative agreements or to meet the Company's needs for internal use.
Development of new pharmaceutical products is highly uncertain, and no assurance
can be given that the Company's drug discovery technology will result in any
commercially successful compound.
The Company's UHTS technology has never been implemented as a fully
operational system. The Company's UHTS system is not expected to be fully
integrated and operational for at least three to four years. The Company's UHTS
system will require significant additional investment and research and
development prior to commencement of full-scale commercial operation, including
integration of complex instrumentation and software and testing to validate
performance and cost effectiveness, and is subject to substantial risks. Complex
instrumentation systems that appear to be promising at early stages of
development may not become fully operational for a number of reasons. These
systems may be found ineffective, be difficult or uneconomical to produce, fail
to achieve expected performance levels or industry acceptance, or be precluded
from commercialization by the proprietary rights of third parties. Much of the
instrumentation and software expected to comprise the Company's UHTS system are
not now and have not previously been used in commercial applications. Many of
these technologies have not been validated or developed at levels necessary to
screen miniaturized assays, and there can be no assurance that UHTS
technologies, if developed, will achieve expected performance levels at these
scales. The successful implementation and operation of the Company's UHTS system
will be a complex process requiring integration and coordination of a number of
factors, including integration of and successful interface between complex
advanced robotics, microfluidics, automated storage and retrieval systems,
fluorescence detector technologies and software and information systems. The
liquid dispensing requirements for the NanoPlates being designed for the UHTS
system are far beyond current high throughput screening practices for dispensing
small volumes. The development of microfluidics to accurately and rapidly
aspirate and dispense the microscopic volumes necessary for the UHTS system is
particularly challenging. There can be no assurance that the Company will be
able to successfully engineer and implement this microfluidics technology or all
of the other instrumentation needed for the UHTS system.
As the system is developed, integrated and used, it is possible that
previously unanticipated limitations or defects may emerge. In addition,
operators using the system may require substantial new technical skills and
training. There can be no assurance that unforeseen complications will not arise
in the development, delivery and operation of the UHTS system that could
materially delay or limit its use by the Company and its corporate
collaborators, substantially increase the anticipated cost of development of the
system, result in the breach by the Company of its contractual obligations to
its collaborators and others, or render the system unable to perform at the
quality and capacity levels required for success. Such complications or delays
could subject the Company to litigation and have other material adverse effects
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company will be able to successfully develop its
UHTS system, achieve anticipated throughputs, gain industry acceptance of the
Company's approach to the identification of lead compounds or develop a
sustainable profitable business.
Dependence on Pharmaceutical and Biotechnology Collaborations. The
Company's strategy for the development and commercialization of its integrated
technology platform involves the formation of multiple corporate collaborations.
To date, all revenue received by the Company has been from its collaborations
and technology alliances. The Company expects that substantially all revenue for
the foreseeable future will come from collaborators. Furthermore, the Company's
ability to achieve profitability will be dependent upon the ability of the
Company to enter into additional
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corporate collaborations for co-development of the UHTS system as well as for
development of screens and for screening services. Because pharmaceutical and
biotechnology companies engaged in drug discovery activities have historically
conducted drug discovery and screening activities through their own internal
research departments, these companies must be convinced that the Company's UHTS
technologies justify entering into collaborative agreements with the Company.
There can be no assurance that the Company will be able to negotiate additional
collaborative agreements in the future on acceptable terms, if at all, that such
current or future collaborative agreements will be successful and provide the
Company with expected benefits, or that current or future collaborators will not
pursue or develop alternative technologies either on their own or in
collaboration with others, including the Company's competitors, as a means for
identifying lead compounds or targets. To the extent the Company chooses not to
or is unable to enter into such agreements, it will require substantially
greater capital to undertake the research, development and marketing of systems,
services and technologies at its own expense. In the absence of such
collaborative agreements, the Company may be required to delay or curtail its
research and development activities to a significant extent.
In addition, the amount and timing of resources that current and future
collaborators, if any, devote to collaborations with the Company are not within
the control of the Company. There can be no assurance that such collaborators
will perform their obligations as expected or that the Company will derive any
additional revenue from such agreements. Further, the Company's collaborations
generally may be terminated by its collaborators without cause upon short
notice, which terminations would result in loss of anticipated revenue.
Termination of the Company's existing or future collaboration agreements, or the
failure to enter into a sufficient number of additional collaborative agreements
on favorable terms, could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's strategy involves obtaining access to libraries of compounds
from third parties to be screened against multiple targets. Because of the
potential overlap of compounds and targets provided by the Company's
collaborators, there can be no assurance that conflicts will not arise among
collaborators as to rights to particular products developed as a result of being
identified through the use of the Company's technologies. Failure to
successfully manage existing and future collaborator relationships, maintain
confidentiality among such relationships or prevent the occurrence of such
conflicts could lead to disputes that result in, among other things, a
significant strain on management resources, legal claims involving significant
time and expense and loss of reputation, a loss of capital or a loss of
collaborators, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"-- Uncertainty of Milestone Payments on Pharmaceutical Products; Government
Regulation."
Management of Growth. The Company's success will depend on its ability to
expand and manage its operations and facilities. To be cost-effective and timely
in the development and installation of its systems, services and technologies,
the Company must coordinate the integration of multiple technologies in complex
systems, both internally and for its collaborators. The Company's officers and
employees have been with the Company for only a limited period of time, and many
of them came to the Company with limited or no experience integrating multiple
technologies into complex systems. There can be no assurance that the Company
will be able to manage its growth, to meet the staffing requirements of current
or additional collaborative relationships or to successfully assimilate and
train its new employees. In addition, to manage its growth effectively, the
Company will be required to expand its management base and enhance its operating
and financial systems. If the Company continues to grow, there can be no
assurance that the management skills and systems currently in place will be
adequate or that the Company will be able to manage any additional growth
effectively. Failure to achieve any of these goals could have a material adverse
effect on the Company's business, financial condition or results of operations.
Dependence on Technology Alliances. In order to further the development of
its UHTS system, the Company has formed and intends to continue to form
technology alliances with certain
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companies in the areas of informatics, robotics, automated storage and
retrieval, liquid handling systems, microfluidics and detection devices. The
Company relies on these companies, many of which are single-source vendors, for
the development, manufacture and supply of certain components of the Company's
UHTS system. Although the Company believes that alternative sources for UHTS
system components could be made available, any interruption in the development,
manufacture or supply of a sole-sourced component could have a material adverse
effect on the Company's ability to develop its UHTS system until a new source of
supply is qualified, could subject the Company to penalties for delays in
delivery of the UHTS system and, as a result, could have a material adverse
effect on the Company's business, financial condition and results of operations.
There can be no assurance the Company will be able to enter into additional
technology alliances on commercially reasonable terms, if at all, or that the
Company's current or future technology suppliers will meet the Company's
requirements for quality, quantity or timeliness.
Dependence on Patents and Proprietary Rights. The Company's success will
depend in part on its ability to obtain patent protection for its systems,
services and technologies, and to operate without infringing the proprietary
rights of third parties. The Company has had no patents issued to date. The
Company is dependent, in part, on the patent rights licensed from third parties
with respect to its fluorescent assay technologies. There can be no assurance
that patent applications filed by the Company or its licensors will result in
patents being issued, that the claims of such patents will offer significant
protection of the Company's technology, or that any patents issued to, or
licensed by, the Company will not be challenged, narrowed, invalidated, or
circumvented. The Company may also be subject to legal proceedings that result
in the revocation of patent rights previously owned by or licensed to the
Company, as a result of which the Company may be required to obtain licenses
from others to continue to develop, test or commercialize its systems, services
or technologies. There can be no assurance that the Company will be able to
obtain such licenses on acceptable terms, if at all.
The drug discovery industry, including screening technology companies, has
a history of patent litigation and will likely continue to have patent
litigation suits concerning drug discovery technologies. The patent positions of
pharmaceutical, biotechnology and drug discovery companies, including the
Company, are generally uncertain and involve complex legal and factual
questions. A number of patents have issued and may issue on certain targets or
their use in screening assays that could prevent the Company and its
collaborators from developing screens using such targets, or relate to certain
other aspects of technology utilized or expected to be utilized by the Company.
The Company has received invitations from third parties to license patents owned
or controlled by third parties. The Company evaluates these requests and intends
to obtain licenses that are compatible with its business objectives. The
Company's inability to obtain or maintain patent protection or necessary
licenses could have a material adverse effect on the business, financial
condition and results of operations of the Company.
The Company is aware of a third party Patent Cooperation Treaty application
that claims certain uses of green fluorescent protein including its use in
protein kinase assays. If a patent were to issue from such application that
relates to the Company's GFP kinase reporters, the Company believes that such
patent would be unlikely to require the Company to obtain a license. However,
the Company may need to obtain such a license and there can be no assurance that
any such license would be available on commercially reasonable terms, if at all.
The Company is also aware of third party patents and published patent
applications that contain issued or issuable claims that may cover certain
aspects of the Company's or its collaborators' technologies, including certain
types of fluorescent assay methods, certain assays for ligands to certain
classes of targets such as certain cell surface and intracellular receptors, and
certain transcription based assays for chemicals that modulate transcription of
a gene encoding a protein related to disease. There can be no assurance that the
Company would not be required to take a license under any such patents to
practice certain aspects of its fluorescent assay technologies or that such
license would be available on commercially reasonable terms, if at all. Any
action against the Company or its collaborators claiming damages and
9
<PAGE> 11
seeking to enjoin commercial activities relating to the affected technologies
could, in addition to subjecting the Company to potential liability for damages,
require the Company or its collaborators to obtain a license in order to
continue to develop, manufacture or market the affected technologies. The
Company could incur substantial costs in defending patent infringement claims,
obtaining patent licenses, engaging in interference and opposition proceedings
or other challenges to its patent rights or intellectual property rights made by
third parties, or in bringing such proceedings or enforcing any patent rights
against third parties.
In addition to patent protection, Aurora also relies on copyright
protection, trade secrets, know-how, continuing technological innovation and
licensing opportunities. In an effort to maintain the confidentiality and
ownership of trade secrets and proprietary information, the Company requires
employees, consultants and certain collaborators to execute confidentiality and
invention assignment agreements upon commencement of a relationship with the
Company. There can be no assurance, however, that these agreements will provide
meaningful protection for the Company's trade secrets or other confidential
information in the event of unauthorized use or disclosure of such information
or that adequate remedies would exist in the event of such unauthorized use or
disclosure. The loss or exposure of trade secrets possessed by the Company could
adversely affect its business. Like many high technology companies, the Company
may from time to time hire scientific personnel formerly employed by other
companies involved in one or more areas similar to the activities conducted by
the Company. Although the Company requires its employees to maintain the
confidentiality of all confidential information of previous employers, there can
be no assurance that the Company or these individuals will not be subject to
allegations of trade secret misappropriation or other similar claims as a result
of their prior affiliations.
Competition and the Risk of Obsolescence of Technology. Competition among
pharmaceutical and biotechnology companies which attempt to identify compounds
for development is intense. Because the Company's UHTS system is being designed
to integrate a number of different technologies, the Company competes in many
areas, including assay development, high throughput screening and functional
genomics. In the pharmaceutical industry, the Company competes with the research
departments of pharmaceutical and biotechnology companies and other commercial
enterprises, as well as numerous academic and research institutions.
Pharmaceutical and biotechnology companies, academic institutions, governmental
agencies and other research organizations are conducting research in various
areas which constitute portions of the Company's technology platform, either on
their own or in collaboration with others. There can be no assurance that
pharmaceutical and biotechnology companies which currently compete with the
Company in specific areas will not merge or enter into joint ventures or other
alliances with one or more other such companies and become substantial
multi-point competitors or that the Company's collaborators will not assemble
their own ultra-high throughput screening systems by purchasing components from
competitors. Genomics and combinatorial chemistry companies may also expand
their business to include compound screening or screen development, either alone
or pursuant to alliances with others. The Company anticipates that it will face
increased competition in the future as new companies enter the market and
advanced technologies, including more sophisticated information technologies,
become available. The Company's technological approaches, in particular its UHTS
system, may be rendered obsolete or uneconomical by advances in existing
technological approaches or the development of different approaches by one or
more of the Company's current or future competitors. Many of these competitors
have greater financial and personnel resources, and more experience in research
and development, than the Company. Historically, pharmaceutical and
biotechnology companies have maintained close control over their research
activities, including the synthesis, screening and optimization of chemical
compounds. Many of these companies, which represent the greatest potential
market for the Company's systems, services and technologies, have developed or
are developing internal programs and other methodologies to improve
productivity, including major investments in robotics technology to permit the
automated screening of compounds.
10
<PAGE> 12
Future Capital Needs; Uncertainty of Additional Funding. The Company may be
required to raise substantial additional capital over a period of several years
in order to conduct its operations. Such capital may be raised through
additional public or private equity financings, as well as collaborative
arrangements, borrowings and other available sources. The Company depends upon
its corporate collaborators for research and development funding. As of December
31, 1996, the Company had received approximately $1.3 million from its
collaborators. The Company believes that the net proceeds of this offering,
expected revenue from collaborations, existing capital resources and interest
income should be sufficient to fund its anticipated levels of operations at
least through mid-1999. No assurance can be given that the Company's business or
operations will not change in a manner that would consume available resources
more rapidly than anticipated, or that substantial additional funding will not
be required before the Company can achieve profitable operations. There can be
no assurance that the Company will continue to receive funding under the
existing collaborative agreements or that the Company's existing or potential
future collaborative agreements will be adequate to fund the Company's
operations. The Company's capital requirements depend on numerous factors,
including the ability of the Company to enter into additional collaborative
agreements, competing technological and market developments, changes in the
Company's existing collaborative relationships, the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property rights,
the purchase of additional capital equipment, the development of the Company's
UHTS system and the progress of the Company's collaborators' drug development
activities. There can be no assurance that additional funding, if necessary,
will be available on favorable terms, if at all. If adequate funds are not
available, the Company may be required to curtail operations significantly or to
obtain funds by entering into arrangements with collaborators or others that may
require the Company to relinquish rights to certain of its systems, services,
technologies or potential markets that the Company would not otherwise
relinquish, which would have a material adverse effect on the Company's
business, financial condition and results of operations. To the extent that
additional capital is raised through the sale of equity or securities
convertible into equity, the issuance of such securities would result in
dilution to the Company's stockholders. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Uncertainty of Milestone Payments on Pharmaceutical Products; Government
Regulation. The Company's future revenue will depend in part on the realization
of milestone payments and royalties, if any, triggered by the successful
development and commercialization of lead compounds identified through the use
of the Company's technologies. The Company's screens may result in developed and
commercialized pharmaceutical products generating milestone payments and
royalties only after lengthy and costly preclinical and clinical development
efforts, the receipt of requisite regulatory approvals, and the integration of
manufacturing capabilities and successful marketing efforts, all of which must
be performed by the Company's collaborators. The commercialization of any such
products is highly uncertain due to the significant research, development,
market, regulatory and other risks associated with the drug development process.
With the exception of certain aspects of preclinical development, the Company
does not currently intend to perform any of these activities. The Company's
agreements with its collaborators do not obligate those parties to develop or
commercialize lead compounds identified through the use of the Company's
technologies. Development and commercialization of lead compounds will therefore
depend not only on the achievement of research objectives by the Company and its
collaborators, which cannot be assured, but also on each collaborator's own
financial, competitive, marketing and strategic considerations, all of which are
outside the Company's control. Such strategic considerations may include the
relative advantages of alternative products being marketed or developed by
others, including relevant patent and proprietary positions. There can be no
assurance that the interests and motivations of the Company's collaborators are,
or will remain, aligned with those of the Company, that current or future
collaborators will not pursue alternative technology in preference to that of
the Company or that such collaborators will successfully perform their
development, regulatory, compliance, manufacturing or marketing functions.
Should a collaborator fail to develop or
11
<PAGE> 13
commercialize a lead compound identified through the use of the Company's
technologies, or should such a compound be determined to be unsafe or of no
therapeutic benefit, the Company will not receive any future milestone payments
or royalties associated with such compound, and the Company may have only
limited or no rights to independently develop and commercialize such compounds
or products. In addition, there can be no assurance that any product will be
developed and commercialized as a result of such collaborations, that any such
development or commercialization would be successful or that disputes will not
arise over the application of payment provisions to such drugs.
Regulation by the U.S. Food and Drug Administration (the "FDA") and other
governmental entities in the United States and other countries will be a
significant factor in the production and marketing of any pharmaceutical
products that may be developed by a collaborator. It is not currently
anticipated that the Company will develop its own drugs through clinical trials.
However, pharmaceutical products, if any, developed by the Company's
collaborators will require lengthy and costly pre-clinical and clinical trials
and regulatory approval by governmental agencies prior to commercialization. The
process of obtaining these approvals and the subsequent compliance with
appropriate federal, state and foreign statutes and regulations are time
consuming and require the expenditure of substantial resources. Delays in
obtaining regulatory approvals would adversely affect the marketing of any drugs
developed by the Company's collaborators, diminish any competitive advantages
that the Company's collaborators may attain and therefore adversely affect the
Company's ability to receive royalties or milestone payments. If the product is
classified as a new drug, a New Drug Application will be required to be filed
with, and product approval must be obtained from, the FDA before commercial
marketing of the drug. These testing and approval processes require substantial
time and effort and there can be no assurance that any approval will be granted
on a timely basis, if at all.
Attraction and Retention of Key Employees and Consultants. The Company is
highly dependent on the principal members of its scientific and management
staff, as well as its scientific consultants, particularly Drs. Timothy J. Rink,
J. Gordon Foulkes, Harry G. Stylli and Roger Y. Tsien. The loss of one or more
members of its staff could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company does not
maintain "key person" insurance on any of its employees. The Company's future
success will also depend in part on its ability to identify, recruit and retain
additional qualified personnel, including individuals holding doctoral degrees
in the basic sciences. There is intense competition for such personnel in the
areas of the Company's activities, and there can be no assurance that the
Company will be able to continue to attract and retain personnel with the
advanced technical qualifications necessary for the development of the Company's
business. Failure to attract and retain key personnel could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Scientific Advisors" and "Management."
Significant Fluctuations in Quarterly Results. To date, all revenue
received by the Company has been from the payment of license and up-front fees
and research and co-development funding paid pursuant to collaborative
agreements. The Company expects that a significant portion of its revenue for
the foreseeable future will be comprised of such payments. The timing of such
payments in the future will depend upon the completion of certain milestones as
provided for in such collaborative agreements. In any one quarter the Company
may receive multiple or no payments from its several collaborators. Operating
results may therefore vary substantially from quarter to quarter and will not
necessarily be indicative of results in subsequent periods.
Hazardous Materials. The research and development processes of the Company
involve the controlled use of hazardous materials, chemicals and various
radioactive compounds, including microbial organisms and other biological
materials. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and certain waste products. The risk of accidental contamination
or injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be
12
<PAGE> 14
held liable for any damages that result and any such liability could exceed the
resources of the Company. There can be no assurance that the Company will not be
required to incur significant costs to comply with environmental laws and
regulations in the future.
Control By Management and Existing Stockholders. Upon completion of this
offering, the Company's principal stockholders, executive officers, directors
and affiliated individuals and entities together will beneficially own
approximately 56.0% of the outstanding shares of Common Stock (54.5% if the
Underwriters' over-allotment option is exercised in full). As a result, these
stockholders, acting together, will be able to influence significantly and
possibly control most matters requiring approval by the stockholders of the
Company, including approvals of amendments to the Company's Certificate of
Incorporation, mergers, a sale of all or substantially all of the assets of the
Company, going private transactions and other fundamental transactions. In
addition, the Company's Certificate of Incorporation, as it is proposed to be
amended and restated concurrently with the closing of this offering (the
"Restated Certificate"), does not provide for cumulative voting with respect to
the election of directors. Consequently, the present directors and executive
officers of the Company, together with the Company's principal stockholders,
will be able to control the election of the members of the Board of Directors of
the Company. Such a concentration of ownership could have an adverse effect on
the price of the Common Stock, and may have the effect of delaying or preventing
a change in control of the Company, including transactions in which stockholders
might otherwise receive a premium for their shares over then current market
prices.
No Prior Public Market for Common Stock; Possible Volatility of Stock
Price. Prior to this offering, there has been no public market for the Common
Stock and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after this offering. The initial public
offering price will be determined by negotiations between the Company and the
Underwriters and is not necessarily indicative of the market price at which the
Common Stock of the Company will trade after this offering. See "Underwriting"
for a discussion of the factors considered in determining the initial public
offering price. The market prices for securities of comparable companies have
been highly volatile and the market has experienced significant price and volume
fluctuations that are often unrelated to the operating performance of particular
companies. Announcements of technological innovations or new commercial products
by the Company or its competitors, disputes or other developments concerning
proprietary rights, including patents and litigation matters, publicity
regarding actual or potential results with respect to systems, services or
technologies under development by the Company, its collaborative partners or its
competitors, regulatory developments in both the United States and foreign
countries, public concern as to the efficacy of new technologies, general market
conditions, as well as quarterly fluctuations in the Company's revenues and
financial results and other factors, may have a significant impact on the market
price of the Common Stock. In particular, the realization of any of the risks
described in these "Risk Factors" could have a dramatic and materially adverse
impact on such market price.
Availability of Preferred Stock for Issuance; Anti-Takeover Provisions. The
Restated Certificate authorizes the Board of Directors of the Company, without
stockholder approval, to issue additional shares of Common Stock and to fix the
rights, preferences and privileges of and issue up to 7,500,000 shares of
preferred stock with voting, conversion, dividend and other rights and
preferences that could adversely affect the voting power or other rights of the
holders of Common Stock. The issuance of preferred stock, rights to purchase
preferred stock or additional shares of Common Stock may have the effect of
delaying or preventing a change in control of the Company. In addition, the
possible issuance of preferred stock or additional shares of Common Stock could
discourage a proxy contest, make more difficult the acquisition of a substantial
block of the Company's Common Stock or limit the price that investors might be
willing to pay for shares of the Company's Common Stock. Further, the Restated
Certificate provides that any action required or permitted to be taken by
stockholders of the Company must be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent in writing.
Special meetings of the stockholders of the Company may be called only by the
Chairman of the Board of Directors, the President of
13
<PAGE> 15
the Company, by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors, or by the holders of 50%
of the outstanding voting stock of the Company. These and other provisions
contained in the Restated Certificate and the Company's Bylaws, as well as
certain provisions of Delaware law, could delay or make more difficult certain
types of transactions involving an actual or potential change in control of the
Company or its management (including transactions in which stockholders might
otherwise receive a premium for their shares over then current market prices)
and may limit the ability of stockholders to remove current management of the
Company or approve transactions that stockholders may deem to be in their best
interests and, therefore, could adversely affect the price of the Company's
Common Stock.
Shares Eligible for Future Sale and Potential Adverse Effect on Market
Price. Sales of Common Stock in the public market following this offering could
adversely affect the market price of the Common Stock. Upon completion of this
offering, the Company will have 15,893,814 shares of Common Stock outstanding,
assuming no exercise of currently outstanding options, but including warrants to
purchase an aggregate of 45,290 shares of Common Stock to be exercised upon the
closing of this offering. Of these shares, the 3,000,000 shares sold in this
offering (plus any additional shares sold upon exercise of the Underwriters'
over-allotment option) will be freely transferable without restriction under the
Securities Act of 1933, as amended (the "Securities Act"), unless they are held
by "affiliates" of the Company as that term is used under the Securities Act and
the regulations promulgated thereunder. Approximately 10,826,367 shares of
Common Stock will be fully vested and eligible for sale under Securities Act
Rules 144 and 701 on the ninety-first day after the effectiveness of this
offering. Stockholders of the Company, holding an aggregate of 10,762,778 of
these 10,826,367 shares of Common Stock, have agreed pursuant to lock-up
agreements with the Underwriters, subject to certain limited exceptions, not to
sell or otherwise dispose of any of the shares held by them as of the date of
this Prospectus for a period of 180 days after the date of this Prospectus
without the prior written consent of Alex. Brown & Sons Incorporated. At the end
of such 180-day period, an additional 217,722 shares of Common Stock (plus
approximately 15,985 shares issuable upon exercise of vested options) will be
eligible for immediate resale, subject to compliance with Rule 144 or Rule 701.
The remainder of the approximately 1,849,725 shares of Common Stock held by
existing stockholders will become eligible for sale at various times over a
period of two years and could be sold earlier if the holders exercise any
available registration rights. The holders of 9,915,977 shares of Common Stock
have the right in certain circumstances to require the Company to register their
shares under the Securities Act for resale to the public beginning at the end of
the 180 day lock-up period. If such holders, by exercising their demand
registration rights, cause a large number of shares to be registered and sold in
the public market, such sales could have an adverse effect on the market price
for the Company's Common Stock. If the Company were required to include in a
Company-initiated registration shares held by such holders pursuant to the
exercise of their piggyback registration rights, such sales may have an adverse
effect on the Company's ability to raise needed capital. In addition, the
Company expects to file a registration statement on Form S-8 registering a total
of approximately 2,170,168 shares of Common Stock subject to outstanding stock
options or reserved for issuance under the Company's stock option plans. Such
registration statement is expected to be filed and to become effective as soon
as practicable after the effective date of this offering. Shares registered
under such registration statement will, subject to Rule 144 volume limitations
applicable to affiliates, be available for sale in the open market, unless such
shares are subject to vesting restrictions with the Company or the lock-up
agreements described above. See "Management," "Description of Capital
Stock -- Registration Rights," "Shares Eligible for Future Sale" and
"Underwriting."
Immediate and Substantial Dilution. Purchasers of the shares of Common
Stock offered hereby will experience immediate and substantial dilution in the
net tangible book value of their investment from the initial public offering
price. Additional dilution will occur upon exercise of outstanding options. See
"Dilution" and "Shares Eligible for Future Sale."
14
<PAGE> 16
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered hereby at an assumed public offering price of $10.00 per
share are estimated to be $27.3 million ($31.5 million if the Underwriters'
over-allotment option is exercised in full) after deducting underwriting
discounts and commissions and estimated offering expenses.
The Company intends to use the net proceeds from this offering principally
for working capital and general corporate purposes, including facilities
expansion and improvements, capital equipment purchases, enhancement of internal
research and development capabilities and the acquisition of chemical libraries.
The amounts actually expended by the Company for working capital purposes will
vary significantly depending on a number of factors, including future revenue
growth, if any, and the amount of cash, if any, generated by the Company's
operations. The Company's management will retain broad discretion in the
allocation of the net proceeds of this offering. The Company may also use a
portion of the net proceeds to fund acquisitions of complementary technologies,
products or businesses, although the Company has no current agreements or
commitments for any such acquisition. Pending such uses, the Company intends to
invest the net proceeds of this offering in short-term, interest-bearing,
investment-grade securities.
DIVIDEND POLICY
To date, the Company has never declared nor paid any cash dividends on its
Common Stock. The Company currently intends to retain any earnings for funding
growth and, therefore, does not intend to pay any cash dividends on its Common
Stock in the foreseeable future.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1996 (i) on an actual basis after giving effect to the conversion
of all outstanding Preferred Stock into 9,915,977 shares of Common Stock and
(ii) as adjusted to give effect to the receipt by the Company of the estimated
net proceeds from the sale of 3,000,000 shares of Common Stock offered hereby at
an assumed initial public offering price of $10.00 per share, after deducting
underwriting discounts and commissions and estimated offering expenses, and the
exercise upon the closing of this offering of outstanding warrants to purchase
an aggregate of 45,290 shares of Common Stock:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Capital lease obligations, less current portion(1)................... $ 1,111 $ 1,111
Stockholders' equity:
Preferred stock, $.001 par value, 25,000,000 shares authorized,
actual, and 7,500,000 shares authorized, as adjusted; no shares
issued or outstanding, actual and as adjusted................... -- --
Common stock, $.001 par value, 50,000,000 shares authorized;
12,781,137 shares issued and outstanding, actual; 15,826,427
shares issued and outstanding, as adjusted (2).................. 13 16
Additional paid-in capital......................................... 18,888 46,185
Deferred compensation, net......................................... (372) (372)
Accumulated deficit................................................ (3,345) (3,345)
-
-------
Total stockholders' equity...................................... 15,184 42,484
-
-------
Total capitalization....................................... $16,295 $43,595
======= =
</TABLE>
- ---------------
(1) See Note 5 of Notes to Financial Statements for a description of the
Company's capital lease obligations.
(2) Excludes 452,920 shares of Common Stock issuable upon exercise of
outstanding stock options as of February 28, 1997 at a weighted average
exercise price of $1.16 per share and 1,757,248 shares of Common Stock
reserved for future grant under the Company's 1996 Stock Plan, Employee
Stock Purchase Plan and Non-Employee Directors' Stock Option Plan (including
shares reserved in 1997). See "Capitalization," "Management," "Description
of Capital Stock" and Notes 6 and 11 of Notes to Financial Statements.
16
<PAGE> 18
DILUTION
The pro forma net tangible book value of the Company as of December 31,
1996 was approximately $15.1 million, or $1.17 per share. Pro forma net tangible
book value per share represents the amount of the Company's total tangible
assets less total liabilities divided by 12,826,427 shares of Common Stock
outstanding after giving effect to the conversion of all outstanding shares of
Preferred Stock into Common Stock and the exercise upon the closing of this
offering of outstanding warrants to purchase an aggregate of 45,290 shares of
Common Stock.
Pro forma net tangible book value dilution per share represents the
difference between the amount per share paid by purchasers of shares of Common
Stock in the offering and the pro forma net tangible book value per share of
Common Stock immediately after completion of the Offering. After giving effect
to the sale of the 3,000,000 shares of Common Stock offered by the Company
hereby at an assumed initial public offering price of $10.00 per share and the
application of the net proceeds therefrom, the Company's pro forma net tangible
book value at December 31, 1996 would have been approximately $42.4 million, or
$2.68 per share. This represents an immediate increase in pro forma net tangible
book value of $1.51 per share to existing stockholders and an immediate dilution
in pro forma net tangible book value of $7.32 per share to new investors
purchasing Common Stock in this offering, as illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........................... $10.00
Pro forma net tangible book value per share as of December 31, 1996..... $1.17
Increase per share attributable to new investors........................ 1.51
-----
Pro forma net tangible book value per share after this offering........... 2.68
------
Net tangible book value dilution per share to new investors............... $ 7.32
======
</TABLE>
The following table summarizes on a pro forma basis, as of December 31,
1996, the differences between the existing stockholders and the purchasers of
shares in this offering (at an assumed price of $10.00 per share) with respect
to the number of shares purchased from the Company, the total consideration paid
and the average price per share paid.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)............. 12,826,427 81.0% $18,836,000 38.6% $ 1.47
New investors........................ 3,000,000 19.0 30,000,000 61.4 $ 10.00
-
---------- ----- -----
Total.............................. 15,826,427 100.0% $48,836,000 100.0%
========== ===== = =====
</TABLE>
- ---------------
(1) Excludes 452,920 shares of Common Stock issuable upon exercise of
outstanding stock options as of February 28, 1997 at a weighted average
exercise price of $1.16 per share and 1,757,248 shares of Common Stock
reserved for future grant under the Company's 1996 Stock Plan, Employee
Stock Purchase Plan and Non-Employee Directors' Stock Option Plan (including
shares reserved in 1997). See "Capitalization" and "Management,"
"Description of Capital Stock" and Notes 6 and 11 of Notes to Financial
Statements. To the extent that outstanding options are exercised in the
future, there may be further dilution to new stockholders.
17
<PAGE> 19
SELECTED FINANCIAL DATA
The selected financial data presented below for the period from May 8, 1995
(inception) to December 31, 1995 and the year ended December 31, 1996 and at
December 31, 1995 and 1996 are derived from the Company's financial statements
audited by Ernst & Young LLP, independent auditors, which are included elsewhere
in this Prospectus. The data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PERIOD FROM
MAY 8, 1995
(INCEPTION) TO YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
------------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue under collaborative agreements............. $ -- $ 2,217
Operating expenses:
Research and development........................ 366 4,396
General and administrative...................... 46 1,275
----- -------
Total operating expenses........................... 412 5,671
Interest income, net............................... -- 521
----- -------
Net loss........................................... $(412) $(2,933)
===== =======
Pro forma net loss per share (1)................... $(0.14) $ (0.26)
Shares used in computing pro forma net loss per
share (1)....................................... 2,880 11,260
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1995 1996
------------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and investment securities
available for sale................................. $ 11 $13,167
Total assets......................................... 115 17,515
Capital lease obligations, less current portion...... -- 1,111
Accumulated deficit.................................. (412) (3,345)
Total stockholders' equity........................... (412) 15,184
</TABLE>
- ---------------
(1) See Note 1 of Notes to Financial Statements for a description of the
computation of the pro forma net loss per share and the number of shares
used in the pro forma net loss per share calculation.
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under the
caption "Risk Factors," which could cause actual results to differ materially
from those indicated by such forward-looking statements.
OVERVIEW
Aurora Biosciences Corporation ("Aurora" or the "Company") designs and
develops proprietary drug discovery systems, services and technologies to
accelerate and enhance the discovery of new medicines. From May 8, 1995
(inception) to December 31, 1995, the Company's operating activities related
primarily to recruitment of personnel and raising capital. Operating activities
since the beginning of 1996 have focused on the development of Aurora's
portfolio of proprietary fluorescent assay technologies, as well as the
development of its ultra-high throughput screening ("UHTS") system, designed to
integrate advanced instrumentation and miniaturized assays. The Company has
incurred losses since inception and, as of December 31, 1996, had an accumulated
deficit of $3.3 million.
The Company's ability to achieve profitability will depend in part on its
ability to successfully develop the UHTS system, provide screen development and
screening services to pharmaceutical and biotechnology companies, achieve
acceptable performance specifications for its UHTS system, and gain industry
acceptance of its systems, services and technologies. Payments from corporate
collaborators and interest income are expected to be the only sources of revenue
for the foreseeable future. The Company has not yet generated any revenue from
milestones under its collaborative agreements. Royalties or other revenue from
commercial sales of products developed from any compound identified by using the
Company's technologies are not expected for at least several years, if at all.
Payments under collaborative agreements will be subject to significant
fluctuation in both timing and amount and therefore the Company's results of
operations for any period may not be comparable to the results of operations for
any other period.
In November 1996 and December 1996, Aurora announced collaborative
agreements with Bristol-Myers Squibb ("BMS") and Eli Lilly and Company
("Lilly"). Under the terms of each of the BMS and Lilly agreements, the Company
is required to develop and separately install three components to be integrated
into one complete UHTS system. The Company will also co-develop with each party
high throughput screening assays for use by such party. Each party will also
have the right to use the Company's fluorescent assay technologies for internal
research and drug development, including the development of screening assays.
Aurora has also entered into drug discovery collaborations with Sequana
Therapeutics, Inc., Alanex Corporation and ArQule, Inc. and into strategic
technology alliances for UHTS system development with several companies
including Packard Instrument Company ("Packard") and Carl Creative Systems, Inc.
Additionally, in December 1996 Aurora signed a collaborative agreement with
Roche Bioscience Corporation ("Roche") to access one of the Company's
fluorescent assay technologies and to develop specialized instrumentation. See
"Business -- Corporate Collaborations" and "-- UHTS Technology Alliances."
Revenue under collaborative agreements typically consists of non-refundable
up-front fees, ongoing research and co-development payments, and milestone,
royalty and other contingent payments. Revenue from non-refundable up-front fees
is recognized upon signing of the agreement. Revenue from ongoing research and
co-development payments is recognized ratably over the term of the agreement,
and the Company believes such payments will approximate the research and
19
<PAGE> 21
development expense being incurred associated with the agreement. Revenue from
milestone, royalty and other contingent payments will be recognized as earned.
Revenue from screen development and screening and other services is recognized
as earned. Advance payments received under any agreements in excess of amounts
earned are classified as unearned revenue. Revenue under cost reimbursement
contracts is recognized as the related costs are incurred. The Company records
and amortizes over the related vesting periods deferred compensation
representing the difference between the price of stock issued or options granted
and the deemed fair market value of the Common Stock at the time of issue or
grant. Stock and options generally vest over a four-year period.
RESULTS OF OPERATIONS
Revenue under collaborative agreements totaled $2.2 million for the year
ended December 31, 1996. The Company had no revenue during the period from May
8, 1995 (inception) through December 31, 1995 ("the 1995 Period"). The 1996
revenue resulted from the Company's collaborative agreements with BMS, Lilly and
Roche and the technology alliance with Packard.
Research and development expenses increased to $4.4 million in 1996 from
$366,000 in the 1995 Period. The increase in research and development expenses
was attributable to increased research and development personnel expenses,
increased equipment and depreciation and facilities expenses in connection with
the establishment of operations, payments under technology development and
license agreements, purchase of laboratory supplies and increased expenses
associated with the compensation paid to the Company's scientific advisors.
General and administrative expenses increased to $1.3 million in 1996 from
$46,000 in the 1995 Period. The increase was primarily attributable to increased
management and administrative personnel expenses, increased depreciation
expenses from the acquisition of equipment in connection with the establishment
of operations and legal and professional fees incurred in connection with the
overall scale-up of the Company's operations and business development efforts.
Deferred compensation in the amount of approximately $374,000 was recorded
as of December 31, 1996. Subsequent to December 31, 1996, the Company recorded
an additional $3.2 million of deferred compensation in connection with stock
issued and options granted.
The Company had net interest income of $521,000 in 1996 resulting from
interest earned on cash and investment securities derived from private
placements of equity securities, partially offset by interest expense incurred
on capital lease obligations entered into in 1996. The Company did not earn
interest income or incur interest expense in the 1995 Period.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, Aurora held cash, cash equivalents and investment
securities of $13.2 million and working capital of $13.5 million. The Company
has funded its operations to date primarily through private placements of equity
securities with aggregate net proceeds of approximately $18.7 million, capital
equipment lease financing totaling $1.6 million and interest income earned on
the net proceeds of its private placements. Receipts from corporate
collaborations and strategic technology alliances totaled $1.4 million through
December 31, 1996 and an additional $2.9 million has been received subsequent to
such date.
To date, all revenue received by the Company has been from its
collaborations and technology alliances. The Company expects that substantially
all revenue for the foreseeable future will come from collaborators and interest
income. Furthermore, the Company's ability to achieve profitability will be
dependent upon the ability of the Company to enter into additional corporate
collaborations. There can be no assurance that the Company will be able to
negotiate additional collaborative agreements in the future on acceptable terms,
if at all, or that such current or future collaborative agreements will be
successful and provide the Company with expected benefits.
20
<PAGE> 22
The Company believes that the net proceeds from this offering, expected
revenue from collaborations, existing capital resources and interest income
should be sufficient to fund its anticipated levels of operations at least
through mid-1999. No assurance can be given that the Company's business or
operations will not change in a manner that would consume available resources
more rapidly than anticipated, or that substantial additional funding will not
be required before the Company can achieve profitable operations. The Company's
capital requirements depend on numerous factors, including the ability of the
Company to enter into additional collaborative agreements, competing
technological and market developments, changes in the Company's existing
collaborative relationships, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, the purchase of
additional capital equipment, the development of the Company's UHTS system and
the progress of the Company's collaborators' milestone and royalty-producing
activities. There can be no assurance that additional funding, if necessary,
will be available on favorable terms, if at all. If adequate funds are not
available, the Company may be required to curtail operations significantly or to
obtain funds by entering into arrangements with collaborators or others that may
require the Company to relinquish rights to certain of its systems, services,
technologies or potential markets that the Company would not otherwise
relinquish, which would have a material adverse effect on the Company's
business, financial condition and results of operations.
21
<PAGE> 23
BUSINESS
OVERVIEW
Aurora Biosciences Corporation ("Aurora" or the "Company") designs and
develops proprietary drug discovery systems, services and technologies to
accelerate and enhance the discovery of new medicines. Aurora is developing an
integrated technology platform comprised of a portfolio of proprietary
fluorescent assay technologies and an ultra-high throughput screening ("UHTS")
system designed to allow assay miniaturization and to overcome many of the
limitations associated with the traditional drug discovery process. The Company
believes that this platform will enable Aurora and its collaborators, which
include Bristol-Myers Squibb ("BMS") and Eli Lilly and Company ("Lilly"), to
take advantage of the opportunities created by recent advances in genomics and
combinatorial chemistry that have generated many new therapeutic targets and an
abundance of new small molecule compounds. Aurora believes its integrated
platform will accelerate the drug discovery process by shortening the time
required to identify high quality lead compounds and to optimize those compounds
into drug development candidates.
Aurora's goal is to become the leader in the development and
commercialization of technologies that will accelerate and enhance the discovery
of new medicines. The Company seeks to diversify business risk by generating
revenue from multiple collaborators seeking to exploit Aurora's fluorescent
assay technologies and UHTS system in many different drug discovery programs.
The Company expects to generate revenue by developing screens, providing
screening services, developing and providing UHTS systems to syndicate members,
licensing its proprietary technologies, and realizing royalty and milestone
payments from the development and commercialization of drug candidates
identified using Aurora's technologies. To date, the Company has entered into
collaborative agreements with BMS and Lilly to license the Company's fluorescent
assay technologies for their internal discovery research, to collaborate on
screen development and as initial members of a syndicate to co-develop Aurora's
UHTS system. In addition, Aurora has also entered into agreements to develop
screens for or provide screening services to Sequana Therapeutics, Inc.
("Sequana"), Allelix Biopharmaceuticals, Inc. ("Allelix") and Roche Bioscience
("Roche"). The Company has also entered into agreements with Alanex Corporation
("Alanex") and ArQule, Inc. ("ArQule") providing Aurora with non-exclusive
access to certain of their combinatorial chemistry libraries.
THE DISCOVERY OF NEW MEDICINES
Drug discovery methods generally involve the synthesis and testing of large
libraries of different compounds in relatively simple assays, or tests,
containing targets designed to mimic aspects of a disease process. Assays are
employed to determine the effect of a compound upon a particular target. When
applied methodically, assays can be used as screens to identify active
chemicals, referred to as "hits," that may produce a desired effect upon a
target's function. Lead compounds can be identified by additional screening of
hits and may then be optimized to generate candidate compounds for development
as potential medicines.
- --------------------------------------------------------------------------------
ELEMENTS OF THE DRUG DISCOVERY PROCESS
Targets Assays SCREENING - Libraries of Compounds
Hits
Lead Compounds
Candidate Compounds
Drug Development
- --------------------------------------------------------------------------------
22
<PAGE> 24
TARGETS
Targets are specific biological molecules, often proteins such as
receptors, enzymes or ion channels, which are believed to play a role in the
onset or progression of disease. Most drugs work by binding to a target and
modulating the target's biological function or activity. Thus, most drugs are
discovered by identifying compounds that modulate an established target's
biological function. Until recently, pharmacologists and molecular biologists
had identified only a few hundred targets using conventional methods.
Recent developments in molecular biology and genomics have led to a
dramatic increase in the number of potential therapeutic targets available for
drug discovery. The chemical information required for cells to produce proteins
is encoded in genes. It is currently estimated that several thousand of the
roughly 100,000 different human genes encode potential targets. Industrial and
academic researchers have already identified tens of thousands of new genes as
they decipher the genomes of both humans and disease-causing organisms.
Determining the function of these genes and the proteins they encode, including
their evaluation as potential targets, is known as functional genomics and can
be a rate-limiting step in the selection of novel targets for drug discovery.
The large number of newly discovered targets has created the need for faster
screen development and higher throughput screening.
COMPOUNDS
Traditionally, chemists laboriously synthesized new compounds one at a
time, or painstakingly isolated them from natural sources, such as plants or
microbial fermentation broths. Over decades, chemists in major pharmaceutical
and chemical companies built up collections, or libraries, of hundreds of
thousands of compounds. During the last few years, however, many industrial and
academic groups have developed combinatorial chemistry techniques to greatly
increase the supply and diversity of small molecules for screening. Already,
many companies have used combinatorial chemistry to quickly create libraries of
hundreds of thousands, or even millions, of small molecules, which are now
available to be tested against both established and novel targets to yield
potential lead compounds for new medicines. These vast numbers of compounds
present a substantial challenge to the drug discovery process and create a need
for faster and more efficient screening.
ASSAYS
Targets can be incorporated into either biochemical or cell-based assays. A
biochemical assay consists of a target which is isolated from its natural
cellular environment. If enough of the target can be isolated, such assays can
be relatively simple to develop and perform. It is often desirable, however, to
test compounds on targets functioning in the environment of living human or
other mammalian cells. Such cell-based assays provide a number of advantages,
including in many cases greater predictive value of therapeutic effect and
potential toxicity. In addition, cell-based assays may be required to screen
certain targets not readily amenable to biochemical assays. However, cell-based
assays have typically been more difficult and time consuming both to develop and
to perform due to difficulties in detecting the function of a target in a living
cell and the inherent technical complexities of using human or other mammalian
cells in drug screens.
SCREENING
Screening is the process of methodically testing libraries of compounds for
potential therapeutic value by using assays to determine if any compounds affect
a selected target. Primary screening determines if any of the compounds tested
are hits. Re-testing confirms initial hits and secondary screening refines the
initial evaluation of hits. For example, secondary screening may measure a hit's
potency (the amount of the hit compound required to exert its effect) and
specificity (the degree to which the hit does not affect unintended targets).
These secondary screens help in selecting lead compounds for further discovery
efforts to identify candidate compounds for development.
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<PAGE> 25
Until the last five to ten years, screening was a labor intensive manual
process in which it was generally possible to test only tens of compounds per
day. Today, pharmaceutical and biotechnology companies with advanced drug
discovery programs use semi-automated or robotic high throughput screening
systems with microtiter plates that contain 96 separate wells for assays.
Certain current best practice screening systems can operate at throughputs of up
to approximately 10,000 discrete compounds per day per system, but typically
such systems operate at throughputs of less than 3,000 discrete compounds per
day.
THE NEED TO IMPROVE THE DRUG DISCOVERY PROCESS
The discovery and development of new medicines remains an expensive,
time-consuming and often unsuccessful process. Although many pharmaceutical,
biotechnology and clinical research organizations have significantly improved
the efficiency of the drug development phase, only about five to ten percent of
candidate compounds entering development will ultimately be approved for
marketing. Candidate compounds that are identified in discovery frequently fail
in the development phase due to insufficient therapeutic benefit or unexpected
side effects. To date, efforts to improve the initial discovery process have
been inadequate. If the discovery process were sufficiently improved,
pharmaceutical and biotechnology companies could more quickly and efficiently
discover larger numbers of higher quality candidate compounds that have a
greater chance of development into medicines that meet significant unmet needs.
The dramatic increases in the number of potential targets and the size of
compound libraries resulting from advances in genomics and combinatorial
chemistry, respectively, have created a significant opportunity to discover
greater numbers of higher quality lead compounds for development into medicines.
However, the increasing numbers of targets and compounds have created severe
bottlenecks in the drug discovery process. These bottlenecks result from the
difficulty of quickly analyzing function and disease relevance of newly
discovered targets, the complexity of incorporating the many different types of
targets into screens, and the inability to screen extensive compound libraries
quickly and at a reasonable cost.
AURORA'S APPROACH
TECHNOLOGY PLATFORM
Aurora is developing an integrated technology platform designed to allow
assay miniaturization and to overcome many of the limitations associated with
traditional drug discovery and enable the Company and its collaborators to take
advantage of the recent advances in genomics and combinatorial chemistry. The
two principal components of Aurora's platform are its proprietary fluorescent
assay technologies and its highly automated ultra-high throughput screening
system that is being designed to screen over 100,000 discrete compounds per day
per system in miniaturized assays.
Aurora's fluorescent assay technologies are being used today to facilitate
drug discovery by the Company's collaborators and in the Company's existing high
throughput screening system. In addition, the Company is currently developing
screens for collaborators which it expects to deliver in the next several
months. To significantly advance current high throughput screening capabilities
and to exploit the power of its fluorescent assay technologies, Aurora is
developing an ultra-high throughput screening system over the next three to four
years. Aurora believes that this integrated technology platform will allow
Aurora and its collaborators to accelerate the drug discovery process by
shortening the time required to identify higher quality lead compounds and to
optimize those compounds into drug development candidates.
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<PAGE> 26
AURORA'S INTEGRATED TECHNOLOGY PLATFORM
[FLUORESCENT ASSAY TECHNOLOGIES]
POTENTIAL BENEFITS
<TABLE>
<S> <C>
Applicable to most targets Reduced assay volumes
Cell-based and biochemical assays Simplified screening process
Faster assay development Versatile screening platform
Functional genomics in mammalian cells Automated access to compound libraries
Miniaturized assays Throughputs of 100,000 compounds per day
</TABLE>
The following are key features of Aurora's integrated technology platform:
Ability to Design Assays for a Broad Range of Targets. Aurora's portfolio
of novel fluorescent assay technologies is designed to enable screening
against nearly all major classes of human drug targets, including
receptors, ion channels and enzymes, in most therapeutic areas.
Ability to Conduct Both Cell-based and Biochemical Assays. Aurora's
fluorescent assay technologies include both cell-based and biochemical
approaches. Many of the Company's screens are being designed to be
performed with living mammalian cells to better model human disease
processes. In addition a cell-based approach may be needed because certain
important targets may not be amenable to biochemical assays.
Reduction in Time and Investment Required to Develop Cell-based
Assays. Aurora's fluorescent reporter technologies are highly sensitive.
The b-lactamase reporter system, for example, enables the measurement of
certain activation responses within a single living mammalian cell. For
many drug targets, this feature permits the rapid genetic selection and
multiplication of cells with optimal properties for particular screens,
which can reduce the time required for screen development from months, with
conventional methods, down to a few weeks.
Ability to Analyze Gene Function in Living Mammalian Cells. Certain of the
Company's fluorescent assay technologies may facilitate the understanding
of gene function in human and other mammalian cells. The Company believes
that this approach complements genetic approaches which employ fruit flies,
worms or yeast, and allows the functional analysis of human genes in a more
appropriate cellular context. This technology, if fully developed, could
prove valuable to companies with significant involvement in the genomics
area.
Increased Throughput and Reduced Costs Through Miniaturization of
Assays. The sensitivity and ratiometric readouts of Aurora's fluorescent
reporter technologies permit development of miniaturized assays, important
for cost-effective ultra-high throughput screening. The Company's
scientists have miniaturized both cell-based and biochemical assays for
certain applications. The Company believes that its assays will allow
increased throughput with decreased costs.
Advanced Instrumentation for Small Volumes. The Company is developing novel
screening plates (NanoPlates) and innovative microfluidics to enable
miniaturized assays in volumes approximately 100 times smaller than
conventional screens. Smaller volumes reduce the amount of expensive or
scarce reagents that may be required in a screen.
Simplified Screening Process. Most conventional high throughput screens
require special liquid handling devices to perform liquid dispensing and
washing steps before the data can be
25
<PAGE> 27
obtained from a screen. Liquid handling and washing often cause such long
delays in screening that it may be impossible to measure certain events as
they happen in real time. The Company's screens are designed to function
with a significantly reduced number of liquid handling steps and without
washing steps.
Versatile Ultra-high Throughput Screening Platform. The Company is
developing novel fluorescence instrumentation and NanoPlates to enable a
wide variety of targets to be screened in cell-based or biochemical assays
in the UHTS system. The Company believes that other systems being designed
for ultra-high throughput screening may be more restricted to certain
target classes and assay types.
Automated Access to Compound Libraries. Ultra-high throughput screening
requires automated rapid access both to organized collections of large
compound libraries, as well as to individual compounds in the collection
for re-testing. Aurora is unaware of any system currently available with
such capabilities. The Company is developing a compound storage and
retrieval system designed to allow fully automated access to over 1,000,000
compounds, for itself and each of its syndicate members.
Ultra-high Throughput. Aurora's technology platform is designed to
integrate the Company's proprietary fluorescent assays and automated
miniaturized systems with advanced informatics to create an ultra-high
throughput screening system capable of testing more than 100,000 discrete
compounds per day per system. If realized, this throughput would be over
ten times faster than current best practice high throughput screening
systems and would test each compound at a fraction of current costs.
BUSINESS STRATEGY
Aurora's goal is to become the leader in the development and
commercialization of technologies to accelerate and enhance the discovery of new
medicines. The Company seeks to diversify business risk by generating revenue
from multiple collaborators seeking to exploit Aurora's fluorescent assay
technologies and ultra-high throughput screening system in many different drug
discovery programs. To implement this strategy, the Company intends to:
Generate Multiple Revenue Streams from Screen Development and Screening
Services. Aurora generates revenue from multiple collaborators by
developing screens, primarily on a non-exclusive basis, for diverse targets
and providing screening services. To date, Aurora has entered into
agreements for screen development with pharmaceutical and biotechnology
companies, including BMS, Lilly, Roche and Allelix. The Company develops
screens with respect to specific targets rather than for broad therapeutic
areas. The developed screen is then either transferred to the collaborator
for internal research or is utilized by Aurora to provide screening
services. When Aurora provides such screening services, it will use a high
throughput screening system to screen the compounds for and provide
information and potential lead candidates to its collaborators.
Additionally, the Company is entitled to receive milestone payments and
royalties if any compound discovered through such screening is developed
and commercialized. Aurora plans to greatly enhance such screening services
once its own UHTS system is available for screening.
Establish a Syndicate for the Co-development of Aurora's UHTS
System. Aurora is currently establishing a syndicate consisting of up to
six leading pharmaceutical companies to co-develop Aurora's UHTS system.
Aurora has entered into collaborative agreements with BMS and Lilly as
initial syndicate members. Each member is scheduled to receive its own UHTS
system over a three- to four-year period for use in its internal drug
discovery programs. Through the syndicate, Aurora is able to share the cost
of the development of the UHTS system and offer to its syndicate members
co-exclusive access to the system. The Company believes that the payments
made by each syndicate member will be significantly lower than the cost for
any one company to develop a similar system on its own.
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<PAGE> 28
Expand Compound Libraries. In providing screening services, Aurora will
utilize compounds that are either supplied by its collaborators or from
compound libraries to which Aurora has access. In order to provide
additional opportunity for Aurora and its collaborators, the Company is
obtaining access to libraries of compounds focused on small molecules, but
also including selected natural product extracts, peptides and proteins. To
gain access to these diverse sets of compounds, the Company plans to enter
into collaborations with companies specializing in combinatorial chemistry
and natural extract discovery and purification, and to purchase compounds
from available commercial sources. To date, Aurora has entered into
agreements with Alanex and ArQule, providing Aurora with non-exclusive
access to certain of their combinatorial chemistry libraries.
Form Biotechnology Collaborations. Aurora is seeking to collaborate with
genomics companies that may have access to considerable numbers of
potentially important new targets, and with therapeutically focused
companies that have promising discovery programs with validated targets,
for which Aurora's screening technology could substantially accelerate the
identification of lead or candidate compounds. To date, Aurora has entered
into such collaborations with Allelix and Sequana. Aurora is also
considering providing screening services in three-party collaborations
among Aurora, genomics companies or other companies that provide targets
and specialized biologic expertise, and combinatorial chemistry companies
that provide compounds and chemical optimization expertise.
Develop Information Tools and Databases. Utilizing the fluorescent assay
technologies and the UHTS system, the Company expects to have the ability
to generate and analyze large amounts of complex information on molecular
and genomic targets and large numbers of chemical structures. Aurora
intends to exploit these applications of its technology either directly or
in collaborations with leaders in the areas of informatics, genomics and
drug discovery. Ultimately, the Company plans to leverage this information
to create new revenue opportunities in the future.
Maintain Technology Leadership. The Company has assembled a unique
multi-disciplinary team of scientists from leading companies in the
biology, chemistry, instrumentation, automation and computer science
industries. Aurora intends to continue investing significantly in research
and development in order to make advances in its core technologies and to
maintain its technology leadership. The Company also intends to continue to
form strategic technology alliances with leading companies from each of
these industries and with leading academic institutions to provide the
Company with access to those parties' technologies and expertise.
AURORA'S TECHNOLOGY
The two principal components of Aurora's integrated technology platform are
its proprietary fluorescent assay technologies and its highly automated
ultra-high throughput system that is being developed for screening miniaturized
assays. This unique platform results from the Company's innovative integration
of many different disciplines, including fluorescence chemistry, biophysics,
molecular biology, protein engineering, automation, process control, optics,
microfluidics, informatics and software development.
AURORA'S PROPRIETARY FLUORESCENT ASSAY TECHNOLOGIES
The Company has internally developed or licensed a broad range of
proprietary fluorescent assay technologies which the Company believes exhibit
significant advantages over existing screening assays. The Company's fluorescent
assay technologies utilize light glowing from fluorescent molecules to reveal
molecular and cellular activity with precision and sensitivity. Fluorescence is
the property of certain molecules to absorb and be excited by light of one color
(excitation wavelength) and to send, or emit, light of another color having a
longer wavelength (emission wavelength). Aurora's fluorescent assay technologies
allow monitoring of the function of tiny
27
<PAGE> 29
amounts of biomolecules in a non-destructive manner, and therefore many aspects
of cell function can now be observed in single living cells.
Aurora's fluorescent assay technologies generally exploit certain special
types of fluorescence measurements, including ratiometric and fluorescence
resonance energy transfer measurements. These features enable highly accurate
data to be obtained in high throughput screening, significantly reducing the
number of replicates and the cost required to carry-out such screens. As used in
the Company's fluorescent assay technologies, these approaches provide a change
in color of the emitted light rather than just a change in the intensity of the
emitted light. Ratiometric measurements, the ratio of the signal at two
wavelengths, provide a measure that greatly reduces unwanted artifacts. These
artifacts may result from a variable number of cells in an assay, instrumental
fluctuation, photo-bleaching (light-induced degradation) of the probe molecules,
or the presence of quenching substances. Fluorescence resonance energy transfer
can occur when two fluorescent molecules interact as donor and acceptor over
very short distances. When the donor is illuminated with light at its wavelength
of excitation, instead of giving its usual color of emitted light, it transfers
energy to the acceptor that now emits at the acceptor's characteristic
wavelength. This transfer rapidly decreases if the two molecules move apart, for
example if a chemical linker is cleaved, and the fluorescence emission now
changes to the wavelength of the donor. The ratiometric signal change generated
can give a highly sensitive and reliable readout of molecular proximity.
Aurora's portfolio of fluorescent assay technologies is designed to enable
screening of compounds against nearly all major classes of human drug targets,
including receptors, ion channels and enzymes, in most therapeutic areas. The
following chart summarizes several of Aurora's key fluorescent assay
technologies, together with examples of the classes of targets and therapeutic
areas to which they may be applicable:
<TABLE>
<S> <C> <C>
-------------------------------------------------------------------------------------------------
ASSAY TECHNOLOGY TARGET CLASSES THERAPEUTIC AREA
-------------------------------------------------------------------------------------------------
BETA-LACTAMASE REPORTER GENE cell surface receptors, intra- most areas, including
SYSTEM cellular receptors, and intra- cardiovascular diseases,
(cell-based assays) cellular signaling proteins inflammation, cancer, central
nervous system diseases and
endocrine diseases
-------------------------------------------------------------------------------------------------
PROMISCUOUS G-PROTEINS G-protein coupled receptors most areas, including
(cell-based assays) cardiovascular diseases,
inflammation, cancer, central
nervous system diseases and
endocrine diseases
-------------------------------------------------------------------------------------------------
MEMBRANE VOLTAGE REPORTERS ion channels cardiac diseases, central
(cell-based assays) nervous system conditions and
gastro-intestinal diseases
-------------------------------------------------------------------------------------------------
GFP PROTEASE REPORTERS proteases AIDS, cardiovascular diseases
(biochemical and cell-based and degenerative brain diseases
assays)
-------------------------------------------------------------------------------------------------
GFP KINASE REPORTERS protein kinases cancer and autoimmune diseases
(biochemical and cell-based
assays)
-------------------------------------------------------------------------------------------------
</TABLE>
To date, only a limited number of targets have been incorporated into
assays utilizing the Company's fluorescent assay technologies. There can be no
assurance that the Company will be able to develop screening assays for each
target selected by its collaborators in a timely and cost-effective manner, or
if developed, that such assays will function as anticipated.
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<PAGE> 30
Beta-lactamase Reporter Gene System
Reporter genes can be genetically engineered into cells to monitor the
activation of a particular signaling pathway that alters the expression (the
production of the protein coded by that gene) of the reporter gene. Reporter
genes are chosen to code for proteins that can be readily measured under
particular experimental conditions. Most reporter genes typically encode enzymes
that can act on reporter substrates to give some form of optical signal, such as
a colored product, or an enzyme-induced discharge of light. Reporter genes are
now used by many pharmaceutical and biotechnology companies to facilitate drug
discovery.
Over recent years, it has been discovered that many natural ligands (such
as hormones, growth factors and neurotransmitters) that act via receptors on the
surface membrane of cells can increase, or sometimes decrease, the expression of
particular genes. Thus, it is now possible to genetically engineer cell lines in
which a wide range of receptor targets are functionally linked to an
intracellular reporter gene. Such cells can then be used to screen for agonists
and antagonists, compounds that, respectively, activate or inhibit the receptor.
The Company utilizes an engineered bacterial enzyme, b-lactamase, as a
reporter gene in mammalian cells. The Company believes that its b-lactamase
reporter system is an important advance in reporter gene technology that can be
used to design drug screens for a number of major classes of drug targets
including growth factors, cytokine or G-protein coupled receptors, transcription
factors and signal transduction pathways. Functional cell-based assays have a
number of advantages over the commonly used binding assays that detect
interaction of test compounds with targets isolated from their natural cellular
environment. The Company's b-lactamase reporter system allows drug screens to be
constructed in the more physiological environment of mammalian cells, does not
require the use of radioactivity and can readily distinguish between agonists
and antagonists. In addition, the b-lactamase reporter system can facilitate the
search for compounds acting on newly discovered target receptors where no
natural ligands have been identified, also known as orphan receptors. Certain
aspects of the b-lactamase reporter system were exclusively licensed from the
Regents of the University of California.
The Company's b-lactamase reporter system was originally designed to
measure gene expression, including measurement of genes of great interest that
may be expressed only at very low levels, in single living cells and in real
time. These stringent criteria are critical for both rapid assay development and
ultra-high throughput miniaturized drug screens and call for the following
features:
- a reporter enzyme not naturally present in mammalian cells that can be
expressed in those cells with high efficiency, and with well researched
biochemical properties;
- the substrate that actually reports the enzyme activity should provide
extreme sensitivity and precision, coupled with advanced fluorescence
properties providing a ratiometric readout; and
- the substrate must be non-fluorescent when first added to the cells, be
able to freely enter living cells and then be trapped inside a cell with
a distinct fluorescence, and expression of the reporter must then change
the substrate's fluorescent properties.
The Company believes that these features have been demonstrated in its
proprietary forms of b-lactamase reporter gene and the proprietary substrate,
CCF2-AM. This reporter system signals activation by a green to blue ratio change
that can be readily measured in single cells. The Company has now linked the
b-lactamase reporter system to cell surface receptors in assays suitable for
high throughput screening.
The Company's b-lactamase reporter system has the potential to greatly
reduce both the time and cost of developing cell-based screens. This feature
derives from the ability to measure activation responses in single living cells.
Even with modern techniques for making genetically engineered
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<PAGE> 31
cells, cell line development is an unpredictable process. Making cell lines for
reporter gene assays with current methods usually takes many months and involves
testing hundreds or even thousands of individual cell "clones" to generate a
usable screening assay. In contrast, the b-lactamase reporter system employs the
power of fluorescence-activated cell sorting, which can rapidly isolate the
living cells in which the reporter gene is connected to the right signaling
elements. Thus, with the Company's b-lactamase reporter system, incorporation of
a target into a cell-based assay can be reduced to weeks instead of months.
Promiscuous G-proteins
Cell surface receptors are important targets because they transfer
information from the surface to the inside of the cell. One major class of cell
surface receptors is termed G-protein coupled receptors because G-proteins,
attached to the inner face of the cell membrane, transmit the information from
these receptors into the cell interior. These receptors are the targets of
numerous valuable medicines such as Zantac and Inderal, and many are the targets
of current drug discovery programs. It is believed that there are over 1,000
G-protein coupled receptors. Many new members of this class of receptor have
been cloned in recent years. However, for many of these receptors, the natural
activator and the biological function are not known. These are the so-called
orphan receptors, which could prove to be important targets.
Normally each receptor must couple to a specific type of G-protein to have
a biological effect. In order to engineer a cell-based assay for a G-protein
coupled receptor, it is necessary for that receptor to couple via its specific
sub-type of G-protein to a signaling pathway that provides a robust signal for
screening. For example, activation of many G-protein coupled receptors can be
measured with the b-lactamase reporter system. However, for many G-protein
coupled receptors, it is not yet known with which G-protein they communicate.
Even when this is known, many G-proteins produce signals that are difficult to
incorporate into assays in current practice. The Company has an exclusive
license from the California Institute of Technology to the use of novel
"promiscuous" G-proteins, which are "universal adapters" that couple to a wide
range of receptors of this family of targets to a signaling pathway that is well
suited to certain of the Company's fluorescent assays. Thus, the Company
believes that its proprietary promiscuous G-protein methods can be helpful in
developing screens containing G-protein coupled receptors previously difficult
to incorporate into mammalian cell-based assays. The promiscuous G-proteins may
also be useful in constructing screens for orphan receptors that can be used to
search for compounds that activate such receptors as tools to help analyze the
function of these newly discovered genes. To date, the Company has limited
experience developing G-protein coupled receptor assays based on its proprietary
promiscuous G-protein methods.
Membrane Voltage Reporters
Membrane voltage, a fundamental property of cells, is controlled by
membrane proteins. Unregulated membrane voltage can cause serious medical
conditions. Thus membrane proteins, particularly ion channels, help regulate
membrane voltage and can be targets for drug discovery in major disease areas
such as neurology and cardiology. Important medicines acting on ion channels
include certain anti-epileptic and anti-arrhythmic medicines. However, screening
in this area is typically limited to testing compounds with an electrical
measuring apparatus, which requires skilled scientists and has a low throughput
of only tens of compounds per day. There has been some success in adapting an
existing type of fluorescent probe of membrane voltage for semi-automated
screening. The Company believes that this approach is likely to have too slow of
a response to report on many relevant ion channel targets, and can be highly
susceptible to severe artifacts which limit assay performance.
Aurora's proprietary membrane voltage reporters incorporate fluorescence
resonance energy transfer and ratiometric readout to permit more reliable
detection of changes in membrane voltage. With Aurora's approach, two different
fluorescent probes are confined to the surface membrane of the cells in the
assay. When the membrane voltage changes due to cell stimulation, the two probes
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<PAGE> 32
move further apart, or closer together, depending on whether the stimulation
increases or decreases the voltage. Thus the degree of fluorescence energy
transfer between the probes varies and a ratiometric readout may be obtained.
These key features and other aspects of the Company's membrane voltage reporters
should provide faster responses, which should be less susceptible to the
artifacts that can defeat the older methods. The Company believes that assays
incorporating its membrane voltage reporters will be adaptable for sub-types of
ion channels, several of which are currently the targets of screening programs
in pharmaceutical company research departments and in certain specialized
biotechnology companies. The Company is currently developing a screen for an ion
channel subtype for one of its corporate collaborators.
Proprietary Variants of Green Fluorescent Protein
Green Fluorescent Protein ("GFP") is a naturally fluorescent protein
discovered in light-producing jellyfish. The fluorescence of GFP is an intrinsic
property of the protein and, therefore, the protein requires no additional
chemicals to make it fluoresce. This feature of GFP allows it to be expressed
within genetically engineered mammalian cells and to provide an intracellular
reporter with its own intrinsic fluorescence. Using various techniques of
protein engineering, Aurora has developed several mutants, or variants, of the
naturally occurring type of GFP, which are readily expressed in mammalian cells
and provide much brighter fluorescence than that of the naturally occurring GFP
protein. The Company has also engineered variants that have significantly
different excitation and emission wavelengths and hence they fluoresce with
different colors. This provides the basis for GFP-based reporters that use
fluorescence resonance energy transfer to give ratiometric signals. At present,
the Company utilizes three main proprietary GFP variants: blue, green and
yellow. The Company believes that the main application for GFP in drug discovery
requires the further engineering of GFP variants to produce reporters of
important biologic modifications to proteins, such as protein cleavage by
proteases and protein phosphorylation by protein kinases. Accordingly, the
Company is developing GFP protease assays and GFP kinase assays as summarized
below. Certain aspects of Aurora's technology related to GFP reporters are
exclusively licensed from the Regents of the University of California and from
the University of Oregon.
GFP Protease Reporters. Proteases are enzymes that break proteins into
smaller pieces, sometimes to create a functional product and sometimes to
degrade the protein. A number of diseases involve proteases, such as infectious
diseases and cardiovascular disorders. For example, several HIV medicines target
HIV protease. Aurora's proprietary protease reporters are designed to detect
protease activity in cell-based or biochemical assays. Aurora's protease
substrates change their color of fluorescence when they are cleaved by a
protease. Such changes can be detected with current high throughput screening
systems. While there are currently several approaches to developing screens for
proteases, these are nearly all biochemical. However, because some proteases
operate in the interior of the cell, the ability to screen for protease
inhibitors in a cell-based assay could be an important advance. To date, in
addition to research into this class of reporters, the Company has made
prototype biochemical assays for two different proteases.
GFP Kinase Reporters. Protein kinases are a family of enzymes that can add
phosphate groups to proteins and can thereby modulate the protein's biological
function. Aurora's ultra-bright variants of GFP may be engineered to provide
fluorescent assays for protein kinase activity. A number of companies have
targeted protein kinases to discover therapeutics to treat a wide range of
diseases, including cancer and autoimmune disease. These companies typically use
kinase screens involving biochemical assays that often require washing steps or
radioactivity. These types of assays can be difficult to adapt to high
throughput screening and may be less predictive than cell-based assays, because
kinases are often regulated by intra-cellular modulators, which are missing in a
biochemical assay. Aurora's fluorescent kinase reporters are designed to detect
kinase activity in cell-based or biochemical assays. These reporters use novel
fluorescent substrates that are designed to measure kinase activity through
changes in the fluorescence readout, without washing steps or radioactivity. To
date, Aurora has developed a prototype biochemical kinase assay, is researching
the incorpora-
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tion of this reporter into cell-based assays and is developing reporters for
other types of protein kinases.
AURORA'S ULTRA-HIGH THROUGHPUT SCREENING SYSTEM
Over the last five years, many of the major pharmaceutical companies and
some biotechnology companies have assembled high throughput screening systems
that incorporate varying degrees of robotics and automation to facilitate their
drug discovery efforts. These current systems, however, are unable to
accommodate miniaturized assays that are critical for screening at increasing
rates against the large number of new targets identified through genomics and
the growing libraries of test compounds being generated by combinatorial
chemistry. The Company believes that because most current systems have been
developed without an adequately integrated design concept, it can be challenging
to improve performance at certain rate-limiting steps without creating almost
equally limiting bottlenecks elsewhere in the process. In addition, the Company
believes that many of these systems are designed to screen only one class of
target or one type of assay.
To overcome limitations of present high throughput screening and to exploit
the power of its fluorescent assay technologies, Aurora is developing an
ultra-high throughput screening system over the next three to four years. Using
a fully integrated approach, the Company has combined a wide array of expertise
and technologies to develop its UHTS system. The Company is combining key
internally developed advances with the technologies accessed through its
strategic technology alliances, such as those with Packard and Carl Creative.
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The following diagram summarizes the currently planned features of the UHTS
system:
MASTER STORE OF COMPOUNDS
<TABLE>
<CAPTION>
<S> <C> <C>
NATURAL PRODUCT COMBINATORIAL "HISTORIC" FILE
EXTRACTS LIBRARIES COMPOUNDS
--------------- ------------- --------------
[ AUTOMATED STORAGE - STORE 1 MILLION COMPOUNDS
[ AND RETRIEVAL - ACCESS 100,000 PER DAY
[
[
[ MICROFLUIDICS - ASPIRATE AND DISPENSE
[ NANOLITER VOLUMES
[
UHTS --[ NANOPLATES - 3,456 ASSAY WELLS PER PLATE
[ - - 1 MICROLITER VOLUME PER WELL
[
[
[ FLUORESCENCE DETECTOR - HIGHLY SENSITIVE
[ RATIOMETRIC READOUT
[
[
[ SCREENING DATA INFORMATICS - CAPTURE DATA FROM
[ SCREENING RESULTS
DRUG DISCOVERY DATABASE
</TABLE>
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Automated Storage and Retrieval System
The UHTS system's automated storage and retrieval system is designed to
house over 1,000,000 compounds in solution for immediate access. The robotic
systems for storage and retrieval of compounds are being adapted from other
industrial settings where automated, rapid access to very large stores of small
items have been reliably deployed. Aurora is customizing the system for ultra-
high throughput screening. This approach exemplifies the Company's strategy of
bringing to the drug discovery process technological advances that have already
been deployed successfully in other industrial processes, while adding Aurora's
own proprietary innovations to adapt these advanced technologies to the UHTS
system.
The system is designed to allow ready replenishment of the compound store
from libraries in the master store. The robot that operates between the racks of
compound storage plates is designed to deliver (and once sampled, return to the
store for further use) over 100,000 selected compounds per day for primary
screening and over 2,000 hits for re-test and potency determination. This
capability should relieve a significant bottleneck in current screening
operations which have largely failed to automate these steps. The ability to
deliver selected compounds to the screen at ultra-high rates under computer
control is a key advance expected to be offered by the Aurora platform. The
automated storage and retrieval system is also being designed to facilitate high
throughput screening in conventional 96-well plates. The Company's automated
storage and retrieval system is expected to be available in 1998.
Microfluidics: Compound and Assay Component Dispensing
Current technologies for dispensing small volumes of liquid cannot meet the
requirements for screening in NanoPlates. The Company, together with Packard, is
developing microfluidic technologies to accurately and rapidly transfer
microscopic volumes of the compounds into the miniature assay wells of the
NanoPlates at rates of up to 10,000 wells per hour. While current screening
systems can dispense volumes down to a microliter (one millionth of a liter),
Aurora is developing miniaturized screening dispensers capable of accurately
dispensing sub-nanoliter volumes (less than one billionth of a liter) required
for the UHTS system. These sample dispensing devices are designed to remove
small amounts of the compounds from the storage plates and dispense at high
speed precise sub-nanoliter volumes into the appropriate wells of the
NanoPlates. The Company intends to incorporate these devices into proprietary
robotic platforms that are being co-developed with Carl Creative. These
platforms are designed to enable the precise location of the various components
in a manner superior to available compound dispensing technology. To date, the
Company has used prototype nanoliter dispensing devices to perform test assays
in prototype NanoPlates. The Company believes that its microfluidic systems
suitable for ultra-high throughput screening will be operational in 1999.
NanoPlates for Miniaturized Screening Assays
Another key component of Aurora's UHTS system is the NanoPlate, which has
3,456 miniaturized wells in which fluorescent assay screens may be performed.
The Company, in collaboration with Packard Instrument Company and specialized
manufacturers, has developed prototype proprietary NanoPlates. The diagram below
compares the new design with a conventional 96-well plate currently used in
almost all high throughput screening. A key feature is the small assay volume
(approximately 100 times smaller than conventional screening assays), which is
critical for reducing cost per test and conserving compounds made by
combinatorial methods that produce only very small amounts of each test
compound. In addition, the Company is developing technologies to reduce
evaporation that might occur in such small assay volumes. The Company is
developing its NanoPlates to be compatible with most of Aurora's fluorescent
assay technologies. Certain cell-based
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and biochemical assays, based on the Company's fluorescent reporters, have
already been shown to work in a prototype NanoPlate.
[ASSAY PLATES GRAPHIC]
<TABLE>
<CAPTION>
Conventional Aurora's
96 Well-Plate NanoPlate
------------- ---------
<S> <C> <C>
Wells per Plate: 96 3,456
Assay Volume: 150uL 1ul
</TABLE>
Fluorescence Detector for NanoPlates
There are a number of fluorescence plate readers presently available which
enable the use of Aurora's proprietary fluorescent assays for high throughput
screening in 96-well plates. However, none of these provide the necessary
sensitivity and precision to enable ultra-high throughput miniaturized screens.
Aurora is collaborating with Packard to develop highly sensitive fluorescence
detectors capable of measuring miniaturized fluorescent assays in NanoPlates.
The detector is designed to record and process, in real time, data from more
than 100,000 assays in 24 hours. Aurora's detector is designed to measure the
signals generated from the various fluorescent assays over the range of
different wavelengths that the Company's various reporters require and to
rapidly acquire ratiometric data. The Company believes that the resulting
quality of the fluorescent assays should minimize the number of replicates
required compared to traditional screening, thereby increasing throughput and
decreasing costs. Currently the Company is finalizing the design of its detector
and believes that detectors operational with a NanoPlate can be developed within
a two-year time frame.
Informatics and System Integration
Successful overall integration of the UHTS system will require a strategy
for user-friendly computer control. The Company will be required to link the
operation of the automated storage and retrieval system to existing chemistry
information databases and master compound store inventories in the discovery
operations of its syndicate members. The integration of the entire system will
need to ensure that the large amount of screening data from the UHTS system is
efficiently captured, processed and deposited in a centralized database. The
Company plans to integrate advanced software tools and systems from leading
providers. While the basic building blocks are being
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<PAGE> 37
acquired from leading suppliers, the supervisory control systems, the subsystem
controllers for the instruments, the data analysis tools and overall system
architecture and database structure for the UHTS system are being developed by
the Company's in-house informatics team.
The Company's UHTS system is not expected to be fully integrated and
operational for at least three to four years. The Company's UHTS system will
require significant additional investment and research and development prior to
commencement of full-scale commercial operation, including integration of
complex instrumentation and software and testing to validate performance and
cost effectiveness, and is subject to substantial risks. Much of the
instrumentation and software that will comprise the Company's UHTS system are
not now and have not previously been used in commercial applications. Many of
these technologies have not been developed or validated at levels necessary to
screen miniaturized assays, and there can be no assurance that UHTS technologies
will achieve expected performance levels at these scales. The successful
implementation and operation of the Company's UHTS system will be a complex
process requiring integration and coordination of a number of factors, including
integration of and successful interfacing among complex advanced robotics,
microfluidics, automated storage and retrieval systems, fluorescence detector
technologies and software and information systems.
CORPORATE COLLABORATIONS
Aurora has entered into corporate collaborations with a number of companies
relating to screen development, functional genomics, screening services, access
to compound libraries and the co-development with its syndicate members of the
Company's UHTS system. The Company's significant collaborations and their major
features are summarized below:
<TABLE>
<S> <C>
----------------------------------------------------------------------------------------
BRISTOL-MYERS SQUIBB Member of UHTS system syndicate
Screen development
License to fluorescent assay technologies
----------------------------------------------------------------------------------------
ELI LILLY AND COMPANY Member of UHTS system syndicate
Screen development
License to fluorescent assay technologies
----------------------------------------------------------------------------------------
ROCHE BIOSCIENCE Screen development
Specialized instrumentation
----------------------------------------------------------------------------------------
SEQUANA THERAPEUTICS Screen development
Functional genomics
Screening services
----------------------------------------------------------------------------------------
ALLELIX BIOPHARMACEUTICALS Screen development
Screening services
----------------------------------------------------------------------------------------
ARQULE Screening of combinatorial chemistry libraries
----------------------------------------------------------------------------------------
ALANEX CORPORATION Screening of combinatorial chemistry libraries
----------------------------------------------------------------------------------------
</TABLE>
Bristol-Myers Squibb. In November 1996, the Company and Bristol-Myers
Squibb Pharmaceutical Research Institute entered into a Collaborative Research
and License Agreement (the "BMS Agreement") regarding the development of the
Company's UHTS system and the installation of a UHTS system at BMS. Under the
terms of the BMS Agreement, the Company is required to develop and separately
install three components to be integrated into one complete UHTS system. In
return, BMS is obligated to make certain payments to the Company in the form of
non-refundable up-front fees, installation payments and ongoing research and
co-development funding. The Company is obligated to provide service and support
for the UHTS system installed at BMS for a limited period of time.
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<PAGE> 38
The Company and BMS will also co-develop high throughput screening assays
for use by BMS. In connection with such screen development, BMS is required to
pay Aurora certain fees. Certain target screens developed by the Company for BMS
will be exclusive for a limited period of time. In exchange for certain payments
to Aurora, BMS will also have the right to use the Company's fluorescent assay
technologies for internal research and drug development, including the
development of screening assays. BMS will also make certain milestone and
royalty payments to Aurora if BMS develops and commercializes any compound
identified using a screen based on Aurora's fluorescent assay technologies.
Under the terms of the BMS Agreement, subject to certain conditions, the
UHTS syndicate is restricted to six members for a limited period. BMS may
withdraw from the development of the UHTS system at any time without cause,
provided that certain withdrawal payments have been made. BMS may also withdraw
from the development of the UHTS system for "good cause," as defined in the
agreement, without obligation to make further payments relating to development
of the UHTS system. Each party also has the right to terminate the agreement
upon the material breach by the other party of its obligations under the
agreement. The BMS Agreement also provides for penalties payable by the Company
if it fails to deliver the completed UHTS system by a specified time.
Eli Lilly and Company. In December 1996, the Company and Lilly entered into
a Collaborative Research and License Agreement (the "Lilly Agreement") regarding
the development of the Company's UHTS system and the installation of a UHTS
system at Lilly. Under the terms of the Lilly Agreement, the Company is required
to develop and separately install three components to be integrated into one
complete UHTS system. In return, Lilly is obligated to make certain payments to
the Company in the form of non-refundable up-front fees, delivery payments and
ongoing co-development funding. The Company is obligated to provide service and
support for the UHTS system installed at Lilly for a limited period.
The Company and Lilly will also co-develop high throughput screening assays
for use by Lilly. In connection with such development, Lilly is required to pay
Aurora certain fees. In exchange for certain payments to Aurora, Lilly will also
have the right to use the Company's fluorescent assay technologies for internal
research and drug development, including the development of screening assays.
Lilly will also make certain milestone and royalty payments to Aurora if Lilly
develops and commercializes any compound identified using a screen based on
Aurora's fluorescent assay technologies, subject to certain limitations on the
royalties payable to Aurora.
Under the terms of the Lilly Agreement, subject to certain conditions, the
UHTS syndicate is restricted to six members for a limited period of time. Lilly
may terminate the agreement at any time without cause upon 45 days written
notice to Aurora, provided that certain withdrawal payments are made. Each party
has the right to terminate the agreement upon the material breach by the other
party of its obligations under the agreement. The Lilly Agreement also provides
for penalties payable by the Company if it fails to deliver the completed UHTS
system by a specified time.
Roche Bioscience. In December 1996, the Company and Roche entered into a
Collaborative Research and License Agreement ("Roche Agreement") regarding the
development and delivery of a certain screening instrument by Aurora. Roche is
obligated to make certain payments to the Company in the form of non-refundable
up-front fees and delivery payments. For a limited period of time specified in
the agreement, the Company is obligated to provide service and support for any
instrument delivered to Roche. The Company and Roche will also co-develop a
screening assay for use with a target identified in the Roche Agreement. In
connection with such development, Roche is obligated to make certain payments to
the Company in the form of non-refundable up-front fees and ongoing research and
co-development funding. Aurora is prohibited, for a period of time specified in
the agreement, from entering into any third-party collaboration with respect to
the specific target set forth in the Roche Agreement. Roche may elect to
terminate the agreement at any time without cause upon 30 days written notice to
Aurora, provided that certain payments are made.
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Sequana Therapeutics, Inc. In April 1996, the Company and Sequana entered
into a Research Agreement (the "Sequana Agreement") regarding the screening of
certain targets to be selected by Sequana. Under the terms of the Sequana
Agreement, Sequana may require the Company to provide functional analysis, assay
development and screening for such targets, and Sequana would then be obligated
to make certain payments to the Company in the form of non-refundable up-front
fees, delivery payments and ongoing research funding. Sequana will also be
obligated to make certain milestone and royalty payments to the Company if any
pharmaceutical product is developed and commercialized as a result of work
performed by the Company pursuant to the agreement.
During the term of the agreement, and subject to certain provisions, Aurora
is prohibited from performing services for third parties related to a limited
number of targets selected by Sequana and discovered as a result of positional
cloning or statistical genetics. Unless terminated earlier in accordance with
its provisions, the Sequana Agreement will terminate on June 17, 1999, subject
to Sequana's right to extend such term for up to two one-year periods. Each
party has the right to terminate the agreement in the event of a material breach
of the agreement by the other party by giving the other party notice of its
intention to terminate if within 90 days of such notice such party does not cure
the breach. In connection with the execution of the Sequana Agreement, Sequana
made a $1.5 million equity investment in Aurora. See "Certain Transactions."
Allelix Biopharmaceuticals, Inc. In February 1997, the Company and Allelix
entered into a Collaboration Agreement (the "Allelix Agreement") regarding the
development over a three-year period of screening assays for use with targets
identified by Allelix and agreed to by Aurora. Under the terms of the Allelix
Agreement, the Company is required to develop such screening assays and to
perform screening services, and Allelix is obligated to make certain payments to
the Company in the form of up-front fees, development payments and fees for
screening services. Allelix is also required to make certain milestone and
royalty payments to Aurora in the event of development and commercialization of
a compound identified using a screen based on Aurora's fluorescent assay
technologies.
ArQule, Inc. In September 1996, the Company and ArQule entered into a
Material Transfer and Screening Agreement (the "ArQule Agreement") regarding the
screening of up to 20,000 small organic compounds ("ArQule Compounds"). Should
the Company detect activity in one or more of the ArQule Compounds, the Company
and ArQule under certain conditions may enter into negotiations to establish a
research collaboration agreement. Unless terminated earlier in accordance with
its provisions, the ArQule Agreement is in effect for a period of six months
following the effective date of the agreement. Thereafter, the ArQule Agreement
will automatically extend for successive additional six-month periods unless the
Company or ArQule provides 30 days written notice of termination prior to the
expiration of any such period. Neither party delivered such a notice prior to
the initial expiration date of March 10, 1997.
Alanex Corporation. In November 1996, the Company and Alanex entered into a
Material Transfer and Screening Agreement (the "Alanex Agreement") regarding the
screening of the Alanex compound library consisting of 150,000 compounds
("Alanex Compounds"). Should the Company detect activity in one or more of the
Alanex Compounds during the term of the Alanex Agreement, the Company and Alanex
under certain conditions may enter into negotiations to establish a research
collaboration agreement. Unless terminated earlier in accordance with its
provisions, the Alanex Agreement shall be in effect for a period of six months
following the effective date of the agreement. Thereafter, the Alanex Agreement
will automatically extend for successive additional six- month periods unless
the Company or Alanex provides 30 days written notice prior to the expiration of
any such period.
To date, all revenue received by the Company has been from its
collaborations and technology alliances. The Company expects that substantially
all revenue for the foreseeable future will come from collaborators.
Furthermore, the Company's ability to achieve profitability will be dependent
upon the ability of the Company to enter into additional corporate
collaborations. Because
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pharmaceutical and biotechnology companies engaged in drug discovery activities
have historically conducted drug discovery and screening activities through
their own internal research departments, these companies must be convinced that
the Company's UHTS technologies justify entering into collaborative agreements
with the Company. There can be no assurance that the Company will be able to
negotiate additional collaborative agreements in the future on acceptable terms,
if at all, that such current or future collaborative agreements will be
successful and provide the Company with expected benefits, or that current or
future collaborators will not pursue or develop alternative technologies either
on their own or in collaboration with others, including the Company's
competitors, as a means for identifying lead compounds or targets. To the extent
the Company chooses not to or is unable to enter into such agreements, it will
require substantially greater capital to undertake the research, development and
marketing of its systems, services and technologies at its own expense. In the
absence of such collaborative agreements, the Company may be required to delay
or curtail its research and development activities to a significant extent.
In addition, the amount and timing of resources that current and future
collaborators, if any, devote to collaborations with the Company are not within
the control of the Company. There can be no assurance that such collaborators
will perform their obligations as expected or that the Company will derive any
additional revenue from such agreements. Termination of the Company's existing
or future collaboration agreements, or the failure to enter into a sufficient
number of additional collaborative agreements on favorable terms, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
UHTS TECHNOLOGY ALLIANCES
Aurora has entered into strategic technology alliances to design, develop
and implement its UHTS system with leading companies in the areas of
instrumentation, storage and retrieval systems and microfluidics, including the
alliances with Packard, Carl Creative and Universal Technologies, Inc. ("UTI")
summarized below.
Packard Instrument Company. In April 1996, the Company entered into a
Collaboration and License Agreement with Packard (the "Packard Agreement")
regarding the joint development of microfluidic components, NanoPlates and
fluorescence detectors for use, among other things, in the Company's UHTS
system. Under the terms of the Packard Agreement, Packard is required to develop
and deliver such components, and Aurora is obligated to make certain payments to
Packard in the form of non-refundable up-front fees and delivery payments.
Aurora was granted, for a period of two to three years from Aurora's acceptance
of an operational component, an exclusive right to use, market, lease and sell,
for use in certain applications defined in the agreement, the components
developed under the agreement. Packard was granted a worldwide, exclusive
sublicense under the Company's license with the University of California Regents
to make, have made and sell certain fluorescent reagents covered by such license
to non-profit organizations for their internal, non-commercial research. In
connection with the execution of the Packard Agreement, Packard made a $1.0
million equity investment in Aurora. Packard is also providing the Company with
research funding for the development of certain instrumentation.
The Packard Agreement, unless terminated earlier in accordance with its
terms, has an initial term of ten years. If either party fails to satisfy
certain milestones applicable to it under the agreement, and the parties fail to
reach a mutually satisfactory resolution within 90 days after such failure, the
other party shall have the right to terminate the agreement, unless the party
who failed to satisfy such milestone used reasonable good faith efforts to
accomplish such milestone, in which case the other party shall only have the
right to modify the agreement as specified therein. Each party has the right to
terminate the agreement, upon 90 days written notice, for a material breach by
the other party of its obligations under the agreement which is not cured within
such 90-day period.
Carl Creative Systems, Inc. In November 1996, the Company entered into a
Development Agreement with Carl Creative (the "CCS Agreement") regarding the
development and sale of,
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<PAGE> 41
among other things, liquid handling components and robotics for use with the
Company's UHTS system. Under the terms of the CCS Agreement, Carl Creative is
required to develop and deliver such components, and the Company is obligated to
make certain development payments to Carl Creative in accordance with the
payment schedule set forth in the CCS Agreement. A portion of such development
payments will be credited towards any purchases by Aurora of components or
services from Carl Creative. During the term of the CCS Agreement, provided
certain price and supply criteria are satisfied, the Company is obligated to
utilize Carl Creative as the primary manufacturer of certain components. The
Company was granted, for a period of time specified in the agreement, an
exclusive right to such components. The CCS Agreement, unless terminated earlier
in accordance with its terms, has an initial term of two years, which shall
automatically renew for successive six-month periods unless either party
provides at least 30 days written notice of its intent to terminate at the end
of the then-current term. Each party has the right to terminate the agreement if
the other party breaches or defaults in the performance of any of its material
obligation under the agreement, and such breach or default continues for 60 days
after written notice thereof.
Universal Technology, Inc. In December 1996, the Company entered into a
Development Agreement with UTI (the "UTI Agreement") regarding the development
and sale of storage and retrieval systems for use with the Company's UHTS
system. Under the terms of the UTI Agreement, UTI is required to develop and
deliver a storage and retrieval system for use with the Company's UHTS system,
and Aurora is obligated to make certain payments to UTI. Aurora was granted, for
a period of time specified in the agreement, an exclusive right to make, use,
and sell certain UTI technology, including the storage and retrieval system
developed under the agreement. The UTI Agreement, unless terminated earlier in
accordance with its terms, has an initial term of two years, which shall
automatically renew for successive six-month periods unless either party
provides at least 30 days written notice of its intent to terminate at the end
of the then-current term. Each party has the right to terminate the agreement if
the other party breaches or defaults in the performance of any material
obligation under the agreement, and such breach or default continues for 60 days
after written notice thereof.
The Company relies on these companies, many of which are single-source
vendors, for the development, manufacture and supply of certain components of
the Company's UHTS system. Although the Company believes these technology
alliances should provide the Company with a competitive advantage, the Company's
competitive advantage could be substantially weakened or displaced by other
technologies that supplant those made available to the Company through its
alliances. To the extent possible and commercially reasonable, the Company has,
and will continue to seek, alternative sources for various components of its
UHTS system, and may also develop various components of its UHTS system
utilizing its internal engineering capabilities. Although the Company believes
that alternative sources for UHTS system components could be made available, any
interruption in the development, manufacture or supply of a sole-sourced
component could have a material adverse effect on the Company's ability to
develop its UHTS system until a new source of supply is qualified, could subject
the Company to penalties for delays in delivery of the UHTS system and, as a
result, could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance the
Company will be able to enter into additional technology alliances on
commercially reasonable terms, if at all, or that the Company's current or
future allies or suppliers will meet the Company's requirements for quality,
quantity or timeliness.
PATENTS AND PROPRIETARY RIGHTS
The Company's patent portfolio includes 29 patent applications filed in the
United States and foreign patent jurisdictions. Two of the United States
applications relating to the Company's fluorescent assay technology have
recently been allowed. The Company is either the assignee or exclusive licensee
of these patent applications. Certain aspects of the Company's technology
related to GFP reporters, b-lactamase based reporters, protease reporters,
kinase reporters, and membrane
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<PAGE> 42
voltage reporters are exclusively licensed from The Regents of the University of
California. Certain aspects of the Company's technology related to GFP reporters
are exclusively licensed from the University of Oregon. Certain aspects of the
Company's technology related to G-protein coupled receptor reporters are
exclusively licensed from the California Institute of Technology. Additionally,
the Company has obtained a non-exclusive license from SIBIA Neurosciences, Inc.,
with limited rights to sublicense, under patent rights covering certain
transcription-based assay technology (which relates to certain uses of reporter
genes) for screening. The Company is dependent on the rights licensed from such
institutions. Any challenge to, invalidation or loss of such rights could have a
material adverse effect on the business, financial condition and results of
operation of the Company.
The Company's success will depend in part on its ability to obtain patent
protection for its systems, services and technologies, and to operate without
infringing the proprietary rights of third parties. The Company has had no
patents issued to date. The Company is dependent, in part, on the patent rights
licensed from third parties with respect to its fluorescent assay technologies.
There can be no assurance that patent applications filed by the Company or its
licensors will result in patents being issued, that the claims of such patents
will offer significant protection of the Company's technology, or that any
patents issued to, or licensed by, the Company will not be challenged, narrowed,
invalidated, or circumvented. The Company may also be subject to legal
proceedings that result in the revocation of patent rights previously owned by
or licensed to the Company, as a result of which the Company may be required to
obtain licenses from others to continue to develop, test or commercialize its
systems, services or technologies. There can be no assurance that the Company
will be able to obtain such licenses on acceptable terms, if at all.
The drug discovery industry, including screening technology companies, has
a history of patent litigation and will likely continue to have patent
litigation suits concerning drug discovery technologies. The patent positions of
pharmaceutical, biotechnology and drug discovery companies, including the
Company, are generally uncertain and involve complex legal and factual
questions. A number of patents have issued and may issue on certain targets or
their use in screening assays that could prevent the Company and its
collaborators from developing screens using such targets, or relate to certain
other aspects of technology utilized or expected to be utilized by the Company.
The Company has received invitations from third parties to license patents owned
or controlled by third parties. The Company evaluates these requests and intends
to obtain licenses that are compatible with its business objectives. The
Company's inability to obtain or maintain patent protection or necessary
licenses could have a material adverse effect on the business, financial
condition and results of operations of the Company.
The Company is aware of a third party Patent Cooperation Treaty application
that claims certain uses of green fluorescent protein including its use in
protein kinase assays. If a patent were to issue from such application that
relates to the Company's GFP kinase reporters, the Company believes that such
patent would be unlikely to require the Company to obtain a license. However,
the Company may need to obtain such a license and there can be no assurance that
any such license would be available on commercially reasonable terms, if at all.
The Company is also aware of third party patents and published patent
applications that contain issued or issuable claims that may cover certain
aspects of the Company's or its collaborators' technologies, including certain
types of fluorescent assay methods, certain assays for ligands to certain
classes of targets such as certain cell surface and intracellular receptors, and
certain transcription based assays for chemicals that modulate transcription of
a gene encoding a protein related to disease. There can be no assurance that the
Company would not be required to take a license under any such patents to
practice certain aspects of its fluorescent assay technologies or that such
license would be available on commercially reasonable terms, if at all. Any
action against the Company or its collaborators claiming damages and seeking to
enjoin commercial activities relating to the affected technologies could, in
addition to
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<PAGE> 43
subjecting the Company to potential liability for damages, require the Company
or its collaborators to obtain a license in order to continue to develop,
manufacture or market the affected technologies. The Company could incur
substantial costs in defending patent infringement claims, obtaining patent
licenses, engaging in interference and opposition proceedings or other
challenges to its patent rights or intellectual property rights made by third
parties, or in bringing such proceedings or enforcing any patent rights against
third parties.
In addition to patent protection, Aurora also relies on copyright
protection, trade secrets, know-how, continuing technological innovation and
licensing opportunities. In an effort to maintain the confidentiality and
ownership of trade secrets and proprietary information, the Company requires
employees, consultants and certain collaborators to execute confidentiality and
invention assignment agreements upon commencement of a relationship with the
Company. There can be no assurance, however, that these agreements will provide
meaningful protection for the Company's trade secrets or other confidential
information in the event of unauthorized use or disclosure of such information
or that adequate remedies would exist in the event of such unauthorized use or
disclosure. The loss or exposure of trade secrets possessed by the Company could
adversely affect its business. Like many high technology companies, the Company
may from time to time hire scientific personnel formerly employed by other
companies involved in one or more areas similar to the activities conducted by
the Company. Although the Company requires its employees to maintain the
confidentiality of all confidential information of previous employers, there can
be no assurance that the Company or these individuals will not be subject to
allegations of trade secret misappropriation or other similar claims as a result
of their prior affiliations.
COMPETITION
Competition among pharmaceutical and biotechnology companies which attempt
to identify compounds for development is intense. Because the Company's UHTS
system is being designed to integrate a number of different technologies, the
Company competes in many areas, including assay development, high throughput
screening and functional genomics. In the pharmaceutical industry, the Company
competes with the research departments of pharmaceutical and biotechnology
companies and other commercial enterprises, as well as numerous academic and
research institutions. Pharmaceutical and biotechnology companies, academic
institutions, governmental agencies and other research organizations are
conducting research in various areas which constitute portions of the Company's
technology platform, either on their own or in collaboration with others. There
can be no assurance that pharmaceutical and biotechnology companies which
currently compete with the Company in specific areas will not merge or enter
into joint ventures or other alliances with one or more other such companies and
become substantial multi-point competitors or that the Company's collaborators
will not assemble their own ultra-high throughput screening systems by
purchasing components from competitors. Genomics and combinatorial chemistry
companies may also expand their business to include compound screening or screen
development, either alone or pursuant to alliances with others. The Company
anticipates that it will face increased competition in the future as new
companies enter the market and advanced technologies, including more
sophisticated information technologies, become available. The Company's
technological approaches, in particular its UHTS system, may be rendered
obsolete or uneconomical by advances in existing technological approaches or the
development of different approaches by one or more of the Company's current or
future competitors. Many of these competitors have greater financial and
personnel resources, and more experience in research and development, than the
Company. Historically, pharmaceutical and biotechnology companies have
maintained close control over their research activities, including the
synthesis, screening and optimization of chemical compounds. Many of these
companies, which represent the greatest potential market for the Company's
systems, services and technologies, have developed or are developing internal
programs and other methodologies to improve productivity, including major
investments in robotics technology to permit the automated screening of
compounds.
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GOVERNMENT REGULATION
Regulation by the U.S. Food and Drug Administration ("FDA") and other
governmental entities in the United States and other countries will be a
significant factor in the production and marketing of any pharmaceutical
products that may be developed by a collaborator. It is not currently
anticipated that the Company will develop its own drugs through clinical trials
and marketing. However, pharmaceutical products, if any, developed by the
Company's collaborators will require lengthy and costly pre-clinical and
clinical trials and regulatory approval by governmental agencies prior to
commercialization. The process of obtaining these approvals and the subsequent
compliance with appropriate federal, state and foreign statutes and regulations
are time consuming and require the expenditure of substantial resources. Delays
in obtaining regulatory approvals would adversely affect the marketing of any
drugs developed by the Company's collaborators, diminish any competitive
advantages that the Company's collaborators may attain and therefore adversely
affect the Company's ability to receive royalties or milestone payments. If the
product is classified as a new drug, a New Drug Application will be required to
be filed with, and product approval must be obtained from, the FDA before
commercial marketing of the drug. These testing and approval processes require
substantial time and effort and there can be no assurance that any approval will
be granted on a timely basis, if at all.
The Company is subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of certain
materials and waste products used and produced by the Company. The risk of
accidental contamination or injury from these materials cannot be eliminated and
in the event of such an accident, the Company could be held liable for any
damages that result and any liability could exceed the resources of the Company
and, in addition, there can be no assurance that the Company will not be
required to incur significant costs to comply with environmental laws and
regulations in the future.
EMPLOYEES
As of February 28, 1997, the Company had a total of 50 employees, 18 of
whom hold M.D. or Ph.D. degrees and 10 of whom hold other advanced degrees. Of
these, 36 were engaged in research, screen development, screening services and
UHTS system development. The remainder were engaged in legal, business
development, general administration and finance. The Company's future success
depends in significant part upon the continued service of its key scientific,
technical and senior management personnel and its continuing ability to attract
and retain highly qualified technical and managerial personnel. None of the
Company's employees is represented by a labor union or covered by a collective
bargaining agreement. The Company has not experienced any work stoppages and
considers its relations with its employees to be good.
FACILITIES
The company's facilities are located in La Jolla, California. The Company
leases approximately 22,245 square feet of space used for laboratory and
administrative purposes. These facilities are leased through October 15, 1999.
The Company is currently negotiating the terms of an 11-year lease for
approximately 54,000 square feet of laboratory and office space and plans to
relocate its operations in the fourth quarter of 1997. The Company believes
that, upon such relocation, the Company's facilities will be adequate for its
current and projected needs and that additional space at a nearby location will
be available as needed.
LEGAL PROCEEDINGS
Aurora is not a party to any legal proceedings.
SCIENTIFIC ADVISORS
The Company's scientific advisors, who have demonstrated expertise in
various fields, advise the Company from time to time concerning long-term
scientific planning, research and development. The scientific advisors also
evaluate the Company's research programs, recommend personnel to the
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<PAGE> 45
Company, and advise the Company on specific scientific and technical issues. The
scientific advisors are compensated by retainer and on a time and expenses basis
and have received shares of Common Stock of the Company. The Company has entered
into consulting agreements with a number of the scientific advisors.
None of the scientific advisors is employed by the Company, and they may
have other commitments to or consulting or advisory contracts with their
employers or other entities that may conflict or compete with their obligations
to the Company. Accordingly, such persons are expected to devote only a small
portion of their time to the Company. The Company's scientific advisors are:
Roger Y. Tsien, Ph.D. -- Investigator, Howard Hughes Medical Institute;
Professor, Department of Pharmacology, School of Medicine, University of
California, San Diego; Professor, Department of Chemistry and Biochemistry,
University of California, San Diego
Charles S. Zuker, Ph.D. -- Investigator, Howard Hughes Medical Institute;
Professor, Departments of Biology and Neurosciences, School of Medicine,
University of California, San Diego
Lubert Stryer, M.D. -- Winzer Professor in the School of Medicine and
Professor of Neurobiology, Stanford University
Michael Geoffrey Rosenfeld, M.D. -- Investigator, Howard Hughes Medical
Institute; Professor of Medicine, University of California, San Diego
Burton G. Christensen, Ph.D. -- former Senior Vice President for Chemistry,
Merck Sharp & Dohme
Tom Curran, Ph.D. -- Chairman, Department of Developmental Neurobiology, St.
Jude's Hospital Medical Center, Memphis; formerly Associate Director, Roche
Institute of Molecular Biology
Melvin I. Simon, Ph.D. -- Professor of Biological Sciences and Chairman of
the Biology Division, California Institute of Technology
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<PAGE> 46
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information regarding the Company's
directors, executive officers and key employees as of February 28, 1997:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Timothy J. Rink, M.D., Sc.D............... 50 Chairman of the Board, President and Chief
Executive Officer
J. Gordon Foulkes, Ph.D................... 43 Chief Technical Officer, Director
Paul A. Grayson........................... 32 Vice President, Corporate Development
Harry G. Stylli, Ph.D..................... 35 Vice President, Screen Technology
Frank F. Craig, Ph.D...................... 35 Senior Director, Screen Development
Deborah J. Tower.......................... 35 Senior Director, Finance and
Administration, Secretary and Treasurer
John D. Mendlein, Ph.D.................... 37 Senior Legal Counsel and Director,
Intellectual Property
James C. Blair, Ph.D. (1)................. 57 Director
Kevin J. Kinsella (1)..................... 51 Director, Co-founder
Hugh Y. Rienhoff, Jr., M.D.(1)(2)......... 44 Director
Lubert Stryer, M.D........................ 59 Director
Timothy J. Wollaeger (2).................. 53 Director
</TABLE>
- ---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
All directors hold office until the next annual meeting of stockholders of
the Company and until their successors have been elected and qualified.
Directors do not receive any fees for services on the Board. Board members are
reimbursed for their expenses for each meeting attended. Officers serve at the
discretion of the Board of Directors. There are no family relationships between
any directors or executive officers of the Company.
Timothy J. Rink has served as Chairman of the Board, President and Chief
Executive Officer of the Company since January 1996. From 1990 through 1995, Dr.
Rink served as President and Chief Technical Officer of Amylin Pharmaceuticals,
Inc., a publicly held biopharmaceutical company. Dr. Rink was Vice President,
Research at SmithKline Beecham in the U.K. from 1984 to 1989, and previously was
Lecturer in Physiology at the University of Cambridge. Dr. Rink currently serves
on the Scientific Advisory Board of Amylin, and he is a director of CoCensys,
Inc. and NPS Pharmaceuticals, Inc., all publicly held biopharmaceutical
companies. Dr. Rink received his M.A., M.D. and Sc.D. in Medical Sciences from
the University of Cambridge, England.
J. Gordon Foulkes has been Chief Technical Officer and a director of the
Company since December 1996. From 1987 to 1996, Dr. Foulkes served in several
capacities at Oncogene Science, Inc., where he was a director and most recently
held the position of Chief Scientific Officer. Prior to joining Oncogene
Science, Dr. Foulkes led a research group at National Institute for Medical
Research in the U.K., and was previously a post-doctoral fellow in Dr. David
Baltimore's laboratory at the Massachusetts Institute of Technology. Dr. Foulkes
obtained his B.Sc. in Biochemistry at the University College, Cardiff, U.K. and
his Ph.D. in Biochemistry at the University of Dundee, Scotland.
Paul A. Grayson joined the Company in April 1996 and currently serves as
Vice President, Corporate Development. From 1994 to 1996, Mr. Grayson served as
Director of Business Development for Advanced Tissue Sciences, Inc. From 1987 to
1994, Mr. Grayson held various research, marketing and business development
positions at Allergan Pharmaceuticals and Gensia Inc. Mr.
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<PAGE> 47
Grayson received his B.S. in Biochemistry and Computer Science from the
University of California, Los Angeles, and his M.B.A. from the University of
California, Irvine.
Harry G. Stylli joined the Company in November 1995 and currently serves as
Vice President, Screen Technology. From 1987 to 1995, Dr. Stylli held several
positions at Glaxo Wellcome plc, where he was integrally involved in the
International Screening and Technology Program. Dr. Stylli obtained a Ph.D. in
Pharmaceutical Chemistry from Kings College London University, an M.B.A. from
Open University, Milton Keynes, U.K. and a B.Sc. in Biochemical Pharmacology,
with honors, from the University of East London.
Frank F. Craig joined the Company in November 1995 and currently serves as
Senior Director, Screen Development since November 1995. From 1993 to 1995, Dr.
Craig worked in the Lead Discovery Division of Glaxo Wellcome plc. From 1989 to
1992 he worked in the Life Sciences Division of Amersham International plc. Dr.
Craig received B.Sc. and Ph.D. degrees in Microbiology from the University of
Glasgow, U.K., and a Diploma in Business Studies and Political Economy from the
University of Westminster, U.K.
Deborah J. Tower joined the Company in May 1996 and currently serves as
Senior Director, Finance and Administration, Secretary and Treasurer. From 1994
to 1996, Ms. Tower served as Director of Finance and Accounting of Sequana
Therapeutics, Inc. From 1989 to 1993, she served as Controller of Vical Inc. Ms.
Tower received a B.S. in Accounting, with honors, from San Diego State
University and is a Certified Public Accountant.
John D. Mendlein has been Senior Legal Counsel and Director, Intellectual
Property since
August 1996. From 1990 to 1996, Dr. Mendlein worked at Cooley Godward LLP, Palo
Alto, California, where he specialized in intellectual property law. Dr.
Mendlein received his Ph.D. in Physiology from the University of California, Los
Angeles, his J.D. from the University of California, Hastings College of Law and
his B.S. in Biology from the University of Miami, Florida.
James C. Blair has been a director of the Company since March 1996. Dr.
Blair has been a general partner of Domain Associates, a venture capital
investment firm, since 1985. Domain Associates manages Domain Partners III, L.P.
and DP III Associates, L.P. and is the U.S. venture capital advisor to
Biotechnology Investments Limited. From 1969 to 1985, Dr. Blair was an officer
of three investment banking and venture capital firms. Dr. Blair is a director
of Amylin Pharmaceuticals, Inc., CoCensys, Inc., Dura Pharmaceuticals, Inc.,
Gensia, Inc., Houghten Pharmaceuticals, Inc. and Vista Medical Technologies,
Inc. Dr. Blair received a B.S.E. from Princeton University and M.S.E. and Ph.D.
degrees in Electrical Engineering from the University of Pennsylvania.
Kevin J. Kinsella, a co-founder of the Company, has been a director of the
Company since its inception in May 1995. Mr. Kinsella was the founder of Sequana
Therapeutics, Inc. in February 1993, where he currently serves as President,
Chief Executive Officer and a director. He was the Managing General Partner of
Avalon Ventures, a venture capital firm. Avalon Ventures has financed over
thirty companies, many of which are in the biopharmaceutical field, including
Pharmacopeia, Inc., Athena Neurosciences Inc., ONYX Pharmaceuticals and Vertex
Pharmaceuticals Inc. He is also a director of ONYX Pharmaceuticals. He received
a B.S. from the Massachusetts Institute of Technology and an M.A. from the Johns
Hopkins School of Advanced International Studies.
Hugh Y. Rienhoff, Jr. has been a director of the Company since March 1996.
Dr. Rienhoff is a director of Abingworth Management Limited, a venture capital
investment firm. From 1992 to 1997, Dr. Rienhoff held various positions at New
Enterprise Associates Development Corporation, where he most recently served as
Partner. He is a director of Healtheon, Hexagen plc., Microcide Pharmaceuticals,
Inc., VacTex and Sensors for Medicine and Science. Dr. Rienhoff received an M.D.
degree from The John Hopkins University and a B.A. degree in English Literature
and Biology, with honors, from Williams College.
Lubert Stryer has been a director of the Company since March 1996, and
currently serves as a scientific advisor of the Company. He is a Winzer
Professor in the School of Medicine and Professor
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<PAGE> 48
of Neurobiology at Stanford University. He is a director of Affymetrix, Inc.
From 1989 to 1990, Dr. Stryer served as President and Director of Affymax
Research Institute. He is co-inventor of Affymetrix's light-directed synthesis
technology. Dr. Stryer has pioneered the development of novel fluorescence
detection techniques and holds ten patents involving fluorescence and
light-activated chemical syntheses. Dr. Stryer is the author of Biochemistry, a
major text used widely in colleges and universities around the world. Dr. Stryer
received the American Chemical Society Award in Biological Chemistry (the Eli
Lilly Award) and is a member of the National Academy of Sciences and received an
honorary Doctor of Science from The University of Chicago. Dr. Stryer received
his M.D. degree from Harvard University and his B.S. degree from the University
of Chicago.
Timothy J. Wollaeger has been a director of the Company since March 1996.
He has been the general partner of Kingsbury Associates and the general partner
of Kingsbury Capital Partners, L.P. and Kingsbury Capital Partners, L.P. II
venture capital investment partnerships since 1993. From 1990 to 1993, Mr.
Wollaeger served as Senior Vice President and was a director of Columbia
Hospital Corporation, a hospital management company now known as Columbia/HCA
Healthcare Corporation. From 1986 until 1993, he was a general partner of the
general partner of Biovest Associates, a venture capital investment firm. He is
Chairman and a director of Amylin Pharmaceuticals, Inc., Chairman and a director
of Biosite Diagnostics, Inc. and a director of Phamis, Inc. He received an
M.B.A. from Stanford University and a B.A. in Economics from Yale University.
The Company and certain of its stockholders are party to a Voting Agreement
dated March 8, 1996 (the "Voting Agreement"). Pursuant to the terms of the
Voting Agreement, subject to certain conditions, each of Avalon Bioventures II,
L.P. ("Avalon"), Kingsbury Capital Partners, L.P. II ("Kingsbury"), Abingworth
Bioventures SICAV ("Abingworth"), New Enterprise Associates VI, L.P. ("NEA") and
Domain Partners III, L.P. ("Domain III") are entitled to designate a nominee for
election as one of the directors of the Company (collectively, the "Venture
Nominees"). Each party to the Voting Agreement has agreed to vote, at each
meeting (or action by written consent in lieu thereof) of stockholders of the
Company at or by which directors were to be elected, all or their respective
shares of the Company's capital stock to elect, as directors of the Company, (i)
the Venture Nominees, (ii) the Chief Executive Officer of the Company and (iii)
an individual designated jointly by Roger Y. Tsien and Charles S. Zuker. Venture
Nominees currently serving on the Board of Directors include Kevin J. Kinsella,
nominee of Avalon, Timothy J. Wollaeger, nominee of Kingsbury, Hugh Y. Rienhoff,
Jr., nominee of Abingworth, and James C. Blair, nominee of Domain III. Lubert
Stryer currently serves as the nominee of Roger Y. Tsien and Charles S. Zuker.
Timothy J. Rink, as Chief Executive Officer of the Company, was elected as a
director pursuant to the Voting Agreement. In accordance with its terms, the
Voting Agreement will terminate upon the conversion of the outstanding shares of
Preferred Stock into Common Stock upon the completion of the Offering.
COMMITTEES OF THE BOARD OF DIRECTORS
The Compensation Committee consists of Dr. Blair, Mr. Kinsella and Dr.
Rienhoff. The Compensation Committee makes recommendations regarding the
Company's 1996 Stock Plan, Non-Employee Directors' Stock Option Plan and
Employee Stock Purchase Plan and makes decisions concerning salaries and
incentive compensation for employees and consultants of the Company.
The Audit Committee consists of Dr. Rienhoff and Mr. Wollaeger. The Audit
Committee makes recommendations to the Board of Directors regarding the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by the Company's independent auditors and reviews
and evaluates the Company's audit and control functions.
DIRECTOR COMPENSATION
The Company's directors do not currently receive any cash compensation for
services on the Board of Directors or any committee thereof, but directors may
be reimbursed for certain expenses
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<PAGE> 49
in connection with attendance at Board and committee meetings. All directors are
eligible to participate in the Company's 1996 Stock Plan. Non-employee directors
receive automatic grants of options under the Company's Non-Employee Directors'
Stock Option Plan as described below. See "-- Equity Incentive Plan" and
"-- Non-Employee Directors' Stock Option Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee. See "Certain Transactions" for a description of transactions between
the Company and entities affiliated with members of the Compensation Committee.
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning compensation
paid by, or accrued for services rendered to, the Company during the fiscal year
ended December 31, 1996 to the Company's Chief Executive Officer. No other
executive officer of the Company earned in excess of $100,000 in salary and
bonus during the fiscal year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1)
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(2)
- ------------------------------------------------------- -------- ------- ---------------
<S> <C> <C> <C>
Timothy J. Rink, M.D., Sc.D.
President, Chief Executive Officer and Chairman of
the Board............................................ $229,649 $50,000 $27,188
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), the compensation described in this table does not include
medical, group life insurance or other benefits received by the Chief
Executive Officer which are available generally to all salaried employees of
the Company and certain perquisites and other personal benefits received by
the Chief Executive Officer which do not exceed the lesser of $50,000 or 10%
of any such officer's salary and bonus disclosed in this table. There were
no long-term compensation awards granted to the Chief Executive Officer
during the year ended December 31, 1996. As of December 31, 1996, the Chief
Executive Officer held 222,000 shares of restricted common stock having an
aggregate value of $83,250.
(2) Represents fees paid for consulting services rendered prior to employment
with the Company from January to March 1996.
EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS
The Company has entered into employment agreements with Drs. Rink and
Foulkes dated as of January 23, 1996 (as amended on March 8, 1996) and August 6,
1996, respectively. Dr. Rink's employment agreement provides for the payment of
an annual base salary of $250,000. In the event that Dr. Rink's employment is
terminated, other than "for cause" (as defined in his employment agreement),
prior to March 1, 1999, Dr. Rink will be entitled to severance payments equal to
six times his then-current monthly base salary. Dr. Foulkes' employment
agreement provides for the payment of an annual base salary of $250,000. In the
event that Dr. Foulkes' employment is terminated, other than "for cause" (as
defined in his employment agreement), prior to the second anniversary of his
commencement of employment with the Company, Dr. Foulkes will be entitled to
severance payments equal to 12 times his then-current monthly base salary, plus
$100,000. In the event that Dr. Foulkes' employment is terminated, other than
"for cause," after the second anniversary of his commencement of employment with
the Company, but prior to the third anniversary of such commencement, Dr.
Foulkes will be entitled to severance payments equal to nine times his
then-current monthly base salary. Pursuant to his employment agreement, Dr.
Foulkes
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<PAGE> 50
was reimbursed for relocation expenses aggregating approximately $19,000. He was
also paid a mortgage allowance of $7,500, and was loaned, on an interest-free
basis, $150,000 for use in connection with the purchase of a home in San Diego,
California. Such loan is payable on the earlier of one year following
termination of employment or four years following the loan date. So long as Dr.
Foulkes is then employed with the Company, he will receive a bonus in the amount
of $150,000 from the Company upon such four-year anniversary. See "Certain
Transactions."
EQUITY INCENTIVE PLAN
The Company adopted its 1996 Stock Plan in January 1996 and amended and
restated the 1996 Stock Plan in February 1997 (as amended and restated, the
"Stock Plan"). An aggregate of 2,000,000 shares of the Company's Common Stock
have been reserved for issuance pursuant to the exercise of stock awards granted
to employees, directors and consultants under the Stock Plan. The Stock Plan
will terminate in January 2006, unless sooner terminated by the Board.
The Stock Plan permits the granting of options intended to qualify as
incentive stock options ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
employees (including officers and employee directors), and options that do not
so qualify ("Nonstatutory Stock Options," and, together with Incentive Stock
Options, the "Options") to employees (including officers and employee
directors), directors and consultants (including non-employee directors). In
addition, the Stock Plan permits the granting of stock appreciation rights
("SARs") appurtenant to or independently of Options, as well as stock bonuses
and rights to purchase restricted stock (Options, SARs, stock bonuses and rights
to purchase restricted stock are hereinafter referred to as "Stock Awards"). No
person is eligible to be granted Options and SARs covering more than 200,000
shares of the Company's Common Stock in any 12-month period.
The Stock Plan is administered by the Board or a committee appointed by the
Board. Subject to the limitations set forth in the Stock Plan, the Board has the
authority to select the persons to whom grants are to be made, to designate the
number of shares to be covered by each Stock Award, to determine whether an
Option is to be an Incentive Stock Option or a Nonstatutory Stock Option, to
establish vesting schedules, to specify the Option exercise price and the type
of consideration to be paid to the Company upon exercise and, subject to certain
restrictions, to specify other terms of Stock Awards. In addition, the Board has
delegated to Timothy J. Rink the authority to grant Stock Awards to certain
non-executive officer employees of the Company.
The maximum term of Options granted under the Stock Plan is ten years. The
aggregate fair market value, determined at the time of grant, of the shares of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by an optionee during any calendar year (under all such plans of
the Company and its affiliates) may not exceed $100,000. Options granted under
the Stock Plan generally are non-transferable and expire three months after the
termination of an optionee's service to the Company. In general, if an optionee
is permanently disabled or dies during his or her service to the Company, such
person's Options may be exercised up to 12 months following such disability and
up to 18 months following such death.
The exercise price of Options granted under the Stock Plan is determined by
the Board of Directors in accordance with the guidelines set forth in the Stock
Plan. The exercise price of an Incentive Stock Option cannot be less than 100%
of the fair market value of the Common Stock on the date of the grant. The
exercise price of a Nonstatutory Stock Option cannot be less than 85% of the
fair market value of the Common Stock on the date of grant. Options granted
under the Stock Plan vest at the rate specified in the option agreement. The
exercise price of Incentive Stock Options granted to any person who at the time
of grant owns stock representing more than 10% of the total combined voting
power of all classes of the Company's capital stock must be at least 110% of the
fair market value of such stock on the date of grant and the term of such
Incentive Stock Options cannot exceed five years.
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<PAGE> 51
Any stock bonuses or restricted stock purchase awards granted under the
Stock Plan shall be in such form and will contain such terms and conditions as
the Board deems appropriate. The purchase price under any restricted stock
purchase agreement will not be less than 85% of the fair market value of the
Company's Common Stock on the date of grant. Stock bonuses and restricted stock
purchase agreements awarded under the Stock Plan are generally non-transferable.
Pursuant to the Stock Plan, shares subject to Stock Awards that have
expired or otherwise terminated without having been exercised in full again
become available for grant, but shares subject to exercised stock appreciation
rights will not again become available for grant. The Board of Directors has the
authority to reprice outstanding Options and SARs and to offer optionees and
holders of SARs the opportunity to replace outstanding options and SARs with new
options or SARs for the same or a different number of shares.
Upon certain changes in control of the Company, all outstanding Stock
Awards under the Stock Plan must either be assumed or substituted by the
surviving entity. In the event the surviving entity determines not to assume or
substitute such Stock Awards, with respect to persons then performing services
as employees, directors or consultants, the time during which such Stock Awards
may be exercised will be accelerated and such Stock Awards will be terminated if
not exercised prior to such change in control.
As of February 28, 1997, the Company had issued 429,832 shares of Common
Stock pursuant to the exercise of purchase rights granted under the Stock Plan,
and had granted Incentive Stock Options to purchase an aggregate of 372,920
shares of Common Stock. As of February 28, 1997, 1,197,248 shares of Common
Stock remained available for future grants under the Stock Plan.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In February 1997, the Company adopted its Non-Employee Directors' Stock
Option Plan (the "Directors' Plan") to provide for the automatic grant of
options to purchase shares of Common Stock to non-employee directors of the
Company. The Directors' Plan is administered by the Board, unless the Board
delegates administration to a committee of at least two disinterested directors.
The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 240,000. Pursuant to the terms of
the Directors' Plan: (i) each person who upon the effective date of the
Directors' Plan was a Non-Employee Director automatically was granted a one-time
option to purchase 16,000 shares of Common Stock; (ii) each person who, after
the effective date of this offering, for the first time becomes a Non-Employee
Director automatically will be granted, upon the date of his or her initial
appointment or election to be a Non-Employee Director, a one-time option to
purchase 16,000 shares of Common Stock; and (iii) on the date of each annual
meeting of the stockholders of the Company after the effective date of this
offering (other than any such annual meeting held in 1997), each person who is
elected at such annual meeting to serve as a Non-Employee Director (other than a
person who receives a grant in accordance with (ii) above on or during the
three-month period preceding such date) automatically will be granted an option
to purchase 4,000 shares of Common Stock.
No options granted under the Directors' Plan may be exercised after the
expiration of ten years from the date it was granted. Options granted under the
Directors' Plan vest monthly over a four-year period. The exercise price of
options under the Directors' Plan will equal 100% of the fair market value of
the Common Stock on the date of grant. Options granted under the Directors' Plan
are generally non-transferable. Unless otherwise terminated by the Board of
Directors, the Directors' Plan automatically terminates on the tenth anniversary
of the date of this offering. As of the date hereof, options to purchase an
aggregate of 80,000 shares of Common Stock have been granted under the
Directors' Plan.
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<PAGE> 52
EMPLOYEE STOCK PURCHASE PLAN
In February 1997, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan") covering an aggregate of 400,000 shares of Common Stock. The
Purchase Plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Code. Under the Purchase Plan, the Board may
authorize participation by eligible employees, including officers, in periodic
offerings following the commencement of the Purchase Plan. The initial offering
under the Purchase Plan will commence on the date of this Prospectus and
terminate on April 30, 1999.
Unless otherwise determined by the Board, employees are eligible to
participate in the Purchase Plan only if they are employed by the Company or a
subsidiary of the Company designated by the Board for at least 20 hours per week
and are customarily employed by the Company or a subsidiary of the Company
designated by the Board for at least five months per calendar year. Employees
who participate in an offering may have up to 15% of their earnings withheld
pursuant to the Purchase Plan. The amount withheld is then used to purchase
shares of the Common Stock on specified dates determined by the Board. The price
of Common Stock purchased under the Purchase Plan will be equal to 85% of the
lower of the fair market value of the Common Stock at the commencement date of
each offering period or the relevant purchase date. Employees may end their
participation in the offering at any time during the offering period, and
participation ends automatically on termination of employment with the Company.
In the event of a merger, reorganization, consolidation or liquidation
involving the Company, the Board has discretion to provide that each right to
purchase Common Stock will be assumed or an equivalent right substituted by the
successor corporation, or the Board may shorten the offering period and provide
for all sums collected by payroll deductions to be applied to purchase stock
immediately prior to such merger or other transaction. The Board has the
authority to amend or terminate the Purchase Plan, provided, however, that no
such action may adversely affect any outstanding rights to purchase Common
Stock.
401(K) PLAN
In January 1996, the Board adopted an employee retirement savings plan (the
"401(k) Plan") covering certain of the Company's employees who have at least 30
days of service with the Company and work a minimum of 1,000 hours during the
plan year. Pursuant to the 401(k) Plan, eligible employees may elect to reduce
their current compensation by up to the statutorily prescribed annual limit
($9,500 in 1996) and have the amount of such reduction contributed to the 401(k)
Plan. In addition, eligible employees may make roll-over contributions to the
401(k) Plan from a tax-qualified retirement plan. The 401(k) Plan allows for the
Company to make discretionary matching and additional profit sharing
contributions, each as determined by a committee of the Board of Directors. No
discretionary or profit sharing contributions were made by the Company in 1996
and the Company has no intention of making such contributions in the near
future. Company contributions, if any, become 20% vested after two years of
service, with an additional 20% becoming vested for each year of service
thereafter. The 401(k) Plan is intended to qualify under Section 401 of the
Code, so that contributions by employees and the Company to the 401(k) Plan, and
income earned on the 401(k) Plan contributions, are not taxable to employees
until withdrawn from the 401(k) Plan, and so that contributions by the Company,
if any, will be deductible by the Company when made. The trustee under the
401(k) Plan, at the direction of each participant, invests the 401(k) Plan
employee salary deferrals in selected investment options.
LIMITATIONS ON DIRECTORS' AND EXECUTIVE OFFICERS' LIABILITY AND INDEMNIFICATION
The Company's Amended and Restated Bylaws provide that the Company will
indemnify its directors and executive officers and may indemnify its other
officers, employees and other agents to the fullest extent permitted by Delaware
law. The Company is also empowered under its Amended and Restated Bylaws to
enter into indemnification contracts with its directors and officers and to
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<PAGE> 53
purchase insurance on behalf of any person it is required or permitted to
indemnify. Pursuant to this provision, the Company has entered into
indemnification agreements with each of its directors and executive officers and
certain of its key employees.
In addition, the Company's Restated Certificate of Incorporation provides
that directors of the Company will not be personally liable to the Company or
its stockholders for monetary damages for any breach of fiduciary duty as a
director, except for liability (i) for any breach of the directors' duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) in respect of certain unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the director
derives any improper personal benefit. The Restated Certificate of Incorporation
also provides that if the Delaware General Corporation Law is amended after the
approval by the Company's stockholders of the Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of the Company's directors
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
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<PAGE> 54
CERTAIN TRANSACTIONS
The Company was incorporated in California in May 1995 and reincorporated
in Delaware in January 1996. In connection with its reincorporation, the Company
issued 100 shares of Common Stock to Avalon Medical Partners L.P. ("AMP"). From
May 1995 to March 1996, AMP and Avalon Bioventures II L.P. ("ABV") loaned the
Company an aggregate of $425,000 and $500,000, respectively, pursuant to
Convertible Promissory Notes issued by the Company to AMP and ABV. Such
Convertible Promissory Notes were canceled, and the interest thereon forgiven,
in connection with the sale and issuance of shares of Series A Preferred Stock
to AMP and ABV in March 1996. Kevin J. Kinsella, a member of the Board of
Directors of the Company and its Chairman of the Board and Acting Chief
Executive Officer at the time of these transactions, was a general partner of
AMP and ABV until their dissolution in February 1997.
Subsequent to its reincorporation in Delaware in January 1996 and through
February 28, 1997, the Company sold the following shares of its Common Stock and
Preferred Stock in private placement transactions: 1,926,303 shares of Common
Stock at a price of $.00125 per share; 215,720 shares of Common Stock at a price
of $.0875 per share; 501,840 shares of Common Stock at a price of $.125 per
share; 284,672 shares of Common Stock at a price of $.375 per share; 4,000
shares of Common Stock at a price of $1.50 per share; 8,191,282 shares of Series
A Preferred Stock at a price of $1.6625 per share; 666,665 shares of Series B
Preferred Stock at a price of $2.25 per share; 600,000 shares of Series C
Preferred Stock at a price of $2.50 per share; and 458,028 shares of Series D
Preferred Stock at a price of $4.50 per share. Upon the closing of this
offering, each share of Series A, Series B, Series C and Series D Preferred
Stock will automatically convert into one share of Common Stock.
The purchasers of Common and Preferred Stock described above included,
among others, the following officers and directors of the Company, entities
affiliated with certain of the Company's directors, and holders of more than 5%
of the Company's voting securities:
<TABLE>
<CAPTION>
SHARES OF PREFERRED STOCK(1)
COMMON ------------------------------------------
PURCHASER STOCK SERIES A SERIES B SERIES C SERIES D
- -------------------------------------------- ------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Abingworth Bioventures SICAV(2)............. -- 2,105,262 -- -- --
Avalon Medical Partners L.P.(3)............. 348,000 255,638 -- -- --
Avalon Bioventures II L.P.(3)............... -- 300,751 -- -- --
Biotechnology Investments Limited(4)........ -- 1,142,856 -- -- --
DP III Associates, L.P.(4).................. -- 57,324 -- -- --
Domain Partners III, L.P.(4)................ -- 1,656,961 -- -- --
J. Gordon Foulkes, Ph.D..................... 208,000 -- -- -- --
Kingsbury Capital Partners, L.P. II(5)...... -- 601,503 -- -- --
Kevin J. Kinsella(3)........................ -- 30,074 -- -- --
NEA Ventures 1996, L.P.(6).................. -- 6,014 -- -- --
New Enterprise Associates VI
Limited Partnership(6).................... -- 1,654,135 -- -- --
Timothy J. Rink, M.D., Sc.D................. 492,000 15,036 -- -- --
Sequana Therapeutics, Inc.(3)............... -- -- -- 600,000 --
Lubert Stryer, M.D.......................... 60,000 45,112 -- -- --
</TABLE>
- ---------------
(1) Certain of these entities are parties to a voting agreement. See
"Management." The Purchasers of these securities are entitled to
registration rights after this offering. See "Description of Capital
Stock -- Registration Rights."
(2) Dr. Stephen W. Bunting, a Director of the Company from March 1996 until
February 1997, is a director of Abingworth Management Limited, the
investment adviser to Abingworth Bioventures SICAV.
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<PAGE> 55
(3) Kevin J. Kinsella, a director of the Company and its Chairman of the Board
and Acting Chief Executive Officer until March 1996, was a general partner
of Avalon Medical Partners L.P. and Avalon Bioventures II L.P. until such
partnerships dissolved in February 1997. Mr. Kinsella is also the President,
Chief Executive Officer and a director of Sequana Therapeutics, Inc.
("Sequana").
(4) Dr. James C. Blair, a director of the Company, is a general partner of
Domain Associates, a venture capital investment firm. Domain Associates
manages Domain Partners III, L.P. and DP III Associates, L.P. and is the
U.S. venture capital advisor to Biotechnology Investments Limited.
(5) Timothy J. Wollaeger, a director of the Company, is the general partner of
Kingsbury Capital Partners, L.P. II.
(6) Dr. Hugh Y. Rienhoff, Jr., a director of the Company, was a partner of New
Enterprise Associates Development Corporation at the time of the
transactions listed above. New Enterprise Associates Development Corporation
manages NEA Ventures 1996, L.P. and New Enterprise Associates VI Limited
Partnership.
In connection with Sequana's purchase of Series C Preferred Stock, the
Company and Sequana entered into a Research Agreement dated April 2, 1996. See
"Business -- Corporate Collaborations." As noted above, Kevin J. Kinsella, a
director of the Company and its Chairman of the Board and Acting Chief Executive
Officer until February 1996, is the President and Chief Executive Officer of
Sequana.
The Company has employment agreements with Timothy J. Rink, its Chief
Executive Officer and President, and J. Gordon Foulkes, its Chief Technical
Officer. See "Management -- Employment Agreements and Severance Arrangements."
In October 1996, the Company loaned $150,000 to J. Gordon Foulkes, the
Company's Chief Technical Officer and a director of the Company, to assist with
the purchase of a residence in connection with Dr. Foulkes' relocation to San
Diego, California from Long Island, New York. The loan is interest-free and is
secured by a second deed of trust on the property purchased in part by such
funds. Such loan is payable on the earlier of one year following termination of
employment or four years following the loan date. So long as Dr. Foulkes is then
employed with the Company, he will receive a bonus in the amount of $150,000
from the Company upon such four-year anniversary. See "Management."
The Company has granted options to certain of its directors and executive
officers. The Company has also entered into an Indemnification Agreement with
each of its directors and executive officers.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and its
officers, directors, principal stockholders and their affiliates will be
approved by a majority of the Board of Directors, including a majority of the
disinterested directors, and will continue to be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
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<PAGE> 56
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of February 28, 1997, and
as adjusted to reflect the sale of the shares of Common Stock offered hereby, by
(i) the Company's Chief Executive Officer, (ii) each of the Company's directors,
(iii) each holder of more than 5% of the Company's Common Stock and (iv) all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED (1)
SHARES --------------------------------
5% STOCKHOLDERS, DIRECTORS BENEFICIALLY BEFORE AFTER
AND NAMED EXECUTIVE OFFICERS OWNED(1) OFFERING OFFERING
- ----------------------------------------------------- ------------ --------------- --------------
<S> <C> <C> <C>
Abingworth Bioventures SICAV......................... 2,105,262 16.4% 13.2%
c/o Sanne & Cie
Boite Postale 566
L-2015 Luxemberg
Biotechnology Investments Limited.................... 1,142,856 8.9% 7.2%
St. Peter Port House
Saus Marez Street
St. Peter Port, Guernsey
GY1 3PH
Entities affiliated with Domain Partners III,
L.P.(2)............................................ 1,714,285 13.3% 10.8%
One Palmer Square, Suite 515
Princeton, NJ 08542
Entities affiliated with New Enterprise Associates
Development Corporation(3)......................... 1,660,149 12.9% 10.4%
1119 St. Paul Street
Baltimore, MD 21202
Timothy J. Rink, M.A., M.D., Sc.D.(4)................ 491,036 3.8% 3.1%
J. Gordon Foulkes, Ph.D.............................. 208,000 1.6% 1.3%
James C. Blair, Ph.D.(5)............................. 1,714,951 13.3% 10.8%
Kevin J. Kinsella(6)................................. 778,888 6.1% 4.9%
Hugh Y. Rienhoff, Jr., M.D.(7)....................... 2,108,935 16.4% 13.3%
Lubert Stryer, M.D.(8)............................... 105,778 * *
Timothy J. Wollaeger(9).............................. 602,169 4.7% 3.8%
All directors and executive officers as a group (10
persons)........................................... 6,104,957 47.5% 38.4%
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 12,848,524 shares of Common
Stock outstanding as of February 28, 1997 and 15,893,814 shares of Common
Stock outstanding after completion of this offering.
(2) Represents 57,324 shares held by DP III Associates, L.P. ("DP III") and
1,656,961 shares held by Domain Partners III., L.P. ("Domain III"). One
Palmer Square Associates III, L.P. is the general partner of DP III and
Domain III.
(3) Represents 1,654,135 shares held by New Enterprise Associates VI Limited
Partnership and 6,014 shares held by NEA Ventures 1996, L.P. New Enterprise
Associates Development Corporation manages New Enterprise Associates VI
Limited Partnership and NEA Ventures 1996, L.P.
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<PAGE> 57
(4) Includes 222,000 shares held by Dr. Rink's spouse, Norma J. Rink, as her
separate property. Also includes 32,000 shares held by Dr. Rink as custodian
for two of his minor children. Dr. Rink disclaims beneficial ownership of
all of such shares.
(5) Represents 57,324 shares held by DP III and 1,656,961 shares held by Domain
III. Dr. Blair is a general partner of One Palmer Square Associates III,
L.P., the general partner of DP III and Domain III. Dr. Blair disclaims
beneficial ownership of such shares except to the extent of his partnership
interest therein. Also includes 666 shares subject to stock options granted
to Dr. Blair which are exercisable within 60 days of the date of this
Prospectus.
(6) Includes 600,000 shares held by Sequana Therapeutics, Inc., of which Mr.
Kinsella is the President and Chief Executive Officer and a member of the
board of directors. Mr. Kinsella disclaims beneficial ownership of such
shares. Also includes 666 shares subject to stock options granted to Mr.
Kinsella which are exercisable within 60 days of the date of this
Prospectus.
(7) Includes 2,105,262 shares held by Abingworth Bioventures SICAV. Dr. Rienhoff
is a director of Abingworth Management Limited, the investment adviser to
Abingworth Bioventures SICAV. Dr. Rienhoff disclaims beneficial ownership of
such shares except to the extent of his partnership interest therein. Also
includes 666 shares subject to stock options granted to Dr. Rienhoff which
are exercisable within 60 days of the date of this Prospectus.
(8) Includes 22,556 shares held by Dr. Stryer's spouse, Andrea S. Stryer. Also
includes 666 shares subject to stock options granted to Dr. Stryer which are
exercisable within 60 days of the date of this Prospectus.
(9) Includes 601,503 shares held by Kingsbury Capital Partners, L.P. II
("Kingsbury"). Mr. Wollaeger is the general partner of Kingsbury. Mr.
Wollaeger disclaims beneficial ownership of such shares except to the extent
of his partnership interest therein. Also includes 666 shares subject to
stock options granted to Mr. Wollaeger which are exercisable within 60 days
of the date of this Prospectus.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, $.001 par value, and, effective upon the closing of this
offering, 7,500,000 shares of Preferred Stock, $.001 par value.
COMMON STOCK
As of February 28, 1997, there were 12,848,524 shares of Common Stock
outstanding, after giving effect to the conversion of all outstanding shares of
Preferred Stock into 9,915,977 shares of Common Stock.
The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by the stockholders. Subject to preferences that may be
applicable to any outstanding shares of Preferred Stock, holders of Common Stock
are entitled to receive ratably such dividends as may be declared by the Board
of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preferences of any outstanding shares of
Preferred Stock. Holders of Common Stock have no preemptive, conversion,
subscription or other rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are, and
all shares of Common Stock to be outstanding upon completion of this offering
will be, fully paid and nonassessable.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of Preferred
Stock will be converted into 9,915,977 shares of Common Stock. See Notes 6 and
11 of Notes to Financial Statements for a
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<PAGE> 58
description of the currently outstanding Preferred Stock. Following the
conversion, the Company's Restated Certificate of Incorporation will be amended
and restated to delete all references to such shares of Preferred Stock. Under
the Certificate of Incorporation, as amended and restated upon the closing of
this offering (the "Restated Certificate"), the Board has the authority, without
further action by stockholders, to issue up to 7,500,000 shares of Preferred
Stock in one or more series and to fix the rights, preferences, privileges,
qualifications and restrictions granted to or imposed upon such Preferred Stock,
including dividend rights, conversion rights, voting rights, rights and terms of
redemption, liquidation preference and sinking fund terms, any or all of which
may be greater than the rights of the Common Stock. The issuance of Preferred
Stock could adversely affect the voting power of holders of Common Stock and
reduce the likelihood that such holders will receive dividend payments and
payments upon liquidation. Such issuance could have the effect of decreasing the
market price of the Common Stock. The issuance of Preferred Stock could have the
effect of delaying, deterring or preventing a change in control of the Company.
The Company has no present plans to issue any shares of Preferred Stock.
REGISTRATION RIGHTS
After this offering, the holders of 9,915,977 shares of Common Stock will
be entitled to certain rights with respect to the registration of such shares
under the Securities Act, pursuant to that certain Amended and Restated Investor
Rights Agreement dated December 27, 1996 (the "Investors' Rights Agreement").
Under the terms of the Investors' Rights Agreement, if the Company proposes to
register any of its securities under the Securities Act, either for its own
account or for the account of other security holders exercising registration
rights, such holders are entitled to notice of such registration and are
entitled, subject to certain limitations, to include shares therein. Commencing
with the date that is one year after this offering, the holders may also require
the Company to file a registration statement under the Securities Act with
respect to their shares, and the Company is required to use its best efforts to
effect to such registration. Furthermore, the holders may require the Company to
register their shares on Form S-3 when such form becomes available to the
Company. Generally, the Company is required to bear all registration and selling
expenses incurred in connection with any such registrations. These rights are
subject to certain conditions and limitations, among them the right of the
underwriters of an offering to limit the number of shares included in such
registration. Such registration rights terminate on the seventh anniversary of
the effective date of the Offering.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
The Company is governed by the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales or other transactions resulting in a financial
benefit to the stockholder. An "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years, did own)
15% or more of the corporation's voting stock. The existence of this provision
would be expected to have anti-takeover effects with respect to transactions not
approved in advance by the Board of Directors, such as discouraging takeover
attempts that might result in a premium over the market price of the Common
Stock.
The Company's Restated Certificate provides that any action required or
permitted to be taken by stockholders of the Company must be effected at a duly
called annual or special meeting of stockholders and may not be effected by any
consent in writing. In addition, special meetings of the stockholders of the
Company may be called only by the Chairman of the Board, the President of the
Company, by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors, or by the holders of 50%
of the outstanding voting stock of the
57
<PAGE> 59
Company. The Company's Restated Certificate also specifies that the authorized
number of directors may be changed only by resolution of the Board of Directors.
These and other provisions contained in the Restated Certificate and the
Company's Amended and Restated Bylaws could delay or make more difficult certain
types of transactions involving an actual or potential change in control of the
Company or its management (including transactions in which stockholders might
otherwise receive a premium for their shares over then current prices) and may
limit the ability of stockholders to remove current management of the Company or
approve transactions that stockholders may deem to be in their best interests
and, therefore, could adversely affect the price of the Company's Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is Harris
Trust Company of California.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no public market for the Common Stock
of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect prevailing market prices. Furthermore,
since only a limited number of shares will be available for sale shortly after
the Offering because of certain contractual and legal restrictions on resale
described below, sales of substantial amounts of Common Stock of the Company in
the public market after the restrictions lapse could adversely affect the
prevailing market price and the ability of the Company to raise equity capital
in the future.
Upon completion of the Offering, the Company will have 15,893,814 shares of
Common Stock outstanding, assuming no exercise of currently outstanding options,
but including warrants to purchase an aggregate of 45,290 shares of Common Stock
to be exercised upon the closing of this offering. Of these shares, the
3,000,000 shares sold in this offering (plus any additional shares sold upon
exercise of the Underwriters' over-allotment option) will be freely transferable
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), unless they are held by "affiliates" of the Company as that
term is used under the Securities Act and the regulations promulgated thereunder
("Affiliates"). Approximately 10,826,367 shares of Common Stock will be fully
vested and eligible for sale under Securities Act Rules 144 and 701 on the
ninety-first day after the effectiveness of this offering. Stockholders of the
Company holding an aggregate of 10,762,778 of these 10,826,367 shares have
agreed pursuant to lock-up agreements with the Underwriters, subject to certain
limited exceptions, not to sell or otherwise dispose of any of the shares held
by them for a period of 180 days after the effective date of this offering
without the prior written consent of Alex. Brown & Sons Incorporated. At the end
of such 180-day period, an additional 217,722 shares of Common Stock (plus
approximately 15,985 shares issuable upon exercise of vested options) will be
eligible for immediate resale, subject to compliance with Rule 144 and Rule 701.
The remainder of the approximately 1,849,725 shares of Common Stock held by
existing stockholders will become eligible for sale at various times over a
period of two years and could be sold earlier if the holders exercise any
available registration rights. The holders of 9,915,977 shares of Common Stock
have the right in certain circumstances to require the Company to register their
shares under the Securities Act for resale to the public beginning one year from
the effective date of this offering. If such holders, by exercising their demand
registration rights, cause a large number of shares to be registered and sold in
the public market, such sales could have an adverse effect on the market price
for the Company's Common Stock. If the Company were required to include in a
Company-initiated registration shares held by such holders pursuant to the
exercise of their piggyback registration rights, such sales may have an adverse
effect on the Company's ability to raise needed capital. In addition, the
Company expects to file a registration statement on Form S-8 registering a total
of approximately 2,170,168 shares of Common Stock subject to outstanding stock
options or reserved for issuance under the Company's stock option plans. Such
registration statement is expected to be
58
<PAGE> 60
filed and to become effective as soon as practicable after the effective date of
this offering. Shares registered under such registration statement will, subject
to Rule 144 volume limitations applicable to Affiliates, be available for sale
in the open market, unless such shares are subject to vesting restrictions with
the Company or the lock-up agreements described above.
In general, under Rule 144 as in effect on the date of this Prospectus,
beginning 90 days after the effective date of the Offering, an Affiliate of the
Company, or a person (or persons whose shares are aggregated) who has
beneficially owned Restricted Shares (as defined under Rule 144) for at least
one year is entitled to sell within any three-month period a number of shares
that does not exceed greater of (i) one percent of the then outstanding shares
of the Company's Common Stock or (ii) the average weekly trading volume of the
Company's Common Stock in the Nasdaq National Market during the four calendar
weeks immediately preceding the date on which notice of the sale is filed with
the Commission. Sales pursuant to Rule 144 are subject to certain requirements
relating to the manner of sale, notice, and the availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who was not an Affiliate of the Company at any time during the 90 days
immediately preceding the sale and who has beneficially owned Restricted Shares
for at least two years is entitled to sell such shares under Rule 144(k) without
regard to the limitations described above.
An employee, officer or director of or consultant to the Company who
purchased or was awarded shares or options to purchase shares pursuant to a
written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701 under the Securities Act, which permits Affiliates and
non-Affiliates to sell their Rule 701 shares without having to comply with Rule
144's holding period restrictions, in each case commencing 90 days after the
date of this Prospectus. In addition, non-Affiliates may sell Rule 701 shares
without complying with the public information, volume and notice provisions of
Rule 144.
59
<PAGE> 61
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated, Hambrecht & Quist LLC and Robertson, Stephens &
Company LLC, have severally agreed to purchase from the Company the following
respective numbers of shares of Common Stock at the initial public offering
price less the underwriting discounts and commissions set forth on the cover
page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
---------
<S> <C>
Alex. Brown & Sons Incorporated.................................................
Hambrecht & Quist LLC...........................................................
Robertson, Stephens & Company LLC...............................................
---------
Total................................................................. 3,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all the shares of the Common Stock offered hereby if
any of such shares are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain other dealers. After the initial
public offering, the offering price and other selling terms may be changed by
the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 450,000
additional shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it in the above table bears to 3,000,000, and the Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 3,000,000 shares are being offered.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
60
<PAGE> 62
Stockholders of the Company, holding in the aggregate 10,681,219 shares of
Common Stock, have agreed not to offer, sell, contract to sell or otherwise
dispose of (or enter into any transaction which is designed to, or could be
expected to, result in the disposition of any portion of) any Common Stock for a
period of 180 days after the date of this Prospectus without the prior written
consent of Alex. Brown & Sons Incorporated. The Company has entered into a
similar agreement, except that it may issue, and grant options to purchase,
shares of Common Stock under its 1996 Stock Plan, Employee Stock Purchase Plan
and Non-Employee Directors' Stock Option Plan and pursuant to currently
outstanding warrants. See "Shares Eligible for Future Sale."
In May 1996, Hambrecht & Quist Group, an entity affiliated with Hambrecht &
Quist LLC, purchased 222,221 shares of the Company's Series B Preferred Stock
for a purchase price of $2.25 per share, or an aggregate of $500,000. Such
shares will convert into 222,221 shares of Common Stock upon the closing of this
offering.
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock will be determined by negotiation among the Company and the
Representatives. The factors to be considered in such negotiations include
prevailing market conditions, the results of operations of the Company in recent
periods, the market capitalizations and stages of development of other companies
which the Company and the Representatives believe to be comparable to the
Company, estimates of the business potential of the Company, the present stage
of the Company's development and other factors deemed relevant.
In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
the Common Stock in the open market. The Underwriters may also reclaim selling
concessions allowed to an underwriter or a dealer for distributing the Common
Stock in the offering, if the Underwriters repurchase previously distributed
Common Stock in transactions to cover their short positions, in stabilization
transactions or otherwise. Finally, the Underwriters may bid for, and purchase,
shares of the Common Stock in market making transactions and impose penalty
bids. These activities may stabilize or maintain the market price of the Common
Stock above market levels that may otherwise prevail. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Cooley Godward LLP, San Diego, California. As of the
date of this Prospectus, certain members and associates of Cooley Godward own an
aggregate of 30,074 shares of Common Stock through an investment partnership.
Certain legal matters will be passed upon for the Underwriters by Morrison &
Foerster LLP, New York, New York.
61
<PAGE> 63
EXPERTS
The financial statements of the Company as of December 31, 1995 and 1996
and for the period from May 8, 1995 (inception) through December 31, 1995 and
for the year ended December 31, 1996 included in this Prospectus and elsewhere
in the Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The statements in this Prospectus under the captions "Risk
Factors -- Dependence on Patents and Proprietary Rights," "Business -- Patents
and Proprietary Rights," and other references herein to intellectual property of
the Company have been reviewed and approved by Fish & Richardson, PC, San Diego,
California, patent counsel for the Company, as experts on such matters, and are
included herein in reliance upon that review and approval.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act, with respect to the Common Stock offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus,
which is a part of the Registration Statement, omits certain information,
exhibits, schedules and undertakings set forth in the Registration Statement.
For further information pertaining to the Company and the Common Stock offered
hereby, reference is made to such Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents or
provisions of any contract or other document referred to herein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. A copy of
the Registration Statement may be inspected without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of all or any part of the
Registration Statement may be obtained from such offices upon the payment of the
fees prescribed by the Commission. In addition, registration statements and
certain other filings made with the Commission through its Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") system are publicly available
through the Commission's web site on the Internet's World Wide Web, located at
http://www.sec.gov. The Registration Statement, including all exhibits thereto
and amendments thereof, has been filed with the Commission through EDGAR.
62
<PAGE> 64
AURORA BIOSCIENCES CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Balance Sheets as of December 31, 1995 and 1996....................................... F-3
Statements of Operations for the period from May 8, 1995 (inception) to December 31,
1995 and the year ended December 31, 1996........................................... F-4
Statements of Stockholders' Equity for the period from May 8, 1995 (inception) to
December 31, 1995 and the year ended December 31, 1996.............................. F-5
Statements of Cash Flows for the period from May 8, 1995 (inception) to December 31,
1995 and the year ended December 31, 1996........................................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 65
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Aurora Biosciences Corporation
We have audited the accompanying balance sheets of Aurora Biosciences
Corporation as of December 31, 1995 and 1996, and the related statements of
operations, stockholders' equity, and cash flows for the period from May 8, 1995
(inception) to December 31, 1995 and for the year ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aurora Biosciences Corporation
at December 31, 1995 and 1996, and the results of its operations and its cash
flows for the period from May 8, 1995 (inception) to December 31, 1995 and for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
San Diego, California
March 13, 1997, except as to Note 11, as to which the date is
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the four-for-five reverse stock split discussed in Note 11 to the financial
statements.
ERNST & YOUNG LLP
San Diego, California
March 13, 1997
F-2
<PAGE> 66
AURORA BIOSCIENCES CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- STOCKHOLDERS' EQUITY
1995 1996 AT DECEMBER 31, 1996
--------- ----------- --------------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................. $ 11,119 $ 3,914,038
Investment securities,
available-for-sale..................... -- 9,252,870
Accounts receivable under collaborative
agreements............................. -- 1,116,523
Notes receivable from officers and
employees.............................. 69,798 --
Prepaid expenses.......................... 18,333 228,029
Other current assets...................... -- 169,175
---------- -----------
Total current assets.............. 99,250 14,680,635
Equipment, furniture and leaseholds, net.... 9,110 1,901,515
Notes receivable from officers and
employees................................. -- 200,000
Other assets................................ 6,440 732,374
---------- -----------
$ 114,800 $17,514,524
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................... $ 41,589 $ 299,819
Accrued compensation...................... 9,938 319,770
Notes payable............................. 475,000 --
Unearned revenue.......................... -- 250,000
Capital lease obligations, current
portion................................ -- 350,247
---------- -----------
Total current liabilities......... 526,527 1,219,836
Capital lease obligations, less current
portion................................... -- 1,110,897
Commitments
Stockholders' equity:
Convertible preferred stock, $.001 par
value, 25,000,000 shares authorized, no
shares and 9,915,977 shares issued and
outstanding at December 31, 1995 and
1996, respectively (7,500,000 shares
authorized and no shares issued and
outstanding pro forma); aggregate
liquidation preference of $18,679,151
at December 31, 1996................... -- 9,916 $ --
Common stock, $.001 par value, 50,000,000
shares authorized, 80 and 2,865,160
shares issued and outstanding at
December 31, 1995 and 1996,
respectively (12,781,137 shares pro
forma)................................. -- 2,865 12,781
Additional paid-in capital................ -- 18,887,790 18,887,790
Deferred compensation..................... -- (371,573) (371,573)
Accumulated deficit....................... (411,727) (3,345,207) (3,345,207)
---------- ----------- -----------
Total stockholders' equity........ (411,727) 15,183,791 $ 15,183,791
===========
---------- -----------
$ 114,800 $17,514,524
========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 67
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
MAY 8, 1995
(INCEPTION) TO YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
Revenue under collaborative agreements (Note 9)........ $ -- $ 2,216,523
Operating expenses:
Research and development............................. 365,548 4,395,914
General and administrative........................... 46,179 1,275,032
---------- -----------
Total operating expenses..................... 411,727 5,670,946
---------- -----------
Loss from operations................................... (411,727) (3,454,423)
Interest income........................................ -- 580,382
Interest expense....................................... -- (59,439)
---------- -----------
Net loss............................................... $ (411,727) $(2,933,480)
========== ===========
Pro forma net loss per share........................... $ (0.14) $ (0.26)
========== ===========
Shares used in computing pro forma net loss per
share................................................ 2,880,269 11,260,196
========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 68
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
------------------ ------------------- PAID-IN DEFERRED ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
---------- ------ ----------- ------ ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock... -- $ -- 80 $ -- $ -- $ -- $ -- $ --
Net loss................... -- -- -- -- -- -- (411,727) (411,727)
---------- ------- --------- ------ ----------- --------- ----------- -----------
Balance at December 31,
1995................... -- -- 80 -- -- -- (411,727) (411,727)
Issuance of Series A
preferred stock, net..... 7,634,895 7,635 -- -- 12,617,058 -- -- 12,624,693
Issuance of Series A
preferred stock for
cancellation of notes
payable.................. 556,389 556 -- -- 924,441 -- -- 924,997
Issuance of Series B
preferred stock, net..... 666,665 667 -- -- 1,494,889 -- -- 1,495,556
Issuance of Series C
preferred stock, net..... 600,000 600 -- -- 1,496,800 -- -- 1,497,400
Issuance of Series D
preferred stock, net..... 458,028 458 -- -- 2,054,943 -- -- 2,055,401
Issuance of common stock,
net...................... -- -- 2,677,080 2,677 90,847 -- -- 93,524
Issuance of common stock
for acquired
technology............... -- -- 188,000 188 63,312 -- -- 63,500
Deferred compensation
related to stock and
stock options............ -- -- -- -- 145,500 (373,742) -- (228,242)
Amortization of deferred
compensation............. -- -- -- -- -- 2,169 -- 2,169
Net loss................... -- -- -- -- -- -- (2,933,480) (2,933,480)
---------- ------- --------- ------ ----------- --------- ----------- -----------
Balance at December 31,
1996................... 9,915,977 $9,916 2,865,160 $2,865 $18,887,790 $ (371,573) $(3,345,207) $15,183,791
========== ======= ========= ====== =========== ========= =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 69
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
MAY 8, 1995
(INCEPTION) TO YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................... $(411,727) $ (2,933,480)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................ 1,822 156,861
Forgiveness of notes receivable from officers and
employees......................................... -- 93,129
Issuance of common stock in exchange for acquired
technology........................................ -- 63,500
Amortization of deferred compensation................ -- 2,169
Changes in operating assets and liabilities:
Accounts receivable under collaborative
agreements................................... -- (1,116,523)
Prepaid expenses and other current assets....... (18,333) (378,871)
Accounts payable and accrued expenses........... 51,527 339,820
Unearned revenue................................ -- 250,000
--------- ------------
Net cash used in operating activities.................. (376,711) (3,523,395)
--------- ------------
INVESTING ACTIVITIES:
Purchases of investment securities..................... -- (12,147,818)
Sales and maturities of investment securities.......... -- 2,894,948
Purchases of equipment, furniture and leaseholds....... (10,932) (458,657)
Notes receivable from officers and employees........... (69,798) (223,331)
Other assets........................................... (6,440) (725,934)
--------- ------------
Net cash used in investing activities.................. (87,170) (10,660,792)
--------- ------------
FINANCING ACTIVITIES:
Issuance of convertible preferred stock, net........... -- 17,673,050
Issuance of common stock, net of repurchases........... -- 93,524
Issuance of notes payable.............................. 475,000 449,997
Principal payments on capital lease obligations........ -- (129,465)
--------- ------------
Net cash provided by financing activities.............. 475,000 18,087,106
--------- ------------
Net increase in cash and cash equivalents.............. 11,119 3,902,919
Cash and cash equivalents at beginning of period....... -- 11,119
--------- ------------
Cash and cash equivalents at end of period............. $ 11,119 $ 3,914,038
========= ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Equipment acquired under capital leases................ $ -- $ 1,590,609
========= ============
Conversion of notes payable to convertible preferred
stock................................................ $ -- $ 924,997
========= ============
</TABLE>
See accompanying notes.
F-6
<PAGE> 70
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business Activity
Aurora Biosciences Corporation (the "Company" or "Aurora") was incorporated
in California on May 8, 1995 and subsequently re-incorporated in Delaware on
January 22, 1996. The Company designs and develops proprietary drug discovery
systems, services and technologies to accelerate and enhance the discovery of
new medicines. Aurora is developing an integrated technology platform comprised
of a portfolio of proprietary fluorescent assay technologies and an ultra-high
throughput screening ("UHTS") system designed to allow assay miniaturization and
to overcome many of the limitations associated with the traditional drug
discovery process. This integrated technology platform will support functional
genomics in mammalian cells, facile assay development and extremely rapid
screening of molecular targets to identify lead compounds with novel therapeutic
potential.
Cash, Cash Equivalents and Investment Securities
The Company considers all highly-liquid investments with maturities of
three months or less from the date of purchase to be cash equivalents.
Management determines the appropriate classification of its cash equivalents and
investment securities at the time of purchase and re-evaluates such
determination as of each balance sheet date. Management has classified the
Company's cash equivalents and investment securities as available-for-sale
securities in the accompanying financial statements. Available-for-sale
securities are carried at fair value, with unrealized gains and losses reported
in a separate component of stockholders' equity. The cost of debt securities
classified as available-for-sale is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization and accretion, as well as
interest and dividends, are included in interest income. Realized gains and
losses are also included in interest income. The cost of securities sold is
based on the specific identification method.
The Company invests its excess cash in U.S. Government and agency
securities and debt instruments of financial institutions and corporations with
strong credit ratings. The Company has established guidelines regarding
diversification of its investments and their maturities which should maintain
safety and liquidity.
Equipment, Furniture and Leaseholds
Equipment, including capitalized leased equipment, furniture and leaseholds
is stated at cost less accumulated depreciation and amortization. Depreciation
and amortization is calculated using the straight-line method over the shorter
of the estimated useful lives of the respective assets (generally three to five
years) or the term of the applicable lease.
Revenue Recognition
Revenue under collaborative agreements typically consists of non-refundable
up-front fees, ongoing research and co-development payments, and milestone,
royalty and other contingent payments. Revenue from non-refundable up-front fees
is recognized upon signing of the agreement. Revenue from ongoing research and
co-development payments is recognized ratably over the term of the agreement,
and the Company believes such payments will approximate the research and
development expense being incurred associated with the agreement. Revenue from
milestone, royalty and other contingent payments will be recognized as earned.
Revenue from screen development and screening and other services is
recognized as earned.
F-7
<PAGE> 71
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Advance payments received under any agreements in excess of amounts earned
are classified as unearned revenue.
Revenue under cost reimbursement contracts is recognized as the related
costs are incurred.
Substantially all of the revenue recorded to date has been derived from
agreements with two collaborators (Note 9).
Research and Development Expense
All research and development costs are expensed in the period incurred.
Pro Forma Net Loss Per Share
Pro forma net loss per share is computed using the weighted average number
of common shares outstanding during the period. Pursuant to certain requirements
of the Securities and Exchange Commission, ("SEC"), common and common equivalent
shares issued by the Company during the twelve months immediately preceding the
initial filing of the Company's Registration Statement, including common and
common equivalent shares issued after December 31, 1996, have been included in
the calculation of the shares used in computing pro forma net loss per share as
if these shares were outstanding for all periods presented, using the treasury
stock method and assumed public offering price of $10 per share. In addition,
the calculation of the shares used in computing pro forma net loss per share
includes convertible preferred stock not included above that will automatically
convert into common stock upon completion of an initial public offering, as if
they were converted into common stock as of the original date of issuance.
Accounting Standard on Impairment of Long-Lived Assets
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," regarding the impairment of
long-lived assets, identifiable intangibles and goodwill related to those assets
when there are indications that the carrying values of those assets may not be
recoverable. The adoption of this standard had no impact on the Company's
financial position.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. CASH EQUIVALENTS AND INVESTMENT SECURITIES
A summary of the estimated fair value of cash equivalents and investment
securities as of December 31, 1996 is shown below:
<TABLE>
<S> <C>
Money market funds....................................................... $ 3,141,747
U.S. government securities............................................... 3,738,755
U.S. corporate securities................................................ 5,012,834
Other debt securities.................................................... 1,000,241
-----------
Total debt securities.......................................... 12,893,577
Less amounts classified as cash equivalents.............................. (3,640,707)
-----------
Total investment securities.................................... $ 9,252,870
===========
</TABLE>
F-8
<PAGE> 72
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The estimated fair value of cash equivalents and investment securities
approximates cost and no unrealized gains or losses were reported as of December
31, 1996. Realized gains or losses on sales of available-for-sale securities in
1996 were not significant. There were no realized gains or losses in the period
from May 8, 1995 (inception) to December 31, 1995. The estimated fair value of
available-for-sale debt securities as of December 31, 1996 by contractual
maturity is as follows: $9.7 million due within one year and $3.2 million due in
one to two years.
3. NOTES RECEIVABLE FROM OFFICERS AND EMPLOYEES
Notes receivable from officers and employees generally consist of
relocation and housing loans to assist in the relocation of new employees. These
notes are generally secured by all shares of the Company's common stock owned by
the individual or by a deed of trust on the individual's principal residence.
During 1996, the notes were forgiven. Notes receivable as of December 31, 1996
include an interest-free $150,000 loan to an officer and director of the Company
which is secured by a deed of trust on the individual's principal residence.
4. EQUIPMENT, FURNITURE AND LEASEHOLDS
Equipment, furniture and leaseholds consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
------- ----------
<S> <C> <C>
Scientific equipment........................................... $ -- $1,255,749
Office furniture, computers and equipment...................... 10,932 731,423
Leasehold improvements......................................... -- 73,026
------- ----------
10,932 2,060,198
Less accumulated depreciation and amortization................. (1,822) (158,683)
------- ----------
$ 9,110 $1,901,515
======= ==========
</TABLE>
Equipment, furniture and leaseholds at December 31, 1996 included
scientific equipment acquired under capital leases of $1,065,173 and office
furniture, computers and equipment acquired under capital leases of $525,436.
The amount of related amortization included in accumulated depreciation and
amortization at December 31, 1996 was $120,550.
5. COMMITMENTS
Consulting Agreements
The Company has entered into various consulting agreements with its
Scientific advisors and others for aggregate minimum annual fees of
approximately $215,000. The agreements generally provide for four or five-year
terms and are cancelable by either party upon 60 or 90 days written notice.
During the period from May 8, 1995 (inception) through December 31, 1995 and the
year ended December 31, 1996, the Company expensed approximately $95,000 and
$332,000, respectively, of fees and expense reimbursements related to these
agreements.
In 1996, in connection with the various consulting agreements, the Company
issued 48,000 shares of common stock for $.001 per share pursuant to restricted
stock purchase agreements, excluding shares issued to founders and directors of
the Company who also serve as consultants as the Scientific advisors.
F-9
<PAGE> 73
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Technology and Licensing Agreements
The Company has entered into various strategic technology agreements with
third parties regarding the development of instrumentation technology. These
agreements contain varying terms and provisions which require the Company to
make payments to the third parties. Pursuant to these agreements, the Company
paid approximately $550,000 in 1996 and is obligated to make future payments
totaling approximately $1.4 million in 1997 and 1998 if all milestones are met.
The Company has also entered into various license agreements with academic
institutions regarding certain inventions and technologies. Most such agreements
may be terminated by the Company with 60 days written notice without significant
financial penalty. Pursuant to these agreements, the Company paid approximately
$120,000 in 1996 and is obligated to make future payments totaling approximately
$850,000 over the next seven years. In addition, the Company is required to make
royalty payments upon the sale of products incorporating inventions or
technologies covered under these agreements.
Leases
The Company leases its facilities and certain equipment under operating
lease agreements which expire in October 1999. Lease payments are subject to
future increases based upon increases in the Consumer Price Index, taxes and
insurance. Rent expense totaled approximately $462,000 in the year ended
December 31, 1996.
The Company leases certain equipment under a $3.5 million capital lease
line which expires in June 1997. At December 31, 1996, the Company had $1.9
million available under the capital lease line for future equipment
acquisitions.
Annual future minimum lease payments for operating and capital leases as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
OPERATING LEASES CAPITAL LEASES
---------------- --------------
<S> <C> <C>
Years ended December 31,
1997..................................................... $ 683,665 $ 542,652
1998..................................................... 703,686 542,652
1999..................................................... 632,205 548,469
2000..................................................... -- 237,413
---------- ----------
Total minimum lease payments............................. $2,019,556 1,871,186
==========
Less amounts representing interest....................... (410,042)
----------
Present value of capital lease payments.................. 1,461,144
Less current portion..................................... (350,247)
----------
Capital lease obligations, noncurrent.................... $1,110,897
==========
</TABLE>
F-10
<PAGE> 74
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. STOCKHOLDERS' EQUITY
Convertible Preferred Stock
Convertible preferred stock issued and outstanding at December 31, 1996 is
as follows:
<TABLE>
<CAPTION>
SHARES
ISSUED AND PREFERENCE IN
AUTHORIZED OUTSTANDING PAR VALUE LIQUIDATION
---------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Series A......................... 10,500,000 8,191,284 $ 8,191 $ 13,618,023
Series B......................... 833,332 666,665 667 1,499,998
Series C......................... 800,000 600,000 600 1,500,000
Series D......................... 572,536 458,028 458 2,061,130
--------- ------ -----------
9,915,977 $ 9,916 $ 18,679,151
========= ====== ===========
</TABLE>
The Company issued shares of Series A, B and C preferred stock at $1.66,
$2.25 and $2.50 per share, respectively, pursuant to March 1996 preferred stock
purchase agreements. The Company issued Series D preferred stock at $4.50 per
share pursuant to a December 1996 preferred stock purchase agreement.
The preferred stock is convertible into equal shares of common stock,
subject to certain anti-dilution provisions, at any time at the option of the
holder or automatically upon (i) the consent of not less than 67% of the
preferred stockholders, or (ii) the closing of an underwritten public offering
of common stock with gross proceeds of not less than $10,000,000 at not less
than $7.50 per common share. The holder of each share of preferred stock is
currently entitled to one vote for each share of common stock into which it
would convert.
Holders of Series A, B, C and D preferred stock are entitled to
noncumulative annual dividends of $.133, $.18, $.20 and $.36 per share,
respectively. These dividends are payable prior and in preference to any
declaration or payment of any dividend or other distribution on common stock
payable other than in common stock, when and if declared by the Board of
Directors. The Company has never declared or paid dividends on its capital stock
and does not intend to pay dividends in the foreseeable future.
In March 1996, the Company issued 556,389 shares of Series A preferred
stock in exchange for the cancellation of promissory notes payable totaling
approximately $925,000 (see Note 10). Common Stock
The majority of the outstanding shares of common stock have been issued to
founders, directors and employees of, and consultants to, the Company. In
connection with certain stock purchase agreements, the Company has the option to
repurchase, at the original issuance price, the unvested shares in the event of
termination of employment or engagement. Shares issued under these agreements
generally vest over four years. At December 31, 1996, 1,652,853 shares of common
stock were subject to repurchase by the Company.
During 1996, the Company issued 188,000 shares of common stock in exchange
for certain licenses and rights. Research and development expense of $63,500 was
recorded related to such issuances.
At December 31, 1996, the Company had committed to issue 71,072 shares of
common stock under stock purchase agreements. The Company is also obligated to
issue 4,000 shares of common stock upon the completion of a milestone in
connection with a license agreement.
F-11
<PAGE> 75
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Warrants
In May 1996, the Company issued warrants to purchase 54,320 shares of
Series A preferred stock at $1.66 per share to a leasing company in connection
with the execution of a $3.5 million capital lease agreement (Note 5). The
warrants expire in May 2002, subject to certain extensions based on the
utilization of the capital lease line.
Deferred Compensation
The Company records and amortizes over the related vesting periods deferred
compensation representing the difference between the price per share of
restricted stock issued or the exercise price of stock options granted and the
deemed fair value (for SEC purposes) of the Company's common stock at the date
of issuance or grant. Shares included in the computation of deferred
compensation at December 31, 1996 include restricted stock issued or committed
and stock options granted or committed from April 1996 through December 1996.
Gross deferred compensation at December 31, 1996 totaled $373,742 and related
amortization expense in 1996 totaled $2,169.
Stock Plan
In January 1996, the Company adopted the 1996 Stock Plan (the "Plan"),
under which 800,000 shares of the Company's common stock were reserved for
future issuance. The Plan provides for the grant of incentive stock options and
stock appreciation rights to employees and nonstatutory stock options and stock
purchase rights to employees, directors and consultants.
All options and stock appreciation rights granted under the Plan expire not
later than ten years from the date of grant and vest and become fully
exercisable after not more than five years of continued employment or
engagement. Options generally vest either monthly over four years or with
one-fourth of the shares vesting after one year and the remainder vesting
ratably over the next three years. The exercise price of incentive stock options
must be equal to at least the fair market value on the date of grant, and the
exercise price of nonstatutory options may be no less than 85% of the fair
market value on the date of grant.
Stock option activity under the Plan in 1996 consisted of grants of options
to purchase 4,000 shares of common stock at an exercise price of $.09 per share.
No options were exercised or forfeited during 1996. At December 31, 1996,
options to purchase 500 shares of common stock were exercisable at a weighted
average exercise price of $.09 per share. The weighted average remaining
contractual life of the 4,000 options outstanding at December 31, 1996 was 9.5
years.
At December 31, 1996, the Company had committed to grant options to
purchase 36,336 shares of common stock at an exercise price of $.38 per share.
During 1996, the Company issued 393,960 shares of restricted common stock
at prices ranging from $.09 to $.40 per share. Of the 393,960 shares issued,
353,960 shares were issued under the Plan and 52,800 shares were issued at
prices below fair value on the date of issuance. The weighted average fair value
of these issuances was $2.75 per share and the total fair value has been
included in deferred compensation as of December 31, 1996.
F-12
<PAGE> 76
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). In accordance with the provisions of SFAS 123, the Company has elected to
follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" ("APB 25") and related Interpretations in accounting for its
employee stock options. Under APB 25, when the purchase price of restricted
stock or the exercise price of the Company's employee stock options equals or
exceeds the fair value of the underlying stock on the date of issuance or grant,
no compensation expense is recognized.
Pro forma information regarding net loss and loss per share is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value of these options was estimated at the date of grant using the minimum
value method with the following weighted average assumptions for 1996: risk-free
interest rate of 6.22%; no annual dividends; and an expected option life of five
years. The effect of applying the minimum value method of SFAS 123 to options
granted in 1996 did not result in pro forma net loss and loss per share amounts
that are materially different from amounts reported. Accordingly, such pro forma
information is not presented herein. Should the Company successfully complete an
initial public offering, it would no longer be able to utilize the minimum value
method and, therefore, the pro forma effect determined in 1996 may not be
representative of the pro forma effect to be reported in future years.
Common Stock Reserved for Future Issuance
At December 31, 1996, common stock reserved for future issuance is as
follows:
<TABLE>
<S> <C>
Conversion of Series A, B, C and D convertible preferred stock.............. 9,915,977
Warrants to purchase Series A convertible preferred stock................... 54,320
Common stock and stock options under 1996 Stock Plan........................ 446,040
Other obligations........................................................... 4,000
----------
10,420,337
==========
</TABLE>
7. INCOME TAXES
At December 31, 1996, the Company had federal and California income tax net
operating loss carryforwards of approximately $3,210,000 and $3,286,000,
respectively. Federal and California tax loss carryforwards will begin to expire
in 2010 and 2003, respectively, unless previously utilized. The Company also had
federal and California research tax credit carryforwards of approximately
$165,000 and $89,000, respectively, which will begin to expire in 2010 unless
previously utilized.
Pursuant to Sections 382 and 383 of the Internal Revenue Code, use of these
net operating loss and credit carryforwards may be substantially limited because
of cumulative changes in the Company's ownership of more that 50%. However, the
Company does not believe such limitations will have a material impact upon the
utilization of these carryforwards.
F-13
<PAGE> 77
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Significant components of the Company's net deferred tax assets as of
December 31, 1995 and 1996 are shown below. A valuation allowance of $1,548,000
at December 31, 1996 has been recognized to offset the net deferred tax assets
as realization of such assets is uncertain.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $86,000 $1,321,000
Tax credit carryforwards.................................. -- 223,000
Other..................................................... -- 114,000
------- ----------
Total deferred tax assets................................... 86,000 1,658,000
Deferred tax liability:
Depreciation.............................................. -- (110,000)
------- ----------
Net deferred tax assets..................................... 86,000 1,548,000
Valuation allowance for deferred tax assets................. (86,000) (1,548,000)
------- ----------
Net deferred taxes.......................................... $ -- $ --
======= ==========
</TABLE>
8. 401(K) RETIREMENT SAVINGS PLAN
In January 1996, the Company adopted a 401(k) Retirement Savings Plan
covering substantially all employees who have completed certain service
requirements. Participants may contribute a portion of their compensation to the
Plan through payroll deductions. Company matching contributions, if any, are
determined by the Company at its sole discretion. To date, there have been no
Company contributions under the Plan.
9. COLLABORATIVE AGREEMENTS
The Company entered into the following collaborative agreements in 1996:
Ultra-High-Throughput Screening System and Screen Development Agreements
The Company entered into collaborative agreements ("the Agreements") in
November and December 1996 with Bristol-Myers Squibb Pharmaceutical Research
Institute and Eli Lilly and Company, respectively (collectively, "the
Collaborators"), regarding the development and installation of the Company's
UHTS system at each of the Collaborators. Under the terms of the Agreements, the
Company is required to develop and separately install three components to be
integrated into one complete UHTS system. In return, the Collaborators are
obligated to make certain payments to the Company in the form of non-refundable
up-front fees, delivery or installation payments and ongoing research and
co-development funding. The Company is obligated to provide service and support
for the installed UHTS systems for a limited period of time.
The Company and the Collaborators will also co-develop high throughput
screening assays for use by the Collaborators. In addition to certain payments
to be made by the Collaborators for the use of these assays and assay
technologies, the Collaborators will also make certain milestone and royalty
payments to the Company if the Collaborators develop and commercialize any
compound identified using a screen based on the Company's fluorescent assay
technologies.
The Collaborators may terminate the agreement at any time without cause
upon written notice, provided that certain withdrawal payments are made. The
Agreements also provide for penalties payable by the Company if it fails to
deliver the completed UHTS system by a specified time.
F-14
<PAGE> 78
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Screen Development and Specialized Instrumentation Agreement
In December 1996, the Company and Roche Bioscience ("Roche") entered into a
Collaborative Research and License Agreement ("Roche Agreement") regarding the
development and delivery of a certain screening instrument by the Company. Roche
is obligated to make certain payments to the Company in the form of
non-refundable up-front fees and delivery payments. For a limited period of time
specified in the agreement, the Company is obligated to provide service and
support for any instrument delivered to Roche. The Company and Roche will also
co-develop a screening assay for use with a target identified in the Roche
Agreement. In connection with such development, Roche is obligated to make
certain payments to the Company in the form of non-refundable up-front fees and
ongoing research and co-development funding.
Screen Development Agreement, Functional Genomics, and Screening Services
Agreement
In April 1996, the Company and Sequana Therapeutics, Inc. ("Sequana")
entered into a Research Agreement (the "Sequana Agreement") regarding the
screening of certain targets to be selected by Sequana. Under the terms of the
Sequana Agreement, Sequana may require the Company to provide functional
analysis, assay development and screening for such targets, and Sequana would
then be obligated to make certain payments to the Company in the form of
non-refundable up-front fees, delivery payments and ongoing research funding.
Sequana will also be obligated to make certain milestone and royalty payments to
the Company if any pharmaceutical product is developed and commercialized as a
result of work performed by the Company pursuant to the agreement. Concurrent
with the execution of the agreement, Sequana purchased $1.5 million of the
Company's Series C preferred stock (Note 10).
Screening Services Agreements
The Company has entered into collaborative agreements with ArQule, Inc. and
Alanex Corporation to screen compounds provided by these companies. Should the
Company detect activity in one or more of the compounds, the Company and the
collaborative partner under certain conditions may enter into negotiations to
establish a research collaboration agreement.
Strategic Technology Alliances
The Company has entered into strategic technology alliances with Packard
Instrument Company ("Packard"), Carl Creative Systems, Inc. and Universal
Technologies, Inc. to design, develop and implement certain instrumentation,
storage and retrieval systems and microfluidics. The alliances require the
Company to make certain payments for development work performed by these
companies (Note 5).
Pursuant to the agreement with Packard, Aurora receives certain payments
for development work it performs and Packard receives certain sublicense rights.
In addition, Packard purchased $1 million of the Company's Series B preferred
stock in May 1996 in connection with the collaboration.
10. RELATED PARTY TRANSACTIONS
During the period from May 8, 1995 (inception) to December 31, 1995 and the
year ended December 31, 1996, one of the Company's founding stockholders and an
affiliated venture fund
F-15
<PAGE> 79
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
loaned the Company $475,000 and $449,997, respectively. The notes were converted
into 556,389 shares of Series A preferred stock in March 1996.
The general partner of the venture funds which made these loans was the
Company's Chairman of the Board and Acting Chief Executive Officer at the time
of these transactions. This individual and stockholder continues to serve on the
Company's Board of Directors and is also the President, Chief Executive Officer
and member of the Board of Directors of Sequana, a company which is both a
stockholder of and a party to a collaboration agreement with Aurora (see Note
9).
11. SUBSEQUENT EVENTS
Screen Development and Screening Services Agreement
In February 1997, the Company and Allelix Biopharmaceuticals, Inc.
("Allelix") entered into a collaborative agreement (the "Allelix Agreement")
regarding the development over a three-year period of screening assays for use
with targets identified by Allelix and agreed to by Aurora. Under the terms of
the Allelix Agreement, the Company is required to develop such screening assays
and to perform screening services, and Allelix is obligated to make certain
payments to the Company in the form of up-front fees, development payments and
fees for screening services. Allelix is also required to make certain milestone
and royalty payments to Aurora in the event of development and commercialization
of a compound identified using a screen based on Aurora's fluorescent assay
technologies.
Stockholders' Equity
In February 1997, the Board of Directors (i) authorized an increase in the
number of shares of common stock reserved for issuance under the Company's 1996
Stock Plan to 2,000,000 shares, (ii) adopted an Employee Stock Purchase Plan
which reserves 400,000 shares of common stock for issuance thereunder, and (iii)
adopted its Non-Employee Directors' Stock Option Plan which reserves 240,000
shares of common stock for issuance thereunder. Such actions are subject to
stockholder approval.
In February 1997, the Board of Directors also authorized management of the
Company to file a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock to the
public. If the initial public offering is consummated under the terms presently
anticipated, all of the preferred stock outstanding at December 31, 1996 will
automatically convert into 9,915,977 shares of common stock. Unaudited pro forma
stockholders' equity, as adjusted for the assumed conversion of the preferred
stock, is set forth on the accompanying balance sheet.
From January 1, 1997 through March 6, 1997, the Company issued 106,272
shares of common stock at prices ranging from $.38 to $1.50 per share and
granted stock options to purchase 573,720 shares of common stock at exercise
prices ranging from $.38 to $3.00 per share. The Company will record
approximately $3.2 million of additional deferred compensation related to these
issuances.
In March 1997, the Board of Directors approved a four-for-five reverse
split of the Company's outstanding common stock and amended the post-split
number of authorized shares of preferred stock to 7,500,000. All share and per
share amounts, including those relating to preferred stock, in the accompanying
financial statements have been retroactively restated to reflect the reverse
stock split.
F-16
<PAGE> 80
AURORA BIOSCIENCES CORPORATION
[COMPANY LOGO]
SELECTED FEATURES OF AURORA'S INTEGRATED TECHNOLOGY PLATFORM
FLUORESCENT ASSAY TECHNOLOGIES
POTENTIAL BENEFITS
- Applicable to most targets
- Cell-based and biochemical assays
- Faster assay development
- Functional genomics in mammalian cells
- Miniaturized assays
GREEN FLUORESCENT PROTEIN (GFP)
COMPUTER MODEL OF THREE DIMENSIONAL STRUCTURE
[DEPICTED IS A COMPUTER MODEL OF THE THREE DIMENSIONAL STRUCTURE OF GFP]
BETA-LACTAMASE CELL-BASED ASSAY
GREEN TO BLUE CHANGE IDENTIFIES HIT COMPOUND
[DEPICTED ARE PHOTOGRAPHS OF CELLS UNDERGOING A GREEN TO BLUE COLOR
CHANGE]
MINIATURIZATION TECHNOLOGIES
- Photograph of drops, one billionth of a liter, being dispensed through
the eye of a needle (Right)
- Assays in volumes of one millionth of a liter, in each well of the 3,456
well NanoPlate(TM) (Far Right)
MICROFLUIDICS
NANOPLATE(TM) [DEPICTED IS A PHOTOGRAPH OF FLUID DROPLETS PASSING THROUGH
THE EYE OF A NEEDLE, AND A NANOPLATE(TM)]
ADVANCED AUTOMATION
- Automated store designed to hold in excess of 1,000,000 compounds
- Expected throughput in excess of 100,000 compounds per day
AUTOMATED STORAGE AND RETRIEVAL SYSTEM
[DEPICTED IS AURORA'S AUTOMATED STORAGE AND RETRIEVAL SYSTEM]
<PAGE> 81
======================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 22
Management............................ 45
Certain Transactions.................. 53
Principal Stockholders................ 55
Description of Capital Stock.......... 56
Shares Eligible for Future Sale....... 58
Underwriting.......................... 60
Legal Matters......................... 61
Experts............................... 62
Additional Information................ 62
Index to Financial Statements......... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================
======================================================
3,000,000 SHARES
(AURORA LOGO)
COMMON STOCK
-------------------
PROSPECTUS
-------------------
ALEX. BROWN & SONS
INCORPORATED
HAMBRECHT & QUIST
ROBERTSON, STEPHENS & COMPANY
April , 1997
======================================================
<PAGE> 82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered. All the amounts
shown are estimates except for the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration fee............................................. $ 11,500
NASD filing fee.................................................. 4,300
Nasdaq Stock Market Listing Application fee...................... 50,000
Blue sky qualification fees and expenses......................... 10,000
Printing and engraving expenses.................................. 150,000
Legal fees and expenses.......................................... 250,000
Accounting fees and expenses..................................... 100,000
Transfer agent and registrar fees................................ 10,000
Miscellaneous.................................................... 14,200
--------
Total.................................................. $600,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its Directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act.
The Registrant's Restated Certificate of Incorporation and Amended and
Restated Bylaws include provisions to (i) eliminate the personal liability of
its directors for monetary damages resulting from breaches of their fiduciary
duty to the extent permitted by Section 102(b)(7) of the General Corporation Law
of Delaware (the "Delaware Law") and (ii) require the Registrant to indemnify
its Directors and officers to the fullest extent permitted by Section 145 of the
Delaware Law, including circumstances in which indemnification is otherwise
discretionary. Pursuant to Section 145 of the Delaware Law, a corporation
generally has the power to indemnify its present and former directors, officers,
employees and agents against expenses incurred by them in connection with any
suit to which they are or are threatened to be made, a party by reason of their
serving in such positions so long as they acted in good faith and in a manner
they reasonably believed to be in or not opposed to, the best interests of the
corporation and with respect to any criminal action, they had no reasonable
cause to believe their conduct was unlawful. The Registrant believes that these
provisions are necessary to attract and retain qualified persons as Directors
and officers. These provisions do not eliminate the Directors' duty of care,
and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware Law. In
addition, each Director will continue to be subject to liability for breach of
the Director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for acts or omissions that the Director believes to be contrary to the best
interests of the Registrant or its stockholders, for any transaction from which
the Director derived an improper personal benefit, for acts or omissions
involving a reckless disregard for the Director's duty to the Registrant or its
stockholders when the Director was aware or should have been aware of a risk of
serious injury to the Registrant or its stockholders, for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the Director's duty to the Registrant or its stockholders, for improper
transactions between the Director and the Registrant and for improper
distributions to stockholders and loans to Directors and officers. The provision
also does not affect a Director's responsibilities under any other law, such as
the federal securities law or state or federal environmental laws.
II-1
<PAGE> 83
The Registrant has entered into indemnity agreements with each of its
Directors and executive officers that require the Registrant to indemnify such
persons against expenses, judgments, fines, settlements and other amounts
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be made a
party by reason of the fact that such person is or was a Director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable cause
to believe his conduct was unlawful. The indemnification agreements also set
forth certain procedures that will apply in the event of a claim for
indemnification thereunder. The Registrant has entered into similar indemnity
agreements with certain of its key employees.
At present, there is no pending litigation or proceeding involving a
Director, officer or key employee of the Registrant as to which indemnification
is being sought nor is the Registrant aware of any threatened litigation that
may result in claims for indemnification by any officer or Director.
The Registrant has an insurance policy covering the officers and Directors
of the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since its inception in May 1995, the Registrant has sold and issued the
following unregistered securities:
(a) From May 1995 to March 1996, Avalon Medical Partners, L.P. ("AMP") and
Avalon Bioventures II L.P. ("ABV") loaned the Registrant an aggregate of
$425,000 and $500,000, respectively, pursuant to Convertible Promissory Notes
issued by the Registrant to AMP and ABV. Such Convertible Promissory Notes were
canceled, and the interest thereon forgiven, in connection with the sale and
issuance of shares of Series A Preferred Stock to AMP and ABV in March 1996. The
Registrant issued such Convertible Promissory Notes in reliance on the exemption
provided by Section 4(2) of the Act.
(b) In connection with its reincorporation in Delaware in January 1996, the
Registrant issued 100 shares of Common Stock to AMP. The Registrant issued such
shares in reliance on the exemption provided by Section 4(2) of the Act.
(c) Subsequent to its reincorporation in Delaware and on various dates
through February 28, 1997, the Registrant sold an aggregate of 2,744,535 shares
of its Common Stock to 56 directors, officers, employees and consultants
pursuant to restricted stock purchase agreements. The purchase price for such
sales ranged from $.00125 to $1.50 per share. The Registrant issued such shares
of Common Stock in reliance upon the exemption provided by Rule 701 under the
Act.
(d) Subsequent to its reincorporation in Delaware and on various dates
through February 28, 1997, the Registrant issued incentive and nonstatutory
stock options to purchase an aggregate of 452,920 shares of Common Stock to 55
directors, officers, employees and consultants. The exercise price for such
options ranges from $.0875 to $1.50 per share. The Registrant issued such
options in reliance upon the exemption provided by Rule 701 under the Act.
(e) On March 8, 1996, the Registrant sold 8,191,282 shares of Series A
Preferred Stock at a price of $1.6625 per share. On April 2, 1996, the
Registrant sold 600,000 shares of Series C Preferred Stock at a price of $2.50
per share. On May 6, 1996, the Registrant sold 666,665 shares of Series B
Preferred Stock at a price of $2.25 per share. Upon the closing of this
offering, the shares of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock will automatically convert into 8,191,282, 600,000 and
666,665 shares of Common Stock, respectively. The Registrant issued such shares
of Preferred Stock in reliance upon the exemption provided by Rule 506
promulgated under Regulation D under the Act.
II-2
<PAGE> 84
(f) On August 13, 1996, the Registrant issued 28,000 shares of Common
Stock, valued at $3,500.00, to California Institute of Technology in connection
with the execution of a license agreement. The Registrant issued such shares of
Common Stock in reliance upon the exemption provided by Section 4(2) under the
Act.
(g) On December 20, 1996, the Registrant issued 160,000 shares of Common
Stock, valued at $60,000.00, to SIBIA Neurosciences, Inc. in connection with the
execution of a license agreement. The Registrant issued such shares of Common
Stock in reliance upon the exemption provided by Section 4(2) under the Act.
(h) On December 27, 1996, the Registrant sold 458,028 shares of Series D
Preferred Stock at a price of $4.50 per share. Upon the closing of this
offering, the shares of Series D Preferred Stock will automatically convert into
458,028 shares of Common Stock. The Registrant issued such shares of Preferred
Stock in reliance upon the exemption provided by Rule 506 promulgated under
Regulation D under the Act.
The recipients of the above-described securities represented their
intention to acquire the securities for investment only and not with a view to
distribution thereof. Appropriate legends were affixed to the stock certificates
issued in such transactions. All recipients had adequate access, through
employment or other relationships, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -------------------------------------------------------------------------
<S> <C>
1.1+ Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation.
3.2 Amended and Restated Bylaws.
3.3 Form of Certificate of Amendment of Restated Certificate of
Incorporation, to be filed and become effective prior to the
effectiveness of this Registration Statement.
3.4 Form of Restated Certificate of Incorporation, to be filed and become
effective upon completion of the offering.
3.5 Form of Restated Bylaws to become effective upon completion of the
offering.
4.1 Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5.
4.2+ Form of Common Stock Certificate.
4.3 Amended and Restated Investors' Rights Agreement dated as of December 27,
1996 between the Registrant and the individuals and entities listed in
the signature pages thereto.
5.1 Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement entered into between Registrant and its
directors and officers.
10.2 Registrant's 1996 Stock Plan, as amended and restated (the "1996 Stock
Plan").
10.3 Form of Incentive Stock Option Agreement under the 1996 Stock Plan.
10.4 Form of Nonstatutory Stock Option Agreement under the 1996 Stock Plan.
10.5 Form of Restricted Stock Purchase Agreement under the 1996 Stock Plan.
10.6 Registrant's Employee Stock Purchase Plan and related offering document.
10.7 Registrant's Non-Employee Directors' Stock Option Plan.
10.8 Form of Nonstatutory Stock Option under Registrant's Non-Employee
Directors' Stock Option Plan.
10.9 Employment Agreement dated January 23, 1996 between the Registrant and
Timothy J. Rink, as subsequently amended on March 8, 1996.
</TABLE>
II-3
<PAGE> 85
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -------------------------------------------------------------------------
<S> <C>
10.10 Employment Agreement dated August 6, 1996 between the Registrant and J.
Gordon Foulkes.
10.11 Preferred Stock Purchase Agreement dated as of March 8, 1996 between the
Registrant and the individuals and entities listed in the signature pages
thereto.
10.12 Series D Preferred Stock Purchase Agreement dated as of December 27, 1996
between the Registrant and the individual and entities listed in the
signature pages thereto.
10.13 SubLease dated May 29, 1996 between the Registrant and Torrey Pines
Science Center Limited Partnership, as subsequently amended on August 31,
1996.
10.14 Master Lease Agreement dated May 17, 1996 between the Registrant and
Lease Management Services Incorporated.
10.15 Equipment Financing Agreement dated May 17, 1996 between the Registrant
and Lease Management Services Incorporated.
10.16 Security Deposit Pledge Agreement dated May 17, 1996 between the
Registrant and Lease Management Services Incorporated.
10.17* Exclusive License Agreement for Fluorescent Assay Technologies dated June
17, 1996 between the Registrant and The Regents of the University of
California.
10.18* License Agreement dated August 2, 1996 between the Registrant and
California Institute of Technology.
10.19* License Agreement dated October 4, 1996 between the Registrant and the
State of Oregon, acting by and through the State Board of Higher
Education on behalf of the University of Oregon.
10.20* Research Agreement dated April 2, 1996 between the Registrant and Sequana
Therapeutics, Inc.
10.21* Collaboration and License Agreement effective as of April 24, 1996
between the Registrant and Packard Instrument Company, Inc.
10.22* Collaborative Research and License Agreement dated November 26, 1996
between the Registrant and Bristol-Myers Squibb Pharmaceutical Research
Institute.
10.23* Collaborative Research and License Agreement dated December 18, 1996
between the Registrant and Eli Lilly and Company.
10.24* Collaboration Agreement effective as of February 1, 1997 between the
Registrant and Allelix Biopharmaceuticals Inc.
11.1 Computation of Net Loss per Share.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
23.3 Consent of Fish & Richardson P.C.
24.1 Power of Attorney. Reference is made to page II-5.
</TABLE>
- ---------------
* Confidential Treatment has been requested with respect to certain portions of
this exhibit. Omitted portions will be filed separately with the Securities
and Exchange Commission.
+ To be filed by amendment.
(B) SCHEDULES.
All schedules are omitted because they are not required, are not applicable
or the information is included in the consolidated financial statements or notes
thereto.
II-4
<PAGE> 86
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to provisions described in Item 15 or otherwise, the registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(2) That, for purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 87
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, County of San Diego, State of California,
on the 14th day of March, 1997.
By: /s/ TIMOTHY J. RINK
------------------------------------
Timothy J. Rink
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy J. Rink, J. Gordon Foulkes and
Paul A. Grayson and each of them, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments, exhibits thereto and other
documents in connection therewith) to this Registration Statement and any
subsequent registration statement filed by the registrant pursuant to Rule
462(b) of the Securities Act of 1933, as amended, which relates to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ----------------------------- ----------------
<S> <C> <C>
/s/ TIMOTHY J. RINK Chairman of the Board, March 14, 1997
- --------------------------------------------- President and Chief Executive
Timothy J. Rink, M.A., M.D., Sc.D. Officer (Principal Executive
Officer)
/s/ DEBORAH J. TOWER Senior Director of Finance March 14, 1997
- --------------------------------------------- and Administration
Deborah J. Tower (Principal Financial and
Accounting Officer)
/s/ J. GORDON FOULKES Director March 14, 1997
- ---------------------------------------------
J. Gordon Foulkes, Ph.D.
/s/ JAMES C. BLAIR Director March 14, 1997
- ---------------------------------------------
James C. Blair, Ph.D.
/s/ KEVIN J. KINSELLA Director March 14, 1997
- ---------------------------------------------
Kevin J. Kinsella
/s/ HUGH Y. RIENHOFF, JR. Director March 14, 1997
- ---------------------------------------------
Hugh Y. Rienhoff, Jr., M.D.
/s/ LUBERT STRYER, M.D. Director March 14, 1997
- ---------------------------------------------
Lubert Stryer
/s/ TIMOTHY J. WOLLAEGER Director March 14, 1997
- ---------------------------------------------
Timothy J. Wollaeger
</TABLE>
II-6
<PAGE> 88
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------ ----------------------------------------------------------------------------- ----
<C> <S> <C>
1.1+ Form of Underwriting Agreement. .............................................
3.1 Restated Certificate of Incorporation. ......................................
3.2 Amended and Restated Bylaws. ................................................
3.3 Form of Certificate of Amendment of Restated Certificate of Incorporation, to
be filed and become effective prior to the effectiveness of this Registration
Statement. ..................................................................
3.4 Form of Restated Certificate of Incorporation, to be filed and become
effective upon completion of the offering. ..................................
3.5 Form of Restated Bylaws to become effective upon completion of the
offering. ...................................................................
4.1 Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5. ...................
4.2+ Form of Common Stock Certificate. ...........................................
4.3 Amended and Restated Investors' Rights Agreement dated as of December 27,
1996 between the Registrant and the individuals and entities listed in the
signature pages thereto. ....................................................
5.1 Opinion of Cooley Godward LLP. ..............................................
10.1 Form of Indemnity Agreement entered into between Registrant and its directors
and officers. ...............................................................
10.2 Registrant's 1996 Stock Plan, as amended and restated (the "1996 Stock
Plan"). .....................................................................
10.3 Form of Incentive Stock Option Agreement under the 1996 Stock Plan. .........
10.4 Form of Nonstatutory Stock Option Agreement under the 1996 Stock Plan. ......
10.5 Form of Restricted Stock Purchase Agreement under the 1996 Stock Plan. ......
10.6 Registrant's Employee Stock Purchase Plan and related offering document. ....
10.7 Registrant's Non-Employee Directors' Stock Option Plan. .....................
10.8 Form of Nonstatutory Stock Option under Registrant's Non-Employee Directors'
Stock Option Plan. ..........................................................
10.9 Employment Agreement dated January 23, 1996 between the Registrant and
Timothy J. Rink, as subsequently amended on March 8, 1996. ..................
10.10 Employment Agreement dated August 6, 1996 between the Registrant and J.
Gordon Foulkes. .............................................................
10.11 Preferred Stock Purchase Agreement dated as of March 8, 1996 between the
Registrant and the individuals and entities listed in the signature pages
thereto. ....................................................................
10.12 Series D Preferred Stock Purchase Agreement dated as of December 27, 1996
between the Registrant and the individual and entities listed in the
signature pages thereto. ....................................................
10.13 SubLease dated May 29, 1996 between the Registrant and Torrey Pines Science
Center Limited Partnership, as subsequently amended on August 31, 1996. .....
10.14 Master Lease Agreement dated May 17, 1996 between the Registrant and Lease
Management Services Incorporated. ...........................................
10.15 Equipment Financing Agreement dated May 17, 1996 between the Registrant and
Lease Management Services Incorporated. .....................................
10.16 Security Deposit Pledge Agreement dated May 17, 1996 between the Registrant
and Lease Management Services Incorporated. .................................
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------ ----------------------------------------------------------------------------- ----
<C> <S> <C>
10.17* Exclusive License Agreement for Fluorescent Assay Technologies dated June 17,
1996 between the Registrant and The Regents of the University of
California. .................................................................
10.18* License Agreement dated August 2, 1996 between the Registrant and California
Institute of Technology. ....................................................
10.19* License Agreement dated October 4, 1996 between the Registrant and the State
of Oregon, acting by and through the State Board of Higher Education on
behalf of the University of Oregon. .........................................
10.20* Research Agreement dated April 2, 1996 between the Registrant and Sequana
Therapeutics, Inc. ..........................................................
10.21* Collaboration and License Agreement effective as of April 24, 1996 between
the Registrant and Packard Instrument Company, Inc. .........................
10.22* Collaborative Research and License Agreement dated November 26, 1996 between
the Registrant and Bristol-Myers Squibb Pharmaceutical Research
Institute. ..................................................................
10.23* Collaborative Research and License Agreement dated December 18, 1996 between
the Registrant and Eli Lilly and Company. ...................................
10.24* Collaboration Agreement effective as of February 1, 1997 between the
Registrant and Allelix Biopharmaceuticals Inc. ..............................
11.1 Computation of Net Loss per Share. ..........................................
23.1 Consent of Ernst & Young LLP, Independent Auditors. .........................
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1. ............
23.3 Consent of Fish & Richardson P.C. ...........................................
24.1 Power of Attorney. Reference is made to page II-5. ..........................
</TABLE>
- ---------------
* Confidential Treatment has been requested with respect to certain portions of
this exhibit. Omitted portions will be filed separately with the Securities
and Exchange Commission.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
AURORA BIOSCIENCES CORPORATION
AURORA BIOSCIENCES CORPORATION, a corporation organized and existing
under the laws of the state of Delaware, hereby certifies as follows:
FIRST. The name of the corporation is Aurora Biosciences Corporation.
SECOND. The date of the filing of the corporation's original
Certificate of Incorporation with the Secretary of State of
Delaware was January 22, 1996.
THIRD. This Restated Certificate of Incorporation was duly adopted by
the corporation in accordance with Section 245 of the General
Corporation Law of the State of Delaware.
FOURTH. The Certificate of Incorporation of the corporation shall be
amended and restated to read in full as follows.
I.
The name of this corporation is AURORA BIOSCIENCES CORPORATION.
<PAGE> 2
II.
The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 30 Old Rudnick
Lane, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware at such address is CorpAmerica Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.
IV.
A. CLASSES OF STOCK. This corporation is authorized to issue two
classes of stock to be designated, respectively, "COMMON STOCK" and "PREFERRED
STOCK." The total number of shares which the corporation is authorized to issue
is seventy-five million (75,000,000) shares. Fifty million (50,000,000) shares
shall be Common Stock, each having a par value of one-tenth of one cent
($0.001). Twenty-five million (25,000,000) shares shall be Preferred Stock,
each having a par value of one-tenth of one cent ($0.001). Notwithstanding
Section 242 of the General Corporation Law of the State of Delaware, the number
of authorized shares of Common Stock may be increased or decreased (but not
below the number of shares then outstanding) by the affirmative vote of holders
of a majority of the outstanding shares of capital stock of the corporation,
with each such share being entitled to such number of votes per share as is
provided in this Article IV.
The Preferred Stock may be issued from time to time in one or more
series. Subject to compliance with applicable voting rights, if any, which may
have been granted to the
2
<PAGE> 3
Preferred Stock or any series thereof, the Board of Directors is hereby
authorized, by filing a certificate pursuant to the Delaware General
Corporation Law, to fix or alter from time to time the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof, including without
limitation the dividend rights, dividend rate, conversion rights, voting rights
and the liquidation preferences of any wholly unissued series of Preferred
Stock, and to establish from time to time the number of shares constituting any
such series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issuance of
shares of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
Of the Preferred Stock, ten million five hundred thousand (10,500,000)
shares shall be designated "SERIES A PREFERRED STOCK," eight hundred
thirty-three thousand three hundred thirty-two (833,332) shares shall be
designated "SERIES B PREFERRED STOCK", eight hundred thousand (800,000) shares
shall be designated "SERIES C PREFERRED STOCK" and five hundred seventy-two
thousand five hundred thirty-six (572,536) shares shall be DESIGNATED "SERIES D
PREFERRED STOCK." The Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock and the Series D Preferred Stock is hereinafter
sometimes collectively referred to as the "DESIGNATED PREFERRED."
3
<PAGE> 4
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SERIES
A, SERIES B, SERIES C AND SERIES D PREFERRED STOCK.
SECTION 1. DIVIDENDS. The holders of the Designated Preferred
shall be entitled to receive dividends at the rate per annum of $0.1064 per
share of Series A Preferred Stock, $0.1440 per share of Series B Preferred
Stock, $0.1600 per share of Series C Preferred Stock and $0.288 per share of
Series D Preferred Stock, when, as and if declared by the Board of Directors out
of any funds legally available therefor, prior and in preference to any
declaration or payment of any dividend on the Common Stock of this corporation
("COMMON") payable other than in Common. Such dividends shall not be
cumulative. Such dividends shall be distributed ratably among the holders of
each Series of Designated Preferred based on the full dividend to which such
holder is entitled. No dividends or other distributions shall be made with
respect to the Common in any year, other than dividends payable solely in
Common, unless and until (i) the full amount of the dividend provided for above
with respect to the Designated Preferred for such year has been paid or declared
and set apart for payment, and (ii) an equal dividend per share shall have been
paid or declared and set apart for payment to the holders of the Designated
Preferred (in addition to the dividend provided for above) for each share of
Common which the holders of the Designated Preferred then have the right to
acquire upon conversion of their respective shares under this Certificate.
SECTION 2. LIQUIDATION PREFERENCE.
A. In the event of any liquidation, dissolution or
winding up of the corporation, either voluntary or involuntary, the holders of
the Designated 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 Common by reason of their ownership thereof:
4
<PAGE> 5
(i) the sum of $1.33 per share of Series A Preferred Stock, $1.80 per share of
Series B Preferred Stock, $2.00 per share of Series C Preferred Stock and $3.60
per share of Series D Preferred Stock then held by them (such amounts per share
with respect to each such Series are hereinafter referred to as the "Original
Issue Price"), and (ii) an amount equal to all declared but unpaid dividends on
the Designated Preferred then held by them. If, upon the occurrence of such
event, the assets and funds thus distributed among the holders of the
Designated 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 ratably among the holders of the Designated Preferred in proportion
to the preferential amount each such holder would have been entitled to receive
pursuant to this Section 2a. if such distribution had been sufficient to permit
the full payment of such preferential amount.
b. Upon the completion of the distribution provided
for in Section 2a., all of the assets remaining in the corporation, if any,
shall be distributed pro rata among the holders of the Common, based upon the
number of shares of Common held by each such holder.
c. For purposes of this Section 2, a merger or
consolidation of this corporation with or into any other corporation or
corporations where the stockholders of this corporation immediately prior to
such merger or consolidation do not beneficially own more than 50% of the
outstanding voting stock of the surviving entity immediately following such
merger or consolidation and in which the stockholders of this corporation
receive distributions in cash or in securities of another corporation as a
result of such merger or consolidation, or a sale or other disposition of all or
substantially all of the assets of the corporation, shall be treated as a
liquidation, dissolution or winding up of the corporation.
5
<PAGE> 6
SECTION 3. CONVERSION. The holders of the Designated
Preferred shall have conversion rights as follows (the "CONVERSION RIGHTS"):
a. OPTIONAL CONVERSION. Each share of Designated
Preferred shall be convertible at the option of the holder thereof, without
payment of additional consideration, at any time, at the office of the
corporation or any transfer agent for the Designated Preferred, into one share
of Common, subject to adjustment as provided in Sections 3.d. and 3.e. below.
b. AUTOMATIC CONVERSION. Each share of Designated
Preferred shall automatically be converted into the number of shares of Common
into which such share of Designated Preferred is then convertible pursuant to
Section 3a (i) in the event that the holders of not less than sixty-seven
percent (67%) of the outstanding Designated Preferred consent to such
conversion, or (ii) upon the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "ACT"), covering the offer and sale by the
corporation of Common to the public at an aggregate offering price of not less
than $10,000,000 (prior to underwriters' discounts and expenses), and at a
public offering price not less than $6.00 per share, subject to adjustment for
stock splits, stock dividends, reorganizations and the like with respect to the
Common.
c. MECHANICS OF CONVERSION.
(1) No fractional shares of Common shall be issued
upon conversion of the Designated Preferred. In lieu of any fractional share,
the corporation shall pay cash equal to such fraction multiplied by the then
current fair market value of a share of Common as determined in good faith by
the Board of Directors of the corporation. Before any
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holder of Designated Preferred shall be entitled to convert the same into
shares of Common, it shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the corporation or of any transfer agent for
the Designated Preferred, and shall give written notice to the corporation at
such office that it elects to convert the same (except that no such written
notice of election to convert shall be necessary in the event of an automatic
conversion pursuant to Section 3b.). The corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Designation Preferred a certificate or certificates, registered in such names
as specified by the holder, for the number of shares of Common to which such
holder shall be entitled as aforesaid, and a check payable to the holder in the
amount of any amounts payable for fractional shares and any declared and unpaid
dividends on the converted Designated Preferred. 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 the Designated Preferred to be converted,
and the person or persons entitled to receive the shares of Common issuable
upon such
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conversion shall be treated for all purposes as the record holder or
holders of such shares of Common on such date (except that in the event of an
automatic conversion pursuant to Section 3b.(i), such conversion shall be deemed
to have been made at the close of business on the date fixed in the vote
approving such automatic conversion and in the event of automatic conversion
pursuant to Section 3b.(ii), such conversion shall be deemed to have been made
immediately prior to the closing of the offering referred to in Section
3b.(ii)). If the conversion is in connection with an underwritten offer of
securities registered pursuant to the Act, the conversion may, at the option of
any holder tendering Designated Preferred for conversion, be conditioned upon
the closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common issuable
upon such conversion of Designated Preferred shall not be deemed to have
converted such Designated Preferred until immediately prior to the closing of
such sale of securities. If such conversion is in connection with a merger,
consolidation or sale of assets which would be treated as a liquidation,
dissolution or winding up of the corporation in accordance with and for purposes
of Section 2, the conversion may, at the option of the holder tendering
Designated Preferred for conversion, be conditioned upon the consummation of
such transaction, in which event the person(s) entitled to receive the Common
issuable upon such conversion of Designated Preferred shall not be deemed to
have converted such Designated Preferred until immediately prior to the
consummation of such transaction.
d. ADJUSTMENTS FOR SUBDIVISIONS, DIVIDENDS,
COMBINATIONS OR CONSOLIDATIONS OF COMMON.
(1) In the event the outstanding shares of Common
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common, the number of shares of Common into which the
Designated Preferred is convertible immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately decreased.
(2) In the event the corporation shall declare or
pay any dividend on the Common payable in Common or in the event the outstanding
shares of Common shall be subdivided, by reclassification or otherwise than by
payment of a dividend in Common, into a greater number of shares of Common, the
number of shares of Common into which the Designated Preferred is convertible
immediately prior to such dividend or subdivision shall be proportionately
increased:
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(a) in the case of any such dividend,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend, or
(b) in the case of any such subdivision, at
the close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
(3) If such record date shall have been fixed and
such dividend shall not have been fully paid on the date fixed therefor, the
adjustment previously made in accordance with this Subsection d. shall be
canceled (to the extent such dividend was not paid) as of the close of business
on the date so fixed, and thereafter the number of shares of Common into which
the Designated Preferred is convertible shall be adjusted as of the time of
actual payment of such dividend.
e. ADJUSTMENTS FOR OTHER RECLASSIFICATIONS,
DIVIDENDS AND DISTRIBUTIONS. If there occurs any capital reorganization or any
reclassification of the capital stock of the corporation (other than any
subdivision, dividend, combination, consolidation or other transaction provided
for in Section 3d), each share of Designated Preferred shall thereafter be
convertible into the same kind and amounts of securities or other assets, or
both, that were issuable or distributable to the holders of shares of
outstanding Common Stock of the corporation upon such reorganization or
reclassification, in proportion to that number of shares of Common Stock into
which such shares of Designated Preferred might have been converted immediately
prior to such reorganization or reclassification; and in any such case,
appropriate adjustments (as determined by the Board of Directors) shall be made
in the application of the provisions herein
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set forth with respect to the rights and interests thereafter of the holders of
Designated Preferred to the end that the provisions of this Certificate shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities or other assets thereafter deliverable upon the conversion of the
Designated Preferred.
f. NO IMPAIRMENT. The Corporation will not, by
amendment of its Certificate of Incorporation, by filing a Certificate of
Designation 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 3 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 Designated Preferred against
impairment.
g. CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment, pursuant to this Section 3, of
the number of shares of Common into which any shares of Designated Preferred are
convertible, the corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of such shares of Designated 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, upon the written
request at any time of any holder of Designated Preferred, furnish or cause to
be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the number of shares of Common into which
the Designated Preferred is then convertible, and (iii) the number of shares of
Common and the
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amount, if any, of other property which at the time would be received upon the
conversion of Designated Preferred.
h. NOTICES OF RECORD DATE. In the event that this
Corporation shall propose at any time:
(1) to declare any dividend or distribution
upon the Common, 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;
(2) to offer for subscription pro rata to
the holders of any class or series of its stock any additional shares of stock
of any class or series or other rights;
(3) to effect any reclassification or
recapitalization of its Common shares outstanding involving a change in the
Common shares; or
(4) 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
Designated Preferred:
(a) at least 10 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 shares shall be entitled thereto) or for
determining rights to vote in respect of the matters referred to in (1) and (2)
above; and
(b) in the case of the matters
referred to in (3) and (4) above, at least 10 days' prior written notice of the
date when the same shall take place (and
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specifying, if practicable, or estimating the date on which the holders of
Common shares shall be entitled to exchange their Common shares for securities
or other property deliverable upon the occurrence of such event).
(c) Each such written notice shall be
given by first class mail, postage prepaid, addressed to the holders of the
Designated Preferred at the address for each such holder as shown on the books
of this Corporation; provided that any such notice to an address outside the
United States shall be given by facsimile and confirmed in writing
contemporaneously sent by two-day guaranteed international courier.
i. COMMON STOCK RESERVED. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Designated Preferred, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Designated Preferred, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then-outstanding shares of Designated Preferred, the
Corporation shall take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
j. ISSUE TAX. The issuance of certificates for
shares of Common upon conversion of Designated Preferred shall be made without
charge to the holders thereof for any issuance tax in respect thereof, provided
that the corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
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certificate in a name other than that of the holder of the Designated Preferred
which is being converted.
k. CLOSING OF BOOKS. The corporation will at no time
close its transfer books against the transfer of any Designated Preferred or of
any shares of Common issued or issuable upon the conversion of any shares of
Designated Preferred in any manner which interferes with the timely conversion
of such Designated Preferred, except as may otherwise be required to comply
with applicable securities laws.
SECTION 4. VOTING RIGHTS.
a. GENERAL. Except as otherwise required by law or
this Certificate of Incorporation, (i) each share of Common issued and
outstanding shall have one vote; (ii) each share of Designated Preferred issued
and outstanding shall have a number of votes equal to the number of Common
shares (including fractions of a share) into which such share of Designated
Preferred is then convertible as adjusted from time to time pursuant to Section
3 hereof; and (iii) the Common and the Designated Preferred and any other class
and series of Stock of the corporation shall vote together as a single class.
b. BOARD SIZE. The corporation shall not, without the
written consent or affirmative vote of the holders of at least sixty-seven
percent (67%) of the then outstanding shares of Designated Preferred, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class, increase the maximum number of directors constituting the
Board of Directors to a number of excess of nine (9).
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c. BOARD SEATS. The holders of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the
"VOTING PREFERRED"), voting together as a separate class, shall be entitled to
elect five (5) directors of the corporation. The holders of Common, voting as a
separate class, shall be entitled to elect two (2) directors of the corporation.
The holders of Series D Preferred Stock shall not be entitled to vote for the
election of directors of the corporation. At any meeting (or in a written
consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of a
majority of the shares of Voting Preferred then outstanding shall constitute a
quorum of the Voting Preferred for the election of directors to be elected
solely by the holders of the Voting Preferred. A vacancy in any directorship
elected by the holders of the Voting Preferred shall be filled only by vote or
written consent of the holders of the Voting Preferred and a vacancy in any
directorship elected by the holders of Common shall be filled only by vote or
written consent of the holders of Common. A director elected by the holders of
Voting Preferred may be removed without cause only by vote of holders of a
majority of the outstanding shares of Voting Preferred and a director elected by
the holders of Common may be removed without cause only by vote of holders of a
majority of the outstanding shares of Common.
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SECTION 5. COVENANTS.
a. In addition to any other rights provided by law,
this corporation shall not, without first obtaining the affirmative vote or
written consent of the holders of not less than sixty-seven percent (67%) of all
outstanding shares of Designated Preferred, voting together as a class:
(1) make any amendment to the corporation's
Certificate of Incorporation or Bylaws that would materially and adversely alter
or change the rights, preferences, or privileges of the outstanding Designated
Preferred;
(2) increase or decrease the authorized
number of shares of Preferred Stock or any Series thereof;
(3) create (by reclassification, Certificate of
Designation or otherwise) any new class or series of shares of stock having a
preference over the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock with respect to voting rights,
liquidation preferences, or dividends; increase the authorized amount of any
class or series of shares of stock having a preference over the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock with respect to voting rights, liquidation preferences or
dividends; or create or authorize (by reclassification, Certificate of
Designation or otherwise) any obligation or security convertible into shares of
any class or series of stock having a preference over the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock with respect to voting rights, liquidation preferences or dividends; or
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(4) take any action that results in any
liquidation, dissolution or winding up of the corporation or any merger,
consolidation, or other corporate reorganization, or effect any transaction in
which all or substantially all of the assets of the corporation are sold or
otherwise disposed of.
b. In addition to any other rights provided by law,
this corporation shall not, without first obtaining the affirmative vote or
written consent of the holders of a majority of the outstanding shares of a
particular Series of Designated Preferred, take any action that would (i)
materially and adversely alter or change the rights, preferences, or privileges
of such Series in a manner different than the other Series, (ii) increase or
decrease the authorized number of shares of such Series or (iii) amend the terms
of another Series of Designated Preferred which, when established, was pari pasu
with such Series with respect to voting rights, liquidation preferences or
dividends, if such amendment results in the other Series having a preference
over such Series with respect to voting rights, liquidation preferences or
dividends..
SECTION 6. STATUS OF CONVERTED STOCK. In case any shares of
Designated Preferred shall be converted pursuant to Section 3 hereof, the
shares so converted shall resume the status of authorized but unissued and
undesignated shares of Preferred Stock.
SECTION 7. RESIDUAL RIGHTS. All rights accruing to the
outstanding shares of this corporation not expressly provided for to the
contrary herein shall be vested in the Common.
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V.
For the management of the business and for the conduct of the affairs of the
corporation, and in further definition, limitation and regulation of the powers
of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
a. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. Subject to Section
4b of Article IV, the number of directors which shall constitute the whole Board
of Directors shall be fixed by the Board of Directors in the manner provided in
the Bylaws, provided that such number shall not be less than the number of
directors provided for in Section 4 of Article IV.
b. Subject to Section 5 of Article IV, the Board of Directors may
from time to time make, amend, supplement or repeal the Bylaws; provided,
however, that (subject to such Section 5) the stockholders may change or repeal
any Bylaw adopted by the Board of Directors by the affirmative vote of the
holders of a majority of the voting power of all of the then outstanding shares
of the capital stock of the corporation (considered for this purpose as one
class); and, provided further, that no amendment or supplement to the Bylaws
adopted by the Board of Directors shall vary or conflict with any amendment or
supplement thus adopted by the stockholders.
c. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
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d. Following the effectiveness of the registration of any class of
securities of the corporation pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, no action shall be taken by the stockholders
of the corporation except at an annual or special meeting of stockholders called
in accordance with the Bylaws and no action shall be taken by the stockholders
by written consent.
e. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A director of the corporation shall, to the full extent not prohibited by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended, not be liable to the corporation or its stockholders for monetary
damages for breach of his fiduciary duty as a director.
VII.
The corporation is to have perpetual existence.
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VIII.
Subject to the provisions of this Certificate of Incorporation, 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 the stockholders herein are granted
subject to this right.
IN WITNESS WHEREOF,said Aurora Biosciences Corporation has caused this
Certificate to be signed by its President and Chief Executive Officer, Timothy
J. Rink, and attested to by its Secretary, Deborah J. Tower, this __th day of
December, 1996.
------------------------------------
TIMOTHY J. RINK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
- ------------------------------------
DEBORAH J. TOWER
SECRETARY
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EXHIBITS 3.2
AMENDED AND RESTATED BYLAWS
OF
AURORA BIOSCIENCES CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
corporation in the State of Delaware shall be in the City of Dover, County of
Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and
maintain an office or principal place of business in San Diego, California, at
such place as may be fixed by the Board of Directors, and may also have offices
at such other places, both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of
a die bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of
the corporation shall be held at such place, either within or without the State
of Delaware, as may be designated from time to time by the Board of Directors,
or, if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
1.
<PAGE> 2
SECTION 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the
corporation, for the purpose of election of Directors and for such other
business as may lawfully come before it, shall be held on such date and at such
time as may be designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be:
(a) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a stockholder. For business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary
of the corporation. To be timely, a stockholder's notice must be delivered to
or mailed and received at the principal executive offices of the corporation
not less than one hundred twenty (120) calendar days in advance of the date of
the corporation's proxy statement released to stockholders in connection with
the previous year's annual meeting of stockholders; provided, however, that in
the event that no annual meeting was held in the previous year or the date of
the annual meeting has been changed by more than thirty (30) days from the date
contemplated at the time of the previous year's proxy statement, notice by the
stockholder to be timely must be so received a reasonable time before the
solicitation is made. A stockholder's notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of
the corporation which are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) any other
information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, in his
capacity as a proponent to a stockholder proposal. Notwithstanding the
foregoing, in order to include information with respect to a stockholder
proposal in the proxy statement and form of proxy for a stockholder's meeting,
stockholders must provide notice as required by the regulations promulgated
under the Securities and Exchange Act of 1934, as amended. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
paragraph (b). The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this paragraph (b),
and, if he should so determine, he shall so declare at the meeting that any
such business not properly brought before the meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of
the corporation may be made at a meeting of stockholders by or at the direction
of the Board of Directors or by any stockholder of the corporation entitled to
vote in the
2.
<PAGE> 3
election of Directors at the meeting who complies with the notice procedures
set forth in this paragraph (c). Such nominations, other than those made by or
at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the corporation in accordance with the
provisions of paragraph (b) of this Section 5. Such stockholder's notice shall
set forth (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a Director: (a) the name, age,
business address and residence address of such person, (b) the principal
occupation or employment of such person, (c) the class and number of shares of
the corporation which are beneficially owned by such person, (d) a description
of all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nominations are to be made by the stockholder, and (e) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including without limitation such person's written consent to
being named in the proxy statement, if any, as a nominee and to serving as a
Director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section
5. At the request of the Board of Directors, any person nominated by a
stockholder for election as a Director shall furnish to the Secretary of the
corporation that information required to be set forth in the stockholder's
notice of nomination which pertains to the nominee. No person shall be
eligible for election as a Director of the corporation unless nominated in
accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the
meeting that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if he should so determine, he shall so declare
at the meeting and the defective nomination shall be disregarded.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the
corporation may be called, for any purpose or purposes, by (i) the Chairman of
the Board, (ii) the President, (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption)or (iv) by the holders of shares entitled to cast not less than ten
percent (10%) of the votes at the meeting, and shall be held at such place, on
such date, and at such time as they or he shall fix; provided, however, that
following registration of any of the classes of equity securities of the
corporation pursuant to the provisions of the Securities Exchange Act of 1934,
as amended, special meetings of the stockholders may only be called by the
Board of Directors pursuant to a resolution adopted by a majority of the total
number of authorized Directors.
(b) If a special meeting is called by any person or
persons other than the Board of Directors, the request shall be in writing,
specifying the time of such meeting and the general nature of the business
proposed to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile transmission to the
Chairman of the Board, the
3.
<PAGE> 4
President, any Vice President, or the Secretary of the corporation. No
business may be transacted at such special meeting otherwise than specified in
such notice. The officer receiving the request shall cause notice to be
promptly given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws, that a meeting will be held not less
than thirty-five (35) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after the receipt
of the request, the person or persons requesting the meeting may give the
notice. Nothing contained in this paragraph (b) shall be construed as
limiting, fixing, or affecting the time when a meeting of stockholders called
by action of the Board of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by
law or the Certificate of Incorporation, written notice of each meeting of
stockholders shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting to each stockholder entitled to vote at
such meeting, such notice to specify the place, date and hour and purpose or
purposes of the meeting. Notice of the time, place and purpose of any meeting
of stockholders may be waived in writing, signed by the person entitled to
notice thereof, either before or after such meeting, and will be waived by any
stockholder by his attendance thereat in person or by proxy, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Any stockholder so waiving notice
of such meeting shall be bound by the proceedings of any such meeting in all
respects as if due notice thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the voting power of shares of stock entitled to vote
shall constitute a quorum for the transaction of business. Any shares, the
voting of which at said meeting has been enjoined, or which for any reason
cannot be lawfully voted at such meeting, shall not be counted to determine a
quorum at such meeting. In the absence of a quorum any meeting of stockholders
may be adjourned, from time to time, either by the Chairman of the meeting or by
vote of the holders of a majority of the shares represented thereat, but no
other business shall be transacted at such meeting. The stockholders present at
a duly called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all action taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation; provided,
however, that Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of Directors. Where a separate vote by a class or classes
is required, a majority of the voting power of shares of such class or classes,
present in person or represented by proxy, shall constitute a quorum entitled to
take action with respect to that vote on that matter and the affirmative vote of
the majority (plurality, in the case of the election of Directors) of the voting
power of shares of such class or classes present in person or represented by
proxy at the meeting
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shall be the act of such class, except where a greater vote is required by law
or the Certificate of Incorporation.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any
meeting of stockholders, whether annual or special, may be adjourned from time
to time either by the Chairman of the meeting or by the vote of a majority of
the shares represented thereat. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS.
For the purpose of determining those stockholders entitled to
vote at any meeting of the stockholders, except as otherwise provided by law,
only persons in whose names shares stand on the stock records of the
corporation on the record date, as provided in Section 12 of these Bylaws,
shall be entitled to vote at any meeting of stockholders. Except as may be
otherwise provided in the Certificate of Incorporation or these Bylaws, each
stockholder shall be entitled to one vote for each share of capital stock held
by such stockholder. Every person entitled to vote or execute consents shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by such person or his duly authorized agent, which
proxy shall be filed with the Secretary at or before the meeting at which it is
to be used. An agent so appointed need not be a stockholder. No proxy shall
be voted after three (3) years from its date of creation unless the proxy
provides for a longer period. All elections of Directors shall be by written
ballot, unless otherwise provided in the Certificate of Incorporation.
SECTION 11. BENEFICIAL OWNERS OF STOCK.
(a) If shares or other securities having voting power
stand of record in the names of two (2) or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by the
entirety, or otherwise, or if two (2) or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary is given written
notice to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided, their
acts with respect to voting shall have the following effect: (a) if only one
(1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is held
in unequal interests, a majority or even-split for the purpose of this
subsection (c) shall be a majority or even-split in interest.
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(b) Persons holding stock in a fiduciary capacity shall
be entitled to vote the shares so held. Persons whose stock is pledged shall
be entitled to vote, unless in the transfer by the pledgor on the books of the
corporation he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent such stock and vote thereon.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Any action required by statute to be taken at any
annual or special meeting of the stockholders, or any action which may be taken
at any annual or special meeting of the stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, are signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
(b) Every written consent shall bear the date of
signature of each stockholder who signs the consent, and no written consent
shall be effective to take the corporate action referred to therein unless,
within sixty (60) days of the earliest dated consent delivered to the
Corporation in the manner herein required, written consents signed by a
sufficient number of stockholders to take action are delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General corporation Law of Delaware if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written notice and written consent
have been given as provided in Section 228 of the General Corporation Law of
Delaware.
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(d) Not withstanding the foregoing, no such action by
written consent may be taken following the effectiveness of the registration of
any class of securities of the corporation under the Securities Exchange Act of
1934, as amended.
SECTION 14. ORGANIZATION.
(e) At every meeting of stockholders, the Chairman of the
Board of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, the most senior Vice President
present, or in the absence of any such officer, a chairman of the meeting
chosen by a majority in interest of the stockholders entitled to vote, present
in person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President, shall act
as secretary of the meeting.
(f) The Board of Directors of the corporation shall be
entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board of Directors, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of
the meeting, including, without limitation, establishing an agenda or order of
business for the meeting, rules and procedures for maintaining order at the
meeting and the safety of those present, limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies, and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless, and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.
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ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The Board of Directors
shall consist of one or more members, the number thereof to be determined from
time to time by resolution of the Board of Directors. The number of authorized
Directors may be modified from time to time by amendment of this Section 15 in
accordance with the provisions of Section 44 hereof. Notwithstanding anything
in the foregoing to the contrary, the number of directors shall not be less
than the number provided for in the Certificate of Incorporation. Except as
provided in Section 17, the Directors shall be elected by the stockholders at
their annual meeting in each year and shall hold office until the next annual
meeting and until their successors shall be duly elected and qualified.
Directors need not be stockholders unless so required by the Certificate of
Incorporation. If for any cause, the Directors shall not have been elected at
an annual meeting, they may be elected as soon thereafter as convenient at a
special meeting of the stockholders called for that purpose in the manner
provided in these Bylaws. No reduction of the authorized number of Directors
shall have the effect of removing any Director before the Director's term of
office expires, unless such removal is made pursuant to the provisions of
Section 19 hereof.
SECTION 16. POWERS. The powers of the corporation shall be
exercised, its business conducted and its property controlled by the Board of
Directors, except as may be otherwise provided by statute or by the Certificate
of Incorporation.
SECTION 17. VACANCIES. Unless otherwise provided in the
Certificate of Incorporation, vacancies and newly created directorships
resulting from any increase in the authorized number of Directors may be filled
by a majority of the Directors then in office, although less than a quorum, or
by a sole remaining Director, and each Director so elected shall hold office
for the unexpired portion of the term of the Director whose place shall be
vacant and until his successor shall have been duly elected and qualified. A
vacancy in the Board of Directors shall be deemed to exist under this Section
17 in the case of the death, removal or resignation of any Director, or if the
stockholders fail at any meeting of stockholders at which Directors are to be
elected (including any meeting referred to in Section 19 below) to elect the
number of Directors then constituting the whole Board of Directors.
SECTION 18. RESIGNATION. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to
specify whether it will be effective at a particular time, upon receipt by the
Secretary or at the pleasure of the Board of Directors. If no such
specification is made, it shall be deemed effective at the pleasure of the
Board of Directors. Except as otherwise provided in the Certificate of
Incorporation with respect to the filling of vacancies on the Board, when one
or more Directors shall resign from the Board of Directors, effective at a
future date, a majority of the Directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold
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office for the unexpired portion of the term of the Director whose place shall
be vacated and until his successor shall have been duly elected and qualified.
SECTION 19. REMOVAL. At a special meeting of stockholders called
for the purpose in the manner hereinabove provided, subject to any limitations
imposed by law or the Certificate of Incorporation, the Board of Directors, or
any individual Director, may be removed from office, with or without cause, and
a new Director or Directors elected by a vote of stockholders holding a
majority of the voting power of shares entitled to vote at an election of
Directors.
SECTION 20. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately after the annual meeting of stockholders
and at the place where such meeting is held. No notice of an annual meeting of
the Board of Directors shall be necessary and such meeting shall be held for
the purpose of electing officers and transacting such other business as may
lawfully come before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise
provided, regular meetings of the Board of Directors shall be held in the
office of the corporation required to be maintained pursuant to Section 2
hereof. Unless otherwise restricted by the Certificate of Incorporation,
regular meetings of the Board of Directors may also be held at any place within
or without the State of Delaware which has been determined by the Board of
Directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the President or any three of the Directors.
(d) TELEPHONE MEETINGS. Any member of the Board of
Directors, or of any committee thereof, may participate in a meeting by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Written notice of the time and
place of all special meetings of the Board of Directors shall be given at least
three (3) days before the date of the meeting. Notice of any meeting may be
waived in writing at any time before or after the meeting and will be waived by
any Director by attendance thereat, except when the Director attends the
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened.
(f) WAIVER OF NOTICE. The transaction of all business at
any meeting of the Board of Directors, or any committee thereof, however called
or noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present
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and if, either before or after the meeting, each of the Directors not present
shall sign a written waiver of notice, or a consent to holding such meeting, or
an approval of the minutes thereof. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board of Directors
need be specified in any written waiver of notice or consent unless so required
by the Certificate of Incorporation or these Bylaws. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
SECTION 21. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a
greater number and except with respect to indemnification questions arising
under Section 42 hereof, for which a quorum shall be one-third of the exact
number of Directors fixed from time to time in accordance with Section 15
hereof, but not less than one (1), a quorum of the Board of Directors shall
consist of a majority of the exact number of Directors fixed from time to time
in accordance with Section 15 of these Bylaws, but not less than one (1);
provided, however, at any meeting whether a quorum be present or otherwise, a
majority of the Directors present may adjourn from time to time until the time
fixed for the next regular meeting of the Board of Directors, without notice
other than by announcement at the meeting.
(b) At each meeting of the Board of Directors at which a
quorum is present all questions and business shall be determined by a vote of a
majority of the Directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
SECTION 22. ACTION WITHOUT MEETING. Unless otherwise restricted
by the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
such writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
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SECTION 23. FEES AND COMPENSATION. Directors shall be entitled
to such compensation for their services as may be approved by the Board of
Directors, including, if so approved, by resolution of the Board of Directors,
a fixed sum and expenses of attendance, if any, for attendance at each regular
or special meeting of the Board of Directors and at any meeting of a committee
of the Board of Directors. Nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity as an
officer, agent, employee, or otherwise and receiving compensation therefor.
SECTION 24. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors, appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and
specifically granted by the Board of Directors, shall have and may exercise
when the Board of Directors is not in session all powers of the Board of
Directors in the management of the business and affairs of the corporation,
including, without limitation, the power and authority to declare a dividend or
to authorize the issuance of stock, except such committee shall not have the
power or authority to amend the Certificate of Incorporation, to adopt an
agreement of merger or consolidation, to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, to recommend to the stockholders of the corporation a
dissolution of the corporation or a revocation of a dissolution or to amend
these Bylaws.
(b) OTHER COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, from time to
time appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors, and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall such committee have the powers denied to the
Executive Committee in these Bylaws.
(c) TERM. The members of all committees of the Board of
Directors shall serve a term coexistent with that of the Board of Directors
which shall have appointed such committee. The Board of Directors, subject to
the provisions of subsections (a) or (b) of this Section 24, may at any time
increase or decrease the number of members of a committee or terminate the
existence of a committee. The membership of a committee member shall terminate
on the date of his death or voluntary resignation from the committee or from
the Board of Directors. The Board of Directors may at any time for any reason
remove any individual committee member and the Board of Directors may fill any
committee vacancy created by death, resignation, removal or increase in the
number of members of the committee. The Board of Directors may designate one
or more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee, and, in
addition, in the absence or disqualification of any member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum but provided that if the
committee includes one or more directors elected by the holders of Series A,
Series B and Series C
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Preferred Stock at least one of such members present and not disqualified is a
director so elected, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
(d) MEETINGS. Unless the Board of Directors shall
otherwise provide, regular meetings of the Executive Committee or any other
committee appointed pursuant to this Section 24 shall be held at such times and
places as are determined by the Board of Directors, or by any such committee,
and when notice thereof has been given to each member of such committee, no
further notice of such regular meetings need be given thereafter. Special
meetings of any such committee may be held at any place which has been
determined from time to time by such committee, and may be called by any
Director who is a member of such committee, upon written notice to the members
of such committee of the time and place of such special meeting given in the
manner provided for the giving of written notice to members of the Board of
Directors of the time and place of special meetings of the Board of Directors.
Notice of any special meeting of any committee may be waived in writing at any
time before or after the meeting and will be waived by any Director by
attendance thereat, except when the Director attends such special meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. A majority of the authorized number of members of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall be
the act of such committee.
SECTION 25. ORGANIZATION. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
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ARTICLE V
OFFICERS
SECTION 26. OFFICERS DESIGNATED. The officers of the corporation
shall be the Chairman of the Board of Directors, the President, one or more
Vice Presidents, the Secretary and the Chief Financial Officer or Treasurer,
all of whom shall be elected at the annual organizational meeting of the Board
of Directors. The order of the seniority of the Vice Presidents shall be in
the order of their nomination, unless otherwise determined by the Board of
Directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may
assign such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation
at any one time unless specifically prohibited therefrom by law. The salaries
and other compensation of the officers of the corporation shall be fixed by or
in the manner designated by the Board of Directors.
SECTION 27. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the
pleasure of the Board of Directors and until their successors shall have been
duly elected and qualified, unless sooner removed. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board of
Directors. If the office of any officer becomes vacant for any reason, the
vacancy may be filled by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The
Chairman of the Board of Directors, when present, shall preside at all meetings
of the stockholders and the Board of Directors. The Chairman of the Board of
Directors shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. If there is no President, then
the Chairman of the Board of Directors shall also serve as the Chief Executive
Officer of the corporation and shall have the powers and duties prescribed in
paragraph (c) of this Section 27.
(c) DUTIES OF PRESIDENT. The President shall preside at
all meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is
present. The President shall be the Chief Executive Officer of the corporation
and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and officers of the
corporation. The President shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in
the order of their seniority, may assume and perform the duties of the
President in the absence or disability of the President or whenever the office
of President is vacant. The Vice Presidents shall perform other
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duties commonly incident to their office and shall also perform such other
duties and have such other powers as the Board of Directors or the President
shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors, and shall record
all acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders, and of all meetings of the Board of Directors and any
committee thereof requiring notice. The Secretary shall perform all other
duties given him in these Bylaws and other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors shall designate from time to time. The President may
direct any Assistant Secretary to assume and perform the duties of the
Secretary in the absence or disability of the Secretary, and each Assistant
Secretary shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors or the President shall designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The
Chief Financial Officer or Treasurer shall keep or cause to be kept the books
of account of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form and as
often as required by the Board of Directors or the President. The Chief
Financial Officer or Treasurer, subject to the order of the Board of Directors,
shall have the custody of all funds and securities of the corporation. The
Chief Financial Officer or Treasurer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct any Assistant Treasurer to assume and
perform the duties of the Chief Financial Officer or Treasurer in the absence
or disability of the Chief Financial Officer or Treasurer, and each Assistant
Treasurer shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors or the President shall designate from time to time.
SECTION 28. DELEGATION OF AUTHORITY. The Board of Directors may
from time to time delegate the powers or duties of any officer to any other
officer or agent, notwithstanding any provision hereof.
SECTION 29. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 30. REMOVAL. Any officer may be removed from office at
any time, either with or without cause, by the vote or written consent of a
majority of the Directors in office at the time,
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or by any committee or superior officers upon whom such power of removal may
have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 31. EXECUTION OF CORPORATE INSTRUMENTS. The Board of
Directors may, in its discretion, determine the method and designate the
signatory officer or officers, or other person or persons, to execute on behalf
of the corporation any corporate instrument or document, or to sign on behalf
of the corporation the corporate name without limitation, or to enter into
contracts on behalf of the corporation, except where otherwise provided by law
or these Bylaws, and such execution or signature shall be binding upon the
corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and
other evidences of indebtedness of the corporation, and other corporate
instruments or documents requiring the corporate seal, and certificates of
shares of stock owned by the corporation, shall be executed, signed or endorsed
by the Chairman of the Board of Directors, or the President or any Vice
President, and by the Secretary or Chief Financial Officer or Treasurer or any
Assistant Secretary or Assistant Treasurer. All other instruments and
documents requiring the corporate signature, but not requiring the corporate
seal, may be executed as aforesaid or in such other manner as may be directed
by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall
be signed by such person or persons as the Board of Directors shall authorize
so to do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
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SECTION 32. VOTING OF SECURITIES OWNED BY THE CORPORATION. All
stock and other securities of other corporations owned or held by the
corporation for itself, or for other parties in any capacity, shall be voted,
and all proxies with respect thereto shall be executed, by the person
authorized so to do by resolution of the Board of Directors, or, in the absence
of such authorization, by the Chairman of the Board of Directors, the
President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 33. FORM AND EXECUTION OF CERTIFICATES. Certificates for
the shares of stock of the corporation shall be in such form as is consistent
with the Certificate of Incorporation and applicable law. Every holder of
stock in the corporation shall be entitled to have a certificate signed by or
in the name of the corporation by the Chairman of the Board of Directors, or
the President or any Vice President and by the Treasurer or Assistant Treasurer
or the Secretary or Assistant Secretary, certifying the number of shares owned
by him in the corporation. Where such certificate is countersigned by a
transfer agent other than the corporation or its employee, or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent, or registrar at the date of issue. Each
certificate shall state upon the face or back thereof, in full or in summary,
all of the designations, preferences, limitations, restrictions on transfer and
relative rights of the shares authorized to be issued.
SECTION 34. LOST CERTIFICATES. A new certificate or certificates
shall be issued in place of any certificate or certificates theretofore issued
by the corporation alleged to have been lost, stolen, or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen, or destroyed. The corporation may require, as a
condition precedent to the issuance of a new certificate or certificates, the
owner of such lost, stolen, or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
or to give the corporation a surety bond in such form and amount as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen, or
destroyed.
SECTION 35. TRANSFERS.
(a) Transfers of record of shares of stock of the
corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and
perform any agreement with any number of stockholders of any one or more
classes of stock of the corporation to restrict
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the transfer of shares of stock of the corporation of any one or more classes
owned by such stockholders in any manner not prohibited by the General
Corporation Law of Delaware.
SECTION 36. FIXING RECORD DATES.
(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors,
the record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date shall not be
more than ten (10) days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. If no record date has been
fixed by the Board of Directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by law, shall be the first
date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board
of Directors and prior action by the Board of Directors is required by law, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix, in advance, a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date
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is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
SECTION 37. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 38. EXECUTION OF OTHER SECURITIES. All bonds, debentures
and other corporate securities of the corporation, other than stock
certificates (covered in Section 33), may be signed by the Chairman of the
Board of Directors, the President or any Vice President, or such other person
as may be authorized by the Board of Directors, and the corporate seal
impressed thereon or a facsimile of such seal imprinted thereon and attested by
the signature of the Secretary or an Assistant Secretary, or the Chief
Financial Officer or Treasurer or an Assistant Treasurer; provided, however,
that where any such bond, debenture or other corporate security shall be
authenticated by the manual signature of a trustee under an indenture pursuant
to which such bond, debenture or other corporate security shall be issued, the
signatures of the persons signing and attesting the corporate seal on such
bond, debenture or other corporate security may be the imprinted facsimile of
the signatures of such persons. Interest coupons appertaining to any such
bond, debenture or other corporate security, authenticated by a trustee as
aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the
corporation or such other person as may be authorized by the Board of
Directors, or bear imprinted thereon the facsimile signature of such person.
In case any officer who shall have signed or attested any bond, debenture or
other corporate security, or whose facsimile signature shall appear thereon or
on any such interest coupon, shall have ceased to be such officer before the
bond, debenture or other corporate security so signed or attested shall have
been delivered, such bond, debenture or other corporate security nevertheless
may be adopted by the corporation and issued and delivered as though the person
who signed the same or whose facsimile signature shall have been used thereon
had not ceased to be such officer of the corporation.
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ARTICLE IX
DIVIDENDS
SECTION 39. DECLARATION OF DIVIDENDS. Dividends upon the capital
stock of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to
law at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
SECTION 40. DIVIDEND RESERVE. Before payment of any dividend,
there may be set aside out of any funds of the corporation available for
dividends such sum or sums as the Board of Directors from time to time, in
their absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the Board of
Directors shall think conducive to the interests of the corporation, and the
Board of Directors may modify or abolish any such reserve in the manner in
which it was created.
ARTICLE X
FISCAL YEAR
SECTION 41. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 42. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
OTHER AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation
shall indemnify its Directors and executive officers to the fullest extent not
prohibited by the Delaware General Corporation Law; provided, however, that the
corporation may limit the extent of such indemnification by individual
contracts with its Directors and executive officers; and, provided, further,
that the corporation shall not be required to indemnify any Director or
executive officer in connection with any proceeding (or part thereof) initiated
by such person or any proceeding by such person against the corporation or its
Directors, officers, employees or other agents unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the corporation or (iii) such indemnification is
provided by the corporation, in its sole discretion, pursuant to the powers
vested in the corporation under the Delaware General Corporation Law.
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(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The
corporation shall have power to indemnify its other officers, employees and
other agents as set forth in the Delaware General Corporation Law.
(c) GOOD FAITH.
(1) For purposes of any determination under this
Bylaw, a Director or executive officer shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe that his conduct was
unlawful, if his action is based on information, opinions, reports and
statements, including financial statements and other financial data, in each
case prepared or presented by:
(i) one or more officers or employees of
the corporation whom the Director or executive officer believed to be reliable
and competent in the matters presented;
(ii) counsel, independent accountants or
other persons as to matters which the Director or executive officer believed to
be within such person's professional competence; and
(iii) with respect to a Director, a
committee of the Board upon which such Director does not serve, as to matters
within such Committee's designated authority, which committee the Director
believes to merit confidence; so long as, in each case, the Director or
executive officer acts without knowledge that would cause such reliance to be
unwarranted.
(2) The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal proceeding, that he had reasonable cause to believe that his conduct
was unlawful.
(3) The provisions of this paragraph (c) shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
by the Delaware General Corporation Law.
(d) EXPENSES. The corporation shall advance, prior to
the final disposition of any proceeding, promptly following request therefor,
all expenses incurred by any Director or executive officer in connection with
such proceeding upon receipt of an undertaking by or on behalf of such person
to repay said amounts if it should be determined ultimately that such person is
not entitled to be indemnified under this Bylaw or otherwise.
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Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made (1) by the Board of Directors by
a majority vote of a quorum consisting of Directors who were not parties to the
proceeding, or (2) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision making party at the time
such determination is made demonstrate clearly and convincingly that such
person acted in bad faith or in a manner that such person did not believe to be
in or not opposed to the best interests of the corporation.
(e) ENFORCEMENT. Without the necessity of entering into
an express contract, all rights to indemnification and advances to Directors
and executive officers under this Bylaw shall be deemed to be contractual
rights and be effective to the same extent and as if provided for in a contract
between the corporation and the Director or executive officer. Any right to
indemnification or advances granted by this Bylaw to a Director or executive
officer shall be enforceable by or on behalf of the person holding such right
in any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim
is made within ninety (90) days of request therefor. The claimant in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. The corporation shall be
entitled to raise as a defense to any such action that the claimant has not met
the standards of conduct that make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
(f) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
any person by this Bylaw shall not be exclusive of any other right which such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office. The
corporation is specifically authorized to enter into individual contracts with
any or all of its Directors, officers, employees or agents respecting
indemnification and advances, to the fullest extent not prohibited by the
Delaware General Corporation Law.
(g) SURVIVAL OF RIGHTS. The rights conferred on any
person by this Bylaw shall continue as to a person who has ceased to be a
Director, officer, employee or other agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
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(h) INSURANCE. To the fullest extent permitted by the
Delaware General Corporation Law, the corporation, upon approval by the Board
of Directors, may purchase insurance on behalf of any person required or
permitted to be indemnified pursuant to this Bylaw.
(i) AMENDMENTS. Any repeal or modification of this Bylaw
shall only be prospective and shall not affect the rights under this Bylaw in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any director, officer, employee or
agent of the corporation.
(j) SAVING CLAUSE. If this Bylaw or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each Director and executive
officer to the full extent not prohibited by any applicable portion of this
Bylaw that shall not have been invalidated, or by any other applicable law.
(k) CERTAIN DEFINITIONS. For the purposes of this Bylaw,
the following definitions shall apply:
(1) The term "PROCEEDING" shall be broadly
construed and shall include, without limitation, the investigation,
preparation, prosecution, defense, settlement, arbitration and appeal of, and
the giving of testimony in, any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative.
(2) The term "EXPENSES" shall be broadly
construed and shall include, without limitation, court costs, attorneys' fees,
witness fees, fines, amounts paid in settlement or judgment and any other costs
and expenses of any nature or kind incurred in connection with any proceeding.
(3) The term the "CORPORATION" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Bylaw with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(4) References to a "DIRECTOR," "OFFICER,"
"EMPLOYEE," or "AGENT" of the corporation shall include, without limitation,
situations where such person is serving at the request of the corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
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(5) References to "OTHER ENTERPRISES" shall
include employee benefit plans; references to "FINES" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "SERVING AT THE REQUEST OF THE CORPORATION" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "NOT
OPPOSED TO THE BEST INTERESTS OF THE CORPORATION" as referred to in this Bylaw.
ARTICLE XII
NOTICES
SECTION 43. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any
provisions of these Bylaws, notice is required to be given to any stockholder,
it shall be given in writing, timely and duly deposited in the United States
mail, postage prepaid, and addressed to his last known post office address as
shown by the stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given
to any Director may be given by the method stated in subsection (a), or by
facsimile, telex or telegram, except that such notice other than one which is
delivered personally shall be sent to such address as such Director shall have
filed in writing with the Secretary, or, in the absence of such filing, to the
last known post office address of such Director. Notwithstanding the foregoing
(i) any notice of a special meeting of the Board of Directors or a Committee
thereof to be held less than ten (10) business days after the giving of such
notice shall, in addition to any other method, be given by facsimile or
personal delivery and (ii) any notice to be sent to an address outside of the
United States shall be sent by two-day guaranteed courier rather than by United
States mail.
(c) ADDRESS UNKNOWN. If no address of a stockholder or
Director be known, notice may be sent to the office of the corporation required
to be maintained pursuant to Section 2 hereof.
(d) AFFIDAVIT OF MAILING. An affidavit of mailing,
executed by a duly authorized and competent employee of the corporation or its
transfer agent appointed with respect to the class of stock affected,
specifying the name and address or the names and addresses of the stockholder
or stockholders, or Director or Directors, to whom any such notice or notices
was or were given, and the time and method of giving the same, shall be
conclusive evidence of the statements therein contained.
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(e) TIME NOTICES DEEMED GIVEN. All notices given by
mail, as above provided, shall be deemed to have been given as at the time of
mailing and all notices given by facsimile, telex or telegram shall be deemed
to have been given as of the sending time recorded at time of transmission.
(f) METHODS OF NOTICE. It shall not be necessary that
the same method of giving notice be employed in respect of all Directors, but
one permissible method may be employed in respect of any one or more, and any
other permissible method or methods may be employed in respect of any other or
others.
(g) FAILURE TO RECEIVE NOTICE. The period or limitation
of time within which any stockholder may exercise any option or right, or enjoy
any privilege or benefit, or be required to act, or within which any Director
may exercise any power or right, or enjoy any privilege, pursuant to any notice
sent him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by
the corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS.
Whenever notice is required to be given, under any provision of law or the
Certificate of Incorporation or Bylaws of the corporation, to any stockholder
to whom (i) notice of two consecutive annual meetings, and all notices of
meetings or of the taking of action by written consent without a meeting to
such person during the period between such two consecutive annual meetings, or
(ii) all, and at least two, payments (if sent by first class mail) of dividends
or interest on securities during a twelve month period, have been mailed
addressed to such person at his address as shown on the records of the
Corporation and have been returned undeliverable, the giving of such notice to
such person shall not be required. Any action or meeting which shall be taken
or held without notice to such person shall have the same force and effect as
if such notice had been duly given. If any such person shall deliver to the
corporation a written notice setting forth his then current address, the
requirement that notice be given to such person shall be reinstated. In the
event that the action taken by the corporation is such as to require the filing
of a certificate under any provision of the Delaware General Corporation Law,
the certificate need not state that notice was not given to persons to whom
notice was not required to be given pursuant to this paragraph.
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ARTICLE XIII
AMENDMENTS
SECTION 44. AMENDMENTS. Except as otherwise set forth in
paragraph (i) of Section 42 of these Bylaws, these Bylaws may be amended or
repealed and new Bylaws adopted by the stockholders entitled to vote. The
Board of Directors shall also have the power, if such power is conferred upon
the Board of Directors by the Certificate of Incorporation, to adopt, amend or
repeal Bylaws (including, without limitation, the amendment of any Bylaw
setting forth the number of Directors who shall constitute the whole Board of
Directors).
ARTICLE XIV
RIGHT OF FIRST REFUSAL
SECTION 45. RIGHT OF FIRST REFUSAL. No stockholder shall sell,
assign, pledge, or in any manner transfer any of the shares of stock of the
corporation or any right or interest therein, whether voluntarily or by
operation of law, or by gift or otherwise, except by a transfer which meets the
requirements hereinafter set forth in this Bylaw:
(a) If the stockholder receives from anyone a bona fide
offer acceptable to the stockholder to purchase any of his shares of stock, or
if the stockholder desires to otherwise transfer any of his shares of stock,
then the stockholder shall first give written notice thereof to the
corporation. The notice shall name the proposed transferee and state the
number of shares to be transferred, the price per share and all other terms and
conditions of the offer or proposed transfer. In the event of a gift, property
settlement or other transfer in which the proposed transferee is not paying the
full price for the shares, and that is not otherwise exempted from the
provisions of this Section 45, the price shall be deemed to be the fair market
value of the stock at such time as determined in good faith by the Board of
Directors.
(b) The Secretary of the corporation shall, within
fifteen (15) days of receipt of said selling stockholder's notice, give written
notice thereof to the stockholders of the corporation other than the selling
stockholder. Said written notice shall state the number of shares available
for purchase (which shall be the same as the number contained in said selling
stockholder's notice). Each of the other stockholders shall have the option to
purchase that proportion of the shares available for purchase as the number of
shares of Common Stock owned by each of said other stockholders (treating all
shares of stock convertible into or exchangeable for Common Stock as having
been so converted or exchanged) bears to the total issued and outstanding
shares of Common Stock of the corporation (calculated as aforesaid), excepting
those shares owned by the selling stockholder. A stockholder electing to
exercise such option shall, within ten (10) days after mailing of the
corporation's notice, give notice to the corporation specifying the number of
shares such stockholder will purchase. Within such ten-day period, each of
said other stockholders shall give written notice stating how many additional
shares such stockholder will purchase if additional
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shares are made available. Failure to respond in writing within said ten-day
period to the notice given by the Secretary of the corporation shall be deemed
a rejection of such stockholder's right to acquire a proportionate part of the
shares of the selling stockholder. In the event one or more stockholders do
not elect to acquire the shares available to them, said shares shall be
allocated on a pro rata basis to the stockholders who requested shares in
addition to their pro rata allotment.
(c) In the event the stockholders, other than the selling
stockholder, elect to acquire any of the shares of the selling stockholder as
specified in said selling stockholder's notice, the Secretary of the
corporation shall so notify the selling stockholder and settlement thereof
shall be made in cash within thirty (30) days after the Secretary of the
corporation receives said selling stockholder's notice; provided that if the
terms of payment set forth in said selling stockholder's notice were other than
cash against delivery, the other stockholders shall pay for said shares on the
same terms and conditions set forth in said selling stockholder's notice.
(d) In the event the other stockholders do not elect to
acquire all of the shares specified in the selling stockholder's notice, said
selling stockholder may, within the sixty-day period following the expiration
of the option rights granted to the other stockholders herein, sell elsewhere
those shares specified in said selling stockholder's notice which were not
acquired by the other stockholders in accordance with the provisions of
paragraph (c) of this Bylaw, provided that said sale shall not be on terms and
conditions more favorable to the purchaser than those contained in the bona
fide offer set forth in said selling stockholder's notice. All shares so sold
by said selling stockholder shall continue to be subject to the provisions of
this Bylaw in the same manner as before said transfer.
(e) Anything to the contrary contained herein
notwithstanding, the following transactions shall be exempt from the provisions
of this Bylaw:
(1) A stockholder's transfer of any or all shares
held either during such stockholder's lifetime or on death by will or intestacy
to such stockholder's immediate family. "Immediate family" as used herein
shall mean spouse, lineal descendant, father, mother, brother, or sister of the
stockholder making such transfer and shall include any trust established
primarily for the benefit of the stockholder or his immediate family.
(2) A stockholder's bona fide pledge or mortgage
of any shares with a commercial lending institution, provided that any
subsequent transfer of said shares by said institution shall be conducted in
the manner set forth in this Section 45.
(3) A stockholder's transfer of any or all of
such stockholder's shares to the corporation or to any other stockholder of the
corporation.
(4) A stockholder's transfer of any or all of
such stockholder's shares to a person who, at the time of such transfer, is an
officer or director of the corporation.
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(5) A corporate stockholder's transfer of any or
all of its shares pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital reorganization of the
corporate stockholder, or pursuant to a sale of all or substantially all of the
stock or assets of a corporate stockholder.
(6) A corporate stockholder's transfer of any or
all of its shares to any or all of its stockholders.
(7) A transfer by a stockholder which is a
limited or general partnership to any or all of its partners.
(8) A transfer by a stockholder which is a
corporation or a partnership to another entity which, directly or indirectly,
controls, is controlled by or is under common control with such stockholder.
In any such case, the transferee, assignee, or other recipient shall
receive and hold such stock subject to the provisions of this Bylaw, and there
shall be no further transfer of such stock except in accordance with this
Bylaw.
(f) The provisions of this Section 45 may be waived with
respect to any transfer by the stockholders, upon the express written consent
of the owners of a majority of the voting power of the corporation (excluding
the votes represented by those shares to be sold by the selling stockholder).
This Section 45 may be amended or repealed by the stockholders, upon the
express vote or written consent of the owners of a majority of the voting power
of the corporation.
(g) Any sale or transfer, or purported sale or transfer,
of securities of the corporation shall be null and void unless the terms,
conditions, and provisions of this Bylaw are strictly observed and followed.
(h) The foregoing right of first refusal shall terminate
on either of the following dates, whichever shall first occur:
(1) On January 1, 2006; or
(2) Upon the date any class of securities of the
corporation are first offered to the public pursuant to a registration
statement filed with, and declared effective by, the United States Securities
and Exchange Commission under the Securities Act of 1933, as amended.
(i) The certificates representing shares of stock of the
corporation shall bear on their face the following legend so long as the
foregoing right of first refusal remains in effect:
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"The shares represented by this certificate are subject to a
right of first refusal option in favor of the corporation's
stockholders, as provided in the bylaws of the corporation."
ARTICLE XV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money
to, or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiaries, including any officer or
employee who is a Director of the corporation or its subsidiaries, whenever, in
the judgment of the Board of Directors, such loan, guarantee or assistance may
reasonably be expected to benefit the corporation. The loan, guarantee or
other assistance may be with or without interest and may be unsecured, or
secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the corporation. Nothing in
this Section 46 shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the corporation at common law or under any statute.
ARTICLE XVI
MISCELLANEOUS
SECTION 47 ANNUAL REPORT.
(a) Subject to the provisions of Section 47(b) below, the
Board of Directors shall cause an annual report to be sent to each stockholder
of the corporation not later than one hundred twenty (120) days after the close
of the corporation's fiscal year. Such report shall include a balance sheet as
of the end of such fiscal year and an income statement and statement of changes
in financial position for such fiscal year, accompanied by any report thereon
of independent accounts or, if there is no such report, the certificate of an
authorized officer of the corporation that such statements were prepared
without audit from the books and records of the corporation. When there are
more than 100 stockholders of record of the corporation's shares, as determined
by Section 605 of the California Corporations Code, additional information as
required by Section 1501(b) of the California Corporations Code shall also be
contained in such report, provided that if the corporation has a class of
securities registered under Section 12 of the United States Securities Exchange
Act of 1934, that Act shall take precedence. Such report shall be sent to
stockholders at least fifteen (15) days prior to the next annual meeting of
stockholders after the end of the fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of
record of the corporation's shares, the requirement of sending of an annual
report to the stockholders of the corporation is hereby expressly waived.
28.
<PAGE> 29
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 5. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 8. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 9. Adjournment and Notice of Adjourned Meetings . . . . . . . . . . . . . . . . 5
Section 10. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 11. Beneficial Owners of Stock . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 12. List of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 13. Action without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 14. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 15. Number and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 16. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 16. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 17. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 18. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 19. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 20. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i.
<PAGE> 30
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
Section 21. Quorum and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 22. Action without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 23. Fees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 24. Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 25. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 26. Officers Designated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 27. Tenure and Duties of Officers . . . . . . . . . . . . . . . . . . . . . . . 13
Section 28. Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 29. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 30. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION . 15
Section 31. Execution of Corporate Instruments . . . . . . . . . . . . . . . . . . . . . 15
Section 32. Voting of Securities Owned by the Corporation . . . . . . . . . . . . . . . 16
ARTICLE VII SHARES OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 33. Form and Execution of Certificates . . . . . . . . . . . . . . . . . . . . . 16
Section 34. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 35. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 36. Fixing Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 37. Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 38. Execution of Other Securities . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 39. Declaration of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 40. Dividend Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii.
<PAGE> 31
TABLE OF CONTENTS
(CONTENTS)
<TABLE>
<S> <C>
ARTICLE X FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 41. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 42. Indemnification of Directors, Officers, Employees and Other Agents . . . . . 19
ARTICLE XII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 43. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XIII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 44. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XIV RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 45. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XV LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 46. Loans to Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XVI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 47. Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
AURORA BIOSCIENCES CORPORATION
AURORA BIOSCIENCES CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is Aurora Biosciences Corporation.
SECOND: The date on which the Certificate of Incorporation of the
Corporation was originally filed with the Secretary of State of the State of
Delaware is January 22, 1996.
THIRD: The Board of Directors of the Corporation, acting in accordance
with the provisions of Sections 141 and 242 of the General Corporation Law of
the State of Delaware, adopted resolutions amending its Certificate of
Incorporation as follows:
The first paragraph of Article IV A. shall be amended to add two
sentences thereto, such sentences to read as follows:
"Effective at the time of filing with the Secretary of State of the State
of Delaware of this Certificate of Amendment of Restated Certificate of
Incorporation (the "Effective Time"), each share of the Corporation's
Common Stock, par value $0.001 per share, issued and outstanding or held
in treasury at the Effective Time shall, automatically and without any
action on the part of the respective holders thereof, be subdivided and
converted into .8 shares of Common Stock, par value $0.001 per share, of
the Corporation. No fractional shares will be issued and, in lieu thereof,
any holder of less than one share of Common Stock shall be entitled to
receive cash for such holder's fractional share based on the fair market
value per share as of the Effective Time as determined in good faith by
the Board of Directors."
FOURTH: Thereafter, pursuant to a resolution of the Board of Directors
this Certificate of Amendment was submitted to the stockholders of the
Corporation for their approval, and was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
1.
<PAGE> 2
IN WITNESS WHEREOF, Aurora Biosciences Corporation has caused this
Certificate of Amendment to be signed by its President and attested to by its
Secretary this day of March, 1997.
AURORA BIOSCIENCES
CORPORATION
By:__________________________________
Timothy J. Rink, President
ATTEST:
_____________________________________
Deborah J. Tower, Secretary
2.
<PAGE> 1
EXHIBIT 3.4
RESTATED CERTIFICATE OF INCORPORATION
OF
AURORA BIOSCIENCES CORPORATION
AURORA BIOSCIENCES CORPORATION, a corporation organized and existing under
the laws of the state of Delaware, hereby certifies as follows:
FIRST. The name of the corporation is Aurora Biosciences Corporation.
SECOND. The date of the filing of the corporation's original Certificate of
Incorporation with the Secretary of State of Delaware was January
22, 1996.
THIRD. This Restated Certificate of Incorporation was duly adopted by the
corporation in accordance with Section 245 of the General
Corporation Law of the State of Delaware.
FOURTH. The Certificate of Incorporation of the corporation shall be amended
and restated to read in full as follows.
I.
The name of this corporation is AURORA BIOSCIENCES CORPORATION.
II.
The address, including street, number, city, and county, of the registered
office of the corporation in the State of Delaware is 30 Old Rudnick Lane, City
of Dover, County of Kent; and the name of the registered agent of the
corporation in the State of Delaware at such address is CorpAmerica Inc.
III.
1.
<PAGE> 2
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Delaware General Corporation
Law.
IV.
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is
fifty-seven million five hundred thousand (57,500,000) shares. Fifty million
(50,000,000) shares shall be Common Stock, each having a par value of one-tenth
of one cent ($0.001). Seven million five hundred thousand (7,500,000) shares
shall be Preferred Stock, each having a par value of one-tenth of one cent
($0.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
pursuant to the Delaware General Corporation Law, to fix or alter from time to
time the designation, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof, including
without limitation the dividend rights, dividend rate, conversion rights, voting
rights and the liquidation preferences of any wholly unissued series of
Preferred Stock, and to establish from time to time the number of shares
constituting any such series and the designation thereof, or any of them; and to
increase or decrease the number of shares of any series subsequent to the
issuance of shares of that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any series shall be
decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
2. Subject to the rights of the holders of any series of Preferred
Stock, the Board of Directors or any individual director may be removed from
office at any time (i) with cause by the affirmative vote of the holders of a
majority of the voting power of all the then-outstanding shares of voting stock
of the corporation, entitled to vote at an election of directors (the "Voting
Stock") or (ii) without cause by the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of all the
then-outstanding shares of the Voting Stock.
3. Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected
2.
<PAGE> 3
in accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified.
4. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the Voting Stock. The Board of Directors shall
also have the power to adopt, amend, or repeal Bylaws.
5. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
6. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws and no action shall be taken by the stockholders by written consent.
7. Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (iv) by the holders of the shares entitled to cast
not less that fifty percent (50%) of the votes at the meeting, and shall be held
at such place, on such date, and at such time as the Board of Directors shall
fix.
8. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General corporation Law, as so amended.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. 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, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
3.
<PAGE> 4
IN WITNESS WHEREOF, said Aurora Biosciences Corporation has caused this
Certificate to be signed by its President and Chief Executive Officer, Timothy
J. Rink, and attested to by its Secretary, Deborah J. Tower, this _____th day
of May, 1997.
_____________________________
TIMOTHY J. RINK
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
ATTEST:
__________________________________
DEBORAH J. TOWER
SECRETARY
4.
<PAGE> 1
EXHIBIT 3.5
RESTATED BYLAWS
OF
AURORA BIOSCIENCES CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation in
the State of Delaware shall be in the City of Dover, County of Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain an
office or principal place of business in San Diego, California, at such place as
may be fixed by the Board of Directors, and may also have offices at such other
places, both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
SECTION 5. ANNUAL MEETING.
1.
<PAGE> 2
(a) The annual meeting of the stockholders of the corporation, for
the purpose of election of Directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days in advance of the date of the corporation's proxy statement
released to stockholders in connection with the previous year's annual meeting
of stockholders; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the
2.
<PAGE> 3
procedures set forth in this paragraph (b). The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this paragraph (b), and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as Directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of Directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 5. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a Director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
Director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section 5.
At the request of the Board of Directors, any person nominated by a stockholder
for election as a Director shall furnish to the Secretary of the corporation
that information required to be set forth in the stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a Director of the corporation unless nominated in accordance with
the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting and
the defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation
3.
<PAGE> 4
with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board, (ii) the
Chief Executive Officer, (iii) the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors (whether or
not there exist any vacancies in previously authorized directorships at the time
any such resolution is presented to the Board for adoption) or (iv) by the
holders of shares entitled to cast not less than fifty percent (50%) of the
votes at the meeting, and shall be held at such place, on such date, and at such
time as the Board of Directors shall fix.
(b) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
time of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the Chairman of the Board of
Directors, the Chief Executive Officer, or the Secretary of the corporation. No
business may be transacted at such special meeting otherwise than specified in
such notice. The Board of Directors shall determine the time and place of such
special meeting, which shall be held not less than thirty-five (35) nor more
than one hundred twenty (120) days after the date of the receipt of the request.
Upon determination of the time and place of the meeting, the officer receiving
the request shall cause notice to be given to the stockholders entitled to vote,
in accordance with the provisions of Section 7 of these Bylaws. If the notice is
not given within sixty (60) days after the receipt of the request, the person or
persons requesting the meeting may set the time and place of the meeting and
give the notice. Nothing contained in this paragraph (b) shall be construed as
limiting, fixing, or affecting the time when a meeting of stockholders called by
action of the Board of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any
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stockholder so waiving notice of such meeting shall be bound by the proceedings
of any such meeting in all respects as if due notice thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. In the absence of a quorum any meeting
of stockholders may be adjourned, from time to time, either by the Chairman of
the meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the vote cast, excluding
abstentions, at any meeting at which a quorum is present shall be valid and
binding upon the corporation; provided, however, that Directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of Directors. Where a
separate vote by a class or classes or series is required, except where
otherwise provided by statute or by the Certificate of Incorporation or these
Bylaws, a majority of the outstanding shares of such class or classes or series,
present in person or represented by proxy, shall constitute a quorum entitled to
take action with respect to that vote on that matter and, except where otherwise
provided by statute or by the Certificate of Incorporation or these Bylaws, the
affirmative vote of the majority (plurality, in the case of the election of
Directors) of the votes cast, including abstentions, by the holders of shares of
such class or classes or series shall be the act of such class or classes or
series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the Chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS.
For the purpose of determining those stockholders entitled to vote
at any meeting of the stockholders, except as otherwise provided by law, only
persons in whose
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names shares stand on the stock records of the corporation on the record date,
as provided in Section 12 of these Bylaws, shall be entitled to vote at any
meeting of stockholders. Except as may be otherwise provided in the Certificate
of Incorporation or these Bylaws, each stockholder shall be entitled to one vote
for each share of capital stock held by such stockholder. Every person entitled
to vote shall have the right to do so either in person or by an agent or agents
authorized by a proxy granted in accordance with Delaware law. An agent so
appointed need not be a stockholder. No proxy shall be voted after three (3)
years from its date of creation unless the proxy provides for a longer period.
SECTION 11. BENEFICIAL OWNERS OF STOCK.
(a) If shares or other securities having voting power stand of
record in the names of two (2) or more persons, whether fiduciaries, members of
a partnership, joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two (2) or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect: (a) if only one (1) votes, his act
binds all; (b) if more than one (1) votes, the act of the majority so voting
binds all; (c) if more than one (1) votes, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or may apply to the Delaware Court of Chancery for relief as
provided in the General Corporation Law of Delaware, Section 217(b). If the
instrument filed with the Secretary shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of this subsection
(c) shall be a majority or even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not specified, at the place where
the meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING. No action shall be taken by the
stockholders of the corporation except at an annual or special meeting of the
stockholders called in accordance with these Bylaws and no action shall be taken
by the stockholders by written consent.
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SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary
directed to do so by the President, shall act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies, and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless, and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of directors
of the corporation shall be fixed in accordance with the Certificate of
Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the Directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws. No reduction of the authorized number of
Directors shall have the effect of removing any Director before the Director's
term of office expires, unless such removal is made pursuant to the provisions
of Section 19 hereof.
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SECTION 16. POWERS. The powers of the corporation shall be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation.
SECTION 17. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Bylaw in the case
of the death, removal or resignation of any director.
SECTION 18. RESIGNATION. Any Director may resign at any time by delivering
his written resignation to the Secretary, such resignation to specify whether it
will be effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it shall
be deemed effective at the pleasure of the Board of Directors. Except as
otherwise provided in the Certificate of Incorporation with respect to the
filling of vacancies on the Board, when one or more Directors shall resign from
the Board of Directors, effective at a future date, a majority of the Directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each Director so chosen shall hold
office for the unexpired portion of the term of the Director whose place shall
be vacated and until his successor shall have been duly elected and qualified.
SECTION 19. REMOVAL. Subject to the rights of the holders of any series of
Preferred Stock, the Board of Directors or any individual director may be
removed from office at any time (i) with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding shares of
voting stock of the corporation, entitled to vote at an election of directors
(the "Voting Stock") or (ii) without cause by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting
power of all the then-outstanding shares of the Voting Stock.
SECTION 20. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the
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place where such meeting is held. No notice of an annual meeting of the Board of
Directors shall be necessary and such meeting shall be held for the purpose of
electing officers and transacting such other business as may lawfully come
before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the Certificate
of Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or any three of the directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
facsimile, telegraph or telex, during normal business hours, at least
twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the Directors not present shall sign a written waiver of
notice, or a consent to holding such meeting, or an approval of the minutes
thereof. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in any
written waiver of notice or consent unless so required by the Certificate of
Incorporation or these Bylaws. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
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SECTION 21. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 42 hereof, for which a quorum shall be one-third of the exact number of
Directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of Directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; provided, however, at any
meeting whether a quorum be present or otherwise, a majority of the Directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b) At each meeting of the Board of Directors at which a quorum is
present all questions and business shall be determined by the affirmative vote
of a majority of the Directors present, unless a different vote be required by
law, the Certificate of Incorporation or these Bylaws.
SECTION 22. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 23. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
SECTION 24. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, including without limitation
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the power or authority to declare a dividend, to authorize the issuance of stock
and to adopt a certificate of ownership and merger, and may authorize the seal
of the corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation.
(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors, and shall have such powers and perform such duties as
may be prescribed by the resolution or resolutions creating such committees, but
in no event shall such committee have the powers denied to the Executive
Committee in these Bylaws.
(c) TERM. The members of all committees of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Section 24, may at any time increase or decrease
the number of members of a committee or terminate the existence of a committee.
The membership of a committee member shall terminate on the date of his death or
voluntary resignation from the committee or from the Board of Directors. The
Board of Directors may at any time for any reason remove any individual
committee member and the Board of Directors may fill any committee vacancy
created by death, resignation, removal or increase in the number of members of
the committee. The Board of Directors may designate one or more Directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee, and, in addition, in the absence or
disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
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(d) MEETINGS. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 24 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any Director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any Director by attendance thereat, except when the Director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee.
SECTION 25. ORGANIZATION. At every meeting of the Directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
SECTION 26. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.
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SECTION 27. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 27.
(c) DUTIES OF PRESIDENT. The President shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. Unless
some other officer has been elected Chief Executive Officer of the corporation,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in the order of
their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of President is
vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors, and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders,
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any
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Assistant Secretary to assume and perform the duties of the Secretary in the
absence or disability of the Secretary, and each Assistant Secretary shall
perform other duties commonly incident to his office and shall also perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The Chief
Financial Officer or Treasurer shall keep or cause to be kept the books of
account of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form and as often
as required by the Board of Directors or the President. The Chief Financial
Officer or Treasurer, subject to the order of the Board of Directors, shall have
the custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time. The President
may direct any Assistant Treasurer, or the Controller or any Assistant
Controller to assume and perform the duties of the Chief Financial Officer or
Treasurer in the absence or disability of the Chief Financial Officer or
Treasurer, and each Assistant Treasurer and each Controller and Assistant
Controller shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors or the President shall designate from time to time.
SECTION 28. DELEGATION OF AUTHORITY. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officer or
agent, notwithstanding any provision hereof.
SECTION 29. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 30. REMOVAL. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
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EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 31. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositories on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 32. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 33. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of
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Incorporation and applicable law. Every holder of stock in the corporation shall
be entitled to have a certificate signed by or in the name of the corporation by
the Chairman of the Board of Directors, or the President or any Vice President
and by the Treasurer or Assistant Treasurer or the Secretary or Assistant
Secretary, certifying the number of shares owned by him in the corporation. Any
or all of the signatures on the certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set forth
on the face or back a statement that the corporation will furnish without charge
to each stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
SECTION 34. LOST CERTIFICATES. A new certificate or certificates shall be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
SECTION 35. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation shall
be made only upon its books by the holders thereof, in person or by attorney
duly authorized,
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and upon the surrender of a properly endorsed certificate or certificates for a
like number of shares.
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
SECTION 36. FIXING RECORD DATES.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix, in advance, a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to
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consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
SECTION 37. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 38. EXECUTION OF OTHER SECURITIES. All bonds, debentures and other
corporate securities of the corporation, other than stock certificates (covered
in Section 33), may be signed by the Chairman of the Board of Directors, the
President or any Vice President, or such other person as may be authorized by
the Board of Directors, and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Chief Financial Officer or Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or
other corporate security shall be authenticated by the manual signature, or
where permissible facsimile signature, of a trustee under an indenture pursuant
to which such bond, debenture or other corporate security shall be issued, the
signatures of the persons signing and attesting the corporate seal on such bond,
debenture or other corporate security may be the imprinted facsimile of the
signatures of such persons. Interest coupons appertaining to any such bond,
debenture or other corporate security, authenticated by a trustee as aforesaid,
shall be signed by the Treasurer or an Assistant Treasurer of the corporation or
such other person as may be authorized by the Board of Directors, or bear
imprinted thereon the facsimile signature of such person. In case any officer
who shall have signed or attested any bond, debenture or other corporate
security, or whose facsimile signature shall appear thereon or on any such
interest
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coupon, shall have ceased to be such officer before the bond, debenture or other
corporate security so signed or attested shall have been delivered, such bond,
debenture or other corporate security nevertheless may be adopted by the
corporation and issued and delivered as though the person who signed the same or
whose facsimile signature shall have been used thereon had not ceased to be such
officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 39. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors pursuant to law at any regular
or special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 40. DIVIDEND RESERVE. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
FISCAL YEAR
SECTION 41. FISCAL YEAR. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 42. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its Directors and executive officers to the fullest extent not
prohibited by the Delaware General Corporation Law; provided, however, that the
corporation may limit the extent of such indemnification by individual contracts
with its Directors and executive officers; and, provided, further, that the
corporation shall not be required to indemnify any
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Director or executive officer in connection with any proceeding (or part
thereof) initiated by such person or any proceeding by such person against the
corporation or its Directors, officers, employees or other agents unless (i)
such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the corporation or (iii)
such indemnification is provided by the corporation, in its sole discretion,
pursuant to the powers vested in the corporation under the Delaware General
Corporation Law.
(b) OTHER OFFICERS, EMPLOYEES AND OTHER Agents. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the Delaware General Corporation Law.
(c) EXPENSES. The corporation shall advance to any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or executive
officer of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any Director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph
(e) of this Bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made (1) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to the
proceeding, or (2) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
(d) ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances to Directors and executive
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a Director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
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ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his or her conduct was
lawful. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct. In
any suit brought by a director or executive officer to enforce a right to
indemnification or to an advancement of expenses hereunder, the burden of
proving that the director or executive officer is not entitled to be
indemnified, or to such advancement of expenses, under this Article XI or
otherwise shall be on the corporation.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its Directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
(f) SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a Director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may
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purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Bylaw.
(h) AMENDMENTS. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any director, officer, employee or agent of the
corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "PROCEEDING" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
(2) The term "EXPENSES" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.
(3) The term the "CORPORATION" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director,
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executive officer, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(5) References to "OTHER ENTERPRISES" shall include employee
benefit plans; references to "FINES" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "SERVING AT
THE REQUEST OF THE CORPORATION" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "NOT OPPOSED TO THE BEST INTERESTS OF THE
CORPORATION" as referred to in this Bylaw.
ARTICLE XII
NOTICES
SECTION 43. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to any
Director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such Director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such Director.
(c) ADDRESS UNKNOWN. If no address of a stockholder or Director be
known, notice may be sent to the office of the corporation required to be
maintained pursuant to Section 2 hereof.
(d) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall, in the absence of fraud, be prima
facie evidence of the facts therein contained.
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(e) TIME NOTICES DEEMED GIVEN. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing and all
notices given by facsimile, telex or telegram shall be deemed to have been given
as of the sending time recorded at time of transmission.
(f) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.
(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that
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notice be given to such person shall be reinstated. In the event that the action
taken by the corporation is such as to require the filing of a certificate under
any provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 44. AMENDMENTS. Subject to paragraph (h) of Section 42 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the Voting Stock. The
Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
SECTION 45. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this Section 46 shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.
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EXHIBIT 4.3
AURORA BIOSCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT
DECEMBER 27, 1996
<PAGE> 2
AURORA BIOSCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (the "AGREEMENT") is entered into as of
December 27, 1996 among (i) AURORA BIOSCIENCES CORPORATION, a Delaware
corporation (the "COMPANY"), with its principal office located at 11149 North
Torrey Pines Road, La Jolla, CA 92037, (ii) holders of the Company's Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (such
holders are listed on Exhibit A attached hereto and are referred to herein as
the "PREVIOUS INVESTORS"), and (iii) the purchasers listed on the Schedule of
Purchasers attached to that certain Series D Preferred Stock Purchase Agreement
of even date herewith (THE "PURCHASE AGREEMENT") and Exhibit B hereto (the
"PURCHASERS"). Each of the Previous Investors and the Purchasers are referred to
herein as a "STOCKHOLDER;" collectively they are referred to as the
"STOCKHOLDERS."
This Agreement supersedes, amends and restates in its entirety that
certain Investors Rights Agreement dated as of March 8, 1996, by and among the
Company and the Previous Investors, as amended by that certain Amendment
Agreement dated April 9, 1996 as further amended by that certain Second
Amendment Agreement dated April 29, 1996 (collectively, the "FORMER INVESTORS
RIGHTS AGREEMENT").
RECITALS
A. The Company proposes to issue and sell up to an aggregate of 572,536
shares of its Series D Preferred Stock pursuant to the Purchase Agreement (the
"FINANCING").
B. Each of the Previous Investors desire to waive his, her or its right to
receive notice of the Financing and to purchase a certain portion of the Series
D Preferred Stock to be sold by the Company in the Financing as set forth in
Section 3 of the Former Investors Rights Agreement.
C. As a condition of entering into the Purchase Agreement, the Purchasers
have requested that the Company extend to them registration rights, information
rights and other rights as set forth herein.
D. In order to induce the Purchasers to enter into the Purchase Agreement
and to induce the Purchasers to invest funds in the Company, the Company and the
Previous Investors have agreed to enter into this Agreement in order to amend
and restate the Former Investors Rights Agreement so that this Agreement is the
sole agreement with respect to the obligations and rights contained herein.
E. Section 4.7 of the Former Investors Rights Agreement provides that such
agreement may be amended with the written consent of the Company and the holders
of at least two-thirds (2/3) of the shares which are then Registrable Securities
(as defined in the Former
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<PAGE> 3
Investors Rights Agreement) and that such amendment shall be binding upon the
Stockholders (as defined in the Former Investors Rights Agreement), each of
their transferees and the Company.
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the parties
hereby agree that the Former Investors Rights Agreement is amended and restated
in its entirety to read as set forth above and as follows (unless otherwise
defined herein, capitalized terms used herein shall have the meanings assigned
in the Purchase Agreement):
AGREEMENT
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
1.1. RESTRICTIONS ON TRANSFERABILITY. Neither the shares of the Company's
Series A, Series B, Series C or Series D Preferred Stock issued to the
Stockholders pursuant to the Purchase Agreement or pursuant to that certain
Preferred Stock Purchase Agreement dated March 8, 1996, as amended by that
certain Amendment Agreement dated April 9, 1996, as further amended by that
certain Second Amendment Agreement dated April 29, 1996 (the "DESIGNATED
PREFERRED") nor the Registrable Securities (as defined below) shall be
transferable except upon compliance with (i) the Right of First Refusal set
forth in Section 45 of the Company's Bylaws, (ii) the conditions specified in
this Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act (as defined below), and (iii) if such shares
are Restricted Securities (as defined below), upon such other terms as are in
the opinion of counsel to the Company necessary to comply with the provisions of
the Securities Act; provided, however that such restrictions shall not apply to
transfers under the circumstances described in Sections 1.5, 1.6 or 1.7 and that
the requirements of clause (iii) shall not apply to a transfer without
consideration to one or more partners or shareholders of a Stockholder (e.g., an
in-kind distribution pursuant to the terms of the Stockholder's governing
documents). Except for transfers made pursuant to Rule 144 of the Securities
Act, each Stockholder will cause any proposed transferee of Designated Preferred
or Registrable Securities held by such Stockholder to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Agreement and it will be a condition precedent to the effectiveness of any
such transfer that such Stockholder shall have secured a written agreement of
such transferee in form and substance satisfactory to the Company to that
effect, if so requested by the Company; provided, however, that this sentence
shall not apply with respect to any proposed transferee in whose hands the
transferred shares will not be Restricted Securities.
1.2. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
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<PAGE> 4
"COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
Company, as constituted on the date of this Agreement.
"FORM S-3" shall mean Form S-3 under the Securities Act (as defined below)
as in effect on the date of this Agreement, or any substantially similar,
equivalent or successor form under the Securities Act.
"HOLDER" shall mean each holder of Registrable Securities.
"INITIAL PUBLIC OFFERING" shall mean the Company's initial firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "ACT"), covering the offer and
sale by the Company of Common Stock to the public at an aggregate offering price
of not less than $10,000,000 (prior to underwriters' discounts and expenses),
and at a public offering price not less than $6.00 per share, subject to
adjustment for stock splits, stock dividends, reorganizations and the like with
respect to such shares.
"REGISTRABLE SECURITIES" means shares of the Company's Common Stock (i)
issued or issuable upon conversion of Designated Preferred which have not been
sold to the public, and (ii) issued in respect of the shares of Common Stock
referred to under the foregoing clause (i) by reason of any stock split, stock
dividend, recapitalization or similar event which have not been sold to the
public.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 1.5, 1.6 and 1.7 hereof other than Selling Expenses,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel, blue sky fees
and expenses (including counsel fees), and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company required
to bear the legends set forth in Section 1.3 hereof or legends substantially
similar thereto.
"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.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
1.3. RESTRICTIVE LEGEND(S). Each certificate representing the shares of
Designated Preferred and Registrable Securities shall (unless otherwise
permitted by the provisions of Section 1.4 below) be stamped or otherwise
imprinted with legends in the following form (in addition to any other legend
required by the Bylaws of the Company, or under applicable California or other
state securities laws):
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(A) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
(B) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION'S STOCKHOLDERS, AS
PROVIDED IN THE BYLAWS OF THE CORPORATION.
1.4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to comply,
in addition to the requirements of Section 45 of the Company's Bylaws, in all
respects with the provisions of this Section 1.4. Prior to any proposed transfer
of any Restricted Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the holder thereof
shall give written notice to the Company of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall be accompanied (except in
transactions in compliance with Rule 144 and except for transfers without
consideration to one or more partners or shareholders of the holder (e.g., an
in-kind distribution pursuant to the terms of the holder's governing documents))
by either (i) a written opinion of legal counsel who shall be reasonably
satisfactory to the Company (it being agreed that Testa Hurwitz & Thibeault is
satisfactory) addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission, a copy of any
holder's request (together with all supplements or amendments thereto) for which
shall have been provided to the Company, at or prior to the time of first
delivery to the Commission's staff, to the effect that the transfer of such
securities without registration will not result in a recommendation by such
staff that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
provided for above shall bear the appropriate restrictive legends set forth in
Section 1.3 above, except that such certificate shall not bear the restrictive
legend set forth in Section 1.3(a) above if, in the opinion of counsel for the
Company or counsel for such holder, such legend is not required in order to
establish compliance with any provisions of the Securities Act and except that
such certificate shall not bear the restrictive legend set forth in Section
1.3(b) above if the right of first refusal set forth in the Company's Bylaws is
no longer applicable.
1.5. DEMAND REGISTRATION RIGHTS.
(A) Commencing on the earlier of (i) five (5) years after the date
hereof, or (ii) one (1) year after the Company's initial public offering of
securities pursuant to a registration statement
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under the Securities Act, if the Company shall receive a written request
(specifying that it is being made pursuant to this Section 1.5) from the Holders
of at least fifty percent (50%) of the Registrable Securities that the Company
file a registration statement or similar document under the Securities Act
covering the registration of the greater of (i) 20% of the shares which are then
Registrable Securities, or (ii) Registrable Securities the expected aggregate
offering price to the public of which is at least $5,000,000, then the Company
shall promptly notify all other Holders of such request and shall use its best
efforts to promptly and expeditiously cause all Registrable Securities that such
Holders have requested, within 15 days after receipt of such written notice, to
be registered in accordance with this Section 1.5 to be registered under the
Securities Act. The Holders making the written request pursuant to this Section
1.5 shall be referred to hereinafter as the "INITIATING HOLDERS".
Notwithstanding the foregoing: (i) the Company shall not be obligated to
effect a registration pursuant to this Section 1.5 during the period starting
with the date one hundred twenty (120) days prior to the Company's estimated
date of filing of, and ending on a date one hundred twenty (120) days following
the effective date of, a registration statement pertaining to an underwritten
public offering of the Company's securities, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that the Company's estimate of
the date of filing such registration statement is made in good faith; or (ii) if
the Company shall furnish to such Holders 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 for a
registration statement 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 six (6) months; provided, however, that the
Company shall not obtain such a deferral more than once in any 12-month period.
The Company shall not be obligated to effect more than two (2)
registrations pursuant to this Section 1.5 for which holders of Registrable
Securities are the Initiating Holders; provided, however that such obligation
shall be deemed satisfied only when a registration statement covering all
Registrable Securities requested by Holders to be registered pursuant to such
demand shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.
(B) If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to this Section 1.5,
and the Company shall include such information in the notice referred to in
Section 1.5(a). In such event, the right of any Holder to registration pursuant
to this Section 1.5 shall be conditioned upon such Holder's participation 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) to the extent provided herein.
The Company shall, together with all Holders proposing to distribute their
securities through such underwriting, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by a majority of
interest of the Initiating Holders and reasonably satisfactory to the Company.
Notwithstanding any other provision of this Section 1.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then the
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Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be reduced and shall be allocated pro rata among such Holders
thereof in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration.
If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration. If by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account (or for
the account of other securityholders) in such registration if the underwriter so
agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited
and if such inclusion will not adversely affect the marketing of the Registrable
Securities.
Except for registration statements on Form S-4, S-8 or any successor
thereto, the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other stockholders, from the date of receipt of a request for registration
from Initiating Holders pursuant to this Section 1.5 until the earlier of (a)
one hundred twenty (120) days from the receipt of the initial request pursuant
to Section 1.5(a) or (b) the completion of the period of distribution of the
registration contemplated thereby. Although the Company shall have no obligation
to register any Designated Preferred, in any underwritten public offering
contemplated by this Section 1.5 or Section 1.6 or 1.7, holders of Designated
Preferred shall be entitled to sell shares of Designated Preferred representing
Registrable Securities to be included in such underwriting to the underwriters
for conversion and sale of the Registrable Securities issued upon conversion
thereof.
1.6. COMPANY REGISTRATION.
(A) If, at any time or from time to time, the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights, other than a registration (A) relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, (B) a registration on Form S-4 or similar forms which may be promulgated
in the future relating solely to a Securities and Exchange Commission Rule 145
or similar transaction or (C) in connection with the Company's Initial Public
Offering, the Company will (i) promptly give to each Holder written notice
thereof and (ii) include in such registration (and any related qualification
under Blue Sky laws or other compliance),
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and in any underwriting involved therein, all Registrable Securities of such
Holders as specified in a written request or requests made within 15 days after
receipt of such written notice from the Company.
(B) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
indicate in the notice given pursuant to Section 1.6(a). In such event the right
of any Holder to registration pursuant to this Section 1.6 shall be conditioned
upon such Holder's agreeing to participate in such underwriting and in the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. 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 in customary form with the underwriter or underwriters
selected for such underwriting by the Company or by other holders exercising any
demand registration rights to the extent such holders are not excluded from the
registration pursuant to the Underwriter Cutback described below.
Notwithstanding any other provision of this Section 1.6, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities or other securities from such registration and underwriting
(hereinafter an "UNDERWRITER CUTBACK"). In the event of an Underwriter Cutback,
the Company shall so advise all Holders and the other holders distributing their
securities through such underwriting, and the Underwriter Cutback shall be
implemented on the basis that the holders who are not Holders shall be cut back
before any cutback of Holders. If the limitation determined by the underwriter
requires an Underwriter Cutback with respect to the Registrable Securities to be
included, such Underwriter Cutback shall be in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
1.7. FORM S-3 REGISTRATION RIGHTS. After the Initial Public Offering, the
Company shall use its best efforts to qualify for registration on Form S-3, and
to that end the Company shall use its best efforts to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), within twelve (12) months following the effective date of the first
registration of any securities of the Company for an underwritten registered
public offering. After the Company has qualified for the use of Form S-3, and
subject to the provisions of Section 1.14, each Holder shall have the right to
request registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by each such Holder), subject only
to the following limitations:
(A) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred twenty (120) days following
the effective date of a Company initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145);
(B) The Company shall not be required to effect a registration
pursuant to this Section 1.7 unless the Holder or Holders requesting such a
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $1,000,000 (unless the value of all of the
Registrable
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Securities held by all Holders is less than $1,000,000, in which case the
Holders shall be entitled to a final demand registration pursuant to this
Section 1.7 for an amount equal to the value of the Registrable Securities held
by all Holders at the time of such demand; provided that for purposes of the
foregoing, "value" shall be determined based on the average of the last sale
prices of the Company's Common Stock on the principal exchange or market on
which such Common Stock is traded during the five (5) trading days immediately
preceding such demand);
(C) The Company shall not be required to effect a registration
pursuant to this Section 1.7 if the Company shall furnish to the requesting
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company or its stockholders for the registration
statement to be filed at the date filing would be required, in which case the
Company shall have an additional period of not more than one hundred twenty
(120) days within which to file such registration statement; provided however,
that the Company shall not use this right more than once in any twelve- month
period;
(D) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred twenty
(120) days from the effective date thereof; and
(E) The Company shall not be obligated to cause a registration on
Form S-3 if in the prior twelve-month period the Company has caused a
registration on Form S-3 to become effective as the result of a request pursuant
to this Section 1.7.
The Company shall give notice to all Holders of the receipt of a request
for registration pursuant to this Section 1.7 and shall use its best efforts to
cause all Registrable Securities that such Holders have requested, within 15
days after receipt of such written notice, be registered in accordance with this
Section 1.7 to be registered under the Securities Act. Subject to the foregoing,
the Company will use its best efforts to effect promptly any registration
pursuant to this Section 1.7. The provisions of Section 1.5(b) shall apply to
any registration effected pursuant to this Section 1.7
1.8. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of one special counsel to the selling Holders)
shall be borne by the Company. Notwithstanding anything to the contrary herein,
the Company shall not be required to pay for any expenses of any registration
proceeding under Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered, unless such Holders agree to forfeit their
right to a demand registration pursuant to Section 1.5 (in which event such
right shall be forfeited by all Holders). In the absence of such an agreement to
forfeit, the Holders of Registrable Securities to have been registered shall
bear all such expenses pro rata on the basis of the Registrable Securities to
have been registered. Notwithstanding the foregoing, however, if at the time of
the withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses
and shall retain their rights pursuant to Section 1.5.
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1.9. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(A) Keep such registration, qualification or compliance effective
for a period of one hundred twenty (120) days or until the Holder or Holders
have completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(B) 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;
(C) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them;
(D) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders or
the underwriters, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;
(E) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with (and provide customary due diligence materials and information to)
the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement;
(F) 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; and
(G) use its best efforts to list the Registrable Securities covered
by such registration statement with any securities exchange on which the Common
Stock of the Company is then listed.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.
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1.10. INDEMNIFICATION.
(A) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
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, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will promptly reimburse each such Holder, each of its
officers and directors and partners, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred (as and when incurred) in
connection with investigating, preparing to defend or defending any such claim,
loss, damage, liability or action, provided 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 on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder or underwriter and stated to be specifically for use therein.
(B) 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, severally and not jointly indemnify the Company,
each of its directors and officers, 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 Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and partners and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened, arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or 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, in the light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification, or compliance,
and will promptly reimburse the Company, such Holders, such directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred (as and when incurred) in connection with
investigation, preparing to defend or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
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omission) is made in such registration statement, prospectus, offering circular
or other document or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each such Holder hereunder shall be
limited to an amount equal to the proceeds to each such Holder of Registrable
Securities sold in such registration as contemplated herein.
(C) Each party entitled to indemnification under this Section 1.10
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense; provided, however, that, if the defendants in any such claim or
litigation include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 1 unless such failure resulted in actual
detriment to the Indemnifying Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party a release from all liability in respect of
such claim or litigation.
(D) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission, provided, however, that in no case will any seller of
Registrable Securities be required to contribute any amount in excess of the
amount of proceeds to such seller of Registrable Securities sold pursuant to the
registration statement with respect to which the contribution obligation arose.
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(E) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1 and otherwise.
1.11. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.
1.12. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(A) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(B) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Exchange Act at any time after it has become subject to such reporting
requirements;
(C) So long as a Stockholder owns any Restricted Securities, to
furnish to the Stockholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company as a Stockholder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Stockholder to sell any such
securities without registration.
1.13. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted under Sections 1.5, 1.6 and 1.7 may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder," and the transferred shares shall be considered
"Registrable Securities," for purposes of this Section 1, provided that (i) said
transferee acquires Registrable Securities (including shares of Designated
Preferred prior to conversion into Registrable Securities) in a private
transaction, and (ii) the Company is given written notice by such Holder at the
time of or within a reasonable time (but not more than 30 days) after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, subject to said transferee's agreement to be bound by and comply
with the provisions of this Section 1.
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<PAGE> 14
1.14. TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Section 1 shall terminate (i) upon the seventh anniversary of
the effective date of the Initial Public Offering or (ii) if earlier, as to any
individual Holder, at such time after the Company's Initial Public Offering as
all Registrable Securities held by such Holder can be sold within any
three-month period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144 (including Rule 144(k)) promulgated
thereunder.
1.15. "MARKET STAND OFF" AGREEMENT. Each Holder hereby agrees that it
shall not, to the extent requested by the Company and the underwriters managing
any underwritten offering of the Company's Common Stock (or other securities),
sell or otherwise transfer or dispose of (other than to those who agree to be
similarly bound) any Registrable Securities or any 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 in connection with the
Company's Initial Public Offering. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the
Registrable Securities and other securities of the Holders (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such one hundred eighty (180) day period.
1.16. OTHER REGISTRATION RIGHTS. The Company shall not grant to any third
party any registration rights more favorable than or inconsistent with any of
those contained herein, so long as any of the registration rights under this
Agreement remains in effect.
1.17. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock or the Designated Preferred by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Designated Preferred as so changed.
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS
2.1. FINANCIAL INFORMATION. Subject to Section 2.16, the Company will
furnish the following reports to the Stockholders for so long as the
Stockholders are Holders of Registrable Securities:
(A) As soon as practicable after the end of each fiscal year (other
than the fiscal year ended March 31, 1996), and in any event within 90 days
thereafter, audited consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of income, stockholders' equity and cash flows of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of recognized national standing
selected by the Company; and
(B) As soon as practicable after the end of each fiscal quarter, and
in any event within 45 days thereafter, unaudited consolidated balance sheets of
the Company and its subsidiaries, if any, as of the end of such quarter, and
unaudited consolidated statements of income, stockholders'
13
<PAGE> 15
equity and cash flows of the Company and its subsidiaries, if any, for such
quarter and for the period from the beginning of the fiscal year to the end of
such quarter, prepared in accordance with generally accepted accounting
principles (but subject to normal year-end audit adjustments) and certified by
the chief financial officer.
2.2. ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 2.1 and Section 2.3 may be assigned by the Stockholders (or
by any permitted transferee of any such rights) so long as (i) the Company is
given notice of any such assignment within a reasonable time after the date the
same is effected, (ii) the transferee shall have acquired Registrable Securities
(including shares of Designated Preferred prior to conversion into Registrable
Securities) in a private transaction, and (iii) the transferee is not engaged in
a business that is competitive with the Company.
2.3. INSPECTION AND VISITATION RIGHTS. Each Stockholder, so long as such
Stockholder holds Registrable Securities, shall have the right to visit and
inspect the Company's principal place of business, subject to such limitations
and restrictions as the President of the Company in good faith determines to be
necessary for the protection of the Company's Proprietary Information.
2.4. RESERVE FOR CONVERSION SHARES. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
for the purpose of effecting the conversion of the Designated Preferred and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Designated Preferred from time to time outstanding or
otherwise to comply with the terms of this Agreement. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Designated Preferred or otherwise to comply with
the terms of this Agreement, the Company will forthwith take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
The Company will obtain any authorization, consent, approval or other action by
or make any filing with any court or administrative body that may be required
under applicable state securities laws in connection with the issuance of shares
of Common Stock upon conversion of the Designated Preferred.
2.5. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain and cause
each of its subsidiaries to maintain as to their respective properties and
business, with financially sound and reputable insurers, insurance against such
casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, which insurance shall be deemed by
the Company to be sufficient.
2.6. RESTRICTIVE AGREEMENTS PROHIBITED. Neither the Company nor any of its
subsidiaries shall become a party to any agreement which by its terms restricts
the Company's performance of this Agreement, the Management Rights Agreements,
the Voting Agreements or the Restated Certificate.
2.7. TRANSACTIONS WITH AFFILIATES. Except for transactions contemplated by
the Agreements or as otherwise approved by the Board of Directors, neither the
Company nor any of its subsidiaries shall enter into any material transaction
with any director, officer, employee or holder of more than 5% of the
outstanding capital stock of any class or series of capital stock of the Company
or any of its subsidiaries, or to the Company's knowledge any member of the
family
14
<PAGE> 16
of any such person, any corporation, partnership, trust or other entity in which
any such person, or member of the family of any such person, is a director,
officer, trustee, partner or holder of more than 5% of the outstanding capital
stock thereof, except for transactions on customary terms related to such
person's employment.
2.8. EXPENSES OF DIRECTORS. The Company shall promptly reimburse in full,
each director of the Company who is not an employee of the Company for all of
his reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any Committee thereof.
2.9. BYLAWS. The Company shall at all times cause its Bylaws to provide
that (a) any three directors shall have the right to call a meeting of the Board
of Directors and (b) the number of directors fixed in accordance therewith shall
in no event conflict with any of the terms or provisions of the Designated
Preferred as set forth in the Restated Certificate. The Company shall at all
times maintain provisions in its Bylaws and/or Certificate of Incorporation
indemnifying all directors against liability and absolving all directors from
liability to the Company and its stockholders to the maximum extent permitted
under the laws of the State of Delaware.
2.10. PERFORMANCE OF CONTRACTS. The Company shall not amend, modify,
terminate, waive or otherwise alter, in whole or in part, any of the Proprietary
Information Agreements or the provisions contained in the Employment Amendment
without the approval of the Company's Board of Directors.
2.11. PROPRIETARY INFORMATION AGREEMENTS. The Company shall use its best
efforts to obtain, and shall cause its subsidiaries to use their best efforts to
obtain, a Proprietary Information Agreement in substantially the form of Exhibit
E to the Purchase Agreement from all future officers, key employees and other
employees who will have access to confidential information of the Company or any
of its subsidiaries, upon their employment or engagement by the Company or any
of its subsidiaries. The Company shall use its reasonable best efforts to cause
any consultant with whom the Company contracts to agree to maintain the
confidentiality of the Company's confidential or Proprietary information, and to
assign to the Company any proprietary rights arising from work performed by the
consultant for the Company.
2.12. COMPLIANCE WITH LAWS. The Company shall comply, and cause each
subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could materially adversely affect its business or
condition, financial or otherwise.
2.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall keep, and
cause each subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied, reflecting
financial transactions of the Company and each subsidiary in accordance with
GAAP.
2.14. U.S. REAL PROPERTY INTEREST STATEMENT. The Company shall provide
prompt written notice to each Stockholder following any "determination date" (as
defined in Treasury Regulation Section 1.897-2(c)(i)) on which the Company
becomes a United States real property holding corporation. In addition, upon a
written request by any Stockholder, the Company shall provide such
15
<PAGE> 17
Stockholder with a written statement informing the Stockholder whether such
Stockholder's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Stockholder shall be delivered to such Stockholder within ten
(10) days of such Stockholder's written request therefor. In addition, upon
request by any foreign Stockholder but subject to the succeeding sentence, the
Company shall provide along with such statement either or both of the following
documents: (i) an affidavit in conformance with the requirements of Section
1445(b)(3) of the Code and the regulations thereunder or (ii) a notarized
statement, executed by an officer having actual knowledge of the facts, that the
shares of Company stock held by such Stockholder are of a class that is
regularly traded on an established securities market, within the meaning of
Section 1445(b)(6) of the Code and the regulations thereunder. If the Company is
unable to provide either of the documents described in (i) or (ii) above upon
request, it shall promptly, and in any event within such ten (10) day period,
notify such Stockholder in writing of the reason for such inability. Finally,
upon the request of a foreign Stockholder and without regard to whether either
document described in (i) or (ii) above has been requested, the Company shall
reasonably cooperate with the efforts of such foreign Stockholder to obtain a
"qualifying statement" within the meaning of Section 1445(b)(4) of the Code and
the regulations thereunder or such other documents as would excuse a transferee
of a foreign Stockholder's interest from withholding of income tax imposed
pursuant to Section 897(a) of the Code.
2.15. RULE 144A INFORMATION. The Company shall, at all times during which
it is not subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, provide in writing, upon the
written request of any Stockholder or a prospective buyer of Registrable
Securities (including Designated Preferred before conversion into Registrable
Securities) from any Stockholder, all information required by Rule 144A(d)(4)(i)
of the General Regulations promulgated by the Commission under the Securities
Act ("RULE 144A INFORMATION"). The Company's obligations under this Section 2.15
shall at all times be contingent upon the relevant Stockholder's obtaining from
the prospective buyer of such Registrable Securities a written agreement to take
all reasonable precautions to safeguard the Rule 144A Information from
disclosure to anyone other than a person who will assist such buyer in
evaluating the purchase of such Registrable Securities.
2.16. TERMINATION OF COVENANTS. The covenants set forth in Section 2.1,
Sections 2.3 through 2.13 and Section 2.15 shall terminate and be of no further
force or effect upon the earlier of (i) the closing of the Initial Public
Offering, or (ii) the date on which none of the Registrable Securities
(including shares of Designated Preferred prior to conversion into Common Stock)
is outstanding. The Covenants set forth in Section 2.14 shall terminate five (5)
years after the closing of the Initial Public Offering.
2.17. CONFIDENTIAL INFORMATION, ETC. Each Holder agrees that (i) all
information received by it pursuant to this Section 2 which the Company
designates as or promptly confirms in writing to be "Confidential" or the like,
and (ii) any other information relating to the Company's technology, processes
or formulas that is disclosed by the Company to any Holder in writing and is
marked "Confidential" or the like, shall be considered confidential information.
Each Holder further agrees that
16
<PAGE> 18
it shall hold all such confidential information in confidence and shall not,
without the Company's prior express written consent, disclose any such
confidential information to any third party other than its counsel, accountants,
employees and other professional advisors, representatives and agents, all of
whom shall have a need to know such information and shall be bound by the
provisions of this Section 2.17, nor shall such Holder, without the Company's
prior express written consent, use such confidential information for any purpose
other than evaluation of such Holder's investment in the Company; provided,
however, that the foregoing obligation to hold in confidence and not to disclose
confidential information shall not apply to any such information that (a) was
known to the public or the Holder or its representatives prior to disclosure by
the Company, (b) becomes known to the public through no fault of such Holder,
(c) is disclosed to such Holder on a non-confidential basis by a third party
having a legal right to make such disclosure, (d) is independently developed by
such Holder, or (e) is required to be disclosed as a matter of law or pursuant
to court order; and provided further that the foregoing obligation to hold in
confidence and not to disclose confidential information shall not prohibit such
Holder from disclosing to its partners or shareholders financial and other
information described in clause (i) of this Section 2.17 which is of a type
customarily provided by such Holder to such partners or shareholders in the
ordinary course or from disclosing to a bona-fide prospective transferee of its
securities of the Company such financial and other information described in such
clause (i) which is reasonably necessary to provide such transferee with
adequate disclosure of material information.
3. RIGHTS OF FIRST REFUSAL
3.1. RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.
(A) The Company hereby grants to each Stockholder the right of first
refusal to purchase its Pro Rata Share (defined below) of all (or any part) of
New Securities (defined below) that the Company may from time to time propose to
sell and issue. Stockholder's "PRO RATA SHARE," for purposes of this Section 3,
is the ratio of the number of shares of Common Stock (assuming conversion of all
shares of Designated Preferred) then held by such Stockholder to the total
number of shares of Common Stock then outstanding (assuming conversion of all
shares of Designated Preferred). This right of first refusal shall be subject to
the following provisions:
(B) "NEW SECURITIES" shall mean any Common Stock or Preferred Stock
of the Company, whether now authorized or not, and rights, options, or warrants
to purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
Common Stock or Preferred Stock; provided, however, that "NEW SECURITIES" does
not include (i) the Designated Preferred; (ii) securities issuable upon
conversion of or with respect to the Designated Preferred; (iii) shares of the
Company's Common Stock (or related options) issued to officers, directors,
employees of and/or consultants to the Company pursuant to plans or agreements
as approved by the Company's Board of Directors; (iv) shares of the Company's
Common Stock or Preferred Stock issued to holders of the Designated Preferred in
connection with any stock split, stock dividend, or recapitalization by the
Company; (v) securities issued in connection with any equipment leasing,
technology licensing, corporate partnering, strategic alliance, acquisition,
merger, purchase of assets or similar transaction as approved by the Company's
Board of Directors;
17
<PAGE> 19
(vi) shares of Common Stock issued to holders of Common Stock in connection with
a stock split or stock dividend with respect to the Common Stock; and (vii)
shares issued in the Initial Public Offering.
(C) In the event that the Company proposes to undertake an issuance
of New Securities, it shall give the Stockholders written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. The Stockholders shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase for cash some or all of its Pro Rata Share of such New Securities for
the price and upon the general terms, including deferred payment, if any,
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
(D) In the event that any Stockholder (a "NON-EXERCISING
STOCKHOLDER") fails to exercise in full the right of first refusal within said
twenty (20) day period, notice shall promptly be given by the Company to those
Stockholders who have exercised the right of first refusal in full. Such
Stockholders shall have the right for an additional ten (10) days to elect by
notice to the Company to purchase any or all of the New Securities which the
Non-exercising Stockholders were entitled to purchase but elected not to, with
such right of over-subscription to be allocated among such Stockholders in
accordance with their respective Pro Rata Shares or as they may otherwise agree.
After the aggregate thirty (30) day period during which Stockholders may
exercise their first refusal right, the Company shall have one hundred twenty
(120) days thereafter to sell (or enter into an agreement pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within one
hundred twenty (120) days from the date of said agreement) the New Securities
respecting which the Stockholder's rights were not exercised, at a price and
upon general terms no more favorable to the purchasers thereof than specified in
the Company's notice. In the event the Company has not sold the New Securities
within said one hundred twenty (120) day period (or sold and issued New
Securities in accordance with the foregoing agreement within one hundred twenty
(120) days from the date of said agreement), the Company shall not thereafter
issue or sell any New Securities, without first offering such securities to the
Stockholders in the manner provided above.
(E) The right of first refusal granted under this Section 3.1 shall
not apply to and shall expire upon the closing of the Company's Initial Public
Offering.
(F) The rights granted pursuant to this Section 3.1 may be assigned
by the Stockholder (or by any permitted transferee of any such rights) so long
as (i) the Company is given notice of any such assignment within a reasonable
time after the date the same is effected and (ii) the transferee shall have
acquired Registrable Securities (including shares of Designated Preferred prior
to conversion into Registrable Securities) in a private transaction.
18
<PAGE> 20
4. MISCELLANEOUS
4.1. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by California residents.
4.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
4.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (a) if to a Stockholder, to such Stockholder's address
set forth in the Purchase Agreement or to such other address as such Stockholder
shall have furnished to the Company in writing, (b) if to any other holder of
Registrable Securities, at such address as such holder shall have furnished the
Company in writing, or (c) if to the Company, to its address set forth above and
addressed to the attention of the President or at such other address as the
Company shall have furnished to the Stockholders. All notices and other
communications pursuant to the provisions of this Section 4.4 shall be deemed
delivered when mailed or sent by facsimile. Notwithstanding the foregoing, any
notice or communication to an address outside the United States shall be sent by
facsimile and confirmed in writing contemporaneously sent by two day guaranteed
international courier.
4.5. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
4.6. SEVERABILITY. In the event that any provision of this Agreement
becomes or is 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.
4.7. APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of (i) the Company and (ii) the holders
of at least two-thirds (2/3) of the shares which are then Registrable
Securities. Any amendment, termination or waiver effected in accordance with
this section shall be binding upon the Stockholders, each of their transferees
and the Company. The Stockholders acknowledge that by the operation of this
Section the holders of two-thirds (2/3) of the outstanding Registrable
Securities as aforesaid may have the right and power to diminish or eliminate
all rights of such Stockholder under this Agreement.
19
<PAGE> 21
The foregoing Amended and Restated Investors Rights Agreement is hereby
executed as of the date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By: __________________________
Title: __________________________
THE PURCHASERS:
JAPAN ASSOCIATED FINANCE CO., LTD. JAFCO G-6(A) INVESTMENT
ENTERPRISE PARTNERSHIP
By: __________________________ By: __________________________________
Title: __________________________ Title:__________________________________
JAFCO R-2 INVESTMENT JAFCO G-6(B) INVESTMENT
ENTERPRISE PARTNERSHIP ENTERPRISE PARTNERSHIP
By: __________________________ By: __________________________________
Title: __________________________ Title:__________________________________
JAFCO R-3 INVESTMENT
ENTERPRISE PARTNERSHIP
By: __________________________ ________________________________________
ROGER Y. TSIEN
Title: __________________________
20
<PAGE> 22
THE PREVIOUS INVESTORS:
AVALON MEDICAL PARTNERS, L.P.
By: __________________________
Title: __________________________
AVALON BIOVENTURES II, L.P.
By: __________________________
Title: __________________________
KINGSBURY CAPITAL PARTNERS, L.P. II
By: Kingsbury Associates, L.P.
By: __________________________
Title: General Partner
ABINGWORTH BIOVENTURES SICAV
By: __________________________
Title: __________________________
21
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 23
NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership,
its General Partner
By: __________________________
Title: General Partner
NEA VENTURES 1996, L.P.
By: __________________________
Title: Authorized Signatory
DP III ASSOCIATES, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: ___________________________
General Partner
DOMAIN PARTNERS III, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: ___________________________
General Partner
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By: ___________________________
Attorney - in - Fact
22
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 24
PACKARD INSTRUMENT COMPANY, INC.
By: __________________________
Title: __________________________
SEQUANA THERAPEUTICS, INC.
By: __________________________
Title: __________________________
GC&H INVESTMENTS
By: __________________________
Title: __________________________
- ---------------------------------
KEVIN J. KINSELLA
- ---------------------------------
ROGER Y. TSIEN
- ---------------------------------
THERESA E. GLOBE
23
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 25
- ---------------------------------
CHARLES S. ZUKER
- ---------------------------------
MICHAEL G. ROSENFELD
- ---------------------------------
JOHN A. PORCO, JR.
- ---------------------------------
LUBERT STRYER
- ---------------------------------
ANDREA S. STRYER
- ---------------------------------
WALTER LUETOLF
FOR ADRIAN J.R. LANGINGER
- ---------------------------------
NORMAND F. SMITH
- ---------------------------------
HUGH Y. RIENHOFF, JR.
- ---------------------------------
JANICE THOMPSON
24
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 26
THE GREENE FAMILY TRUST
By:______________________________
HOWARD E. GREENE, JR., TRUSTEE
By:______________________________
ARLINE GREENE, TRUSTEE
- ---------------------------------
TIMOTHY J. RINK
HAMBRECHT & QUIST GROUP
By:______________________________
Dennis J. Purcell
Title:___________________________
25
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 27
EXHIBIT A
PREVIOUS INVESTORS
Avalon Medical Partners, L.P.
Avalon Bioventures II, L.P.
Kingsbury Capital Partners, L.P. II
Abingworth Bioventures SICAV
New Enterprises Associates VI, Limited partnership
NEA Ventures 1996, L.P.
DP III Associates, L.P.
Domain Partners III, L.P.
Biotechnology Investments Limited
Packard Instrument Company, Inc.
Sequana Therapeutics, Inc.
GC&H Investments
Kevin J. Kinsella
Roger Y. Tsien
Theresa E. Globe
Charles S. Zuker
Michael G. Rosenfeld
John A. Porco, Jr.
Lubert Stryer
Andrea S. Stryer
Walter Luetolf
for Adrian J.R. Langinger
Normand F. Smith
Hugh Y. Rienhoff, Jr.
Janice Thompson
The Greene Family Trust
Timothy J. Rink
Hambrecht & Quist Group
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 28
EXHIBIT B
PURCHASERS
Japan Associated Finance Co., Ltd.
JAFCO R-2 Investment Enterprise Partnership
JAFCO R-3 Investment Enterprise Partnership
JAFCO G-6(A) Investment Enterprise Partnership
JAFCO G-6(B) Investment Enterprise Partnership
Roger Y. Tsien
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 29
<TABLE>
<S> <C>
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.............................1
1.1. Restrictions on Transferability...................................1
1.2. Certain Definitions...............................................1
1.3. Restrictive Legend(s).............................................2
1.4. Notice of Proposed Transfers......................................3
1.5. Demand Registration Rights........................................4
1.6. Company Registration..............................................6
1.7. Form S 3 Registration Rights......................................6
1.8. Expenses of Registration..........................................8
1.9. Registration Procedures...........................................8
1.10. Indemnification..................................................9
1.11. Information by Holder...........................................11
1.12. Rule 144 Reporting..............................................11
1.13. Transfer of Registration Rights.................................12
1.14. Termination of Registration Rights..............................12
1.15. "Market Stand Off" Agreement....................................12
1.16. Other Registration Rights.......................................12
1.17. Changes in Common Stock or Preferred Stock......................13
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS....................13
2.1. Financial Information............................................13
2.2. Assignment of Rights to Financial Information....................13
2.3. Inspection and Visitation Rights.................................13
2.4. Reserve for Conversion Shares....................................13
2.5. Properties, Business, Insurance..................................14
2.6. Restrictive Agreements Prohibited................................14
2.7. Transactions with Affiliates.....................................14
2.8. Expenses of Directors............................................14
2.9. Bylaws...........................................................14
2.10. Performance of Contracts........................................15
2.11. Proprietary Information Agreements..............................15
2.12. Compliance with Laws............................................15
</TABLE>
i
<PAGE> 30
<TABLE>
<S> <C>
2.13. Keeping of Records and Books of Account.........................15
2.14. U.S. Real Property Interest Statement...........................15
2.15. Rule 144A Information...........................................16
2.16. Termination of Covenants........................................16
2.17. Confidential Information, etc...................................16
3. RIGHTS OF FIRST REFUSAL..................................................17
3.1. Right of First Refusal on Company Issuances......................17
4. MISCELLANEOUS............................................................18
4.1. Governing Law....................................................18
4.2. Successors and Assigns...........................................18
4.3. Entire Agreement.................................................18
4.4. Notices, etc.....................................................18
4.5. Counterparts.....................................................19
4.6. Severability.....................................................19
4.7. Approval of Amendments and Waivers...............................19
</TABLE>
ii
<PAGE> 1
Exhibit 5.1
[COOLEY GODWARD LLP LETTERHEAD]
March 14, 1997
Aurora Biosciences Corporation
11149 N. Torrey Pines Road
La Jolla, CA 92037
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Aurora Biosciences Corporation (the "Company") of a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission, including a related prospectus to be filed
with the Commission pursuant to Rule 424(b) of Regulation C (the "Prospectus")
promulgated under the Securities Act of 1933, as amended, and the underwritten
public offering of up to 3,450,000 shares (including 450,000 shares of Common
Stock for which the underwriters have been granted an over allotment option) of
the Company's Common Stock (the "Common Stock").
In connection with this opinion, we have (i) examined and relied upon the
Registration Statement and related Prospectus, the Company's Restated
Certificate of Incorporation and Amended and Restated Bylaws, and the originals
or copies certified to our satisfaction of such records, documents,
certificates, memoranda and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below and (ii)
assumed that the shares of Common Stock will be sold by the underwriters at a
price established by the Pricing Committee of the Board of Directors of the
Company.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Common Stock, when sold and issued in accordance with the Registration
Statement and related Prospectus, will be validly issued, fully paid, and
nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Yours very truly,
Cooley Godward LLP
/s/Thomas A. Coll
Thomas A. Coll
<PAGE> 1
EXHIBIT 10.01
AURORA BIOSCIENCES CORPORATION
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ___________ day of
_________, 1996 by and between AURORA BIOSCIENCES CORPORATION, a Delaware
corporation (the "Corporation"), and ("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in
[his/her] capacity as a [Director/Executive Officer/Officer] of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as a
[Director/Executive Officer/Officer] of the Corporation, the Corporation has
determined and agreed to enter into this Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as a
[Director/Executive Officer/Officer] after the date hereof, the parties hereto
agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as a
[Director/Executive Officer/Officer] of the Corporation or as a director,
officer or other fiduciary of an affiliate of the Corporation (including any
employee benefit plan of the Corporation) faithfully and to the best of
[his/her] ability so long as [he/she] is duly elected and qualified in
accordance with the provisions of the Bylaws or other applicable charter
documents of the Corporation or such affiliate; provided, however, that Agent
may at any time and for any reason resign from such position (subject to any
contractual obligation that Agent may have assumed apart from this Agreement)
and that the
1.
<PAGE> 2
Corporation or any affiliate shall have no obligation under this Agreement to
continue Agent in any such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and any
other amounts that Agent becomes legally obligated to pay because of any claim
or claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and
b) otherwise to the fullest extent as may be provided to Agent
by the Corporation under the non-exclusivity provisions of the Code and Section
42 of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:
a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Corporation
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
b) on account of Agent's conduct that was knowingly fraudulent
or deliberately dishonest or that constituted willful misconduct;
2.
<PAGE> 3
c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
d) for which payment is actually made to Agent under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment under
such insurance, clause, bylaw or agreement;
e) if indemnification is not lawful (and, in this respect,
both the Corporation and Agent have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
f) in connection with any proceeding (or part thereof)
initiated by Agent, or any proceeding by Agent against the Corporation or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers
vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify Agent for the portion thereof to
which Agent is entitled.
3.
<PAGE> 4
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
a) the Corporation will be entitled to participate therein at
its own expense;
b) except as otherwise provided below, the Corporation may, at
its option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Corporation, (ii)
Agent shall have reasonably concluded that there may be a conflict of interest
between the Corporation and Agent in the conduct of the defense of such action
or (iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of Agent's
separate counsel shall be at the expense of the Corporation. The Corporation
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to which Agent shall have made
the conclusion provided for in clause (ii) above; and
c) the Corporation shall not be liable to indemnify Agent
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
4.
<PAGE> 5
9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Agent, in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
12. SURVIVAL OF RIGHTS.
a) The rights conferred on Agent by this Agreement shall
continue after Agent has ceased to be a director, officer, employee or other
agent of the Corporation or to serve at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and shall inure
to the benefit of Agent's heirs, executors and administrators.
b) The Corporation shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this
5.
<PAGE> 6
Agreement in the same manner and to the same extent that the Corporation would
be required to perform if no such succession had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
a) If to Agent, at the address indicated on the signature page
hereof.
b) If to the Corporation, to
Aurora Biosciences Corporation
11149 North Torrey Pines Road
La Jolla, California 92037
Attention: Chief Executive Officer
or to such other address as may have been furnished to Agent by the Corporation.
6.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
AURORA BIOSCIENCES CORPORATION
By:__________________________________
Title:_______________________________
AGENT
_____________________________________
(Type Name Here)
Address:
_____________________________________
_____________________________________
_____________________________________
7.
<PAGE> 1
EXHIBIT 10.2
AURORA BIOSCIENCES CORPORATION
1996 STOCK PLAN
ADOPTED JANUARY 23, 1996
AS AMENDED AND RESTATED AS OF FEBRUARY 4, 1997
(SHARE NUMBERS HEREIN HAVE NOT BEEN ADJUSTED TO REFLECT THE FOUR
FOR FIVE REVERSE STOCK SPLIT TO BE EFFECTED PRIOR TO THE OFFERING)
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by
which selected Employees and Directors of and Consultants to the Company, and
its Affiliates, may be given an opportunity to benefit from increases in value
of the stock of the Company through the granting of (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to
purchase restricted stock, and (v) stock appreciation rights, all as defined
below.
(b) The Company, by means of the Plan, seeks to retain
the services of persons who are now Employees or Directors of or Consultants to
the Company or its Affiliates, to secure and retain the services of new
Employees, Directors and Consultants, and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.
(c) The Company intends that the Stock Awards issued
under the Plan shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof,
including Incentive Stock Options and Nonstatutory Stock Options, (ii) stock
bonuses or rights to purchase restricted stock granted pursuant to Section 7
hereof, or (iii) stock appreciation rights granted pursuant to Section 8
hereof. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and in such form as issued
pursuant to Section 6, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or
subsidiary corporation, whether now or hereafter existing, as those terms are
defined in Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as
amended.
(d) "COMMITTEE" means a Committee appointed by the Board
in accordance with subsection 3(c) of the Plan.
1
<PAGE> 2
"COMPANY" means Aurora Biosciences Corporation, a Delaware
corporation.
(f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT
RIGHT" means a right granted pursuant to subsection 8(b)(2) of the Plan.
(g) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE , DIRECTOR OR
CONSULTANT" means that the service of an individual to the Company, whether as
an Employee, Director or Consultant is not interrupted or terminated. The
Board, in its sole discretion, may determine whether Continuous Status as an
Employee, Director or Consultant shall be considered interrupted in the case
of: (i) any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company, Affiliates or their
successors.
(i) "COVERED EMPLOYEE" means the chief executive officer
and the four (4) other highest compensated officers of the Company for whom
total compensation is required to be reported to stockholders under the
Exchange Act, as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board.
(k) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value
of the common stock determined as follows and, in each case, in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations:
(i) If the common stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a share of
common stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in common stock) on the last
market trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board deems reliable;
2
<PAGE> 3
(ii) If the common stock is quoted on the NASDAQ System
(but not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of Common Stock shall be the mean between the bid and
asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(iii) In the absence of an established market for the
common stock, the Fair Market Value shall be determined in good faith by the
Board.
(n) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(o) "INDEPENDENT STOCK APPRECIATION RIGHT" or
"INDEPENDENT RIGHT" means a right granted pursuant to subsection 8(b)(3) of the
Plan.
(p) "LISTING DATE" means the first date upon which any
security of the Company is listed (or approved for listing) upon notice of
issuance on any securities exchange, or designated (or approved for
designation) upon notice of issuance as a national market security on an
interdealer quotation system if such securities exchange or interdealer
quotation system has been certified in accordance with the provisions of
Section 25100(o) of the California Corporate Securities Law of 1968.
(q) "NON-EMPLOYEE DIRECTOR" means a Director who either
(i) is not a current Employee or Officer of the Company or its parent or
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or subsidiary for services rendered as a consultant or in
any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee" for purposes
of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.
(s) "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(t) "OPTION" means a stock option granted pursuant to the
Plan.
(u) "OPTION AGREEMENT" means a written agreement between
the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the terms
and conditions of the Plan.
3
<PAGE> 4
(v) "OPTIONEE" means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.
(w) "OUTSIDE DIRECTOR" means a Director who either (i) is
not a current employee of the Company or an "affiliated corporation" (within
the meaning of the Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time, and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in
any capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.
(x) "PLAN" mans this 1996 Stock Plan.
(y) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or
any successor to Rule 16b-3, as in effect with respect to the Company when
discretion is being exercised regarding the Plan.
(z) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(aa) "STOCK APPRECIATION RIGHT" means any of the various
types of rights which may be granted under Section 8 of the Plan.
(bb) "STOCK AWARD" means any right granted under the Plan,
including any Option, any stock bonus, any right to purchase restricted stock,
and any Stock Appreciation Right.
(cc) "STOCK AWARD AGREEMENT" means a written agreement
between the Company and a holder of a Stock Award evidencing the terms and
conditions of an individual Stock Award grant. Each Stock Award Agreement
shall be subject to the terms and conditions of the Plan.
(dd) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT"
means a right granted pursuant to subsection 8(b)(1) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; whether
4
<PAGE> 5
a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a
stock bonus, a right to purchase restricted stock, a Stock Appreciation Right,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; whether a person shall
be permitted to receive stock upon exercise of an Independent Stock
Appreciation Right; and the number of shares with respect to which a Stock
Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided
in Section 14.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.
(c) The Board may delegate administration of the Plan to
a committee of the Board composed of not fewer than two (2) members (the
"Committee"), all of the members of which Committee may be, in the discretion
of the Board, Non-Employee Directors and/or Outside Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee of
two (2) or more Outside Directors any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or such a subcommittee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board. The Board may abolish the Committee
at any time and revest in the Board the administration of the Plan.
Additionally, prior to the Listing Date, and notwithstanding anything to the
contrary contained herein, the Board may delegate administration of the Plan to
a committee of one or more members of the Board and the term Committee shall
apply to any person or persons to whom such authority has been delegated.
Notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Stock Awards to eligible persons who (1) are not then
subject to Section 16 of the Exchange Act and/or (2) are either (i) not then
Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award, or (ii) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate
5
<PAGE> 6
two million five hundred thousand (2,500,000) shares of the Company's common
stock. If any Stock Award shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the stock not
acquired under such Stock Award shall revert to and again become available for
issuance under the Plan. Shares subject to Stock Appreciation Rights exercised
in accordance with Section 8 of the Plan shall not be available for subsequent
issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights
appurtenant thereto may be granted only to Employees. Stock Awards other than
Incentive Stock Options and Stock Appreciation Rights appurtenant thereto may
be granted only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an
Option or an award to purchase restricted stock if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any of its Affiliates unless the
exercise price of such Option is at least one hundred ten percent (110%) of the
Fair Market Value of such stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant, or
in the case of a restricted stock purchase award, the purchase price is at
least one hundred percent (100%) of the Fair Market Value of such stock at the
date of grant.
(c) Subject to the provisions of Section 13 relating to
adjustments upon changes in stock, no person shall be eligible to be granted
Options and Stock Appreciation Rights covering more than two hundred fifty
thousand (250,000) shares of the Company's common stock in any twelve (12)
month period. This subsection 5(c) shall not apply prior to the Listing Date
and, following the Listing Date, shall not apply until (i) the earliest of:
(a) the first material modification of the Plan (including any increase to the
number of shares reserved for issuance under the Plan in accordance with
Section 4); (b) the issuance of all of the shares of common stock reserved for
issuance under the Plan; (c) the expiration of the Plan; or (d) the first
meeting of stockholders at which directors are to be elected that occurs after
the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under section 12 of the
Exchange Act; or (ii) such other date required by Section 162(m) of the Code
and the rules and regulations promulgated thereunder.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but
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each Option shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the following
provisions:
(a) TERM. No Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the stock subject to the Option on the date the Option is granted; the
exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of
the Code.
(c) CONSIDERATION. The purchase price of stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is
exercised, or (ii) at the discretion of the Board or the Committee, at the time
of the grant of the Option, (a) by delivery to the Company of other common
stock of the Company, or (b) in any other form of legal consideration that may
be acceptable to the Board.
(d) TRANSFERABILITY. An Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Option is granted
only by such person; provided, however, that, after the Listing Date, to the
extent permitted by applicable law, a Nonstatutory Stock Option shall be
transferable by the person to whom such Option is granted upon such terms and
conditions as are set forth in the Option Agreement for such Nonstatutory Stock
Option, as the Board or Committee shall determine in its discretion.
Notwithstanding the foregoing, the person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject
to an Option may, but need not, be allotted in periodic installments (which
may, but need not, be equal). The Option Agreement may provide that from time
to time during each of such installment periods, the Option may become
exercisable ("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the shares allotted
to such period and/or any prior period as to which the Option became vested but
was not fully exercised. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary but in each case will provide for
vesting of at least twenty percent (20%) per year of the total number of shares
subject to the Option. The provisions of this subsection 6(e) are subject to
any Option provisions governing the minimum number of shares as to which an
Option may be exercised.
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(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A
DIRECTOR OR CONSULTANT. In the event an Optionee's Continuous Status as an
Employee, Director or Consultant terminates (other than upon the Optionee's
death or disability), the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionee's
Continuous Status as an Employee, Director or Consultant (or such longer or
shorter period, which shall not be less than thirty (30) days, specified in the
Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionee does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise
of the Option following the termination of the Optionee's Continuous Status as
an Employee, Director, or Consultant (other than upon the Optionee's death or
disability) would result in liability under Section 16(b) of the Exchange Act,
then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the Option Agreement, or (ii) the tenth (10th)
day after the last date on which such exercise would result in such liability
under Section 16(b) of the Exchange Act. Finally, an Optionee's Option
Agreement may also provide that if the exercise of the Option following the
termination of the Optionee's Continuous Status as an Employee, Director or
Consultant (other than upon the Optionee's death or disability) would be
prohibited at any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the first paragraph of this subsection 6(f), or (ii) the expiration of
a period of three (3) months after the termination of the Optionee's Continuous
Status as an Employee, Director or Consultant during which the exercise of the
Option would not be in violation of such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's
Continuous Status as an Employee, Director or Consultant terminates as a result
of the Optionee's disability, the Optionee may exercise his or her Option (to
the extent that the Optionee was entitled to exercise it as of the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option Agreement after the
termination of, the Optionee's Continuous Status as an Employee, Director or
Consultant, the Option may be exercised (to the extent the Optionee was
entitled to exercise the Option as of the date of death) by the Optionee's
estate, by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person
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designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
(i) EARLY EXERCISE. The Option may, but need not,
include a provision whereby the Optionee may elect at any time while an
Employee, Director or Consultant to exercise the Option as to any part or all
of the shares subject to the Option prior to the full vesting of the Option.
Any unvested shares so purchased shall be subject to a repurchase right in
favor of the Company, with the repurchase price to be equal to the original
purchase price of the stock, or to any other restriction the Board determines
to be appropriate; provided, however, that (i) the right to repurchase at the
original purchase price shall lapse at a minimum rate of twenty percent (20%)
per year over five (5) years from the date the Option was granted, and (ii)
such right shall be exercisable only within (A) the ninety (90) day period
following the termination of employment or the relationship as a Director or
Consultant, or (B) such longer period as may be agreed to by the Company and
the Optionee (for example, for purposes of satisfying the requirements of
Section 1202(c)(3) of the Code (regarding "qualified small business stock")),
and (iii) such right shall be exercisable only for cash or cancellation of
purchase money indebtedness for the shares. Should the right of repurchase be
assigned by the Company, the assignee shall pay the Company cash equal to the
difference between the original purchase price and the stock's Fair Market
Value if the original purchase price is less than the stock's Fair Market
Value.
(j) RIGHT OF REPURCHASE. The Option may, but need not,
include a provision whereby the Company may elect, prior to the Listing Date,
to repurchase all or any part of the vested shares exercised pursuant to the
Option; provided, however, that (i) such repurchase right shall be exercisable
only within (a) the ninety (90) day period following the termination of
employment or the relationship as a Director or Consultant and (ii) such right
shall be exercisable only for cash or cancellation of purchase money
indebtedness for the shares at a repurchase price equal to the greater of (a)
the stock's Fair Market Value at the time of such termination, or (b) the
original purchase price paid for such shares by the Optionee.
(k) RIGHT OF FIRST REFUSAL. The Option may, but need
not, include a provision whereby the Company may elect, prior to the Listing
Date, to exercise a right of first refusal following receipt of notice from the
Optionee of the intent to transfer all or any part of the shares exercised
pursuant to the Option.
(l) RE-LOAD OPTIONS. Without in any way limiting the
authority of the Board or Committee to make or not to make grants of Options
hereunder, the Board or Committee shall have the authority (but not an
obligation) to include as part of any Option Agreement a provision entitling
the Optionee to a further Option (a "Re-Load Option") in the event the Optionee
exercises the Option evidenced by the Option agreement, in whole or in part, by
surrendering
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<PAGE> 10
other shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option Agreement. Any such Re-Load Option (i) shall be for a
number of shares equal to the number of shares surrendered as part or all of
the exercise price of such Option; (ii) shall have an expiration date which is
the same as the expiration date of the Option the exercise of which gave rise
to such Re-Load Option; and (iii) shall have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option which is granted to a 10%
stockholder (as described in subsection 5(b)), shall have an exercise price
which is equal to one hundred ten percent (110%) of the Fair Market Value of
the stock subject to the Re-Load Option on the date of exercise of the original
Option and shall have a term which is no longer than five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollar ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 12(e) of the Plan and in
Section 422(d) of the Code. There shall be no Re-Load Options on a Re-Load
Option. Any such Re-Load Option shall be subject to the availability of
sufficient shares under subsection 4(a) and the limits on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions
as the Board or Committee may determine which are not inconsistent with the
express provisions of the Plan regarding the terms of Options.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted
stock purchase Stock Award Agreement shall be such amount as the Board or
Committee shall determine and designate in such agreement, but in no event
shall the purchase price be less than eighty-five percent (85%) of the stock's
Fair Market Value on the date such award is made. Notwithstanding the
foregoing, the Board or the Committee may determine that eligible participants
in the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted
stock purchase agreement shall be transferable except by will or the laws of
descent and distribution or pursuant to a QDRO satisfying the requirements of
Rule 16b-3 and any administrative interpretations or
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pronouncements thereunder, so long as stock awarded under such agreement
remains subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant
to a stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; or (ii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in its discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may,
but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee. The applicable agreement shall provide (i) that the right to
repurchase at the original purchase price shall lapse at a minimum rate of
twenty percent (20%) per year over five (5) years from the date the Stock Award
was granted, and (ii) such right shall be exercisable only (a) within the
ninety (90) day period following the termination of employment or the
relationship as a Director or Consultant, or (b) such longer period as may be
agreed to by the Company and the holder of the Stock Award (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
(regarding "qualified small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for
the shares. Should the right of repurchase be assigned by the Company, the
assignee shall pay the Company cash equal to the difference between the
original purchase price and the stock's Fair Market Value if the original
purchase price is less than the stock's Fair Market Value.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire, subject to the limitations described in subsection 7(d), any or all
of the shares of stock held by that person which have not vested as of the date
of termination under the terms of the stock bonus or restricted stock purchase
agreement between the Company and such person.
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8. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and
authority, exercisable in its sole discretion, to grant Stock Appreciation
Rights under the Plan to Employees or Directors of or Consultants to, the
Company or its Affiliates. To exercise any outstanding Stock Appreciation
Right, the holder must provide written notice of exercise to the Company in
compliance with the provisions of the Stock Award Agreement evidencing such
right. If a Stock Appreciation Right is granted to an individual who is at the
time of grant subject to Section 16(b) of the Exchange Act, the Stock Award
Agreement shall incorporate all the terms and conditions at the time necessary
to assure that the subsequent exercise of such right shall qualify for the
safe-harbor exemption from short-swing profit liability provided by Rule 16b-3
promulgated under the Exchange Act (or any successor rule or regulation).
Except as provided in subsection 5(c), no limitation shall exist on the
aggregate amount of cash payments the Company may make under the Plan in
connection with the exercise of a Stock Appreciation Right.
(b) Three types of Stock Appreciation Rights shall be
authorized for issuance under the Plan:
(1) TANDEM STOCK APPRECIATION RIGHTS. Tandem
Stock Appreciation Rights will be granted appurtenant to an Option, and shall,
except as specifically set forth in this Section 8, be subject to the same
terms and conditions applicable to the particular Option grant to which it
pertains. Tandem Stock Appreciation Rights will require the holder to elect
between the exercise of the underlying Option for shares of stock and the
surrender, in whole or in part, of such Option for an appreciation
distribution. The appreciation distribution payable on the exercised Tandem
Right shall be in cash (or, if so provided, in an equivalent number of shares
of stock based on Fair Market Value on the date of the Option surrender) in an
amount up to the excess of (a) the Fair Market Value (on the date of the Option
surrender) of the number of shares of stock covered by that portion of the
surrendered Option in which the Optionee is vested over (b) the aggregate
exercise price payable for such vested shares.
(2) CONCURRENT STOCK APPRECIATION RIGHTS.
Concurrent Rights will be granted appurtenant to an Option and may apply to all
or any portion of the shares of stock subject to the underlying Option and
shall, except as specifically set forth in this Section 8, be subject to the
same terms and conditions applicable to the particular Option grant to which it
pertains. A Concurrent Right shall be exercised automatically at the same time
the underlying Option is exercised with respect to the particular shares of
stock to which the Concurrent Right pertains. The appreciation distribution
payable on an exercised Concurrent Right shall be in cash (or, if so provided,
in an equivalent number of shares of stock based on Fair Market Value on the
date of the exercise of the Concurrent Right) in an amount equal to such
portion as shall be determined by the Board or the Committee at the time of the
grant of the excess of (a) the aggregate Fair Market Value (on the date of the
exercise of the Concurrent Right) of the vested shares of stock purchased under
the underlying Option which have Concurrent Rights appurtenant to them over (b)
the aggregate exercise price paid for such shares.
(3) INDEPENDENT STOCK APPRECIATION RIGHTS.
Independent Rights will be granted independently of any Option and shall,
except as specifically set forth in this Section 8,
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be subject to the same terms and conditions applicable to Nonstatutory Stock
Options as set forth in Section 6. They shall be denominated in share
equivalents. The appreciation distribution payable on the exercised
Independent Right shall be not greater than an amount equal to the excess of
(a) the aggregate Fair Market Value (on the date of the exercise of the
Independent Right) of a number of shares of Company stock equal to the number
of share equivalents in which the holder is vested under such Independent
Right, and with respect to which the holder is exercising the Independent Right
on such date, over (b) the aggregate Fair Market Value (on the date of the
grant of the Independent Right) of such number of shares of Company stock. The
appreciation distribution payable on the exercised Independent Right shall be
in cash or, if so provided, in an equivalent number of shares of stock based on
Fair Market Value on the date of the exercise of the Independent Right.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority
to effect, at any time and from time to time, (i) the repricing of any
outstanding Options and/or any Stock Appreciation Rights under the Plan and/or
(ii) with the consent of the affected holders of Options and/or Stock
Appreciation Rights, the cancellation of any outstanding Options and/or any
Stock Appreciation Rights under the Plan and the grant in substitution therefor
of new Options and/or Stock Appreciation Rights under the Plan covering the
same or different numbers of shares of stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value (one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option) or, in the case of a 10% stockholder (as described in subsection
5(b)), not less than one hundred ten percent (110%) of the Fair Market Value)
per share of stock on the new grant date. Notwithstanding the foregoing, the
Board or the Committee may grant an Option and/or Stock Appreciation Right with
an exercise price lower than that set forth above if such Option and/or Stock
Appreciation Right is granted as part of a transaction to which section 424(a)
of the Code applies.
(b) Shares subject to an Option or Stock Appreciation
Right canceled under this Section 9 shall continue to be counted against the
maximum award of Options and Stock Appreciation Rights permitted to be granted
pursuant to subsection 5(c) of the Plan. The repricing of an Option and/or
Stock Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original and
the substituted Options and Stock Appreciation Rights shall be counted against
the maximum awards of Options and Stock Appreciation Rights permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 9(b) shall be applicable only to the extent required by Section
162(m) of the Code.
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10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company
shall keep available at all times the number of shares of stock required to
satisfy such Stock Awards.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the Stock Award;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any Stock Award or any stock
issued or issuable pursuant to any such Stock Award. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
Stock Awards unless and until such authority is obtained.
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
12. MISCELLANEOUS.
(a) Neither an Employee, Director or Consultant nor any
person to whom a Stock Award is transferred under subsection 6(d), 7(b), or
8(b) shall be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to such Stock Award unless and until
such person has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.
(b) Throughout the term of any Stock Award, the Company
shall deliver to the holder of such Stock Award, not later than one hundred
twenty (120) days after the close of each of the Company's fiscal years during
the term of such Stock Award, a balance sheet and an income statement. This
subsection shall not apply when issuance is limited to key employees whose
duties in connection with the Company assure them access to equivalent
information.
(c) Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto shall confer upon any Employee, Director,
Consultant or other holder of Stock Awards any right to continue in the employ
of the Company or any Affiliate (or to continue acting as a Director or
Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment of any Employee with or without cause, the right of
the Company's Board of Directors and/or the Company's stockholders to remove
any Director as provided in the Company's By-Laws and the provisions of the
Delaware General Corporation Law or the right to terminate the relationship of
any Consultant subject to the terms of such Consultant's agreement with the
Company or Affiliate.
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(d) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which Incentive
Stock Options are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
(e) The Company may require any person to whom a Stock
Award is granted, or any person to whom a Stock Award is transferred pursuant
to subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring
stock under any Stock Award, (1) to give written assurances satisfactory to the
Company as to such person's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock
Award; and (2) to give written assurances satisfactory to the Company stating
that such person is acquiring the stock subject to the Stock Award for such
person's own account and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise or acquisition of stock under the Stock Award has been
registered under a then currently effective registration statement under the
Securities Act, or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award
Agreement, the person to whom a Stock Award is granted may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under a Stock Award by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise or acquisition of stock
under the Stock Award; or (3) delivering to the Company owned and unencumbered
shares of the common stock of the Company.
13. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the
Plan, or subject to any Stock Award (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the type(s) and maximum number of securities subject
to the Plan pursuant to subsection 4(a) and the maximum number of securities
subject to award to any person during any twelve (12) month
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period pursuant to subsection 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the type(s) and number of securities and price per
share of stock subject to such outstanding Stock Awards. Such adjustments
shall be made by the Board or the Committee, the determination of which shall
be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company".)
(b) In the event of: (1) a dissolution, liquidation or sale of
all or substantially all of the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation or (3) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) after the Listing Date, the acquisition
by any person, entity or group within the meaning of Section 13(d) or 14(d) of
the Exchange Act or any comparable successor provisions (excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company or any
Affiliate of the Company) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then: (i)
any surviving or acquiring corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar stock awards (including
an award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 13(b) for those outstanding under the
Plan, or (ii) in the event any surviving or acquiring corporation refuses to
assume such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan (A) with respect to Stock Awards held by persons
then performing services as Employees, Directors or Consultants, and subject to
any applicable provisions of the California Corporate Securities Law of 1968
and related regulations relied upon as a condition of issuing securities
pursuant to the Plan, the vesting of such Stock Awards (and, if applicable, the
time during which such Stock Awards may be exercised) shall be accelerated
prior to such event and the Stock Awards terminated if not exercised (if
applicable) after such acceleration and at or prior to such event, and (B) with
respect to any other Stock Awards outstanding under the Plan, such Stock Awards
shall be terminated if not exercised (if applicable) prior to such event.
14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 13 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:
(i) Increase the number of shares
reserved for Stock Awards under the Plan;
16
<PAGE> 17
(ii) Modify the requirements as to
eligibility for participation in the Plan (to the extent such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code); or
(iii) Modify the Plan in any other way if
such modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422 of the Code or to comply with the
requirements of Rule 16b-3.
(b) The Board may in its sole discretion submit any other
amendment to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m)
of the Code and the regulations promulgated thereunder regarding the exclusion
of performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees with the maximum benefits provided or to be provided under
the provisions of the Code and the regulations promulgated thereunder relating
to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock
Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may
amend the terms of any one or more Stock Award; provided, however, that the
rights and obligations under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the person to whom the
Stock Award was granted and (ii) such person consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on January 22, 2006,
which shall be within ten (10) years from the date the Plan is adopted by the
Board or approved by the stockholders of the Company, whichever is earlier. No
Stock Awards may be granted under the Plan while the Plan is suspended or after
it is terminated.
(b) Rights and obligations under any Stock Award granted
while the Plan is in effect shall not be impaired by suspension or termination
of the Plan, except with the written consent of the person to whom the Stock
Award was granted.
17
<PAGE> 18
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercised unless and until the
Plan has been approved by the stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted by
the Board, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.
18
<PAGE> 1
EXHIBIT 10.3
INCENTIVE STOCK OPTION
______________________, Optionee:
Aurora Biosciences Corporation (the "Company"), pursuant to its 1996
Stock Plan (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
employees (including officers), directors or consultants and is intended to
comply with the provisions of Rule 701 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act").
Defined terms not explicitly defined in this agreement but defined in the Plan
shall have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The
total number of shares of Common Stock subject to this option is
____________________ (__________).
2. VESTING. Subject to the limitations contained
herein, this option shall become exercisable (vest) with respect to each
installment shown below on or after the date of vesting applicable to such
installment, as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
------------------------------ -----------------------------------
<S> <C>
__________ __________, 199__
__________ The ___ day of each month thereafter,
commencing on ________, 199__ through and
including _________, 199__.
__________ __________, 199__
</TABLE>
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this
option is ___________ ($___________) per share, being not less than the fair
market value of the Common Stock on the date of grant of this option.
<PAGE> 2
(b) METHOD OF PAYMENT. Payment of the exercise price per
share is due in full upon exercise of all or any part of each installment which
has accrued to you. You may elect, to the extent permitted by applicable
statutes and regulations, to make payment of the exercise price under one of
the following alternatives:
(i) Payment of the exercise
price per share in cash (including check) at the time of exercise;
(ii) Payment pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve
Board which, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds;
(iii) Provided that at the time of
exercise the Company's Common Stock is publicly traded and quoted regularly in
the Wall Street Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market value
on the date of exercise; or
(iv) Payment by a combination of
the methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii)
above.
4. WHOLE SHARES. This option may not be exercised for any number
of shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
6. TERM. The term of this option commences on __________, 19__,
the date of grant, and expires on _____________________ (the "Expiration Date,"
which date shall be no more than ten (10) years from the date this option is
granted), unless this option expires sooner as set forth below or in the Plan.
In no event may this option be exercised on or after the Expiration Date. This
option shall terminate prior to the Expiration Date as follows: three (3)
months after the termination of your Continuous Status as an Employee, Director
or Consultant with the Company or an Affiliate of the Company for any reason or
for no reason unless:
(a) such termination of Continuous Status as an Employee,
Director or Consultant is due to your permanent and total disability as defined
in Section 422(c)(6) of the
<PAGE> 3
Code, in which event the option shall expire on the earlier of the Expiration
Date set forth above or twelve (12) months following such termination of
Continuous Status as an Employee, Director or Consultant; or
(b) such termination of Continuous Status as an Employee,
Director or Consultant is due to your death or your death occurs within three
(3) months following your termination of Continuous Status as an Employee,
Director or Consultant for any other reason, in which event the option shall
expire on the earlier of the Expiration Date set forth above or twelve (12)
months after your death; or
(c) during any part of such three (3) month period the
option is not exercisable solely because of the condition set forth in
paragraph 5 above, in which event the option shall not expire until the earlier
of the Expiration Date set forth above or until it shall have been exercisable
for an aggregate period of three (3) months after the termination of Continuous
Status as an Employee, Director or Consultant; or
(d) exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or with an Affiliate of the Company would result in liability
under section 16(b) of the Securities Exchange Act of 1934, in which case the
option will expire on the earlier of (i) the Expiration Date set forth above,
(ii) the tenth (10th) day after the last date upon which exercise would result
in such liability or (iii) six (6) months and ten (10) days after the
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or an Affiliate of the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions
of paragraph 2 of this option.
In order to obtain the federal income tax advantages associated with
an "incentive stock option," the Code requires that at all times beginning on
the date of grant of the option and ending on the day three (3) months before
the date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or permanent and
total disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option," particularly if you provide services to the Company or an
Affiliate of the Company as a consultant or exercise your option more than
three (3) months after the date your employment with the Company and all
Affiliates of the Company terminates.
7. REPRESENTATIONS. By executing this option agreement, you
hereby warrant and represent that you are acquiring this option for your own
account and that you have no intention of distributing, transferring or selling
all or any part of this option except in accordance with the terms of this
option agreement.
<PAGE> 4
8. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require
pursuant to Section 12(e) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion
of any exercise of this option, the Company may require you to enter an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (a) the exercise of
this option; (b) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (c) the disposition of shares
acquired upon such exercise;
(ii) you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of
the shares of the Common Stock issued upon exercise of this option that occurs
within two (2) years after the date of this option grant or within one (1) year
after such shares of Common Stock are transferred upon exercise of this option;
and
(iii) the Company (or a representative of
the underwriters) may, in connection with the first underwritten registration
of the offering of any securities of the Company under the Act, require that
you not sell or otherwise transfer or dispose of any shares of Common Stock or
other securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date of the registration statement
of the Company filed under the Act as may be requested by the Company or the
representative of the underwriters. You further agree that the Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.
9. TRANSFERABILITY. This option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a
third party who, in the event of your death, shall thereafter be entitled to
exercise this option.
10. OPTION NOT A SERVICE CONTRACT. This option is not an
employment contract and nothing in this option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate of
the Company, or their respective stockholders, Board
<PAGE> 5
of Directors, officers or employees to continue any relationship which you
might have as a Director or Consultant for the Company or Affiliate of the
Company.
11. NOTICES. Any notices provided for in this option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the
address specified below or at such other address as you hereafter designate by
written notice to the Company.
12. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
AURORA BIOSCIENCES CORPORATION
By______________________________________
Duly authorized
on behalf of the Board of
Directors
ATTACHMENTS:
Aurora Biosciences Corporation 1996 Stock Plan
Notice of Exercise
<PAGE> 6
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this
option, it sets forth the entire understanding between the undersigned optionee
and the Company and its Affiliates regarding the acquisition of stock in the
Company and supersedes all prior oral and written agreements on that subject
with the exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the following
agreements only:
NONE _________________________
(Initial)
OTHER _________________________________
_________________________________
_________________________________
____________________________________
OPTIONEE
Address:____________________________
____________________________
<PAGE> 1
EXHIBIT 10.4
NONSTATUTORY STOCK OPTION
_______________________, Optionee:
Aurora Biosciences Corporation (the "Company"), pursuant to its 1996
Stock Plan (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is not intended to qualify and will not be treated as an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
employees (including officers), directors or consultants and is intended to
comply with the provisions of Rule 701 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act").
Defined terms not explicitly defined in this agreement but defined in the Plan
shall have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The
total number of shares of Common Stock subject to this option is
___________________ (_______).
2. VESTING. Subject to the limitations contained
herein, this option shall become exercisable (vest) with respect to each
installment shown below on or after the date of vesting applicable to such
installment, as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
------------------------------ -----------------------------------
<S> <C>
__________ __________, 199__
__________ The ___ day of each month thereafter,
commencing on ________, 199__ through and
including _________, 199__.
__________ __________, 199__
</TABLE>
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this
option is _________________ ($____________) per share, being not less than 85%
of the fair market value of the Common Stock on the date of grant of this
option.
(b) METHOD OF PAYMENT. Payment of the exercise
price per share is due in full upon exercise of all or any part of each
installment which has accrued to you. You may elect, to the extent permitted
by applicable statutes and regulations, to make payment of the exercise price
under one of the following alternatives:
<PAGE> 2
(i) Payment of the exercise
price per share in cash (including check) at the time of exercise;
(ii) Payment pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve
Board which, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds;
(iii) Provided that at the time of
exercise the Company's Common Stock is publicly traded and quoted regularly in
the Wall Street Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market value
on the date of exercise; or
(iv) Payment by a combination of
the methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii)
above.
4. WHOLE SHARES. This option may not be exercised for any number
of shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
6. TERM. The term of this option commences on ___________, 19__,
the date of grant, and expires on _____________________ (the "Expiration Date,"
which date shall be no more than ten (10) years from the date this option is
granted), unless this option expires sooner as set forth below or in the Plan.
In no event may this option be exercised on or after the Expiration Date. This
option shall terminate prior to the Expiration Date as follows: three (3)
months after the termination of your Continuous Status as an Employee, Director
or Consultant with the Company or an Affiliate of the Company for any reason or
for no reason unless:
(a) such termination of Continuous Status as an Employee,
Director or Consultant is due to your permanent and total disability as defined
in Section 422(c)(6) of the Code, in which event the option shall expire on the
earlier of the Expiration Date set forth above or twelve (12) months following
such termination of Continuous Status as an Employee, Director or Consultant;
or
<PAGE> 3
(b) such termination of Continuous Status as an Employee,
Director or Consultant is due to your death or your death occurs within three
(3) months following termination of your Continuous Status as an Employee,
Director or Consultant for any other reason, in which event the option shall
expire on the earlier of the Expiration Date set forth above or twelve (12)
months after your death; or
(c) during any part of such three (3) month period the
option is not exercisable solely because of the condition set forth in
paragraph 5 above, in which event the option shall not expire until the earlier
of the Expiration Date set forth above or until it shall have been exercisable
for an aggregate period of three (3) months after the termination of Continuous
Status as an Employee, Director or Consultant; or
(d) exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or with an Affiliate of the Company would result in liability
under section 16(b) of the Securities Exchange Act of 1934 (the "Exchange
Act"), in which case the option will expire on the earlier of (i) the
Expiration Date set forth above, (ii) the tenth (10th) day after the last date
upon which exercise would result in such liability or (iii) six (6) months and
ten (10) days after the termination of your Continuous Status as an Employee,
Director or Consultant with the Company or an Affiliate of the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions
of paragraph 2 of this option.
7. REPRESENTATION. By executing this option agreement, you
hereby warrant and represent that you are acquiring this option for your own
account and that you have no intention of distributing, transferring or selling
all or any part of this option except in accordance with the terms of this
option agreement.
8. EXERCISE.
(a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subsection 12(e) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion
of any exercise of this option, the Company may require you to enter an
arrangement providing for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of: (1) the exercise of
this option; (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (3) the disposition of shares
acquired upon
<PAGE> 4
such exercise. You also agree that any exercise of this option has not been
completed and that the Company is under no obligation to issue any Common Stock
to you until such an arrangement is established or the Company's tax
withholding obligations are satisfied, as determined by the Company; and
(ii) the Company (or a representative of
the underwriters) may, in connection with the first underwritten registration
of the offering of any securities of the Company under the Act, require that
you not sell or otherwise transfer or dispose of any shares of Common Stock or
other securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may be requested
by the Company or the representative of the underwriters. You further agree
that the Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such period.
9. TRANSFERABILITY. This option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may designate a
third party who, in the event of your death, shall thereafter be entitled to
exercise this option.
10. OPTION NOT A SERVICE CONTRACT. This option is not an
employment contract and nothing in this option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate of
the Company, or their respective stockholders, Board of Directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
11. NOTICES. Any notices provided for in this option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the
address specified below or at such other address as you hereafter designate by
written notice to the Company.
<PAGE> 5
GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
AURORA BIOSCIENCES CORPORATION
By______________________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Aurora Biosciences Corporation 1996 Stock Plan
Notice of Exercise
<PAGE> 6
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it
sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company
and supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the following
agreements only:
NONE _________________
(Initial)
OTHER _______________________________
_______________________________
_______________________________
________________________________________
OPTIONEE
Address:
______________________________
_______________________________
<PAGE> 1
EXHIBIT 10.5
AURORA BIOSCIENCES CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of _____________ in San Diego, California,
between AURORA BIOSCIENCES CORPORATION, a Delaware corporation (the "Company"),
and __________________________ (the "Purchaser").
WHEREAS, the Purchaser is an employee, director or consultant of the
Company and the Purchaser's continued service to the Company is considered by
the Company to be important for the Company's continued growth; and
WHEREAS, in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Company is willing to sell to the Purchaser
and the Purchaser desires to purchase shares of Common Stock according to the
terms and conditions contained in the Company's 1996 Stock Plan and herein; and
WHEREAS, the issuance of Common Stock hereunder is in connection with
and in furtherance of the Company's compensatory benefit plan for participation
of the Company's employees, directors, officers, consultants and advisors and
is intended to comply with the provisions of Rule 701 promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act").
NOW, THEREFORE, the parties agree as follows:
1. SALE OF STOCK. The Company hereby agrees to sell to the
Purchaser and the Purchaser hereby agrees to purchase an aggregate of ______
shares of the Company's Common Stock (the "Shares"), at the price of _____ per
share for an aggregate purchase price of _________.
2. PAYMENT OF PURCHASE PRICE. The purchase price for the Shares
shall be paid by delivery to the Company at the time of execution of this
Agreement of cash or check in the amount of the aggregate purchase price, and
the Company shall immediately issue and deliver to Purchaser a share
certificate in accordance with the terms of this Agreement.
3. REPURCHASE OPTION. In the event of any termination of the
Purchaser's employment by or services to the Company for any or no reason
(including death or disability) before all of the Shares are released from the
Company's repurchase option
1
<PAGE> 2
(see Section 4), the Company shall, upon the date of such termination (as
reasonably fixed and determined by the Company) have an irrevocable, exclusive
option for a period of 90 days (or such longer period of time either mutually
agreed to by Purchaser and the Company or determined by the Company in good
faith to be necessary to avoid the loss of "qualified small business stock"
treatment under section 1202 of the Internal Revenue Code for any stockholder
other than the Purchaser) from such date to repurchase some or all of the
Unreleased Shares (as defined in Section 4) at such time at the original
purchase price per share (the "Repurchase Price"). Said option shall be
exercised by the Company by written notice to the Purchaser or the Purchaser's
executor (with a copy to the Escrow Holder, as defined in Section 6) and, at
the Company's option, (i) by delivery to the Purchaser or the Purchaser's
executor with such notice of a check in the amount of the purchase price for
the Shares being repurchased, or (ii) by cancellation by the Company of an
amount of any Purchaser's indebtedness to the Company equal to the purchase
price for the Shares being repurchased, or (iii) by a combination of (i) and
(ii) so that the combined payment and cancellation of indebtedness equals such
repurchase price. Upon delivery of such notice and the payment of the purchase
price in any of the ways described above, the Company shall become the legal
and beneficial owner of the Shares being repurchased and all rights and
interests therein or relating thereto, and the Company shall have the right to
retain and transfer to its own name the number of Shares being repurchased by
the Company.
4. RELEASE OF SHARES FROM REPURCHASE OPTION.
(a) The number of Shares to be released from the
Company's repurchase option, and the timing thereof, is set forth in a schedule
attached hereto as Exhibit A, provided that, as to each incremental period
resulting in the release of Shares from such repurchase option, that the
Purchaser's employment or services have not been terminated prior to the date
of any such release.
(b) Any of the Shares which have not yet been released
from the Company's repurchase option are referred to herein as "Unreleased
Shares".
(c) The Shares which (i) have been released from the
Company's repurchase option, (ii) have been paid for in full, and (iii) no
longer secure Shares not yet paid for in full, shall be delivered to the
Purchaser at the Purchaser's request (see Section 6).
5. RESTRICTIONS ON TRANSFER.
(a) Except for the escrow described in Section 6, none of
the Shares or any beneficial interest therein shall be transferred, encumbered
or otherwise disposed of
2
<PAGE> 3
in any manner until the release of such Shares from the Company's repurchase
option in accordance with the provisions of this Agreement.
(b) The Shares may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred in the absence of an effective
registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to such Shares or an opinion of counsel
reasonably acceptable to the Company that such registration is not required. The
Company shall not be required to transfer on its books any portion of such
Shares purchased hereunder which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement, or to treat as
the owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
(c) The Purchaser hereby agrees that if so requested by
the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under Section 7 of
the Securities Act, the Purchaser shall not sell, transfer or otherwise dispose
of any Shares or other securities of the Company during a period of up to 180
days (as specified by such representative) following the effective date of a
registration statement of the Company filed under the Securities Act; provided,
however, that such restriction shall only apply to the first two registration
statements of the Company to become effective under the Securities Act which
include securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such 180-day period.
(d) The Shares are subject to a Right of First Refusal as
set forth in Article XIV of the Company's Bylaws.
6. ESCROW OF SHARES. The Shares issued under this Agreement
shall be held by an escrow holder designated by the Company (the "Escrow
Holder"), along with a stock assignment executed by the Purchaser in blank in
the form attached hereto as Exhibit B, pursuant to the terms of the Joint
Escrow Instructions attached hereto as Exhibit C.
7. ADJUSTMENT FOR STOCK SPLIT. All references to the number of
Shares and the purchase price of the Shares in this Agreement shall be
appropriately adjusted to reflect any stock split, stock dividend or other
change in the Shares which may be made by the Company after the date of this
Agreement.
8. TAX CONSEQUENCES. The Purchaser has reviewed with the
Purchaser's own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement. The Purchaser is relying solely on such
3
<PAGE> 4
advisors and not on any statements or representations of the Company or any of
its agents. The Purchaser understands that the Purchaser (and not the Company)
shall be responsible for the Purchaser's own tax liability that may arise as a
result of this investment or the transactions contemplated by this Agreement.
The Purchaser understands that Section 83 of the Internal Revenue Code of 1986,
as amended (the "Code"), taxes as ordinary income both (i) the difference
between the fair market value of the Shares when the Company granted the
Purchaser the right to purchase the Shares and the fair market value of the
Shares on the date of this Agreement, and (ii) the difference between the
amount paid for the Shares and the fair market value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "restriction"
includes the right of the Company to buy back the Shares pursuant to its
repurchase option. In the event the Company has registered under the Exchange
Act, "restriction" with respect to officers, directors and 10% shareholders
also means the period after the purchase of the Shares during which such
officers, directors and 10% shareholders could be subject to suit under Section
16(b) of the Exchange Act. The Purchaser understands that the Purchaser may
elect to be taxed at the time the Shares are purchased rather than when and as
the Company's repurchase option or 16(b) period expires by filing an election
under Section 83(b) of the Code with the I.R.S. within 30 days from the date of
purchase. A form of election under Section 83(b) is attached as Exhibit D
hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE RESPONSIBILITY AND
NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE
PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE PURCHASER'S BEHALF.
9. GENERAL PROVISIONS.
(a) The rights and benefits of the Company under this
Agreement shall be transferable to any one or more persons or entities, and all
covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by the Company's successors and assigns. The rights and
obligations of the Purchaser under this Agreement may only be assigned with the
prior written consent of the Company.
(b) Any notice, demand or request required or permitted
to be given by either the Company or the Purchaser pursuant to the terms of
this Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. Mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end
of this Agreement or such other address as a party may request by notifying the
other in writing.
4
<PAGE> 5
(c) Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights granted
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
(d) The Purchaser agrees upon request to execute any
further documents or instruments necessary or desirable to carry out the
purposes or intent of this Agreement.
(e) Purchaser acknowledges that it is aware that the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Act") and that the Shares are deemed to constitute "restricted
securities" under Rule 144 and Rule 701 promulgated under the Act. In this
connection, Purchaser warrants and represents to the Company that Purchaser is
purchasing the Shares for Purchaser's own account and Purchaser has no present
intention of distributing or selling said Shares except as permitted under the
Act and Section 25102(f) of the California Corporations Code. Purchaser
further warrants and represents that Purchaser has either (i) preexisting
personal or business relationships with the Company or any of its officers,
directors or controlling persons, or (ii) the capacity to protect its own
interests in connection with the purchase of the Shares by virtue of the
business or financial expertise of Purchaser or of any professional advisors to
Purchaser who are unaffiliated with and who are not compensated by the Company
or any of its affiliates, directly or indirectly. Purchaser further
acknowledges that the exemption from registration under Rule 144 will not be
available for at least three years from the date of sale of the Shares unless
at least two years from the date of sale (i) a public trading market then
exists for the Common Stock of the Company, (ii) adequate information
concerning the Company is then available to the public, and (iii) other terms
and conditions of Rule 144 are complied with; and that any sale of the Shares
may be made only in limited amounts in accordance with such terms and
conditions.
(f) All certificates representing any shares of Common
Stock of the Company subject to the provisions of this Agreement shall have
endorsed thereon legends in substantially the following form:
(i) The securities represented by this
certificate have not been registered under the Act. They may not be sold or
offered for sale or otherwise distributed unless the securities are registered
under the Act or an exemption therefrom is available.
5
<PAGE> 6
(ii) Any other legend required to be placed
thereon by the Company's Bylaws or applicable state, federal or foreign
securities laws.
(g) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN
EMPLOYEE, DIRECTOR OR CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH
PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE PURCHASER'S EMPLOYMENT AT
ANY TIME, WITH OR WITHOUT CAUSE.
(h) Purchaser has reviewed this Agreement in its
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of this
Agreement.
(i) PURCHASER ACKNOWLEDGES THAT THIS AGREEMENT SETS FORTH
THE ENTIRE UNDERSTANDING BETWEEN THE COMPANY AND PURCHASER REGARDING SHARES OF
THE COMPANY'S SECURITIES, AND THIS AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS
AND/OR UNDERSTANDINGS REGARDING THE SAME.
IN WITNESS WHEREO, the parties have duly executed this Agreement as of
the day and year first set forth above.
AURORA BIOSCIENCES CORPORATION PURCHASER:
By: __________________________ __________________________
6
<PAGE> 7
CONSENT OF SPOUSE
I, __________________________________, spouse of ,
have read and approve the foregoing Agreement. In consideration of granting
of the right to my spouse to purchase shares of Aurora Biosciences Corporation,
as set forth in the Agreement, I hereby appoint my spouse as my
attorney-in-fact in respect to the exercise of any rights under the Agreement
and agree to be bound by the provisions of the Agreement insofar as I may have
any rights in said Agreement or any shares issued pursuant thereto under the
community property laws of the State of California or similar laws relating to
marital property in effect in the state of our residence as of the date of the
signing of the foregoing Agreement.
Dated:
_______________________________
<PAGE> 8
EXHIBIT A
REPURCHASE OPTION -- RELEASE SCHEDULE
The number of Shares subject to the Company's repurchase option shall be
released in accordance with the following schedule:
<PAGE> 9
EXHIBIT B
AURORA BIOSCIENCES CORPORATION
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, hereby sells, assigns and
transfers unto AURORA BIOSCIENCES CORPORATION, a Delaware Corporation (the
"Company"), pursuant to the Repurchase Option under that certain Restricted
Stock Purchase Agreement dated by and between the undersigned and
the Company (the "Agreement"), shares of Common Stock of Aurora
Biosciences Corporation, a Delaware corporation (the "Company") standing in the
undersigned's name on the books of the Company represented by Certificate No.
and does hereby irrevocably constitute and appoint the Secretary of the
Company attorney to transfer said stock on the books of the Company with full
power of substitution in the premises. This Assignment may be used only in
accordance with and subject to the terms and conditions of the Agreement, in
connection with the repurchase of shares of Common Stock issued to the
undersigned pursuant to the Agreement, and only to the extent that such shares
remain subject to the Company's Repurchase Option under the Agreement.
Dated: ________________________
________________________________
(Signature)
<PAGE> 10
EXHIBIT C
AURORA BIOSCIENCES CORPORATION
JOINT ESCROW INSTRUCTIONS
President
Aurora Biosciences Corporation
11149 North Torrey Pines Road
La Jolla, CA 92037
Dear Sir:
As Escrow Agent for both Aurora Biosciences Corporation, a Delaware
corporation (the "Company"), and the undersigned purchaser of stock of the
Company ("Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement ("Agreement"), dated to which a copy
of these Joint Escrow Instructions is attached as Exhibit C, in accordance
with the following instructions:
1. In the event the Company or an assignee shall elect to
exercise the Repurchase Option set forth in the Agreement, the Company or its
assignee will give to Purchaser and you a written notice specifying the number
of shares of stock to be purchased, the purchase price, and the time for a
closing hereunder at the principal office of the Company. Purchaser and the
Company hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
2. At the closing you are directed (a) to date any stock
assignments necessary for the transfer in question, (b) to fill in the number
of shares being transferred, and (c) to deliver same, together with the
certificate evidencing the shares of stock to be transferred, to the Company
against the simultaneous delivery to you of the purchase price (which may
include suitable acknowledgment of cancellation of indebtedness) of the number
of shares of stock being purchased pursuant to the exercise of the Repurchase
Option.
3. Purchaser irrevocably authorizes the Company to deposit with
you any certificates evidencing shares of stock to be held by you hereunder and
any additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as her
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of
<PAGE> 11
assignment and/or transfer and all stock certificates necessary or appropriate
to make all securities negotiable and complete any transaction herein
contemplated.
4. This escrow shall terminate upon expiration or exercise in
full of the Repurchase Option, whichever occurs first.
5. If at the time of termination of this escrow you should have
in your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be discharged
of all further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Company that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Company.
6. Except at otherwise provided in these Joint Escrow
Instructions, your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties or their assignees. You shall not be personally liable for any act you
may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for
Purchaser while acting in good faith and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or decree
of any court, you shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such compliance, notwithstanding
any such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without
jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights under
any statute of limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.
<PAGE> 12
11. You shall be entitled to employ such legal counsel (including
without limitation the firm of Cooley, Godward, Castro, Huddleson & Tatum) and
other experts as you may deem necessary properly to advise you in connection
with your obligations hereunder, may rely upon the advice of such counsel, and
may pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be President of the Company or if you shall
resign by written notice to each party. In the event of any such termination,
the Company may appoint any officer or assistant officer of the Company as
successor Escrow Agent and Purchaser hereby confirms the appointment of such
successor or successors as his attorney-in-fact and agent to the full extent of
your appointment.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you may (but are not obligated to) retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or
defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Box, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties hereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' written notice to each of the other parties hereto:
COMPANY: AURORA BIOSCIENCES CORPORATION
11149 North Torrey Pines Road
La Jolla, CA 92037
PURCHASER:
<PAGE> 13
PRESIDENT: AURORA BIOSCIENCES CORPORATION
11149 North Torrey Pines Road
La Jolla, CA 92037
16. By signing these Joint Escrow Instructions you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
It is understood and agreed that references to "you" or "your" herein refer to
the original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Company may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
Very truly yours,
AURORA BIOSCIENCES CORPORATION
By____________________________________
PURCHASER:
______________________________________
ESCROW AGENT:
______________________________________
<PAGE> 1
Exhibit 10.6
AURORA BIOSCIENCES CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
ADOPTED FEBRUARY 4, 1997
(SHARE NUMBERS HEREIN HAVE NOT BEEN ADJUSTED TO REFLECT THE FOUR
FOR FIVE REVERSE STOCK SPLIT TO BE EFFECTED PRIOR TO THE OFFERING)
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of Aurora Biosciences Corporation, a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board,
1.
<PAGE> 2
subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate five hundred thousand (500,000)
shares of the Company's common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges. The provisions of separate Offerings
need not be identical, but each Offering shall include (through incorporation of
the provisions of this Plan by reference in the Offering or otherwise) the
period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee is in
the employ of the Company and has been in the employ of the Company or any
Affiliate for such continuous period preceding such grant as the Board or the
Committee may require, but in no event shall the required period of continuous
employment be greater than two (2) years. In addition, unless otherwise
determined by the Board or the Committee and set forth in the terms of the
applicable Offering, no employee of the Company or any Affiliate shall be
eligible to be granted rights under the Plan, unless, on the Offering Date, such
employee's customary employment with the Company or such Affiliate is for at
least twenty (20) hours per week and at least five (5) months per calendar year.
(b) Each person who, during the course of an Offering, first becomes an
eligible employee of the Company or designated Affiliate shall not be eligible
to be granted rights under such Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph
2.
<PAGE> 3
5(c), the rules of Section 424(d) of the Code shall apply in determining the
stock ownership of any employee, and stock which such employee may purchase
under all outstanding rights and options shall be treated as stock owned by such
employee.
(d) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's rights to purchase stock of the Company
or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of fair market value of such stock (determined at the time such rights
are granted) for each calendar year in which such rights are outstanding at any
time.
(e) Officers of the Company and any designated Affiliate shall be eligible
to participate in Offerings under the Plan, provided, however, that the Board
may provide in an Offering that certain employees who are highly compensated
employees within the meaning of Section 423(b)(4)(D) of the Code shall not be
eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase up to the number of
shares of Common Stock of the Company purchasable with a percentage designated
by the Board or the Committee not exceeding fifteen percent (15%) of such
employee's Earnings (as defined in subparagraph 7(a)) during the period which
begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no later than the end of the Offering. The Board
or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock effected in accordance with such Offering.
(b) In connection with each Offering made under this Plan, the Board or
the Committee shall specify a maximum number of shares which may be purchased by
any employee as well as a maximum aggregate number of shares which may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering which contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted under
the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant to
an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides; provided,
however, that an eligible employee shall be entitled to participate in no more
than one (1) Offering at any time. Each such agreement shall authorize payroll
deductions of up to the maximum percentage specified by the Board or the
Committee of such employee's Earnings during the Offering. "Earnings" is defined
as an employee's regular salary or wages (including amounts thereof elected to
be deferred by the employee, that would otherwise have been paid, under any cash
or deferred arrangement established by the Company), which shall include
commissions and overtime pay, but shall exclude bonuses, incentive pay, profit
sharing, other remuneration
3.
<PAGE> 4
paid directly to the employee, the cost of employee benefits paid for by the
Company or an Affiliate, education or tuition reimbursements, imputed income
arising under any group insurance or benefit program, traveling expenses,
business and moving expense reimbursements, income received in connection with
stock options, contributions made by the Company or an Affiliate under any
employee benefit plan, and similar items of compensation. The payroll deductions
made for each participant shall be credited to an account for such participant
under the Plan and shall be deposited with the general funds of the Company or
an Affiliate. A participant may reduce (including to zero) such payroll
deductions after the beginning of any Offering only as provided for in the
Offering. A participant may not increase such payroll deductions during the
course of an Offering. A participant may not make additional payments into his
or her account.
(b) At any time during an Offering, a participant may terminate his or her
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Offering except as
provided by the Board or the Committee in the Offering. Upon such withdrawal
from the Offering by a participant, the Company shall distribute to such
participant all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating employee's employment with the
Company and any designated Affiliate, for any reason, and the Company shall
distribute to such terminated employee all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable, and, except
as provided in paragraph 14, shall be exercisable only by the person to whom
such rights are granted.
8. EXERCISE.
(a) On each date specified therefor in the relevant Offering ("Purchase
Date"), each participant's accumulated payroll deductions and other additional
payments specifically provided for in the Offering (without any increase for
interest) will be applied to the purchase of whole shares of stock of the
Company, up to the maximum number of shares permitted pursuant to the terms of
the Plan and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares shall be issued upon the exercise of rights
granted under the Plan. The amount, if any, of accumulated payroll deductions
remaining in each participant's account after the purchase of shares on the
final Purchase Date of an Offering shall be distributed to the participant after
such final Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent unless
the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Plan is in material compliance with all applicable
state, foreign and other securities and other laws applicable to the Plan. If on
a Purchase Date in any Offering hereunder the Plan is not so registered, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and in such compliance, except that
the Purchase Date shall not be delayed more than twelve (12) months and the
Purchase Date shall in no event be more than twenty-seven (27) months from the
Offering Date. If on the Purchase Date of any Offering hereunder, as delayed to
the maximum extent permissible, the Plan is not registered and in such
compliance, no rights granted under the Plan or any Offering shall be exercised
and all payroll deductions accumulated during the Offering (reduced to the
extent, if any, such deductions have been used to acquire stock) shall be
distributed to the participants, without interest.
4.
<PAGE> 5
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's stockholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
rights will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, as determined by the Board in its sole discretion (i)
any surviving corporation may assume outstanding rights or substitute similar
rights for those under the Plan, (ii) such rights may continue in full force and
effect, or (iii) participants' accumulated payroll deductions may be used to
purchase Common Stock immediately prior to the transaction described above and
the participants' rights under the ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to obtain employee stock purchase plan treatment
5.
<PAGE> 6
under Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule
16b-3")); or
(iii) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements
of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted or except as necessary to
comply with any laws or governmental regulation.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to him of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No rights may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except as
expressly provided in the Plan or with the consent of the person to whom such
rights were granted or except as necessary to comply with any laws or
governmental regulation.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the effectiveness of the Company's
initial public offering of shares of common stock, but no rights granted under
the Plan shall be exercised unless and until the Plan has been approved by the
stockholders of the Company.
6.
<PAGE> 7
AURORA BIOSCIENCES CORPORATION
EMPLOYEE STOCK PURCHASE PLAN OFFERING
1. GRANT; OFFERING DATE.
(a) The Board of Directors of Aurora Biosciences Corporation (the
"Company"), pursuant to the Company's Employee Stock Purchase Plan (the
"Plan"), hereby authorizes the grant of rights to purchase shares of the common
stock of the Company ("Common Stock") to all Eligible Employees (an
"Offering"). The first Offering shall begin simultaneously with the initial
public offering of the Company's Common Stock, or the effective date of such
initial public offering (the "Effective Date") and end on April 30, 1999 (the
"Initial Offering"). Thereafter, an Offering shall begin on May 1st, every
year, beginning with calendar year 1998, and shall end on the day prior to the
second anniversary of its Offering Date.
(b) Prior to the commencement of any Offering, the Board of
Directors (or the Committee described in subparagraph 2(c) of the Plan, if any)
may change any or all terms of such Offering and any subsequent Offerings. The
granting of rights pursuant to each Offering hereunder shall occur on each
respective Offering Date unless, prior to such date (a) the Board of Directors
(or such Committee) determines that such Offering shall not occur, or (b) no
shares remain available for issuance under the Plan in connection with the
Offering.
2. ELIGIBLE EMPLOYEES.
(a) All employees of the Company and each of its Affiliates (as
defined in the Plan) incorporated in the United States shall be granted rights
to purchase Common Stock under each Offering on the Offering Date of such
Offering (an "Eligible Employee"); provided, however, that an Eligible Employee
shall be entitled to participate in no more than one (1) Offering at any time.
Notwithstanding the foregoing, no employee who is disqualified by subparagraph
5(c) or 5(d) of the Plan shall be an Eligible Employee or be granted rights
under an Offering. An employee need not otherwise satisfy the employment
requirements of subparagraph 5(a) of the Plan (that is, an employee need not be
in the employ of the Company for any continuous period, nor customarily
employed for at least twenty (20) hours per week and at least five (5) months
per calendar year) to be an Eligible Employee granted rights under the
Offering.
(b) Each person who, with respect to any Offering, first becomes
an Eligible Employee subsequent to the Offering Date of such Offering, shall
not receive any right under such Offering.
3. RIGHTS.
(a) Subject to the limitations contained herein and in the Plan,
on each Offering Date each Eligible Employee shall be granted the right to
purchase the number of shares of Common Stock purchasable with up to fifteen
percent (15%) of such employee's Earnings paid during the period of such
Offering beginning after such Eligible Employee first commences participation;
provided, however, that no employee may purchase Common Stock in a particular
year with more than fifteen percent (15%) of such employee's Earnings in such
year under all ongoing Offerings under the Plan and all other Company plans
intended to qualify as "employee stock purchase plans" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). "Earnings" for this
purpose means an employee's regular salary or wages (including amounts the
employee elected to defer, but which would otherwise have been paid under a
401(k) plan or similar arrangement), commissions and overtime pay. The maximum
number of shares of Common Stock an Eligible Employee may purchase on any
Purchase Date in an Offering shall be such number of shares as has a fair
market value (determined as of the Offering Date for such Offering) equal to
(x) $25,000 multiplied by the number of calendar years in which the right under
such Offering has been outstanding at any time, minus (y) the fair market value
of any other shares of Common Stock (determined as of the relevant Offering
Date with respect to such shares) which, for purposes of the limitation of
Section 423(b)(8) of the Code, are attributed to any of such calendar years in
which the right is outstanding. The amount in clause (y) of the previous
sentence shall be determined in accordance with regulations applicable under
Section 423(b)(8) of the Code based on (i) the number of shares previously
purchased with respect to such calendar years
<PAGE> 8
pursuant to such Offering or any other Offering under the Plan, or pursuant to
any other Company plans intended to qualify as "employee stock purchase plans"
under Section 423 of the Code, and (ii) the number of shares subject to other
rights outstanding on the Offering Date for such Offering pursuant to the Plan
or any other such Company plan.
(b) The maximum aggregate number of shares available to be
purchased by all Eligible Employees under an Offering on any Purchase Date
shall be the number of shares remaining available under the Plan on the
applicable Purchase Date. If the aggregate purchase of shares of Common Stock
upon exercise of rights granted under the Offering would exceed the maximum
aggregate number of shares available, the Board shall make a pro rata
allocation of the shares available in a uniform and equitable manner.
4. PURCHASE PRICE.
The purchase price of the Common Stock under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Common
Stock on the Offering Date or eighty-five percent (85%) of the fair market
value of the Common Stock on the Purchase Date, in each case rounded up to the
nearest whole cent per share. For the Initial Offering, the fair market value
of the Common Stock at the time when the Offering commences shall be the price
per share at which shares of Common Stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering. As otherwise used herein, "fair market value" means,
as of any date, the value of the common stock of the Company determined as
follows:
(i) If the common stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market, the fair market value of a share of common stock shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day
prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Board deems reliable;
(ii) If the common stock is quoted on Nasdaq (but not on
the National Market thereof) or is regularly quoted by a recognized securities
dealer but selling prices are not reported, the fair market value of a share of
common stock shall be the mean between the bid and asked prices for the common
stock on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the Board deems
reliable;
(iii) In the absence of an established market for the
common stock, the fair market value shall be determined in good faith by the
Board.
5. PARTICIPATION.
(a) An Eligible Employee may elect to participate in an Offering
only on the Offering Date. An Eligible Employee shall become a participant in
an Offering by delivering an agreement authorizing payroll deductions. Such
deductions may be in whole percentages only, with a minimum percentage of one
percent (1%), and a maximum percentage of fifteen percent (15%). A participant
may not make additional payments into his or her account. The agreement shall
be made on such enrollment form as the Company provides, and must be delivered
to the Company before the Offering Date to be effective for that Offering,
unless a later time for filing the enrollment form is set by the Board for all
Eligible Employees with respect to a given Offering Date. As to the Initial
Offering, the time for filing an enrollment form and commencing participation
for individuals who are Eligible Employees on the Offering Date for the Initial
Offering shall be determined by the Company and communicated to such Eligible
Employees.
(b) A participant may not increase his or her participation level
during the course of an Offering. A participant may reduce (including to zero)
his or her participation level only once during any six month period ending on
a Purchase Date by delivering a notice to the Company in such form and at such
time as the Company provides. Notwithstanding the foregoing, a participant may
make a second reduction during such six month period if such second reduction
is to zero. A participant may withdraw from an Offering and receive his or her
<PAGE> 9
accumulated payroll deductions from the Offering (reduced to the extent, if
any, such deductions have been used to acquire Common Stock for the participant
on any prior Purchase Dates), without interest, at any time prior to the end of
the Offering by delivering a withdrawal notice to the Company in such form as
the Company provides.
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date,
each participant's accumulated payroll deductions (without any increase for
interest) shall be applied to the purchase of whole shares of Common Stock, up
to the maximum number of shares permitted under the Plan and the Offering.
"Purchase Date" shall be defined as each April 30 (excluding April 30, 1997)
and October 31.
7. TERMINATION.
Rights granted under the Offering shall terminate immediately upon
cessation of any participating employee's employment with the Company and any
designated Affiliate, for any reason, and the Company shall distribute to such
terminated employee all of his or her accumulated payroll deductions (reduced
to the extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.
8. NOTICES AND AGREEMENTS.
Any notices or agreements provided for in an Offering or the Plan
shall be given in writing, in a form provided by the Company, and unless
specifically provided for in the Plan or this Offering shall be deemed
effectively given upon receipt or, in the case of notices and agreements
delivered by the Company, five (5) days after deposit in the United States
mail, postage prepaid.
9. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The rights granted under an Offering are subject to the approval of
the Plan by the stockholders as required for the Plan to obtain treatment as a
tax-qualified employee stock purchase plan under Section 423 of the Code and to
comply with the requirements of the exemption from potential liability under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), set forth in Rule 16b-3 promulgated under the Exchange Act.
10. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to
all interpretations, amendments, rules and regulations which may from time to
time be promulgated and adopted pursuant to the Plan. In the event of any
conflict between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan), the provisions of the Plan
shall control.
<PAGE> 1
EXHIBIT 10.7
AURORA BIOSCIENCES CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON FEBRUARY 10, 1997
(SHARE NUMBERS HEREIN HAVE NOT BEEN ADJUSTED TO REFLECT THE FOUR FOR
FIVE REVERSE STOCK SPLIT TO BE EFFECTED PRIOR TO THE OFFERING)
1. PURPOSE.
(a) The purpose of the Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which certain directors of Aurora
Biosciences Corporation, a Delaware corporation (the "Company"), who are not
otherwise employees of the Company or of any Affiliate of the Company
("Non-Employee Directors"), will be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of certain persons now serving as Non-Employee Directors of the
Company, to secure and retain the services of persons capable of serving in
such capacity, and to provide incentives for such persons to exert maximum
efforts for the success of the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of
the Company (the "Board") unless and until the Board delegates administration
to a committee, as provided in subparagraph 2(b).
(b) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members of the Board (the
"Committee"). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate three hundred
thousand (300,000) shares of the
1.
<PAGE> 2
Company's common stock. If any option granted under the Plan shall for any
reason expire or otherwise terminate without having been exercised in full, the
stock not purchased under such option shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the
Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who, upon the effective date of the Plan as set
forth in Section 13 below, is a Non-Employee Director automatically shall be
granted a one-time option to purchase twenty thousand (20,000) shares of common
stock of the Company on the terms and conditions set forth herein.
(b) Each person who, after the effective date of the Company's
initial public offering of shares of Common Stock pursuant to a registration
statement on Form S-1 filed with the Securities and Exchange Commission (the
"Effective Date"), for the first time becomes a Non- Employee Director
automatically shall be granted, upon the date of his or her initial appointment
or election to be a Non-Employee Director by the Board or stockholders of the
Company, a one-time option to purchase twenty thousand (20,000) shares of
common stock of the Company on the terms and conditions set forth herein.
(c) On the date of each annual meeting of the stockholders of the
Company after the Effective Date (other than any such annual meeting held in
1997), each person who is elected at such annual meeting to serve as a
Non-Employee Director (other than a person who receives a grant under
subparagraph 5(b) on or during the three-month period preceding such date)
automatically shall be granted an option to purchase five thousand (5,000)
shares of common stock of the Company on the terms and conditions set forth
herein.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) TERM. The term of each option commences on the date it is
granted and, unless sooner terminated as set forth herein, expires on the date
ten (10) years from the date of grant (the "Expiration Date"). No option shall
be exercisable after the Expiration Date.
2.
<PAGE> 3
(b) TERMINATION OF SERVICE TO THE COMPANY. If the optionee's
service as a Non-Employee Director or employee of or consultant to the Company
or any Affiliate ("Service") terminates (other than upon the optionee's death
or disability), the optionee may exercise his or her option (to the extent that
the optionee was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the optionee's Service (or such longer or
shorter period, which shall not be less than thirty (30) days, specified in the
option agreement), or (ii) the Expiration Date. If, at the date of
termination, the optionee is not entitled to exercise his or her entire option,
the shares covered by the unexercisable portion of the option shall revert to
and again become available for issuance under the Plan. If, after termination
of Service, the optionee does not exercise his or her option within the time
specified herein, the option shall terminate, and the shares covered by such
option shall revert to and again become available for issuance under the Plan.
An optionee's option agreement may also provide that, if the exercise
of the option following the termination of the optionee's Service (other than
upon the optionee's death or disability) would result in liability under
Section 16(b) of the Exchange Act, then the option shall terminate on the
earlier of (i) the Expiration Date or (ii) the tenth (10th) day after the last
date on which such exercise would result in such liability under Section 16(b)
of the Exchange Act. Finally, an optionee's option agreement may also provide
that if the exercise of the option following the termination of the optionee's
Service (other than upon the optionee's death or disability) would be
prohibited at any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the option shall
terminate on the earlier of (i) the Expiration Date or (ii) the expiration of a
period of three (3) months after the termination of the optionee's Service
during which the exercise of the Option would not be in violation of such
registration requirements.
(c) DISABILITY OF OPTIONEE. In the event an optionee's Service
terminates as a result of the optionee's disability, the optionee may exercise
his or her option (to the extent that the optionee was entitled to exercise it
as of the date of termination), but only within such period of time ending on
the earlier of (i) the date twelve (12) months following such termination (or
such longer or shorter period, which in no event shall be less than six (6)
months, specified in the option agreement), or (ii) the Expiration Date. If,
at the date of termination, the optionee is not entitled to exercise his or her
entire option, the shares covered by the unexercisable portion of the option
shall revert to and again become available for issuance under the Plan. If,
after termination, the optionee does not exercise his or her option within the
time specified herein, the option shall terminate, and the shares covered by
such option shall revert to and again become available for issuance under the
Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an optionee
during, or within a period specified in the option agreement after the
termination of, the optionee's
3.
<PAGE> 4
Service, the option may be exercised (to the extent the optionee was entitled
to exercise the option as of the date of death) by the optionee's estate, by a
person who acquired the right to exercise the option by bequest or inheritance
or by a person designated to exercise the option upon the optionee's death
pursuant to subsection 6(d), but only within the period ending on the earlier
of (i) the date eighteen (18) months following the date of death (or such
longer or shorter period, which in no event shall be less than six (6) months,
specified in the option agreement), or (ii) the Expiration Date. If, at the
time of death, the optionee was not entitled to exercise his or her entire
option, the shares covered by the unexercisable portion of the option shall
revert to and again become available for issuance under the Plan. If, after
death, the option is not exercised within the time specified herein, the option
shall terminate, and the shares covered by such option shall revert to and
again become available for issuance under the Plan.
(e) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted.
(f) Payment of the exercise price of each option is due in full in
cash upon any exercise, provided that an option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company prior to
the issuance of shares of the Company's common stock.
(g) An option shall only be transferable by the optionee upon such
terms and conditions as are set forth in the option agreement for such option,
as the Board or the Committee shall determine in its discretion. The optionee
may, by delivering written notice to the Company in a form satisfactory to the
Company, designate a third party who, in the event of the death of the optionee,
shall thereafter be entitled to exercise the option.
(h) The option shall become exercisable (vest) in monthly
installments over a period of four years from the date of grant, with one
forty-eighth (1/48) of the shares vesting on each one-month anniversary of the
grant date; provided that the optionee has, during the entire period prior to
such vesting date, continuously served as a Non-Employee Director or employee
of or consultant to the Company or any Affiliate of the Company, whereupon such
option shall become fully exercisable in accordance with its terms with respect
to that portion of the shares represented by that installment. Notwithstanding
the foregoing, the option may, but need not, include a provision whereby the
Optionee may elect at any time while a Director to exercise the option as to
any part or all of the shares subject to the option prior to the full vesting
of the option. Any unvested shares so purchased may be subject to a repurchase
right in favor of the Company or to any other restriction the Board or
Committee determines to be appropriate.
(i) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(g), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances
4.
<PAGE> 5
satisfactory to the Company stating that such person is acquiring the stock
subject to the option for such person's own account and not with any present
intention of selling or otherwise distributing the stock. These requirements,
and any assurances given pursuant to such requirements, shall be inoperative if
(i) the issuance of the shares upon the exercise of the option has been
registered under a then- currently-effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), or (ii), as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then-
applicable securities laws.
(j) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of stock
required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option
granted under the Plan, or any stock issued or issuable pursuant to any such
option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is
transferred under subparagraph 6(g) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for exercise
of the option pursuant to its terms.
5.
<PAGE> 6
(b) Throughout the term of any option granted pursuant to the
Plan, the Company shall make available to the holder of such option, not later
than one hundred twenty (120) days after the close of each of the Company's
fiscal years during the option term, upon request, such financial and other
information regarding the Company as comprises the annual report to the
shareholders of the Company provided for in the Bylaws of the Company and such
other information regarding the Company as the holder of such option may
reasonably request.
(c) Nothing in the Plan or in any instrument executed pursuant
thereto shall confer upon any Non-Employee Director any right to continue in
the service of the Company or any Affiliate or shall affect any right of the
Company, its Board or shareholders or any Affiliate to terminate the service of
any Non-Employee Director with or without cause.
(d) No Non-Employee Director, individually or as a member of a
group, and no beneficiary or other person claiming under or through him, shall
have any right, title or interest in or to any option reserved for the purposes
of the Plan except as to such shares of common stock, if any, as shall have
been reserved for him pursuant to an option granted to him.
(e) In connection with each option granted pursuant to the Plan,
it shall be a condition precedent to the Company's obligation to issue or
transfer shares to a Non-Employee Director, or to evidence the removal or lapse
of any restrictions on transfer, that such Non-Employee Director make
arrangements satisfactory to the Company to insure that the amount of any
federal or other withholding tax required to be withheld with respect to such
sale or transfer, or such removal or lapse, is made available to the Company
for timely payment of such tax.
(f) As used in this Plan, "fair market value" means, as of any
date, the value of the common stock of the Company determined as follows:
(i) If the common stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market, the fair market value of a share of common stock shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day
prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Board deems reliable;
(ii) If the common stock is quoted on Nasdaq (but not on
the National Market thereof) or is regularly quoted by a recognized securities
dealer but selling prices are not reported, the fair market value of a share of
common stock shall be the mean
6.
<PAGE> 7
between the bid and asked prices for the common stock on the last market
trading day prior to the day of determination, as reported in the Wall Street
Journal or such other source as the Board deems reliable;
(iii) In the absence of an established market for the
common stock, the fair market value shall be determined in good faith by the
Board.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or otherwise), the Plan and
outstanding options will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving corporation; (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) any other capital reorganization (including a sale of
stock of the Company to a single purchaser or single group of affiliated
purchasers) after which less than fifty percent (50%) of the outstanding voting
shares of the new or continuing corporation are owned by stockholders of the
Company immediately before such transaction, the time during which options
outstanding under the Plan may be exercised shall be accelerated to permit the
optionee to exercise all such options in full prior to such event, and the
options shall terminate if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan, provided, however, that the Board shall not amend the plan more than once
every six (6) months with respect to the provisions of the Plan which relate to
the amount, price and timing of grants, other than to comport with changes in
the Code or applicable regulations or rulings thereunder. Except as provided
in paragraph 10 relating to adjustments upon changes in stock, no amendment
shall be effective unless approved by the stockholders of the Company within
twelve (12) months before or after the adoption of the amendment, where the
amendment will:
(i) Increase the number of shares which may be issued
under the Plan;
7.
<PAGE> 8
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to comply with the requirements of Rule 16b-3);
or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to comply with the
requirements of Rule 16b-3 or Section 162(m) of the Internal Revenue Code.
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the date that is ten (10)
years after the Effective Date. No options may be granted under the Plan while
the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any of the
events described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective on the date on which the Board
approves the Plan, subject to the condition that the Plan be approved by the
stockholders of the Company.
(b) No option granted under the Plan shall be exercised or
exercisable unless and until the condition of subparagraph 13(a) above has been
met.
8.
<PAGE> 1
EXHIBIT 10.8
NONSTATUTORY STOCK OPTION
(NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN)
__________, Optionee:
AURORA BIOSCIENCES CORPORATION(the "Company"), pursuant to its
Non-Employee Directors' Stock Option Plan (the "Plan") has on _________ granted
to you, the optionee named above, an option to purchase shares of the common
stock of the Company ("Common Stock"). This option is not intended to qualify
and will not be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Capitalized terms used but not otherwise defined in this agreement shall have
the meaning ascribed to them in the Plan.
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
Non-Employee Directors (as defined in the Plan).
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_________ (______). Subject to the limitations contained herein, this option
shall become exercisable (vest) with respect to each installment shown below on
or after the date of vesting applicable to such installment, as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
------------------------------ -----------------------------------
<S> <C>
__________ __________, 199__
__________ The ___ day of each month thereafter,
commencing on ________, 199__ through and
including _________, 199__.
__________ __________, 199__
</TABLE>
2. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is
_________________ ($____________) per share, being the fair market value (as
defined in the Plan) of the Common Stock on the date of grant of this option.
(b) METHOD OF PAYMENT. Payment of the exercise price per share is
due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise;
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds;
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall Street
Journal, payment by delivery of already-owned shares of Common Stock, held for
the period required to avoid a charge to the Company's reported earnings, and
owned free and clear of any liens, claims, encumbrances or security interests,
which Common Stock shall be valued at its fair market value on the date of
exercise; or
1.
<PAGE> 2
(iv) Payment by a combination of the methods of payment
permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
3. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
5. TERM. The term of this option commences on ___________, 19__, the
date of grant, and expires on _____________________ (the "Expiration Date,"
which date shall be no more than ten (10) years from the date this option is
granted), unless this option expires sooner as set forth below or in the Plan.
In no event may this option be exercised on or after the Expiration Date. This
option shall terminate prior to the Expiration Date as follows: three (3)
months after the termination of your service as a Non-Employee Director or
employee of or Consultant to the Company or an Affiliate of the Company
("Service") for any reason or for no reason unless:
(a) such termination of Service is due to your permanent and total
disability as defined in Section 422(c)(6) of the Code, in which event the
option shall expire on the earlier of the Expiration Date set forth above or
twelve (12) months following such termination of Service; or
(b) such termination of Service is due to your death or your death
occurs within three (3) months following termination of your Service for any
other reason, in which event the option shall expire on the earlier of the
Expiration Date set forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is
not exercisable solely because of the condition set forth in paragraph 4 above,
in which event the option shall not expire until the earlier of the Expiration
Date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of Service; or
(d) exercise of the option within three (3) months after
termination of your Service would result in liability under section 16(b) of
the Securities Exchange Act of 1934 (the "Exchange Act"), in which case the
option will expire on the earlier of (i) the Expiration Date set forth above,
(ii) the tenth (10th) day after the last date upon which exercise would result
in such liability or (iii) six (6) months and ten (10) days after the
termination of your Service.
However, this option may be exercised following termination of Service
only as to that number of shares as to which it was exercisable on the date of
termination of Service under the provisions of paragraph 1 of this option.
6. EXERCISE.
(a) This option may be exercised, to the extent specified above,
by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require
pursuant to paragraph 6 of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any exercise
of this option, the Company may require you to enter an arrangement providing
for the cash payment by you to the Company of any tax withholding obligation of
the Company arising by reason of: (1) the exercise of this option; (2) the
lapse of any substantial risk of forfeiture to which the shares are subject at
the time of exercise; or (3) the disposition of shares acquired upon such
exercise. You also agree that any exercise of this option has not been
completed and that the Company is
2.
<PAGE> 3
under no obligation to issue any Common Stock to you until such an arrangement
is established or the Company's tax withholding obligations are satisfied, as
determined by the Company; and
(ii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. You further agree that the Company
may impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.
7. OPTION NOT A SERVICE CONTRACT. Nothing in this option shall obligate
the Company or any Affiliate of the Company, or their respective stockholders,
Board of Directors, Officers or employees to continue any relationship which
you might have as a Director or employee of or consultant to the Company or any
Affiliate of the Company.
8. NOTICES. Any notices provided for in this option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
9. TRANSFERABILITY. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
3.
<PAGE> 4
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated
and adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated as of ___________.
Very truly yours,
AURORA BIOSCIENCES CORPORATION
By:___________________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Aurora Biosciences Corporation Non-Employees Directors' Stock Option Plan
Notice of Exercise
4.
<PAGE> 5
The undersigned:
(A) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(B) Acknowledges that as of the date of grant of this option, it
sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company
and supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the following
agreements only:
NONE __________________________________
(Initial)
OTHER __________________________________
__________________________________
__________________________________
__________________________________
Optionee
__________________________________
Address
__________________________________
__________________________________
5.
<PAGE> 1
EXHIBIT 10.9
AMENDMENT
AMENDMENT dated as of March 8, 1996 between Aurora Biosciences
Corporation, a Delaware corporation (the "Company"), and Timothy J. Rink
("Rink").
Reference is made to that certain letter (the "Letter") dated January
23, 1996 relating to the principal terms on which Rink would join the Company.
WHEREAS, the Company was formed as of January 22, 1996 and merged with
Aurora Biosciences, Inc., a California corporation ("Aurora"), on February 14,
1996 to reincorporate Aurora in Delaware, and Rink has joined the Company.
WHEREAS, on or about the date hereof, certain persons and entities (the
"Purchasers") are purchasing shares of Series A, Series B and Series C
Preferred Stock of the Company (the "Preferred Stock"), which purchases will
benefit the Company and its present stockholders and employees.
WHEREAS, it is a condition to the obligations of the Purchasers to
purchase the Preferred Stock that Rink and the Company enter into this
Amendment, and they are willing to do so.
NOW THEREFORE, in consideration of the foregoing and the agreements
contained herein, and intending to be legally bound hereby, the Company and
Rink hereby agree as follows (references to "you" herein shall mean Rink):
1. The second sentence of the paragraph of the letter captioned
"Bonuses" is hereby amended by deleting it in its entirety and replacing it
with the following:
You will also be entitled to an additional one-time bonus of $25,000
payable upon the Company closing a corporate partner collaboration within one
year of the closing of the Company's first round of financing with committed
payments to the Company by such corporate partner greater than $2,000,000
(excluding equity purchases and the pending collaborations with Sequana and
Packard), provided that you are employed as chief executive officer of the
Company at the time of such closing.
2. The paragraph of the Letter captioned "Outside Activities" is
hereby amended by deleting the second sentence of such paragraph in its
entirety and replacing it with the following:
It is further acknowledged that you will occasionally provide
additional consulting services to companies which are not in competition with
the Company
<PAGE> 2
- 2 -
and that you are currently serving on the Board of Directors of four
companies other than the Company, none of which is in competition with
the Company. Notwithstanding the foregoing, with the exception of the 4
days a month you are committed to provide consulting services to Amylin
and customary Board of Directors duties related to the four other Boards
of which you are currently a member, you will devote substantially all
of your business time, attention and services to the faithful discharge
of your duties and responsibilities for the Company and, in any event,
such time as is necessary to so faithfully discharge such duties and
responsibilities. In addition, you will not serve on the Board of
Directors of any company for which you not currently a Board member
without the prior consent of a majority of the members of the Company's
Board of Directors (excluding you if you are then a member of the
Board).
3. The paragraph of the Letter captioned "Employment at Will" is
hereby amended by deleting it in its entirety and replacing it with the
following:
Termination of
Employment by You: Subject to the provisions of the paragraphs captioned
"Termination After Three Years" and "Termination of
Employment by You Without Advance Notice" below, you may
terminate your employment with the Company upon at least
six months' prior written notice to the Company. During
such notice period, you will, in addition to continuing
to perform your responsibilities (except to the extent
determined by the Company's Board of Directors), assist
the Company in the transition to a successor officer.
In the event you decide to terminate your employment,
you shall not be entitled to any severance or other
termination benefits. Subject to the provisions of the
paragraphs captioned "Termination After Three Years" and
"Termination of Employment by You Without Advance
Notice" below, you agree that you will not terminate
your employment with the Company without providing at
least six months' prior written notice to the Company.
Termination of
Employment by You
Without Advance
Notice: It is understood that you may terminate your employment
with the Company without the requirement of six months'
prior written notice to the Company under the following
circumstances: (i) your death; (ii) your disability or
other physical or mental incapacity which renders you
unable to perform your responsibilities for the Company
for any 90 work days in any 180 day period; (iii) a
Change of Control Transaction (as defined below) in
which stockholders of the Company
<PAGE> 3
- 3 -
immediately before such event do not own more than 50%
of the surviving company following such event; (iv) a
significant reduction in your responsibilities and
powers as chief executive officer and president or your
removal from either position of chief executive officer
or president; (v) serious and continuing medical
conditions involving a member of your immediate family
which requires such amount of your attention as to make
it impracticable for you to continue to perform your
responsibilities for the Company; or (vi) such other
unforeseeable personal circumstances beyond your control
which the Board of Directors of the Company (excluding
you if you are then a member of the Board), in its sole
discretion, reasonably determines result in your
inability to perform your responsibilities for the
Company. To the extent the requirement of six months'
notice is not applicable, you will make reasonable
efforts to effect an efficient transition of your
responsibilities and duties to a successor. Following
termination of your employment in the event of one of
the following situations, you will not be entitled to
any severance or termination benefits.
Termination by the
Company for Cause: The Company may immediately terminate your employment
"for cause" at any time without any prior written
notice to you. Termination shall constitute a
termination "for cause" if such termination is for one
or more of the following causes, as found by the Board
of Directors of the Company by a resolution duly adopted
by a majority of its members, excluding you if you are
then a member of the Board (a copy of which resolution
shall be delivered to you):
(i) your substantial and continuing failure to
render services to the Company substantially in
accordance with your responsibilities, which
materially and adversely affects or could
reasonably be expected to materially and
adversely affect the business, prospects,
financial condition, operations, property or
affairs of the Company, after 30 days' notice
from the Board of Directors of the Company (so
long as such failure is continuing), such notice
setting forth in reasonable detail the nature of
such failure;
(ii) the commission by you of an act of willful
misconduct, fraud or embezzlement, which results
in material loss, damage or injury to the
Company, whether directly or indirectly, or the
commission by you of any other action with the
intent to injure materially the Company which
could, in the reasonable opinion of the Board of
Directors, result in material harm to the
Company;
<PAGE> 4
- 4-
(iii) if you are convicted of a felony, either in
connection with the performance of your
responsibilities for the Company or which shall
materially adversely affect your ability to
perform your responsibilities for the Company;
or
(iv) the commission of an act which constitutes
unfair competition with the Company or with the
intent of inducing any third party to breach a
material contract with the Company or the
willful and materially injurious unauthorized
disclosure of any trade secret or confidential
information of the Company.
In the event of a termination "for cause"
pursuant to the provisions of clauses (i)
through (iv) above, inclusive, you shall be
entitled to no severance or other termination
benefits except as required by law.
Termination by
Company without Cause: Subject to the provisions of the paragraph
captioned "Termination After Three Years" below,
the Company may terminate your employment with
the Company other than "for cause" upon at least
six months' prior written notice to you. During
such notice period, you will, in addition to
continuing to perform your responsibilities
(except to the extent determined by the
Company's Board of Directors), assist the
Company in the transition to a successor
officer. Following such notice period, you
shall not be entitled to any severance or other
termination benefits except as required by law.
Notwithstanding the foregoing but subject to the
provisions of the paragraph captioned
"Termination After Three Years" below, the
Company may terminate your employment on less
than six months' notice, but in such event, the
Company will continue to pay you, as a severance
payment, your salary, based on your base salary
and in accordance with the Company's normal
payroll practices, during the period from the
date your employment terminates until the date
which is six months following the date on which
the Company gave you notice of termination;
provided that the Company may terminate such
severance payment in the event you commit any
action described in clauses (ii) or (iv) of the
preceding paragraph. Except as set forth in the
preceding sentence, the Company will have no
further obligation to you following termination
of your employment, except as may be imposed by
law.
<PAGE> 5
- 5 -
Termination After
Three Years: On and after March 1, 1999, if you are still
employed with the Company on such date, your
employment with the Company will be at-will,
meaning that it may be terminated at any time by
you or the Company upon written notice to the
other, and following such termination you will
not be entitled to any severance or other
termination benefits except as required by law.
General Provisions
Relating to Termination: For purposes of the preceding five paragraphs,
termination of your position as Chairman of the
Board shall not constitute termination of your
employment with the Company. In addition, for
purposes of the paragraph captioned "Termination
by Company without Cause", your employment will
not be considered to have been terminated by the
Company if the Company is acquired (a "Change of
Control Transaction"), whether by merger,
consolidation, sale of substantially all its
assets or otherwise.
4. Rink represents to the Company that he is not bound by any agreement or
any other existing or previous business relationship which conflicts
with, or may conflict with, his carrying on of the business of the
Company.
5. The provisions contained in this Amendment together with the Letter
constitute the entire understanding of the parties relating to the
subject matter hereof and supersede and cancel all agreements, written
or oral, made prior to the date hereof relating to such subject matter,
including, without limitation, Section 10.5 of that certain Employee
Proprietary Information and Inventions Agreement between Rink and the
Company. Except as expressly amended above, the Letter shall remain in
full force and effect. Rink acknowledges that, as of the date of this
Amendment, he has no right to acquire any equity securities of the
Company other than the 615,000 shares purchased pursuant to that certain
Restricted Stock Purchase Agreement between Rink and the Company dated
February 14, 1996.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 6
- 6 -
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
AURORA BIOSCIENCES CORPORATION /s/ TIMOTHY J. RINK
-------------------------------
Timothy J. Rink
By: /s/ John T. Hendrick
----------------------------
Title: VP Finance
-------------------------
<PAGE> 7
[AURORA BIOSCIENCES, INC. LETTERHEAD]
January 23, 1996
Timothy J. Rink, M.A., M.D., Sc.D.
5666 La Jolla Blvd. #5
La Jolla, CA 92037
Dear Tim:
This letter is a formal offer setting forth the principal terms for you to join
Aurora Biosciences, Inc., a to-be-formed California corporation (the
"Company"), which will be located in San Diego, California.
Position: Chairman, President and Chief Executive Officer
Initial
Responsibilities: Serve as the Company's chairman and chief executive
officer responsible for all aspects of the Company's
operations and reporting to the Board of Directors.
Compensation: Your monthly compensation will be $20,833.33 per month.
Bonuses: You will be entitled to a $25,000 bonus payable upon the
Company closing a first round of financing with a
premoney valuation in excess of $3,000,000. You will
also be entitled to an additional one-time bonus of
$25,000 payable upon the Company closing a corporate
partner collaboration within one year of the closing of
the Company's first round of financing with committed
payments to the Company greater than $2,000,000
(excluding equity purchases and the pending
collaborations with Sequana and Packard).
<PAGE> 8
Page 2
Timothy J. Rink, M.A., M.D., Sc.D.
January 23, 1996
Equity: You will be entitled to purchase at fair market value
- ------- twenty and one-half percent (20.5%) of the common stock
of the Company (615,000) shares set aside for founders,
initial employees, consultants and directors (a total of
three million (3,000,000) shares. As of January 31,
1996, forty five thousand twelve (45,012) of your shares
will be vested. Of the remaining shares, five hundred
thousand four hundred (500,400) shares and sixty nine
thousand five hundred eighty eight (69,588) shares will
vest monthly over a three-year period at the rate of one
thirty-sixth (1/36) of such shares each month beginning
February 1, 1996 based on your continued service as the
Company's Chief Executive Officer and Chairman,
respectively.
Benefits: You will be entitled to receive standard medical and
- --------- dental insurance benefits for yourself similar to those
typically afforded in similar-sized biotechnology
companies. In addition, the Company will pay the
premiums on a $500,000 term life insurance policy and a
disability insurance policy. The Company will also make
its best efforts to obtain Directors and officers
liability insurance under terms and conditions which the
Board of Directors find to be reasonable. You will also
be provided with a Company-paid mobile phone.
Vacation: You will be entitled to 22 days per year of paid
- --------- personal leave. If Aurora establishes a Company policy
to close between Christmas and News Year's, such time
off will not count against the 22 days.
Outside Activities: It is acknowledged that you are committed to spend up
- ------------------- to 4 days a month providing consulting services to
Amylin Pharmaceuticals, Inc. and that you have a
non-compete agreement with Amylin. It is further
acknowledged that you will occasionally provide
additional consulting services and that you are
currently serving on the Board of Directors of other
companies which are not in competition with Aurora.
<PAGE> 9
Page 3
Timothy J. Rink, M.A., M.D., Sc.D.
January 23, 1996
Employment at Will: Your employment will be at will, which means it may be
terminated at any time by you or the Company with or
without cause.
Start Date: February 1, 1996.
I am excited about Aurora's prospects for success, and I look forward to your
joining the Company.
Sincerely,
/s/ Kevin J. Kinsella
Kevin J. Kinsella
Founding Chairman and
Chief Executive Officer
SIGNED AND AGREED TO:
/s/ Timothy J. Rink
- --------------------------
Timothy J. Rink, M.A., M.D., Sc.D.
Date: 1/29/96
---------------------
<PAGE> 1
EXHIBIT 10.10
[AURORA LETTERHEAD]
STRICTLY CONFIDENTIAL
August 6, 1996
J. Gordon Foulkes, Ph.D.
35B East Rogues Path
Huntington Station, NY 11746
Dear Gordon:
This letter is a formal offer setting forth the principal terms for you to join
Aurora Biosciences Corporation, (The "Company"), a Delaware corporation, which
is located in San Diego, California, and is subject to your fulfilling all
contractual obligations to Oncogene Science, Inc. and not being subject to any
non-compete or other conditions, excepting customary obligations of
confidentiality, which would conflict with or impair the performance of our
duties at Aurora.
Position: Chief Technical Officer and member of the Board of Directors
Reporting to: Dr. Timothy J. Rink
Base Salary: $20,833.33 per month
Bonus Plan: $150,000 dependent on and payable (minus normal withholdings)
immediately following your completing four year's continuous
employment at Aurora.
Relocation: Reimbursed expenses to include reasonable and customary closing
costs for the sale of your house, including realtors' fees,
payment for movement of household goods (and two cars),
including packing, unpacking, and insurance; economy air fares
for you and your immediate family from Huntington Station, New
York, and two "house hunting" visits for you and your spouse;
and up to four months' payment of temporary accommodations and
car rental not to exceed $3,000 per month. All expenses must
be documented and paid either directly to the vendor or
reimbursed by normal means. The Company will "gross up" the
compensation element of directly paid or reimbursed relocation
expenses. The Company will follow federal, state and local
tax regulations with regards to
<PAGE> 2
J. Gordon Foulkes, Ph.D.
August 6, 1996
Page two
reporting reimbursements associated with the move. Aurora
would pay applicable taxes related to the compensation
element of these relocation reimbursables. The terms of
this move package would be valid for 12 months from date of
employment.
Mortgage Allowance: The Company will pay you $2,500 per month commencing on
your start date through the earlier of the closing of the
sale of your house in New York or three months following
your start date, i.e., to a maximum of $7,500.
The relocation payments (including tax payments) and mortgage allowance
will be repayable by you if you were to terminate your employment
voluntarily during the first 18 months following your start date, other
than for health reasons. Such repayment will be made within one (1)
year of your termination of employment. If the Company were to
terminate your employment during the first two years, other than for
cause, you would receive a payment for 12 months' salary plus $100,000,
minus normal withholdings. If the Company were to terminate your
employment after the second anniversary of your start date, other than
for cause, you would receive a lump sum payment of nine months' salary,
minus normal withholdings.
Termination for Cause: As used in the agreement, a termination of your
employment for cause shall be limited to a termination based upon
your conviction of a felony or other crime involving moral
turpitude, your commission of an act or failure to take an action
in bad faith and to the detriment of Aurora, or your breach of
any material term of this agreement or other agreements with the
Company, including but not limited to the Proprietary Information
and Invention Agreement, or repeated failure to follow reasonable
procedures and policies of the Company on requirements of the
Board of Directors or your supervisor, which breach or failure
remains uncorrected on the expiration of 21 days from your
receipt of written notice of such breach or failure.
House Purchase Loan: Up to $150,000 interest free loan to be used for your
purchase of a new principal residence, to be funded on
closing house purchase in San Diego County within one year
of your start date, secured by
<PAGE> 3
Gordon Foulkes, Ph.D.
August 6, 1996
Page three
such property. The loan will be repayable to the Company
on the earlier of the fourth anniversary of your start
date or within one year following termination of your
employment, for any reason, prior to the fourth
anniversary of your start date. The loan would be
evidenced by a promissory note to be executed by you at
the time of such house purchase closing. Such note would
contain the terms set forth herein, as well as other terms
customary for such a loan. You hereby certify that you
reasonably expect to be entitled to and, if lawful, will
itemize deductions for each year the loan is outstanding.
For purposes of this letter, "voluntary termination of
your employment" shall be deemed to have occurred if you
fail to commence employment by March 10, 1997, or if the
Company is notified, or has good reason to believe, that
you will not commence employment before March 10, 1997.
Equity: Following acceptance of this offer you will be entitled to
purchase 260,000 shares of the common stock of the Company
at a price equal to ten cents ($.10) per share and
otherwise on the terms specified in the Company's standard
form of restricted stock purchase agreement. Your shares
will vest according to the following schedule:
Twenty-five percent (25%) at the end of one year from your
employment start date, and monthly thereafter over the
following three-year period at the rate of one
forty-eighth (1/48) of such shares each month. If the
Company were to undergo a change of control as specified
in the stock purchase agreement and your employment were
terminated by the Company, other than for cause, within 18
months of such change, vesting of all then unvested shares
would occur at such termination.
Benefits: You will be entitled to receive standard medical, life and
dental insurance benefits for yourself and your dependents
in accordance with Company policy.
<PAGE> 4
J. Gordon Foulkes, Ph.D.
August 6, 1996
Page four
Paid Personal Leave: You will be entitled to 20 days per year of paid personal
leave. If Aurora establishes a Company policy to close
between Christmas and New Year's, such time off will not
count against the 20 days.
Employment at Will: Your employment will be at will, which means it may be
terminated at any time by you or the Company with or
without cause.
Start Date: March 10, 1997, or at such earlier date as is mutually
agreeable and is consistent with observance of all the
terms of your employment contract with Oncogene Science,
Inc.
As a condition of your employment, you will be required to sign a copy of our
Employee Proprietary Information and Inventions Agreement when you begin your
employment. A copy of this form is enclosed for your review. In addition, to
conform with the Immigration Reform and Control Act of 1986, please bring with
you on your start date the original of one of the documents noted in List A on
the I-9 form enclosed or one document from List B and one document from List
C. If you do not have the originals of any of these documents, please call me
immediately. This offer is contingent upon your providing sufficient
documentation to show proof of eligibility for employment in the United States.
It is Aurora's policy to respect fully the rights of your previous employers in
their proprietary or confidential information. No employee is expected to
disclose, or is allowed to use for Aurora's purpose, any confidential or
proprietary information he or she may have acquired as a result of previous
employment.
I am pleased to extend this offer to you and look forward to your acceptance.
Please sign and return the enclosed copy of this offer letter as soon as
possible to indicate your agreement with the terms of this offer. This offer
will lapse if not signed and returned by August 15, 1996.
Once signed by you, this letter will constitute the complete agreement between
you and Aurora regarding employment matters and will supersede all prior
written or oral agreements or understandings on these matters.
<PAGE> 5
J. Gordon Foulkes, Ph.D.
August 6, 1996
Page five
I believe you will be able to make substantial contributions to Aurora's
effort, and I think you will enjoy the rewards of working for an innovative,
fast-paced company. One of the keys to our accomplishments is good people. We
hope you accept our offer to be one of those people.
Yours sincerely,
/s/ TIMOTHY J. RINK
Timothy J. Rink, M.D., Sc.D.
Chairman, CEO and President
TJR/jkc
Enclosures
I accept the terms of employment as described in this offer letter dated August
6, 1996, and will start my employment on or before March 10, 1997. I confirm
that by my start date at Aurora I will have taken all reasonable and feasible
steps to ensure that I will be under no contract or agreement with any entity
other than Oncogene Science, Inc. which would in any way restrict my ability to
work at Aurora or perform the functions of my job for Aurora. With respect to
Oncogene Science, Inc., I confirm that I have already given oral and written
notice to Oncogene Science, Inc. of non-renewal of my employment contract,
effective February 28, 1997.
/s/ J. GORDON FOULKES Date August 14th 1996
- --------------------------------- ---------------------------------
J. Gordon Foulkes
<PAGE> 1
EXHIBIT 10.11
AURORA BIOSCIENCES CORPORATION
PREFERRED STOCK PURCHASE AGREEMENT
MARCH 8, 1996
<PAGE> 2
<TABLE>
<S> <C>
SECTION 1 Sale of Shares....................................................1
1.2 Closing Date.......................................................1
1.3 Delivery...........................................................2
SECTION 2 Representations and Warranties of the Company.....................2
2.1 Organization and Standing..........................................2
2.2 Corporate Power....................................................3
2.3 Subsidiaries.......................................................3
2.4 Capitalization.....................................................3
2.5 Authorization......................................................4
2.6 Contracts and Other Commitments....................................5
2.7 Compliance with Other Instruments, etc.............................5
2.8 Litigation, etc....................................................5
2.9 Registration Rights................................................6
2.10 Permits...........................................................6
2.11 Governmental Consent, etc.........................................6
2.12 Disclosure........................................................6
2.13 Offering..........................................................7
2.14 Liabilities.......................................................7
2.15 Changes...........................................................7
2.16 Title to Properties and Assets; Liens, Leases, etc................9
2.17 Patents and Trademarks............................................9
2.18 Tax Returns; Taxes...............................................10
2.19 Employees........................................................10
2.20 No Defaults......................................................11
2.21 Insurance........................................................11
2.22 Brokers or Finders...............................................12
2.23 Environmental and Safety Laws....................................12
2.24 No Dividends.....................................................12
2.25 Employee Benefit Plan Obligations................................12
2.26 Qualification as a Qualified Small Business......................12
2.27 Financial Statements.............................................12
2.28 Transactions with Affiliates.....................................12
2.29 Proprietary Information and Inventions Agreements................13
2.30 U.S. Real Property Holding Corporation...........................13
SECTION 3 Investment Representations.......................................13
3.1 Power and Authority...............................................13
3.2 Due Execution.....................................................13
3.3 Experience; Accredited Investor...................................14
3.4 Investment........................................................14
3.5 Rule 144..........................................................14
3.6 No Public Market..................................................14
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C>
3.7 Disclosure of Information.........................................14
SECTION 4 Conditions of the Purchaser's Obligations at Closing ............15
4.1 Representations and Warranties....................................15
4.2 Covenants.........................................................15
4.3 No Material Adverse Change........................................15
4.4 Securities Laws...................................................15
4.5 Compliance Certificate............................................15
4.6 Opinion of Counsel................................................15
4.7 Investors' Rights Agreement.......................................15
4.8 Proceedings and Documents.........................................15
4.9 Supporting Documents..............................................16
4.10 Management Rights Agreements.....................................16
4.11 Voting Agreement.................................................16
4.12 Amendment to Employment Agreement................................17
4.13 Charter..........................................................17
4.14 Bylaws...........................................................17
4.14 Proprietary Information Agreements...............................17
4.15 Election of Directors............................................17
4.16 Certificate as to Disqualified Persons...........................17
4.18 Fees of Purchasers' Counsel......................................17
SECTION 5 Conditions of the Company's Obligations at Closing...............18
5.1 Representations and Warranties....................................18
5.2 Covenants.........................................................18
SECTION 6 Miscellaneous....................................................18
6.1 Governing Law.....................................................18
6.2 Successors and Assigns............................................18
6.3 Entire Agreement..................................................18
6.4 Notices, etc......................................................18
6.5 Expenses..........................................................19
6.6 Counterparts......................................................19
6.7 Severability......................................................19
6.8 Survival of Agreements............................................19
6.9 Brokerage.........................................................19
6.10 Amendments.......................................................20
</TABLE>
ii.
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
A RESTATED CERTIFICATE OF INCORPORATION
B SCHEDULE OF EXCEPTIONS
C INVESTORS' RIGHTS AGREEMENT
D FORM OF MANAGEMENT RIGHTS LETTER
E FORM OF VOTING AGREEMENT
F FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
G FORM OF LEGAL OPINION OF COMPANY COUNSEL
</TABLE>
iii.
<PAGE> 5
AURORA BIOSCIENCES CORPORATION
PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of March 8, 1996 between Aurora Biosciences
Corporation, a Delaware corporation (the "COMPANY"), with its principal office
at 1020 Prospect Street, Suite 405, La Jolla, California 92037, and the
purchasers listed on Schedule A hereto who execute this Agreement (each a
"Purchaser", and collectively, the "Purchasers").
WHEREAS, the Company has authorized the issuance and sale of up to
10,239,115 shares of its Series A Preferred Stock (the "SERIES A PREFERRED"),
555,555 shares of Series B Preferred Stock (the "SERIES B PREFERRED"), and
750,000 shares of Series C Preferred Stock (the "SERIES C PREFERRED")
(collectively, the "SHARES") having the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company in the form attached to this Agreement as Exhibit A (the "RESTATED
CERTIFICATE").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:
SECTION 1
SALE OF SHARES
1.1 SALE OF SHARES. Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined), each Purchaser (severally but not jointly)
agrees to purchase from the Company, and the Company agrees to sell and issue,
shares of Preferred Stock of the Company being of the number, Series, and price
per share as set forth opposite each Purchaser's name on Schedule A hereto.
1.2 CLOSING DATE. The purchase and sale of the Shares hereunder shall take
place in up to three (3) closings, each of which shall be held at the law
offices of Cooley Godward Castro Huddleson & Tatum, 4365 Executive Drive, Suite
1100, San Diego, California 92121. The first closing of such purchase and sale
hereunder, at which the shares of Series A Preferred to be purchased and sold
hereunder shall be so purchased and sold (the "FIRST CLOSING"), shall be held on
the date of this Agreement or at such other time upon which the Company and the
Purchasers participating in the First Closing shall agree. The closing of the
purchase and sale of the Series B Preferred hereunder (the "SERIES B CLOSING")
and the closing of the purchase and sale of the Series C Preferred hereunder
(the "SERIES C CLOSING") (the Series B Closing and the Series C Closing are
1
<PAGE> 6
hereinafter collectively referred to as the "SUBSEQUENT Closings" and the First
Closing and the Subsequent Closings are hereinafter collectively referred to as
the "Closings") shall be held as soon as practicable but in each case not more
than thirty (30) days following the date hereof as agreed upon by the Company
and Purchasers purchasing at least a majority of the Shares to be purchased and
sold in such Subsequent closing.
Upon delivery of a duly executed copy of this Agreement, the Investor's
Rights Agreement (defined below) and the Voting Agreement (defined below), any
purchaser of Shares at a Subsequent Closing shall be deemed to be a party to
this Agreement, the Investors' Rights Agreement and the Voting Agreement, such
purchaser shall be deemed to be a "Purchaser" for purposes of this Agreement, a
"Stockholder" for purposes of the Investor's Rights Agreement and a "Purchaser"
for purposes of the Voting Agreement, and the Shares acquired by such purchaser
shall be deemed to have been acquired pursuant to this Agreement.
1.3 DELIVERY. At each Closing, the Company will deliver to each Purchaser
purchasing Shares in such Closing a certificate representing the Shares being
purchased upon payment of the aggregate purchase price therefor (as set forth
opposite each Purchaser's name on Schedule A hereto) by (i) check payable to the
order of the Company, (ii) wire transfer of immediately available funds made
payable to the order of the Company or (iii) cancellation of outstanding
principal and accrued interest under promissory notes issued by the Company, or
any combination of the foregoing, as provided on Schedule A.
Section 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedule of Exceptions attached
hereto as Exhibit B, the Company hereby represents and warrants to the
Purchasers as follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has all requisite
corporate power to own and operate its assets and to carry on its business as
presently conducted and as proposed to be conducted. The Company is qualified to
do business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
or where the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, "Material Adverse Effect" shall mean material adverse effect
on the Company's business as presently conducted or planned to be conducted or
the Company's financial condition, operations or prospects.
2
<PAGE> 7
2.2 CORPORATE POWER. The Company has, and at the time of each Closing
will have, all requisite legal and corporate power to execute and deliver this
Agreement, the Investors' Rights Agreement in substantially the form attached
hereto as Exhibit C (the "INVESTORS' RIGHTS AGREEMENT"), the Management Rights
letter agreements between the Company and certain of the Purchasers
substantially in the form attached hereto as Exhibit D (the "MANAGEMENT RIGHTS
AGREEMENTS") and the Voting Agreement in substantially the form attached hereto
as Exhibit E (this Agreement, the Investors' Rights Agreement, the Management
Rights Agreements and the Voting Agreement are hereinafter collectively referred
to as the "AGREEMENTS"), to sell and issue the Shares under this Agreement, to
issue the Common Stock issuable upon conversion of the Shares and to carry out
and perform its obligations under the terms of the Agreements, including all
exhibits and schedules hereto and thereto.
2.3 SUBSIDIARIES. The Company does not own (of record or beneficially)
or control, directly or indirectly, any equity interest in any other
corporation, association or business entity (other than investments in
marketable securities). The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, of which 2,508,500 shares will be
issued and outstanding immediately prior to the First Closing, and 25,000,000
shares of Preferred Stock, of which 10,500,000 are designated Series A Preferred
Stock, 600,000 are designated Series B Preferred Stock, and 800,000 are
designated Series C Preferred Stock, none of which will be issued and
outstanding immediately prior to the First Closing. No other shares of capital
stock or other securities of the Company are outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable and have been offered, issued, sold and delivered by the
Company in compliance with applicable federal and state securities laws. The
Shares have the rights, preferences and privileges set forth in the Restated
Certificate, and all such rights, preferences and privileges are valid, binding
and enforceable in accordance with all applicable laws. The stockholders of
record and holders of subscriptions, warrants, options, convertible securities
and other rights to purchase or otherwise acquire equity securities of the
Company, and the number of shares of Common Stock and the number of such
subscriptions, warrants, options, convertible securities, and other such rights
held by each are as set forth in Exhibit B. All of the outstanding shares of
stock held by each such holder are subject to vesting as described in Exhibit B,
and the Company has the right to repurchase unvested shares upon the termination
of such holder's employment or other business relationship with the Company at
the original purchase price per share paid to the Company by such holder. The
Company has reserved 1,000,000 shares of its Common Stock (the "Reserved
Shares") for issuance pursuant to the Company's 1996 Stock Plan. Except for the
transactions contemplated in the Agreements, the conversion privileges of the
Company's
3
<PAGE> 8
Series A, Series B and Series C Preferred Stock specified in the Restated
Certificate, and as set forth in Exhibit B, there are no options, warrants,
conversion privileges or other rights or agreements presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company and there is no
commitment by the Company to issue shares, options, warrants, convertible
securities or other rights to purchase or otherwise acquire shares of the
Company's capital stock or other securities of the Company. Except as set forth
in Section 45 of the Company's Bylaws and as contemplated by the Agreements or
as provided for in Exhibit B, to the best of the Company's knowledge, there are
no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to securities of the Company (whether or not the Company is a party
thereto). The Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities.
2.5 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) and the performance of the Company's obligations under
the Agreements has been taken or will be taken prior to the First Closing. The
Agreements, when executed and delivered by the Company, will constitute valid
and binding obligations of the Company enforceable in accordance with their
terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors, general equity principles and limitations
upon rights to indemnity. This Agreement has been duly executed and delivered by
the Company. The Shares, when issued in compliance with the provisions of this
Agreement, will be duly and validly issued, fully paid and nonassessable and
will be free and clear of all liens, encumbrances or restrictions imposed by or
through the Company. The Common Stock issuable upon conversion of the Shares has
been duly and validly reserved and, when issued in compliance with the
provisions of the Restated Certificate, will be duly and validly issued, fully
paid and nonassessable and will be free and clear of all liens, encumbrances or
restrictions imposed by or through the Company. The issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) is not subject to any
preemptive rights, rights of first refusal or similar rights that have not been
waived; provided, however, that the Shares (and the Common Stock issuable upon
conversion of the Shares) are subject to a right of first refusal as set forth
in Section 45 of the Company's Bylaws, and may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein.
4
<PAGE> 9
2.6 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, other than contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $25,000 individually or $50,000 in the aggregate. For
the purpose of this paragraph, employment and consulting contracts (including
any severance arrangements), license agreements and any other agreements
relating to the acquisition or disposition of the Company's technology (other
than pursuant to the Company's standard form of Proprietary Information and
Inventions Agreement (the "PROPRIETARY INFORMATION AGREEMENT")) shall not be
considered to be contracts entered into in the ordinary course of business. The
Company is not a party to or bound by any judgment, order, writ or decree
restricting or affecting the development, manufacture or distribution of the
Company's products or services or proposed products or services or limiting or
restricting the Company's right to compete with any person in any respect.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation (with or without the
passage of time or giving of notice or both) of any term of the Restated
Certificate or its Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any material order, statute, rule or regulation applicable
to the Company, other than any of the foregoing such violations that do not
impair the Company's ability to enter into or perform its obligations under the
Agreements or which, either individually or in the aggregate, do not have a
Material Adverse Effect. Entering into and performing the Agreements and the
transactions contemplated thereunder by the Company will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to the Company or its properties or business.
2.8 LITIGATION, ETC. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding, investigation,
governmental inquiry, or claim, or any basis therefor or threat thereof, whether
or not purportedly on behalf of the Company, to which the Company is or may be
named as a party or its property is or may be subject or, to the Company's
knowledge, to which any officer, key employee, key consultant, or principal
shareholder of the Company is subject; and the Company has no knowledge (i) of
any unasserted claim, the assertion of which is likely and which, if asserted,
will seek damages, an injunction or other legal, equitable, monetary or
nonmonetary relief, which claim individually or collectively with other such
unasserted claims if granted would have a Material Adverse Effect, or (ii) that
there exists, or there is
5
<PAGE> 10
pending or planned, any patent, trademark, tradename, invention, device,
application or principle, or any statute, rule, law, regulation, standard or
code which would result in a Material Adverse Effect. There is no pending or, to
the Company's knowledge and belief, threatened claim or litigation against or
affecting the Company contesting, or which if adversely determined might
materially impair, its right to produce, manufacture, sell or use any product,
process, method, substance, part or other material presently produced,
manufactured, sold or used or planned to be produced, manufactured, sold or used
by the Company in connection with the operations of the Company. The Company has
no current plans to initiate any action, suit or proceeding.
2.9 REGISTRATION RIGHTS. Except as set forth in the Investors' Rights
Agreement, the Company is not under any obligation to register (as defined in
the Investors' Rights Agreement), and has not granted any rights to register,
any of its presently outstanding securities or any of its securities that may
hereafter be issued.
2.10 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it and as proposed to be conducted, the lack of which would have a
Material Adverse Effect. The Company is not in default or violation in any
material respect under any of such franchises, permits, licenses, or other
similar authority, and the execution and delivery of the Agreements will not
result in any such default or violation, with or without the passage of time or
giving of notice or both.
2.11 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) or the consummation of
any other transaction contemplated thereby, except the filing of the Restated
Certificate in the Office of the Secretary of State of the State of Delaware and
the qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the Shares
(and the Common Stock issuable upon conversion of the Shares) under the
California Corporate Securities Law, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the First Closing.
2.12 DISCLOSURE. The Company has provided each Purchaser with all the
information reasonably available to it without undue expense that such Purchaser
has requested or could reasonably be expected to be material in deciding whether
to purchase the Shares. The Agreements and the Exhibits thereto as well as any
other document, certificate, schedule, financial, business or other statement
furnished to such Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby,
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including, without limitation, the Business Plan dated January 8, 1996, do not
contain any untrue statement of a material fact and do not omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading; provided, however, that with respect to any projections,
expressions of opinion, forecasts, predictions or the like (collectively,
"Projections") contained in such Business Plan, the Company represents only that
such Projections were made in good faith and that the Company believes there is
a reasonable basis therefor.
2.13 OFFERING. Subject to the accuracy of the representations set forth in
Section 3 hereof, the offer, sale and issuance of the Shares pursuant to this
Agreement and the issuance of the Common Stock to be issued upon conversion of
the Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemption.
2.14 LIABILITIES. The Company has no indebtedness for borrowed money that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than obligations not in excess of $25,000
individually or in the aggregate. The Company has not assumed, guaranteed,
endorsed or otherwise become directly or contingently liable on any indebtedness
of any other person (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor, or otherwise to assure the
creditor against loss), except for guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business.
2.15 CHANGES. Since December 31, 1995, there has not been:
(a) any change in the assets, liabilities, financial condition, or
operating results of the Company except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
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(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(e) to the best of the Company's knowledge, any material change to a
material contract or arrangement by which the Company or any of its assets is
bound or subject;
(f) any material change in any compensation arrangement or agreement
with any employee, consultant, officer, director or shareholder;
(g) any sale, assignment, license or transfer of any patents,
trademarks, copyrights, trade secrets, Proprietary Information (as defined
herein) or other intangible assets;
(h) any resignation or termination of employment of any key officer of
the Company or termination of engagement of any key consultant of the Company;
and the Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer or termination of
engagement of any such consultant;
(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or lien
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the benefit
of any person, other than travel advances to employees and/or consultants and
other advances to employees and/or consultants made in the ordinary course of
its business;
(l) to the best of the Company's knowledge, any other event or
condition of any character that might, individually or in the aggregate,
materially and adversely affect the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(m) any amount borrowed or any liability (absolute, accrued or
contingent) incurred, or to which the Company has become subject, except
liabilities not in excess of $25,000 individually or $50,000 in the aggregate
and except current liabilities incurred
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and liabilities under contracts entered into in the ordinary course of business
which have not been, individually or in the aggregate materially adverse;
(n) any transaction except in the ordinary course of business or as
otherwise contemplated hereby; or
(o) any agreement or commitment by the Company to do any of the things
described in this paragraph 2.15.
2.16 TITLE TO PROPERTIES AND ASSETS; LIENS, LEASES, ETC. The Company has
good and marketable title to its properties and assets and has good title to all
of its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances that do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have not arisen
otherwise than in the ordinary course of business.
Set forth on Exhibit B is a correct and complete list (including the
amount of rents called for and a description of the leased property) of all
material leases (involving more than $25,000 either individually or in the
aggregate if such leases are of a similar nature or with the same lessor) under
which the Company is a lessee. The Company enjoys peaceful and undisturbed
possession under all such leases, all of such leases are valid and subsisting
and, except as would not result in a Material Adverse Effect, the Company and,
to the Company's knowledge, each other party to such leases is not in default
thereunder.
2.17 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, applications for each of
the foregoing, trade names, copyrights, trade secrets, information, proprietary
rights and processes (collectively "PROPRIETARY INFORMATION"), or has, or
believes to the best of its knowledge that it has the ability to acquire on
comercially reasonable terms, valid licenses to such Proprietary Information (as
described further on Exhibit B), as necessary for its business as now conducted
and as proposed to be conducted without any conflict with or infringement of the
rights of others. The Schedule of Exceptions contains a complete list of patents
and pending patent applications of the Company or of which the Company is a
licensee. There are no outstanding options, licenses, or agreements of any kind
relating to Proprietary Information owned by the Company, 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, applications for each of the
foregoing, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company is
not aware of any impropriety with regard to the granting of any licenses of
Proprietary Information to or from the Company, and no claim is pending or, to
the Company's knowledge, threatened to the effect that any such Property
Information owned or licensed by the Company, or which the Company otherwise has
the right to use, is
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invalid or unenforceable by the Company (and to the Company's knowledge, there
is no basis for any such claim). Neither the Company nor, to the Company's
knowledge, any of its employees or consultants has received any written
communications alleging, nor does the Company know of any grounds for any claims
or allegations now or in the future, that the Company or its employees or
consultants has violated or infringed or that the Company or its employees or
consultants would, by conducting its business as proposed, violate or infringe
any of the patents, trademarks, service marks, applications for each of the
foregoing, 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 or consultants 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, in
the case of employees, interfere with the use of such 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 or, in the case of consultants, which would
conflict with their obligations in serving as consultants to the Company. No
third party, including the employers or former employers of the Company's
employees and consultants, has asserted any rights or claims to the Proprietary
Information or any inventions used or proposed to be used in the Company's
business, and the Company does not believe that any such third party has a right
to assert any such rights or claims, except to the extent that such Proprietary
Information or such inventions are licensed to or from such third party. Except
pursuant to the terms of the Proprietary Information Agreements, there are no
agreements, understandings, instruments, or contracts to which the Company is a
party or by which it is bound that involve the license of any patent, copyright,
trade secret or other similar proprietary right to or from the Company.
2.18 TAX RETURNS; TAXES. The Company has accurately prepared and timely
filed all federal, state and other tax returns which are required to be filed
and has timely paid all taxes covered by such returns which have become due and
payable. The Company has not been advised that any of its returns, federal,
state or other, have been or are being audited as of the date hereof. The
Company is not delinquent in taxes or assessments and has no tax deficiency
proposed or assessed and has made no waiver of the statute of limitations
regarding assessments or collections. All taxes, if any, imposed by law in
connection with the issuance, sale and delivery of the Shares shall have been
paid, and all laws imposing such taxes shall have been fully complied with,
prior to the First Closing. Neither the Company nor any of its present or former
stockholders has ever filed an election pursuant to Section 1362 of the Internal
Revenue Code of 1986, as amended (the "Code"), that the Company be taxed as an S
corporation.
2.19 EMPLOYEES. None of the Company's employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the Company's
knowledge, no employee of or
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consultant to the Company is or will be in violation of any judgment, decree, or
order, or any term of any employment contract, patent disclosure agreement,
proprietary information and inventions agreement, or any restrictive covenant,
or any other common law obligation to a former employer, or any other contract
or agreement relating to the relationship of any such person with the Company,
or any other party, or to the use of trade secrets or proprietary information of
others, because of the nature of the business conducted or to be conducted by
the Company or the use by any such employee of his best efforts with respect to
such business or the performance by any such consultant of his obligations to
the Company. To the knowledge of the Company, no third party has claimed or has
reason to claim that any employee of or consultant to the Company has disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or interfered or
may be interfering in the employment relationship between such third party and
any of its present or former employees and, to the Company's knowledge, no such
person proposes to do any of such things. The Company is not a party to or bound
by any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement, other than with respect to the Company's 1996
Stock Plan, a true and correct copy of which has been provided to each
Purchaser. The Company is not aware that any officer, key employee or key
consultant, or that any group of key employees or key consultants, intends to
terminate their employment or consultancy with the Company, nor does the Company
have a present intention to terminate the employment or engagement as a
consultant of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company. The Company has
delivered to counsel for the Purchasers a copy of each consulting agreement to
which it is a party.
2.20 NO DEFAULTS. The Company has, in all material respects, performed all
material obligations required to be performed by it to date and is not in
default under any of the contracts, loans, notes, mortgages, indentures,
licenses, security agreements, agreements, leases, documents, commitments or
other arrangements to which it is a party or by which it is otherwise bound,
except for such defaults which in the aggregate would not have a Material
Adverse Effect, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.
2.21 INSURANCE. The Company maintains adequate insurance on its properties
of a character and in such amounts and on such terms usually insured by
corporations engaged in the same or a similar business against loss or damage
resulting from fire or other risks insured against by such corporations, and
maintains in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or in
connection with the use of any of its properties, products
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or services and maintains such other insurance as may be required by law or
other agreement to which the Company is a party.
2.22 BROKERS OR FINDERS. The Company has not incurred, and will not incur,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Agreements.
2.23 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.24 NO DIVIDENDS. The Company has never made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.
2.25 EMPLOYEE BENEFIT PLAN OBLIGATIONS. The Company does not maintain or
have any obligations with respect to any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan
within the meaning of Section 3(37) of ERISA.
2.26 QUALIFICATION AS A QUALIFIED SMALL BUSINESS. The Company is a
"qualified small business," as defined in Section 1202(b) of the Internal
Revenue Code (the "Code") and the Shares constitute "qualified small business
stock" as defined in Section 1202(c) of the Code. The Company covenants and
agrees to comply with the reporting and recordkeeping requirements of Section
1202 of the Code and any regulations promulgated thereunder and to execute and
deliver to the Purchasers and the Internal Revenue Service, from time to time,
such forms, documents, schedules and other instruments as may be reasonably
requested thereby to cause the Shares and the shares of Common Stock issuable
upon conversion of the Shares to qualify as a "qualified small business stock,"
as defined in Section 1202(c) of the Code.
2.27 FINANCIAL STATEMENTS. The Company has furnished to the Purchasers the
unaudited balance sheet of the Company as of January 31, 1996 and the related
unaudited statement of income for the period from the Company's inception
through January 31, 1996. All such financial statements fairly present the
financial position of the Company as of January 31, 1996, and the results of
operations during such period.
2.28 TRANSACTIONS WITH AFFILIATES. No director or officer or, to the
Company's knowledge, employee or stockholder of the Company, or, to the
Company's knowledge,
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member of the family of any such person, or, to the Company's knowledge, any
corporation, partnership, trust or other entity in which any such person, or any
member of the family of any such person, has a substantial interest or is an
officer, director, trustee, partner or holder of more than 5% of the outstanding
capital stock thereof, is a party to any material transaction with the Company,
including any contract, agreement or other arrangement providing for the
employment of, furnishing of services by, rental of real or personal property
from or otherwise requiring payments to any such person or firm, other than
employment-at-will arrangements in the ordinary course of business.
2.29 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each of the
officers of the Company, each key employee and each other employee now employed
by the Company who has access to confidential information of the Company has
executed the Proprietary Information Agreement substantially in the form of
Exhibit F (collectively, the "Proprietary Information Agreements"), and such
agreements are in full force and effect. The Company is not aware that any of
such persons is in violation of any such agreement.
2.30 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now and
has never been a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the Regulations
promulgated by the Internal Revenue Service, and the Company has filed with the
Internal Revenue Service all statements, if any, with its United States income
tax returns which are required under Section 1.897-2(h) of such Regulations.
SECTION 3
INVESTMENT REPRESENTATIONS
Each Purchaser, severally and not jointly, hereby represents and warrants
to the Company as follows:
3.1 POWER AND AUTHORITY. Such Purchaser has the requisite power and
authority to enter into this Agreement, to purchase the Shares hereunder, to
convert the Shares into Common Stock, and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding agreement of such Purchaser,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and general equity principles.
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3.3 EXPERIENCE; ACCREDITED INVESTOR. Such Purchaser has, from time to
time, evaluated investments in start-up companies and has, either individually
or through the personal experience of one or more of its current officers or
partners, experience in evaluating and investing in start-up companies. Such
Purchaser is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act.
3.4 INVESTMENT. Such Purchaser is acquiring the Shares (and any Common
Stock issuable upon conversion of the Shares) for investment for its own account
and not with the view to, or for resale in connection with, any distribution
thereof. Such Purchaser understands that the Shares (and any Common Stock
issuable upon conversion of the Shares) to be purchased have not been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.
3.5 RULE 144. Such Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than two years
after a party has purchased and paid for the securities to be sold, the sale
being through a "BROKER'S TRANSACTION" or in transactions directly with a
"MARKET MAKER" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations. Such
Purchaser is aware that the conditions for resale set forth in Rule 144 have not
been satisfied and that the Company has no plan to satisfy these conditions in
the foreseeable future.
3.6 NO PUBLIC MARKET. Such Purchaser understands that no public market now
exists for the Shares and that a public market may never exist for the Shares.
3.7 DISCLOSURE OF INFORMATION. Such Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Shares. Such Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares.
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SECTION 4
CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING
Each Purchaser's obligation to purchase the Shares at each Closing, as
applicable, is subject to the fulfillment on or prior to such Closing of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true when made and on and as of the
date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
4.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to such Closing shall have
been performed or complied with in all material respects.
4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Company's business or financial condition or affairs between the
date of this Agreement and the date of such Closing, if different.
4.4 SECURITIES LAWS. The Company shall have obtained all necessary permits
and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Common
Stock issuable upon conversion of the Shares.
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered on the date
of such Closing a certificate signed by the President and Chief Financial
Officer of the Company certifying that the conditions specified in Sections 4.1,
4.2, 4.3, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 have been
fulfilled.
4.6 OPINION OF COUNSEL. The Purchasers purchasing shares in such Closing
shall have received from Cooley Godward Castro Huddleson & Tatum, counsel for
the Company, an opinion dated as of such Closing in substantially the form
attached hereto as Exhibit G.
4.7 INVESTORS' RIGHTS AGREEMENT. The Company shall have executed and
delivered the Investors' Rights Agreement.
4.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at such Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchasers' counsel,
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which shall have received all such counterpart original and certified or other
copies of such documents as it may reasonably request.
4.9 SUPPORTING DOCUMENTS. The Purchasers purchasing shares in such Closing
and their counsel shall have received copies of the following documents:
(i) (A) the Certificate of Incorporation of the Company,
certified as of a recent date by the Secretary of State of the State of
Delaware and (B) a certificate of said Secretary dated as of a recent
date as to the due incorporation and good standing of the Company, the
payment of all excise taxes by the Company and listing all documents of
the Company on file with said Secretary.
(ii) a certificate of the Secretary or an Assistant Secretary
of the Company dated the date of such Closing and certifying: (A) that
attached thereto is a true and complete copy of the Bylaws of the
Company as in effect on the date of such certification; (B) that
attached thereto is a true and complete copy of all resolutions adopted
by the Board of Directors or the stockholders of the Company
authorizing the execution, delivery and performance of the Agreements,
the issuance, sale and delivery of the Shares, and the reservation,
issuance and delivery of the shares of Common Stock issuable upon
conversion of the Shares, and that all such resolutions are in full
force and effect and are all the resolutions adopted in connection with
the transactions contemplated by the Agreements; (C) that the
Certificate of Incorporation has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to
clause (i)(B) above, except for the filing of the Restated Certificate;
and (D) to the incumbency and specimen signature of each officer of the
Company executing the Agreements, the stock certificates representing
the Shares and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate
referred to in this clause (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Company
as the Purchasers or their counsel reasonably may request.
4.10 MANAGEMENT RIGHTS AGREEMENTS. The Company shall have executed and
delivered the Management Rights Agreements to those Purchasers participating in
such Closing who have made a request to the Company therefor and are subject in
any manner with respect to their investment in the Company to ERISA.
4.11 VOTING AGREEMENT. The Company and the other parties thereto shall
have executed and delivered the Voting Agreement.
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4.12 AMENDMENT TO EMPLOYMENT AGREEMENT. Timothy J. Rink and the Company
shall have entered into an amendment (the "EMPLOYMENT AMENDMENT") to the terms
of his employment arrangements with the Company in a form satisfactory to Dr.
Rink, the Purchasers and their counsel, and a copy thereof shall have been
delivered to counsel for the Purchasers.
4.13 CHARTER. The Certificate of Incorporation of the Company shall read
in its entirety as set forth in Exhibit A.
4.14 BYLAWS. The Company's Bylaws shall have been amended, if necessary,
to provide that (i) any three directors shall have the right to call a meeting
of the Board of Directors and (ii) the number of directors fixed in accordance
therewith shall in no event conflict with any of the terms or provisions of the
Series A Preferred Stock. Series B Preferred Stock and Series C Preferred Stock
as set forth in the Restated Certificate.
4.15 PROPRIETARY INFORMATION AGREEMENTS. Copies of the Proprietary
Information Agreements shall have been delivered to counsel for the Purchasers.
4.16 ELECTION OF DIRECTORS. The number of directors constituting the
entire Board of Directors shall have been fixed at seven (7) and the following
persons shall have been elected as the directors and shall each hold such
position as of the First Closing: Timothy J. Rink and Lubert Stryer, as the
directors elected solely by the holders of the Common Stock, and Kevin J.
Kinsella, Timothy J. Wollaeger, Stephen Bunting, James C. Blair and Hugh Y.
Rienhoff, Jr., as the directors elected solely by the holders of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.
4.17 CERTIFICATE AS TO DISQUALIFIED PERSONS. The Company shall have
executed and delivered to New Enterprise Associates VI, Limited Partnership
("NEA VI") a Certificate as to Disqualified Persons, as requested by NEA VI,
dated the Closing Date, in form and substance satisfactory to NEA VI.
4.18 FEES OF PURCHASERS' COUNSEL. The Company shall have paid in
accordance with Section 6.5 the reasonable fees and disbursements of Testa,
Hurwitz and Thibeault in connection with this Agreement and related transactions
as specified on a reasonably detailed invoice, detailing all time entries and
costs, submitted to counsel to the Company a reasonable time in advance of such
Closing.
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SECTION 5
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The Company's obligation to issue and sell the Shares at each Closing
is subject to the fulfillment on or prior to such Closing of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchasers contained in Section 3 shall be true when made and on and as
of the date of such Closing with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the date of such
Closing shall have been performed or complied with in all respects.
SECTION 6
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by residents of California.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
provided, however, that the rights of the Purchasers to purchase the Shares
shall not be assignable (other than to a corporation a majority of whose
outstanding voting shares are owned or controlled, directly or indirectly, by
the Purchaser) without the consent of the Company, and the Company's obligations
hereunder shall not be assignable without the consent of the Purchasers.
6.3 ENTIRE AGREEMENT. This Agreement, its Exhibits, 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.
6.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or mailed
by registered or
18
<PAGE> 23
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, to the address set forth on Schedule A hereto,
or at such other address as shall have been furnished to the Company in writing
by such Purchaser, or (b) if to the Company, one copy to its address set forth
above and addressed to the attention of the President, or at such other address
or addresses as the Company shall have furnished in writing to the Purchasers,
and one copy to Cooley Godward Castro Huddleson & Tatum, 4365 Executive Drive,
Suite 1100, San Diego, CA 92121, Attn: Thomas A. Coll, Esq. All notices and
other communications pursuant to the provisions of this Section 6.4 shall be
deemed delivered when mailed or sent by facsimile or delivered by hand or
messenger. Notwithstanding the foregoing, any notice or communication to an
address outside the United States shall be sent by facsimile and confirmed in
writing contemporaneously sent by two-day guaranteed international courier.
6.5 EXPENSES. Each party to this Agreement shall bear its own expenses
and legal fees incurred by it with respect to this Agreement and all related
transactions; provided, however, that the Company shall pay the reasonable fees
and expenses of the Purchasers' special counsel, Testa, Hurwitz and Thibeault,
in connection with this Agreement and such transactions and any subsequent
amendment, waiver, consent or enforcement thereof.
6.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
6.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is 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.
6.8 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations
and warranties made herein or in the other Agreements, or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with the
Agreements, shall survive the execution and delivery of the Agreements, the
issuance, sale and delivery of the Shares, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares, and all
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
6.9 BROKERAGE. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for brokerage or other commissions
relative to this
19
<PAGE> 24
Agreement or to the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.
6.10 AMENDMENTS. This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of the Company and
the holders of at least two-thirds of the shares of Common Stock issued or
issuable upon conversion of the Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
<PAGE> 25
The foregoing Preferred Stock Purchase Agreement is hereby executed as
of the date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By: __________________________
Title: _______________________
THE PURCHASERS:
AVALON MEDICAL PARTNERS, L.P.
By: __________________________
Title: _______________________
AVALON BIOVENTURES II, L.P.
By: __________________________
Title: _______________________
21
<PAGE> 26
KINGSBURY CAPITAL PARTNERS, L.P. II
By: Kingsbury Associates, L.P.
By: __________________________
Title: General Partner
ABINGWORTH BIOVENTURES SICAV
By: __________________________
Title: _______________________
NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership,
its General Partner
By: __________________________
Title: General Partner
NEA VENTURES 1996, L.P.
By: __________________________
Title: Authorized Signatory
22
<PAGE> 27
DP III ASSOCIATES, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: __________________________
General Partner
DOMAIN PARTNERS III, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: __________________________
General Partner
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By: __________________________
Attorney - in - Fact
PACKARD INSTRUMENT COMPANY, INC.
By: __________________________
Title: _______________________
[SIGNATURE PAGE FOR PREFERRED STOCK PURCHASE AGREEMENT]
23
<PAGE> 28
SEQUANA THERAPEUTICS, INC.
By: __________________________
Title: _______________________
GC&H INVESTMENTS
By: __________________________
Title: _______________________
______________________________
KEVIN J. KINSELLA
______________________________
ROGER Y. TSIEN
______________________________
THERESA E. GLOBE
______________________________
CHARLES S. ZUKER
24
<PAGE> 29
______________________________
MICHAEL G. ROSENFELD
______________________________
JOHN A. PORCO, JR.
______________________________
LUBERT STRYER
______________________________
ANDREA S. STRYER
______________________________
WALTER LUETOLF
FOR ADRIAN J.R. LANGINGER
______________________________
NORMAND F. SMITH
______________________________
HUGH Y. RIENHOFF, JR.
______________________________
JANICE THOMPSON
25
<PAGE> 30
THE GREENE FAMILY TRUST
By: __________________________
HOWARD E. GREENE, JR., TRUSTEE
By: __________________________
ARLINE GREENE, TRUSTEE
______________________________
TIMOTHY J. RINK
HAMBRECHT & QUIST GROUP
By: __________________________
Dennis J. Purcell
Title: _______________________
26
<PAGE> 31
SCHEDULE A
PURCHASERS OF PREFERRED STOCK
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVALON MEDICAL PARTNERS L.P. $424,998.84 319,548 Ser A $1.33 CD
1020 Prospect Street, Suite 405
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
AVALON BIOVENTURES II L.P. 499,998.87 375,939 Ser A $1.33 CD
1020 Prospect Street, Suite 405
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
KINGSBURY CAPITAL PARTNERS, L.P. II 999,999.07 751,879 Ser A $1.33 C/W
3655 Nobel Drive, Suite 490
San Diego, CA 92122
Fax: (619) 677-0800
- ---------------------------------------------------------------------------------------------------------------------------------
ABINGWORTH BIOVENTURES SICAV 3,499,998.74 2,631,578 Ser A $1.33 C/W
c/o Sanne & Cie
Boite Postale 566
L-2015 Luxemberg
Attn: Karl Sanne
Fax: 352-43-54-10
with a copy to:
Stephen Bunting
Abingworth Management Ltd.
26 St. James Street
London SW1A1HA
Fax: 44-171-930-1891
Daniel P. Finkelman
Testa Hurwitz & Thibeault
125 High Street
Boston, MA 02110
Fax: (617) 248-7100
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEW ENTERPRISE ASSOCIATES VI 2,749,999.77 2,067,669 Ser A $1.33 C/W
LIMITED PARTNERSHIP
1119 St. Paul Street
Baltimore, MD 21202
Fax: (410) 752-7721
- ---------------------------------------------------------------------------------------------------------------------------------
NEA VENTURES 1996, L.P. 9,998.94 7,518 Ser A $1.33 C/W
1119 St. Paul Street
Baltimore, MD 21202
Fax: (410) 752-7721
- ---------------------------------------------------------------------------------------------------------------------------------
DP III ASSOCIATES, L.P. 95,301.15 71,655 Ser A $1.33 C/W
One Palmer Square, Suite 515
Princeton, NJ 08542
Fax: (609) 683-9789
- ---------------------------------------------------------------------------------------------------------------------------------
DOMAIN PARTNERS III., L.P. 2,754,698.66 2,071,202 Ser A $1.33 C/W
One Palmer Square, Suite 515
Princeton, NJ 08542
Fax: (609) 683-9789
- ---------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY INVESTMENTS LIMITED 1,899,999.43 1,428,571 Ser A $1.33 C/W
One Palmer Square, Suite 515
Princeton, NJ 08542
Fax: (609)683-9789
- ---------------------------------------------------------------------------------------------------------------------------------
KEVIN J. KINSELLA 49,998.69 37,593 Ser A $1.33 C/W
Avalon Ventures
1020 Prospect Street, Suite 405
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
ROGER Y. TSIEN 199,500.00 150,000 Ser A $1.33 C/W
8535 Nottingham Place
La Jolla, CA 92037
Fax: (619) 534-5270
- ---------------------------------------------------------------------------------------------------------------------------------
THERESA E. GLOBE 50,540.00 38,000 Ser A $1.33 C/W
142 Bessborough Drive
Toronto, Ontario M4G3J6
Fax: (416) 864-3361
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CHARLES S. ZUKER 79,800.00 60,000 Ser A $1.33 C/W
UCSD
Cellular & Molecular Medicine West
La Jolla, CA 92037
Fax: (619) 534-8510
- ---------------------------------------------------------------------------------------------------------------------------------
MICHAEL G. ROSENFELD 29,999.48 22,556 Ser A $1.33 C/W
UCSD
Eukaryotic Regulatory Biology Program
Room 345 C.M.M.
9500 Gilman Drive
La Jolla, CA 92093
Fax: (619) 534-8180
- ---------------------------------------------------------------------------------------------------------------------------------
JOHN A. PORCO, JR. 4,999.47 3,759 Ser A $1.33 C/W
Argonaut Technologies, Inc.
887-G Industrial Rd., Ste. G
San Carlos, CA 94070-3305
Fax: (415) 598-1359
- ---------------------------------------------------------------------------------------------------------------------------------
LUBERT STRYER 37,499.35 28,195 Ser A $1.33 C/W
843 Sonoma Terrace
Stanford, CA 94305
Fax: (415) 498-5351
- ---------------------------------------------------------------------------------------------------------------------------------
ANDREA S. STRYER 37,499.35 28,195 Ser A $1.33 C/W
843 Sonoma Terrace
Stanford, CA 94305
Fax: (415) 498-5351
- ---------------------------------------------------------------------------------------------------------------------------------
ADRIAN J.R. LANGINGER 53,200.00 40,000 Ser A $1.33 C/W
c/o WALTER LUTOLF
ATAG Vermogensverwaltung AG
8022 Zurich
Bleicherweg 21
Postfach 5272
Fax: 01-202 33 49
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GC&H INVESTMENTS 49,998.69 37,593 Ser A $1.33 C/W
Cooley Godward Castro Huddleson & Tatum
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Fax: (619) 453-3555
- ---------------------------------------------------------------------------------------------------------------------------------
NORMAND F. SMITH 24,998.68 18,796 Ser A $1.33 C/W
Perkins, Smith & Cohen
One Beacon Street
Boston, MA 02108-3106
Fax: (617) 854-4040
- ---------------------------------------------------------------------------------------------------------------------------------
HUGH Y. RIENHOFF, JR. 4,999.47 3,759 Ser A $1.33 C/W
New Enterprise Associates
1119 St. Paul Street
Baltimore, MD 21202
Fax: (410) 752-7721
- ---------------------------------------------------------------------------------------------------------------------------------
JANICE THOMPSON 9,998.94 7,518 Ser A $1.33 C/W
P.O. Box 3471
16360 La Gracia
Rancho Santa Fe, CA 92067
Fax: (619) 756-4320
- ---------------------------------------------------------------------------------------------------------------------------------
THE GREENE FAMILY TRUST 24,998.68 18,796 Ser A $1.33 C/W
C/O HOWARD E. GREENE, JR.
9373 Towne Centre Drive
San Diego, CA 92121
Fax: (619) 552-2212
- ---------------------------------------------------------------------------------------------------------------------------------
TIMOTHY J. RINK 24,998.68 18,796 Ser A $1.33 C/W
5666 La Jolla Boulevard, #5
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
PACKARD INSTRUMENT COMPANY, INC. 999,999.00 555,555 Ser B $1.80 C/W
800 Research Parkway
Meriden, CT 06450
Fax: (203) 235-1347
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SEQUANA THERAPEUTICS, INC. 1,500,000.00 750,000 Ser C $2.00 C/W
11099 North Torrey Pines Rd., Ste. 160
La Jolla, CA 92037
Fax: (619) 452-6653
- ---------------------------------------------------------------------------------------------------------------------------------
HAMBRECHT & QUIST GROUP 499,998.60 277,777 Ser B $1.80 C/W
230 Park Ave., 21st Fl.
New York, NY 10169
Attn: Dennis J. Purcell
Fax: (212) 207-1519
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS $16,618,020.55 11,822,447
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 "C/W" indicates check or wire transfer; "CD" indicates cancellation of
indebtedness.
<PAGE> 36
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
<PAGE> 37
RESTATED CERTIFICATE OF INCORPORATION
OF
AURORA BIOSCIENCES CORPORATION
AURORA BIOSCIENCES CORPORATION, a corporation organized and existing
under the laws of the state of Delaware, hereby certifies as follows:
FIRST. The name of the corporation is Aurora Biosciences Corporation.
SECOND. The date of the filing of the corporation's original Certificate
of Incorporation with the Secretary of State of Delaware was
January 22, 1996.
THIRD. This Restated Certificate of Incorporation was duly adopted by
the corporation in accordance with Section 245 of the General
Corporation Law of the State of Delaware.
FOURTH. The Certificate of Incorporation of the corporation shall be
amended and restated to read in full as follows.
I.
The name of this corporation is AURORA BIOSCIENCES CORPORATION.
1
<PAGE> 38
II.
The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 1050 South
State Street, City of Dover, County of Kent; and the name of the registered
agent of the corporation in the State of Delaware at such address is CorpAmerica
Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.
IV.
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "COMMON STOCK" and "PREFERRED STOCK."
The total number of shares which the corporation is authorized to issue is
seventy-five million (75,000,000) shares. Fifty million (50,000,000) shares
shall be Common Stock, each having a par value of one-tenth of one cent
($0.001). Twenty-five million (25,000,000) shares shall be Preferred Stock, each
having a par value of one-tenth of one cent ($0.001). Notwithstanding Section
242 of the General Corporation Law of the State of Delaware, the number of
authorized shares of Common Stock may be increased or decreased (but not below
the number of shares then outstanding) by the affirmative vote of holders of a
majority of the outstanding shares of capital stock of the corporation, with
each such share being entitled to such number of votes per share as is provided
in this Article IV.
The Preferred Stock may be issued from time to time in one or
more series. Subject to compliance with applicable voting rights, if any, which
may have been granted to the Preferred
2
<PAGE> 39
Stock or any series thereof, the Board of Directors is hereby authorized, by
filing a certificate pursuant to the Delaware General Corporation Law, to fix or
alter from time to time the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof, including without limitation the dividend rights, dividend rate,
conversion rights, voting rights and the liquidation preferences of any wholly
unissued series of Preferred Stock, and to establish from time to time the
number of shares constituting any such series and the designation thereof, or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status that they had prior to the adoption of the resolution originally
fixing the number of shares of such series. Of the Preferred Stock, ten million
five hundred thousand (10,500,000) shares shall be designated "Series A
Preferred Stock," six hundred thousand (600,000) shares shall be designated
"Series B Preferred Stock", and eight hundred thousand (800,000) shares shall be
designated "Series C Preferred Stock." The Series A Preferred Stock, the Series
B Preferred Stock and the Series C Preferred Stock is hereinafter sometimes
collectively referred to as the "Designated Preferred."
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SERIES A,
SERIES B AND SERIES C PREFERRED STOCK.
SECTION 1. DIVIDENDS. The holders of the Designated Preferred shall be
entitled to receive dividends at the rate per annum of $0.1064 per share of
Series A Preferred Stock, $0.1440 per share of Series B Preferred Stock, and
$0.1600 per share of Series C Preferred Stock, when, as and if declared by the
Board of Directors out of any funds legally
3
<PAGE> 40
available therefor, prior and in preference to any declaration or payment of any
dividend on the Common Stock of this corporation ("COMMON") payable other than
in Common. Such dividends shall not be cumulative. Such dividends shall be
distributed ratably among the holders of each Series of Designated Preferred
based on the full dividend to which such holder is entitled. No dividends or
other distributions shall be made with respect to the Common in any year, other
than dividends payable solely in Common, unless and until (i) the full amount of
the dividend provided for above with respect to the Designated Preferred for
such year has been paid or declared and set apart for payment, and (ii) an equal
dividend per share shall have been paid or declared and set apart for payment to
the holders of the Designated Preferred (in addition to the dividend provided
for above) for each share of Common which the holders of the Designated
Preferred then have the right to acquire upon conversion of their respective
shares under this Certificate.
SECTION 2. LIQUIDATION PREFERENCE.
A. In the event of any liquidation, dissolution or winding up
of the corporation, either voluntary or involuntary, the holders of the
Designated 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 Common by reason of their ownership thereof: (i) the sum of $1.33
per share of Series A Preferred Stock, $1.80 per share of Series B Preferred
Stock, and $2.00 per share of Series C Preferred Stock then held by them (such
amounts per share with respect to each such Series are hereinafter referred to
as the "Original Issue Price"), and (ii) an amount equal to all declared but
unpaid dividends on the Designated Preferred then held by them. If, upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Designated Preferred shall be insufficient to permit the payment
to such holders of the full aforesaid
4
<PAGE> 41
preferential amount, then the entire assets and funds of the corporation legally
available for distribution shall be distributed ratably among the holders of the
Designated Preferred in proportion to the preferential amount each such holder
would have been entitled to receive pursuant to this Section 2a. if such
distribution had been sufficient to permit the full payment of such preferential
amount.
B. Upon the completion of the distribution provided for in
Section 2a., all of the assets remaining in the corporation, if any, shall be
distributed pro rata among the holders of the Common, based upon the number of
shares of Common held by each such holder.
C. For purposes of this Section 2, a merger or consolidation of
this corporation with or into any other corporation or corporations where the
stockholders of this corporation immediately prior to such merger or
consolidation do not beneficially own more than 50% of the outstanding voting
stock of the surviving entity immediately following such merger or consolidation
and in which the stockholders of this corporation receive distributions in cash
or in securities of another corporation as a result of such merger or
consolidation, or a sale or other disposition of all or substantially all of the
assets of the corporation, shall be treated as a liquidation, dissolution or
winding up of the corporation.
SECTION 3. CONVERSION. The holders of the Designated Preferred shall
have conversion rights as follows (the "CONVERSION RIGHTS"):
A. OPTIONAL CONVERSION. Each share of Designated Preferred
shall be convertible at the option of the holder thereof, without payment of
additional consideration, at any time, at the office of the corporation or any
transfer agent for the Designated Preferred, into one share of Common, subject
to adjustment as provided in Sections 3.d. and 3.e. below.
5
<PAGE> 42
B. AUTOMATIC CONVERSION. Each share of Designated Preferred
shall automatically be converted into the number of shares of Common into which
such share of Designated Preferred is then convertible pursuant to Section 3a
(i) in the event that the holders of not less than sixty-seven percent (67%) of
the outstanding Designated Preferred consent to such conversion, or (ii) upon
the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "ACT"), covering the offer and sale by the corporation of Common to the
public at an aggregate offering price of not less than $10,000,000 (prior to
underwriters' discounts and expenses), and at a public offering price not less
than $6.00 per share, subject to adjustment for stock splits, stock dividends,
reorganizations and the like with respect to the Common.
C. MECHANICS OF CONVERSION.
(1) No fractional shares of Common shall be issued upon
conversion of the Designated Preferred. In lieu of any fractional share, the
corporation shall pay cash equal to such fraction multiplied by the then current
fair market value of a share of Common as determined in good faith by the Board
of Directors of the corporation. Before any holder of Designated Preferred shall
be entitled to convert the same into shares of Common, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Designated Preferred, and shall
give written notice to the corporation at such office that it elects to convert
the same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 3b.). The
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Designation Preferred a certificate or certificates,
registered in such names as specified by the
6
<PAGE> 43
holder, for the number of shares of Common to which such holder shall be
entitled as aforesaid, and a check payable to the holder in the amount of any
amounts payable for fractional shares and any declared and unpaid dividends on
the converted Designated Preferred. 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 the Designated Preferred to be converted, and the person or
persons entitled to receive the shares of Common issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common on such date (except that in the event of an automatic conversion
pursuant to Section 3b.(i), such conversion shall be deemed to have been made at
the close of business on the date fixed in the vote approving such automatic
conversion and in the event of automatic conversion pursuant to Section 3b.(ii),
such conversion shall be deemed to have been made immediately prior to the
closing of the offering referred to in Section 3b.(ii)). If the conversion is in
connection with an underwritten offer of securities registered pursuant to the
Act, the conversion may, at the option of any holder tendering Designated
Preferred for conversion, be conditioned upon the closing with the underwriter
of the sale of securities pursuant to such offering, in which event the
person(s) entitled to receive the Common issuable upon such conversion of
Designated Preferred shall not be deemed to have converted such Designated
Preferred until immediately prior to the closing of such sale of securities. If
such conversion is in connection with a merger, consolidation or sale of assets
which would be treated as a liquidation, dissolution or winding up of the
corporation in accordance with and for purposes of Section 2, the conversion
may, at the option of the holder tendering Designated Preferred for conversion,
be conditioned upon the consummation of such transaction, in which event the
person(s) entitled to receive the Common issuable upon such conversion of
Designated
7
<PAGE> 44
Preferred shall not be deemed to have converted such Designated Preferred until
immediately prior to the consummation of such transaction.
D. ADJUSTMENTS FOR SUBDIVISIONS, DIVIDENDS, COMBINATIONS
OR CONSOLIDATIONS OF COMMON.
(1) In the event the outstanding shares of Common shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common, the number of shares of Common into which the Designated
Preferred is convertible immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such combination or consolidation,
be proportionately decreased.
(2) In the event the corporation shall declare or pay any
dividend on the Common payable in Common or in the event the outstanding shares
of Common shall be subdivided, by reclassification or otherwise than by payment
of a dividend in Common, into a greater number of shares of Common, the number
of shares of Common into which the Designated Preferred is convertible
immediately prior to such dividend or subdivision shall be proportionately
increased:
(A) in the case of any such dividend, immediately
after the close of business on the record date for the determination of holders
of any class of securities entitled to receive such dividend, or
(B) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such corporate
action becomes effective.
8
<PAGE> 45
(3) If such record date shall have been fixed and such
dividend shall not have been fully paid on the date fixed therefor, the
adjustment previously made in accordance with this Subsection d. shall be
canceled (to the extent such dividend was not paid) as of the close of business
on the date so fixed, and thereafter the number of shares of Common into which
the Designated Preferred is convertible shall be adjusted as of the time of
actual payment of such dividend.
E. ADJUSTMENTS FOR OTHER RECLASSIFICATIONS, DIVIDENDS AND
DISTRIBUTIONS. If there occurs any capital reorganization or any
reclassification of the capital stock of the corporation (other than any
subdivision, dividend, combination, consolidation or other transaction provided
for in Section 3d), each share of Designated Preferred shall thereafter be
convertible into the same kind and amounts of securities or other assets, or
both, that were issuable or distributable to the holders of shares of
outstanding Common Stock of the corporation upon such reorganization or
reclassification, in proportion to that number of shares of Common Stock into
which such shares of Designated Preferred might have been converted immediately
prior to such reorganization or reclassification; and in any such case,
appropriate adjustments (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of Designated Preferred to the end that
the provisions of this Certificate shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or other assets thereafter
deliverable upon the conversion of the Designated Preferred.
F. NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation, by filing a Certificate of Designation or through
any reorganization,
9
<PAGE> 46
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 3 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 Designated Preferred against impairment.
G. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment, pursuant to this Section 3, of the number of shares
of Common into which any shares of Designated Preferred are convertible, the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such shares of Designated 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, upon the written request at any
time of any holder of Designated Preferred, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the number of shares of Common into which the Designated
Preferred is then convertible, and (iii) the number of shares of Common and the
amount, if any, of other property which at the time would be received upon the
conversion of Designated Preferred.
H. NOTICES OF RECORD DATE. In the event that this Corporation
shall propose at any time:
(1) to declare any dividend or distribution upon the
Common, 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;
10
<PAGE> 47
(2) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights;
(3) to effect any reclassification or recapitalization of
its Common shares outstanding involving a change in the Common shares; or
(4) 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 Designated
Preferred:
(A) at least 10 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 shares shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (1) and (2) above; and
(B) in the case of the matters referred to in (3) and
(4) above, at least 10 days' prior written notice of the date when the same
shall take place (and specifying, if practicable, or estimating the date on
which the holders of Common shares shall be entitled to exchange their Common
shares for securities or other property deliverable upon the occurrence of such
event).
(C) Each such written notice shall be given by first
class mail, postage prepaid, addressed to the holders of the Designated
Preferred at the address for each such holder as shown on the books of this
Corporation; provided that any such notice to an address
11
<PAGE> 48
outside the United States shall be given by facsimile and confirmed in writing
contemporaneously sent by two-day guaranteed international courier.
I. COMMON STOCK RESERVED. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Designated Preferred, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding shares of
Designated Preferred, and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then-outstanding shares of Designated Preferred, the Corporation shall take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
J. ISSUE TAX. The issuance of certificates for shares of Common
upon conversion of Designated Preferred shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Designated Preferred which is being
converted.
K. CLOSING OF BOOKS. The corporation will at no time close its
transfer books against the transfer of any Designated Preferred or of any shares
of Common issued or issuable upon the conversion of any shares of Designated
Preferred in any manner which interferes
12
<PAGE> 49
with the timely conversion of such Designated Preferred, except as may otherwise
be required to comply with applicable securities laws.
SECTION 4. VOTING RIGHTS.
A. GENERAL. Except as otherwise required by law or this
Certificate of Incorporation, (i) each share of Common issued and outstanding
shall have one vote; (ii) each share of Designated Preferred issued and
outstanding shall have a number of votes equal to the number of Common shares
(including fractions of a share) into which such share of Designated Preferred
is then convertible as adjusted from time to time pursuant to Section 3 hereof;
and (iii) the Common and the Designated Preferred and any other class and series
of Stock of the corporation shall vote together as a single class.
B. BOARD SIZE. The corporation shall not, without the written
consent or affirmative vote of the holders of at least sixty-seven percent (67%)
of the then outstanding shares of Designated Preferred, given in writing or by
vote at a meeting, consenting or voting (as the case may be) separately as a
class, increase the maximum number of directors constituting the Board of
Directors to a number of excess of nine (9).
C. BOARD SEATS. The holders of the Designated Preferred, voting
as a separate class, shall be entitled to elect five (5) directors of the
corporation. The holders of Common, voting as a separate class, shall be
entitled to elect two (2) directors of the corporation. At any meeting (or in a
written consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of a
majority of the shares of Designated Preferred then outstanding shall constitute
a quorum of the Designated Preferred for
13
<PAGE> 50
the election of directors to be elected solely by the holders of the Designated
Preferred. A vacancy in any directorship elected by the holders of the
Designated Preferred shall be filled only by vote or written consent of the
holders of the Designated Preferred and a vacancy in any directorship elected by
the holders of Common shall be filled only by vote or written consent of the
holders of Common. A director elected by the holders of Designated Preferred may
be removed without cause only by vote of holders of a majority of the
outstanding shares of Designated Preferred and a director elected by the holders
of Common may be removed without cause only by vote of holders of a majority of
the outstanding shares of Common.
SECTION 5. COVENANTS.
A. In addition to any other rights provided by law, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than sixty-seven percent (67%) of all
outstanding shares of Designated Preferred, voting together as a class:
(1) make any amendment to the corporation's Certificate of
Incorporation or Bylaws that would materially and adversely alter or change the
rights, preferences, or privileges of the outstanding Designated Preferred;
(2) increase or decrease the authorized number of shares of
Preferred Stock or any Series thereof;
(3) create (by reclassification, Certificate of Designation
or otherwise) any new class or series of shares of stock having a preference
over the Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock with respect to voting rights, liquidation preferences, or
dividends; increase the authorized amount of any class or series of shares
14
<PAGE> 51
of stock having a preference over the Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock with respect to voting rights,
liquidation preferences or dividends; or create or authorize (by
reclassification, Certificate of Designation or otherwise) any obligation or
security convertible into shares of any class or series of stock having a
preference over the Series A Preferred Stock, Series B Preferred Stock or Series
C Preferred Stock with respect to voting rights, liquidation preferences or
dividends; or
(4) take any action that results in any liquidation,
dissolution or winding up of the corporation or any merger, consolidation, or
other corporate reorganization, or effect any transaction in which all or
substantially all of the assets of the corporation are sold or otherwise
disposed of.
B. In addition to any other rights provided by law, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the outstanding shares of a particular
Series of Designated Preferred, take any action that would (i) materially and
adversely alter or change the rights, preferences, or privileges of such Series
in a manner different than the other Series, (ii) increase or decrease the
authorized number of shares of such Series or (iii) amend the terms of another
Series of Designated Preferred which, when established, was pari pasu with such
Series with respect to voting rights, liquidation preferences or dividends, if
such amendment results in the other Series having a preference over such Series
with respect to voting rights, liquidation preferences or dividends..
SECTION 6. STATUS OF CONVERTED OR REDEEMED STOCK. In case any shares
of Designated Preferred shall be converted pursuant to Section 3 hereof, the
shares so converted shall resume the status of authorized but unissued and
undesignated shares of Preferred Stock.
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<PAGE> 52
SECTION 7. RESIDUAL RIGHTS. All rights accruing to the outstanding
shares of this corporation not expressly provided for to the contrary herein
shall be vested in the Common.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. Subject to Section 4b of
Article IV, the number of directors which shall constitute the whole Board of
Directors shall be fixed by the Board of Directors in the manner provided in the
Bylaws, provided that such number shall not be less than the number of directors
provided for in Section 4 of Article IV.
B. Subject to Section 5 of Article IV, the Board of Directors may from
time to time make, amend, supplement or repeal the Bylaws; provided, however,
that (subject to such Section 5) the stockholders may change or repeal any Bylaw
adopted by the Board of Directors by the affirmative vote of the holders of a
majority of the voting power of all of the then outstanding shares of the
capital stock of the corporation (considered for this purpose as one class);
and, provided further, that no amendment or supplement to the Bylaws adopted by
the Board of Directors shall vary or conflict with any amendment or supplement
thus adopted by the stockholders.
C. The directors of the corporation need not be elected by written ballot
unless the Bylaws so provide.
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<PAGE> 53
D. Following the effectiveness of the registration of any class of
securities of the corporation pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, no action shall be taken by the stockholders
of the corporation except at an annual or special meeting of stockholders called
in accordance with the Bylaws and no action shall be taken by the stockholders
by written consent.
E. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A director of the corporation shall, to the full extent not prohibited by
the Delaware General Corporation Law, as the same exists or may hereafter be
amended, not be liable to the corporation or its stockholders for monetary
damages for breach of his fiduciary duty as a director.
VII.
The corporation is to have perpetual existence.
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VIII.
Subject to the provisions of this Certificate of Incorporation, 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 the stockholders herein are
granted subject to this right.
IN WITNESS WHEREOF, said Aurora Biosciences Corporation has caused this
Certificate to be signed by its President and Chief Executive Officer, Timothy
J. Rink, and attested to by its Secretary, John T. Hendrick, this 6th day of
March, 1996.
-------------------------------------
TIMOTHY J. RINK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
- ---------------------------------
JOHN T. HENDRICK
SECRETARY
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<PAGE> 55
EXHIBIT B
SCHEDULE OF EXCEPTIONS
<PAGE> 56
EXHIBIT C
INVESTORS' RIGHTS AGREEMENT
<PAGE> 57
AURORA BIOSCIENCES CORPORATION
INVESTORS RIGHTS AGREEMENT
MARCH 8, 1996
<PAGE> 58
AURORA BIOSCIENCES CORPORATION
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (the "AGREEMENT") is entered into as
of March 8, 1996 among Aurora Biosciences Corporation, a Delaware corporation
(the "COMPANY"), with its principal office located at 1020 Prospect Street,
Suite 405, La Jolla, CA 92037 and the persons or entities listed as
Stockholders in the signature pages hereto who execute this Agreement (each a
"Stockholder", collectively, the "STOCKHOLDERS"). This Agreement is being
entered into pursuant to Section 4.7 of that certain Preferred Stock Purchase
Agreement of even date herewith (the "PURCHASE AGREEMENT") among the Company
and the Stockholders.
In consideration of the mutual agreements, covenants and conditions
contained herein, the Company and the Stockholders hereby agree as follows
(unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned in the Purchase Agreement):
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
1.1. RESTRICTIONS ON TRANSFERABILITY. Neither the shares of the
Company's Series A, Series B or Series C Preferred Stock purchased by the
Stockholders pursuant to the Purchase Agreement (the "DESIGNATED PREFERRED")
nor the Registrable Securities (as defined below) shall be transferable except
upon compliance with (i) the Right of First Refusal set forth in Section 45 of
the Company's Bylaws, (ii) the conditions specified in this Agreement, which
conditions are intended to insure compliance with the provisions of the
Securities Act (as defined below), and (iii) if such shares are Restricted
Securities, upon such other terms as are in the opinion of counsel to the
Company necessary to comply with the provisions of the Securities Act;
provided, however that such restrictions shall not apply to transfers under the
circumstances described in Sections 1.5, 1.6 or 1.7 and that the requirements
of clause (iii) shall not apply to a transfer without consideration to one or
more partners or shareholders of the Stockholder (e.g., an in-kind distribution
pursuant to the terms of the Stockholder's governing documents). Except for
transfers made pursuant to Rule 144 of the Securities Act, each Stockholder
will cause any proposed transferee of Designated Preferred or Registrable
Securities held by such Stockholder to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Agreement
and it will be a condition precedent to the effectiveness of any such transfer
that such Stockholder shall have secured a written agreement of such transferee
in form and substance satisfactory to the Company to that effect, if so
requested by the Company; provided, however, that this sentence shall not apply
with respect to any proposed transferee in whose hands the transferred shares
will not be Restricted Securities.
1.2. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
1.
<PAGE> 59
"COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
Company, as constituted on the date of this Agreement.
"FORM S-3" shall mean Form S-3 under the Securities Act (as defined
below) as in effect on the date of this Agreement, or any substantially
similar, equivalent or successor form under the Securities Act.
"HOLDER" shall mean each holder of Registrable Securities.
"INITIAL PUBLIC OFFERING" shall mean the Company's initial firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "ACT"), covering
the offer and sale by the Company of Common Stock to the public at an aggregate
offering price of not less than $10,000,000 (prior to underwriters' discounts
and expenses), and at a public offering price not less than $6.00 per share,
subject to adjustment for stock splits, stock dividends, reorganizations and
the like with respect to such shares.
"REGISTRABLE SECURITIES" means shares of the Company's Common Stock
(i) issued or issuable upon conversion of Designated Preferred which have not
been sold to the public, and (ii) issued in respect of the shares of Common
Stock referred to under the foregoing clause (i) by reason of any stock split,
stock dividend, recapitalization or similar event which have not been sold to
the public.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 hereof other than Selling
Expenses, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel,
blue sky fees and expenses (including counsel fees), and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legends set forth in Section 1.3 hereof or legends
substantially similar thereto.
"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.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
1.3. RESTRICTIVE LEGEND(S). Each certificate representing the
shares of Designated Preferred and Registrable Securities shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with legends in the following form (in addition to any
other legend required by the Bylaws of the Company, or under applicable
California or other state securities laws):
2.
<PAGE> 60
(A) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION.
(B) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION'S
STOCKHOLDERS, AS PROVIDED IN THE BYLAWS OF THE CORPORATION.
1.4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to
comply, in addition to the requirements of Section 45 of the Company's Bylaws,
in all respects with the provisions of this Section 1.4. Prior to any proposed
transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in transactions in compliance with Rule 144 and except for
transfers without consideration to one or more partners or shareholders of the
holder (e.g., an in-kind distribution pursuant to the terms of the holder's
governing documents)) by either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to the Company (it being agreed that Testa
Hurwitz & Thibeault is satisfactory) addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission, a copy of any holder's request (together with all supplements or
amendments thereto) for which shall have been provided to the Company, at or
prior to the time of first delivery to the Commission's staff, to the effect
that the transfer of such securities without registration will not result in a
recommendation by such staff that action be taken with respect thereto,
whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to the Company. Each certificate evidencing the
Restricted Securities transferred as provided for above shall bear the
appropriate restrictive legends set forth in Section 1.3 above, except that
such certificate shall not bear the restrictive legend set forth in Section
1.3(a) above if, in the opinion of counsel for the Company or counsel for such
holder, such legend is not required in order to establish compliance with any
provisions of the Securities Act and except that such certificate shall not
bear the restrictive legend set forth in Section 1.3(b) above if the right of
first refusal set forth in the Company's Bylaws is no longer applicable.
1.5. DEMAND REGISTRATION RIGHTS.
(A) Commencing on the earlier of (i) five (5) years after
the date hereof, or (ii) one (1) year after the Company's initial public
offering of securities pursuant to a registration statement
3.
<PAGE> 61
under the Securities Act, if the Company shall receive a written request
(specifying that it is being made pursuant to this Section 1.5) from the
Holders of at least fifty percent (50%) of the Registrable Securities that the
Company file a registration statement or similar document under the Securities
Act covering the registration of the greater of (i) 20% of the shares which are
then Registrable Securities, or (ii) Registrable Securities the expected
aggregate offering price to the public of which is at least $5,000,000, then
the Company shall promptly notify all other Holders of such request and shall
use its best efforts to promptly and expeditiously cause all Registrable
Securities that such Holders have requested, within 15 days after receipt of
such written notice, to be registered in accordance with this Section 1.5 to be
registered under the Securities Act. The Holders making the written request
pursuant to this Section 1.5 shall be referred to hereinafter as the
"INITIATING HOLDERS".
Notwithstanding the foregoing: (i) the Company shall not be obligated
to effect a registration pursuant to this Section 1.5 during the period
starting with the date one hundred twenty (120) days prior to the Company's
estimated date of filing of, and ending on a date one hundred twenty (120) days
following the effective date of, a registration statement pertaining to an
underwritten public offering of the Company's securities, provided that the
Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective and that the Company's estimate
of the date of filing such registration statement is made in good faith; or
(ii) if the Company shall furnish to such Holders 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 for a registration statement 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 six (6) months;
provided, however, that the Company shall not obtain such a deferral more than
once in any 12-month period.
The Company shall not be obligated to effect more than two (2)
registrations pursuant to this Section 1.5 for which holders of Registrable
Securities are the Initiating Holders; provided, however that such obligation
shall be deemed satisfied only when a registration statement covering all
Registrable Securities requested by Holders to be registered pursuant to such
demand shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.
(B) If the Initiating Holders intend to distribute the
Registrable Securities covered by their demand by means of an underwriting,
they shall so advise the Company as part of their demand made pursuant to this
Section 1.5, and the Company shall include such information in the notice
referred to in Section 1.5(a). In such event, the right of any Holder to
registration pursuant to this Section 1.5 shall be conditioned upon such
Holder's participation 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) to the extent
provided herein.
The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting
agreement in customary form with the underwriter or underwriters selected by a
majority of interest of the Initiating Holders and reasonably satisfactory to
the Company. Notwithstanding any other provision of this Section 1.5, if the
underwriter shall advise the Company in writing that marketing factors
(including, without limitation, an adverse effect on the per share offering
price) require a limitation of the number of shares to be underwritten, then
the
4.
<PAGE> 62
Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be reduced and shall be allocated pro rata among such
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing
the registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
If any Holder disapproves of the terms of the underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so
withdrawn shall also be withdrawn from registration. If by the withdrawal of
such Registrable Securities a greater number of Registrable Securities held by
other Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other securityholders) in such registration if
the underwriter so agrees and if the number of Registrable Securities that
would otherwise have been included in such registration and underwriting will
not thereby be limited and if such inclusion will not adversely affect the
marketing of the Registrable Securities.
Except for registration statements on Form S-4, S-8 or any successor
thereto, the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other stockholders, from the date of receipt of a request for registration
from Initiating Holders pursuant to this Section 1.5 until the earlier of (a)
one hundred twenty (120) days from the receipt of the initial request pursuant
to Section 1.5(a) or (b) the completion of the period of distribution of the
registration contemplated thereby. Although the Company shall have no
obligation to register any Designated Preferred, in any underwritten public
offering contemplated by this Section 1.5 or Section 1.6 or 1.7, holders of
Designated Preferred shall be entitled to sell shares of Designated Preferred
representing Registrable Securities to be included in such underwriting to the
underwriters for conversion and sale of the Registrable Securities issued upon
conversion thereof.
1.6. COMPANY REGISTRATION.
(A) If, at any time or from time to time, the Company
shall determine to register any of its securities, either for its own account
or the account of a security holder or holders exercising their respective
demand registration rights, other than a registration (A) relating solely to
employee benefit plans on Form S-8 or similar forms which may be promulgated in
the future, (B) a registration on Form S-4 or similar forms which may be
promulgated in the future relating solely to a Securities and Exchange
Commission Rule 145 or similar transaction or (C) in connection with the
Company's Initial Public Offering, the Company will (i) promptly give to each
Holder written notice thereof and (ii) include in such registration (and any
related qualification under Blue Sky laws or other compliance),
5.
<PAGE> 63
and in any underwriting involved therein, all Registrable Securities of such
Holders as specified in a written request or requests made within 15 days after
receipt of such written notice from the Company.
(B) If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company
shall so indicate in the notice given pursuant to Section 1.6(a). In such
event the right of any Holder to registration pursuant to this Section 1.6
shall be conditioned upon such Holder's agreeing to participate in such
underwriting and in the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. 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 in customary form with the
underwriter or underwriters selected for such underwriting by the Company or by
other holders exercising any demand registration rights to the extent such
holders are not excluded from the registration pursuant to the Underwriter
Cutback described below. Notwithstanding any other provision of this Section
1.6, if the underwriter determines that marketing factors require a limitation
of the number of shares to be underwritten, the underwriter may exclude some or
all Registrable Securities or other securities from such registration and
underwriting (hereinafter an "UNDERWRITER CUTBACK"). In the event of an
Underwriter Cutback, the Company shall so advise all Holders and the other
holders distributing their securities through such underwriting, and the
Underwriter Cutback shall be implemented on the basis that the holders who are
not Holders shall be cut back before any cutback of Holders. If the limitation
determined by the underwriter requires an Underwriter Cutback with respect to
the Registrable Securities to be included, such Underwriter Cutback shall be in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. If any Holder disapproves of the terms of any such underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company
and the underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
1.7. FORM S-3 REGISTRATION RIGHTS. After the Initial Public
Offering, the Company shall use its best efforts to qualify for registration on
Form S-3, and to that end the Company shall use its best efforts to comply with
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), within twelve (12) months following the effective date of
the first registration of any securities of the Company for an underwritten
registered public offering. After the Company has qualified for the use of
Form S-3, and subject to the provisions of Section 1.14, each Holder shall have
the right to request registrations on Form S-3 (such requests shall be in
writing and shall state the number of shares of Registrable Securities to be
disposed of and the intended method of disposition of such shares by each such
Holder), subject only to the following limitations:
(A) The Company shall not be obligated to cause a
registration on Form S-3 to become effective prior to one hundred twenty (120)
days following the effective date of a Company initiated registration (other
than a registration effected solely to qualify an employee benefit plan or to
effect a business combination pursuant to Rule 145);
(B) The Company shall not be required to effect a
registration pursuant to this Section 1.7 unless the Holder or Holders
requesting such a registration propose to dispose of shares of Registrable
Securities having an aggregate disposition price (before deduction of
underwriting discounts and expenses of sale) of at least $1,000,000 (unless the
value of all of the Registrable
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Securities held by all Holders is less than $1,000,000, in which case the
Holders shall be entitled to a final demand registration pursuant to this
Section 1.7 for an amount equal to the value of the Registrable Securities held
by all Holders at the time of such demand; provided that for purposes of the
foregoing, "value" shall be determined based on the average of the last sale
prices of the Company's Common Stock on the principal exchange or market on
which such Common Stock is traded during the five (5) trading days immediately
preceding such demand);
(C) The Company shall not be required to effect a
registration pursuant to this Section 1.7 if the Company shall furnish to the
requesting Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company it
would be seriously detrimental to the Company or its stockholders for the
registration statement to be filed at the date filing would be required, in
which case the Company shall have an additional period of not more than one
hundred twenty (120) days within which to file such registration statement;
provided however, that the Company shall not use this right more than once in
any twelve-month period;
(D) The Company shall not be required to maintain and
keep any such registration on Form S-3 effective for a period exceeding one
hundred twenty (120) days from the effective date thereof; and
(E) The Company shall not be obligated to cause a
registration on Form S-3 if in the prior twelve-month period the Company has
caused a registration on Form S-3 to become effective as the result of a
request pursuant to this Section 1.7.
The Company shall give notice to all Holders of the receipt of a
request for registration pursuant to this Section 1.7 and shall use its best
efforts to cause all Registrable Securities that such Holders have requested,
within 15 days after receipt of such written notice, be registered in
accordance with this Section 1.7 to be registered under the Securities Act.
Subject to the foregoing, the Company will use its best efforts to effect
promptly any registration pursuant to this Section 1.7. The provisions of
Section 1.5(b) shall apply to any registration effected pursuant to this
Section 1.7
1.8. EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of one special counsel to the selling Holders)
shall be borne by the Company. Notwithstanding anything to the contrary
herein, the Company shall not be required to pay for any expenses of any
registration proceeding under Section 1.5 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to have been registered, unless such Holders agree to
forfeit their right to a demand registration pursuant to Section 1.5 (in which
event such right shall be forfeited by all Holders). In the absence of such an
agreement to forfeit, the Holders of Registrable Securities to have been
registered shall bear all such expenses pro rata on the basis of the
Registrable Securities to have been registered. Notwithstanding the foregoing,
however, if at the time of the withdrawal, the Holders have learned of a
material adverse change in the condition, business, or prospects of the Company
from that known to the Holders at the time of their request, of which the
Company had knowledge at the time of the request, then the Holders shall not be
required to pay any of said expenses and shall retain their rights pursuant to
Section 1.5.
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1.9. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(A) Keep such registration, qualification or compliance
effective for a period of one hundred twenty (120) days or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs;
(B) 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;
(C) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(D) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders or the underwriters, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(E) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with (and provide customary due diligence materials
and information to) the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(F) 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; and
(G) use its best efforts to list the Registrable
Securities covered by such registration statement with any securities exchange
on which the Common Stock of the Company is then listed.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.
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1.10. INDEMNIFICATION.
(A) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or 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, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will promptly reimburse each
such Holder, each of its officers and directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred (as
and when incurred) in connection with investigating, preparing to defend or
defending any such claim, loss, damage, liability or action, provided 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 on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(B) 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, severally and not jointly
indemnify the Company, each of its directors and officers, 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
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and partners and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof)
including any of the foregoing incurred in settlement of any litigation
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance or 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, in the light of the circumstances in which they were made, not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification, or compliance, and will promptly
reimburse the Company, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred (as and when incurred) in connection with investigation,
preparing to defend or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged
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omission) is made in such registration statement, prospectus, offering circular
or other document or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by an
instrument duly executed by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of each such Holder hereunder
shall be limited to an amount equal to the proceeds to each such Holder of
Registrable Securities sold in such registration as contemplated herein.
(C) Each party entitled to indemnification under this
Section 1.10 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense; provided, however, that, if the defendants in any
such claim or litigation include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 1 unless
such failure resulted in actual detriment to the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party a release from all liability in respect of such claim or
litigation.
(D) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the Indemnifying
Party and of the Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission, provided, however, that in no case will any seller of
Registrable Securities be required to contribute any
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amount in excess of the amount of proceeds to such seller of Registrable
Securities sold pursuant to the registration statement with respect to which
the contribution obligation arose.
(E) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1 and otherwise.
1.11. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.
1.12. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:
(A) Use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act at all times after the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(B) Use its best efforts to then file with the Commission
in a timely manner all reports and other documents required of the Company
under the Exchange Act at any time after it has become subject to such
reporting requirements;
(C) So long as a Stockholder owns any Restricted
Securities, to furnish to the Stockholder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of said Rule 144 (at any time after 90 days after the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public) and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as a Stockholder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Stockholder to sell any such securities without registration.
1.13. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted under Sections 1.5, 1.6 and 1.7 may be
assigned or otherwise conveyed to a transferee or assignee of Registrable
Securities, who shall be considered a "Holder," and the transferred shares
shall be considered "Registrable Securities," for purposes of this Section 1,
provided that (i) said transferee acquires Registrable Securities (including
shares of Designated Preferred prior to conversion into Registrable Securities)
in a private transaction, and (ii) the Company is given written notice by such
Holder at the time of or within a reasonable time (but not more than 30 days)
after said transfer, stating the name and address of said transferee or
assignee and identifying the securities with respect to
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which such registration rights are being assigned, subject to said transferee's
agreement to be bound by and comply with the provisions of this Section 1.
1.14. TERMINATION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to this Section 1 shall terminate (i) upon the seventh
anniversary of the effective date of the Initial Public Offering or (ii) if
earlier, as to any individual Holder, at such time after the Company's Initial
Public Offering as all Registrable Securities held by such Holder can be sold
within any three-month period without compliance with the registration
requirements of the Securities Act pursuant to Rule 144 (including Rule 144(k))
promulgated thereunder.
1.15. "MARKET STAND OFF" AGREEMENT. Each Holder hereby agrees that
it shall not, to the extent requested by the Company and the underwriters
managing any underwritten offering of the Company's Common Stock (or other
securities), sell or otherwise transfer or dispose of (other than to those who
agree to be similarly bound) any Registrable Securities or any 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 in connection
with the Company's Initial Public Offering. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities and other securities of the Holders (and the shares or
securities of every other person subject to the foregoing restriction) until
the end of such one hundred eighty (180) day period.
1.16. OTHER REGISTRATION RIGHTS. The Company shall not grant to any
third party any registration rights more favorable than or inconsistent with
any of those contained herein, so long as any of the registration rights under
this Agreement remains in effect.
1.17. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often
as, there is any change in the Common Stock or the Designated Preferred by way
of a stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that
the rights and privileges granted hereby shall continue with respect to the
Common Stock or the Designated Preferred as so changed.
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS
2.1. FINANCIAL INFORMATION. Subject to Section 2.16, the Company
will furnish the following reports to the Stockholders for so long as the
Stockholders are Holders of Registrable Securities:
(A) As soon as practicable after the end of each fiscal
year (other than the fiscal year ended March 31, 1996), and in any event within
90 days thereafter, audited consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of income, stockholders= equity and cash flows of the Company and
its subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of recognized national standing
selected by the Company; and
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(B) As soon as practicable after the end of each fiscal
quarter, and in any event within 45 days thereafter, unaudited consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such quarter, and unaudited consolidated statements of income, stockholders'
equity and cash flows of the Company and its subsidiaries, if any, for such
quarter and for the period from the beginning of the fiscal year to the end of
such quarter, prepared in accordance with generally accepted accounting
principles (but subject to normal year-end audit adjustments) and certified by
the chief financial officer.
2.2. ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights
granted pursuant to Section 2.1 and Section 2.3 may be assigned by the
Stockholders (or by any permitted transferee of any such rights) so long as (i)
the Company is given notice of any such assignment within a reasonable time
after the date the same is effected, (ii) the transferee shall have acquired
Registrable Securities (including shares of Designated Preferred prior to
conversion into Registrable Securities) in a private transaction, and (iii) the
transferee is not engaged in a business that is competitive with the Company.
2.3. INSPECTION AND VISITATION RIGHTS. Each Stockholder, so long
as such Stockholder holds Registrable Securities, shall have the right to visit
and inspect the Company's principal place of business, subject to such
limitations and restrictions as the President of the Company in good faith
determines to be necessary for the protection of the Company's Proprietary
Information.
2.4. RESERVE FOR CONVERSION SHARES. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Designated Preferred
and otherwise complying with the terms of this Agreement, such number of its
duly authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Designated Preferred from time to time outstanding or
otherwise to comply with the terms of this Agreement. If at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Designated Preferred or otherwise to
comply with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes. The Company will obtain any authorization, consent, approval or
other action by or make any filing with any court or administrative body that
may be required under applicable state securities laws in connection with the
issuance of shares of Common Stock upon conversion of the Designated Preferred.
2.5. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
and cause each of its subsidiaries to maintain as to their respective
properties and business, with financially sound and reputable insurers,
insurance against such casualties and contingencies and of such types and in
such amounts as is customary for companies similarly situated, which insurance
shall be deemed by the Company to be sufficient.
2.6. RESTRICTIVE AGREEMENTS PROHIBITED. Neither the Company nor
any of its subsidiaries shall become a party to any agreement which by its
terms restricts the Company's performance of this Agreement, the Management
Rights Agreements, the Voting Agreements or the Restated Certificate.
2.7. TRANSACTIONS WITH AFFILIATES. Except for transactions
contemplated by the Agreements or as otherwise approved by the Board of
Directors, neither the Company nor any of
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its subsidiaries shall enter into any material transaction with any director,
officer, employee or holder of more than 5% of the outstanding capital stock of
any class or series of capital stock of the Company or any of its subsidiaries,
or to the Company's knowledge any member of the family of any such person, any
corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof,
except for transactions on customary terms related to such person's employment.
2.8. EXPENSES OF DIRECTORS. The Company shall promptly reimburse
in full, each director of the Company who is not an employee of the Company for
all of his reasonable out-of-pocket expenses incurred in attending each meeting
of the Board of Directors of the Company or any Committee thereof.
2.9. BYLAWS. The Company shall at all times cause its Bylaws to
provide that (a) any three directors shall have the right to call a meeting of
the Board of Directors and (b) the number of directors fixed in accordance
therewith shall in no event conflict with any of the terms or provisions of the
Designated Preferred as set forth in the Restated Certificate. The Company
shall at all times maintain provisions in its Bylaws and/or Certificate of
Incorporation indemnifying all directors against liability and absolving all
directors from liability to the Company and its stockholders to the maximum
extent permitted under the laws of the State of Delaware.
2.10. PERFORMANCE OF CONTRACTS. The Company shall not amend,
modify, terminate, waive or otherwise alter, in whole or in part, any of the
Proprietary Information Agreements or the provisions contained in the
Employment Amendment without the approval of the Company's Board of Directors.
2.11. PROPRIETARY INFORMATION AGREEMENTS. The Company shall use its
best efforts to obtain, and shall cause its subsidiaries to use their best
efforts to obtain, a Proprietary Information Agreement in substantially the
form of Exhibit F to the Purchase Agreement from all future officers, key
employees and other employees who will have access to confidential information
of the Company or any of its subsidiaries, upon their employment or engagement
by the Company or any of its subsidiaries. The Company shall use its
reasonable best efforts to cause any consultant with whom the Company contracts
to agree to maintain the confidentiality of the Company's confidential or
Proprietary information, and to assign to the Company any proprietary rights
arising from work performed by the consultant for the Company.
2.12. COMPLIANCE WITH LAWS. The Company shall comply, and cause
each subsidiary to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could materially adversely affect its business
or condition, financial or otherwise.
2.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep, and cause each subsidiary to keep, adequate records and books of account,
in which complete entries will be made in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied,
reflecting financial transactions of the Company and each subsidiary in
accordance with GAAP.
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2.14. U.S. REAL PROPERTY INTEREST STATEMENT. The Company shall
provide prompt written notice to each Stockholder following any Adetermination
date@ (as defined in Treasury Regulation Section 1.897-2(c)(i)) on which the
Company becomes a United States real property holding corporation. In
addition, upon a written request by any Stockholder, the Company shall provide
such Stockholder with a written statement informing the Stockholder whether
such Stockholder's interest in the Company constitutes a U.S. real property
interest. The Company's determination shall comply with the requirements of
Treasury Regulation Section 1.897-2(h)(1) or any successor regulation, and the
Company shall provide timely notice to the Internal Revenue Service, in
accordance with and to the extent required by Treasury Regulation Section
1.897-2(h)(2) or any successor regulation, that such statement has been made.
The Company's written statement to any Stockholder shall be delivered to such
Stockholder within ten (10) days of such Stockholder's written request
therefor. In addition, upon request by any foreign Stockholder but subject to
the succeeding sentence, the Company shall provide along with such statement
either or both of the following documents: (i) an affidavit in conformance with
the requirements of Section 1445(b)(3) of the Code and the regulations
thereunder or (ii) a notarized statement, executed by an officer having actual
knowledge of the facts, that the shares of Company stock held by such
Stockholder are of a class that is regularly traded on an established
securities market, within the meaning of Section 1445(b)(6) of the Code and the
regulations thereunder. If the Company is unable to provide either of the
documents described in (i) or (ii) above upon request, it shall promptly, and
in any event within such ten (10) day period, notify such Stockholder in
writing of the reason for such inability. Finally, upon the request of a
foreign Stockholder and without regard to whether either document described in
(i) or (ii) above has been requested, the Company shall reasonably cooperate
with the efforts of such foreign Stockholder to obtain a Aqualifying statement@
within the meaning of Section 1445(b)(4) of the Code and the regulations
thereunder or such other documents as would excuse a transferee of a foreign
Stockholder=s interest from withholding of income tax imposed pursuant to
Section 897(a) of the Code.
2.15. RULE 144A INFORMATION. The Company shall, at all times during
which it is not subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, provide in writing, upon the
written request of any Stockholder or a prospective buyer of Registrable
Securities (including Designated Preferred before conversion into Registrable
Securities) from any Stockholder, all information required by Rule
144A(d)(4)(i) of the General Regulations promulgated by the Commission under
the Securities Act ("Rule 144A Information"). The Company's obligations under
this Section 2.15 shall at all times be contingent upon the relevant
Stockholder's obtaining from the prospective buyer of such Registrable
Securities a written agreement to take all reasonable precautions to safeguard
the Rule 144A Information from disclosure to anyone other than a person who
will assist such buyer in evaluating the purchase of such Registrable
Securities.
2.16. TERMINATION OF COVENANTS. The covenants set forth in Section
2.1, Sections 2.3 through 2.13 and Section 2.15 shall terminate and be of no
further force or effect upon the earlier of (i) the closing of the Initial
Public Offering, or (ii) the date on which none of the Registrable Securities
(including shares of Designated Preferred prior to conversion into Common
Stock) is outstanding. The Covenants set forth in Section 2.14 shall terminate
five (5) years after the closing of the Initial Public Offering.
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2.17. CONFIDENTIAL INFORMATION, ETC. Each Holder agrees that (i)
all information received by it pursuant to this Section 2 which the Company
designates as or promptly confirms in writing to be AConfidential@ or the like,
and (ii) any other information relating to the Company's technology, processes
or formulas that is disclosed by the Company to any Holder in writing and is
marked "Confidential" or the like, shall be considered confidential
information. Each Holder further agrees that it shall hold all such
confidential information in confidence and shall not, without the Company=s
prior express written consent, disclose any such confidential information to
any third party other than its counsel, accountants, employees and other
professional advisors, representatives and agents, all of whom shall have a
need to know such information and shall be bound by the provisions of this
Section 2.17, nor shall such Holder, without the Company's prior express
written consent, use such confidential information for any purpose other than
evaluation of such Holder's investment in the Company; provided, however, that
the foregoing obligation to hold in confidence and not to disclose confidential
information shall not apply to any such information that (a) was known to the
public or the Holder or its representatives prior to disclosure by the Company,
(b) becomes known to the public through no fault of such Holder, (c) is
disclosed to such Holder on a non-confidential basis by a third party having a
legal right to make such disclosure, (d) is independently developed by such
Holder, or (e) is required to be disclosed as a matter of law or pursuant to
court order; and provided further that the foregoing obligation to hold in
confidence and not to disclose confidential information shall not prohibit such
Holder from disclosing to its partners or shareholders financial and other
information described in clause (i) of this Section 2.17 which is of a type
customarily provided by such Holder to such partners or shareholders in the
ordinary course or from disclosing to a bona-fide prospective transferee of its
securities of the Company such financial and other information described in
such clause (i) which is reasonably necessary to provide such transferee with
adequate disclosure of material information.
3. RIGHTS OF FIRST REFUSAL
3.1. RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.
(A) The Company hereby grants to each Stockholder the
right of first refusal to purchase its Pro Rata Share (defined below) of all
(or any part) of New Securities (defined below) that the Company may from time
to time propose to sell and issue. Stockholder's "PRO RATA SHARE," for
purposes of this Section 3, is the ratio of the number of shares of Common
Stock (assuming conversion of all shares of Designated Preferred) then held by
such Stockholder to the total number of shares of Common Stock then outstanding
(assuming conversion of all shares of Designated Preferred). This right of
first refusal shall be subject to the following provisions:
(B) "NEW SECURITIES" shall mean any Common Stock or
Preferred Stock of the Company, whether now authorized or not, and rights,
options, or warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into or
exchangeable for said Common Stock or Preferred Stock; provided, however, that
"NEW SECURITIES" does not include (i) securities issuable upon conversion of or
with respect to the Designated Preferred; (ii) shares of the Company's Common
Stock (or related options) issued to officers, directors, employees of and/or
consultants to the Company pursuant to plans or agreements as approved by the
Company's Board of Directors; (iii) shares of the Company's Common Stock or
Preferred Stock issued to holders of the Designated Preferred in connection
with any stock split, stock
16.
<PAGE> 74
dividend, or recapitalization by the Company; (iv) securities issued in
connection with any equipment leasing, technology licensing, corporate
partnering, strategic alliance, acquisition, merger, purchase of assets or
similar transaction as approved by the Company's Board of Directors; (v) shares
of Common Stock issued to holders of Common Stock in connection with a stock
split or stock dividend with respect to the Common Stock; and (vi) shares
issued in the Initial Public Offering.
(C) In the event that the Company proposes to undertake
an issuance of New Securities, it shall give the Stockholders written notice of
its intention, describing the type of New Securities, the price, and the
general terms upon which the Company proposes to issue the same. The
Stockholders shall have twenty (20) days from the date of receipt of any such
notice to agree to purchase for cash some or all of its Pro Rata Share of such
New Securities for the price and upon the general terms, including deferred
payment, if any, specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
(D) In the event that any Stockholder (a "Non-exercising
Stockholder") fails to exercise in full the right of first refusal within said
twenty (20) day period, notice shall promptly be given by the Company to those
Stockholders who have exercised the right of first refusal in full. Such
Stockholders shall have the right for an additional ten (10) days to elect by
notice to the Company to purchase any or all of the New Securities which the
Non-exercising Stockholders were entitled to purchase but elected not to, with
such right of over- subscription to be allocated among such Stockholders in
accordance with their respective Pro Rata Shares or as they may otherwise
agree. After the aggregate thirty (30) day period during which Stockholders
may exercise their first refusal right, the Company shall have one hundred
twenty (120) days thereafter to sell (or enter into an agreement pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within one hundred twenty (120) days from the date of said agreement) the New
Securities respecting which the Stockholder's rights were not exercised, at a
price and upon general terms no more favorable to the purchasers thereof than
specified in the Company's notice. In the event the Company has not sold the
New Securities within said one hundred twenty (120) day period (or sold and
issued New Securities in accordance with the foregoing agreement within one
hundred twenty (120) days from the date of said agreement), the Company shall
not thereafter issue or sell any New Securities, without first offering such
securities to the Stockholders in the manner provided above.
(E) The right of first refusal granted under this Section
3.1 shall not apply to and shall expire upon the closing of the Company's
Initial Public Offering.
(F) The rights granted pursuant to this Section 3.1 may
be assigned by the Stockholder (or by any permitted transferee of any such
rights) so long as (i) the Company is given notice of any such assignment
within a reasonable time after the date the same is effected and (ii) the
transferee shall have acquired Registrable Securities (including shares of
Designated Preferred prior to conversion into Registrable Securities) in a
private transaction.
17.
<PAGE> 75
4. MISCELLANEOUS
4.1. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of California as applicable to contracts entered into and
performed entirely within the State of California by California residents.
4.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3. ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
4.4. NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand
or by messenger, addressed (a) if to a Stockholder, to such Stockholder's
address set forth in the Purchase Agreement or to such other address as such
Stockholder shall have furnished to the Company in writing, (b) if to any other
holder of Registrable Securities, at such address as such holder shall have
furnished the Company in writing, or (c) if to the Company, to its address set
forth above and addressed to the attention of the President or at such other
address as the Company shall have furnished to the Stockholders. All notices
and other communications pursuant to the provisions of this Section 4.4 shall
be deemed delivered when mailed or sent by facsimile. Notwithstanding the
foregoing, any notice or communication to an address outside the United States
shall be sent by facsimile and confirmed in writing contemporaneously sent by
two day guaranteed international courier.
4.5. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
4.6. SEVERABILITY. In the event that any provision of this
Agreement becomes or is 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.
4.7. APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this
Agreement may be amended or terminated and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of (i) the
Company and (ii) the holders of at least two-thirds (2/3) of the shares which
are then Registrable Securities. Any amendment, termination or waiver effected
in accordance with this section shall be binding upon the Stockholders, each of
their transferees and the Company. The Stockholders acknowledge that by the
operation of this Section the holders of two-thirds (2/3) of the outstanding
Registrable Securities as aforesaid may have the right and power to diminish or
eliminate all rights of such Stockholder under this Agreement.
18.
<PAGE> 76
The foregoing Investors' Rights Agreement is hereby executed as of the
date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By ________________________________________________
Title _____________________________________________
THE STOCKHOLDERS:
AVALON MEDICAL PARTNERS, L.P.
By:________________________________________________
Title:_____________________________________________
AVALON BIOVENTURES II, L.P.
By:________________________________________________
Title:_____________________________________________
KINGSBURY CAPITAL PARTNERS, L.P. II
By: Kingsbury Associates, L.P.
By:________________________________________________
Title: General Partner
ABINGWORTH BIOVENTURES SICAV
19.
<PAGE> 77
By:________________________________________________
Title:_____________________________________________
NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership,
its General Partner
By:________________________________________________
Title: General Partner
NEA VENTURES 1996, L.P.
By:________________________________________________
Title: Authorized Signatory
DP III ASSOCIATES, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By:________________________________________________
General Partner
DOMAIN PARTNERS III, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By:________________________________________________
General Partner
20.
<PAGE> 78
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By:________________________________________________
Attorney-in-Fact
PACKARD INSTRUMENT COMPANY, INC.
By:________________________________________________
Title:_____________________________________________
[SIGNATURE PAGE FOR INVESTORS' RIGHTS AGREEMENT]
SEQUANA THERAPEUTICS, INC.
By:________________________________________________
Title:_____________________________________________
GC&H INVESTMENTS
By:________________________________________________
Title:_____________________________________________
___________________________________________________
KEVIN J. KINSELLA
___________________________________________________
ROGER Y. TSIEN
21.
<PAGE> 79
___________________________________________________
THERESA E. GLOBE
___________________________________________________
CHARLES S. ZUKER
___________________________________________________
MICHAEL G. ROSENFELD
___________________________________________________
JOHN A. PORCO, JR.
___________________________________________________
LUBERT STRYER
___________________________________________________
ANDREA S. STRYER
___________________________________________________
WALTER LUETOLF
FOR ADRIAN J.R. LANGINGER
___________________________________________________
NORMAND F. SMITH
22.
<PAGE> 80
___________________________________________________
HUGH Y. RIENHOFF, JR.
___________________________________________________
JANICE THOMPSON
THE GREENE FAMILY TRUST
By:________________________________________________
HOWARD E. GREENE, JR., TRUSTEE
By:________________________________________________
ARLINE GREENE, TRUSTEE
___________________________________________________
TIMOTHY J. RINK
HAMBRECHT & QUIST GROUP
By:________________________________________________
Dennis J. Purcell
Title:_____________________________________________
23.
<PAGE> 81
<TABLE>
<S> <C>
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Restrictions on Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Restrictive Legend(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Notice of Proposed Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. Demand Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6. Company Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.7. Form S 3 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8. Expenses of Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.11. Information by Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.12. Rule 144 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.13. Transfer of Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.14. Termination of Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.15. "Market Stand Off" Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.16. Other Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.17. Changes in Common Stock or Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2. Assignment of Rights to Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3. Inspection and Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.4. Reserve for Conversion Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5. Properties, Business, Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6. Restrictive Agreements Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.7. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8. Expenses of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.9. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10. Performance of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.11. Proprietary Information Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i.
<PAGE> 82
<TABLE>
<S> <C>
2.12. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.13. Keeping of Records and Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.14. U.S. Real Property Interest Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15. Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.16. Termination of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.17. Confidential Information, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. RIGHTS OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1. Right of First Refusal on Company Issuances . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4. Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7. Approval of Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii.
<PAGE> 83
EXHIBIT D
FORM OF MANAGEMENT RIGHTS LETTER
<PAGE> 84
AURORA BIOSCIENCES CORPORATION
1020 Prospect Street, Suite 405
La Jolla, California 92037
March 8, 1996
Re: Management Rights
-----------------
Ladies and Gentlemen:
This letter will confirm our agreement that in connection with your
purchase of shares of Series A Preferred Stock of Aurora Biosciences
Corporation (the "Company"), you will be entitled to the following contractual
management rights, in addition to rights to certain non-public financial
information, inspection rights and other rights specifically provided to you
under that certain Investors' Rights Agreement of even date herewith:
(1) If and for so long as you do not have a representative on the
Company's Board of Directors ("Unrepresented Party"), you shall be permitted to
select one representative ("Representative") to consult with and advise
management of the Company on significant business issues, including
management's proposed annual operating plans, and management will make itself
available to meet with your Representative regularly during each year at the
Company's facilities at mutually agreeable times for such consultation and
advice and to review progress in achieving said plans.
(2) If and for so long as you are an Unrepresented Party, your
Representative may examine the books and records of the Company and inspect its
facilities and may request information at reasonable times and intervals
concerning the general status of the Company's financial condition and
operations, provided that access to highly confidential proprietary information
and facilities need not be provided.
(3) If and for so long as you are an Unrepresented Party, the
Company shall invite you to send your Representative to attend in a nonvoting
observer capacity all meetings of its Board of Directors and, in this respect,
shall give your Representative copies of all notices, minutes, consents, and
other material that it provides to its Directors; provided, however, that the
Company reserves the right to exclude your Representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons. Your Representative may participate
in discussions of matters brought to the Board.
<PAGE> 85
Page 2
(4) Within ten (10) days after the date of this letter, the Company
shall deliver to you, with a copy to , a table showing in reasonable
detail the fully-diluted capitalization of the Company, taking into account the
investments being made on the date hereof.
(5) Any notice or communication to you or to any of your
representatives which is to be sent to an address outside the United States
shall, in addition to any other method(s), be given by telecopy and confirmed in
writing contemporaneously sent by two-day guaranteed international courier. A
copy of any communication sent by the Company to you will also be sent to
at their respective addresses set forth in the Preferred Stock
Purchase Agreement of even date hereof or at such other address as may be
provided to the Company.
The rights described herein shall terminate and be of no further force
or effect upon the earliest to occur of (a) the closing of a public offering of
shares of the Company's capital stock pursuant to a registration statement filed
by the Company under the Securities Act of 1933 which has become effective
thereunder (other than a registration statement relating solely to employee
benefit plans or a transaction covered by Rule 145), (b) such time as the
Company becomes required to file reports with the Securities and Exchange
Commission under Sections 12(g) or 15(d) of the Securities Exchange Act of
1934, or (c) such time as you or your affiliates hold, in the aggregate, less
than 20% of the shares of Series A Preferred Stock purchased by you on the date
hereof or, if such shares have been converted into Common Stock, less than 20%
of the shares of Common Stock issued upon conversion of such shares, adjusted,
in each case, for stock splits, stock dividends, combinations and the like with
respect to the particular class or series of stock.
This letter may be executed in counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
instrument.
Very truly yours,
AURORA BIOSCIENCES CORPORATION
By: /s/ TIMOTHY J. RINK
------------------------------------
Title: President and CEO
---------------------------------
ACCEPTED AND AGREED TO:
By:
-------------------------------
Title:
----------------------------
<PAGE> 86
EXHIBIT E
FORM OF VOTING AGREEMENT
<PAGE> 87
VOTING AGREEMENT
AGREEMENT dated as of March 8, 1996, among Aurora Biosciences
Corporation, a Delaware corporation (the "Company"), the persons listed as
Purchasers in the signature pages hereto who execute this Agreement
(collectively, the "Purchasers" and individually, a "Purchaser"), and the other
persons and entities who execute a signature page hereto.
WHEREAS, on the date hereof the Purchasers are purchasing from the
Company shares of its Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock (collectively, the "Designated Preferred") pursuant to
the terms of a Preferred Stock Purchase Agreement dated the date hereof between
the Company and the Purchasers (the "Purchase Agreement"); and
WHEREAS, certain of the Stockholders (as defined below) are the holders
of at least a majority of the outstanding Common Stock, $.001 par value, of the
Company ("Common Stock");
WHEREAS, the Stockholders wish to make certain provisions for the voting
of their Shares (as defined below);
WHEREAS, the purchases by the Purchasers will benefit the Company and its
current stockholders; and
WHEREAS, it is a condition to the obligations of the Purchasers under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the premises, the agreements set
forth below, and the parties' desire to further the interests of the Company and
its present and future stockholders, the parties agree as follows:
1. DEFINITION. As used in this Agreement, (a) the term "Shares" means
all shares of capital stock of the Company (i) now or hereafter owned (either
beneficially or of record) by a Stockholder, and (ii) which a Stockholder does
not own (either beneficially or of record) but as to which it now or hereafter
has the right to exercise voting control, and (b) the term "Stockholders" means
collectively the Purchasers and each other person or entity executing a
signature page hereto.
2. DESIGNATION OF NOMINEES. Each of Avalon Bioventures II, L.P.
("Avalon"), Kingsbury Capital Partners, L.P. II ("Kingsbury"), Abingworth
Bioventures SICAV ("Abingworth"), New Enterprises Associates VI, Limited
Partnership ("NEA") and Domain Partners III, L.P. ("Domain") (together, the
"Nominating Purchasers" and
1.
<PAGE> 88
individually, a "Nominating Purchaser"), so long as it or its affiliates
continues to own at least 20% of the shares of Designated Preferred acquired by
it and its affiliates on the date hereof (appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and the like with respect
to the Designated Preferred), shall have the right to designate a nominee for
election as one of the directors of the Company who shall be elected solely by
the holders of the Designated Preferred, voting separately as a single class
(together, the "Nominees" and individually, a "Nominee"). At least ten 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
Designated Preferred, voting separately as a single class, each Nominating
Purchaser shall notify the other Purchasers in writing of the Nominee designated
by such Nominating Purchaser for election as a director. In the absence of any
such notification, it shall be presumed that the Nominating Purchaser's then
incumbent Nominee has been redesignated as its Nominee. The initial Nominees of
Avalon, Kingsbury, Abingworth, NEA and Domain are Kevin J. Kinsella, Timothy J.
Wollaeger, Stephen Bunting, Hugh Y. Rienhoff, Jr. and James C. Blair,
respectively. Each Nominating Purchaser shall cause its Nominee to nominate the
other Nominees for election to the Board of Directors of the Company in any
manner which may be required by the Bylaws of the Company.
3. ELECTION OF DIRECTORS. 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 the Designated Preferred, voting separately as a
single class, each Stockholder shall vote all of its Shares of Designated
Preferred to elect, as directors of the Company, the Nominees designated in the
manner provided in Section 2. 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 Common Stock, voting separately as a class, each of
the Stockholders shall vote all of its Shares of Common Stock to elect, as
directors of the Company, (a) the then current Chief Executive Officer of the
Company (the "CEO/Director"), which shall initially be Timothy J. Rink, and (b)
a person (the "Additional Director") designated jointly by Roger Y. Tsien and
Charles S. Zuker who is reasonably acceptable to a majority of the other members
of the Company's Board of Directors, who shall initially be Lubert Stryer. At
least 30 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 Common Stock, voting separately as a class, Drs. Tsien and Zuker
shall notify the Company and the Board of Directors of their designee pursuant
to clause (b), and if such person is reasonably acceptable to a majority of the
other members of the Board of Directors, the Company shall notify the
Stockholders of such designee at least ten days prior to such meeting or written
action. In the absence of any such notification, it shall be presumed that the
then incumbent Additional Director has been redesignated. Notwithstanding the
foregoing, if both Dr. Tsien's and Dr. Zuker's services as consultants to the
Company terminate, for any reason or for no reason, then such Additional
Director shall be designated as above by the holders of a majority of the Common
Stock of the Company.
<PAGE> 89
4. SUCCESSOR DIRECTORS. If a Nominee shall cease to serve as a
director for any reason, the Nominating Purchaser which designated such Nominee
shall have the right to designate a successor Nominee and each of the other
Stockholders shall use its best efforts to ensure that such successor Nominee is
duly elected as a director. If a Nominating Purchaser notifies the other
Stockholders that it desires to remove its Nominee as a director, each of the
other Stockholders shall use its best efforts to ensure that such Nominee is
duly removed as a director. If the CEO/Director ceases to be the Chief Executive
Officer of the Company for any reason, each Stockholder shall use its best
efforts to ensure that such person is promptly removed as a director and that
the newly appointed Chief Executive Officer is elected as a director. If the
Additional Director ceases to be a director for any reason, a successor may be
designated in the manner set forth in Section 3(b) and each Stockholder shall
use its best efforts to ensure that such successor is duly elected as a
director. If Drs. Tsien and Zuker jointly (or, pursuant to the last sentence of
Section 3, the holders of a majority of the outstanding Common Stock of the
Company) desire to remove the Additional Director as a director, each of the
Stockholders shall use its best efforts to ensure that such member is duly
removed as a director. If a Nominating Purchaser notifies the Company that it
desires to remove its Nominee as a director and/or designate a successor Nominee
or if Drs. Tsien and Zuker jointly (or, pursuant to the last sentence of Section
3, the holders of a majority of the outstanding Common Stock of the Company)
notify the Company that they desire to remove the Additional Director as a
director and/or designate a successor, the Company shall, upon request, use its
best efforts to ensure that a meeting of stockholders of the Company is promptly
called for such purpose.
5. CHANGE OF CONTROL. Each Purchaser agrees that such Purchaser will
not sell or dispose of any of its Shares (excluding shares of capital stock
which are Shares solely because of clause (ii) of the definition of Shares) in
connection with any transaction or series of related transactions occurring
subsequent to the date hereof which results or is intended to result in (i) a
sale or transfer of 50% or more of the then outstanding voting securities of the
Company to one or more related purchasers (including persons acting as a
partnership, syndicate or other group for the purpose of acquiring securities of
the Company); (ii) a merger, consolidation or other corporate reorganization
where the stockholders of the Company immediately prior to such transaction do
not immediately following such transaction own at least 50% of the surviving
entity; or (iii) a transfer of all or substantially all of the assets of the
Company (collectively, a "Change of Control"), unless such Change of Control has
been approved or consented to by holders of at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding shares of Designated Preferred, considered
as a single class. Each Purchaser further agrees that it will vote all of its
Shares in favor of (and, if applicable, will tender their Shares to the
acquiring party pursuant to) any Change in Control which is approved by
Purchasers holding at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Designated Preferred (the "Required Approval"). If,
however, despite the foregoing sentences, a Change of Control for which the
Required Approval
<PAGE> 90
has not been obtained does occur (because of sales by holders of the Company's
voting securities who are not subject to this provision), the foregoing
restriction shall not apply and the Purchasers may tender their Shares in
connection with and otherwise participate in such Change of Control transaction.
The provisions of this Section 5 shall be of no further force or effect
following a Change of Control occurring subsequent to the date hereof.
6. TERM. This Agreement shall continue until the earlier of (i) such
time as no shares of Designated Preferred remain outstanding or (ii) the tenth
anniversary of the date of this Agreement.
7. SPECIFIC ENFORCEMENT. Each Stockholder and the Company expressly
agrees that the Stockholders will be irreparably damaged if this Agreement is
not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by a Stockholder or the Company,
the other Stockholders shall, in addition to all other remedies, be entitled to
a temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions hereof.
8. LEGEND. Each certificate evidencing Shares shall bear a legend
substantially as follows:
"The shares represented by this certificate are subject to the
terms and conditions of a certain Voting Agreement dated as of
March __, 1996, a copy of which the Company will furnish to the
holder of this certificate upon request and without charge, and
may only be transferred subject to such terms and conditions."
9. NOTICES. All notices or other communications given hereunder shall
be in writing and shall be deemed effective upon delivery at the address of the
party to be notified and shall be mailed by certified or registered mail, return
receipt requested, delivered by courier, telecopied, or sent by other facsimile
method, addressed to the address specified below such party's signature hereto
or such other address as such party may subsequently notify the other parties of
in writing. Notwithstanding the foregoing, all notices or other communications
to an address outside of the United States shall, in addition to any other
method, be given by telecopy and confirmed in writing sent contemporaneously by
two-day guaranteed international courier.
10. FURTHER ASSURANCES. The Company shall use its best efforts to
cause any persons or entities that acquire newly issued shares of Common Stock
after the date hereof to execute a counterpart signature page to this Agreement
and to become a party to this Agreement in order to ensure that at all times
holders of at least a majority of the Company's outstanding Common Stock are
subject to this Agreement.
<PAGE> 91
11. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
neither this Agreement nor any provision hereof may be waived, modified, amended
or terminated except by a written agreement signed by the Company, Purchasers
owning at least two-thirds of the then outstanding shares of Designated
Preferred held by Purchasers and, with respect to waivers, modifications, etc.,
which adversely effect the rights of any Stockholders (other than Purchasers),
at least fifty percent of the Common Stock held by persons or entities executing
this Agreement; provided however, that no waiver, modification, amendment or
termination shall adversely effect the rights of a particular Nominating
Purchaser with respect to the designation and removal of a member of the
Company's Board of Directors without the written consent of such Nominating
Purchaser.
12. GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of Delaware and shall bind and inure to the
benefit of the heirs, personal representatives, executors, administrators,
successors and assigns of the parties. Without limiting the generality of the
foregoing, all covenants and agreements of the Stockholders shall bind any and
all subsequent holders of their Shares, and the Company agrees that it shall not
transfer on its records any such Shares unless (i) the transferor Stockholder
shall have first delivered to the Company and the other Purchasers the written
agreement of the transferee to be bound by this Agreement to the same extent as
if such transferee had originally been a Stockholder hereunder and (ii) the
certificate or certificates evidencing the Shares so transferred bear the legend
specified in Section 8.
13. CAPTIONS. Captions are for convenience only and are not deemed to
be part of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. ADDITIONAL PARTIES. Additional persons and entities may become
parties to this Agreement by executing a counterpart signature page hereto which
sets forth the address of such person or entity and pursuant to which such
person or entity agrees to be bound by this Agreement, and upon execution
thereof, such person or entity shall be deemed a Stockholder for all purposes
hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
AURORA BIOSCIENCES CORPORATION
By:
---------------------------------------
Title:
------------------------------------
Address: 1020 Prospect Street, Ste. 405
La Jolla, California 92037
Facsimile: (619) 454-5239
PURCHASERS:
AVALON MEDICAL PARTNERS, L.P.
By:
---------------------------------------
Title:
------------------------------------
Address: 1020 Prospect Street, Ste. 405
La Jolla, California 92037
Facsimile: (619) 454-5239
AVALON BIOVENTURES II, L.P.
By:
---------------------------------------
Title:
------------------------------------
Address: 1020 Prospect Street, Ste. 405
La Jolla, California 92037
Facsimile: (619) 454-5239
<PAGE> 93
KINGSBURY CAPITAL PARTNERS, L.P. II
By: Kingsbury Associates, L.P.
By:
---------------------------------------
Title: General Partner
Address: 3655 Nobel Drive, Suite 490
San Diego, California 92122
Facsimile: (619) 677-0800
ABINGWORTH BIOVENTURES SICAV
By:
---------------------------------------
Title: Attorney-in-fact pursuant to Power of
Attorney dated March 6, 1996
Address: c/o Sanne & Cie
Boite Postale 566
L-2015 Luxembourg
Telecopy: (352) 43 5410
With a copy to:
Dr. Stephen Bunting
Abingworth Management
Limited
26 St. James's Street
London, England SW1A 1HA
Telecopy: 44-171-930-1891
Daniel P. Finkelman, Esq.
Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02110
Telecopy: (617) 248-7100
<PAGE> 94
NEW ENTERPRISE ASSOCIATES VI,
LIMITED PARTNERSHIP
By: NEA Partners VI, Limited
Partnership, its General Partner
By:
------------------------------------
Title: General Partner
Address: 1119 St. Paul Street
Baltimore, Maryland 21202
Facsimile: (410) 752-7721
NEA VENTURES 1996, L.P.
By:
------------------------------------
Title: Authorized Signatory
Address: 1119 St. Paul Street
Baltimore, Maryland 21202
Facsimile: (410) 752-7721
DP III ASSOCIATES, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By:
------------------------------------
Title: General Partner
Address: One Palmer Square, Suite 515
Princeton New Jersey 08542
Facsimile: (609) 683-9789
<PAGE> 95
DOMAIN PARTNERS III, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By:
------------------------------------
Title: General Partner
Address: One Palmer Square, Suite 515
Princeton New Jersey 08542
Facsimile: (609) 683-9789
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By:
------------------------------------
Title: Attorney-in-Fact
Address: One Palmer Square, Suite 515
Princeton New Jersey 08542
Facsimile: (609) 683-9789
PACKARD INSTRUMENT COMPANY, INC.
By:
------------------------------------
Title:
Address: 800 Research Parkway
Meriden CT 06450
Facsimile: (203) 235-1347
[SIGNATURE PAGE FOR VOTING AGREEMENT]
<PAGE> 96
SEQUANA THERAPEUTICS, INC.
By:
------------------------------------
Title:
---------------------------------
Address: 11099 North Torrey Pines
Rd., Suite 160
La Jolla, California 92037
Facsimile: (619) 452-6653
GC&H INVESTMENTS
By:
------------------------------------
Title:
---------------------------------
Address: 4365 Executive Dr., Ste. 1100
San Diego, California 92121
Facsimile: (609) 453-3555
----------------------------------------
KEVIN J. KINSELLA
Address: Avalon Ventures
1020 Prospect Street,Suite 405
La Jolla, California 92037
Facsimile: (619) 454-5329
----------------------------------------
ROGER Y. TSIEN
Address: 8535 Nottingham Place
La Jolla, California 92037
Facsimile: (619) 534-5270
<PAGE> 97
----------------------------------------
THERESA E. GLOBE
Address: 142 Bessborough Drive
Toronto, Ontario M4G3J6
Facsimile: (416) 864-3361
----------------------------------------
CHARLES S. ZUKER
Address: UCSD
Cellular & Molecular
Medicine West
9500 Gilman Drive, Rm. 355
La Jolla, California 92037
Facsimile: (619) 534-8510
----------------------------------------
MICHAEL G. ROSENFELD
Address: UCSD
Eukaryotic Regulatory
Biology Program
Room 345 C.M.M.
9500 Gilman Drive
La Jolla, California 92037
Facsimile: (619) 534-8180
----------------------------------------
JOHN A. PORCO, JR.
Address: Argonaut Technologies, Inc.
887-G Industrial Road, Ste. G
San Carlos, California 94070
Facsimile: (415) 598-1359
----------------------------------------
LUBERT STRYER
Address: 843 Sonoma Terrace
Stanford, California 94305
Facsimile: (415) 498-5351
<PAGE> 98
----------------------------------------
ANDREA S. STRYER
Address: 843 Sonoma Terrace
Stanford, California 94305
Facsimile: (415) 498-5351
----------------------------------------
WALTER LUETOLF
FOR ADRIAN J.R. LANGINGER
Address: ATAG Vermogensverwaltung AG
8022 Zurich
Bleichwrweg 21
Postfach 8272
Facsimile: 01-202 33 49
----------------------------------------
NORMAND F. SMITH
Address: Perkins, Smith & Cohen
One Beacon Street
Moston, MA 02108-3106
Facsimilie: (617) 854-4040
----------------------------------------
HUGH Y. RIENHOFF, JR.
Address: New Enterprise Associates
119 St. Paul Street
Baltimore, Maryland 21202
Facsimile: (410) 752-7721
----------------------------------------
JANICE THOMPSON
Address: P.O. Box 3471
16360 La Gracia
Rancho Santa Fe, CA 92067
Facsimile: (619) 756-4320
<PAGE> 99
THE GREENE FAMILY TRUST
By:
------------------------------------
HOWARD E. GREENE, JR., TRUSTEE
By:
------------------------------------
ARLINE GREENE, TRUSTEE
Address: c/o Howard E. Greene, Jr.
9373 Towne Centre Drive
San Diego, California 92121
Facsimile: (619) 552-2212
----------------------------------------
TIMOTHY J. RINK
Address: 5666 La Jolla Boulevard, #5
La Jolla, California 92037
Facsimile: (619) 454-5329
HAMBRECHT & QUIST GROUP
By:
-------------------------------------
Dennis J. Purcell
Title:
----------------------------------
Address: 230 Park Avenue, 21st Fl.
New York, NY 10169
Facsimile: (212) 207-1664
[END OF PURCHASERS]
[OTHER STOCKHOLDER SIGNATURE PAGES FOLLOW IMMEDIATELY]
<PAGE> 100
OTHER STOCKHOLDER SIGNATURE PAGE
The undersigned hereby executes the Voting Agreement among Aurora
Biosciences Corporation and the other parties thereto, authorizes this signature
page to be attached to a counterpart of such Agreement and agrees to be bound by
such Agreement.
Print Exact Name of Stockholder:_____________________________
Signature:___________________________________________________
Print Name of Signer:________________________________________
Print Title of Signer Here, if applicable:___________________
Print Address of Stockholder Here:___________________________
_____________________________________________________________
_____________________________________________________________
<PAGE> 101
EXHIBIT F
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
<PAGE> 102
AURORA BIOSCIENCES CORPORATION
EMPLOYEE PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
In consideration of my employment or continued employment by AURORA
BIOSCIENCES CORPORATION (the "COMPANY"), and the compensation now and hereafter
paid to me, I hereby agree as follows:
1. NONDISCLOSURE
1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I will
obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.
1.2 PROPRIETARY INFORMATION. The term "PROPRIETARY INFORMATION"
shall mean any and all confidential and/or proprietary knowledge, data or
information of the Company. By way of illustration but not limitation,
"PROPRIETARY INFORMATION" includes (a) tangible and intangible information
relating to antibodies and other biological materials, cell lines, samples of
assay components, media and/or cell lines and procedures and formulations for
producing any such assay components, media and/or cell lines, formulations,
products, processes, know-how, designs, drawings, formulas, methods,
developmental or experimental work, clinical data, improvements, discoveries
(hereinafter collectively referred to as "INVENTIONS"); (b) plans for research,
new products, manufacturing, trade secrets, inventions, programs, marketing and
selling, business plans, budgets and unpublished financial statements,
licenses, prices and costs, suppliers and customers; and (c) information
regarding the skills and compensation of other employees of the Company.
Notwithstanding the foregoing, it is understood that, at all such times, I am
free to use information which is generally known in the trade or industry,
which is not gained as result of a breach of this Agreement, and my own, skill,
knowledge, know-how and experience to whatever extent and in whichever way I
wish.
1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("THIRD PARTY INFORMATION") subject to
a duty on the Company's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.
1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.
2. ASSIGNMENT OF INVENTIONS.
2.1 PROPRIETARY RIGHTS. The term "PROPRIETARY RIGHTS" shall mean
all trade secret, patent,
1.
<PAGE> 103
copyright, mask work and other intellectual property rights throughout the
world.
2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all Inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of my employment
with the Company, that I consider to be my property or the property of third
parties and that I wish to have excluded from the scope of this Agreement
(collectively referred to as "PRIOR INVENTIONS"). If disclosure of any such
Prior Invention would cause me to violate any prior confidentiality agreement,
I understand that I am not to list such Prior Inventions in Exhibit B but am
only to disclose a cursory name for each such invention, a listing of the
party(ies) to whom it belongs and the fact that full disclosure as to such
inventions has not been made for that reason. A space is provided on Exhibit B
for such purpose. If no such disclosure is attached, I represent that there
are no Prior Inventions. If, in the course of my employment with the Company,
I incorporate a Prior Invention into a Company product, process or machine, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license (with rights to sublicense through
multiple tiers of sublicensees) to make, have made, modify, use and sell such
Prior Invention. Notwithstanding the foregoing, I agree that I will not
incorporate, or permit to be incorporated, Prior Inventions in any Company
Inventions without the Company's prior written consent.
2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as directed by the
Company pursuant to this Section 2, are hereinafter referred to as "COMPANY
INVENTIONS."
2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "SECTION 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.
2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment with the Company, I will promptly disclose to the Company fully and
in writing all Inventions authored, conceived or reduced to practice by me,
either alone or jointly with others. In addition, I will promptly disclose to
the Company all patent applications filed by me or on my behalf prior to
termination of employment. For a period of six (6) months following
termination of my employment with the Company, I will promptly disclose to the
Company fully and in writing all Inventions authored, conceived or reduced to
practice by me, either alone or jointly with others, and all patent
applications filed by me or on my behalf, which Inventions or patent
applications directly relate to the field of my work at the Company at the time
of termination or within three (3) years prior thereto. At the time of each
such disclosure, I will advise the Company in writing of any Inventions that I
believe fully qualify for protection under Section 2870; and I will at that
time provide to the Company in writing all evidence necessary to substantiate
that belief. The Company will keep in confidence and will not use for any
purpose or disclose to third parties without my consent any confidential
information disclosed in writing to the Company pursuant to this Agreement
relating to Inventions that qualify fully for protection under the provisions
of Section 2870. I will preserve the confidentiality of any Invention that
does not fully qualify for protection under Section 2870.
2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my
right, title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.
2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C., Section 101).
2.
<PAGE> 104
2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain, and from time to time enforce, United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof.
In addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company
with respect to Proprietary Rights relating to such Company Inventions in any
and all countries shall continue beyond the termination of my employment, but
the Company shall compensate me at a reasonable rate after my termination for
the time actually spent by me at the Company's request on such assistance.
2.9 In the event the Company is unable for any reason, after
reasonable effort, to secure my signature on any document needed in connection
with the actions specified in the preceding paragraph, I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents
as my agent and attorney in fact, which appointment is coupled with an
interest, to act for and in my behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes
of the preceding paragraph with the same legal force and effect as if executed
by me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.
3. RECORDS. I agree to keep and maintain adequate and current records
(in the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and all
Inventions made by me during the period of my employment at the Company, which
records shall be available to and remain the sole property of the Company at
all times.
4. ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity which is competitive
with, or would otherwise conflict with, my employment by the Company. I agree
further that for the period of my employment by the Company and for one (l)
year after the date of termination of my employment by the Company I will not
induce any employee of the Company to leave the employ of the Company.
5. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any agreement either written
or oral in conflict herewith.
6. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company,
I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company.
I further agree that any property situated on the Company's premises and owned
by the Company, including disks and other storage media, filing cabinets or
other work areas, is subject to inspection by Company personnel at any time
with or without notice. Prior to leaving, I will cooperate with the Company in
completing and signing the Company's termination statement.
7. LEGAL AND EQUITABLE REMEDIES. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to
any other rights and remedies that the Company may have for a breach of this
Agreement.
8. NOTICES. Any notices required or permitted hereunder shall be given
to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed
given upon personal delivery to the appropriate address or if sent by certified
or registered mail, three (3) days after the date of mailing.
9. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
10. GENERAL PROVISIONS.
3.
<PAGE> 105
10.1 GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by and construed according to the laws of the State
of California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in San Diego County, California for any lawsuit filed there against me
by Company arising from or related to this Agreement.
10.2 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
10.3 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
10.4 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
10.5 EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause.
10.6 WAIVER. No waiver by the Company of any breach of this
Agreement shall be a waiver of any preceding or succeeding breach. No waiver
by the Company of any right under this Agreement shall be construed as a waiver
of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.
10.7 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and
2 of this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during such
period. This Agreement is the final, complete and exclusive agreement of the
parties with respect to the subject matter hereof and supersedes and merges all
prior discussions between us. No modification of or amendment to this
Agreement, nor any waiver of any rights under this Agreement, will be effective
unless in writing and signed by the party to be charged. Any subsequent change
or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.
This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19__.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.
Dated:____________________________
________________________________________________________
SIGNATURE
________________________________________________________
(PRINTED NAME)
ACCEPTED AND AGREED TO:
AURORA BIOSCIENCES CORPORATION
BY:_____________________________________________________
TITLE:__________________________________________________
________________________________________________________
(ADDRESS)
________________________________________________________
4.
<PAGE> 106
EXHIBIT A
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFYyou in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;
(2) Result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to
require you to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.
This limited exclusion does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.
I ACKNOWLEDGE RECEIPT of a copy of this notification.
By:_____________________________________
(Printed Name of Employee)
Date:___________________________________
WITNESSED BY:
________________________________________________
Signature
________________________________________________
(Printed Name of Representative)
Dated:________________________________________________
A-1.
<PAGE> 107
EXHIBIT B
TO: AURORA BIOSCIENCES CORPORATION
FROM: ___________________________
DATE: ___________________________
SUBJECT: PREVIOUS INVENTIONS
1. Except as listed in Section 2 below, the following is a
complete list of all inventions or improvements relevant to the subject matter
of my employment by Aurora Biosciences Corporation (the "COMPANY") that have
been made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company:
[ ] No inventions or improvements.
[ ] See below:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
[ ] Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete
the disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies):
INVENTION OR IMPROVEMENT PARTY(IES) RELATIONSHIP
1. ___________________________ ____________________ ____________
2. ___________________________ ____________________ ____________
3. ___________________________ ____________________ ____________
[ ] Additional sheets attached.
_________________________
(Name of Employee)
B-1.
<PAGE> 108
EXHIBIT G
FORM OF LEGAL OPINION OF COMPANY COUNSEL
<PAGE> 109
March 8, 1996
To the Purchasers listed on Schedule A
of that certain Preferred Stock Purchase Agreement
of even date herewith referred to below
Ladies and Gentlemen:
We have acted as counsel for Aurora Biosciences Corporation, a Delaware
corporation (the "Company"), in connection with the issuance and sale of
10,239,115 shares of Series A Preferred Stock, 555,555 shares of Series B
Preferred Stock, and 750,000 shares of Series C Preferred Stock under the
Preferred Stock Purchase Agreement dated March 8, 1996, among the Company and
the purchasers listed on Schedule A thereto (the "Agreement"). We are
rendering this opinion pursuant to Section 4.6 of the Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have
the respective meanings given to them in the Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we
render an opinion "to the best of our knowledge" or concerning an item "known
to us" or our opinion otherwise refers to our knowledge, it is based solely
upon (i) an inquiry of attorneys within this firm who perform legal services
for the Company, (ii) receipt of a certificate executed by an officer of the
Company covering such matters and (iii) such other investigation, if any, that
we specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity
of all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement, the Investors' Rights Agreement, the
Management Rights Agreements and the Voting Agreement (collectively, the
"Agreements")), where authorization, execution and delivery are prerequisites
to the effectiveness of such documents. We have also assumed: that all
individuals executing and delivering documents had the legal capacity to so
execute and deliver; that you have received all documents you were to receive
under the Agreements; that the Agreements are an obligation binding upon you;
if you are a corporation or other entity, that you have filed any required
California franchise or income tax returns and have paid any required
California franchise or income taxes; and that there are no extrinsic
agreements or understandings among the parties to the Agreements that would
modify or interpret the terms of the Agreements or the respective rights or
obligations of the parties thereunder.
<PAGE> 110
To the Purchasers
March 8, 1996
Page Two
Our opinion is expressed only with respect to the federal laws of the United
States of America, the General Corporation Law of the State of Delaware, and
the laws of the State of California. We express no opinion as to whether the
laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable
to the subject matter hereof. We are not rendering any opinion as to
compliance with any antifraud law, rule or regulation relating to securities,
or to the sale or issuance thereof.
With regard to our opinion in paragraph 4 below, we have examined and relied
upon a certificate executed by an officer of the Company to the effect that the
consideration for all outstanding shares of capital stock of the Company was
received by the Company in accordance with the provisions of the applicable
Board of Directors resolutions and any plan or agreement relating to the
issuance of such shares, and we have undertaken no independent verification
with respect thereto.
With regard to our opinion in paragraph 5 below with respect to material
defaults under any material agreement known to us, we have relied solely upon
(i) inquiries of officers of the Company, (ii) a list supplied to us by the
Company, a copy of which is attached hereto, of material agreements to which
the Company is a party or by which it is bound and (iii) an examination of the
items on the aforementioned list; we have made no further investigation.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Delaware.
2. The Company has the requisite corporate power to own or lease
its property and assets, to conduct its business as it is currently being
conducted and to execute and perform the Agreements, is qualified as a foreign
corporation to do business in California and, to the best of our knowledge, is
not required to qualify as a foreign corporation to do business in any other
jurisdiction in the United States.
3. The Agreements have been duly and validly authorized, executed
and delivered by the Company and constitute valid and binding agreements of the
Company enforceable against the Company in accordance with their terms, except
as rights to indemnity under section 1.10 of the Investors' Rights Agreement
may be limited by applicable laws and except as enforcement of the Agreements
may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
<PAGE> 111
To the Purchasers
March 8, 1996
Page Three
4. The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, of which 2,508,500 shares are issued and
outstanding immediately prior to the First Closing, and 25,000,000 shares of
Preferred Stock, of which 10,500,000 are designated Series A Preferred Stock,
600,000 are designated Series B Preferred Stock, and 800,000 are designated
Series C Preferred Stock, none of which will be issued and outstanding
immediately prior to the First Closing. No other shares of capital stock or
other securities of the Company are outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. The Shares have the rights, preferences and privileges
set forth in the Restated Certificate. The Shares have been duly authorized,
and upon issuance and delivery against payment therefor in accordance with the
terms of the Agreement, the Shares will be validly issued, outstanding, fully
paid and nonassessable, provided, however, that the Shares (and the Common Stock
issuable upon conversion of the Shares) are subject to a right of first refusal
as set forth in Section 45 of the Company's Bylaws, and may be subject to
restrictions on transfer under state and/or federal securities laws. The shares
of Common Stock issuable upon conversion of the Shares have been duly authorized
and reserved for issuance, and upon issuance in accordance with the terms of the
Restated Certificate, will be validly issued, outstanding, fully paid and
nonassessable. To the best of our knowledge, (a) there are no options,
warrants, conversion privileges, preemptive rights or other rights presently
outstanding to purchase any of the authorized but unissued capital stock of the
Company, other than as disclosed in the Agreement or on Exhibit B thereto, and
(b) other than as disclosed in the Agreement or Exhibit B thereto, there is no
commitment by the Company to issue shares, warrants, options, convertible
securities or such other rights. Neither the issuance, sale or delivery of the
Shares nor the issuance or delivery of the shares of Common Stock issuable upon
conversion of the Shares is subject to any preemptive right of stockholders of
the Company arising under law or the Restated Certificate or Bylaws of the
Company or, to our knowledge, to any contractual right of first refusal or other
similar right in favor of any person under any agreement on the list attached
hereto which has not been waived. To our knowledge, the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein.
5. The execution and delivery of the Agreements by the Company,
the performance by the Company of its obligations thereunder and the issuance of
the Shares pursuant thereto (and the issuance of shares of Common Stock upon
conversion of the Shares (assuming conversion of the Shares by the Purchasers
as of the date hereof)) do not violate any provision of the Company's Restated
Certificate of Incorporation or Bylaws, and do not constitute a material
default under the provisions of any material agreement known to us to which the
Company is a party or by which it is bound, and do not violate or contravene
(a) any governmental statute, rule or regulation applicable to the Company or
(b) any order, writ, judgment, injunction, decree, determination or award which
has been entered against the Company and of which we are aware, the violation
or
<PAGE> 112
To the Purchasers
March 8, 1996
Page Four
contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations or impair the Company's ability to
execute and perform the Agreements.
6. To the best of our knowledge, there is no action, proceeding or
investigation pending or overtly threatened against the Company before any
court, administrative agency or other governmental instrumentality that
questions the validity of the Agreements or might result, either individually
or in the aggregate, in any material adverse change in the assets, financial
condition, or operations of the Company.
7. All consents, approvals, authorizations, or orders of, and
filings, registrations, and qualifications with any regulatory authority or
governmental body in the United States required for the consummation by the
Company of the transactions contemplated by the Agreements (including issuance
of the Shares and issuance of the shares of Common Stock upon conversion of the
Shares (assuming conversion of the Shares by the Purchasers as of the date
hereof)), have been made or obtained, except (a) for the filing of a Notice of
Transaction Pursuant To Section 25102(f) of the California Corporate Securities
Law of 1968, and (b) for the filing of a Form D pursuant to Securities and
Exchange Commission Regulation D.
8. The offer and sale of the Shares is, and the issuance of the
shares of Common Stock upon conversion of the Shares (assuming conversion of the
Shares by the Purchasers as of the date hereof) will be, exempt from the
registration requirements of the Securities Act of 1933, as amended.
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm, or entity without our
prior written consent.
Very truly yours,
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
By:_______________________________
Thomas A. Coll
TAC:flm
35939 v4/SD
<PAGE> 1
EXHIBIT 10.12
AURORA BIOSCIENCES CORPORATION
------------------------------------------------------------------------------
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
------------------------------------------------------------------------------
DECEMBER 27, 1996
<PAGE> 2
<TABLE>
<S> <C>
SECTION 1 Sale of Shares....................................................1
1.2 Closing Date.......................................................1
1.3 Delivery...........................................................2
SECTION 2 Representations and Warranties of the Company.....................2
2.1 Organization and Standing..........................................2
2.2 Corporate Power....................................................3
2.3 Subsidiaries.......................................................3
2.4 Capitalization.....................................................3
2.5 Authorization......................................................4
2.6 Contracts and Other Commitments....................................5
2.7 Compliance with Other Instruments, etc.............................5
2.8 Litigation, etc....................................................5
2.9 Registration Rights................................................6
2.10 Permits...........................................................6
2.11 Governmental Consent, etc.........................................6
2.12 Disclosure........................................................6
2.13 Offering..........................................................7
2.14 Liabilities.......................................................7
2.15 Changes...........................................................7
2.16 Title to Properties and Assets; Liens, Leases, etc................9
2.17 Patents and Trademarks............................................9
2.18 Tax Returns; Taxes...............................................10
2.19 Employees........................................................10
2.20 No Defaults......................................................11
2.21 Insurance........................................................11
2.22 Brokers or Finders...............................................12
2.23 Environmental and Safety Laws....................................12
2.24 No Dividends.....................................................12
2.25 Employee Benefit Plan Obligations................................12
2.26 Qualification as a Qualified Small Business......................12
2.27 Financial Statements.............................................12
2.28 Transactions with Affiliates.....................................12
2.29 Proprietary Information and Inventions Agreements................13
2.30 U.S. Real Property Holding Corporation...........................13
SECTION 3 Investment Representations.......................................13
3.1 Power and Authority...............................................13
3.2 Due Execution.....................................................13
3.3 Experience; Accredited Investor...................................14
3.4 Investment........................................................14
3.5 Rule 144..........................................................14
3.6 No Public Market..................................................14
3.7 Disclosure of Information.........................................14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4 Conditions of the Purchaser's Obligations at Closing.............15
4.1 Representations and Warranties....................................15
4.2 Covenants.........................................................15
4.3 No Material Adverse Change........................................15
4.4 Securities Laws...................................................15
4.5 Compliance Certificate............................................15
4.6 Opinion of Counsel................................................15
4.7 Investors' Rights Agreement.......................................15
4.8 Proceedings and Documents.........................................15
4.9 Supporting Documents..............................................16
4.10 Management Rights Agreements.....................................16
4.11 Voting Agreement.................................................16
4.12 Amendment to Employment Agreement................................17
4.13 Charter..........................................................17
4.14 Bylaws...........................................................17
4.14 Proprietary Information Agreements...............................17
4.15 Election of Directors............................................17
4.16 Certificate as to Disqualified Persons...........................17
4.18 Fees of Purchasers' Counsel......................................17
SECTION 5 Conditions of the Company's Obligations at Closing...............18
5.1 Representations and Warranties....................................18
5.2 Covenants.........................................................18
SECTION 6 Miscellaneous....................................................18
6.1 Governing Law.....................................................18
6.2 Successors and Assigns............................................18
6.3 Entire Agreement..................................................18
6.4 Notices, etc......................................................18
6.5 Expenses..........................................................19
6.6 Counterparts......................................................19
6.7 Severability......................................................19
6.8 Survival of Agreements............................................19
6.9 Brokerage.........................................................19
6.10 Amendments.......................................................20
</TABLE>
EXHIBIT
A RESTATED CERTIFICATE OF INCORPORATION
B SCHEDULE OF EXCEPTIONS
C INVESTORS' RIGHTS AGREEMENT
D FORM OF VOTING AGREEMENT
E FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
F FORM OF LEGAL OPINION OF COMPANY COUNSEL
ii
<PAGE> 4
AURORA BIOSCIENCES CORPORATION
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 27, 1996 between Aurora Biosciences
Corporation, a Delaware corporation (the "COMPANY"), with its principal office
at 11149 North Torrey Pines Road, La Jolla, California 92037, and the purchasers
listed on Schedule of Purchasers attached hereto (the "SCHEDULE OF PURCHASERS")
who execute this Agreement (each a "Purchaser," and collectively, the
"PURCHASERS").
WHEREAS, the Company has authorized the issuance and sale of up to 572,536
shares of its Series D Preferred Stock (the "SHARES") having the rights,
preferences, privileges and restrictions set forth in the Restated Certificate
of Incorporation of the Company in the form attached to this Agreement as
Exhibit A (the "RESTATED CERTIFICATE").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:
SECTION 1
SALE OF SHARES
1.1 SALE OF SHARES. Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined) each Purchaser (severally but not jointly)
agrees to purchase from the Company, and the Company agrees to sell and issue,
at a purchase price per share of $3.60, that number of Shares as is set forth
opposite such Purchaser's name on the Schedule of Purchasers.
CLOSING DATE. The purchase and sale of the Shares hereunder (the
"CLOSING") shall take place at the law offices of Cooley Godward LLP, 4365
Executive Drive, Suite 1100, San Diego, California 92121 on the date of this
Agreement or at such other time upon which the Company and the Purchasers shall
agree.
1.2 DELIVERY. At the Closing, the Company will deliver to each Purchaser a
certificate representing the Shares being purchased by such Purchaser upon
payment of the aggregate purchase price therefor (as set forth opposite each
Purchaser's name on the Schedule of Purchasers) by check payable to the order of
the Company or wire transfer of immediately available funds made payable to the
order of the Company, or any combination of the foregoing.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
1
<PAGE> 5
Except as set forth in the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Purchasers as
follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing under such laws. The Company has all requisite corporate
power to own and operate its assets and to carry on its business as presently
conducted and as proposed to be conducted. The Company is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
or where the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, "Material Adverse Effect" shall mean material adverse effect
on the Company's business as presently conducted or planned to be conducted or
the Company's financial condition or operations.
2.2 CORPORATE POWER. The Company has all requisite legal and corporate
power to execute and deliver this Agreement, the Amended and Restated Investors'
Rights Agreement in substantially the form attached hereto as Exhibit C (the
"AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT") and the Voting Agreement in
substantially the form attached hereto as Exhibit D (the "VOTING AGREEMENT")
(this Agreement, the Investors' Rights Agreement and the Voting Agreement are
hereinafter collectively referred to as the "AGREEMENTS"), to sell and issue the
Shares under this Agreement, to issue the Common Stock issuable upon conversion
of the Shares and to carry out and perform its obligations under the terms of
the Agreements, including all exhibits and schedules hereto and thereto.
2.3 SUBSIDIARIES. The Company does not own (of record or beneficially) or
control, directly or indirectly, any equity interest in any other corporation,
association or business entity (other than investments in marketable
securities). The Company is not a participant in any joint venture, partnership
or similar arrangement.
2.4 CAPITALIZATION. The authorized capital stock of the Company consists
of 50,000,000 shares of Common Stock, of which 3,574,450 shares will be issued
and outstanding immediately prior to the Closing, and 25,000,000 shares of
Preferred Stock, of which 10,500,000 are designated Series A Preferred Stock,
833,332 are designated Series B Preferred Stock, 800,000 are designated Series C
Preferred Stock and 572,536 are designated Series D Preferred Stock. Immediately
prior to the Closing, 10,239,115 shares of Series A Preferred Stock, 833,332
shares of Series B Preferred Stock and 750,000 shares of Series C Preferred
Stock will be outstanding. No shares of Series D Preferred Stock will be issued
and outstanding immediately prior to the Closing. No other shares of capital
stock or other securities of the Company are outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable and have been offered, issued, sold and delivered by the
Company in compliance with applicable federal and state securities laws. The
Shares have the rights, preferences and privileges set forth in the Restated
Certificate, and all
2
<PAGE> 6
such rights, preferences and privileges are valid, binding and enforceable in
accordance with all applicable laws. The stockholders of record and holders of
subscriptions, warrants, options, convertible securities and other rights to
purchase or otherwise acquire equity securities of the Company, and the number
of shares of Common Stock and the number of such subscriptions, warrants,
options, convertible securities, and other such rights held by each are as set
forth in Exhibit B. All of the outstanding shares of stock held by each such
holder are subject to vesting as described in Exhibit B, and the Company has the
right to repurchase unvested shares upon the termination of such holder's
employment or other business relationship with the Company at the original
purchase price per share paid to the Company by such holder. The Company has
reserved 1,000,000 shares of its Common Stock (the "Reserved Shares") for
issuance pursuant to the Company's 1996 Stock Plan. Except for the transactions
contemplated in the Agreements, the conversion privileges of the Company's
Series A, Series B, Series C and Series D Preferred Stock specified in the
Restated Certificate, and except as set forth in Exhibit B, there are no
options, warrants, conversion privileges or other rights or agreements presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the Company's capital stock or other securities of the Company and there is
no commitment by the Company to issue shares, options, warrants, convertible
securities or other rights to purchase or otherwise acquire shares of the
Company's capital stock or other securities of the Company. Except as set forth
in Section 45 of the Company's Bylaws and as contemplated by the Agreements or
as provided for in Exhibit B, to the best of the Company's knowledge, there are
no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to securities of the Company (whether or not the Company is a party
thereto). The Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities.
2.5 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) and the performance of the Company's obligations under
the Agreements has been taken or will be taken prior to the Closing. The
Agreements, when executed and delivered by the Company, will constitute valid
and binding obligations of the Company enforceable in accordance with their
terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors, general equity principles and limitations
upon rights to indemnity. This Agreement has been duly executed and delivered by
the Company. The Shares, when issued in compliance with the provisions of this
Agreement, will be duly and validly issued, fully paid and nonassessable and
will be free and clear of all liens, encumbrances or restrictions imposed by or
through the Company. The Common Stock issuable upon conversion of the Shares has
been duly and validly reserved and, when issued in compliance with the
provisions of the Restated Certificate, will be duly and validly issued, fully
paid and nonassessable and will be free and clear of all liens, encumbrances or
restrictions imposed by or through the Company. The issuance
3
<PAGE> 7
of the Shares (and the Common Stock issuable upon conversion of the Shares) is
not subject to any preemptive rights, rights of first refusal or similar rights
that have not been waived; provided, however, that the Shares (and the Common
Stock issuable upon conversion of the Shares) are subject to a right of first
refusal as set forth in Section 45 of the Company's Bylaws, and may be subject
to restrictions on transfer under state and/or federal securities laws as set
forth herein.
2.6 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, other than contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $100,000 individually or $500,000 in the aggregate. For
the purpose of this paragraph, employment and consulting contracts (including
any severance arrangements), license agreements and any other agreements
relating to the acquisition or disposition of the Company's technology (other
than pursuant to the Company's standard form of Proprietary Information and
Inventions Agreement (the "PROPRIETARY INFORMATION AGREEMENT")) shall not be
considered to be contracts entered into in the ordinary course of business. The
Company is not a party to or bound by any judgment, order, writ or decree
restricting or affecting the development, manufacture or distribution of the
Company's products or services or proposed products or services or limiting or
restricting the Company's right to compete with any person in any respect.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation (with or without the
passage of time or giving of notice or both) of any term of the Restated
Certificate or its Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any material order, statute, rule or regulation applicable
to the Company, other than any of the foregoing such violations that do not
impair the Company's ability to enter into or perform its obligations under the
Agreements or which, either individually or in the aggregate, do not have a
Material Adverse Effect. Entering into and performing the Agreements and the
transactions contemplated thereunder by the Company will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to the Company or its properties or business.
2.8 LITIGATION, ETC. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding, investigation,
governmental inquiry, or claim, or any basis therefor or threat thereof, whether
or not purportedly on behalf of the Company, to which the Company is or may be
named as a party or its property is or may be subject or, to the Company's
knowledge, to which any officer, key employee, key
4
<PAGE> 8
consultant, or principal shareholder of the Company is subject; and the Company
has no knowledge (i) of any unasserted claim, the assertion of which is likely
and which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or nonmonetary relief, which claim individually or
collectively with other such unasserted claims if granted would have a Material
Adverse Effect, or (ii) that there exists, or there is pending or planned, any
patent, trademark, tradename, invention, device, application or principle, or
any statute, rule, law, regulation, standard or code which would result in a
Material Adverse Effect. There is no pending or, to the Company's knowledge and
belief, threatened claim or litigation against or affecting the Company
contesting, or which if adversely determined might materially impair, its right
to produce, manufacture, sell or use any product, process, method, substance,
part or other material presently produced, manufactured, sold or used or planned
to be produced, manufactured, sold or used by the Company in connection with the
operations of the Company. The Company has no current plans to initiate any
action, suit or proceeding.
2.9 REGISTRATION RIGHTS. Except as set forth in the Amended and Restated
Investors' Rights Agreement, the Company is not under any obligation to register
(as defined in the Amended and Restated Investors' Rights Agreement), and has
not granted any rights to register, any of its presently outstanding securities
or any of its securities that may hereafter be issued.
2.10 PERMITS. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it and as proposed to be conducted, the lack of which would have a
Material Adverse Effect. The Company is not in default or violation in any
material respect under any of such franchises, permits, licenses, or other
similar authority, and the execution and delivery of the Agreements will not
result in any such default or violation, with or without the passage of time or
giving of notice or both.
2.11 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) or the consummation of
any other transaction contemplated thereby, except the filing of the Restated
Certificate in the Office of the Secretary of State of the State of Delaware and
the qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the Shares
(and the Common Stock issuable upon conversion of the Shares) under the
California Corporate Securities Law, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the Closing.
2.12 DISCLOSURE. The Company has provided each Purchaser with all the
information reasonably available to it without undue expense that such Purchaser
has requested or could reasonably be expected to be material in deciding whether
to purchase
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the Shares. The Agreements and the Exhibits thereto as well as any other
document, certificate, schedule, financial, business or other statement
furnished to such Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading.
2.13 OFFERING. Subject to the accuracy of the representations set forth in
Section 3 hereof, the offer, sale and issuance of the Shares pursuant to this
Agreement and the issuance of the Common Stock to be issued upon conversion of
the Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemption.
2.14 LIABILITIES. The Company has no indebtedness for borrowed money that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than obligations not in excess of $100,000
individually or $500,000 in the aggregate. The Company has not assumed,
guaranteed, endorsed or otherwise become directly or contingently liable on any
indebtedness of any other person (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor, or otherwise to
assure the creditor against loss), except for guaranties by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
2.15 CHANGES. Since November 30, 1996, there has not been:
(A) any change in the assets, liabilities, financial condition, or
operating results of the Company except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;
(B) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(C) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(D) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
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(E) to the best of the Company's knowledge, any material change
to a material contract or arrangement by which the Company or any of its
assets is bound or subject;
(F) any material change in any compensation arrangement or
agreement with any employee, consultant, officer, director or shareholder;
(G) any sale, assignment, license or transfer of any patents,
trademarks, copyrights, trade secrets, Proprietary Information (as defined
herein) or other intangible assets;
(H) any resignation or termination of employment of any key officer of
the Company or termination of engagement of any key consultant of the Company;
and the Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer or termination of
engagement of any such consultant;
(I) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
(J) any mortgage, pledge, transfer of a security interest in, or lien
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(K) any loans or guarantees made by the Company to or for the benefit
of any person, other than travel advances to employees and/or consultants and
other advances to employees and/or consultants made in the ordinary course of
its business;
(L) to the best of the Company's knowledge, any other event or
condition of any character that might, individually or in the aggregate,
materially and adversely affect the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(M) any amount borrowed or any liability (absolute, accrued or
contingent) incurred, or to which the Company has become subject, except
liabilities not in excess of $50,000 individually or $100,000 in the aggregate
and except current liabilities incurred and liabilities under contracts entered
into in the ordinary course of business which have not been, individually or in
the aggregate materially adverse;
(N) any transaction except in the ordinary course of business
or as otherwise contemplated hereby; or
(O) any agreement or commitment by the Company to do any of the
things described in this paragraph 2.15.
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2.16 TITLE TO PROPERTIES AND ASSETS; LIENS, LEASES, ETC. The Company has
good and marketable title to its properties and assets and has good title to all
of its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances that do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have not arisen
otherwise than in the ordinary course of business.
Set forth on Exhibit B is a correct and complete list (including the
amount of rents called for and a description of the leased property) of all
material leases (involving more than $100,000 either individually or $500,000 in
the aggregate if such leases are of a similar nature or with the same lessor)
under which the Company is a lessee. The Company enjoys peaceful and undisturbed
possession under all such leases, all of such leases are valid and subsisting
and, except as would not result in a Material Adverse Effect, the Company and,
to the Company's knowledge, each other party to such leases is not in default
thereunder.
2.17 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, applications for each of
the foregoing, trade names, copyrights, trade secrets, information, proprietary
rights and processes (collectively "PROPRIETARY INFORMATION"), or has, or
believes to the best of its knowledge that it has the ability to acquire on
commercially reasonable terms, valid licenses to such Proprietary Information
(as described further on Exhibit B), as necessary for its business as now
conducted and as proposed to be conducted without any conflict with or
infringement of the rights of others. The Schedule of Exceptions contains a
complete list of patents and pending patent applications of the Company or of
which the Company is a licensee. There are no outstanding options, licenses, or
agreements of any kind relating to Proprietary Information owned by the Company,
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, applications
for each of the foregoing, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The
Company is not aware of any impropriety with regard to the granting of any
licenses of Proprietary Information to or from the Company, and no claim is
pending or, to the Company's knowledge, threatened to the effect that any such
Property Information owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company (and
to the Company's knowledge, there is no basis for any such claim). Neither the
Company nor, to the Company's knowledge, any of its employees or consultants has
received any written communications alleging, nor does the Company know of any
grounds for any claims or allegations now or in the future, that the Company or
its employees or consultants has violated or infringed or that the Company or
its employees or consultants would, by conducting its business as proposed,
violate or infringe any of the patents, trademarks, service marks, applications
for each of the foregoing, 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 or consultants is obligated under any contract (including
licenses, covenants, or
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commitments of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would, in the case
of employees, interfere with the use of such 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 or, in the case of consultants, which would conflict
with their obligations in serving as consultants to the Company. No third party,
including the employers or former employers of the Company's employees and
consultants, has asserted any rights or claims to the Proprietary Information or
any inventions used or proposed to be used in the Company's business, and the
Company does not believe that any such third party has a right to assert any
such rights or claims, except to the extent that such Proprietary Information or
such inventions are licensed to or from such third party. Except pursuant to the
terms of the Proprietary Information Agreements, there are no agreements,
understandings, instruments, or contracts to which the Company is a party or by
which it is bound that involve the license of any patent, copyright, trade
secret or other similar proprietary right to or from the Company.
2.18 TAX RETURNS; TAXES. The Company has accurately prepared and timely
filed all federal, state and other tax returns which are required to be filed
and has timely paid all taxes covered by such returns which have become due and
payable. The Company has not been advised that any of its returns, federal,
state or other, have been or are being audited as of the date hereof. The
Company is not delinquent in taxes or assessments and has no tax deficiency
proposed or assessed and has made no waiver of the statute of limitations
regarding assessments or collections. All taxes, if any, imposed by law in
connection with the issuance, sale and delivery of the Shares shall have been
paid, and all laws imposing such taxes shall have been fully complied with,
prior to the Closing. Neither the Company nor any of its present or former
stockholders has ever filed an election pursuant to Section 1362 of the Internal
Revenue Code of 1986, as amended (the "CODE"), that the Company be taxed as an S
corporation.
2.19 EMPLOYEES. None of the Company's employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the Company's
knowledge, no employee of or consultant to the Company is or will be in
violation of any judgment, decree, or order, or any term of any employment
contract, patent disclosure agreement, proprietary information and inventions
agreement, or any restrictive covenant, or any other common law obligation to a
former employer, or any other contract or agreement relating to the relationship
of any such person with the Company, or any other party, or to the use of trade
secrets or proprietary information of others, because of the nature of the
business conducted or to be conducted by the Company or the use by any such
employee of his best efforts with respect to such business or the performance by
any such consultant of his obligations to the Company. To the knowledge of the
Company, no third party has claimed or has reason to claim that any employee of
or consultant to the Company has disclosed or may be disclosing or utilized or
may be utilizing any trade secret or proprietary information or documentation of
such third party, or interfered or may be interfering in the employment
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relationship between such third party and any of its present or former employees
and, to the Company's knowledge, no such person proposes to do any of such
things. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement, other than with respect to the Company's 1996 Stock Plan, a true and
correct copy of which has been provided to each Purchaser. The Company is not
aware that any officer, key employee or key consultant, or that any group of key
employees or key consultants, intends to terminate their employment or
consultancy with the Company, nor does the Company have a present intention to
terminate the employment or engagement as a consultant of any of the foregoing.
Subject to general principles related to wrongful termination of employees, the
employment of each officer and employee of the Company is terminable at the will
of the Company. The Company has delivered to counsel for the Purchasers a copy
of each consulting agreement to which it is a party.
2.20 NO DEFAULTS. The Company has, in all material respects, performed all
material obligations required to be performed by it to date and is not in
default under any of the contracts, loans, notes, mortgages, indentures,
licenses, security agreements, agreements, leases, documents, commitments or
other arrangements to which it is a party or by which it is otherwise bound,
except for such defaults which in the aggregate would not have a Material
Adverse Effect, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.
2.21 INSURANCE. The Company maintains adequate insurance on its properties
of a character and in such amounts and on such terms usually insured by
corporations engaged in the same or a similar business against loss or damage
resulting from fire or other risks insured against by such corporations, and
maintains in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or in
connection with the use of any of its properties, products or services and
maintains such other insurance as may be required by law or other agreement to
which the Company is a party.
2.22 BROKERS OR FINDERS. The Company has not incurred, and will not incur,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Agreements.
2.23 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
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2.24 NO DIVIDENDS. The Company has never made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.
2.25 EMPLOYEE BENEFIT PLAN OBLIGATIONS. The Company does not maintain or
have any obligations with respect to any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan
within the meaning of Section 3(37) of ERISA.
2.26 QUALIFICATION AS A QUALIFIED SMALL BUSINESS. The Company is a
"qualified small business," as defined in Section 1202(b) of the Internal
Revenue Code (the "Code") and the Shares constitute "qualified small business
stock" as defined in Section 1202(c) of the Code. The Company covenants and
agrees to comply with the reporting and recordkeeping requirements of Section
1202 of the Code and any regulations promulgated thereunder and to execute and
deliver to the Purchasers and the Internal Revenue Service, from time to time,
such forms, documents, schedules and other instruments as may be reasonably
requested thereby to cause the Shares and the shares of Common Stock issuable
upon conversion of the Shares to qualify as a "qualified small business stock,"
as defined in Section 1202(c) of the Code.
2.27 FINANCIAL STATEMENTS. The Company has furnished to the Purchasers the
unaudited balance sheet of the Company as of November 30, 1996 and the related
unaudited statement of income for the period from April 1, 1996 through November
30, 1996. All such financial statements fairly present the financial position of
the Company as of November 30, 1996, and the results of operations during such
period.
2.28 TRANSACTIONS WITH AFFILIATES. No director or officer or, to the
Company's knowledge, employee or stockholder of the Company, or, to the
Company's knowledge, member of the family of any such person, or, to the
Company's knowledge, any corporation, partnership, trust or other entity in
which any such person, or any member of the family of any such person, has a
substantial interest or is an officer, director, trustee, partner or holder of
more than 5% of the outstanding capital stock thereof, is a party to any
material transaction with the Company, including any contract, agreement or
other arrangement providing for the employment of, furnishing of services by,
rental of real or personal property from or otherwise requiring payments to any
such person or firm, other than employment-at-will arrangements in the ordinary
course of business.
2.29 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each of the
officers of the Company, each key employee and each other employee now employed
by the Company who has access to confidential information of the Company has
executed the Proprietary Information Agreement substantially in the form of
Exhibit E (collectively, the "PROPRIETARY INFORMATION Agreements"), and such
agreements are in
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full force and effect. The Company is not aware that any of such persons is in
violation of any such agreement.
2.30 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now and
has never been a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the Regulations
promulgated by the Internal Revenue Service, and the Company has filed with the
Internal Revenue Service all statements, if any, with its United States income
tax returns which are required under Section 1.897-2(h) of such Regulations.
SECTION 3
INVESTMENT REPRESENTATIONS
Each Purchaser, severally and not jointly, hereby represents and warrants
to the Company as follows:
3.1 POWER AND AUTHORITY. Such Purchaser has the requisite power and
authority to enter into this Agreement, to purchase the Shares hereunder, to
convert the Shares into Common Stock, and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding agreement of such Purchaser,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and general equity principles.
3.3 EXPERIENCE; ACCREDITED INVESTOR. Such Purchaser has, from time to
time, evaluated investments in start-up companies and has, either individually
or through the personal experience of one or more of its current officers or
partners, experience in evaluating and investing in start-up companies. Such
Purchaser is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act.
3.4 INVESTMENT. Such Purchaser is acquiring the Shares (and any Common
Stock issuable upon conversion of the Shares) for investment for its own account
and not with the view to, or for resale in connection with, any distribution
thereof. Such Purchaser understands that the Shares (and any Common Stock
issuable upon conversion of the Shares) to be purchased have not been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.
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3.5 RULE 144. Such Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than two years
after a party has purchased and paid for the securities to be sold, the sale
being through a "BROKER'S TRANSACTION" or in transactions directly with a
"MARKET MAKER" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations. Such
Purchaser is aware that the conditions for resale set forth in Rule 144 have not
been satisfied and that the Company has no plan to satisfy these conditions in
the foreseeable future.
3.6 NO PUBLIC MARKET. Such Purchaser understands that no public
market now exists for the Shares and that a public market may never exist for
the Shares.
3.7 DISCLOSURE OF INFORMATION. Such Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Shares. Such Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares.
SECTION 4
CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING
Each Purchaser's obligation to purchase the Shares at the Closing is
subject to the fulfillment on or prior to the Closing of the following
conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true when made and on and as of the
date of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
4.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing shall have
been performed or complied with in all material respects.
4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Company's business or financial condition or affairs between the
date of this Agreement and the date of the Closing, if different.
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4.4 SECURITIES LAWS. The Company shall have obtained all necessary permits
and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Common
Stock issuable upon conversion of the Shares.
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered on the date of
the Closing a certificate signed by the President and Director of Finance and
Administration of the Company certifying that the conditions specified in
Sections 4.1, 4.2, 4.3, 4.7, 4.9, 4.10, and 4.11 have been fulfilled.
4.6 OPINION OF COUNSEL. The Purchasers purchasing shares in the Closing shall
have received from Cooley Godward LLP, counsel for the Company, an opinion dated
as of the Closing in substantially the form attached hereto as Exhibit F.
4.7 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Company and the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
number of outstanding shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock shall have executed and delivered the Amended
and Restated Investors' Rights Agreement.
4.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchasers' counsel, which shall have received all such counterpart original and
certified or other copies of such documents as it may reasonably request.
4.9 SUPPORTING DOCUMENTS. The Purchasers and their counsel shall have
received copies of the following documents:
(i) (A) the Certificate of Incorporation of the Company, certified as of
a recent date by the Secretary of State of the State of Delaware and (B) a
certificate of said Secretary dated as of a recent date as to the due
incorporation and good standing of the Company, the payment of all excise
taxes by the Company and listing all documents of the Company on file with
said Secretary.
(ii) a certificate of the Secretary or an Assistant Secretary of the
Company dated the date of the Closing and certifying: (A) that attached
thereto is a true and complete copy of the Bylaws of the Company as in effect
on the date of such certification; (B) that attached thereto is a true and
complete copy of all resolutions adopted by the Board of Directors or the
stockholders of the Company authorizing the execution, delivery and
performance of the Agreements, the issuance, sale and delivery of the Shares,
and the reservation, issuance and delivery of the shares of
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Common Stock issuable upon conversion of the Shares, and that all such
resolutions are in full force and effect and are all the resolutions adopted
in connection with the transactions contemplated by the Agreements; (C) that
the Certificate of Incorporation has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to clause
(i)(B) above, except for the filing of the Restated Certificate; and (D) to
the incumbency and specimen signature of each officer of the Company
executing the Agreements, the stock certificates representing the Shares and
any certificate or instrument furnished pursuant hereto, and a certification
by another officer of the Company as to the incumbency and signature of the
officer signing the certificate referred to in this clause (ii); and
(iii) such additional supporting documents and other information with
respect to the operations and affairs of the Company as the Purchasers or
their counsel reasonably may request.
4.10 CHARTER. The Certificate of Incorporation of the Company shall read in
its entirety as set forth in Exhibit A.
4.11 FEES OF PURCHASERS' COUNSEL. The Company shall have paid in accordance
with Section 6.5 the reasonable fees and disbursements of Hamada & Matsumoto in
connection with this Agreement and related transactions as specified on a
reasonably detailed invoice, detailing all time entries and costs, submitted to
counsel to the Company a reasonable time in advance of such Closing.
SECTION 5
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The Company's obligation to issue and sell the Shares at the Closing is
subject to the fulfillment on or prior to the Closing of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchasers contained in Section 3 shall be true when made and on and as of
the date of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchasers on or prior to the date of the
Closing shall have been performed or complied with in all respects.
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5.3 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Purchasers and the
holders of at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
number of outstanding shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock shall have executed and delivered the Amended
and Restated Investors' Rights Agreement.
5.4 VOTING AGREEMENT. Each of the Purchasers shall have executed a
counterpart signature page to the Voting Agreement pursuant to which such
Purchaser agrees to be bound by the provisions of the Voting Agreement.
SECTION 6
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by residents of California.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
provided, however, that the rights of the Purchasers to purchase the Shares
shall not be assignable without the consent of the Company, and the Company's
obligations hereunder shall not be assignable without the consent of the
Purchasers.
6.3 ENTIRE AGREEMENT. This Agreement, its Exhibits, 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.
6.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or mailed
by registered or certified mail, postage prepaid, or otherwise delivered by hand
or by messenger, addressed (a) if to a Purchaser, to the address set forth on
the Schedule of Purchasers, or at such other address as shall have been
furnished to the Company in writing by such Purchaser, or (b) if to the Company,
one copy to its address set forth above and addressed to the attention of the
President, or at such other address or addresses as the Company shall have
furnished in writing to the Purchasers, and one copy to Cooley Godward LLP, 4365
Executive Drive, Suite 1100, San Diego, CA 92121, Attn.: Thomas A. Coll, Esq.
All notices and other communications pursuant to the provisions of this Section
6.4 shall be deemed delivered when mailed or sent by facsimile or delivered by
hand or messenger. Notwithstanding the foregoing, any notice or communication to
an address outside the United
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States shall be sent by facsimile and confirmed in writing contemporaneously
sent by two-day guaranteed international courier.
6.5 EXPENSES. Each party to this Agreement shall bear its own expenses and
legal fees incurred by it with respect to this Agreement and all related
transactions; provided, however, that the Company shall pay the reasonable fees
and expenses of the Purchasers' special counsel, Hamada & Matsumoto, not to
exceed $5,000, in connection with this Agreement and such transactions and any
subsequent amendment, waiver, consent or enforcement thereof.
6.6 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
6.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is 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.
6.8 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations and
warranties made herein or in the other Agreements, or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with the
Agreements, shall survive the execution and delivery of the Agreements, the
issuance, sale and delivery of the Shares, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares, and all
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
6.9 BROKERAGE. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
6.10 AMENDMENTS. This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of the Company and
the holders of at least two-thirds of the shares of Common Stock issued or
issuable upon conversion of the Shares.
17
<PAGE> 21
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE> 22
The foregoing Preferred Stock Purchase Agreement is hereby executed as of
the date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By:
------------------------------------
Title:
---------------------------------
THE PURCHASERS:
JAPAN ASSOCIATED FINANCE CO., LTD.
By:
------------------------------------
Title:
---------------------------------
JAFCO R-2 INVESTMENT ENTERPRISE PARTNERSHIP
By:
------------------------------------
Title:
---------------------------------
JAFCO R-3 INVESTMENT ENTERPRISE PARTNERSHIP
By:
------------------------------------
Title:
---------------------------------
19
<PAGE> 23
JAFCO G-6(A) INVESTMENT ENTERPRISE PARTNERSHIP
By:
------------------------------------
Title:
---------------------------------
JAFCO G-6(B) INVESTMENT ENTERPRISE PARTNERSHIP
By:
------------------------------------
Title:
---------------------------------
- ---------------------------------------
ROGER Y. TSIEN
20
<PAGE> 24
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
AGGREGATE PURCHASE SHARES
SHAREHOLDER PRICE PURCHASED
- ----------------------------------- -------------------- --------------
<S> <C> <C>
JAPAN ASSOCIATED FINANCE CO., LTD.
Tekko Bldg, 1-8-2 $399,999.60 111,111
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Fax: 81-3-5223-7562
JAFCO R-2 INVESTMENT ENTERPRISE
PARTNERSHIP $434,548.80 120,708
Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Fax: 81-3-5223-7562
JAFCO R-3 INVESTMENT ENTERPRISE
PARTNERSHIP $416,232.00 115,620
Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Fax: 81-3-5223-7562
JAFCO G-6(A) INVESTMENT ENTERPRISE
PARTNERSHIP $374,608.80 104,058
Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Fax: 81-3-5223-7562
JAFCO G-6(B) INVESTMENT ENTERPRISE
PARTNERSHIP $374,608.80 104,058
Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Fax: 81-3-5223-7562
ROGER Y. TSIEN
8535 Nottingham Place $61,131.60 16,981
La Jolla, Ca 92037
Fax: (619) 534-5270
------------- --------
TOTAL $2,061,129.60 572,536
============= =======
</TABLE>
<PAGE> 25
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
<PAGE> 26
RESTATED CERTIFICATE OF INCORPORATION
OF
AURORA BIOSCIENCES CORPORATION
AURORA BIOSCIENCES CORPORATION, a corporation organized and existing
under the laws of the state of Delaware, hereby certifies as follows:
FIRST. The name of the corporation is Aurora Biosciences Corporation.
SECOND. The date of the filing of the corporation's original Certificate
of Incorporation with the Secretary of State of Delaware was
January 22, 1996.
THIRD. This Restated Certificate of Incorporation was duly adopted by the
corporation in accordance with Section 245 of the General
Corporation Law of the State of Delaware.
FOURTH. The Certificate of Incorporation of the corporation shall be
amended and restated to read in full as follows.
I.
The name of this corporation is AURORA BIOSCIENCES CORPORATION.
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<PAGE> 27
II.
The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 30 Old Rudnick
Lane, City of Dover, County of Kent; and the name of the registered agent of the
corporation in the State of Delaware at such address is CorpAmerica Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.
IV.
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "COMMON STOCK" and "PREFERRED STOCK."
The total number of shares which the corporation is authorized to issue is
seventy-five million (75,000,000) shares. Fifty million (50,000,000) shares
shall be Common Stock, each having a par value of one-tenth of one cent
($0.001). Twenty-five million (25,000,000) shares shall be Preferred Stock, each
having a par value of one-tenth of one cent ($0.001). Notwithstanding Section
242 of the General Corporation Law of the State of Delaware, the number of
authorized shares of Common Stock may be increased or decreased (but not below
the number of shares then outstanding) by the affirmative vote of holders of a
majority of the outstanding shares of capital stock of the corporation, with
each such share being entitled to such number of votes per share as is provided
in this Article IV.
The Preferred Stock may be issued from time to time in one or more
series. Subject to compliance with applicable voting rights, if any, which may
have been granted to the Preferred
2
<PAGE> 28
Stock or any series thereof, the Board of Directors is hereby authorized, by
filing a certificate pursuant to the Delaware General Corporation Law, to fix or
alter from time to time the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof, including without limitation the dividend rights, dividend rate,
conversion rights, voting rights and the liquidation preferences of any wholly
unissued series of Preferred Stock, and to establish from time to time the
number of shares constituting any such series and the designation thereof, or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status that they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
Of the Preferred Stock, ten million five hundred thousand
(10,500,000) shares shall be designated "SERIES A PREFERRED STOCK," eight
hundred thirty-three thousand three hundred thirty-two (833,332) shares shall be
designated "SERIES B PREFERRED STOCK", eight hundred thousand (800,000) shares
shall be designated "SERIES C PREFERRED STOCK" and five hundred seventy-two
thousand five hundred thirty-six (572,536) shares shall be DESIGNATED "SERIES D
PREFERRED STOCK." The Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock and the Series D Preferred Stock is hereinafter
sometimes collectively referred to as the "DESIGNATED PREFERRED."
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SERIES A,
SERIES B, SERIES C AND SERIES D PREFERRED STOCK.
SECTION 1. DIVIDENDS. The holders of the Designated Preferred
shall be entitled to receive dividends at the rate per annum of $0.1064 per
share of Series A Preferred
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<PAGE> 29
Stock, $0.1440 per share of Series B Preferred Stock, $0.1600 per share of
Series C Preferred Stock and $0.288 per share of Series D Preferred Stock, when,
as and if declared by the Board of Directors out of any funds legally available
therefor, prior and in preference to any declaration or payment of any dividend
on the Common Stock of this corporation ("COMMON") payable other than in Common.
Such dividends shall not be cumulative. Such dividends shall be distributed
ratably among the holders of each Series of Designated Preferred based on the
full dividend to which such holder is entitled. No dividends or other
distributions shall be made with respect to the Common in any year, other than
dividends payable solely in Common, unless and until (i) the full amount of the
dividend provided for above with respect to the Designated Preferred for such
year has been paid or declared and set apart for payment, and (ii) an equal
dividend per share shall have been paid or declared and set apart for payment to
the holders of the Designated Preferred (in addition to the dividend provided
for above) for each share of Common which the holders of the Designated
Preferred then have the right to acquire upon conversion of their respective
shares under this Certificate.
SECTION 2. LIQUIDATION PREFERENCE.
A. In the event of any liquidation, dissolution or winding up
of the corporation, either voluntary or involuntary, the holders of the
Designated 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 Common by reason of their ownership thereof: (i) the sum of $1.33
per share of Series A Preferred Stock, $1.80 per share of Series B Preferred
Stock, $2.00 per share of Series C Preferred Stock and $3.60 per share of Series
D Preferred Stock then held by them (such amounts per share with respect to each
such Series are hereinafter referred to as the "Original Issue Price"), and (ii)
an amount equal to all declared but unpaid dividends on
4
<PAGE> 30
the Designated Preferred then held by them. If, upon the occurrence of such
event, the assets and funds thus distributed among the holders of the Designated
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 ratably
among the holders of the Designated Preferred in proportion to the preferential
amount each such holder would have been entitled to receive pursuant to this
Section 2a. if such distribution had been sufficient to permit the full payment
of such preferential amount.
B. Upon the completion of the distribution provided for in
Section 2a., all of the assets remaining in the corporation, if any, shall be
distributed pro rata among the holders of the Common, based upon the number of
shares of Common held by each such holder.
C. For purposes of this Section 2, a merger or consolidation of
this corporation with or into any other corporation or corporations where the
stockholders of this corporation immediately prior to such merger or
consolidation do not beneficially own more than 50% of the outstanding voting
stock of the surviving entity immediately following such merger or consolidation
and in which the stockholders of this corporation receive distributions in cash
or in securities of another corporation as a result of such merger or
consolidation, or a sale or other disposition of all or substantially all of the
assets of the corporation, shall be treated as a liquidation, dissolution or
winding up of the corporation.
SECTION 3. CONVERSION. The holders of the Designated Preferred shall
have conversion rights as follows (the "CONVERSION RIGHTS"):
A. OPTIONAL CONVERSION. Each share of Designated Preferred
shall be convertible at the option of the holder thereof, without payment of
additional consideration, at any
5
<PAGE> 31
time, at the office of the corporation or any transfer agent for the Designated
Preferred, into one share of Common, subject to adjustment as provided in
Sections 3.d. and 3.e. below.
B. AUTOMATIC CONVERSION. Each share of Designated Preferred
shall automatically be converted into the number of shares of Common into which
such share of Designated Preferred is then convertible pursuant to Section 3a
(i) in the event that the holders of not less than sixty-seven percent (67%) of
the outstanding Designated Preferred consent to such conversion, or (ii) upon
the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "ACT"), covering the offer and sale by the corporation of Common to the
public at an aggregate offering price of not less than $10,000,000 (prior to
underwriters' discounts and expenses), and at a public offering price not less
than $6.00 per share, subject to adjustment for stock splits, stock dividends,
reorganizations and the like with respect to the Common.
C. MECHANICS OF CONVERSION.
(1) No fractional shares of Common shall be issued upon
conversion of the Designated Preferred. In lieu of any fractional share, the
corporation shall pay cash equal to such fraction multiplied by the then current
fair market value of a share of Common as determined in good faith by the Board
of Directors of the corporation. Before any holder of Designated Preferred shall
be entitled to convert the same into shares of Common, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Designated Preferred, and shall
give written notice to the corporation at such office that it elects to convert
the same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 3b.). The
6
<PAGE> 32
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Designation Preferred a certificate or certificates,
registered in such names as specified by the holder, for the number of shares of
Common to which such holder shall be entitled as aforesaid, and a check payable
to the holder in the amount of any amounts payable for fractional shares and any
declared and unpaid dividends on the converted Designated Preferred. 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 the Designated Preferred
to be converted, and the person or persons entitled to receive the shares of
Common issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common on such date (except that in
the event of an automatic conversion pursuant to Section 3b.(i), such conversion
shall be deemed to have been made at the close of business on the date fixed in
the vote approving such automatic conversion and in the event of automatic
conversion pursuant to Section 3b.(ii), such conversion shall be deemed to have
been made immediately prior to the closing of the offering referred to in
Section 3b.(ii)). If the conversion is in connection with an underwritten offer
of securities registered pursuant to the Act, the conversion may, at the option
of any holder tendering Designated Preferred for conversion, be conditioned upon
the closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common issuable
upon such conversion of Designated Preferred shall not be deemed to have
converted such Designated Preferred until immediately prior to the closing of
such sale of securities. If such conversion is in connection with a merger,
consolidation or sale of assets which would be treated as a liquidation,
dissolution or winding up of the corporation in accordance with and for purposes
of Section 2, the conversion may, at the option of the holder tendering
Designated Preferred for conversion, be conditioned upon the consummation of
such transaction, in which
7
<PAGE> 33
event the person(s) entitled to receive the Common issuable upon such conversion
of Designated Preferred shall not be deemed to have converted such Designated
Preferred until immediately prior to the consummation of such transaction.
D. ADJUSTMENTS FOR SUBDIVISIONS, DIVIDENDS, COMBINATIONS OR
CONSOLIDATIONS OF COMMON.
(1) In the event the outstanding shares of Common shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common, the number of shares of Common into which the Designated
Preferred is convertible immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such combination or consolidation,
be proportionately decreased.
(2) In the event the corporation shall declare or pay any
dividend on the Common payable in Common or in the event the outstanding shares
of Common shall be subdivided, by reclassification or otherwise than by payment
of a dividend in Common, into a greater number of shares of Common, the number
of shares of Common into which the Designated Preferred is convertible
immediately prior to such dividend or subdivision shall be proportionately
increased:
(A) in the case of any such dividend, immediately after
the close of business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or
(B) in the case of any such subdivision, at the close of
business on the date immediately prior to the date upon which such corporate
action becomes effective.
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<PAGE> 34
(3) If such record date shall have been fixed and such
dividend shall not have been fully paid on the date fixed therefor, the
adjustment previously made in accordance with this Subsection d. shall be
canceled (to the extent such dividend was not paid) as of the close of business
on the date so fixed, and thereafter the number of shares of Common into which
the Designated Preferred is convertible shall be adjusted as of the time of
actual payment of such dividend.
E. ADJUSTMENTS FOR OTHER RECLASSIFICATIONS, DIVIDENDS AND
DISTRIBUTIONS. If there occurs any capital reorganization or any
reclassification of the capital stock of the corporation (other than any
subdivision, dividend, combination, consolidation or other transaction provided
for in Section 3d), each share of Designated Preferred shall thereafter be
convertible into the same kind and amounts of securities or other assets, or
both, that were issuable or distributable to the holders of shares of
outstanding Common Stock of the corporation upon such reorganization or
reclassification, in proportion to that number of shares of Common Stock into
which such shares of Designated Preferred might have been converted immediately
prior to such reorganization or reclassification; and in any such case,
appropriate adjustments (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of Designated Preferred to the end that
the provisions of this Certificate shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or other assets thereafter
deliverable upon the conversion of the Designated Preferred.
F. NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation, by filing a Certificate of Designation or through
any reorganization,
9
<PAGE> 35
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 3 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 Designated Preferred against impairment.
G. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment, pursuant to this Section 3, of the number of shares
of Common into which any shares of Designated Preferred are convertible, the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such shares of Designated 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, upon the written request at any
time of any holder of Designated Preferred, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the number of shares of Common into which the Designated
Preferred is then convertible, and (iii) the number of shares of Common and the
amount, if any, of other property which at the time would be received upon the
conversion of Designated Preferred.
H. NOTICES OF RECORD DATE. In the event that this Corporation
shall propose at any time:
10
<PAGE> 36
(1) to declare any dividend or distribution upon the Common,
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;
(2) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(3) to effect any reclassification or recapitalization of its
Common shares outstanding involving a change in the Common shares; or
(4) 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 Designated
Preferred:
(A) at least 10 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 shares shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (1) and (2) above; and
(B) in the case of the matters referred to in (3) and (4)
above, at least 10 days' prior written notice of the date when the same shall
take place (and specifying, if practicable, or estimating the date on which the
holders of Common shares shall be entitled to exchange their Common shares for
securities or other property deliverable upon the occurrence of such event).
11
<PAGE> 37
(C) Each such written notice shall be given by first
class mail, postage prepaid, addressed to the holders of the Designated
Preferred at the address for each such holder as shown on the books of this
Corporation; provided that any such notice to an address outside the United
States shall be given by facsimile and confirmed in writing contemporaneously
sent by two-day guaranteed international courier.
I. COMMON STOCK RESERVED. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Designated Preferred, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding shares of
Designated Preferred, and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then-outstanding shares of Designated Preferred, the Corporation shall take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
J. ISSUE TAX. The issuance of certificates for shares of Common
upon conversion of Designated Preferred shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Designated Preferred which is being
converted.
12
<PAGE> 38
K. CLOSING OF BOOKS. The corporation will at no time close its
transfer books against the transfer of any Designated Preferred or of any shares
of Common issued or issuable upon the conversion of any shares of Designated
Preferred in any manner which interferes with the timely conversion of such
Designated Preferred, except as may otherwise be required to comply with
applicable securities laws.
SECTION 4. VOTING RIGHTS.
A. GENERAL. Except as otherwise required by law or this
Certificate of Incorporation, (i) each share of Common issued and outstanding
shall have one vote; (ii) each share of Designated Preferred issued and
outstanding shall have a number of votes equal to the number of Common shares
(including fractions of a share) into which such share of Designated Preferred
is then convertible as adjusted from time to time pursuant to Section 3 hereof;
and (iii) the Common and the Designated Preferred and any other class and series
of Stock of the corporation shall vote together as a single class.
B. BOARD SIZE. The corporation shall not, without the written
consent or affirmative vote of the holders of at least sixty-seven percent (67%)
of the then outstanding shares of Designated Preferred, given in writing or by
vote at a meeting, consenting or voting (as the case may be) separately as a
class, increase the maximum number of directors constituting the Board of
Directors to a number of excess of nine (9).
C. BOARD SEATS. The holders of the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock (collectively, the "VOTING
PREFERRED"), voting together as a separate class, shall be entitled to elect
five (5) directors of the corporation. The
13
<PAGE> 39
holders of Common, voting as a separate class, shall be entitled to elect two
(2) directors of the corporation. The holders of Series D Preferred Stock shall
not be entitled to vote for the election of directors of the corporation. At any
meeting (or in a written consent in lieu thereof) held for the purpose of
electing directors, the presence in person or by proxy (or the written consent)
of the holders of a majority of the shares of Voting Preferred then outstanding
shall constitute a quorum of the Voting Preferred for the election of directors
to be elected solely by the holders of the Voting Preferred. A vacancy in any
directorship elected by the holders of the Voting Preferred shall be filled only
by vote or written consent of the holders of the Voting Preferred and a vacancy
in any directorship elected by the holders of Common shall be filled only by
vote or written consent of the holders of Common. A director elected by the
holders of Voting Preferred may be removed without cause only by vote of holders
of a majority of the outstanding shares of Voting Preferred and a director
elected by the holders of Common may be removed without cause only by vote of
holders of a majority of the outstanding shares of Common.
SECTION 5. COVENANTS.
A. In addition to any other rights provided by law, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than sixty-seven percent (67%) of all
outstanding shares of Designated Preferred, voting together as a class:
(1) make any amendment to the corporation's Certificate of
Incorporation or Bylaws that would materially and adversely alter or change the
rights, preferences, or privileges of the outstanding Designated Preferred;
14
<PAGE> 40
(2) increase or decrease the authorized number of shares of
Preferred Stock or any Series thereof;
(3) create (by reclassification, Certificate of Designation
or otherwise) any new class or series of shares of stock having a preference
over the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock or Series D Preferred Stock with respect to voting rights, liquidation
preferences, or dividends; increase the authorized amount of any class or series
of shares of stock having a preference over the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock with
respect to voting rights, liquidation preferences or dividends; or create or
authorize (by reclassification, Certificate of Designation or otherwise) any
obligation or security convertible into shares of any class or series of stock
having a preference over the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock with respect to voting
rights, liquidation preferences or dividends; or
(4) take any action that results in any liquidation,
dissolution or winding up of the corporation or any merger, consolidation, or
other corporate reorganization, or effect any transaction in which all or
substantially all of the assets of the corporation are sold or otherwise
disposed of.
B. In addition to any other rights provided by law, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the outstanding shares of a particular
Series of Designated Preferred, take any action that would (i) materially and
adversely alter or change the rights, preferences, or privileges of such Series
in a manner different than the other Series, (ii) increase or decrease the
authorized number of shares
15
<PAGE> 41
of such Series or (iii) amend the terms of another Series of Designated
Preferred which, when established, was pari pasu with such Series with respect
to voting rights, liquidation preferences or dividends, if such amendment
results in the other Series having a preference over such Series with respect to
voting rights, liquidation preferences or dividends.
SECTION 6. STATUS OF CONVERTED STOCK. In case any shares
of Designated Preferred shall be converted pursuant to Section 3 hereof, the
shares so converted shall resume the status of authorized but unissued and
undesignated shares of Preferred Stock.
SECTION 7. RESIDUAL RIGHTS. All rights accruing to the
outstanding shares of this corporation not expressly provided for to the
contrary herein shall be vested in the Common.
For the management of the business and for the conduct of the affairs
of the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. Subject to Section 4b of
Article IV, the number of directors which shall constitute the whole Board of
Directors shall be fixed by the Board of Directors in the manner provided in the
Bylaws, provided that such number shall not be less than the number of directors
provided for in Section 4 of Article IV.
B. Subject to Section 5 of Article IV, the Board of Directors may from
time to time make, amend, supplement or repeal the Bylaws; provided, however,
that (subject to such Section 5) the stockholders may change or repeal any Bylaw
adopted by the Board of Directors by
16
<PAGE> 42
the affirmative vote of the holders of a majority of the voting power of all of
the then outstanding shares of the capital stock of the corporation (considered
for this purpose as one class); and, provided further, that no amendment or
supplement to the Bylaws adopted by the Board of Directors shall vary or
conflict with any amendment or supplement thus adopted by the stockholders.
C. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
D. Following the effectiveness of the registration of any class of
securities of the corporation pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, no action shall be taken by the stockholders
of the corporation except at an annual or special meeting of stockholders called
in accordance with the Bylaws and no action shall be taken by the stockholders
by written consent.
E. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A director of the corporation shall, to the full extent not prohibited
by the Delaware General Corporation Law, as the same exists or may hereafter be
amended, not be liable to the corporation or its stockholders for monetary
damages for breach of his fiduciary duty as a director.
VII.
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The corporation is to have perpetual existence.
VIII.
Subject to the provisions of this Certificate of Incorporation, 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 the stockholders herein are
granted subject to this right.
IN WITNESS WHEREOF, said Aurora Biosciences Corporation has caused this
Certificate to be signed by its President and Chief Executive Officer, Timothy
J. Rink, and attested to by its Secretary, Deborah J. Tower, this th day of
December, 1996.
-----------------------------------------
TIMOTHY J. RINK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
- -------------------------------------
DEBORAH J. TOWER
SECRETARY
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EXHIBIT B
SCHEDULE OF EXCEPTIONS
<PAGE> 45
EXHIBIT C
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE> 46
AURORA BIOSCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT
DECEMBER 27, 1996
<PAGE> 47
AURORA BIOSCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (the "AGREEMENT") is entered into as of
December 27, 1996 among (i) AURORA BIOSCIENCES CORPORATION, a Delaware
corporation (the "COMPANY"), with its principal office located at 11149 North
Torrey Pines Road, La Jolla, CA 92037, (ii) holders of the Company's Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (such
holders are listed on Exhibit A attached hereto and are referred to herein as
the "PREVIOUS INVESTORS"), and (iii) the purchasers listed on the Schedule of
Purchasers attached to that certain Series D Preferred Stock Purchase Agreement
of even date herewith (THE "PURCHASE AGREEMENT") and Exhibit B hereto (the
"PURCHASERS"). Each of the Previous Investors and the Purchasers are referred to
herein as a "STOCKHOLDER;" collectively they are referred to as the
"STOCKHOLDERS."
This Agreement supersedes, amends and restates in its entirety that
certain Investors Rights Agreement dated as of March 8, 1996, by and among the
Company and the Previous Investors, as amended by that certain Amendment
Agreement dated April 9, 1996 as further amended by that certain Second
Amendment Agreement dated April 29, 1996 (collectively, the "FORMER INVESTORS
RIGHTS AGREEMENT").
RECITALS
A. The Company proposes to issue and sell up to an aggregate of 572,536
shares of its Series D Preferred Stock pursuant to the Purchase Agreement (the
"FINANCING").
B. Each of the Previous Investors desire to waive his, her or its right to
receive notice of the Financing and to purchase a certain portion of the Series
D Preferred Stock to be sold by the Company in the Financing as set forth in
Section 3 of the Former Investors Rights Agreement.
C. As a condition of entering into the Purchase Agreement, the Purchasers
have requested that the Company extend to them registration rights, information
rights and other rights as set forth herein.
D. In order to induce the Purchasers to enter into the Purchase Agreement
and to induce the Purchasers to invest funds in the Company, the Company and the
Previous Investors have agreed to enter into this Agreement in order to amend
and restate the Former Investors Rights Agreement so that this Agreement is the
sole agreement with respect to the obligations and rights contained herein.
E. Section 4.7 of the Former Investors Rights Agreement provides that such
agreement may be amended with the written consent of the Company and the holders
of at least two-thirds (2/3) of the shares which are then Registrable Securities
(as defined in the Former
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Investors Rights Agreement) and that such amendment shall be binding upon the
Stockholders (as defined in the Former Investors Rights Agreement), each of
their transferees and the Company.
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the parties
hereby agree that the Former Investors Rights Agreement is amended and restated
in its entirety to read as set forth above and as follows (unless otherwise
defined herein, capitalized terms used herein shall have the meanings assigned
in the Purchase Agreement):
AGREEMENT
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
1.1. RESTRICTIONS ON TRANSFERABILITY. Neither the shares of the Company's
Series A, Series B, Series C or Series D Preferred Stock issued to the
Stockholders pursuant to the Purchase Agreement or pursuant to that certain
Preferred Stock Purchase Agreement dated March 8, 1996, as amended by that
certain Amendment Agreement dated April 9, 1996, as further amended by that
certain Second Amendment Agreement dated April 29, 1996 (the "DESIGNATED
PREFERRED") nor the Registrable Securities (as defined below) shall be
transferable except upon compliance with (i) the Right of First Refusal set
forth in Section 45 of the Company's Bylaws, (ii) the conditions specified in
this Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act (as defined below), and (iii) if such shares
are Restricted Securities (as defined below), upon such other terms as are in
the opinion of counsel to the Company necessary to comply with the provisions of
the Securities Act; provided, however that such restrictions shall not apply to
transfers under the circumstances described in Sections 1.5, 1.6 or 1.7 and that
the requirements of clause (iii) shall not apply to a transfer without
consideration to one or more partners or shareholders of a Stockholder (e.g., an
in-kind distribution pursuant to the terms of the Stockholder's governing
documents). Except for transfers made pursuant to Rule 144 of the Securities
Act, each Stockholder will cause any proposed transferee of Designated Preferred
or Registrable Securities held by such Stockholder to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Agreement and it will be a condition precedent to the effectiveness of any
such transfer that such Stockholder shall have secured a written agreement of
such transferee in form and substance satisfactory to the Company to that
effect, if so requested by the Company; provided, however, that this sentence
shall not apply with respect to any proposed transferee in whose hands the
transferred shares will not be Restricted Securities.
1.2. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
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"COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
Company, as constituted on the date of this Agreement.
"FORM S-3" shall mean Form S-3 under the Securities Act (as defined below)
as in effect on the date of this Agreement, or any substantially similar,
equivalent or successor form under the Securities Act.
"HOLDER" shall mean each holder of Registrable Securities.
"INITIAL PUBLIC OFFERING" shall mean the Company's initial firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "ACT"), covering the offer and
sale by the Company of Common Stock to the public at an aggregate offering price
of not less than $10,000,000 (prior to underwriters' discounts and expenses),
and at a public offering price not less than $6.00 per share, subject to
adjustment for stock splits, stock dividends, reorganizations and the like with
respect to such shares.
"REGISTRABLE SECURITIES" means shares of the Company's Common Stock (i)
issued or issuable upon conversion of Designated Preferred which have not been
sold to the public, and (ii) issued in respect of the shares of Common Stock
referred to under the foregoing clause (i) by reason of any stock split, stock
dividend, recapitalization or similar event which have not been sold to the
public.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 1.5, 1.6 and 1.7 hereof other than Selling Expenses,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel, blue sky fees
and expenses (including counsel fees), and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company required
to bear the legends set forth in Section 1.3 hereof or legends substantially
similar thereto.
"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.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
1.3. RESTRICTIVE LEGEND(S). Each certificate representing the shares of
Designated Preferred and Registrable Securities shall (unless otherwise
permitted by the provisions of Section 1.4 below) be stamped or otherwise
imprinted with legends in the following form (in addition to any other legend
required by the Bylaws of the Company, or under applicable California or other
state securities laws):
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(A) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
(B) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION'S STOCKHOLDERS, AS
PROVIDED IN THE BYLAWS OF THE CORPORATION.
1.4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to comply,
in addition to the requirements of Section 45 of the Company's Bylaws, in all
respects with the provisions of this Section 1.4. Prior to any proposed transfer
of any Restricted Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the holder thereof
shall give written notice to the Company of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall be accompanied (except in
transactions in compliance with Rule 144 and except for transfers without
consideration to one or more partners or shareholders of the holder (e.g., an
in-kind distribution pursuant to the terms of the holder's governing documents))
by either (i) a written opinion of legal counsel who shall be reasonably
satisfactory to the Company (it being agreed that Testa Hurwitz & Thibeault is
satisfactory) addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission, a copy of any
holder's request (together with all supplements or amendments thereto) for which
shall have been provided to the Company, at or prior to the time of first
delivery to the Commission's staff, to the effect that the transfer of such
securities without registration will not result in a recommendation by such
staff that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
provided for above shall bear the appropriate restrictive legends set forth in
Section 1.3 above, except that such certificate shall not bear the restrictive
legend set forth in Section 1.3(a) above if, in the opinion of counsel for the
Company or counsel for such holder, such legend is not required in order to
establish compliance with any provisions of the Securities Act and except that
such certificate shall not bear the restrictive legend set forth in Section
1.3(b) above if the right of first refusal set forth in the Company's Bylaws is
no longer applicable.
1.5. DEMAND REGISTRATION RIGHTS.
(A) Commencing on the earlier of (i) five (5) years after the date
hereof, or (ii) one (1) year after the Company's initial public offering of
securities pursuant to a registration statement
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<PAGE> 51
under the Securities Act, if the Company shall receive a written request
(specifying that it is being made pursuant to this Section 1.5) from the Holders
of at least fifty percent (50%) of the Registrable Securities that the Company
file a registration statement or similar document under the Securities Act
covering the registration of the greater of (i) 20% of the shares which are then
Registrable Securities, or (ii) Registrable Securities the expected aggregate
offering price to the public of which is at least $5,000,000, then the Company
shall promptly notify all other Holders of such request and shall use its best
efforts to promptly and expeditiously cause all Registrable Securities that such
Holders have requested, within 15 days after receipt of such written notice, to
be registered in accordance with this Section 1.5 to be registered under the
Securities Act. The Holders making the written request pursuant to this Section
1.5 shall be referred to hereinafter as the "INITIATING HOLDERS".
Notwithstanding the foregoing: (i) the Company shall not be obligated to
effect a registration pursuant to this Section 1.5 during the period starting
with the date one hundred twenty (120) days prior to the Company's estimated
date of filing of, and ending on a date one hundred twenty (120) days following
the effective date of, a registration statement pertaining to an underwritten
public offering of the Company's securities, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that the Company's estimate of
the date of filing such registration statement is made in good faith; or (ii) if
the Company shall furnish to such Holders 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 for a
registration statement 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 six (6) months; provided, however, that the
Company shall not obtain such a deferral more than once in any 12-month period.
The Company shall not be obligated to effect more than two (2)
registrations pursuant to this Section 1.5 for which holders of Registrable
Securities are the Initiating Holders; provided, however that such obligation
shall be deemed satisfied only when a registration statement covering all
Registrable Securities requested by Holders to be registered pursuant to such
demand shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.
(B) If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to this Section 1.5,
and the Company shall include such information in the notice referred to in
Section 1.5(a). In such event, the right of any Holder to registration pursuant
to this Section 1.5 shall be conditioned upon such Holder's participation 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) to the extent provided herein.
The Company shall, together with all Holders proposing to distribute their
securities through such underwriting, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by a majority of
interest of the Initiating Holders and reasonably satisfactory to the Company.
Notwithstanding any other provision of this Section 1.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then the
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Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be reduced and shall be allocated pro rata among such Holders
thereof in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration.
If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration. If by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account (or for
the account of other securityholders) in such registration if the underwriter so
agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited
and if such inclusion will not adversely affect the marketing of the Registrable
Securities.
Except for registration statements on Form S-4, S-8 or any successor
thereto, the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other stockholders, from the date of receipt of a request for registration
from Initiating Holders pursuant to this Section 1.5 until the earlier of (a)
one hundred twenty (120) days from the receipt of the initial request pursuant
to Section 1.5(a) or (b) the completion of the period of distribution of the
registration contemplated thereby. Although the Company shall have no obligation
to register any Designated Preferred, in any underwritten public offering
contemplated by this Section 1.5 or Section 1.6 or 1.7, holders of Designated
Preferred shall be entitled to sell shares of Designated Preferred representing
Registrable Securities to be included in such underwriting to the underwriters
for conversion and sale of the Registrable Securities issued upon conversion
thereof.
1.6. COMPANY REGISTRATION.
(A) If, at any time or from time to time, the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights, other than a registration (A) relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, (B) a registration on Form S-4 or similar forms which may be promulgated
in the future relating solely to a Securities and Exchange Commission Rule 145
or similar transaction or (C) in connection with the Company's Initial Public
Offering, the Company will (i) promptly give to each Holder written notice
thereof and (ii) include in such registration (and any related qualification
under Blue Sky laws or other compliance),
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and in any underwriting involved therein, all Registrable Securities of such
Holders as specified in a written request or requests made within 15 days after
receipt of such written notice from the Company.
(B) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
indicate in the notice given pursuant to Section 1.6(a). In such event the right
of any Holder to registration pursuant to this Section 1.6 shall be conditioned
upon such Holder's agreeing to participate in such underwriting and in the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. 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 in customary form with the underwriter or underwriters
selected for such underwriting by the Company or by other holders exercising any
demand registration rights to the extent such holders are not excluded from the
registration pursuant to the Underwriter Cutback described below.
Notwithstanding any other provision of this Section 1.6, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities or other securities from such registration and underwriting
(hereinafter an "UNDERWRITER CUTBACK"). In the event of an Underwriter Cutback,
the Company shall so advise all Holders and the other holders distributing their
securities through such underwriting, and the Underwriter Cutback shall be
implemented on the basis that the holders who are not Holders shall be cut back
before any cutback of Holders. If the limitation determined by the underwriter
requires an Underwriter Cutback with respect to the Registrable Securities to be
included, such Underwriter Cutback shall be in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
1.7. FORM S-3 REGISTRATION RIGHTS. After the Initial Public Offering, the
Company shall use its best efforts to qualify for registration on Form S-3, and
to that end the Company shall use its best efforts to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), within twelve (12) months following the effective date of the first
registration of any securities of the Company for an underwritten registered
public offering. After the Company has qualified for the use of Form S-3, and
subject to the provisions of Section 1.14, each Holder shall have the right to
request registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by each such Holder), subject only
to the following limitations:
(A) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred twenty (120) days following
the effective date of a Company initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145);
(B) The Company shall not be required to effect a registration
pursuant to this Section 1.7 unless the Holder or Holders requesting such a
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $1,000,000 (unless the value of all of the
Registrable
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Securities held by all Holders is less than $1,000,000, in which case the
Holders shall be entitled to a final demand registration pursuant to this
Section 1.7 for an amount equal to the value of the Registrable Securities held
by all Holders at the time of such demand; provided that for purposes of the
foregoing, "value" shall be determined based on the average of the last sale
prices of the Company's Common Stock on the principal exchange or market on
which such Common Stock is traded during the five (5) trading days immediately
preceding such demand);
(C) The Company shall not be required to effect a registration
pursuant to this Section 1.7 if the Company shall furnish to the requesting
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company or its stockholders for the registration
statement to be filed at the date filing would be required, in which case the
Company shall have an additional period of not more than one hundred twenty
(120) days within which to file such registration statement; provided however,
that the Company shall not use this right more than once in any twelve- month
period;
(D) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred twenty
(120) days from the effective date thereof; and
(E) The Company shall not be obligated to cause a registration on
Form S-3 if in the prior twelve-month period the Company has caused a
registration on Form S-3 to become effective as the result of a request pursuant
to this Section 1.7.
The Company shall give notice to all Holders of the receipt of a request
for registration pursuant to this Section 1.7 and shall use its best efforts to
cause all Registrable Securities that such Holders have requested, within 15
days after receipt of such written notice, be registered in accordance with this
Section 1.7 to be registered under the Securities Act. Subject to the foregoing,
the Company will use its best efforts to effect promptly any registration
pursuant to this Section 1.7. The provisions of Section 1.5(b) shall apply to
any registration effected pursuant to this Section 1.7
1.8. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of one special counsel to the selling Holders)
shall be borne by the Company. Notwithstanding anything to the contrary herein,
the Company shall not be required to pay for any expenses of any registration
proceeding under Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered, unless such Holders agree to forfeit their
right to a demand registration pursuant to Section 1.5 (in which event such
right shall be forfeited by all Holders). In the absence of such an agreement to
forfeit, the Holders of Registrable Securities to have been registered shall
bear all such expenses pro rata on the basis of the Registrable Securities to
have been registered. Notwithstanding the foregoing, however, if at the time of
the withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses
and shall retain their rights pursuant to Section 1.5.
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1.9. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(A) Keep such registration, qualification or compliance effective
for a period of one hundred twenty (120) days or until the Holder or Holders
have completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(B) 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;
(C) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them;
(D) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders or
the underwriters, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;
(E) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with (and provide customary due diligence materials and information to)
the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement;
(F) 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; and
(G) use its best efforts to list the Registrable Securities covered
by such registration statement with any securities exchange on which the Common
Stock of the Company is then listed.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.
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1.10. INDEMNIFICATION.
(A) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
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, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will promptly reimburse each such Holder, each of its
officers and directors and partners, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred (as and when incurred) in
connection with investigating, preparing to defend or defending any such claim,
loss, damage, liability or action, provided 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 on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder or underwriter and stated to be specifically for use therein.
(B) 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, severally and not jointly indemnify the Company,
each of its directors and officers, 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 Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and partners and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened, arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or 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, in the light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification, or compliance,
and will promptly reimburse the Company, such Holders, such directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred (as and when incurred) in connection with
investigation, preparing to defend or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
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omission) is made in such registration statement, prospectus, offering circular
or other document or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each such Holder hereunder shall be
limited to an amount equal to the proceeds to each such Holder of Registrable
Securities sold in such registration as contemplated herein.
(C) Each party entitled to indemnification under this Section 1.10
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense; provided, however, that, if the defendants in any such claim or
litigation include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 1 unless such failure resulted in actual
detriment to the Indemnifying Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party a release from all liability in respect of
such claim or litigation.
(D) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission, provided, however, that in no case will any seller of
Registrable Securities be required to contribute any amount in excess of the
amount of proceeds to such seller of Registrable Securities sold pursuant to the
registration statement with respect to which the contribution obligation arose.
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(E) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1 and otherwise.
1.11. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.
1.12. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(A) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(B) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Exchange Act at any time after it has become subject to such reporting
requirements;
(C) So long as a Stockholder owns any Restricted Securities, to
furnish to the Stockholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company as a Stockholder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Stockholder to sell any such
securities without registration.
1.13. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted under Sections 1.5, 1.6 and 1.7 may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder," and the transferred shares shall be considered
"Registrable Securities," for purposes of this Section 1, provided that (i) said
transferee acquires Registrable Securities (including shares of Designated
Preferred prior to conversion into Registrable Securities) in a private
transaction, and (ii) the Company is given written notice by such Holder at the
time of or within a reasonable time (but not more than 30 days) after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, subject to said transferee's agreement to be bound by and comply
with the provisions of this Section 1.
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1.14. TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Section 1 shall terminate (i) upon the seventh anniversary of
the effective date of the Initial Public Offering or (ii) if earlier, as to any
individual Holder, at such time after the Company's Initial Public Offering as
all Registrable Securities held by such Holder can be sold within any
three-month period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144 (including Rule 144(k)) promulgated
thereunder.
1.15. "MARKET STAND OFF" AGREEMENT. Each Holder hereby agrees that it
shall not, to the extent requested by the Company and the underwriters managing
any underwritten offering of the Company's Common Stock (or other securities),
sell or otherwise transfer or dispose of (other than to those who agree to be
similarly bound) any Registrable Securities or any 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 in connection with the
Company's Initial Public Offering. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the
Registrable Securities and other securities of the Holders (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such one hundred eighty (180) day period.
1.16. OTHER REGISTRATION RIGHTS. The Company shall not grant to any third
party any registration rights more favorable than or inconsistent with any of
those contained herein, so long as any of the registration rights under this
Agreement remains in effect.
1.17. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock or the Designated Preferred by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Designated Preferred as so changed.
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS
2.1. FINANCIAL INFORMATION. Subject to Section 2.16, the Company will
furnish the following reports to the Stockholders for so long as the
Stockholders are Holders of Registrable Securities:
(A) As soon as practicable after the end of each fiscal year (other
than the fiscal year ended March 31, 1996), and in any event within 90 days
thereafter, audited consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of income, stockholders' equity and cash flows of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of recognized national standing
selected by the Company; and
(B) As soon as practicable after the end of each fiscal quarter, and
in any event within 45 days thereafter, unaudited consolidated balance sheets of
the Company and its subsidiaries, if any, as of the end of such quarter, and
unaudited consolidated statements of income, stockholders'
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equity and cash flows of the Company and its subsidiaries, if any, for such
quarter and for the period from the beginning of the fiscal year to the end of
such quarter, prepared in accordance with generally accepted accounting
principles (but subject to normal year-end audit adjustments) and certified by
the chief financial officer.
2.2. ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 2.1 and Section 2.3 may be assigned by the Stockholders (or
by any permitted transferee of any such rights) so long as (i) the Company is
given notice of any such assignment within a reasonable time after the date the
same is effected, (ii) the transferee shall have acquired Registrable Securities
(including shares of Designated Preferred prior to conversion into Registrable
Securities) in a private transaction, and (iii) the transferee is not engaged in
a business that is competitive with the Company.
2.3. INSPECTION AND VISITATION RIGHTS. Each Stockholder, so long as such
Stockholder holds Registrable Securities, shall have the right to visit and
inspect the Company's principal place of business, subject to such limitations
and restrictions as the President of the Company in good faith determines to be
necessary for the protection of the Company's Proprietary Information.
2.4. RESERVE FOR CONVERSION SHARES. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
for the purpose of effecting the conversion of the Designated Preferred and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Designated Preferred from time to time outstanding or
otherwise to comply with the terms of this Agreement. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Designated Preferred or otherwise to comply with
the terms of this Agreement, the Company will forthwith take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
The Company will obtain any authorization, consent, approval or other action by
or make any filing with any court or administrative body that may be required
under applicable state securities laws in connection with the issuance of shares
of Common Stock upon conversion of the Designated Preferred.
2.5. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain and cause
each of its subsidiaries to maintain as to their respective properties and
business, with financially sound and reputable insurers, insurance against such
casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, which insurance shall be deemed by
the Company to be sufficient.
2.6. RESTRICTIVE AGREEMENTS PROHIBITED. Neither the Company nor any of its
subsidiaries shall become a party to any agreement which by its terms restricts
the Company's performance of this Agreement, the Management Rights Agreements,
the Voting Agreements or the Restated Certificate.
2.7. TRANSACTIONS WITH AFFILIATES. Except for transactions contemplated by
the Agreements or as otherwise approved by the Board of Directors, neither the
Company nor any of its subsidiaries shall enter into any material transaction
with any director, officer, employee or holder of more than 5% of the
outstanding capital stock of any class or series of capital stock of the Company
or any of its subsidiaries, or to the Company's knowledge any member of the
family
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of any such person, any corporation, partnership, trust or other entity in which
any such person, or member of the family of any such person, is a director,
officer, trustee, partner or holder of more than 5% of the outstanding capital
stock thereof, except for transactions on customary terms related to such
person's employment.
2.8. EXPENSES OF DIRECTORS. The Company shall promptly reimburse in full,
each director of the Company who is not an employee of the Company for all of
his reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any Committee thereof.
2.9. BYLAWS. The Company shall at all times cause its Bylaws to provide
that (a) any three directors shall have the right to call a meeting of the Board
of Directors and (b) the number of directors fixed in accordance therewith shall
in no event conflict with any of the terms or provisions of the Designated
Preferred as set forth in the Restated Certificate. The Company shall at all
times maintain provisions in its Bylaws and/or Certificate of Incorporation
indemnifying all directors against liability and absolving all directors from
liability to the Company and its stockholders to the maximum extent permitted
under the laws of the State of Delaware.
2.10. PERFORMANCE OF CONTRACTS. The Company shall not amend, modify,
terminate, waive or otherwise alter, in whole or in part, any of the Proprietary
Information Agreements or the provisions contained in the Employment Amendment
without the approval of the Company's Board of Directors.
2.11. PROPRIETARY INFORMATION AGREEMENTS. The Company shall use its best
efforts to obtain, and shall cause its subsidiaries to use their best efforts to
obtain, a Proprietary Information Agreement in substantially the form of Exhibit
E to the Purchase Agreement from all future officers, key employees and other
employees who will have access to confidential information of the Company or any
of its subsidiaries, upon their employment or engagement by the Company or any
of its subsidiaries. The Company shall use its reasonable best efforts to cause
any consultant with whom the Company contracts to agree to maintain the
confidentiality of the Company's confidential or Proprietary information, and to
assign to the Company any proprietary rights arising from work performed by the
consultant for the Company.
2.12. COMPLIANCE WITH LAWS. The Company shall comply, and cause each
subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could materially adversely affect its business or
condition, financial or otherwise.
2.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall keep, and
cause each subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied, reflecting
financial transactions of the Company and each subsidiary in accordance with
GAAP.
2.14. U.S. REAL PROPERTY INTEREST STATEMENT. The Company shall provide
prompt written notice to each Stockholder following any "determination date" (as
defined in Treasury Regulation Section 1.897-2(c)(i)) on which the Company
becomes a United States real property holding corporation. In addition, upon a
written request by any Stockholder, the Company shall provide such
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Stockholder with a written statement informing the Stockholder whether such
Stockholder's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Stockholder shall be delivered to such Stockholder within ten
(10) days of such Stockholder's written request therefor. In addition, upon
request by any foreign Stockholder but subject to the succeeding sentence, the
Company shall provide along with such statement either or both of the following
documents: (i) an affidavit in conformance with the requirements of Section
1445(b)(3) of the Code and the regulations thereunder or (ii) a notarized
statement, executed by an officer having actual knowledge of the facts, that the
shares of Company stock held by such Stockholder are of a class that is
regularly traded on an established securities market, within the meaning of
Section 1445(b)(6) of the Code and the regulations thereunder. If the Company is
unable to provide either of the documents described in (i) or (ii) above upon
request, it shall promptly, and in any event within such ten (10) day period,
notify such Stockholder in writing of the reason for such inability. Finally,
upon the request of a foreign Stockholder and without regard to whether either
document described in (i) or (ii) above has been requested, the Company shall
reasonably cooperate with the efforts of such foreign Stockholder to obtain a
"qualifying statement" within the meaning of Section 1445(b)(4) of the Code and
the regulations thereunder or such other documents as would excuse a transferee
of a foreign Stockholder's interest from withholding of income tax imposed
pursuant to Section 897(a) of the Code.
2.15. RULE 144A INFORMATION. The Company shall, at all times during which
it is not subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, provide in writing, upon the
written request of any Stockholder or a prospective buyer of Registrable
Securities (including Designated Preferred before conversion into Registrable
Securities) from any Stockholder, all information required by Rule 144A(d)(4)(i)
of the General Regulations promulgated by the Commission under the Securities
Act ("RULE 144A INFORMATION"). The Company's obligations under this Section 2.15
shall at all times be contingent upon the relevant Stockholder's obtaining from
the prospective buyer of such Registrable Securities a written agreement to take
all reasonable precautions to safeguard the Rule 144A Information from
disclosure to anyone other than a person who will assist such buyer in
evaluating the purchase of such Registrable Securities.
2.16. TERMINATION OF COVENANTS. The covenants set forth in Section 2.1,
Sections 2.3 through 2.13 and Section 2.15 shall terminate and be of no further
force or effect upon the earlier of (i) the closing of the Initial Public
Offering, or (ii) the date on which none of the Registrable Securities
(including shares of Designated Preferred prior to conversion into Common Stock)
is outstanding. The Covenants set forth in Section 2.14 shall terminate five (5)
years after the closing of the Initial Public Offering.
2.17. CONFIDENTIAL INFORMATION, ETC. Each Holder agrees that (i) all
information received by it pursuant to this Section 2 which the Company
designates as or promptly confirms in writing to be "Confidential" or the like,
and (ii) any other information relating to the Company's technology, processes
or formulas that is disclosed by the Company to any Holder in writing and is
marked "Confidential" or the like, shall be considered confidential information.
Each Holder further agrees that
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it shall hold all such confidential information in confidence and shall not,
without the Company's prior express written consent, disclose any such
confidential information to any third party other than its counsel, accountants,
employees and other professional advisors, representatives and agents, all of
whom shall have a need to know such information and shall be bound by the
provisions of this Section 2.17, nor shall such Holder, without the Company's
prior express written consent, use such confidential information for any purpose
other than evaluation of such Holder's investment in the Company; provided,
however, that the foregoing obligation to hold in confidence and not to disclose
confidential information shall not apply to any such information that (a) was
known to the public or the Holder or its representatives prior to disclosure by
the Company, (b) becomes known to the public through no fault of such Holder,
(c) is disclosed to such Holder on a non-confidential basis by a third party
having a legal right to make such disclosure, (d) is independently developed by
such Holder, or (e) is required to be disclosed as a matter of law or pursuant
to court order; and provided further that the foregoing obligation to hold in
confidence and not to disclose confidential information shall not prohibit such
Holder from disclosing to its partners or shareholders financial and other
information described in clause (i) of this Section 2.17 which is of a type
customarily provided by such Holder to such partners or shareholders in the
ordinary course or from disclosing to a bona-fide prospective transferee of its
securities of the Company such financial and other information described in such
clause (i) which is reasonably necessary to provide such transferee with
adequate disclosure of material information.
3. RIGHTS OF FIRST REFUSAL
3.1. RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.
(A) The Company hereby grants to each Stockholder the right of first
refusal to purchase its Pro Rata Share (defined below) of all (or any part) of
New Securities (defined below) that the Company may from time to time propose to
sell and issue. Stockholder's "PRO RATA SHARE," for purposes of this Section 3,
is the ratio of the number of shares of Common Stock (assuming conversion of all
shares of Designated Preferred) then held by such Stockholder to the total
number of shares of Common Stock then outstanding (assuming conversion of all
shares of Designated Preferred). This right of first refusal shall be subject to
the following provisions:
(B) "NEW SECURITIES" shall mean any Common Stock or Preferred Stock
of the Company, whether now authorized or not, and rights, options, or warrants
to purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
Common Stock or Preferred Stock; provided, however, that "NEW SECURITIES" does
not include (i) the Designated Preferred; (ii) securities issuable upon
conversion of or with respect to the Designated Preferred; (iii) shares of the
Company's Common Stock (or related options) issued to officers, directors,
employees of and/or consultants to the Company pursuant to plans or agreements
as approved by the Company's Board of Directors; (iv) shares of the Company's
Common Stock or Preferred Stock issued to holders of the Designated Preferred in
connection with any stock split, stock dividend, or recapitalization by the
Company; (v) securities issued in connection with any equipment leasing,
technology licensing, corporate partnering, strategic alliance, acquisition,
merger, purchase of assets or similar transaction as approved by the Company's
Board of Directors;
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(vi) shares of Common Stock issued to holders of Common Stock in connection with
a stock split or stock dividend with respect to the Common Stock; and (vii)
shares issued in the Initial Public Offering.
(C) In the event that the Company proposes to undertake an issuance
of New Securities, it shall give the Stockholders written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. The Stockholders shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase for cash some or all of its Pro Rata Share of such New Securities for
the price and upon the general terms, including deferred payment, if any,
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
(D) In the event that any Stockholder (a "NON-EXERCISING
STOCKHOLDER") fails to exercise in full the right of first refusal within said
twenty (20) day period, notice shall promptly be given by the Company to those
Stockholders who have exercised the right of first refusal in full. Such
Stockholders shall have the right for an additional ten (10) days to elect by
notice to the Company to purchase any or all of the New Securities which the
Non-exercising Stockholders were entitled to purchase but elected not to, with
such right of over-subscription to be allocated among such Stockholders in
accordance with their respective Pro Rata Shares or as they may otherwise agree.
After the aggregate thirty (30) day period during which Stockholders may
exercise their first refusal right, the Company shall have one hundred twenty
(120) days thereafter to sell (or enter into an agreement pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within one
hundred twenty (120) days from the date of said agreement) the New Securities
respecting which the Stockholder's rights were not exercised, at a price and
upon general terms no more favorable to the purchasers thereof than specified in
the Company's notice. In the event the Company has not sold the New Securities
within said one hundred twenty (120) day period (or sold and issued New
Securities in accordance with the foregoing agreement within one hundred twenty
(120) days from the date of said agreement), the Company shall not thereafter
issue or sell any New Securities, without first offering such securities to the
Stockholders in the manner provided above.
(E) The right of first refusal granted under this Section 3.1 shall
not apply to and shall expire upon the closing of the Company's Initial Public
Offering.
(F) The rights granted pursuant to this Section 3.1 may be assigned
by the Stockholder (or by any permitted transferee of any such rights) so long
as (i) the Company is given notice of any such assignment within a reasonable
time after the date the same is effected and (ii) the transferee shall have
acquired Registrable Securities (including shares of Designated Preferred prior
to conversion into Registrable Securities) in a private transaction.
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4. MISCELLANEOUS
4.1. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by California residents.
4.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
4.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (a) if to a Stockholder, to such Stockholder's address
set forth in the Purchase Agreement or to such other address as such Stockholder
shall have furnished to the Company in writing, (b) if to any other holder of
Registrable Securities, at such address as such holder shall have furnished the
Company in writing, or (c) if to the Company, to its address set forth above and
addressed to the attention of the President or at such other address as the
Company shall have furnished to the Stockholders. All notices and other
communications pursuant to the provisions of this Section 4.4 shall be deemed
delivered when mailed or sent by facsimile. Notwithstanding the foregoing, any
notice or communication to an address outside the United States shall be sent by
facsimile and confirmed in writing contemporaneously sent by two day guaranteed
international courier.
4.5. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
4.6. SEVERABILITY. In the event that any provision of this Agreement
becomes or is 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.
4.7. APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of (i) the Company and (ii) the holders
of at least two-thirds (2/3) of the shares which are then Registrable
Securities. Any amendment, termination or waiver effected in accordance with
this section shall be binding upon the Stockholders, each of their transferees
and the Company. The Stockholders acknowledge that by the operation of this
Section the holders of two-thirds (2/3) of the outstanding Registrable
Securities as aforesaid may have the right and power to diminish or eliminate
all rights of such Stockholder under this Agreement.
19
<PAGE> 66
The foregoing Amended and Restated Investors Rights Agreement is hereby
executed as of the date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By: __________________________
Title: __________________________
THE PURCHASERS:
JAPAN ASSOCIATED FINANCE CO., LTD. JAFCO G-6(A) INVESTMENT
ENTERPRISE PARTNERSHIP
By: __________________________ By: __________________________________
Title: __________________________ Title:__________________________________
JAFCO R-2 INVESTMENT JAFCO G-6(B) INVESTMENT
ENTERPRISE PARTNERSHIP ENTERPRISE PARTNERSHIP
By: __________________________ By: __________________________________
Title: __________________________ Title:__________________________________
JAFCO R-3 INVESTMENT
ENTERPRISE PARTNERSHIP
By: __________________________ ________________________________________
ROGER Y. TSIEN
Title: __________________________
20
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 67
THE PREVIOUS INVESTORS:
AVALON MEDICAL PARTNERS, L.P.
By: __________________________
Title: __________________________
AVALON BIOVENTURES II, L.P.
By: __________________________
Title: __________________________
KINGSBURY CAPITAL PARTNERS, L.P. II
By: Kingsbury Associates, L.P.
By: __________________________
Title: General Partner
ABINGWORTH BIOVENTURES SICAV
By: __________________________
Title: __________________________
21
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 68
NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership,
its General Partner
By: __________________________
Title: General Partner
NEA VENTURES 1996, L.P.
By: __________________________
Title: Authorized Signatory
DP III ASSOCIATES, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: ___________________________
General Partner
DOMAIN PARTNERS III, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: ___________________________
General Partner
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By: ___________________________
Attorney - in - Fact
22
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 69
PACKARD INSTRUMENT COMPANY, INC.
By: __________________________
Title: __________________________
SEQUANA THERAPEUTICS, INC.
By: __________________________
Title: __________________________
GC&H INVESTMENTS
By: __________________________
Title: __________________________
- ---------------------------------
KEVIN J. KINSELLA
- ---------------------------------
ROGER Y. TSIEN
- ---------------------------------
THERESA E. GLOBE
23
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 70
- ---------------------------------
CHARLES S. ZUKER
- ---------------------------------
MICHAEL G. ROSENFELD
- ---------------------------------
JOHN A. PORCO, JR.
- ---------------------------------
LUBERT STRYER
- ---------------------------------
ANDREA S. STRYER
- ---------------------------------
WALTER LUETOLF
FOR ADRIAN J.R. LANGINGER
- ---------------------------------
NORMAND F. SMITH
- ---------------------------------
HUGH Y. RIENHOFF, JR.
- ---------------------------------
JANICE THOMPSON
24
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 71
THE GREENE FAMILY TRUST
By:______________________________
HOWARD E. GREENE, JR., TRUSTEE
By:______________________________
ARLINE GREENE, TRUSTEE
- ---------------------------------
TIMOTHY J. RINK
HAMBRECHT & QUIST GROUP
By:______________________________
Dennis J. Purcell
Title:___________________________
25
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 72
EXHIBIT A
PREVIOUS INVESTORS
Avalon Medical Partners, L.P.
Avalon Bioventures II, L.P.
Kingsbury Capital Partners, L.P. II
Abingworth Bioventures SICAV
New Enterprises Associates VI, Limited partnership
NEA Ventures 1996, L.P.
DP III Associates, L.P.
Domain Partners III, L.P.
Biotechnology Investments Limited
Packard Instrument Company, Inc.
Sequana Therapeutics, Inc.
GC&H Investments
Kevin J. Kinsella
Roger Y. Tsien
Theresa E. Globe
Charles S. Zuker
Michael G. Rosenfeld
John A. Porco, Jr.
Lubert Stryer
Andrea S. Stryer
Walter Luetolf
for Adrian J.R. Langinger
Normand F. Smith
Hugh Y. Rienhoff, Jr.
Janice Thompson
The Greene Family Trust
Timothy J. Rink
Hambrecht & Quist Group
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 73
EXHIBIT B
PURCHASERS
Japan Associated Finance Co., Ltd.
JAFCO R-2 Investment Enterprise Partnership
JAFCO R-3 Investment Enterprise Partnership
JAFCO G-6(A) Investment Enterprise Partnership
JAFCO G-6(B) Investment Enterprise Partnership
Roger Y. Tsien
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE> 74
<TABLE>
<S> <C>
1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.............................1
1.1. Restrictions on Transferability...................................1
1.2. Certain Definitions...............................................1
1.3. Restrictive Legend(s).............................................2
1.4. Notice of Proposed Transfers......................................3
1.5. Demand Registration Rights........................................4
1.6. Company Registration..............................................6
1.7. Form S 3 Registration Rights......................................6
1.8. Expenses of Registration..........................................8
1.9. Registration Procedures...........................................8
1.10. Indemnification..................................................9
1.11. Information by Holder...........................................11
1.12. Rule 144 Reporting..............................................11
1.13. Transfer of Registration Rights.................................12
1.14. Termination of Registration Rights..............................12
1.15. "Market Stand Off" Agreement....................................12
1.16. Other Registration Rights.......................................12
1.17. Changes in Common Stock or Preferred Stock......................13
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS....................13
2.1. Financial Information............................................13
2.2. Assignment of Rights to Financial Information....................13
2.3. Inspection and Visitation Rights.................................13
2.4. Reserve for Conversion Shares....................................13
2.5. Properties, Business, Insurance..................................14
2.6. Restrictive Agreements Prohibited................................14
2.7. Transactions with Affiliates.....................................14
2.8. Expenses of Directors............................................14
2.9. Bylaws...........................................................14
2.10. Performance of Contracts........................................15
2.11. Proprietary Information Agreements..............................15
2.12. Compliance with Laws............................................15
</TABLE>
i
<PAGE> 75
<TABLE>
<S> <C>
2.13. Keeping of Records and Books of Account.........................15
2.14. U.S. Real Property Interest Statement...........................15
2.15. Rule 144A Information...........................................16
2.16. Termination of Covenants........................................16
2.17. Confidential Information, etc...................................16
3. RIGHTS OF FIRST REFUSAL..................................................17
3.1. Right of First Refusal on Company Issuances......................17
4. MISCELLANEOUS............................................................18
4.1. Governing Law....................................................18
4.2. Successors and Assigns...........................................18
4.3. Entire Agreement.................................................18
4.4. Notices, etc.....................................................18
4.5. Counterparts.....................................................19
4.6. Severability.....................................................19
4.7. Approval of Amendments and Waivers...............................19
</TABLE>
ii
<PAGE> 76
EXHIBIT D
VOTING AGREEMENT
<PAGE> 77
COUNTERPART SIGNATURE PAGE TO
AURORA BIOSCIENCES CORPORATION
VOTING AGREEMENT
The undersigned hereby agrees to be bound by the terms and conditions contained
in the Voting Agreement dated as of March 8, 1996, by and among Aurora
Biosciences Corporation, a Delaware corporation, and the other individuals and
entities listed in the signature pages thereto (the "Voting Agreement"). Upon
the execution of this counterpart signature page, the undersigned shall be
deemed a "Stockholder" for all purposes under the Voting Agreement.
JAPAN ASSOCIATED FINANCE CO., LTD.
By:
-------------------------------
Title
-------------------------------
Address: Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Facsimile: 81-3-5223-7562
<PAGE> 78
COUNTERPART SIGNATURE PAGE TO
AURORA BIOSCIENCES CORPORATION
VOTING AGREEMENT
The undersigned hereby agrees to be bound by the terms and conditions contained
in the Voting Agreement dated as of March 8, 1996, by and among Aurora
Biosciences Corporation, a Delaware corporation, and the other individuals and
entities listed in the signature pages thereto (the "Voting Agreement"). Upon
the execution of this counterpart signature page, the undersigned shall be
deemed a "Stockholder" for all purposes under the Voting Agreement.
JAFCO R-2 INVESTMENT ENTERPRISE PARTNERSHIP
By:
-------------------------------
Title
-------------------------------
Address: Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Facsimile: 81-3-5223-7562
<PAGE> 79
COUNTERPART SIGNATURE PAGE TO
AURORA BIOSCIENCES CORPORATION
VOTING AGREEMENT
The undersigned hereby agrees to be bound by the terms and conditions contained
in the Voting Agreement dated as of March 8, 1996, by and among Aurora
Biosciences Corporation, a Delaware corporation, and the other individuals and
entities listed in the signature pages thereto (the "Voting Agreement"). Upon
the execution of this counterpart signature page, the undersigned shall be
deemed a "Stockholder" for all purposes under the Voting Agreement.
JAFCO R-3 INVESTMENT ENTERPRISE PARTNERSHIP
By:
-------------------------------
Title
-------------------------------
Address: Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Facsimile: 81-3-5223-7562
<PAGE> 80
COUNTERPART SIGNATURE PAGE TO
AURORA BIOSCIENCES CORPORATION
VOTING AGREEMENT
The undersigned hereby agrees to be bound by the terms and conditions contained
in the Voting Agreement dated as of March 8, 1996, by and among Aurora
Biosciences Corporation, a Delaware corporation, and the other individuals and
entities listed in the signature pages thereto (the "Voting Agreement"). Upon
the execution of this counterpart signature page, the undersigned shall be
deemed a "Stockholder" for all purposes under the Voting Agreement.
JAFCO G-6(A) INVESTMENT ENTERPRISE PARTNERSHIP
By:
-------------------------------
Title
-------------------------------
Address: Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Facsimile: 81-3-5223-7562
<PAGE> 81
COUNTERPART SIGNATURE PAGE TO
AURORA BIOSCIENCES CORPORATION
VOTING AGREEMENT
The undersigned hereby agrees to be bound by the terms and conditions contained
in the Voting Agreement dated as of March 8, 1996, by and among Aurora
Biosciences Corporation, a Delaware corporation, and the other individuals and
entities listed in the signature pages thereto (the "Voting Agreement"). Upon
the execution of this counterpart signature page, the undersigned shall be
deemed a "Stockholder" for all purposes under the Voting Agreement.
JAFCO G-6(B) INVESTMENT ENTERPRISE PARTNERSHIP
By:
-------------------------------
Title
-------------------------------
Address: Tekko Bldg, 1-8-2
Marunouchi, Chiyoda-ku
Tokyo, Japan 100
Facsimile: 81-3-5223-7562
<PAGE> 82
COUNTERPART SIGNATURE PAGE TO
AURORA BIOSCIENCES CORPORATION
VOTING AGREEMENT
The undersigned hereby agrees to be bound by the terms and conditions contained
in the Voting Agreement dated as of March 8, 1996, by and among Aurora
Biosciences Corporation, a Delaware corporation, and the other individuals and
entities listed in the signature pages thereto (the "Voting Agreement"). Upon
the execution of this counterpart signature page, the undersigned shall be
deemed a "Stockholder" for all purposes under the Voting Agreement.
- ------------------------------------
Roger Y. Tsien
Address: 8535 Nottingham Place
La Jolla, Ca 92037
Facsimile: (619) 534-5270
<PAGE> 83
EXHIBIT E
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
<PAGE> 84
EXHIBIT F
FORM OF LEGAL OPINION OF COMPANY COUNSEL
<PAGE> 85
[LETTERHEAD]
December 27, 1996
To the Purchasers of Aurora Biosciences Corporation
Series D Preferred Stock listed on Schedule A attached hereto:
We have acted as counsel for Aurora Biosciences Corporation, a Delaware
corporation (the "Company"), in connection with the issuance and sale of
572,536 shares of the Company's Series D Preferred Stock (the "Shares") to the
Purchasers listed in the Schedule of Purchasers attached to the Series D
Preferred Stock Purchase Agreement dated as of December 27, 1996 (the
"Agreement"). We are rendering this opinion pursuant to Section 4.6 of the
Agreement. Except as otherwise defined herein, capitalized terms used but not
defined herein have the respective meanings given to them in the Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we
render an opinion "to the best of our knowledge" or concerning an item "known
to us" or our opinion otherwise refers to our knowledge, it is based solely
upon (i) an inquiry of attorneys within this firm who perform legal services
for the Company, (ii) receipt of a certificate executed by an officer of the
Company covering such matters, and (iii) such other investigation, if any, that
we specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement and the Amended and Restated Investors' Rights
Agreement (together, the "Agreements")), where authorization, execution and
delivery are prerequisites to the effectiveness of such documents. We have also
assumed: that all individuals executing and delivering documents had the legal
capacity to so execute and deliver; that you have received all documents you
were to receive under the Agreements; that the Agreements are obligations
binding upon you; if you are a corporation or other entity, that you have filed
any required California franchise or income tax returns and have paid any
required California franchise or income taxes; and that there are no extrinsic
agreements or understandings among the parties to the Agreements that would
modify or interpret the terms of the Agreements or the respective rights or
obligations of the parties thereunder.
Our opinion is expressed only with respect to the federal laws of
the United States of America, the General Corporation Law of the State of
Delaware, and the laws of the State of California. We express no opinion as to
whether the laws of any particular jurisdiction apply, and no opinion to the
extent that the laws of any jurisdiction other than those identified above are
applicable to the subject matter hereof. We are not rendering any opinion as
to compliance with any antifraud law, rule or regulation relating to
securities, or to the sale or issuance thereof.
With regard to our opinion in paragraph 3 below, we have examined and relied
upon a certificate executed by an officer of the Company, to the effect that the
consideration for all outstanding shares of capital stock of the Company was
received by the Company in accordance with the provisions of the applicable
Board of Directors resolutions and any plan or agreement relating to the
issuance of such shares, and we have undertaken no independent verification with
respect thereto.
<PAGE> 86
The Purchasers of Series D Preferred Stock
December 27, 1996
Page Two
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the
State of Delaware.
2. The Agreements have been duly and validly authorized, executed
and delivered by the Company and constitute valid and binding
agreements of the Company enforceable against the Company in
accordance with their terms, except as rights to indemnity
under section 1.10 of the Amended and Restated Investors'
Rights Agreement may be limited by applicable laws and except
as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar laws affecting creditors' rights, and subject to
general equity principles and to limitations on availability of
equitable relief, including specific performance.
3. The Company's authorized capital stock consists of (a) fifty
million (50,000,000) shares of Common Stock, par value $.001
per share and (b) twenty-five million (25,000,000) shares of
Preferred Stock, par value $.001 per share, of which ten
million five hundred thousand (10,500,000) shares have been
designated Series A Preferred Stock, eight hundred thirty-three
thousand three hundred thirty-two (833,332) shares have been
designated Series B Preferred Stock, eight hundred thousand
(800,000) shares have been designated Series C Preferred Stock
and five hundred seventy-two thousand five hundred thirty-six
(572,536) shares have been designated Series D Preferred Stock.
Immediately prior to the Closing, 3,574,450 shares of Common
Stock, 10,239,115 shares of Series A Preferred Stock, 833,332
shares of Series B Preferred Stock and 750,000 shares of Series
C Preferred Stock were issued and outstanding. Immediately
prior to the Closing, no shares of Series D Preferred Stock
were outstanding. The outstanding shares of Common Stock and
Preferred Stock have been duly authorized and validly issued
and are fully paid and nonassessable. The rights, preferences
and privileges of the Shares are as stated in the Restated
Certificate. The Shares have been duly authorized, and upon
issuance and delivery against payment therefor in accordance
with the terms of the Agreement, the Shares will be validly
issued, outstanding, fully paid and nonassessable. The shares
of Common Stock issuable upon conversion of the Shares have
been duly authorized, and upon issuance and delivery upon
conversion of the Shares in accordance with the terms thereof,
will be validly issued, outstanding, fully paid and
nonassessable. To the best of our knowledge, except as set
forth in the Agreement or Exhibit B thereto, there are no
options, warrants, conversion privileges, preemptive rights or
other rights presently outstanding to purchase any of the
authorized but unissued capital stock of the Company, other
than the conversion privileges of the Preferred Stock, rights
created in connection with the transactions contemplated by the
Agreement, and 1,000,000 shares reserved for issuance under the
Company's 1996 Stock Plan.
4. The execution and delivery of the Agreements by the Company do
not violate any provision of the Company's Certificate of
Incorporation or Bylaws.
5. To the best of our knowledge, there is no action, proceeding
or investigation pending or overtly threatened against the
Company before any court or administrative agency that
questions the validity of the Agreements or might result,
either individually or in the aggregate, in any material
adverse change in the assets, financial condition, or
operations of the Company.
6. All consents, approvals, authorizations, or orders of, and
filings, registrations, and qualifications with any regulatory
authority or governmental body in the United States required
for the consummation by the Company of the transactions
contemplated by the Agreements, have been
<PAGE> 87
The Purchasers of Series D Preferred Stock
December 27, 1996
Page Three
made or obtained, except (a) for the filing of a Notice of
Transaction Pursuant To Section 25102(f) of the California
Corporate Securities Law of 1968, and (b) for the filing of a
Form D pursuant to Securities and Exchange Commission
Regulation D.
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm, or entity without our
prior written consent.
Very truly yours,
Cooley Godward LLP
By:________________________________________________
Thomas A. Coll
TAC:mpc
63000 v2/SD
1CM002!.DOC
<PAGE> 1
EXHIBIT 10.13
Aurora Biosciences Corporation
AMENDMENT NO. 1
TO
SUBLEASE
This AMENDMENT NO. 1 TO SUBLEASE is made and entered into as of the 31st
day of August, 1996, by and between TORREY PINES SCIENCE CENTER LIMITED
PARTNERSHIP, a Delaware limited partnership ("Sublessor") and AURORA BIOSCIENCES
CORPORATION, a Delaware corporation ("Sublessee");
W I T N E S S E T H; That
WHEREAS, Sublessee and Sublessor are parties to a certain Sublease dated
May 29, 1996 (the "Initial Sublease") concerning the premises described therein
(the "Initial Premises"); and
WHEREAS, Sublessor is also a party to a Sublease dated June 26, 1996
(the "Initial Sequana Sublease") with Sequana Therapeutics, Inc. ("Sequana");
and
WHEREAS, Sublessee wishes to utilize a portion of the premises covered
by the Initial Sequana Sublease, and Sequana agrees to permit such use; and
WHEREAS, both the Initial Sublease and the Initial Sequana Sublease
shall be modified to accommodate such use of space;
NOW, THEREFORE, in consideration of the premises, the mutual covenants,
the mutual benefits hereof and other good and valuable consideration, receipt
whereof is hereby acknowledged do hereby agree as follows:
1. Premises (See Paragraph 4 of Initial Sublease). After the
Effective Date, the term Subleased Premises shall be those premises
situated in the City of San Diego, County of San Diego, State of
California in the building commonly known as 11149 North Torrey Pines
Road (the "Building"), consisting of 21,437 square feet located on the
second floor, the utility room of 343 square feet on the first floor and
the library of 465 square feet (the "Library"), all as more particularly
shown on Exhibit A annexed hereto. The Library has been added to the
initial subleased premises as defined in the Initial Sublease.
2. Rent (See Paragraph 3.3 of Initial Sublease). After the
Effective Date, the Basic Rent shall be as follows:
9/1/96 to 6/30/97 $55,612.50 ($2.50 per square foot) per month NNN
7/1/97 to 6/30/98 $57,169.65 ($2.57 per square foot) per month NNN
7/1/98 to 6/30/99 $58,949.25 ($2.65 per square foot) per month NNN
7/1/99 to 10/15/99 $60,728.85 ($2.73 per square foot) per month NNN.
3. Pro Rata Share (See Paragraph 3.3 of Initial Sublease). After
the Effective Date, Sublessee's pro rata share for purposes of
calculating Additional Rent shall be 51.88% of the Building and 18.56%
of the Project.
<PAGE> 2
4. Rentable Area (See Paragraph 3.3 of Initial Sublease). After
the Effective Date, the Rentable Area of the Subleased Premises shall be
22,245 square feet, and shall not be subject to remeasurement.
5. Effective Date; Obligations to Sequana This Amendment shall
be effective as of October 1, 1996 (the "Effective Date"). Any use of
the Library prior to that date shall be resolved between Sublessee and
Sequana, Sublessor being released from all responsibility with respect
thereto and Sublessee agreeing to indemnify, defend and hold Sublessor
harmless with respect thereto.
6. Continuing Validity of Initial Sublease. In all respects,
except as expressly modified by this Amendment No. 1, the Initial
Sublease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their respective,
duly authorized officers or agents to execute this Agreement.
SUBLESSOR: SUBLESSEE:
TORREY PINES SCIENCE CENTER AURORA BIOSCIENCES CORPORATION,
LIMITED PARTNERSHIP a Delaware corporation
By: Slough-Torrey Pines Science Center,
Inc., General Partner
By: [SIG]
---------------------------------
Its: Chairman, CEO and President
-----------------------------
By: [SIG]
--------------------------------
Its: Vice President
----------------------------
CONSENT BY MASTER LESSOR
The undersigned Master Lessor under the Lease referred to in the Initial
Sublease hereby consents to this Amendment No. 1 and the effectuation of the
transactions contemplated hereby.
MASTER LESSOR:
TORREY PINES CENTRE ASSOCIATES
a California Limited Partnership
By: Nexus Properties, Inc.
a California corporation
Its General Partner
By: MICHAEL J. REIDY
-------------------------
Michael J. Reidy, CEO
2
<PAGE> 3
EXHIBIT A
FLOOR PLAN
<PAGE> 4
EXHIBIT A
FLOOR PLAN
<PAGE> 5
SUBLEASE
1. PARTIES.
THIS SUBLEASE (the "Sublease") is entered into as of May 29, 1996, by
and between TORREY PINES SCIENCE CENTER LIMITED PARTNERSHIP, a Delaware limited
partnership ("Sublessor"), and AURORA BIOSCIENCES CORPORATION, a Delaware
corporation ("Sublessee"), as a Sublease under the Lease dated March 1, 1989 (as
amended or otherwise modified from time to time, the "Lease"), entered into by
NEXUS CENTRE/TORREY PINES ("Master Lessor"), as Landlord, and Sublessor, as
Tenant [by assignment from Gemini Science. Inc. ("Gemini")]. Capitalized terms
used herein and not otherwise defined herein shall have the meanings as provided
in the Lease. A copy of said Lease is attached hereto, marked Exhibit A.
2. MASTER LEASE.
This Sublease shall be subject to and subordinate to all of the terms
and provisions of the Lease, and Master Lessor shall have all rights in respect
of the Lease and the Subleased Premises (defined below) as set forth therein.
Sublessee and Sublessor agree not to commit or permit to be committed any act or
omission which shall violate any terms or conditions of the Lease. Except for
payments of rent under Article 5 of the Lease (which payments shall be made by
Sublessor), and, except as otherwise provided in Section 3 hereof, Sublessee
hereby assumes and agrees to perform for Sublessor's benefit, during the term of
this Sublease, all of Sublessor's obligations under the Lease insofar as they
relate to the Subleased Premises (hereinafter the "Assumed Obligations"), which
accrue during the term of this Sublease.
3. PROVISIONS CONSTITUTING SUBLEASE.
3.1 Except as otherwise provided in this Sublease (including, but not
limited to, Paragraph 11), all of the terms and provisions of the Lease are
incorporated into and made a part of this Sublease, and the rights and
obligations of the parties under the Lease are hereby imposed upon the parties
hereto with respect to the Subleased Premises, the Sublessor being substituted
for the Landlord in the Lease, the Sublessee being substituted for the Tenant in
the Lease and the Subleased Premises being substituted for the Premises in the
Lease. It is expressly agreed that the provisions hereof do not release Master
Lessor from any of its obligations under the Lease.
3.2 Notwithstanding the foregoing:
(a) The following Paragraphs of the Lease are not incorporated
herein: 1, 2, 3, 4, 5, 6, 7.3(a), 8, 11, 12.1, 24.10, 31, 42, 43 and 44.
(b) Pursuant to Paragraph 41.7 of the Lease, certain testing is
to be effected at commencement and termination thereof, with the tenant
obligated to effect remediation of contamination which occurred by reason of its
use. Certain tests (the "Gemini Tests") are being effected in conjunction with
Gemini's relinquishment of the entire premises subject to the Lease
1
<PAGE> 6
as of the commencement date hereof, including the Subleased Premises; for
purposes hereof, the condition of the Subleased Premises as of the commencement
date hereof shall be that established by the Gemini Tests, modified only to the
extent of any subsequent documented remediation. The testing to be performed at
the expiration or termination of the Sublease shall be substantially the same as
the Gemini Tests.
(c) In the event of the termination, without fault of Sublessor,
of Sublessor's interest as Tenant under the Lease prior to the expiration of
this Sublease, then this Sublease shall terminate coincidentally therewith
without any liability to Sublessor. To the extent that the Lease grants
Sublessor any discretionary right to terminate the Lease, whether due to
casualty, condemnation, or otherwise, Sublessor shall not exercise such right
during the term of this Sublease without the consent of Sublessee; provided,
however, that Sublessor shall be free to exercise any such right if Sublessee is
in default of any provision hereof. Furthermore, Sublessor shall not otherwise
negotiate any termination or other modification of the Lease which has an
adverse effect on Sublessee without the consent of Sublessee.
(d) Sublessee shall indemnify, defend, protect, and hold
Sublessor harmless from and against all actions, claims, demands, costs,
liabilities, losses, reasonable attorneys' fees, damages, penalties, and
expenses (collectively "Claims") which may be brought or made against Sublessor
or which Sublessor may pay or incur to the extent caused by (i) a breach of this
Sublease by Sublessee (including, but not limited to, amounts due Master Lessor
and damages under the Lease), (ii) any violation of law by Sublessee or its
employees, agents, contractors or invitees ("Agents") relating to the use or
occupancy of the Subleased Premises, (iii) the negligence or willful misconduct
of Sublessee or its Agents, or (iv) any acts or omissions of Sublessee.
Sublessor shall indemnify, defend, protect, and hold Sublessee harmless from and
against all actions, claims which may be brought or made against Sublessee or
which Sublessee may pay or incur to the extent caused by (i) a breach of this
Sublease or the Lease by Sublessor, or (ii) the negligence or willful misconduct
of Sublessor or its Agents, Sublessee and Sublessor shall promptly deliver to
the other party copies of all notices with reference to the Subleased Premises.
3.3 For the purposes of incorporating the terms and provisions of the
Lease into this Sublease, the Lease is hereby amended as follows (references are
to Sections of the Lease):
Section Comments
5.4 and 7.3(a) To the extent that charges for items included as Additional
Rent have been assessed with respect to the entire Building
or Project, Sublessee's pro-rata portion of such charges
shall be calculated as 50.80% of the Building and 18.17% of
the Project.
8.1 and 2.1.3 The "Rentable Area" of the Subleased Premises is 21,780
square feet, and shall not be subject to remeasurement.
2
<PAGE> 7
10.2 The reference in Paragraph 10.2 of the Lease to Paragraph
2.1.9 of the Lease shall, instead, be a reference to
Paragraph 8 of this Sublease.
10.8 Sublessee shall have the right to install a sign on the face
of the Building at Sublessee's sole cost and expense, as
approved by Master Lessor and the City of San Diego, and
shall be allocated 14% of the middle portion of the monument
sign.
15.2 Sublessee shall have the non-exclusive use of 77 of the
parking spaces serving the Building.
21 All insurance required to be, or actually, carried by
Sublessee shall also protect Master Lessor and Sublessor,
including same as additional, named or defined insureds. All
waivers of subrogation, waivers or releases of liability and
indemnifications provided by Sublessee and Master Lessor set
forth in either the Lease or this Sublease shall inure to the
benefit of all of the other parties hereto.
21.3 Insurance coverage of Sublessee shall be $10,000,000. Master
Lessor, Sublessor and Gemini shall be named as additional
insureds on the liability insurance and any other insurance
required to be carried under the Lease; additionally,
Sublessor and Gemini shall be additional insureds under, and
have the benefit of any waivers of subrogation of, any
insurance required to be, or actually, carried by Master
Lessor pursuant to the Lease.
All references to the Work Letter shall be deleted.
4. PREMISES.
4.1 Sublessor hereby leases to Sublessee and Sublessee hereby leases
from said Sublessor, the following described premises (the "Subleased Premises")
situated in the City of San Diego, County of San Diego, State of California:
approximately 21,437 square feet located on the second floor and the Utility
Room of approximately 343 square feet on the first floor of the building
commonly known as 11149 North Torrey Pines Road (the "Building"), all as more
particularly shown in Exhibit B hereto. Said Utility Room and the equipment
which it contains (including steam generating and air filtration equipment)
services all of Sublessor's premises in the Building; Sublessee's use of the
Utility Room and equipment therein is non-exclusive and subject to the
reasonable use by Sublessor and other sublessees of Sublessor.
4.2 Sublessor shall, in common with all tenants of the Project, on a
non-exclusive basis, have reasonable access to, and the right to reasonable use
of, the common loading and on the first floor of the Building, all subject to
the requirements, rights, rules and regulations of Master Lessor.
3
<PAGE> 8
5. TERM.
5.1 The term of this Sublease shall be for a period commencing on July
1, 1996 and ending on October 15, 1999, unless sooner terminated or as extended
pursuant to any provision hereof or of the Lease.
5.2 Notwithstanding said commencement date, if for any reason
Sublessor cannot deliver possession of the Subleased Premises to Sublessee on
said date, Sublessor shall not be subject to any liability therefore, nor shall
such failure affect the validity of this Lease or the obligations of Sublessee
hereunder or extend the term hereof, but in such case Sublessee shall not be
obligated to pay rent until possession of the Subleased Premises is tendered to
Sublessee; provided, however, that if Sublessor shall not have delivered
possession of the Subleased Premises to Sublessee by October 1, 1996, then,
until Sublessor shall tender the Subleased Premises, Sublessee may, at
Sublessee's option, by notice in writing to Sublessor, cancel this Sublease. If
this Lease is canceled as herein provided, Sublessor shall return any monies
previously deposited by Sublessee and the parties shall be discharged from all
obligations hereunder.
5.3 In the event that Sublessor shall permit Sublessee to occupy the
Subleased Premises prior to the commencement date of the term of this Sublease,
such occupancy shall be subject to all of the provisions of this Sublease,
including, but not limited to, payment of Rent and procurement of insurance.
Said early possession shall not advance the termination date of this Sublease.
6. RENT.
Sublessee shall pay to Sublessor as rent for the Subleased Premises,
basic rental ("Basic Rent") plus certain additional rental ("Additional Rent"),
all as provided below. Basic Rent, Additional Rent, and any other charges due
hereunder or under the Lease are hereinafter referred to collectively as "Rent."
6.1 Sublessee shall pay Sublessor equal monthly installments of Basic
Rent, in advance, on the first day of each month of the term hereof, as set
forth in Paragraph 1 of the Addendum attached hereto and incorporated herein by
this reference (the "Addendum").
6.2 Sublessee shall also pay in addition to Basic Rent, with respect
to the Subleased Premises, Additional Rent (as such term is defined in Section
5.4 of the Lease), excluding rental adjustments pursuant to Paragraph 6 of the
Lease.
6.3 To the extent that Additional Rent due under the Lease is payable
on a monthly basis pursuant to the Lease, such Additional Rent shall be paid to
Sublessor as and when Basic Rent is paid. To the extent that Additional Rent is
billed from time to time to Sublessor by Master Lessor, such Additional Rent
shall be paid by Sublessee to Sublessor within fifteen (15) days after
Sublessee's receipt of an invoice therefor. All Rent shall be paid to Sublessor
at the address specified for Sublessor below, or to such other person or to such
other place as Sublessor may from time to time designate in writing. To the
extent that Additional Rent is payable on an
4
<PAGE> 9
estimated basis pursuant to the Lease, the Additional Rent due hereunder shall
be adjusted between the parties (with appropriate reimbursements ) when the
actual Additional Rent due under the Lease has been determined.
6.4 Sublessee shall pay Sublessor upon the execution hereof the sum of
Fifty-Four Thousand Four Hundred Fifty Dollars ($54,450.00) as rent for July,
1996. Rent for any period during the term hereof which is for less than one
month shall be a pro rata portion of the monthly installment. Rent shall be
payable without notice or demand and without any deduction, offset or abatement,
except as specifically set forth herein, in lawful money of the United States of
America to Sublessor at the address stated herein or to such other persons or at
such other places as Sublessor may designate in writing.
7. SECURITY DEPOSIT.
Sublessee shall deposit with Sublessor upon execution hereof the sum of
Fifty-Four Thousand Four Hundred Fifty Dollars ($54,450.00) as security for
Sublessee's faithful performance of Sublessee's obligations hereunder. If
Sublessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Sublease or the Lease, Sublessor
may use, apply or retain all or any portion of said deposit to cure any such
default, for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by all, or any
portion, of said deposit, and may exercise any and all other remedies. Sublessee
shall, within ten (10) days after written demand, deposit cash with Sublessor in
an amount sufficient to restore said deposit to the full amount hereinabove
stated. Sublessee's failure to do so shall be a breach of this Sublease, and
Sublessor may, at its option, terminate this Sublease and pursue all of its
other remedies therefor. If Sublessee performs all of Sublessee's obligations
hereunder, said deposit or so much thereof as had not theretofore been applied
by Sublessor, shall be returned with interest, to Sublessee (or at Sublessor's
option, to the last assignee, if any, of Sublessee's interest hereunder) within
ten (10) days after the expiration of the term hereof, or after Sublessee has
vacated the Subleased Premises, whichever is later. Notwithstanding the
foregoing, Sublessee shall have the option to deposit with Sublessor in lieu of,
or as replacement for, the security deposit an irrevocable (for a period
continuing for 10 days beyond the termination hereof) stand-by letter of credit
with payment conditioned only upon presentation of a sight draft and a
certificate asserting a default of Sublessee hereunder, in form and substance
reasonably satisfactory to, and issued by a bank reasonably acceptable to,
Sublessor.
8. USE.
The Subleased Premises shall be used and occupied only for Research &
Development, laboratory, administrative offices and any other lawful uses
permitted by the Scientific Research (SR) Zone and other governmental
regulation.
9. INSPECTION OF PROPERTY.
Sublessee has inspected said Property and has determined that it is
suitable for Sublessee's purposes. Sublessor hereby warrants that all building
systems (including the HVAC
5
<PAGE> 10
mechanical and plumbing systems) serving the Subleased Premises shall be in good
operating order and condition upon delivery of the Subleased Premises to
Sublessee. Neither Sublessor, Master Lessor, Gemini nor Broker has made any
representations as to the condition of the Subleased Premises or the suitability
for the conduct of Sublessee's business.
10. CONSENT OF MASTER LESSOR.
If Sublessee desires to take any action which requires the consent of
Master Lessor pursuant to the terms of the Lease, including without limitation,
the making of any alterations, then, notwithstanding anything to the contrary
herein, (a) Sublessor, independently, shall have the same rights of approval or
disapproval as Master Lessor has under the Lease, (b) Sublessee shall not take
any such action until it obtains the consent of both Sublessor and Master
Lessor, and (c) Sublessee shall request that Sublessor obtain Master Lessor's
consent on Sublessee's behalf and Sublessor shall use commercially reasonable
efforts to obtain such consent, unless Sublessor and Master Lessor agree that
Sublessee may contact Master Lessor directly with respect to the specific action
for which Master Lessor's consent is required.
11. SUBLESSOR'S OBLIGATIONS.
11.1 With respect to any service or the performance of any obligation
(including, but not limited to, maintenance of insurance), maintenance or any
other act (collectively "Master Lessor Obligations") that is the responsibility
of Master Lessor, Sublessor, upon Sublessee's request, shall make reasonable
efforts to cause Master Lessor to perform such Master Lessor Obligations;
provided, however, that in no event shall Sublessor be responsible for the
performance of any of same or be liable to Sublessee for any liability, loss or
damage whatsoever in the event that Master Lessor should fail to perform the
same, nor for the inaccuracy or breach of any representation or warranty of
Master Lessor, nor shall Sublessee be entitled to withhold the payment of Rent
or terminate this Sublease. If notwithstanding Sublessor's reasonable efforts,
Sublessee's use of the Subleased Premises is substantially impaired due to
Master Lessor's failure to perform any Master Lessor Obligation, upon written
request from Sublessee, Sublessor shall either assign Sublessor's rights under
the Lease to the extent necessary to permit Sublessee to institute legal
proceedings against Master Lessor to obtain the performance of such Master
Lessor Obligation, or Sublessor shall itself institute legal proceedings to
enforce the performance of such Master Lessor Obligation. In the event that such
legal proceedings are required, Sublessor and Sublessee agree to cooperate with
each other in good faith in the course and conduct of such legal proceedings
(including any settlement thereof).
11.2 Except as provided in Section 11 and 12 and as expressly
otherwise provided herein, Sublessor shall have no other obligations to
Sublessee with respect to the Subleased Premises or the performance of the
Master Lessor Obligations.
12. TENANT IMPROVEMENT ALLOWANCE.
Sublessor shall reimburse Sublessee for the construction of certain
tenant improvements as set forth in Paragraph 2 of the Addendum. Sublessor shall
have no further obligation with respect to improvement of the Subleased
Premises.
6
<PAGE> 11
13. COMMISSION.
Each party warrants and represents to the other that such party has not
retained the services of any real estate broker, finder or any other person
whose services would form the basis for any claim for any commission or fee in
connection with this Sublease or the transactions contemplated hereby, except
for brokerage services rendered by John Burnham & Company ("Burnham") to
Sublessor. Sublessor shall pay directly to Burnham its fees due on account
thereof, in accordance with its listing agreement. Each party agrees to save,
defend, indemnify and hold the other party free and harmless from any breach of
its warranty and representation as set forth in the preceding sentence,
including the other party's reasonable attorneys' fees.
14. COUNTERPARTS.
This Sublease may be executed in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which together
shall constitute one and the same instrument.
Address: 33 W. Monroe Street TORREY PINES SCIENCE CENTER
Suite 2610 LIMITED PARTNERSHIP
Chicago, Illinois 60603 By: Slough-Torrey Pines Science Center,
Inc., General Partner
By: D. L. BEAN
---------------------------
Its Vice President
-----------------------
Address: 11149 N. TORREY PINES ROAD AURORA BIOSCIENCES CORPORATION,
----------------------------- a Delaware corporation
La Jolla, CA 92037
-----------------------------
By: [SIG]
-------------------------------
Its President
----------------------------
7
<PAGE> 12
CONSENT BY MASTER LESSOR. The undersigned Master Lessor under the Lease in
Exhibit A, hereby consents to the subletting of the Subleased Premises described
herein on the terms and conditions contained in this Sublease. This consent
shall apply only to this Sublease and shall not be deemed to be a consent to any
other Sublease.
MASTER LESSOR:
NEXUS CENTRE/TORREY PINES,
a California Limited Partnership
By: Nexus Development Corporation
-- Southern Division, a California
corporation
Its General Partner
By: MICHAEL J. REIDY
----------------------------------
Michael J. Reidy, President
8
<PAGE> 13
ADDENDUM TO SUBLEASE AGREEMENT DATED MAY 29,1996
BY AND BETWEEN TORREY PINES SCIENCE CENTER LIMITED PARTNERSHIP AND
AURORA BIOSCIENCES CORPORATION (SUBLESSEE).
1. BASIC RENT: Sublessee shall pay basic rent according to the following
rent schedule:
<TABLE>
<S> <C>
7/1/96 (or such earlier or later $54,450.00 ($2.50 per square foot) per month NNN
date as contemplated pursuant
to the Sublease) to 6/30/97
7/1/97 to 6/30/98 $55,974.60 ($2.57 per square foot) per month NNN
7/1/98 to 6/30/99 $57,717.00 ($2.65 per square foot) per month NNN
7/1/99 to 10/15/99 $59,459.40 ($2.73 per square foot) per month NNN
</TABLE>
2. Tenant Improvement Allowance: Sublessor will also provide up to $5,000
for tenant improvements for separating the premises for Aurora
Biosciences Corporation's occupancy.
<PAGE> 14
LEASE
THIS LEASE is made as of the 1st day of March, 1989, by and between
Nexus Centre/Torrey Pines, A California Limited Partnership (hereinafter called
"Landlord"), and Gemini Science, Inc., a California corporation (hereinafter
called "Tenant").
1. Lease Premises.
1.1 Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, those certain premises (hereinafter called the "Demised Premises")
consisting of the entirety of the second floor and a portion of the first floor
of the smaller of two buildings to be constructed in Nexus Centre/Torrey Pines
at the address set forth below (hereinafter called the "Building"). The two
buildings, the real property upon which the buildings are located, and all
landscaping, parking facilities, and other improvements and appurtenances
related thereto are hereinafter collectively referred to as the "Project", the
site plan for which is attached hereto as Exhibit "A". All exterior portions of
the Project which are for the non-exclusive use of tenants of the Project,
including without limitation roadways, driveways, sidewalks, parking areas, and
landscaped areas, are hereinafter referred to as "Common Area".
2. Basic Lease Provisions.
2.1 For convenience of the parties, certain basic provisions of this
Lease are set forth herein. The provisions set forth herein are subject to the
remaining terms and conditions of this Lease and are to be interpreted in light
of such remaining terms and conditions.
2.1.1 Address of the Building: Building No. 2 of Nexus
Centre-Torrey Pines, North Torrey Pines Road, San
Diego, California, to be one of two buildings
(Building No. 1, consisting of approximately 76,701
square feet, and Building No. 2, consisting of
approximately 43,805 square feet) located on real
property legally described as Parcel 1 of Map No.
14129, Recorded January 27, 1986.
<PAGE> 15
2.1.2 Designation of Tenant's Building: Building No. 2
Floor(s): The Entirety of the Second Floor and a
Portion of the First Floor
Suite(s): 100 and 200
2.1.3 Rentable Area: 26,383 sq. ft.
2.1.4 Basic Annual Rent: $649,021.80 ($2.05 per square
foot per month of Rentable Area, subject to
adjustment pursuant to Sections 5.2, 5.3 and 5.4 and
Article 6 hereof)
2.1.5 Monthly Rental Installments: $54,085.15 ($2.05 per
square foot per month of Rentable Area, subject to
adjustment pursuant to Sections 5.2, 5.3 and 5.4 and
Article 6 hereof)
2.1.6 Tenant's Pro Rata Share: 61.54% of the Building and
22% of the Project (subject to adjustment)
2.1.7 (a) Scheduled Term Commencement Date: October 1,
1989
(b) Term Expiration Date:
Ten (10) years from the
Term Commencement Date (subject to option to
extend)
2.1.8 Security Deposit: None, but see Section 5.1
regarding prepaid rent
2.1.9 Permitted Use: Research and development, laboratory,
headquarters and administrative offices related to
research and development, and any other lawful uses
permitted by the Scientific and Research (SR) Zone
and other governmental regulation
2.1.10 Address for Rent Payment and Notices to Landlord:
Nexus Centre/Torrey Pines Associates
c/o Nexus
Development Corporation
- Southern Division
9373 Towne Centre Drive, Suite 200
San Diego, California 92121
-2-
<PAGE> 16
Addresses for Notices to Tenant:
Gemini Science, Inc.
3333 North Torrey Pines Court, Suite 120
La Jolla, California 92037
Attn: Mr. Toshihiko Maruoka
Gemini Science, Inc.
600 3rd Avenue, 21st Flr (Kirin U.S.A.)
New York, New York 10016
Attn: Mr. Yoshinari Kumagai
With copy to:
Pettit & Martin
Attn: Joel S. Marcus, Esq.
355 South Grand Avenue
Thirty-Third Floor
Los Angeles, California 90071
2.1.11 The following Exhibits are attached hereto and
incorporated herein: "A", "B", "D", "E", "F", and
"G".
3. Term.
3.1 This Lease shall take effect upon the date of execution hereof by
both parties hereto and, except as specifically otherwise provided within this
Lease, each of the provisions hereof shall be binding upon and inure to the
benefit of Landlord and Tenant from the date of execution hereof by both parties
hereto.
3.2 The approximate term of this Lease is as set forth in Section
2.1.7. The actual term of this Lease will be that period from the actual Term
Commencement Date as defined in Section 4.1 below through the Term Expiration
Date, subject to earlier termination of this Lease as provided herein.
4. Possession and Commencement Date.
4.1 The "Term Commencement Date" shall be the date Landlord tenders
possession of the Demised Premises to Tenant with the Tenant Improvements (as
defined in the work letter attached hereto as Exhibit "B", hereinafter the "Work
Letter") Substantially Completed (as defined in the Work Letter). Landlord and
Tenant shall each execute and deliver to the other written acknowledgment of the
Term Commencement Date (and of the Term Expiration Date) when such is
established in the form of Exhibit "F" and shall attach it to this Lease as
Exhibit "F-1"; however, failure to execute and deliver such acknowledgment shall
not affect Tenant's liability hereunder.
-3-
<PAGE> 17
4.2 Landlord shall use its best efforts to tender possession of the
Demised Premises to Tenant on the Scheduled Term Commencement Date as set forth
in Section 2.1.7(a) (and as defined in the Work Letter), with the Tenant
Improvements Substantially Completed (as defined in the Work Letter). Tenant
agrees that in the event Landlord fails to tender possession of the Demised
Premises with Tenant Improvements Substantially Completed on or before the
Scheduled Term Commencement Date, this Lease shall not be void or voidable, and
Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom except as set forth in the Work Letter. In such event, however, Tenant
shall not be liable for any Basic Annual Rent or Operating Expenses (as defined
below) until the Term Commencement Date set forth in Section 4.1.
5. Rent.
5.1 Tenant agrees to pay Landlord as "Basic Annual Rent" for the
Demised Premises the sum set forth in Section 2.1.4, subject to adjustments as
set forth in Sections 5.2, 5.3 and 5.4 and Article 6. Basic Annual Rent shall be
paid in the equal monthly installments set forth in Section 2.1.5, subject to
adjustments as set forth in Sections 5.2, 5.3 and 5.4 and Article 6, each in
advance on the first day of each and every calendar month during the term of
this Lease, except that two month's rent shall be prepaid upon the execution
hereof ("Prepaid Rent"). The Prepaid Rent shall be applied as a credit against
the amounts of Basic Annual Rent otherwise due in respect of the first and
second months of the lease term.
5.2 Basic Annual Rent shall be adjusted, if necessary, so that the
monthly installments shall be equal to $2.05 per month multiplied by the square
feet of the Rentable Area of the Demised Premises (including the Rentable Area
of Tenant's Pro Rata Share of the equipment vault located adjacent to the
Building), as remeasured upon Tenant's occupancy of the Demised Premises if such
remeasurement is requested by Tenant as set forth in Section 8.
5.3 Notwithstanding the forgoing Section 5.1, Basic Annual Rent but
not Additional Rent as defined in Section 5.4 shall be waived and shall not be
payable during the third (3rd) through the eighth (8th) months of the term, and
shall commence on the first day of the ninth (9th) month of the term.
5.4 In addition to Basic Annual Rent, Tenant agrees to pay to Landlord
as additional rent ("Additional Rent") at times hereinafter specified in this
Lease (i) Tenant's pro rata share (as set forth in Section 2.1.6, subject to
adjustment) of Operating Expenses as provided in Article 7, and (ii) any other
amounts that Tenant assumes or agrees to pay under the provisions of this Lease
that are owed to Landlord, including without limitation any and all other sums
that may become due
-4-
<PAGE> 18
by reason of any default of Tenant or failure on Tenant's part to comply with
the agreements, terms, covenants and conditions of this Lease to be performed by
Tenant.
5.5 Basic Annual Rent and Additional Rent shall together be
denominated "Rent." Rent shall be paid to Landlord, without abatement,
deduction, or offset except as set forth in this Lease, in lawful money of the
United States of America, at the office of Landlord as set forth in Section
2.1.10 or to such other person or at such other place in the City of San Diego
as Landlord may from time to time designate in writing. In the event the term of
this Lease commences or ends on a day other than the first day of a calendar
month, then the Rent for such fraction of a month shall be prorated for such
period and shall be paid at the then current rate for such fractional month.
6. Rental Adjustments.
6.1 The Basic Annual Rent shall be subject to annual upward adjustment
in proportion to rises in the Consumer Price Index as provided within this
Article 6. The first such adjustment shall become effective commencing with that
monthly rental installment which is due on or after the first anniversary of the
Term Commencement Date and subsequent adjustments shall become effective on the
same day of each calendar year thereafter for so long as this Lease continues in
effect. By way of example, if the Term Commencement Date is October 1, 1989, the
first such adjustment shall become effective on October 1, 1990; if the Term
Commencement Date is October 2, 1989, the first such adjustment shall become
effective on November 1, 1990.
6.2 The Basic Annual Rent shall be adjusted upward as follows:
(a) The "Base Month" for purposes of each Rent adjustment shall
be that month which is fifteen (15) months prior to the month in which the Rent
adjustment occurs, and the "Comparison Month" shall be that month which is three
(3) months prior to the month in which the Rent adjustment occurs.
(b) As used in this subsection, the term "Consumer Price Index"
means the Consumer Price Index (all items) for all wage earners and clerical
workers in the Long Beach/Anaheim/Riverside metropolitan area (1982/84 = 100) as
published by the United States Department of Labor, Bureau of Labor Statistics.
If the 1982/84 base of the Consumer Price Index is hereafter changed, then the
new base will be converted to the 1982/84 base and the base as so converted
shall be used. In the event that the Bureau ceases to publish the Consumer Price
Index at least once a month, then the successor
-5-
<PAGE> 19
or most nearly comparable index thereto so selected by Landlord shall be used.
(c) In the event that the Consumer Price Index for the Comparison
Month exceeds the Consumer Price Index for the Base Month, the Basic Annual Rent
then payable (as increased by previous adjustments under this Section 6) shall
be multiplied by a fraction, the numerator of which is the Consumer Price Index
figure for the Comparison Month, and the denominator of which is the Consumer
Price Index figure for the Base Month. Such amount as calculated shall be the
Basic Annual Rent to be paid until the next date for adjustment hereunder.
(d) Notwithstanding any of the foregoing to the contrary, Basic
Annual Rent shall not be increased less than three percent (3%) or more than
seven percent (7%) per year.
7. Operating Expenses.
7.1 As used herein, the term "Operating Expenses" shall include:
(a) Government impositions including, without limitation,
property tax costs consisting of real and personal property taxes and
assessments (but excluding personal property taxes and assessments of other
tenants of the Project) including amounts due under any improvement bond upon
the Building and/or Project including the parcel or parcels of real property
upon which Building and areas serving such Building are located or assessments
levied in lieu thereof imposed by any governmental authority or agency, any tax
on or measured by gross rentals received from the rental of space in the
Building, or tax based on the square footage of the Demised Premises or
Buildings as well as any utilities surcharges or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any federal, state,
regional, municipal or local government authority in connection with the use or
occupancy of the Building or the parking facilities serving the Building, and
any expenses, including the cost of attorneys or experts, reasonably incurred by
Landlord after the first two years of the term of this Lease in seeking
reduction by the taxing authority of the applicable taxes, less tax refunds
obtained as a result of an application for review thereof. Tenant shall have the
right to insist that Landlord contest any particular tax or governmental
imposition at Tenant's cost and expense.
(b) Costs of maintenance and repairs to the structural and
exterior portion of the Building and the Common Areas, including roof,
foundations, floors, beams, masonry
-6-
<PAGE> 20
walls, and load-bearing partitions, and to the heating, ventilation, air
conditioning, plumbing, fire sprinkler, electrical, elevator, and window
systems, except to the extent of the warranties set forth in the Work Letter.
(c) Except as set forth in Section 7.2 below, all other costs
paid or incurred by Landlord which, in accordance with accepted principles of
sound accounting practice as applied to the operation and maintenance of first
class buildings, are properly chargeable to the maintenance and operation of the
Building and the Project including, by way of examples and not as a limitation
upon the generality of the foregoing, costs of repairs and replacements to
improvements within the Project as appropriate to maintain the Project in first
class condition, costs of utilities furnished to the Common Areas, sewer fees,
trash collection, cleaning (including windows), maintenance of landscape and
grounds (including the cost of maintaining the entryway to the science park of
which the project is a part under applicable reciprocal easement and access
agreements), maintenance of drives and parking areas, reasonable and customary
security services, maintenance, repair, and replacement of reasonable and
customary security devices, building supplies, maintenance, repair, and
replacement of equipment utilized for operation and maintenance of the Project,
insurance premiums, portions of insured losses paid by Landlord as part of
deductible portion of loss by reason of insurance policy terms, service
contracts for work of nature before referenced, costs of services of independent
contractors retained to do work of nature before referenced, and costs of
compensation (including employment taxes and fringe benefits) of all persons who
perform regular and recurring duties (but only to the extent the duties are not
performed by Tenant) connected with the day-to-day operation and maintenance of
Building No. 2 and the Common Areas, and reasonable costs of management services
which shall not exceed two and one half percent (2 1/2%) of the Basic Annual
Rent due from all tenants of the Project during the first year of the term of
the Lease, and five percent (5%) of the Basic Annual Rent due from all tenants
of the Project thereafter.
7.2 As used herein, and notwithstanding the foregoing Section 7.1, the
term "Operating Expenses" shall not include:
(a) Any net income, franchise, capital stock, estate or
inheritance taxes or taxes which are the personal obligation of Landlord or of
another tenant of the Project; costs of janitors, maintenance personnel, and all
other persons who perform duties connected with the operation and maintenance of
the Building and the Common Areas to the extent Tenant retains and pays for such
services itself (on the condition Landlord has reasonably approved the level of
services and the qualifications of the provider of the services under
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Section 16.6 of this Lease); expenses which relate to preparation of rental
space for a tenant, expenses of initial development and construction, including
but not limited to, grading, paving, landscaping, and decorating (as
distinguished from maintenance and repairs as set forth in Section 7.1(b)
above), any capital repairs, replacements or improvements (as distinguished from
maintenance and repairs as set forth in Section 7.1(b) above); expenses for
which Landlord is reimbursed or indemnified (either by an insurer, condemnor,
tenant or otherwise, but less costs of obtaining such reimbursement); losses
which would have been insured losses if Landlord had carried the insurance
required of Landlord under this Lease (except for that portion of the loss which
would have been part of the deductible); expenses incurred in leasing or
procuring tenants (including, without limitation, lease commissions, advertising
expenses and expenses of renovating space for tenants); legal expenses arising
out of the initial construction of the Project, Building, Common Areas, or any
tenant improvements or for the enforcement of the provisions of any tenant
leases other than this one; interest or amortization payments on any mortgage or
deed of trust encumbering the Project or any portion thereof (provided that
interest upon a government assessment or improvement bond payable in
installments is an Operating Expense under subparagraph 7.1(a) above); wages,
salaries or other compensation paid to any employees of Landlord except as set
forth in subparagraph 7.1(c) above; costs of any new improvements added to the
Project (as distinguished from repair or replacement of an improvement
previously existing on the Project); the cost of any work or service performed
for or facilities furnished to a tenant at such tenant's cost; the cost of
correcting defects in the construction of the Project or any equipment
incorporated therein; any cost or expense representing an amount paid to an
entity affiliated in any way with Landlord which is in excess of the amount
which would be paid in the absence of such relationship; depreciation claimed by
Landlord for tax purposes (provided this exclusion of "depreciation" is not
intended to delete from Operating Expenses actual costs of repairs and
replacements which are provided for in subparagraph 7.1 above), any interest or
penalties imposed upon Landlord by any taxing authority for late payment or
otherwise, taxes of the types set forth within the second to the last sentence
of subparagraph 7.1(a) above; and any other expense otherwise chargeable as part
of the cost of operation and maintenance but which is not of general benefit to
the Project but is primarily for the benefit of one or more specific tenant(s).
(b) Any increase in real property taxes for any period prior to
the termination of the initial term of this Lease caused by a sale or transfer
(but only the first such sale or transfer) of the Building or Project (other
than a sale to Tenant or an affiliate of Tenant). Such amount of real property
taxes which are not included in Operating Expenses
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shall not be greater than the difference between (i) the amount the taxes would
have been if the Building and Project had been fully improved even if they are
not yet fully improved at the time of the sale, and (ii) the sale price. For the
purposes of this Section 7.2(b) two or more related sales or transfers shall be
considered but one sale or transfer, and the provisions of this Section 7.2(b)
shall apply to any sale or transfer between Landlord and any entity in any way
affiliated with Landlord, but such sale or transfer shall not be considered the
"first" sale or transfer. At Landlord's option, Landlord may pay to Tenant at
the time of the first such sale of the Building or Project a mutually agreeable
sum equal to estimated real property taxes caused by the first such sale for the
balance of the initial term of this Lease, in consideration for which Tenant
shall execute an amendment to this Lease deleting this Section 7.2(b).
7.3 Tenant shall pay to Landlord on the first day of each calendar
month of the term of this lease, as Additional Rent, Landlord's good faith
estimate of Tenant's Pro Rata Share (as set forth in 2.1.6) of Operating
Expenses with respect to the Project for such month.
(a) "Tenant's Pro Rata Share" under this Lease shall mean (i)
with regard to the Building, 61.54% of the Rentable Area of the Building, and
(ii) with regard to the Common Area, the Rentable Area of the Demised Premises
divided by the Rentable Area of both buildings of the Project.
(b) Within forty five (45) days after the conclusion of each
calendar year, Landlord shall furnish to Tenant a statement (the "Annual
Operating Expense Statement") showing in reasonable detail the actual Operating
Expenses and Tenant's Pro Rata Share of Operating Expenses for the previous
calendar year. Any additional sum due from Tenant to Landlord shall be due and
payable within twenty (20) days of Tenant's receipt of such statement. If the
amounts paid by Tenant pursuant to this Section 7.3 exceeds Tenant's Pro Rata
Share of Operating Expenses for the previous calendar year, the difference shall
be credited by Landlord against the Rent next due and owing from Tenant;
provided that, if the Lease term has expired, Landlord shall accompany said
statement with payment for the amount of such difference.
(c) Any amount due under this Section 7.3 for any period which is
less than a full month shall be prorated for such fractional month.
(d) Notwithstanding this Section 7.3, Operating Expenses which
can fairly and reasonably be allocated to one or more tenants of the Project
shall be so allocated, and shall be separately scheduled on the Annual Operating
Expense Statement. Furthermore, once the Project has been
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subdivided into two lots, expenses attributable to Building No. 1 and to the
Common Areas located on the lot underlying Building No. 1 shall not be included
in Operating Expenses under this Lease.
7.4 Tenant shall have the right, at Tenant's expense, upon reasonable
notice during reasonable business hours, to have an employee or outside
accountant or other consultant inspect the portion of Landlord's books that are
relevant to preparation of the Annual Operating Expense Statement provided any
request for such review shall be furnished within sixty (60) days of Tenant's
receipt of such statement as to a prior year's statement.
7.5 Operating Expenses for the calendar year in which Tenant's
obligation to share therein commences and in the calendar year in which such
obligation ceases, shall be prorated. Expenses such as taxes, assessments and
insurance premiums which are incurred for an extended time period shall be
prorated based upon time periods to which applicable so that the amounts
attributed to the Demised Premises relate in a reasonable manner to the time
period wherein Tenant has an obligation to share in Operating Expenses.
8. Rentable Area.
8.1 The "Rentable Area" of the Demised Premises shall be as set forth
in Section 2.1.3 of this Lease unless and until Tenant requests a remeasurement
of the Demised Premises (and unless and until the Demised Premises are expanded
under Section 43, Section 44, or otherwise). Basic Annual Rent (but not the
rental rate per square foot) shall be adjusted upward or downward by reason of
any later determination that Rentable Area of the Demised Premises differs from
the Rentable Area set forth in Section 2.1.3. Rentable Area as adjusted shall
also be utilized for computation of Tenant's Pro Rata Share of Operating
Expenses for purposes of allocating Operating Expenses among tenants of the
Project. Tenant's Pro Rata Share shall be equal to a fraction the numerator of
which shall be the Rentable Area of the Demised Premises and the denominator of
which shall be the aggregate of the Rentable Area of the Project.
8.2 In the event Tenant requests a remeasurement of the Demised
Premises (and in the event the Demised Premises are expanded under Section 43,
Section 44, or otherwise), the Rentable Area of each floor shall be computed by
measuring to the inside finished surface of the four exterior glass walls, so
long as such glass walls form fifty percent (50%) or more of the vertical floor
to ceiling dimension (otherwise measurement is from the outside finished surface
of the permanent outer Building walls) provided, in such situations as the floor
is served by a balcony, the balcony area is included and
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<PAGE> 24
measurement is from the centerline of the handrail of such balcony. The full
area calculated as before set forth shall be included as Rentable Area without
deduction for columns and projections necessary to the Building, except that, in
accordance with industry custom, major vertical penetrations which are defined
as stairs and elevator shafts and their enclosing walls which serve more than
one floor of the Building shall be excluded, provided, however, the term major
vertical penetrations shall not be deemed to include stairs and elevator shafts
exclusively serving a tenant occupying space on more than one floor. The
Rentable Area of the Demised Premises shall also include Tenant's Pro Rata Share
of the equipment vault located adjacent to the Building, which is included in
the Rentable Area set forth in Section 2.1.3.
8.3. The Rentable Area of the Building is determined by making
separate calculations of Rentable Area applicable to each floor within the
Building and totaling the Rentable Area of all floors within the Building.
8.4 The Rentable Area of the Project is the total of Rentable Area of
both buildings within the Project.
8.5 The term "Rentable Area" when applied to Tenant is the approximate
area to be occupied by Tenant plus an equitable allocation of Rentable Area
within the Building which is not then utilized or expected to be utilized by
Tenant or other tenants of the Building, including but not limited to the
portion of the Building devoted to corridors, equipment rooms, restrooms,
elevator lobby and mailroom. In making such allocations, consideration will be
given to tenants benefited by space allocated such that areas which primarily
serve tenants of only one floor, such as corridors and restrooms upon such
floor, shall be allocated to that tenant's Rentable Area.
8.6 Review of allocations of Rentable Areas as between tenants of the
Building and the Project may be made as frequently as in Landlord's opinion
appears appropriate in order to facilitate an equitable apportionment of
Operating Expenses. If such review is by a licensed architect and allocations
are certified correct by such licensed architect, the parties shall be bound by
such certifications.
9. [Intentionally Left blank)
10. Use.
10.1 Landlord covenants as a condition of this Lease that it has good
marketable fee title to the Demised Premises and the right to make this Lease
for the term aforesaid; that the provisions of this Lease do not conflict with
or violate the provisions of existing agreements between the Landlord and any
third parties; that the Demised Premises and the uses
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<PAGE> 25
thereof are in conformity with all applicable legal requirements, including,
without limitation, zoning and planning ordinances, and do not violate
applicable restrictions, if any; and that Landlord will deliver actual
possession of the Demised Premises to Tenant free of all tenants and occupants,
and free of all monetary liens other than (i) the lien of any mortgage or deed
of trust encumbering the Project, and (ii) any mechanic's lien filed against the
Demised Premises or against the Building for work claimed to have been done or
materials furnished, the removal of which Landlord shall diligently pursue, and
which will be discharged by Landlord, by bond or otherwise, within thirty (30)
days after the Term Commencment date, at the cost and expense of Landlord.
10.2 Tenant shall use the Demised Premises for the purpose set forth
in Section 2.1.9 and shall not use the Demised Premises, or permit or suffer the
Demised Premises to be used, for any other purpose without the prior written
consent of Landlord. In the event any government law or regulation (or court
order enforcing a government law or regulation) prohibits or substantially
limits Tenant's use of the Demised Premises for research and development,
laboratory, and related offices, Tenant may at any time cancel the Lease by
giving Landlord written notice, and thereafter neither party shall have any
rights, duties or obligations hereunder.
10.3 Tenant shall conduct its business operations and use the Demised
Premises (including any storage or use of Hazardous Materials as defined in
Article 41 of this Lease) in compliance with all federal, state, and local laws
and regulations. Subject to the provisions of Section 10.2, Tenant shall not use
or occupy the Demised Premises in violation of any law or regulation or of the
certificate of occupancy issued for the Building, and shall, upon five (5) days'
written notice from Landlord, discontinue any use of the Demised Premises which
is declared by any governmental authority having jurisdiction to be a violation
of law or of said certificate of occupancy. Tenant shall comply with any
direction of any governmental authority having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Demised Premises,
impose any duty upon Tenant or Landlord with respect to the Demised Premises or
with respect to the use or occupation thereof.
10.4 Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any "all risk" or other insurance policy
covering the Building and Project and shall comply with all rules, orders,
regulations and requirements of the insurers of the Building and Project.
Landlord shall give Tenant written notice of any failure to comply with the
provisions of this Section, and if Tenant fails to remedy such failure within a
reasonable time, Tenant shall
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<PAGE> 26
promptly upon demand reimburse Landlord for any additional premium charged for
such policy by reason of Tenant's failure.
10.5 Tenant shall keep all doors opening onto public corridors closed,
except when in use for ingress and egress.
10.6 Tenant upon termination of this Lease shall return to Landlord
all keys, access cards, and other items and equipment used with the security
system installed in the Building and the Demised Premises, except to the extent
such system is installed by Tenant at Tenant's expense and may be removed
without material damage to the Demised Premises or the Building.
10.7 No awnings or other projection shall be attached to any outside
wall of the Building. No curtains, blinds, shades or screens shall be attached
to or hung in, or used in connection with, any window or door of the Demised
Premises other than those specified in the approved plans and specifications for
the Building and the Demised Premises. Neither the interior nor exterior of any
windows shall be coated or otherwise sunscreened without the express written
consent of Landlord, nor shall any bottles, parcels, or other articles be placed
on the windowsills.
10.8 No sign, advertisement, or notice shall be exhibited, painted or
affixed by Tenant on any part of the Demised Premises or the Building without
the prior written consent of Landlord, except for a sign on the face
(contemplated to be on the upper portion of the face) of the Building at
Tenant's sole cost and expense and not to exceed the size allowed by the City of
San Diego and to the extent approved by Landlord and the City of San Diego, and
a monument sign at Landlord's sole cost and expense to the extent approved by
Tenant and the City of San Diego. In addition, Tenant shall be allocated
eighteen percent (18%) of the total square footage of the monument sign within
the middle portion of the sign; the tenant of Building No. 1 has been allocated
fifty two percent (52%) and the top portion, other tenants of Building No. 2
shall be allocated ten percent (10%) within the middle portion below Tenant's
space, and Landlord shall be allocated twenty percent (20%) and the bottom
portion of the monument sign. Interior signs on doors and the directory tablet
shall be inscribed, painted or affixed for Tenant by Landlord at the expense of
Tenant, and shall be of a size, color, and style acceptable to Landlord. The
directory tablet shall be provided exclusively for the display of the name and
location of tenants only. Nothing may be placed on the exterior of corridor
walls or corridor doors other than Landlord's standard lettering. The Project
plans as approved by the City of San Diego do not allow a separate monument sign
for the Building; however, Landlord is endeavoring to obtain permission for the
installation of such a separate monument sign, and if it is
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successful, Tenant may at its option use the top half of the monument sign. If
Tenant elects to use the additional monument sign, Tenant's fair share of the
expense of the monument sign shall be paid for from the Tenant Improvement
budget described in the Work Letter.
10.9 Tenant shall not place any equipment weighing six hundred (600)
pounds or greater upon the Demised Premises except as installed pursuant to the
Work Letter without consulting with Landlord to insure that the proposed
location of the equipment is designed to carry the weight of such equipment.
10.10 Tenant shall not do or permit anything to be done in or about
the Demised Premises which shall in any way obstruct or interfere with the
rights of other tenants or occupants of the Building.
11. Brokers.
11.1 Tenant represents and warrants that it has had no dealings with
any real estate broker or agent in connection with the negotiation of this Lease
other than John Burnham & Company, and that it knows of no other real estate
broker or agent who is or might be entitled to a commission in connection with
this Lease.
11.2 Landlord shall pay any brokerage commission or finder's fee
payable to John Burnham & Company on account of this Lease, and Landlord shall
pay, indemnify, defend and hold harmless Tenant for any claims, losses, or
damages (including attorneys' fees) arising out of any claimed brokerage
commission or finder's fee arising in connection with this Lease or any of the
transactions contemplated in connection therewith, except to the extent that
such claim arises out of Tenant's dealings with any broker or finder other than
John Burnham & Company.
12. Holding Over.
12.1 If, with Landlord's consent, Tenant holds possession of all or
any part of the Demised Premises after the term of this Lease, Tenant shall
become a tenant from month-to-month upon the date of such expiration or earlier
termination, and in such case Tenant shall continue to pay in accordance with
Article 5 the Basic Annual Rent as adjusted from the Term Commencement Date in
accordance with Article 6 and Operating Expenses in accordance with Article 7,
and such month-to-month tenancy shall be subject to every other term, covenant
and agreement contained herein.
12.2 If Tenant remains in possession of the Demised Premises after the
expiration or earlier termination of the
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term hereof without the express written consent of Landlord, Tenant shall become
a tenant at sufferance upon the terms of this Lease except that monthly rental
shall be equal to one hundred twenty percent (120%) of the monthly rental in
effect during the last thirty (30) days of the Lease term.
12.3 Acceptance by Landlord of rent after such expiration of earlier
termination shall not result in a renewal or reinstatement of this Lease.
12.4 The foregoing provisions of this Article 12 are in addition to
and do not affect Landlord's right to re-entry or any other rights of Landlord
hereunder or as otherwise provided by law.
13. Taxes on Tenant's Property.
13.1 Tenant shall pay not less than ten (10) days before delinquency
taxes levied against any personal property or trade fixtures placed by Tenant in
or about the Demised Premises. Tenant shall not be responsible for taxes levied
against any personal property or trade fixtures of other tenants.
13.2 If any such taxes on Tenant's personal property or trade fixtures
are levied against Landlord or Landlord's property or, if the assessed valuation
of the Building is increased by the inclusion therein of a value attributable to
Tenant's personal property or trade fixtures, and if Landlord after written
notice to Tenant pays the taxes based upon such increase in the assessed value,
then Tenant shall upon demand repay to Landlord the taxes so levied against
Landlord.
13.3 If any improvements in or alterations to the Demised Premises,
whether owned by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which improvements in other
spaces in the Building or Project are assessed, then the real property taxes and
assessments levied against Landlord or the Building or Project by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property to Tenant and shall be governed by the provisions of Section 13.2,
above. Any such excess assessed valuation due to improvements in or alterations
to space in the Building or Project leased by other tenants of Landlord shall
not be included in the Operating Expenses defined in Section 7.5, but shall be
treated, as to such other tenants, as provided in this Section 13.3, and shall
be allocated to such other tenants. If the records of the County assessor are
available and sufficiently detailed to serve as a basis for determining whether
said Tenant improvements or alterations are assessed at a higher valuation than
improvements in other spaces in the
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Building or Project, such records shall be binding on both Landlord and Tenant.
14. [Intentionally Left Blank]
15. Common Areas and Parking Facilities.
15.1 Tenant shall have the nonexclusive right, in common with others,
to use the Common Areas, subject to the rules and regulations adopted by
Landlord and attached hereto as Exhibit "D" together with such other reasonable
and nondiscriminatory rules and regulations as are hereafter promulgated by
Landlord (the "Rules and Regulations").
15.2 As an appurtenance to the Demised Premises, Tenant is entitled to
use free of charge no fewer than 98 of the 155 parking spaces serving the
Building, which portion is computed by multiplying the 155 parking spaces
serving the Building by Tenant's Pro Rata Share of the Building. Tenant's
allocation shall be reduced to the extent installation of Tenant's equipment
outside of the Building reduces the available parking. Twenty percent (20%) of
the spaces allocated to Tenant shall be marked "reserved" for Tenant's use, no
more than twenty percent (20%) of the spaces allocated to other tenants of the
Building shall be marked "reserved" for the other tenants, and the balance of
the spaces shall be used in common with the other tenants. Tenant's reserved
spaces (and the reserved spaces of other tenants of the Building) shall be
located near the main entrance to the Building at a location mutually
satisfactory to Landlord and Tenant.
15.3 Tenant agrees not to overburden the parking facilities and agrees
to cooperate with Landlord and other tenants in the use of parking facilities.
15.4 Landlord reserves the right to modify Common Areas including the
right to add or remove real property by subdivision or otherwise, provided no
such change is of the nature to have an adverse effect upon Tenant's use and
enjoyment of the Demised Premises or on the parking spaces serving the Building.
16. Utilities and Services.
16.1 Tenant shall pay for all water, gas, electricity, telephone and
other utilities supplied to the Demised Premises, together with any taxes
thereon. If any such utility is not separately metered to Tenant, Tenant shall
pay a reasonable proportion to be determined by Landlord of all charges jointly
metered with tenants of other premises as part of its share of Operating
Expenses. Utilities and services provided to the Demised Premises which are
separately metered shall be paid by Tenant directly to the supplier of such
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utility or service, and Tenant shall pay for such utilities and services prior
to delinquency during the term of this Lease.
16.2 Should any such utility or service be suspended for a reason
other than any act, neglect, fault of or omission of any duty by Tenant, its
agents, servants, employees or invitees, and should such suspension materially
interfere with Tenant's use of the Demised Premises, from and after two (2)
business days written notice from Tenant to Landlord of the need to reinstate
such utility or service, Basic Annual Rent and Operating Expenses shall abate
for all or that portion of the Demised Premises incident to which Tenant's use
is materially interfered with until service is fully restored.
16.3 Should any such utility or service be suspended for a reason
other than any act, neglect, fault of or omission of any duty by Tenant, its
agents, servants, employees or invitees, and should such suspension materially
interfere with Tenant's use of the Demised Premises, and should such failure
extend for more than ninety (90) days from written notice from Tenant to
Landlord of the need to reinstate such utility or service, Tenant may, at its
option, cancel this Lease by giving Landlord written notice, and thereafter
neither party shall have any further rights, duties or obligations hereunder.
16.4 In the event the suspension is of such a nature that it can be
remedied by Landlord and Landlord fails to do so within a period of fifteen (15)
days after notice from Tenant of the need to reinstate such utility or service,
Tenant shall have the right but not the obligation to undertake to have such
suspension remedied and may deduct any cost or expense in connection therewith
from any Rent otherwise coming due to the extent such cost is not included
within Tenant's Pro Rata Share of Operating Expenses under Section 7 of this
Lease.
16.5 Except as set forth in this Article 16, Tenant shall not be
relieved from any covenants of this Lease nor shall there be any liability of
Landlord in excess of proceeds of applicable insurance policies, if any (or in
excess of what would have been proceeds of insurance policies required of
Landlord under this Lease if Landlord fails to carry such policies, the amount
of which proceeds shall be Landlord's liability on account of such failure) by
reason of any injury to or interference with Tenant's business arising from the
suspension of utilities or services, except to the extent such injury or
interference is caused by Landlord's gross negligence or willful misconduct.
16.6 Tenant may provide and pay for janitors, maintenance personnel,
and other persons who perform duties connected with the operation and
maintenance of the Demised Premises subject the Landlord's reasonable approval
of the level of services and the qualifications of the provider of the services.
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17. Alterations.
17.1 Tenant shall make no structural alterations, additions or
improvements to the Demised Premises or the Building, and shall make no
non-structural alterations, additions or improvements in or to the Demised
Premises which cost in excess of $50,000 per annum other than wall coverings,
paneling, built-in cabinet work, installation of movable furniture, and trade
fixtures, without Landlord's prior written consent, which shall not be
unreasonably withheld, and then only by contractors or mechanics reasonably
approved by Landlord. To the extent the alterations, additions or improvements
are of the nature which would require a building permit from the city of San
Diego, Tenant shall provide to Landlord a set of "as-built" plans and
specifications of the alterations, additions, or improvements once they have
been completed.
17.2 Tenant agrees that there shall be no construction of partitions
or other obstructions which might interfere with free access to mechanical
installations or service facilities of the Building or interfere with the moving
of Landlord's equipment to or from the enclosures containing said installations
or facilities.
17.3 Tenant agrees that any work by Tenant shall be accomplished in
such a manner as to permit any fire sprinkler system and fire water supply lines
to remain fully operable at all times.
17.4 Tenant covenants and agrees that all work done by Tenant shall be
performed in full compliance with all laws, rules, orders, ordinances,
directions, regulations, and requirements of all governmental agencies, offices,
departments, bureaus and boards having jurisdiction, and in full compliance with
the rules, orders, directions, regulations, and requirements of any applicable
fire rating bureau.
17.5 Before commencing any work described in Section 17.1, Tenant
shall give Landlord at least five (5) days' prior written notice of the proposed
commencement of such work.
17.6 Except for trade fixtures and items of personal property and any
security system installed by Tenant under Section 10.6, all alterations,
fixtures, additions and improvements attached to or built into the Demised
Premises, made by either party, including (without limiting the generality of
the foregoing) all wallcovering, built-in cabinet work, and paneling, shall
become the property of Landlord upon the expiration or earlier termination of
the term of this
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Lease, and shall remain upon and be surrendered with the Demised Premises as a
part thereof.
17.7 All articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned by
Tenant or installed by Tenant at its expense in the Demised Premises shall be
and remain the property of Tenant and may be removed by Tenant at any time up to
ten (10) days after the expiration or earlier termination of the Lease. Tenant
shall repair any damage to the Demised Premises caused by Tenant's removal of
any property from the Demised Premises. If Tenant shall fail to remove all of
its effects from the Demised Premises within ten (10) days after the expiration
or earlier termination of the Lease, then Landlord may, at its option, remove
and dispose of the same in accordance with and upon such notice to Tenant as may
be provided by California law. However, notwithstanding any provision of law to
the contrary, the proceeds of any sale of the property may be applied by
Landlord against any amounts due under this Lease from Tenant to Landlord and
against any expenses incident to the removal, storage and sale of said personal
property.
17.8 Notwithstanding any other provision of this Article 17 to the
contrary, in no event may Tenant remove any improvement from the Demised
Premises as to which Landlord contributed payment without Landlord's prior
written consent.
18. Repairs and Maintenance.
18.1 Landlord shall repair and maintain the structural and exterior
portions and Common Areas of the Building and Project, including roofing and
covering materials, the plumbing, fire sprinkler system (if any), heating,
ventilating, air conditioning, elevator, and electrical systems installed or
furnished by Landlord, subject to reimbursement by Tenant as its Pro Rata Share
of Operating Expenses to the extent provided by Section 7, and subject to the
warranties set forth in the Work Letter. However, if such maintenance or repairs
are required because of any act, neglect, fault of or omissions of any duty by
Tenant, its agents, servants, employees or invitees, Tenant shall pay to
Landlord the costs of such maintenance and repairs attributable to Tenant's act,
neglect, fault or omission.
18.2 Except for services of Landlord, if any, required by the terms of
Section 18.1, Tenant shall at Tenant's sole cost and expense keep the Demised
Premises and every part thereof in good condition and repair, except for damage
thereto from causes beyond the reasonable control of Tenant and ordinary wear
and tear, and except to the extent Landlord is responsible under the warranties
set forth in the Work Letter. Tenant shall upon the expiration or sooner
termination of the
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term hereof surrender the Demised Premises to Landlord in the same condition as
when received, ordinary wear and tear and damage from causes beyond the
reasonable control of Tenant excepted. After completion of the work required by
the Work Letter, Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Demised Premises or any part thereof except for
any remaining "punchlist items" (as defined in the Work Letter).
18.3 Should repairs or maintenance under Section 18.1 be required of
Landlord for a reason other than any act, neglect, fault of or omission of any
duty by Tenant, its agents, servants, employees or invitees, and should the lack
of repairs or maintenance materially interfere with Tenant's use of the Demised
Premises, from and after two (2) business days from written notice from Tenant
to Landlord of the need of such repairs or maintenance, Basic Annual Rent and
Operating Expenses shall abate for all or that portion of the Demised Premises
incident to which Tenant's use is materially interfered with until the repairs
or maintenance are completed.
18.4 Should repairs or maintenance under Section 18.1 be required of
Landlord for a reason other than any act, neglect, fault of or omission of any
duty by Tenant, its agents, servants, employees or invitees, and should the lack
of repairs or maintenance materially interfere with Tenant's use of the Demised
Premises, and should such lack of repairs or maintenance extend for more than
ninety (90) days after written notice from Tenant to Landlord of the need of
such repairs or maintenance, Tenant may, at its option, cancel this Lease by
giving Landlord written notice, and thereafter neither party shall have any
further rights, duties or obligations hereunder.
18.5 In the event Landlord fails to complete the repairs and
maintenance required of it under Section 18.1 within a period of fifteen (15)
days after notice from Tenant of the need of such repairs or maintenance, Tenant
shall have the right but not the obligation to undertake the maintenance and
repairs and may deduct any cost or expense in connection therewith from any Rent
otherwise coming due to the extent such cost is not included within Tenant's Pro
Rata Share of Operating Expenses under Section 7 of this Lease.
18.6 Except as set forth in this Article 18, Tenant shall not be
relieved of any covenants of this Lease nor shall there be any liability of
Landlord in excess of proceeds of applicable insurance policies, if any (or in
excess of what would have been proceeds of insurance policies required of
Landlord under this Lease if Landlord fails to carry such policies, the amount
of which proceeds shall be Landlord's liability on account of such failure), by
reason of any injury to or interference with Tenant's business arising from the
need for or the making of any repairs, alterations or improvements
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in or to any portion of the Building or the Demised Premises or in or to
fixtures, appurtenances and equipment therein, except to the extent such injury
or interference is caused by Landlord's gross negligence or willful misconduct.
18.7 This Article 18 relates to repairs and maintenance arising in
ordinary course of operation of the Building and any related facilities. In the
event of fire, earthquake, flood, vandalism, war, or similar cause of damage or
destruction this Article 18 shall not be applicable and the provisions of
Article 22 entitled "Damage or Destruction" shall apply and control.
19. Liens.
19.1 Tenant shall keep the Demised Premises, the Building and the
property upon which the Building is situated free from any liens arising out of
work performed, materials furnished or obligations incurred by Tenant. Tenant
further covenants and agrees that any mechanic's lien filed against the Demised
Premises or against the Building for work claimed to have been done for, or
materials claimed to have been furnished to Tenant except for tenant
improvements installed pursuant to the Work Letter, the removal of which Tenant
shall diligently pursue, and which will be discharged by Tenant, by bond or
otherwise, within thirty (30) days after the filing thereof, at the cost and
expense of Tenant.
19.2 Landlord covenants and agrees that any mechanic's lien filed
against the Demised Premises or against the Building for work claimed to have
been done for, or materials claimed to have been furnished to Landlord, will be
discharged by Landlord, by bond or otherwise, within thirty (30) days after the
filing thereof, at the cost and expense of Landlord.
19.3 Should Tenant fail to discharge any lien of the nature described
in Section 19.1, Landlord may at Landlord's election pay such claim or post a
bond or otherwise provide security to eliminate the lien as a claim against
title and the cost thereof shall be immediately due from Tenant as Additional
Rent.
19.4 In the event Tenant shall lease or finance the acquisition of
office equipment, furnishings, or other personal property of a removable nature
utilized by Tenant in the operation of Tenant's business, or encumber its
interest in this Lease, Tenant warrants that any Uniform Commercial Code
Financing Statement or mortgage or deed of trust executed by Tenant will upon
its face or by exhibit thereto indicate that such Financing Statement is
applicable only to removable personal property or fixtures of Tenant located
within the Demised Premises or to Tenant's interest in this Lease, as the
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case may be. In no event shall the address or legal description of the Building
be furnished on the statement without qualifying language as to applicability of
the lien only to removable personal property or fixtures located in an
identified suite held by Tenant, or to Tenant's interest in this Lease. Landlord
shall consent to such financing statements upon the request of Tenant, which
consent shall not be unreasonably withheld or delayed; any mortgage or deed of
trust encumbering Tenant's interest in this Lease shall also be subject to the
reasonable consent of any lender of Landlord, and shall be subordinate to any
interest of any lender of Landlord under Section 36 of this Lease. Should any
holder of a Financing Statement or mortgage or deed of trust executed by Tenant
record or place of record a Financing Statement or mortgage or deed of trust
which appears to constitute a lien against any interest of Landlord or against
equipment which may be located other than within the Demised Premises, Tenant
shall within ten (10) days after filing such Financing Statement or mortgage or
deed of trust cause (i) copies of the Security Agreement or other documents to
which the Financing Statement or mortgage or deed of trust pertains to be
furnished to Landlord to facilitate Landlord's being in a position to show such
lien is not applicable to Landlord's interest, and (ii) its lender to amend
documents of record so as to clarify that such lien is not applicable to any
interest of Landlord in the Building or Project. Nothing in this Section 19
shall prohibit Tenant from encumbering its interest in this Lease with a
leasehold mortgage or similar document, subject to the reasonable consent of
Landlord and any lender of Landlord. Landlord agrees to properly execute,
acknowledge, and deliver to Tenant or any lender of Tenant upon request all such
documentation as may be reasonably required by such lender in order for Tenant
to finance its interests under this Lease or the acquisition of office
equipment, furnishings, or other personal property of a removable nature
utilized by Tenant in the operation of Tenant's business.
20. Indemnification and Exculpation.
20.1 Tenant agrees to indemnify Landlord against and save Landlord
harmless from all damages, demands, claims, causes of action or judgments, and
all reasonable expenses incurred in investigating or resisting the same
(including reasonable attorneys' fees), for injury to person or to property
occurring within the Demised Premises and arising out of Tenant's use and
occupancy of the Demised Premises, except if caused by the willful acts or
negligence of Landlord or other tenants of the Project.
20.2 Landlord, during the term of this Lease, agrees to indemnify
Tenant against and save Tenant harmless from all damages, demands, claims,
causes of action or judgments, and all reasonable expenses incurred in
investigating or resisting
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the same (including reasonable attorneys' fees) , for injury to person or
property occurring within the Building and Project, except those occurring
within the Demised Premises for which Tenant is responsible under Section 20.1,
and except if caused by the willful acts or negligence of Tenant or other
tenants of the project except to the extent such damages would have been
avoidable if Landlord had fulfilled its obligations under Section 33 of this
Lease and failed to do so.
20.3 Notwithstanding any provision of Sections 20.1 and 20.2 to the
contrary, Landlord shall not be liable to Tenant and Tenant assumes all risk of
damage any fixtures, goods, inventory, merchandise, equipment, leasehold
improvements, records, research data, experiments, living organisms, chemicals,
or any other personal property kept within the Demised Premises, if the cause of
such damage is of a nature which, if Tenant had elected to maintain "all risk"
insurance covering the above-described risks would be a loss subject to
settlement by the insurance carrier including but not limited to, damage or
losses caused by fire, electrical malfunctions, gas explosion, and water damage
of any type including but not limited to broken water lines, malfunction of fire
sprinkler system, roof leakage or stoppages of lines unless and except if such
loss is due to willful disregard of Landlord of written notice of need for a
repair for an unreasonable period of time. Tenant further waives any claim for
injury to Tenant's business or loss of income relating to any such damage or
destruction of personal property including any loss of records.
20.4 Notwithstanding any provision of Sections 20.1 and 20.2 to the
contrary, Landlord shall not be liable to Tenant and Tenant assumes all risk of
personal injury and property damages caused by Tenant's products.
20.5 Landlord shall not be liable for any damages arising from any act
or neglect of any other tenant in the Building except to the extent such damages
would have been avoidable if Landlord had fulfilled its obligations under
Section 33 of this Lease and failed to do so.
21. Insurance - Waiver of Subrogation.
21.1 Landlord shall carry insurance upon the Building, in an amount
equal to full replacement cost (exclusive of the costs of excavation,
foundations, and footings, and without reference to depreciation taken by
Landlord upon its books or tax returns) or such lesser coverage as Landlord may
elect provided such coverage is not less than ninety percent (90%) of such full
replacement cost or the amount of such insurance Landlord's mortgage lender
requires Landlord to maintain, providing protection against any peril generally
included within the "all risk" classification of
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insurance. Landlord, subject to availability thereof, may upon request of Tenant
further insure as Landlord deems appropriate coverages against flood and/or
earthquake, loss or failure of building equipment, rental loss during the period
to repair or rebuild, workmen's compensation insurance and fidelity bonds for
employees employed to perform services. Notwithstanding the foregoing, Landlord
may, but shall not be deemed required to, provide insurance as to any
improvements installed by Tenant or which are in addition to the Tenant
Improvements installed pursuant to the Work Letter without regard to whether or
not such are made a part of the Building. Tenant shall have the right to approve
the insurance carried by Landlord, which approval shall not be unreasonably
withheld or delayed.
21.2 Landlord shall further carry public liability insurance with
combined single limits of not less than Ten Million Dollars ($10,000,000) for
death, bodily injury, or property damage with respect to the Project and
unrented, uninsured or insured for less than loss claim, areas of the Building
and walks, drives, parking areas, landscaped areas, and other appurtenances
thereto.
21.3 Tenant at its own cost shall procure and continue in effect from
the Term Commencement Date or the date of occupancy, whichever first occurs, and
continuing throughout the term of this Lease (and occupancy by Tenant, if any,
after termination of this Lease) comprehensive public liability insurance,
including employer's non-ownership automobile coverage, with limits of not less
than Ten Million Dollars ($10,000,000) for death, bodily injury, or property
damage with respect to the Demised Premises.
21.4 The aforesaid insurance required of Tenant shall name Landlord,
its agents and employees, as an additional insured. Tenant shall upon written
request of Landlord designate and furnish certificates so evidencing Landlord as
an additional insured to any lender and/or any other party who has a reasonable
business need for such certificates.
21.5 The aforesaid insurance required of Landlord or Tenant shall be
with companies having a rating of not less than policyholder rating of A and
financial category rating of at least Class XII in "Best's Insurance Guide." The
insured party shall obtain for the other party from the insurance companies or
cause the insurance companies to furnish certificates of coverage to the other
party. No such policy shall be cancellable or subject to reduction of coverage
or other modification or cancellation except after thirty (30) days' prior
written notice to Landlord and Tenant from the insurer. All such policies shall
be written as primary policies, not contributing with and not in excess of any
other coverage. Tenant's policy may be a "blanket policy" which specifically
provides that the amount of insurance shall not be reduced by
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other losses covered by the policy. The insured party shall, at least twenty
(20) days prior to the expiration of such policies, furnish the other party with
renewals or binders. Tenant agrees that if Tenant does not take out and maintain
such insurance, Landlord may (but shall not be required to) procure said
insurance on Tenant's behalf.
21.6 Landlord and Tenant each hereby waive any and all rights of
recovery against the other or against the officers, employees, agents, and
representatives of the other, on account of loss or damage occasioned to such
waiving party or its property or the property of others under its control to the
extent that such loss or damage is insured against under any "all risk"
insurance policy which either may have in force at the time of such loss or
damage, such waivers to continue as long as their respective insurers so permit.
Any termination of such a waiver shall be by written notice of circumstances as
hereinafter set forth. Landlord and Tenant upon obtaining the policies of
insurance required or permitted under this Lease shall give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease. If such policies shall not be obtainable with such
waiver or shall be so obtainable only at premium over that chargeable without
such waiver, the party seeking such policy shall notify the other thereof, and
the latter shall have ten (10) days thereafter to either (i) procure such
insurance in companies reasonably satisfactory to the other party or (ii) agree
to pay such additional premium (in the Tenant's case, in the proportion which
the area of the Demised Premises bears to the insured area). If neither (i) nor
(ii) are done, this Section 21.6 shall have no effect during such time as such
policies shall not be obtainable or the party in whose factor a waiver of
subrogation is desired shall refuse to pay the additional premium. If such
policies shall at any time be unobtainable, but shall be subsequently
obtainable, neither party shall be subsequently liable for a failure to obtain
such insurance until a reasonable time after notification thereof by the other
party. If the release of either Landlord or Tenant, as set forth in the first
sentence of this Section 21.6 shall contravene any law with respect to
exculpatory agreements, the liability of the party in question shall be deemed
not released but shall be secondary to the other's insurer.
21.7 Not more frequently than once each three (3) years, Landlord or
Tenant may require insurance policy limits to be raised to conform with
requirements of Landlord's lender and/or to bring coverage limits to the level
then being required of new tenants of space within the Project.
21.8 Any insurance required to be carried by Landlord under this Lease
shall provide for a deductible of not more than Ten Thousand Dollars ($10,000)
per occurrence.
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22. Damage or Destruction.
22.1 In the event of a partial destruction of the Building by fire or
other perils covered by "all risk" insurance not exceeding twenty-five percent
(25%) of the full insurable value thereof, and if the damage thereto is such
that the Building may be repaired, reconstructed or restored within a period of
ninety (90) days from the date of the happening of such casualty and Landlord
will receive insurance proceeds sufficient to cover the cost of such repairs
(except for any deductible amount provided by Landlord's policy, which
deductible amount if paid by Landlord shall be an Operating Expense), Landlord
shall commence and proceed diligently with the work of repair, reconstruction
and restoration and this Lease shall continue in full force and effect.
22.2 In the event of any damage to or destruction of the Building
other than as provided in Section 22.1, Landlord may nevertheless elect to
repair, reconstruct and restore the Building, but if Landlord elects not to do
so, then this Lease shall terminate as of the date of the damage or destruction.
Landlord shall give written notice to Tenant of its election not to repair,
reconstruct or restore the Building or Project within the thirty (30) day period
commencing on the date of damage or destruction.
22.3 In the event of repair, reconstruction and restoration as herein
provided, the Rent provided to be paid under this Lease shall be abated
proportionately based on the extent to which Tenant's use of the Demised
Premises is impaired during the period of such repair, reconstruction or
restoration, unless Landlord provides Tenant with other space in the Project
during the period of repair, which in Tenant's reasonable opinion is suitable
for the temporary conduct of Tenant's business. Tenant shall not be entitled to
any compensation or damages occasioned by any such damage, repair,
reconstruction or restoration except to the extent such damages are caused by
Landlord's gross negligence or willful misconduct.
22.4 If Landlord is obligated to or elects to repair or restore as
herein provided, Landlord shall be obligated to make repairs or restoration only
of those portions of the Demised Premises which were originally provided at
Landlord's expense pursuant to the Work Letter; the repair and restoration of
items not provided at Landlord's expense, including the emergency generator
except to the extent it is paid for from the Tenant Improvement Allowance
described in the Work Letter, shall be the obligation of Tenant.
22.5 Notwithstanding anything to the contrary contained in this
Article, Landlord shall not have any obligation whatsoever to repair,
reconstruct or restore the Demised Premises when the damage resulting from any
casualty
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covered under this Article occurs during the last twelve (12) months of the term
of this Lease or any extension hereof unless Tenant has exercised or elects to
exercise its option to extend the term of the Lease.
22.6 Notwithstanding anything to the contrary contained in this
Article, should Landlord fail to complete the repair or restoration of the
damage of the Demised Premises within ninety (90) days after written notice from
Tenant to Landlord of the need for such repairs or maintenance, Tenant may,
unless the damage or destruction was caused by an act, neglect, fault of or
omission of any duty by Tenant, its agents, servants, employees or invitees, and
unless the damage or destruction does not materially interfere with Tenant's use
of the Demised Premises, at its option, cancel this Lease by giving Landlord
written notice, and thereafter neither party shall have any further rights,
duties or obligations hereunder.
22.7 To the extent it is obligated to repair or restore the Building
or the Demised Premises under this Article 22, in the event Landlord fails to
commence the repair or restoration within a period of thirty (30) days after
notice from Tenant of the need of such repairs or maintenance, or fails to
diligently prosecute the repairs or restoration to completion, Tenant shall have
the right but not the obligation to undertake the repairs or restoration and may
deduct any cost or expense in connection therewith from any Rent otherwise
coming due to the extent such cost is not included within Tenant's Pro Rata
Share of Operating Expenses under Section 7 of this Lease.
22.8 Except as set forth in this Article 22, Tenant shall not be
relieved of any covenants under this Lease nor shall there be any liability of
Landlord in excess of proceeds of applicable insurance policies, if any, by
reason of any injury to or interference with Tenant's business arising from
damage or destruction to the Building or the Demised Premises or in or to
fixtures, appurtenances and equipment therein, except to the extent such injury
or interference is caused by Landlord's gross negligence or willful misconduct.
23. Eminent Domain.
23.1 In the event the whole of the Demised Premises, or such part
thereof as shall substantially interfere with the Tenant's use and occupancy
thereof, shall be taken for any public or quasi-public purpose by any lawful
power or authority by exercise of the right of appropriation, condemnation or
eminent domain, or sold to prevent such taking, Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
said authority.
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23.2 In the event of a partial taking of the Building, the Project or
of drives, walkways, and parking areas serving the Building for any public or
quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or sold to prevent such taking,
Tenant may elect to terminate this Lease provided such taking is of material
detriment to Tenant's use of the Demised Premises.
23.3 Tenant shall be entitled to any award which is specifically
awarded as compensation for the taking of Tenant's personal property and
fixtures, including tenant improvements which were installed at Tenant's
expense, for the value of the unexpired portion of Tenant's interest in the
Lease, and for costs of Tenant moving to a new location.
23.4 If upon any taking of the nature described in this Article 23
this Lease continues in effect, then Landlord shall promptly proceed to restore
the Demised Premises, Building, and Project to substantially their same
condition prior to such partial taking. To the extent such restoration is
feasible, the Rent shall be abated proportionately on the basis of the
percentage of the rental value of the Demised Premises after such taking and the
rental value of the Demised Premises prior to such taking.
24. Defaults and Remedies.
24.1 Late payment by Tenant to Landlord of Rent and other sums due
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing, accounting charges and late charges which
may be imposed on Landlord by the terms of any mortgage or trust deed covering
the Demised Premises. In the event that Tenant shall fail to pay to Landlord
within ten (10) days of the date when due any payment owing to Landlord pursuant
to the terms of this Lease, said late payment shall bear interest at the lesser
of (i) ten percent (10%) per annum, or (ii) the maximum rate permitted by law.
Such interest shall be calculated from the date due and payable until the same
shall have been fully paid.
24.2 No payment by Tenant or receipt by Landlord of a lesser amount
than the rent payment herein stipulated shall be deemed to be other than on
account of the rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided. If at any time a dispute shall arise as to any amount or sum of money
to be paid by Tenant to Landlord, Tenant shall have the right to make
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payment "under protest" and such payment shall not be regarded as a voluntary
payment, and there shall survive the right on the part of Tenant to institute
suit for recovery of the payment paid under protest.
24.3 If Tenant fails to pay any sum of money (other than Basic Annual
Rent) required to be paid by it hereunder, or shall fail to perform any other
act on its part to be performed hereunder, Landlord may, without waiving or
releasing Tenant from any obligations of Tenant, but shall not be obligated to,
make such payment or perform such act; provided, that such failure by Tenant
continued for thirty (30) days after notice from Landlord demanding performance
by Tenant was delivered to Tenant, or that such failure by Tenant unreasonably
interfered with the use of the Building by any other tenant or with the
efficient operation of the Building, or resulted or could have resulted in a
violation of law or the cancellation of an insurance policy maintained by
Landlord. All sums so paid or incurred by Landlord, together with interest
thereon, from the date such sums were paid or incurred, at the annual rate equal
to ten percent (10%) per annum or highest rate permitted by law, whichever is
less, shall be payable to Landlord on demand as Additional Rent.
24.4 The occurrence of either of the following events shall constitute
a "Default" hereunder by Tenant:
(a) The failure by Tenant to make any payment of Rent, as and
when due, where such failure shall continue for a period of ten (10) days after
written notice thereof from Landlord to Tenant. Such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161;
(b) The failure by Tenant to observe or perform any obligation
other than described in Sections 24.4(a) to be performed by Tenant, where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant. Such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161; provided that if the nature of Tenant's default is such that it
reasonably requires more than thirty (30) days to cure, then Tenant shall not be
deemed to be in default if Tenant shall commence such cure within said thirty
(30) day period and thereafter diligently prosecute the same to completion;
Notices given under this Section shall specify the alleged
default and shall demand that Tenant perform the provisions of this Lease or pay
the Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Demised Premises. No such notice shall be deemed a
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forfeiture or a termination of this Lease unless Landlord elects otherwise in
such notice.
24.5 In the event of a Default by Tenant, and at any time thereafter,
upon such notice as may be required by California law, without limiting Landlord
in the exercise of any right or remedy which Landlord may have, Landlord shall
be entitled to terminate Tenant's right to possession of the Demised Premises by
any lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event
Landlord shall have the right, upon such notice as may be required by California
law but no sooner than ten (10) days after the event of Default, to re-enter and
remove all persons and property, and may dispose of the property in accordance
with and upon such notice to Tenant as may be required by California law.
However, notwithstanding any provision of law to the contrary, the proceeds of
any sale of the property may be applied by Landlord against any amounts due
under this Lease from Tenant to Landlord and against any expenses incident to
the removal, storage and sale of said personal property. In the event that
Landlord shall elect to so terminate this Lease, then Landlord shall be entitled
to recover from Tenant all damages incurred by Landlord by reason of Tenant's
default, including:
(a) The worth at the time of award of any unpaid rent which had
been earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds that portion of such rental loss which Tenant proves could have
been reasonably avoided; plus
(c) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss which Tenant proves could have been reasonably
avoided; plus
(d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligation
under this Lease or which in the ordinary course of things would be likely to
result therefrom as may be permitted from time to time by applicable law.
As used in Subsections (a) and (b) above, "worth at the time of
award" shall be computed by allowing interest at the rate specified in Section
24.1. As used in Subsection (c) above, the "worth at the time of award" shall be
computed by taking the present value of such amount, by using
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the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percentage point.
24.6 In the event of a Default by Tenant, and at any time thereafter,
upon such notice as may be required by California law, without terminating this
Lease and without limiting Landlord in the exercise of any right or remedy which
Landlord may have, Landlord shall have the immediate right to re-enter and
remove all persons and property, and to dispose of the property in accordance
with and upon such notice to Tenant as may be provided by California law.
However, notwithstanding any provision of law to the contrary, the proceeds of
any sale of the property may be applied by Landlord against any amounts due
under this Lease from Tenant to Landlord and against any expenses incident to
the removal, storage and sale of said personal property. No such re-entry shall
be considered or construed to be a forcible entry by Landlord. If Landlord does
not elect to terminate this Lease as provided in this Section, then Landlord
may, from time to time, recover all Rent as it becomes due under this Lease. At
any time thereafter, Landlord may elect to terminate this Lease and to recover
damages to which Landlord is entitled.
24.7 All rights, options, and remedies of Landlord contained in this
Lease shall be construed and held to be nonexclusive and cumulative. Landlord
shall have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by law, whether or not stated in this
Lease. No waiver of any default of Tenant hereunder shall be implied from any
acceptance by Landlord of any Rent or other payments due hereunder of any
omission by Landlord to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect defaults
other than as specified in said waiver.
24.8 Termination of this Lease or Tenant's right to possession by
Landlord shall not relieve Tenant from any liability to Landlord which has
theretofore accrued or shall arise based upon events which occurred prior to the
last to occur of (i) the date of Lease termination or (ii) the date the Demised
Premises are vacated.
24.9 Except as set forth in Articles 16, 18, and 22 of this Lease,
Landlord shall not be in default unless Landlord fails to perform obligations
required of Landlord within a reasonable time, but in no event later than thirty
(30) days after written notice by Tenant specifying wherein Landlord has failed
to perform such obligation; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance,
then Landlord shall not be in default if Landlord commences performance within
such thirty (30) day period and thereafter diligently prosecutes the same to
completion.
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24.10 In the event of any default on the part of Landlord or Tenant,
the non-defaulting party will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Building
or any improvements to or equipment in the Building whose address shall have
been furnished and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Building, improvements, or equipment by power of sale or a judicial action if
such should prove necessary to effect a cure.
25. Assignment or Subletting.
25.1 Tenant may sublet the Demised Premises to the La Jolla Institute
for Allergy and Immunology.
25.2 Tenant may sublet the Demised Premises or any part thereof to any
party other than La Jolla Institute for Allergy and Immunology provided that
Tenant first irrevocably assigns to Landlord, as security for Tenant's
obligations under this Lease, all rent from any subletting of all or a part of
the Demised Premises. Landlord as assignee and as attorney-in-fact for Tenant,
or a receiver for Tenant appointed on Landlord's application, may collect such
rent and apply it toward Tenant's obligations under this Lease; except that,
until the occurrence of an act of default by Tenant, Tenant shall have the right
to collect such rent.
25.3 Tenant may assign this Lease provided that the assignee first
executes, acknowledges and delivers to Landlord an agreement whereby the
assignee agrees to be bound by all of the covenants and agreements in this
Lease.
25.4 Notwithstanding any subletting or assignment, Tenant (and the
initial guarantor of the Lease) shall remain fully and primarily liable for the
payment of all rental and other sums due, or to become due hereunder, and for
the full performance of all other terms, conditions, and covenants to be kept
and performed by Tenant, unless the assignee or subsequent guarantor shall have
a net worth (determined in accordance with generally accepted accounting
principles consistently applied) immediately after such assignment which is at
least equal to the net worth (as so determined) of Tenant and the initial
guarantor of Tenant's obligations under this Lease. The acceptance of rent or
any other sum due hereunder, or the acceptance of performance of any other term,
covenant, or condition hereof, from any other person or entity shall not be
deemed to be a waiver of any of the provisions of this Lease or a consent to any
subletting or assignment of the Demised Premises.
25.5 Except as set forth above, Tenant shall not, either voluntarily
or by operation of law, sell, hypothecate or
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transfer this Lease, or sublet the Demised premises or any part hereof, or
permit or suffer the Demised Premises or any part thereof to be used or occupied
as work space, storage space, mailing privileges, concession or otherwise by
anyone other than Tenant or Tenant's employees, without the prior written
consent of Landlord in each instance, which consent shall not be unreasonably
withheld or delayed.
26. Attorney's Fees.
26.1 If either party becomes a party to any litigation concerning this
Lease, the Demised Premises, or the Building or Project in which the Demised
Premises are located, buy reason of any act or omission of the other party or
its authorized representatives, and not by any act or omission of the party that
becomes a party to that litigation or any act or omission of its authorized
representatives, the party that causes the other party to become involved in the
litigation shall be liable to that party for reasonable attorneys' fees and
court costs incurred by it in the litigation.
26.2 If either party commences an action against the other party
arising out of or in connection with this Lease, the prevailing party shall be
entitled to have and recover from the losing party reasonable attorneys' fees
and costs of suit.
27. [Intentionally Left Blank.)
28. Definition of Landlord.
28.1 The term "Landlord" as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only Landlord or the successor-in-interest of Landlord under this Lease
at the time in question. In the event of any transfer, assignment or the
conveyance of Landlord's title or leasehold, the Landlord herein named (and in
case of any subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved from and after the date of such transfer,
assignment or conveyance of all liability for the performance of any covenants
or obligations contained in this Lease thereafter to be performed by Landlord
and, without further agreement, the transferee of such title or leasehold shall
be deemed to have assumed and agreed to observe and perform any and all
obligations of Landlord hereunder, during its ownership or ground lease of the
Demised Premises. Landlord may transfer its interest in the Demised Premises or
this Lease without the consent of Tenant and such transfer or subsequent
transfer shall not be deemed a violation on the part of Landlord or the then
grantor of any of the terms or conditions of this Lease.
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29. Estoppel Certificate.
29.1 Tenant or Landlord, as the case may be, shall within ten (10)
days of written notice from the other party, execute, acknowledge and deliver to
the other party a statement in writing substantially in the form attached to
this Lease as Exhibit "E" with the blanks filled in, and on any other form
reasonably requested by a proposed lender or purchaser, (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification and certifying that this Lease as so modified is in
full force and effect) and the dates to which the rental and other charges are
paid in advance, if any, (ii) acknowledging that there are not, to the
certifying party's knowledge, any uncured defaults on the part of the other
party hereunder, or specifying such defaults if any are claimed and (iii)
setting forth such further information with respect to this Lease or the Demised
Premises as may be requested thereon. Any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the real
property of which the Demised Premises are a part.
30. [Intentionally Left Blank.)
31. Limitation of Landlord's Liability.
31.1 If Landlord is in default of this Lease, and as a consequence,
Tenant recovers a money judgment against Landlord, the judgment shall be
satisfied only out of the proceeds of sale received on execution of the judgment
and levy against the right, title, and interest of Landlord in the Building and
Project of which the Demised Premises are a part, and out of rent or other
income from the Building and Project receivable by Landlord or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title, and interest in the Building and Project of
which the Demised Premises are a part.
31.2 Landlord shall not be personally liable for any deficiency. If
Landlord is a partnership or joint venture, the partners of such partnership
shall not be personally liable and no partner of Landlord shall be sued or named
as a party in any suit or action or service of process be made against any
partner of Landlord except as may be necessary to secure jurisdiction of the
partnership or joint venture. If Landlord is a corporation, the shareholders,
directors, officers, employees, and/or agents of such corporation shall not be
personally liable and no shareholder, director, officer, employee, or agent of
Landlord shall be sued or name as a party in any suit or action or sevice of
process be made against any shareholder, director, officer, employee, or agent
of Landlord. No partner, shareholder, director, employee, or agent of Landlord
shall be required to answer or otherwise
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plead to any service of process and no judgment will be taken or writ of
execution levied against any partner, shareholder, director, employee, or agent
of Landlord.
31.3 Each of the covenants and agreements of this Article 31 shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or by common law.
32. Project Control by Landlord.
32.1 Landlord reserves full control over the Building and Project to
the extent not inconsistent with Tenant's quiet enjoyment and use of Demised
Premises. This reservation includes but is not limited to right of Landlord to
subdivide the project, the right to grant easements and licenses to others
subject to the consent of Tenant, which shall not be unreasonably withheld or
delayed, and the right to maintain or establish ownerships of Building separate
from fee title to land, provided no such change is of the nature to have a
material adverse effect upon Tenant's use and enjoyment of Demised Premises.
32.2 Tenant shall, should Landlord so request, promptly join with
Landlord in execution of such documents as may be appropriate to assist Landlord
to implement any such action provided Tenant need not execute any document which
is of nature wherein liability is created in Tenant or if by reason of the terms
of such document Tenant will be deprived of the quiet enjoyment and use of the
Demised Premises as granted by this Lease.
33. Quiet Enjoyment.
33.1 So long as Tenant is not in default, Landlord covenants that
Landlord or anyone acting through or under Landlord will not disturb Tenant's
occupancy of the Demised Premises except as permitted by the provisions of this
Lease, and that Landlord shall use reasonable efforts to enforce the lease
obligations of tenants of the balance of the Building to the extent they might
otherwise disturb Tenant's occupancy. Landlord shall provide copies to Tenant of
any notices given to other tenants of the Building regarding tenant defaults or
other matters which may materially effect Tenant's quiet enjoyment of the
Demised Premises.
34. Quitclaim Deed.
34.1 Tenant shall execute and deliver to Landlord on the expiration or
termination of this Lease, immediately on Landlord's request, a quitclaim deed
to the Demised premises and Project or other document in recordable form
suitable to evidence of record termination of this Lease.
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35. Rules and Regulations.
35.1 Tenant shall faithfully observe and comply with the Rules and
Regulations attached hereto as Exhibit "D" and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord. Landlord shall not be responsible to Tenant for the
violation or non-performance by any other tenant or any agent, employee or
invitee thereof of any of said Rules and Regulations.
36. Subordination and Attornment.
36.1 Unless the mortgagee or beneficiary elects otherwise, this Lease
shall be subject and subordinate to the lien of any mortgage or deed of trust
now or hereafter in force against the Project and Building of which the Demised
Premises are a part, and to all advances made or hereafter to be made upon the
security thereof without the necessity of the execution and delivery of any
further instruments on the part of Tenant to effectuate such subordination.
36.2 Notwithstanding the foregoing, Tenant shall execute and deliver
upon demand such further instrument or instruments evidencing such subordination
of this Lease to the lien of any such mortgage or mortgages or deeds of trust as
may be required by Landlord. However, if any such mortgagee or beneficiary so
elects, this Lease shall be deemed prior in lien to any such mortgage or deed of
trust upon or including the Demised Premises regardless of date and Tenant will
execute a statement in writing to such effect at Landlord's request.
36.3 In the event any proceedings are brought for foreclosure, or in
the event of the exercise of the power of sale under any mortgage or deed of
trust made by the Landlord covering the Demised Premises, the Tenant shall at
the election of the purchaser at such foreclosure or sale attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as the
Landlord under this Lease.
36.4 So long as this Lease is in full force and effect and there is no
uncured Default with respect to Tenant's obligations under the Lease, no
mortgage, deed of trust, or other interest to which this Lease and/or Tenant's
rights are or may become subordinate, and no action or proceedings under and/or
termination of any such mortgage, deed of trust, or other interest, shall affect
in any manner whatsoever Tenant's rights under this Lease, Tenant's use,
possession or enjoyment of the Demised Premises, or the leasehold estate granted
by this Lease.
36.5 Any and all mortgagees of the Project and beneficiaries of deeds
of trust encumbering the Project shall
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execute and deliver to Tenant a subordination and attornment agreement
substantially in the form attached hereto as Exhibit "G", unless the mortgagee
or beneficiary of the deed of trust has elected under Section 36.2 above that
this Lease shall be deemed prior in lien to the mortgage or deed of trust.
37. Surrender.
37.1 No surrender of possession of any part of the Demised Premises
shall release Tenant from any of its obligations hereunder unless accepted by
Landlord.
37.2 The voluntary or other surrender of this Lease by Tenant shall
not work a merger, unless Landlord consents, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies.
38. Waiver and Modification.
38.1 No provision of this Lease may be modified, amended or added to
except by an agreement in writing. The waiver by Landlord of any breach of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant or condition
herein contained.
39. [Intentionally Left Blank.)
40. [Intentionally Left Blank.]
41. Hazardous Materials.
41.1 Landlord's Representations and Warranties. Landlord represents
and warrants to Tenant that, to Landlord's knowledge, after due inquiry, (a) no
Hazardous Materials (as hereinafter defined), including, without limitation,
asbestos-containing PCBs, are present or were installed, exposed, released or
discharged in, on or under the Demised Premises at any time during or prior to
Landlord's ownership thereof, and no prior owner or occupant of the Demised
Premises has used Hazardous Materials, (b) no storage tanks for gasoline or any
other substance are or were located on the Demised Premises at any time during
or prior to Landlord's ownership thereof, and (c) the Demised Premises has been
used and operated in compliance with all applicable local, state and federal
laws, ordinances, rules, regulations and orders, and Landlord has all permits
and authorizations required for the use and operation of the Demised Premises.
Landlord shall maintain and operate the Demised Premises at all times in
compliance with all applicable local, state and federal laws, ordinances and
regulations, shall make all disclosures required of Landlord by any such laws,
ordinances and regulations, and shall comply with all orders issued by any
governmental
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authority having jurisdiction over the Demised Premises and take all action
required of such governmental authorities to bring the Demised Premises into
compliance with all laws, rules, regulations and ordinances relating to
Hazardous Materials and affecting the Demised Premises.
41.2 Tenant's Representations and Warranties. Tenant shall maintain
and operate the Demised Premises at all times in compliance with all applicable
local, state and federal laws, ordinances and regulations, shall make all
disclosures required of Tenant by any such laws, ordinances and regulations, and
shall comply with all orders issued by any governmental authority having
jurisdiction over the Demised Premises and take all action required of such
governmental authorities to bring the Demised Premises into compliance with all
laws, rules, regulations and ordinances relating to Hazardous Materials and
affecting the Demised Premises.
41.3 Indemnity by Landlord. If contamination of the Demised Premises
by Hazardous Materials occurs for which Landlord is liable to Tenant under
Section 41.1 for damage resulting therefrom, then Landlord shall indemnify,
defend and hold Tenant, its agents, contractors, and sublessees harmless from
any and all claims, judgments, damages, penalties, fines, costs, liabilities or
losses (including, without limitation, damages for the loss or restriction on
use of the Demised Premises and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or after the term of
the Lease as a result of such contamination. The indemnification of Tenant by
Landlord includes, without limitation, costs incurred in connection with any
investigation of site conditions (except as set forth in Section 41.7 below) or
any cleanup, remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision because of Hazardous
Material present in the soil or groundwater on or under the Demised Premises.
41.4 Indemnity by Tenant. If contamination of the Demised Premises by
Hazardous Materials occurs for which Tenant is liable to Landlord under Section
41.2 for damage resulting therefrom, or if the presence of Hazardous Material on
the Demised Premises caused or permitted by Tenant results in contamination of
the Demised Premises, or if contamination of the Demised Premises by Hazardous
Material otherwise occurs for which Tenant is legally liable to Landlord for
damage resulting therefrom, then Tenant shall indemnify, defend and hold
Landlord, its agents and contractors harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses (including,
without limitation, diminution in value of the Demised Premises or any portion
of the Project, damages for the loss or restriction on use of rentable space or
of any amenity of the Demised Premises or Project, damages arising from any
adverse impact on marketing
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of space in the Demised Premises or the Project, and sums paid in settlement of
claims, attorneys' fees, consultant fees and expert fees) which arise during or
after the term of the Lease as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions (except as set
forth in Section 41.7 below) or any cleanup, remedial, removal or restoration
work required by any federal, state or local governmental agency or political
subdivision because of Hazardous Material present in the soil or groundwater on
or under the Demised Premises. Without limiting the foregoing, if the presence
of any Hazardous Material on the Demised Premises caused or permitted by Tenant
results in any contamination of the Demised Premises, Tenant shall promptly take
all actions at its sole expense as are necessary to return the Demised Premises
to the condition existing prior to the introduction of any such Hazardous
Material to the Demised Premises.
41.5 Notices. If at any time Tenant or Landlord shall become aware, or
have reasonable cause to believe, that any Hazardous Material has been released
or has otherwise come to be located on or beneath the Demised Premises, such
party shall, immediately upon discovering the release or the presence or
suspected presence of the Hazardous Material, give written notice of that
condition to the other party. In addition, the party first learning of the
release or presence of a Hazardous Material on or beneath the Demised Premises
shall immediately notify the other party in writing of (i) any enforcement,
cleanup, removal, or other governmental or regulatory action instituted,
completed or threatened pursuant to any Hazardous Material laws, (ii) any claim
made or threatened by any person against Landlord, Tenant or the Demised
Premises arising out of or resulting from any Hazardous Material, and (iii) any
reports made to any local, state or federal environmental agency arising out of
or in connection with any Hazardous Material.
41.6 Hazardous Materials. As used in this Agreement, the term
"Hazardous Materials" means any hazardous or toxic substances, materials or
waste, including, but not limited to, those substances, materials and wastes
listed in the United States Department of Transportation Hazardous Materials
Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous
substances (40 CFR Part 302), and amendments thereto, or such substances
materials and wastes which are or become regulated under any applicable local,
state or federal law, including, without limitation, any material, waste or
substance which is (i) petroleum, (ii) asbestos, (iii) polychlorinated
biphenyls, (iv) defined as a "hazardous waste," "extremely hazardous waste" or
"restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed
pursuant to Section 25140 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law), (v) defined as a "hazardous
substance" under Section 25316 of the
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California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (vi) defined as a
"hazardous material," "hazardous substance" or "hazardous waste" under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (vii) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances),
(viii) defined as a "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. Section 1251, et seq. (33 U.S.C. Section 1321), or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317), (ix)
defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C.
Section 6903), or (x) defined as a "hazardous substance" pursuant to Section 101
of the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601).
41.7 Testing. Prior to the Term Commencement Date, at the time Tenant
vacates the Demised Premises, and at the time any other Tenant vacates any other
portion of the Building, Landlord shall conduct appropriate tests of water and
soil and deliver to Tenant the results of such tests to demonstrate the level of
contamination, if any, at the time of the Term Commencement Date or the vacation
of the Demised Premises or other portion of the Building, as the case may be, in
order to determine if contamination in excess of permissible levels has occurred
as a result of Tenant's use of the Demised Premises. Landlord shall pay the
expense of the tests prior to the Term Commencement Date and at the time any
other Tenant vacates any other portion of the Building, and Tenant shall pay the
expense of the tests at the time Tenant vacates the Demised Premises.
41.8 Storage Tanks. If storage tanks storing Hazardous Materials are
located on the Demised Premises or are hereafter placed on the Demised Premises
by Tenant, Tenant shall monitor the storage tanks, maintain appropriate records,
implement reporting procedures, and take or cause to be taken all other steps
necessary as required under the California Administrative Code and the
California Health and Safety Code as they now exist or may hereafter be adopted
or amended.
41.9 Tenant's and Landlord's Obligations. Tenant's and Landlord's
obligations under this Article 41 shall survive the termination of the Lease.
42. Option to Extend.
42.1 Landlord grants to Tenant the right to extend the term of
this Lease for two (2) separate five (5) year
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periods under the same terms and conditions existing in the original Lease.
Basic Annual Rent shall be adjusted on the first day of the first full calendar
month of each extension term and annually thereafter in accordance with Article
6, as if the initial term of the Lease had not expired. Tenant shall exercise
such right to extend the term of this Lease by written notice to Landlord no
later than twelve (12) months prior to the end of the original term or the first
extension term of this Lease, as the case may be. There shall be no further
right to extend the term of this Lease beyond said two (2) extension periods.
43. Continuing Right of First Refusal to Lease Additional Space.
43.1 Each time during the term of the Lease Landlord determines to
lease all or any part of the balance of the space in Building No. 2 to a
prospective tenant, other than the initial lease of the space, Landlord shall
notify Tenant of the identity of the prospective tenant and the term, tenant
concessions, tenant improvements, and rent of the proposed lease. If Tenant,
within ten (10) days after Landlord's notice is given, indicates in writing its
agreement to lease all of the space described in Landlord's notice on the terms
stated in Landlord's notice, Landlord shall lease the space to Tenant on the
terms stated in the notice. If Tenant does not indicate in writing its agreement
within ten (10) days after Landlord's notice is given, Landlord thereafter shall
have the right to lease the space to the prospective tenant on substantially the
same terms as are stated in the notice. If Landlord does not lease such space to
the prospective tenant within one hundred and fifty (150) days after Landlord's
notice is given, any further transaction shall be deemed a new determination by
Landlord to lease the space and the provisions of this Article shall again be
applicable.
43.2 Notwithstanding the forgoing Section 43.1, in the event Tenant
fails to exercise the Expansion Option in response to the notice given by
Landlord pursuant to Section 44.4 of this Lease and thereafter fails to exercise
the right of first refusal described in the preceding Section 43.1, then the
right of first refusal shall terminate and Tenant shall have no further right of
first refusal to lease such space.
44. Option to Expand.
44.1 Landlord grants to Tenant the option ("Expansion Option") to
lease the entire balance, but not less than the entire balance, of the space
("Expansion Space") in the Building under the terms and conditions of this
Section 44.
44.2 Tenant shall exercise the Expansion Option by giving written
notice to Landlord no earlier than twelve (12)
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months and no later than six (6) months prior to the fifth (5th) anniversary of
the Term Commencement Date (the first day of the sixth year of the term of the
Lease). If Tenant exercises the Expansion Option, Tenant shall occupy and
commence paying Rent for the Expansion Space on the fifth (5th) anniversary of
the Term Commencement Date (the first day of the sixth year of the term of the
Lease). If Tenant fails to exercise the Expansion Option as set forth above, the
Expansion Option shall expire and be of no further force or effect.
44.3 At the election of Landlord, for every month or part thereof
after the thirty-sixth (36th) and before the forty-ninth (49th) month of the
Lease term that the Expansion Space is vacant and not producing rent to
Landlord, the period of time during which Tenant may exercise the Expansion
Option and occupy and commence paying Rent for the Expansion Space shall be
extended one (1) month. Landlord shall advise Tenant in writing on a
month-to-month basis of its election pursuant to the preceding sentence to
extend the period of time during which Tenant may exercise the Expansion Option
and occupy and commence paying Rent for the Expansion Space, and such time shall
be extended one month for each month Tenant receives such notice.
44.4 If after the last day of the forty-eighth (48th) month of the
Lease term the Expansion Space is vacant and not producing rent to Landlord,
Landlord at its election may give Tenant sixty (60) days written notice that it
may exercise the Expansion Option by (i) notice to Landlord, (ii) occupancy of
the Expansion Space, and (iii) the commencement of the payment of Rent for the
Expansion Space on or before the sixty-first (61st) day from the date of the
notice, and if Tenant fails to so exercise the Expansion Option within such
period, the Expansion Option shall expire and be of no further force or effect.
44.5 Tenant shall occupy the Expansion Space in an "as is" condition,
and Landlord shall not be required to pay for any tenant improvements. However,
to the extent that Landlord had previously installed Tenant Improvements at a
cost to Landlord of less than $90.00 per usable square foot (based upon 14,731
of usable square feet in the Expansion Space), Landlord shall contribute the
difference between the cost of the tenant improvements previously installed and
$90.00 per usable square foot toward improving or modifying the Expansion Space
to Tenant's specifications.
44.6 In the event Tenant exercises the Expansion Option, Landlord and
Tenant shall execute an amendment to this Lease (i) adding the Expansion Space
to the Demised premises, (ii) increasing the Basic Annual Rent to include the
Rentable Area of the Expansion Space (16,490 rentable square feet) multiplied by
the Basic Annual rent then payable per rentable
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square foot of the Demised Premises as increased annually under Section 6 of the
Lease ($2.05 per rentable square foot per month as increased annually under
Section 6), (iii) changing Tenant's Pro Rata Share to reflect that Tenant is
occupying the entirety of the Building, and (iv) making such other revisions as
may be appropriate to reflect the fact that Tenant has increased the size of the
Demised Premises and occupied the Expansion Space without any tenant concessions
except as set forth in this Section 44. The rent Tenant shall pay upon occupancy
for the Expansion Space will be the amount Tenant then pays per rentable square
foot for the Demised Premises, and the rent shall be increased under Section 6
at the same time the rent is increased for the Demised Premises (the first day
of the calendar month following each anniversary of the Term Commencement Date).
45. Miscellaneous.
45.1 Terms and Headings. Where applicable in this Lease, the singular
includes the plural and the masculine or neuter includes the masculine, feminine
and neuter. The section headings of this Lease are not a part of this Lease and
shall have no effect upon the construction or interpretation of any part hereof.
45.2 Examination of Lease. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.
45.3 Time. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.
45.4 Covenants and Conditions. Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition.
45.5 Consents. Whenever consent or approval of either party is
required, that party shall not unreasonably withhold or delay such consent or
approval, except as may be expressly set forth to the contrary.
45.6 Entire Agreement. The terms of this Lease are intended by the
parties as a final expression of their agreement with respect to the terms as
are included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement. The Basic Lease Provisions, General Provisions,
Addendum, and Exhibits all constitute a single document and are incorporated
herein.
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45.7 Severability. Any provision of this Lease which shall prove to be
invalid, void, or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.
45.8 Recording. A short form memorandum hereof shall be recorded at
the election of either Landlord or Tenant.
45.9 Impartial Construction. The language in all parts of this Lease
shall be in all cases construed as a whole according to its fair meaning and not
strictly for or against either Landlord or Tenant.
45.10 Inurement. Each of the covenants, conditions, and agreements
herein contained shall inure to the benefit of and shall apply to and be binding
upon the parties hereto and their respective heirs, legatees, devisees,
executors, administrators, successors, assigns, sublessees, or any person who
may come into possession of said Demised Premises or any part thereof in any
manner whatsoever. Nothing in this Section 45.10 contained shall in any way
alter the provisions against assignment or subletting in this Lease provided.
45.11 Notices. All notices, requests, demands, and other communications
required or permitted to be given under this Lease shall be in writing and given
by first class registered or certified mail, return receipt requested, postage
prepaid, and properly addressed to Tenant or Landlord at the addresses shown in
Section 2.1.10 of this Lease, in which case such notice shall be deemed to have
been duly given on the fifth (5th) day following the date such notice is mailed.
A courtesy copy of the notice or other communication shall be given by
telephonic facsimile transmission on the day the notice is mailed. Either party
may, by notice to the other given pursuant to this Section, specify additional
or different addresses for notice purposes.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.
Landlord: Tenant:
Nexus Centre/Torrey Pines Gemini Science, Inc.
A California Limited Partnership A California Corporation
By Nexus Development Corporation By: /s/ KOICHIRO ARAMAKI
- Southern Division ----------------------------
A California Corporation Koichiro Aramaki
General Partner President
By: /s/ MICHAEL J. REIDY
------------------------------
Michael J. Reidy
President
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<PAGE> 58
EXHIBIT "A"
Project Site Plan
<PAGE> 59
NEXUS CENTRE / TORREY PINES
SCHEMATIC LANDSCAPE
<PAGE> 60
HOPE Architects and Engineers
401 WEST "A" STREET SAN DIEGO CA 92112-4171
NEXUS
NEXUS CENTRE
TORREY PINES
<PAGE> 61
EXHIBIT "A-1"
Floor Plan of Demised Premises
<PAGE> 62
NEXUS
FLOOR PLAN
<PAGE> 63
NEXUS
FLOOR PLAN
<PAGE> 64
EXHIBIT "B"
Work Letter Agreement
<PAGE> 65
WORK LETTER AGREEMENT
This Work Letter Agreement ("Agreement") is made and entered into as of
the 1st day of March, 1989, by and between Nexus Centre/Torrey Pines, a
California limited partnership ("Landlord"), and Gemini Science, Inc., a
California corporation ("Tenant").
RECITALS
A. Concurrently with the execution of this Work Letter Agreement,
Landlord and Tenant have entered into a lease (the "Lease) covering certain
premises (the "Demised Premises") more particularly described in Exhibit "A" to
the Lease.
B. In order to induce Tenant to enter into the Lease, Landlord has
agreed to install certain leasehold improvements in the Demised Premises (the
"Tenant Improvements") and has entered into an agreement with Kornberg &
Associates ("Architect") to perform certain architectural services in connection
therewith.
C. Landlord expressly understands that Tenant would not have entered
into the Lease without the assurances made by Landlord hereunder, including
without limitation, the assurance that Landlord shall use its best efforts to
complete the Tenant Improvements and deliver the Demised Premises to Tenant on
or before the Scheduled Commencement Date (as defined herein), and shall do so
within the Fixed Price (as defined herein).
D. Landlord further understands and acknowledges that Tenant will
incur substantial costs and expenses in reliance on the assurances of Landlord
hereunder. Such costs and expenses shall include, without limitation, the cost
of moving and relocating scientists, technicians, and administrative officers,
acquiring other employees of Tenant from all over the continental United States
and abroad, and the hiring of such additional personnel and the acquisition of
such specialized equipment as may be necessary to commence Tenant's immediate
operations in the Demised Premises on or before the Scheduled Commencement Date.
NOW, THEREFORE, in recognition of the foregoing and in consideration of
the mutual covenants and conditions contained herein, Landlord and Tenant hereby
agree as follows:
<PAGE> 66
1. Tenant Improvements.
Landlord shall complete the Tenant Improvements and deliver the Demised
Premises to Tenant in accordance with the terms and conditions of this
Agreement. Landlord and Tenant shall at all times cooperate with each other in
good faith to effect the timely completion of the various tasks required of
Landlord and Tenant for the completion of the Tenant Improvements on or before
the Scheduled Commencement Date. In the event Tenant fails to fulfill any
obligation of Tenant hereunder and such failure results from a matter other than
an event of Force Majeure (as defined herein), such failure shall be deemed a
"Tenant Delay". In the event Landlord fails to deliver the Demised Premises to
Tenant on or before the Scheduled Commencement Date and such failure results
from any matter other than a Tenant Delay or an event of Force Majeure, such
failure shall be deemed a "Landlord Delay". Landlord and Tenant shall reasonably
attempt to give each other advance written notice of any matter within the
notifying party's control that is causing or threatening to cause any failure of
an obligation hereunder. As of the date of this Agreement, neither Landlord nor
Tenant is aware of any matter that would constitute a Landlord or Tenant Delay
or event of Force Majeure. As a result thereof, and subject to the terms and
conditions of this Agreement, Landlord agrees to use its best efforts to
complete the Tenant Improvements and deliver the Demised Premises to Tenant on
or before the Scheduled Commencement Date.
2. Tenant Improvement Plans.
(a) Landlord and Architect have entered into that certain agreement
attached hereto as Exhibit "A" ("Architect Agreement"), whereby Architect has
prepared all tenant improvements plans ("Tenant Improvement Plans") for the
Demised Premises and shall monitor the construction of the Tenant Improvements
to ensure they are constructed in accordance with the Tenant Improvement Plans.
(b) As of the date of this Agreement Landlord and Tenant have agreed
to a list of subcontractors attached hereto as Exhibit "B" ("Approved
Subcontractors") which each considers acceptable to perform the construction of
the Tenant Improvements. The Approved Subcontractors (i) are licensed and
bondable, (ii) have no prior adverse relationship with the Contractor, (iii) are
willing to provide warranties against defects in workmanship and materials for a
period and to the extent as is customary in their trades in the San Diego
community, (iv) are willing to sign the Contractor's normal contract forms which
shall include a guaranteed maximum contract price endorsement, and (v) are
acceptable to Architect.
- 2 -
<PAGE> 67
(c) Landlord has caused Architect to prepare and deliver a set of
preliminary plans and specifications ("Preliminary Plans") for the Demised
Premises to Tenant, which Tenant approved on December 19, 1988.
(d) Landlord has caused Architect to prepare working drawings and
specifications ("Working Drawings") for construction of the Tenant Improvements,
which Tenant approved on February 17, 1989.
(e) Architect delivered a set of Working Drawings to the appropriate
governmental bodies for plan checking and the issuance of building permits on
February 17, 1989. In the event the City of San Diego ("City") or County of San
Diego ("County") require any changes in the Working Drawings prior to issuing
the necessary building permits, Architect shall immediately notify Landlord and
Tenant of any such change and Tenant shall approve or disapprove such change
within one (1) business day after receipt of such notification. Tenant shall not
disapprove any change that does not have a material adverse impact on the use or
design of the Demised Premises or on the cost of the Tenant Improvements .
(f) As soon as practical, but no later than seven (7) business days
after Landlord receives all necessary City and County approvals of the Working
Drawings, Landlord shall obtain final bids from the Approved Subcontractors for
construction of the Tenant Improvements and shall deliver a final price (the
"Final Price") for such work to Tenant. Tenant shall have five (5) days after
receipt of the Final Price to approve or disapprove the Final Price.
(g) In the event Tenant disapproves the Final Price, Architect shall
revise the Working Drawings as directed by Tenant. Landlord shall obtain revised
final bids from the Approved Subcontractors for construction of the Tenant
Improvements in accordance with the revised Working Drawings and shall deliver a
revised Final Price for such work to Tenant. Tenant shall have two (2) days
after receipt of the revised Final Price to approve or disapprove the revised
Final Price. In the event Tenant disapproves the revised Final Price, Architect
and Tenant shall repeat the procedure set forth in this subparagraph (g) until
Tenant approves a Final Price. Any delays associated with such revisions shall
be deemed a Tenant Delay, and any expenses associated therewith shall be paid by
Tenant. The Final Price which is ultimately approved by Tenant shall be deemed
the fixed price ("Fixed Price") hereunder.
(h) If the Fixed Price exceeds the Tenant Allowance (as defined
herein), Tenant shall pay such excess cost either, at Tenant's election, (i) as
a single payment to
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<PAGE> 68
Landlord within ninety (90) days after the Actual Commencement Date, or (ii) as
Rent under the Lease, in which event Tenant's initial monthly installments of
Basic Annual Rent shall increase by one and a half cents ($.015) per rentable
square foot for each one dollar ($1.00) of such excess cost per usable square
foot (based upon 23,205 usable square feet in the Demised Premises). By way of
example, if such excess costs are $55,000, Tenant's initial monthly installments
of Basic Annual Rent shall increase from $2.05 to 2.085 per rentable square foot
per month ($2.05 plus ($55,000 divided by 23,205) multiplied by .015).
(i) Landlord shall use its best efforts to obtain all necessary
building permits for construction of the Tenant Improvements by no later than
April 17, 1989. Upon receipt of all such permits Landlord shall commence
construction of the Tenant Improvements: In the event Landlord elects to proceed
with construction of the Tenant Improvements prior to receipt of necessary
building permits, Landlord shall bear the entire cost of any change in the
Working Drawings required by the City or County in addition to the cost of
having to reconstruct portions of the Tenant Improvements completed prior to the
issuance of building permits. In addition, any delay to the Scheduled
Commencement Date as a result thereof shall be deemed a Landlord Delay and shall
not be considered an event of Force Majeure.
3. Tenant Allowance:
(a) Landlord shall provide at Landlord's cost the building core and
shell ("Building") and other Building standard equipment described in those
certain plans and specifications previously approved by Tenant: In addition,
Landlord shall pay Two Hundred Thousand Dollars ($200,000) toward an enhanced
mechanical system for the Building. Architect has represented to Tenant that
Architect has reviewed the plans and specifications for the Building and for the
enhanced mechanical system and that the Building as enhanced is satisfactory for
Tenant's intended use.
(b) Landlord shall provide Tenant with an allowance ("Tenant
Allowance") in the amount of Two Million Two Hundred Twenty Three Thousand Six
Hundred Thirty Dollars ($2,223,630) for construction of the Tenant Improvements.
The Tenant Allowance shall be applied toward the cost of construction and
installation of all the Tenant Improvements, including, without limitation, the
cost of the following:
(i) All services of Architect in an amount not to exceed One
Hundred Ninety-Thousand Dollars ($190,000);
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<PAGE> 69
(ii) The payment of all City or County Plan checks, permit and
license fees relating to the construction of the Tenant Improvements in an
amount not to exceed Thirty Thousand Dollars ($30,000);
(iii) Construction of the Tenant Improvements in accordance with
the Working Drawings;
(iv) Any and all testing an inspection costs;
(v) Contractors' fees in an amount not to exceed three percent
(3%) of the total cost of the tenant improvements (in addition to three percent
(3%) for general conditions and temporary facilities, and eight percent (8%) for
overhead); and
(vi) All other costs to be expended by Landlord for the
construction of the Tenant Improvements except those set forth in subparagraph
(c) below.
(c) Costs incurred by Landlord for Landlord's office or administrative
overhead, development fees or other similar indirect costs of Landlord or costs
resulting from Landlord Delays shall be paid by Landlord and shall not be
charged against the Tenant Allowance.
(d) Landlord shall pay the Contractor and Approved Subcontractors who
perform construction of the Tenant Improvements on a progress payment basis, and
shall provide Tenant and Architect with copies of the periodic construction draw
requests and supporting documentation together with partial mechanics' lien
releases when they are submitted to the construction lender. Tenant shall
approve in advance expenditures for the purchase and installation of the
emergency generator.
(e) In the event that Fixed Price does not meet or exceed the Tenant
Allowance, Tenant may use such excess as a reimbursement for its relocation
costs, for the payment of equipment which must be installed for Tenant's use of
the Demised Premises, including without limitation, to pay for any emergency
Building generator.
4. Landlord's Cost Completion Guarantee.
Landlord guarantees that the Tenant Improvements shall be completed at
a cost not to exceed the Fixed Price. Landlord shall bear the entire cost of the
Tenant Improvements which may exceed the Fixed Price unless such excess cost
results from a Tenant Change Order under paragraph 5. Landlord shall, for
example and without limitation, be responsible for all costs resulting from (i)
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<PAGE> 70
Landlord Delay, (ii) requirements of any governmental agency subsequent to the
issuance of Building permits, or (iii) excess costs resulting from required
changes to the Working Drawings and reconstruction of Tenant Improvements
resulting from Landlord's election to proceed with construction prior to
Landlord's receipt of all necessary building permits.
5. Changes to Final Plans.
In the event Tenant requires any change, addition or alteration in the
Working Drawings during the construction of the Tenant Improvements, Tenant
shall give Landlord a written request to make such Change ("Change Order").
Within two (2) business days after Landlord receives a Change Order Landlord
shall give Tenant a written estimate of (i) the additional costs, if any, which
may result from such Change Order and (ii) the resulting delay, if any, in the
Scheduled Commencement Date. Tenant shall notify Landlord within two (2)
business days thereafter ("Change Authorization"), as to whether Tenant elects
to proceed with such Change Order. Landlord shall not make a change pursuant to
any Change Order unless Landlord receives Tenant's Change Authorization. Any
delay in failing to complete and deliver the Demised Premises on or before the
Scheduled Commencement Date which results from Tenant's request for a Change
Order or failure to give Landlord a Change Authorization shall be deemed a
Tenant Delay. Notwithstanding anything to the contrary contained in paragraph 4
above, in the event a Change Order causes the cost to the Tenant Improvements to
exceed the Fixed Price, Tenant shall pay such additional cost.
6. Delays Associated with Emergency Generator and Equipment.
Any delays associated with the design and installation of the emergency
generator system shall be deemed a Tenant Delay, and any expenses associated
therewith shall be paid by Tenant.
7. Construction of Tenant Improvements.
The general contractor ("Contractor") for the construction of the
Tenant Improvements shall be Nexus Construction Company, Inc. Landlord shall
cause the Contractor to include Tenant as a third party beneficiary under the
construction contract for the Tenant Improvements and to guarantee the
completion and construction of the Tenant Improvements within the Fixed Price.
Landlord shall supervise Contractor's construction of the Tenant Improvements to
ensure that the Tenant Improvements are constructed and completed with
first-class workmanship. Landlord and Contractor shall warrant the Tenant
Improvements
- 6 -
<PAGE> 71
and the Building against defects covered by a subcontractor's warranty for the
period and to the extent of the warranty, and other defects for a period of one
(1) year after Architect's notice of Substantial Completion. In no event,
however, shall Landlord be responsible for defects which occurred during such
one year warranty period unless written notice thereof is provided from Tenant
to Landlord within the applicable periods of limitation set forth in Section 312
et seq., including without limitation Sections 337.1 and 337.15, of the
California Code of Civil Procedure.
8. Completion of Tenant Improvements and Commencement Date.
(a) Landlord shall use its best efforts to complete construction of
the Tenant Improvements and deliver possession of the Premises to Tenant on
October 1, 1989 (the "Scheduled Commencement Date"). The Tenant Improvements
shall not be deemed complete unless (i) the Architect certifies their
substantial completion in accordance with the Tenant Improvement Plans (except
for minor "punchlist" items which do not affect Tenant's use or occupancy of the
Demised Premises, except for the installation of furniture, fixtures, the
emergency generator, and other equipment which is the responsibility of Tenant
to install, and telephone and utility hookups), (ii) Landlord has obtained a
final inspection from the City for the Demised Premises (unless the final
inspection is withheld because of delays in the installation of furniture,
fixtures, the emergency generator, and other equipment which is the
responsibility of Tenant to install, and telephone and utility hookups), and
(iii) Landlord has given Tenant thirty (30) days advance notice of the actual
commencement date ("Actual Commencement Date"), whether or not the Actual
Commencement Date is the Scheduled Commencement Date. Upon Tenant's receipt of
Landlord's written notice of the Actual Commencement Date and during the thirty
(30) day period of time thereafter, Tenant shall be entitled to enter the
Demised Premises to install the equipment and fixtures which are critical to
Tenant's operation on the Demised Premises. Tenant's entry upon the Demised
Premises shall not advance the Actual Commencement Date or any obligation under
the Lease provided, however, Tenant shall obtain the insurance required of
Tenant under the Lease and shall pay the cost of repairing any damage to the
Building or Tenant Improvements or other injuries or damages which may be caused
by Tenant's entry upon the Premises and shall hold Landlord harmless therefrom.
Any delay in the Actual Commencement Date which may result from Tenant's
interference with the completion of the Tenant Improvements during such period
of time shall be deemed a Tenant Delay. Landlord shall first notify Tenant of
the Actual Commencement Date no later than September 1, 1989. In the event the
Demised Premises are not ready for occupancy by
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<PAGE> 72
the Scheduled Commencement Date, Landlord shall provide Tenant with written
notice at least every ten (10) days thereafter of the estimated Actual
Commencement Date. Landlord shall obtain from the City of San Diego a
certificate of occupancy for Tenant's occupancy of the Demised Premises as soon
as possible after the substantial completion of the Tenant Improvements.
(b) Within five (5) days prior to the Actual Commencement Date,
Landlord, Tenant and Architect shall inspect the Premises for punch list ("Punch
List") items which require Landlord's correction or repair. The Punch List shall
include only those items which Architect certifies do not adversely affect
Tenant's use or operation upon the Premises and which can be corrected or
repaired within thirty (30) days. In the event Landlord, Tenant and Architect
identify items which Architect does not certify as Punch List items, the Actual
Commencement Date shall be delayed until all such items are corrected and
repaired and such delay shall be deemed a Landlord Delay.
9. Failure of Commencement Date.
(a) In the event the Scheduled Commencement Date or estimated Actual
Commencement Date is delayed as a result of a Tenant Delay or event of Force
Majeure, Tenant shall assume any resulting cost and expense to Tenant for each
day of and which directly results from such Tenant Delay.
(b) In the event the Scheduled Commencement Date or estimated Actual
Commencement Date is delayed for any reason other than a Tenant Delay, Landlord
acknowledges that Tenant shall incur substantial damages which are now difficult
to ascertain but which will escalate on a daily basis until the Demised Premises
are completed and ready for Tenant's use and occupancy. Landlord further
acknowledges and understands that Landlord's agreement to compensate Tenant for
such damages as a result thereof is a material consideration to Tenant's
execution of the Lease and this Agreement. Landlord therefore expressly agrees
to pay the Tenant the following amounts if Landlord fails to complete the Tenant
Improvements on or before the Scheduled Commencement Date and such failure is
not the result of a Tenant Delay or an event of Force Majeure:
(i) In the event Landlord does not complete the Tenant
Improvements on or before the Scheduled Commencement Date, Landlord shall pay
tenant the sum of three thousand three hundred thirty-three Dollars ($3,333.00)
per day, commencing October 1, 1989, until the earlier of October 31, 1989, or
the completion of the Tenant Improvements;
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<PAGE> 73
(ii) In the event Landlord does not complete the Tenant
Improvements before November 1, 1989, Landlord shall, in addition to the
previous payments made under Subparagraph (i) above, pay Tenant an additional
sum of Two Hundred Thousand Dollars ($200,000) on November 1, 1989;
(iii) In the event Landlord does not complete the Tenant
Improvements before December 1, 1989, Landlord shall in addition to the previous
payments made under Subparagraphs (i) and (ii) above, pay Tenant the sum of
Three Thousand Three Hundred Thirty-three Dollars ($3,333.00) per day commencing
December 1, 1989, until the Tenant Improvements are completed or March 1, 1990,
whichever first occurs; provided, however, in the event Landlord fails to
complete the Tenant Improvements before March 1, 1990, for any reason, including
Force Majeure, Tenant may elect to terminate the Lease and this Agreement with
no further liability, and Landlord shall return to Tenant all Prepaid Rent and
funds spent by Tenant for tenant improvements in excess of the Tenant Allowance.
THE PARTIES AGREE THAT TENANT'S ACTUAL DAMAGES IN THE EVENT OF DELAY IN
THE COMPLETION OF THE TENANT IMPROVEMENTS WOULD BE DIFFICULT OR IMPOSSIBLE TO
ASCERTAIN. THEREFORE, AS EVIDENCED BY THEIR RESPECTIVE INITIALS BELOW, LANDLORD
AND TENANT AGREE THAT THE AMOUNTS SET FORTH ABOVE HAVE BEEN AGREED UPON, AFTER
NEGOTIATION, AS THEIR BEST ESTIMATE OF TENANT'S DAMAGES IN THE EVENT OF DELAY IN
THE COMPLETION OF THE TENANT IMPROVEMENTS. Landlord's initials. /INITIALS/
Tenant's initials: /INITIALS/.
10. Force Majeure.
In the event of any prevention, delay or stoppage of work or any other
obligation to be performed by Landlord or Tenant hereunder which is due to
strikes, labor disputes, inability to obtain labor or materials, acts of God,
fire or other casualty ("Force Majeure"), either Landlord or Tenant, whichever
party is obligated to perform hereunder, shall be excused from performance of
the work or obligation by that party for a period equal to the duration of that
preventation, delay or stoppage. For purposes of this Agreement, Force Majeure
shall be deemed to include any period of time after May 27, 1989, that it takes
to obtain the necessary building permits, provided such failure is not due to a
Landlord Delay or matters within Landlord's reasonable control, or to inclusion
of matters other than the Tenant Improvements in the plans submitted to the City
on February 17, 1989.
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<PAGE> 74
11. Notices.
All notices required or permitted hereunder must be in writing and may be given
by personal delivery or telefax transmission at the addresses set forth below
for each party.
Landlord: Nexus Centre/Torrey Pines
c/o Nexus Development Corporation
- Southern Division
9373 Towne Center Drive, Suite 200
San Diego, California 92121
Tenant: Gemini Science, Inc.
3333 North Torrey Pines Court, Suite 120
La Jolla, California 92037
Attn: Mr. Toshihiko Maruoka
With copy which shall not constitute notice hereunder to:
Gemini Science, Inc.
600 3rd Avenue, 21st Floor (Kirin USA)
New York, New York 10016
Attn: Mr. Yoshinari Kumagai
Pettit & Martin
355 So. Grand Avenue, 33rd Floor
Los Angeles, California 90071
Attention: Joel S. Marcus, Esq.
Architect: Kornberg & Associates
2214 Via aprilia
Del Mar, California 92014
Attention: Ken Edrington
The notice shall be deemed to have been given on the day of the
personal delivery or telefax transmission. Either party may specify a different
address for notice purposes by written notice to the other.
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<PAGE> 75
12. Defined Terms.
All terms with an initial capitalized letter herein shall have the same
definition as set forth in the Lease unless otherwise defined herein.
IN WITNESS WHEREOF, this Work Letter Agreement has been executed as of
the date first above written.
LANDLORD:
NEXUS CENTRE/TORREY PINES
A California Limited Partnership
By Nexus Development Corporation
- Southern Division
A California Corporation
General Partner
By: MICHAEL J. REIDY
---------------------------------
Michael J. Reidy, President
TENANT:
GEMINI SCIENCE, INC.
A California Corporation
By: KOICHIRO ARAMAKI
--------------------------------
Koichiro Aramaki, President
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<PAGE> 76
[THE AMERICAN INSTITUTE OF ARCHITECTS LETTERHEAD]
NEXUS PROJECT NO. 85TI16
- -------------------------------------------------------------------------------
AIA Document B151
Abbreviated Form of Agreement
Between Owner and Architect
for Construction Projects of Limited Scope
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH
AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
- -------------------------------------------------------------------------------
AGREEMENT
made as of the 1st day of December in the year of
Nineteen Hundred and Eighty-eight
BETWEEN the Owner: NEXUS CONSTRUCTION CO., INC.
(Name and address) 9373 Towne Centre Drive, Suite 200
San Diego, CA 92121
(Agent for NEXUS CENTRE/TORREY PINES ASSOCIATES)
and the Architect: KORNBERG ASSOCIATES
(Name and address) 2214 Via Aprilia
Del Mar, CA 92014
For the following Project:
(Include detailed description of Project, location, address and scope.)
The Design, Construction Documents, and Construction Administration of 24,707
usable square feet of B-2 occupancy interior development for La Jolla Institute
for Allergy and Immunology and associated mechanical, site and core
improvements (as described in attachment A) at Building 2 Nexus Centre/Torrey
Pines, La Jolla, California.
The Owner and Architect agree as set forth below.
- -------------------------------------------------------------------------------
Copyright 1974, 1978 (C) 1987 by The American Institute of Architects, 1735 New
York Avenue, N.W., Washington, D.C. 20006. Reproduction of the material herein
or substantial quotation of its provisions without written permission of the
AIA violates the copyright laws of the United States and will be subject to
legal prosecution.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C>
AIA DOCUMENT B151 - ABBREVIATED OWNER-ARCHITECT AGREEMENT - THIRD EDITION - AIA - (C) 1987
THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006 B151-1987 1
</TABLE>
EXHIBIT A
<PAGE> 77
TERMS AND CONDITIONS OF AGREEMENT BETWEEN OWNER AND ARCHITECT
ARTICLE 1
ARCHITECT'S RESPONSIBILITIES
1.1 ARCHITECT'S SERVICES
1.1.1 The Architect's services consist of those services performed by the
Architect, Architect's employees and Architect's consultants as enumerated in
Articles 2 and 3, of this Agreement and any other services included in Article
12.
1.1.2 The Architect's services shall be performed as expeditiously as is
consistent with professional skill and care and the orderly progress of the
Work.
1.1.3 The services covered by this Agreement are subject to the time limitations
contained in Subparagraph 11.5.1.
ARTICLE 2
SCOPE OF ARCHITECT'S BASIC SERVICES
2.1 DEFINITION
2.1.1. The Architect's Basic Services consist of those described under the three
phases identified below, any other services identified in Article 12, and
include normal structural, mechanical and electrical engineering services.
2.2 DESIGN PHASE
2.2.1 The Architect shall review with the Owner alternative approaches to design
and construction of the Projects.
2.2.2 Based on the mutually agreed-upon program, schedule and construction
budget requirements, the Architect shall prepare, for approval by the Owner,
Design Documents consisting of drawings and other documents appropriate for the
Project, and shall submit to the Owner a preliminary estimate of Construction
Cost.
2.3 CONSTRUCTION DOCUMENTS PHASE
2.3.1 Based on the approved Design Documents, the Architect shall prepare, for
approval by the Owner, Construction Documents consisting of Drawings and
Specifications setting forth in detail the requirements for the construction of
the Project and shall advise the Owner of any adjustments to previous
preliminary estimates of Construction Cost.
2.3.2 The Architect shall assist the Owner in connection with the Owner's
responsibility for filing documents required for the approval of governmental
authorities having jurisdiction over the Project.
2.3.3 Unless provided in Article 12, the Architect, following the Owner's
approval of the Construction Documents and of the latest preliminary estimate of
Construction Cost, shall assist the Owner in obtaining bids or negotiated
proposals and assist in awarding and preparing contracts for construction.
2.4 CONSTRUCTION PHASE--ADMINISTRATION
OF THE CONSTRUCTION CONTRACT
2.4.1 The Architect's responsibility to provide Basic Services for the
Construction Phase under this Agreement commences with the award of the Contract
for Construction and terminates at the earlier of issuance to the Owner of the
final Certificate for Payment of 60 days after the date of Substantial
Completion of the Work, unless extended under the terms of Subparagraph 10.???
2.4.2 The Architect shall provide administration of the Contract for
Construction as set forth below and in the edition of AIA Document A201, General
Conditions of the Contract for Construction, current as of the date of this
Agreement.
2.4.3 Duties, responsibilities and limitations of authority of the Architect
shall not be restricted, modified or extended without written agreement of the
Owner and Architect with consent of the Contractor, which consent shall not be
unreasonably withheld.
2.4.4 The Architect shall be a representative of and shall advise and consult
with the Owner (1) during construction until final payment to the Contractor is
due and (2) as an Additional Service at the Owner's direction from time to time
during the correction period described in the Contract for Construction.
2.4.5 The Architect shall visit the site at intervals appropriate to the stage
of construction or as otherwise agreed by the Owner and Architect in writing to
become generally familiar with the progress and quality of the Work completed
and to determine in general if the Work is being performed in a manner
indicating that the Work when completed will be in accordance with the Contract
Documents. However, the Architect shall not be required to make exhaustive or
continuous on-site inspections to chick the quality or quantity of the Work. On
the basis of on-site observations as an architect, the Architect shall keep the
Owner informed of the progress and quality of the Work, and shall endeavor to
guard the Owner against defects and deficiencies in the Work. (More extensive
site representation may be agreed to as an Additional Service, as described in
Paragraph 3.2.)
2.4.6 The Architect shall not have control over or charge of and shall not be
responsible for construction means, methods, techniques, sequences or
procedures, or for safety precautions and programs in connection with the Work,
since these are solely the Contractor's responsibility under the Contract for
Construction. The Architect shall not be responsible for the Contractor's
schedules or failure to carry out the Work in accordance with the Contract
Documents. The Architect shall not have control over or charge of acts or
omissions of the Contractor, Subcontractors, or their agents or employees, or of
any other persons performing portions of the Work.
2.4.7 The Architect shall at all times have access to the Work wherever it is in
preparation or progress.
2.4.8 Based on the Architect's observations and evaluations of the Contractor's
Applications for Payment, the Architect shall review and certify the amounts due
the Contractor.
2.4.9 The Architect's certification for payment shall constitute a
representation to the Owner, based on the Architect's observations at the site
as provided in Subparagraph 2.4.5 and on the
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data comprising the Contractor's Application for Payment, that the Work has
progressed to the point indicated and that, to the best of the Architect's
knowledge, information and belief, quality of the Work is in accordance with
the Contract Documents. The issuance of a Certificate for Payment shall not be
a representation that the Architect has (1) made exhaustive or continuous
on-site inspections to check the quality or quantity of the Work, (2) reviewed
construction means, methods, techniques, sequences or procedures, (3) reviewed
copies of requisitions received from Subcontractors and material suppliers and
other data requested by the Owner to substantiate the Contractor's right to
payment or (4) ascertained how or for what purpose the Contractor has used
money previously paid on account of the Contract Sum.
2.4.10 The Architect shall have authority to reject Work which does not
conform to the Contract Documents and will have authority to require additional
inspection or testing of the Work whenever, in the Architect's reasonable
opinion, it is necessary or advisable for the implementation of the intent of
the Contract Documents.
2.4.11 The Architect shall review and approve or take other appropriate action
upon Contractor's submittals such as Shop Drawings, Product Data and Samples,
but only for the limited purpose of checking for conformance with information
given and the design concept expressed in the Contract Documents. The
Architect's action shall be taken with such reasonable promptness as to cause
no delay. The Architect's approval of a specific item shall not indicate
approval of an assembly of which the item is a component. When professional
certification of performance characteristics of materials, systems or equipment
is required by the Contract Documents, the Architect shall be entitled to rely
upon such certification to establish that the materials, systems or equipment
will meet the performance criteria required by the Contract Documents.
2.4.12 The Architect shall prepare Change Orders and Construction Change
Directives, with supporting documentation and data if authorized or confirmed
in writing by the Owner as provided in Paragraphs 3.1 and 3.3, for the owner's
approval and execution in accordance with the Contract Documents, and may
authorize minor changes in the Work not involving an adjustment in the Contract
Sum or an extension of the Contract Time which are not inconsistent with the
intent of the Contract Documents.
2.4.13 The Architect shall conduct inspections to determine the dates of
Substantial Completion and final completion and shall issue a final Certificate
for Payment.
2.4.14 The Architect shall interpret and decide matters concerning performance
of the Owner and Contractor under the requirements of the Contract Documents on
written request of either the Owner or Contractor. The Architect's response to
such requests shall be made with reasonable promptness and within any time
limits agreed upon. When making such interpretations and initial decisions, the
Architect shall endeavor to secure faithful performance by both Owner and
Contractor, shall not show partiality to either, and shall not be liable for
results of interpretations or decisions so rendered in good faith.
ARTICLE 3
---------
ADDITIONAL SERVICES
3.1 Additional Services shall be provided if authorized or confirmed in writing
by the Owner or if included in Article 12, and they shall be paid for by the
Owner as provided in this Agreement. Such Additional Services shall include, in
addition to those described in Paragraphs 3.2 and 3.3, budget analysis,
financial feasibility studies, planning surveys, environmental studies,
measured drawings of existing conditions, coordination of separate contractors
or independent consultants, coordination of construction or project managers,
detailed Construction Cost estimates, quantity surveys, interior design,
planning of tenant or rental spaces, inventories of materials or equipment,
preparation of record drawings, and any other services not otherwise included
in this Agreement under Basic Services or not customarily furnished in
accordance with generally accepted architectural practice.
3.2 If more extensive representation at the site than is described in
Subparagraph 2.4.5 is required, such additional project representation shall be
provided and paid for as set forth in Articles 11 and 12.
3.3 As an Additional Service in connection with Change Orders and Construction
Change Directives, the Architect shall prepare Drawings, Specifications and
other documentation and data, evaluate Contractor's proposals, and provide any
other services made necessary by such Change Orders and Construction Change
Directives.
ARTICLE 4
---------
OWNER'S RESPONSIBILITIES
4.1 The Owner shall provide full information, including a program which shall
set forth the Owner's objectives, schedule, constraints, budget with reasonable
contingencies, and criteria.
4.2 The Owner shall furnish surveys describing physical characteristics, legal
limitations and utility locations for the site of the Project, a written legal
description of the site and the services of geotechnical engineers or other
consultants when such services are requested by the Architect.
4.3 The Owner shall furnish structural, mechanical, chemical, air and water
pollution tests, tests for hazardous materials, and other laboratory and
environmental tests, inspections and reports required by law or the Contract
Documents.
4.4 The Owner shall furnish all legal, accounting and insurance counseling
services as may be necessary at any time for the Project, including auditing
services the Owner may require to verify the Contractor's Applications for
Payment or to ascertain how or for what purposes the Contractor has used the
money paid by the Owner.
4.5 The foregoing services, information, surveys and reports shall be
furnished at the Owner's expense, and the Architect shall be entitled to rely
upon the accuracy and completeness thereof.
4.6 Prompt written notice shall be given by the Owner to the Architect if the
Owner becomes aware of any fault or defect in the Project or nonconformance
with the Contract Documents.
4.7 The proposed language of certificates or certifications requested of the
Architect or Architect's consultants shall be submitted to the Architect for
review and approval at least 14 days prior to execution.
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ARTICLE 5
CONSTRUCTION COST
5.1 DEFINITION
5.1.1 The Construction Cost shall be the total cost or estimated cost to the
Owner of all elements of the Project designed or specified by the Architect.
5.1.2 The Construction Cost shall include the cost at current market rates of
labor and materials furnished by the Owner and equipment designed, specified,
selected or specially provided for by the Architect, plus a reasonable
allowance for the Contractor's overhead and profit. In addition, a reasonable
allowance for contingencies shall be included for market conditions at the time
of bidding and for changes in the Work during construction.
5.1.3 Construction Cost does not include the compensation of the Architect
and Architect's consultants, the costs of the land, rights-of-way, financing or
other costs which are the responsibility of the Owner as provided in Article 4.
5.2 RESPONSIBILITY FOR CONSTRUCTION COST
5.2.1 It is recognized that neither the Architect nor the Owner has control
over the cost of labor, materials or equipment, over the Contractor's methods
of determining bid prices, or over competitive bidding, market or negotiating
conditions. Accordingly, the Architect cannot and does not warrant or
represent that bids or negotiated prices will not vary from any estimate of
Construction Cost or evaluation prepared or agreed to by the Architect.
5.2.2 No fixed limit of Construction Cost shall be established as a condition
of this Agreement by the furnishing, proposal or establishment of a Project
budget, unless a fixed limit has been agreed upon in writing and signed by the
parties hereto. Fixed limits, if any, shall be increased in the amount of an
increase in the Contract Sum occurring after execution of the Contract for
Construction.
5.2.3 Any Project budget or fixed limit of Construction Cost may be adjusted
to reflect changes in the general level of prices in the construction industry
between the date of submission of the Construction Documents to the Owner and
the date on which proposals are sought.
5.2.4 If a fixed limit of Construction Cost is exceeded by the lowest bona
fide bid or negotiated proposal, the Owner shall:
.1 give written approval of an increase in such fixed limit;
.2 authorize rebidding or renegotiating of the Project within a
reasonable time;
.3 if the Project is abandoned, terminate in accordance with
Paragraph 8.3; or
.4 cooperate in revising the Project scope and quality as required
to reduce the Construction Cost.
5.2.4 If the Owner chooses to proceed under Clause 5.2.4.4, the Architect,
without additional charge, shall modify the Contract Documents as necessary to
comply with the fixed limit, if established as a condition of this Agreement.
The modification of Contract Documents shall be the limit of the Architect's
responsibility arising out of the establishment of a fixed limit. The
Architect shall be entitled to compensation in accordance with this Agreement
for all services performed whether or not the Construction Phase is commenced.
ARTICLE 6
USE OF ARCHITECT'S DRAWINGS,
SPECIFICATIONS AND OTHER DOCUMENTS
6.1 The Drawings, Specifications and other documents prepared by the
Architect for this Project are instruments of the Architect's service for use
solely with respect to this Project, and the Architect shall be deemed the
author of these documents and shall retain all common law, statutory and other
reserved rights, including the copyright. The Owner shall be permitted to
retain copies, including reproducible copies, of the Architect's Drawings,
Specifications and other documents for information and reference in connection
with the Owner's use and occupancy of the Project. The Architect's Drawings,
Specifications or other documents shall not be used by the Owner or others on
other projects, for additions to this Project or for completion of this Project
by others, unless the Architect is adjudged to be in default under this
Agreement, except by agreement in writing and with appropriate compensation to
the Architect.
6.2 Submission or distribution of documents to meet official regulatory
requirements or for similar purposes in connection with the Project is not to
be construed as publication in derogation of the Architect's reserved rights.
ARTICLE 7
ARBITRATION
7.1 Claims, disputes or other matters in question between the parties to
this Agreement arising out of or relating to this Agreement or breach thereof
shall be subject to and decided by arbitration in accordance with the
Construction Industry Arbitration Rules of the American Arbitration Association
currently in effect unless the parties mutually agree otherwise. No
arbitration arising out of or relating to this Agreement shall include, by
consolidation, joinder or in any other manner, an additional person or entity
not a party to this Agreement, except by written consent containing a specific
reference to this Agreement signed by the Owner, Architect, and any other
person or entity sought to be joined. Consent to arbitration involving an
additional person or entity shall not constitute consent to arbitration of any
claim, dispute or other matter in question not described in the written
consent. The foregoing agreement to arbitrate and other agreements to
arbitrate with an additional person or entity duly consented to by the parties
to this Agreement shall be specifically enforceable in accordance with
applicable law in any court having jurisdiction thereof.
7.2 In no event shall the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such claim, dispute or
other matter in question would be barred by the applicable statutes of
limitations.
7.3 The award rendered by the arbitrator or arbitrators shall be final,
and judgment may be entered upon in accordance with applicable law in any court
having jurisdiction thereof.
ARTICLE 8
TERMINATION, SUSPENSION OR ABANDONMENT
8.1 This Agreement may be terminated by either party upon not less than
seven days' written notice should the other party
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fail substantially to perform in accordance with the terms of this Agreement
through no fault of the party initiating the termination.
8.2 If the Project is suspended by the Owner for more than 30 consecutive
days, the Architect shall be compensated for services performed prior to notice
of such suspension. When the Project is resumed, the Architect's compensation
shall be equitably adjusted to provide for expenses incurred in the interruption
and resumption of the Architect's services.
8.3 This Agreement may be terminated by the Owner upon not less than seven
days' written notice to the Architect in the event that the Project is
permanently abandoned. If the Project is abandoned by the Owner for more than 90
consecutive days, the Architect may terminate this Agreement by giving written
notice.
8.4 Failure of the Owner to make payments to the Architect in accordance
with this Agreement shall be considered substantial nonperformance and cause for
termination.
8.5 If the Owner fails to make payment when due the Architect for services
and expenses, the Architect may, upon seven days' written notice to the Owner,
suspend performance of services under this Agreement. Unless payment in full is
received by the Architect within seven days of the date of the notice, the
suspension shall take effect without further notice. In the event of a
suspension of services, the Architect shall have no liability to the Owner for
delay or damage caused the Owner because of such suspension of services.
8.6 In the event of termination not the fault of the Architect, the
Architect shall be compensated for services performed prior to termination,
together with Reimbursable Expenses then due and all Termination Expenses.
8.7 Termination Expenses are in addition to compensation for Basic and
Additional Services, and include expenses which are directly attributable to
termination.
ARTICLE 9
---------
MISCELLANEOUS PROVISIONS
9.1 Unless otherwise provided, this Agreement shall be governed by the law
of the principal place of business of the Architect.
9.2 Terms in this Agreement shall have the same meaning as those in AIA
Document A201, General Conditions of the Contract for Construction, current as
of the date of this Agreement.
9.3 Causes of action between the parties to this Agreement pertaining to
acts or failures to act shall be deemed to have accrued and the applicable
statutes of limitations shall commence to run not later than either the date of
Substantial Completion for acts or failures to act occurring prior to
Substantial Completion, or the date of issuance of the final Certificate for
Payment for acts or failures to act occurring after Substantial Completion.
9.4 The Owner and Architect waive all rights against each other and against
the contractors, consultants, agents and employees of the other for damages, but
only to the extent covered by property insurance during construction, except
such rights as they may have to the proceeds of such insurance as set forth in
the edition of AIA Document A201, General Conditions of the Contract for
Construction, current as of the date of this Agreement. The Owner and Architect
each shall require similar waivers from their contractors, consultants and
agents.
9.5 The Owner and Architect, respectively, bind themselves, their partners,
successors, assigns and legal representatives to the other party to this
Agreement and to the partners, successors, assigns and legal representatives of
such other party with respect to all covenants of this Agreement. Neither Owner
nor Architect shall assign this Agreement without the written consent of the
other.
9.6 This Agreement represents the entire and integrated agreement between
the Owner and Architect and supersedes all prior negotiations, representations
or agreements, either written or oral. This Agreement may be amended only by
written instrument signed by both Owner and Architect.
9.7 Nothing contained in this Agreement shall create a contractual
relationship with or a cause of action in favor of a third party against either
the Owner or Architect.
9.8 The Architect and Architect's consultants shall have no responsibility
for the discovery, presence, handling, removal or disposal of or exposure of
persons to hazardous materials of any form at the Project site, including but
not limited to asbestos, asbestos products, polychlorinated biphenyl (PCB) or
other toxic substances.
ARTICLE 10
----------
PAYMENTS TO THE ARCHITECT
10.1 DIRECT PERSONNEL EXPENSE
10.1.1 Direct Personnel Expense is defined as the direct salaries of the
Architect's personnel engaged on the Project and the portion of the cost of
their mandatory and customary contributions and benefits related thereto, such
as employment taxes and other statutory employee benefits, insurance, sick
leave, holidays, vacations, pensions and similar contributions and benefits.
10.2 REIMBURSABLE EXPENSES
10.2.1 Reimbursable Expenses include expenses incurred by the Architect in the
interest of the Project for:
.1 expense of transportation and living expenses in connection with
out-of-town travel authorized by the Owner;
.2 long-distance communications;
.3 fees paid for securing approval of authorities having jurisdiction
over the Project;
.4 reproductions;
.5 postage and handling of Drawings and Specifications;
.6 expense of overtime work requiring higher than regular rates, if
authorized by the Owner;
.7 renderings and models requested by the Owner;
.8 expense of additional insurance coverage or limits, including
professional liability insurance, requested by the Owner in excess of
that normally carried by the Architect and Architect's consultants;
and
.9 expense of computer-aided design and drafting equipment time when used
in connection with the Project.
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10.3 PAYMENTS ON ACCOUNT OF BASIC SERVICES
10.3.1 An initial payment as set forth in Paragraph 11.1 is the minimum
payment under this Agreement.
10.3.2 Subsequent payments for Basic Services shall be made monthly and, where
applicable, shall be in proportion to services performed within each phase of
service.
10.3.3 If and to the extent that the time initially established in Subparagraph
11.5.1 of this Agreement is exceeded or extended through no fault of the
Architect, compensation for any services rendered during the additional period
of time shall be computed in the manner set forth in Subparagraph 11.3.2.
10.3.4 When compensation is based on a percentage of Construction Cost and any
portions of the Project are deleted or otherwise not constructed, compensation
for those portions of the Project shall be payable to the extent services are
performed on those portions, in accordance with the schedule set forth in
Subparagraph 11.2.2, based on (1) the lowest bona fide bid or negotiated
proposal, or (2) if no such bid or proposal is received, the most recent
preliminary estimate of Construction Cost or detailed estimate of Construction
Cost for such portions of the Project.
10.4 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES AND REIMBURSABLE EXPENSES
10.4.1 Payments on account of the Architect's Additional Services and for
Reimbursable Expenses shall be made monthly upon presentation of the Architect's
statement of services rendered or expenses incurred.
10.5 PAYMENTS WITHHELD
10.5.1 No deductions shall be made from the Architect's compensation on account
of sums withheld from payments to contractors.
ARTICLE 11
BASIS OF COMPENSATION
The Owner shall compensate the Architect as follows:
11.1 AN INITIAL PAYMENT OF Ten Thousand Dollars ($10,000.00) shall be made
upon execution of this Agreement and credited to the Owner's account at final
payment.
11.2 BASIC COMPENSATION
11.2.1 FOR BASIC SERVICES, as described in Article 2, and any other services
included in Article 12 as part of Basic Services, Basic Compensation shall be
computed as follows:
[COPY ILLEGIBLE]
Compensation - Stipulated Sum: Two Hundred Fifty-four Thousand Dollars
($254,000.00)
as follows:
Core and Shell $ 67,550.00
Gemini/LIAI T.I. 186,450.00
-----------
TOTAL FEE: $254,000.00
11.2.2 Where compensation is based on a stipulated sum or percentage of
Construction Cost, progress payments for Basic Services in each phase shall
total the following percentages of the total Basic Compensation payable:
(Insert additional __________ as appropriate.)
Design Phase: percent (30%)
Construction Documents Phase: percent (50%)
Construction Phase: percent (20%)
- -------------------------------------------------------------
Total Basic Compensation: one hundred percent(100%)
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11.3 COMPENSATION FOR ADDITIONAL SERVICES
11.3.1 FOR PROJECT REPRESENTATION BEYOND BASIC SERVICES as described in
Paragraph 12, compensation shall be computed as follows:
On a time and materials basis (see 11.3.2)
11.3.2 FOR ADDITIONAL SERVICES OF THE ARCHITECT provided under Article 5 or
identified in Article 12, compensation shall be computed as follows:
Two lines of italicized gobbledygook....
Principal's time at a fixed rate of one hundred dollars ($100.00)/hr.
Project Architect's time at a fixed rate of eighty-five dollars
($85.00)/hr.
Job Captain's time at a fixed rate of forty-five dollars ($45.00)/hr.
Draftsman's time at a fixed rate of thirty-five ($35.00)/hr.
Clerical's time at a fixed rate of thirty-five dollars ($35.00)/hr.
11.3.3 FOR ADDITIONAL SERVICES OF CONSULTANTS, including additional
structural, mechanical and electrical engineering services and those provided
under Article 3 or identified in Article 12 as part of Additional Services, a
multiple of one point zero (1.0) times the amounts billed to the Architect for
such services.
(Identify specific types of consultants in Article 12, if ????)
11.4 REIMBURSABLE EXPENSES
11.4.1 FOR REIMBURSABLE EXPENSES, as described in Paragraph 10.2, and any
other items included in Article 12 as Reimbursable Expenses, a multiple of on
point one (1.1) times the expenses incurred by the Architect, the Architect's
employees and consultants in the interest of the Project.
11.5 ADDITIONAL PROVISIONS
11.5.1 IF THE BASIC SERVICES covered by this Agreement have not been completed
within twelve (12) months of the date hereof, through no fault of the
Architect, extension of the Architect's services beyond that time shall be
compensated as provided in Subparagraphs 10.3.3 and 11.3.2.
11.5.2 Payments are due and payable thirty days from the date of the
Architect's invoice. Amounts unpaid sixty days after invoice date shall bear
interest from the date payment is due at the rate entered below, or in the
absence thereof, at the legal rate prevailing from time to time at the
principal place of business of the Architect.
(Insert any rate of interest agreed upon.)
(Usury laws and requirements under the Federal Truth in Lending Act,
________________?? and local consumer credit laws and other
regulations______________________________?? principal places of business, the
location of the Project, _____?? may affect the validity of this provision.
Specific legal advice should be and ______________________?? modifications, and
also regarding requirements such as written disclosures of ___________??)
11.5.3 The rates and multiples set forth for Additional Services shall be
annually adjusted in accordance with normal salary review practices of the
Architect.
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ARTICLE 12
----------
OTHER CONDITIONS OR SERVICES
[ILLEGIBLE]
This Agreement entered into as of the day and year first written above.
OWNER NEXUS CONSTRUCTION CO., INC. ARCHITECT
/s/ WILLIAM G. BUGENHAGAN /s/ KENNETH A. KORNBERG
- ----------------------------------- -----------------------------------
(Signature) (Signature)
WILLIAM G. BUGENHAGAN, AIA
VICE PRESIDENT Kenneth A. Kornberg, President
- ----------------------------------- -----------------------------------
(Printed name and title) (Printed name and title)
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<PAGE> 84
ATTACHMENT A
SCOPE OF SERVICES:
1. CORE AND SHELL
o Revisions to exterior of shell building
o Location of shafts penetrating shell structure
o Space planning of subterranean structure to house mechanical and
electrical equipment
o Space planning of on-site equipment enclosure, transformer enclosure,
and trash enclosure
o Coordination with Shell Architect for items listed above (Shell
Architect shall provide construction documents for items listed above)
o Restrooms, lobbies, and tenant corridors
o Central Mechanical Plant
o Building Electrical Main, Subpanels and site lighting connections (Shell
Architect shall specify and locate site fixtures)
2. GEMINI/LIAI TENANT IMPROVEMENT
o Architectural, mechanical, plumbing, and electrical services necessary
to produce the 26,000 SF (plus or minus) tenant improvement for
Gemini/LIAI. This excludes the 16,000 SF (plus or minus) future lease
space area.
o Coordination of and services for Gemini/LIAI provided equipment
<PAGE> 85
NEXUS
G.S.I
FINAL BID LIST
November 11, 1988
HVAC
Helm Corporation
ACCO
R & H
Padre Mechanical
University Mechanical
ELECTRICAL
Sorrento Electric
Nutter Electric
Fleet Electrical
Mark Snyder Electric
Bergelectric
PLUMBING
Coast Plumbing
Sherwood Plumbing, Inc.
University Mechanical
Tridimensional Plumbing
FIRE SPRINKLERS
Schmidt Fire Protection Co., Inc.
Arrow Automatic Fire Sprinklers, Inc.
Wormald Fire Systems Southwest
DRYWALL
Tenant Development, Inc.
National Corporate Drywall
San Diego Drywall
Coastal Systems
Exhibit B
Nexus Development Corporation o Southern Division
9373 Towne Centre Drive, Suite 200, Sen Diego, CA 92121 (619) 587-2100
P.O. Box 22040, San Diego, CA 92122
<PAGE> 86
G.S.I. PRELIMINARY BID LIST
November 11, 1988
Page 2
DOORS
Tenant Development, Inc.
National Corporate Drywall, Inc.
LOCKSETS & PASSAGE SETS
Pacific Builders Hardware, Inc.
CEILINGS
Tenant Development, Inc.
National Corporate Drywall, Inc.
Daryl Griffis Acoustics, Inc.
FLOORCOVERING
Carpet Services, Inc.
Howard's Rug Company
Engineered Flooring Systems
PAINT
General Coatings Corporation
Southern
Ron Nielson
SPECIAL COATINGS
Integrated Coatings & Flooring, Inc.
MILLWORK
Bowser Cabinets & Casework Corporation
California Custom Woodworks
Montbleu
Creative Woodcraft
JRV/jas:B:05C
<PAGE> 87
EXHIBIT "C"
[Intentionally Left Blank]
<PAGE> 88
EXHIBIT "D"
Rules and Regulations
<PAGE> 89
EXHIBIT D
RULES AND REGULATIONS
1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name
or notice shall be installed or displayed on any part of the outside of
the Premises without prior written consent of Landlord. Landlord shall
have the right to remove, at Tenant's expense and without notice, any
sign installed or displayed in violation of this rule.
2. If Landlord objects in writing to any curtains, blinds, shades, screens
or hanging plants or other similar objects attached to or used in
connections with any window or door of the Premises, or placed on any
windowsill, which is visible from the exterior of the Premises Tenant
shall remove said object.
3. Intentionally Omitted.
4. Intentionally Omitted.
<PAGE> 90
5.
6. Except as prohibited by Tenant's security regulations, Landlord will
furnish Tenant, free of charge, with two keys to each door lock in the
Premises. Landlord may make a reasonable charge for any additional
keys. Tenant shall not alter any lock or install a new additional lock
or bolt on any door of its Premises. Tenant, upon the termination of
its tenancy, shall deliver to Landlord the keys of all doors which have
been furnished to Tenant, and in the event of loss of any keys so
furnished, shall pay Landlord therefor.
7. If Tenant requires telegraphic, burglar alarm or similar services, it
shall first obtain, and comply with, Landlord's instructions in their
installation.
8. Intentionally Omitted.
9. Intentionally Omitted.
<PAGE> 91
10. Intentionally omitted.
11. Tenant shall not use any method of heating or air-conditioning other
than that supplied by Landlord.
12. Intentionally omitted.
13. Intentionally omitted.
<PAGE> 92
14. Intentionally Omitted.
15. Intentionally Omitted.
16. Intentionally Omitted.
17. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be
thrown therein. The expense of any breakage, stoppage or damage
resulting frozen the violation of this rule shall be borne by the
tenant who, or whose employees or invitees, shall have caused it.
18. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or
merchandise to the general public in or on the Premises. Tenant shall
not make any room-to-room solicitation of business from other tenants
in the Building or Project. Tenant shall not use the Premises for any
business or activity other than that specifically provided for in
Tenant's Lease.
<PAGE> 93
19. Tenant shall not install any radio or television antenna, loudspeaker or
other devices on the roof or exterior walls of the Premises. Tenant
shall not interfere with radio or television broadcasting or reception
from or in the Premises or elsewhere.
20. Intentionally omitted.
21. Intentionally omitted.
22. Canvassing, soliciting and distribution of handbills or any other
written material, and peddling in the Complex are prohibited, and Tenant
shall cooperate to prevent such activities.
23. Landlord reserves the right to exclude or expel from the Premises or the
Complex any person who, in Landlord's judgment, is intoxicated or under
the influence of liquor or drugs or who is in violation of any of the
Rules and Regulations of the Complex.
24. Tenant shall store all its trash and garbage within its Premises or in
other facilities provided by Landlord. Tenant shall not place in any
trash box or receptacle any material which cannot be disposed of in the
ordinary and customary manner of trash and garbage disposal. All garbage
and refuse disposal shall be made in accordance with directions issued
from time to time by Landlord.
25. Intentionally omitted.
<PAGE> 94
26. Intentionally Omitted.
27. Intentionally Omitted.
28. Intentionally Omitted.
29. Intentionally Omitted.
30. Tenant's requirements will be attended to only upon appropriate
application to the Complex management office by an authorized
individual. Employees of Landlord shall not perform any work or do
anything outside of their regular duties unless under special
instructions from Landlord, and no employee of Landlord will admit any
person (Tenant or otherwise) to any office without specific
instructions from Landlord.
31. Landlord may waive any one or more of these Rules and Regulations for
the benefit of Tenant or any other tenant, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations
in favor of Tenant or any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules and Regulations against any or all
of the tenants of the Complex.
<PAGE> 95
32. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the
terms, covenants, agreements and conditions of Tenant's lease of its
Premises.
33. Intentionally Omitted.
34. Intentionally Omitted.
35. The term "Complex" as used in these Rules and Regulations shall mean
the same as the term "Project" as used in the Lease.
<PAGE> 96
EXHIBIT "E"
Form of Estoppel Letter from Tenants
_________________, 19_____
TO: ____________________
____________________
____________________
____________________
Re: Lease ("Lease") dated March 1, 1989, by and between Nexus
Centre/Torrey Pines, a California Limited Partnership ("Landlord"), and
Gemini Science, Inc., a California corporation ("Tenant"), of
approximately 26,383 square feet of space located on the first and
second floor of Building No. 2 of Nexus Centre/Torrey Pines, in the
City and County of San Diego, California.
Gentlemen:
The undersigned, as Tenant, has been advised that the Lease has been or
will be assigned to you as a result of your purchase of the above-referenced
Property or that you are a lender who intends to perfect a security interest in
the property, and as an inducement therefor hereby confirms the following:
1. That it has accepted possession and is in full occupancy of the
Demised Premises, that the Lease is in full force and effect, and that Tenant
has received no notice of any default of any of its obligations under the Lease
and is not in default of any such obligations.
2. That the improvements and space required to be furnished according
to the Lease, including any construction required to be made by the Landlord
under the Lease, have been satisfactorily completed by the Landlord in all
respects and that the Landlord has fulfilled all of its duties under the terms,
covenants and obligations of the Lease and is not currently in default
thereunder.
3. That the Lease has not been modified, altered or amended and
represents the entire agreement of the parties.
4. That Tenant has accepted the Premises "as is" and there are no
off-sets, concessions, counter-claims or credits against rentals, nor have
rentals been prepaid or forgiven.
<PAGE> 97
5. That Tenant has no claim, cause of action or right of setoff
against the Landlord, or any defense to payment of any sum or performance of any
obligation due under the Lease.
6. That the rent payable under the Lease is $_______ per month plus
additional rent comprised of a complete pass through of Tenant's share of taxes
and other operating expenses with respect to the Property and said rentals
commenced to accrue on the _____ day of ______________ , 19 . The Lease term
commenced on __________________ . There has been no advance payment of rent
payable under the Lease. The Lease term expires on _________________ unless
extended pursuant to ______________ option(s) to renew for ______ years each,
________ of which have been exercised as of the date hereof. The amount of the
security deposit and all other deposits paid to Landlord is $________.
7. That Tenant has no notice of a prior assignment, hypothecation or
pledge of rents under the Lease.
8. That Tenant agrees to attorn to you and recognize you as Landlord
under the Lease upon your purchase of the Property and assumption of the Lease
pursuant to its terms, and hereby consents to the assignment of the Lease to
you.
9. That this letter shall inure to your benefit and to the benefit of
your successors and assigns and shall be binding upon Tenant and Tenant's heirs,
personal representatives, successors and assigns. This letter shall not be
deemed to alter or modify any of the terms, covenants or obligations of the
Lease.
10. That Tenant has not executed or otherwise agreed to any sublease or
other rental or occupancy agreements with respect to the Premises.
11. That Tenant does not claim, and knows of no person or entity
claiming, any right to or interest in all or any part of the Premises.
12. That Tenant does not have a purchase option or renewal option other
than as described above with regard to the Premises, nor does Tenant have a
right of first refusal to lease any other space in the Property.
13. That the Tenant has accepted parking in the Project known as
______________________________ without requiring from the Landlord to provide
other parking elsewhere.
14. That the Tenant has no right to cancel or terminate the Lease
under the terms thereof or otherwise, except in the case of condemnation or
destruction of the entire Premises in accordance with the applicable provisions
of the
<PAGE> 98
Lease and except to the extent that applicable California law may permit the
termination of a lease by a tenant in the case of certain breaches thereof by
the landlord thereunder (but nothing herein shall be deemed to imply that the
Tenant has any greater right to terminate the Lease beyond any rights of
termination, if any, generally permitted under applicable California Law).
The above statements are made with the understanding that you will rely
on them in connection with the purchase or financing of the Property.
Very truly yours,
-------------------------------------
(Tenant)
By:
---------------------------------
Its:
-----------------------------
<PAGE> 99
EXHIBIT "F"
Acknowledgment of Term Commencement Date
Pursuant to Section 4.2 of that certain Lease ("Lease") dated March 1,
1989, by and between Nexus Centre/Torrey Pines, a California Limited Partnership
("Landlord"), and Gemini Science, Inc., a California corporation ("Tenant"),
of approximately 26,383 square feet of space located on the first and second
floor of Building No. 2 of Nexus Centre/Torrey Pines, in the City and County of
San Diego, California,
We hereby acknowledge that the Term Commencement Date of the Lease is
_______________ , 19__.
We hereby acknowledge that the Term Expiration Date of the Lease is
________________ , 19__.
Landlord: Tenant:
____________________________ _________________________________
By:_________________________ By:______________________________
Its:_____________________ Its:__________________________
By:_________________________ By:______________________________
Its:_____________________ Its:__________________________
<PAGE> 100
EXHIBIT "G"
Subordination Agreement
<PAGE> 101
GUARANTY OF LEASE
WHEREAS Nexus Centre/Torrey Pines, a California Limited partnership,
hereinafter referred to as "Landlord", and Gemini Science, Inc., a California
corporation, hereinafter referred to as "Tenant", are about to execute a Lease
dated March 1, 1989, for approximately 26,383 square feet consisting of the
entire second floor and a portion of the first floor of Building No. 2 of Nexus
Centre-Torrey Pines, North Torrey Pines Road, San Diego, California, and
WHEREAS, Kirin Brewery Company, Ltd., hereinafter
referred to as "Guarantor", has a financial interest in
Tenant; and
WHEREAS, Landlord would not execute the Lease if Guarantor did not
execute and deliver to Landlord this Guaranty of Lease.
NOW, THEREFORE, for and in consideration of the execution of the
foregoing Lease by Landlord and as a material inducement to Landlord to execute
said Lease, Guarantor hereby irrevocably guarantees the prompt payment by Tenant
of all rent and all other sums payable by Tenant under said Lease and the
faithful and prompt performance by Tenant of each and every one of the terms,
conditions and covenants of said Lease to be kept and performed by Tenant.
It is specifically agreed and understood that the terms of the
foregoing Lease may be altered, affected, modified or changed by agreement
between Landlord and Tenant, or by a course of conduct, and said Lease may be
assigned by Landlord or any assignee of Landlord without consent or notice to
Guarantor and that this Guaranty shall thereupon and thereafter guarantee the
performance of said Lease as so changed, modified, altered or assigned.
This Guaranty shall not be released, modified or affected by failure or
delay on the part of Landlord to enforce any of the rights or remedies of the
Landlord under said Lease, whether pursuant to the terms thereof or at law or in
equity.
The parties hereto specifically agree and understand that the guarantee
of the undersigned is a continuing guarantee under which Landlord may proceed
forthwith and immediately against Tenant, or against Guarantor following any
breach or default by Tenant or for the enforcement of any rights which Landlord
may have as against Tenant pursuant to or under the terms of the within Lease or
at law or in equity.
<PAGE> 102
Landlord shall have the right to proceed against Guarantor hereunder
following any breach or default by Tenant without first proceeding against
Tenant and without previous notice to or demand upon Tenant except to the extent
required by the terms of the Lease.
Landlord shall have the right to proceed against Guarantor hereunder
following any breach or default by Tenant without first proceeding against
Tenant upon written notice to Guarantor that a breach or default has occurred
and that it intends to proceed against Guarantor under this Guaranty. Such
notice shall be given by first class registered or certified mail, return
receipt requested, postage prepaid, and properly addressed to Guarantor at the
address set forth below, in which case such notice shall be deemed to have been
duly given on the fifth (5th) day following the date such notice is mailed:
Kirin Brewery Co., Ltd.
26-1, Jingumae 6-chome
Shibuya-ku, Tokyo 150
Japan
Attn: Dr. Toru Sasahari
General Manager, Pharmaceutical Department
With copy to:
Kirin USA
600 Third Avenue, 21st Floor
New York, New York 10016
Attn: Mr. Yoshinari Kumagai
Gemini Science, Inc.
3333 North Torrey Pines Court, Suite 120
La Jolla, California 92037
Attn: Mr. Toshihiko Maruoka
Pettit & Martin
Attn: Joel S. Marcus, Esq.
355 South Grand Avenue
Thirty-Third Floor
Los Angeles, California 90071
A courtesy copy of the notice or other communication shall be given by
telephonic facsimile transmission on the day the notice is mailed. Either party
may, by notice to the other given pursuant to this Section, specify additional
or different addresses for notice purposes.
Guarantor hereby waives (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (c) all right to assert or plead
any statute of limitations
- 2 -
<PAGE> 1
EXHIBIT 10.14
[LEASE MANAGEMENT SERVICES LETTERHEAD]
MASTER LEASE AGREEMENT NUMBER 10494
LESSEE: AURORA BIOSCIENCES CORPORATION LESSOR: LEASE MANAGEMENT SERVICES, INC.
11149 NO. TORREY PINES ROAD 2500 Sand Hill Road, Suite 101
LA JOLLA, CA 92037 Menlo Park, CA 94025
- --------------------------------------------------------------------------------
LEASE TERMS
- --------------------------------------------------------------------------------
1. LEASE. Lessor hereby agrees to lease to Lessee and Lessee
hereby agrees to lease from Lessor, subject to the terms of this Master Lease
Agreement and any addenda thereto (the "Master Lease") and the Schedule defined
below, the personal property (together with all attachments, replacements,
parts, substitutions, additions, repairs, accessions, and accessories,
Incorporated therein and/or affixed, thereto) (the "Equipment") described in
any Lease Schedule and any addenda thereto (a "Schedule") executed by the
parties hereto and incorporating the terms of this Master Lease by reference
therein (the "Lease"). The parties agree that this Lease is a "Finance Lease"
as defined by Section 10103(1)(g) of the California Commercial Code
(Cal.Com.C.). Lessee acknowledges either (a) that Lessee has reviewed and
approved any written Supply Contract (as defined by Cal.Com.C 10103(1)(y)
covering the Equipment purchased from the "Supplier" (as defined by Cal.Com.C.
10103(1)(x)) thereof for lease to Lessee or (b) that Lessor has informed or
advised Lessee,in writing, either previously or by this Lease of the following:
(i) the identity of the Supplier; (ii) that the Lessee may have rights under
the Supply Contract; and (iii) that the Lessee may contact the Supplier for a
description of any such rights Lessee may have under the Supply Contract.
2. TERM AND RENT. The term of this Lease shall be as specified
in the Schedule(s). The rental payments ("Rent") for the Equipment shall be as
set forth in the Schedule(s) and any addenda and shall be payable at the time
set forth therein.
3. LATE CHARGES. Time is of the essence in this Lease and if any
Rent is not paid within ten (10) days after the due date thereof, Lessor shall
have the right to add and collect, and Lessee agrees to pay: (a) a late charge
on and in addition to such Rent equal to five percent (5%) of such Rent or a
lesser amount if established by any state or federal statute applicable
thereto, and (b) interest on such Rent from thirty (30) days after the due date
until paid at the highest contract rate enforceable against Lessee under
applicable law but never to exceed eighteen percent (18%) per annum.
4. DISCLAIMER OF WARRANTIES. LESSOR IS NOT THE MANUFACTURER,
SUPPLIER OR SELLER OF THE EQUIPMENT. LESSOR IS NOT THE AGENT OF THE
MANUFACTURER, SUPPLIER OR SELLER OF THE EQUIPMENT. LESSOR MAKES NO EXPRESS OR
IMPLIED WARRANTIES AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION,
THE FITNESS, MERCHANTABILITY, CONDITION, QUALITY, DURABILITY OR SUITABILITY OF
THE EQUIPMENT IN ANY RESPECT, OR IN CONNECTION WITH, OR FOR THE PURPOSES AND
USES OF LESSEE OR ANY OTHER REPRESENTATION OR COVENANT OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT THERETO. As between Lessor and
Lessee, the Equipment shall be accepted and leased by Lessee "as is" and "with
all faults." Lessee specifically waives all rights to make claim against Lessor
herein for breach of any warranty of any kind whatsoever, asserting and
resolving any such claims directly with the Supplier of the Equipment, and
Lessor hereby assigns to Lessee all warranties, if any, received by Lessor
resulting from its ownership of the Equipment. Lessor shall not be responsible
for any repairs, service or defects in the quality or in its operation or for
any delay of Supplier and Lessee waives any claim it might have with respect to
Lessor for any loss, damage, or expense caused by the Equipment, its use or
maintenance. In no event shall Lessor be liable for any consequential damages.
Supplier is not an agent of Lessor and no employee, salesperson, or agent of
Supplier is authorized to waive, supplement, or otherwise alter any provision of
this Lease, and no representation as to the Equipment or any other matter by
the Supplier shall in any way affect the Lessee's duty to pay Rent and perform
all its obligations as set forth in this Lease. Lessor makes no warranty that
the Equipment is in compliance with applicable governmental requirements, rules
or regulations. Lessor has not made any representation or warranty to Lessee as
to the tax benefits, if any, Lessee will obtain from this Lease, or as to the
manner in which Lessee should treat this Lease in Lessee's records for tax,
financial reporting or accounting purposes.
5. ACCEPTANCE. Lessee's acceptance of the Equipment shall be
conclusively and irrevocably evidenced by Lessee signing the Lessor's standard
form Certificate of Acceptance. If Lessee fails or refuses to sign the
Certificate of Acceptance as to all or any part of the Equipment within a
reasonable time, Lessee shall automatically assume all of Lessor's purchase
obligations for the Equipment and Lessee agrees to indemnify and defend Lessor
from any claims including any demand for payment of the purchase price for the
Equipment by the manufacturer, Supplier or seller of the Equipment.
6. USE, OPERATION AND LOCATION. Lessee shall not use or operate
the Equipment so as to violate the terms of any insurance coverage for the
Equipment as required herein. Lessee agrees not to allow the Equipment to be
used by persons other than employees of Lessee, not to rent or sublet the
Equipment or any part thereof to others, to use the Equipment solely for
commercial, agricultural or business purposes, and to use and operate the
Equipment in accordance with the manufacturer's operating procedures and all
applicable governmental laws, ordinances, rules and regulations. If at any time
during the term hereof, Lessor supplies Lessee with labels or other markings,
stating that the Equipment is owned by Lessor, Lessee (or Lessor, at Lessor's
option) shall affix and keep the labels upon a prominent place on the
Equipment. The Equipment shall be located as shown on the Schedule(s). Lessee,
without the prior written consent of Lessor, shall not remove the Equipment
from such location nor give up possession or control thereof. Lessor, upon
prior reasonable notice to Lessee, shall have the right to inspect the
Equipment during Lessee's normal business hours.
7. ALTERATIONS, MAINTENANCE AND REPAIRS. Lessee, at its sole
expense, shall keep Equipment in good condition and working order and furnish
all labor, parts and supplies required therefor. Lessee agrees to maintain
accurate and complete records of all repairs and maintenance to the Equipment.
Any modifications or additions to the Equipment required by any governmental
edict shall be promptly made by Lessee at its own expense.
Without the prior written consent of Lessor, Lessee shall not make any
alterations, additions or improvements to the Equipment which are permanent or
which detract from its economic value or functional utility, except as may be
required pursuant to the preceding sentence of this Paragraph 7. All additions
and improvements to the Equipment shall belong to and immediately become the
property of Lessor and shall be returned to Lessor with the Equipment upon the
expiration or earlier termination of this Lease unless Lessor notifies Lessee
to restore such Equipment to its original state.
8. LOSS, DAMAGE. Lessee assumes the risk of loss and damage to
the Equipment, or any portion thereof, from every cause whatsoever, including
but not limited to damage, destruction, loss or theft. No loss, theft, damage,
destruction of the Equipment shall relieve Lessee of the obligation to pay Rent
or to comply with any other obligation under this Lease. In the event of damage
to any item of Equipment, Lessee shall immediately place the Equipment in good
condition and working order at Lessee's expense. If Lessor determines that any
item of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee
shall, at Lessor's option, either:
(a) Replace the same with like equipment in good condition and working
order, free and clear of all liens, claims and encumbrances, which equipment
shall thereupon become subject to this Lease; or
(b) Pay Lessor, not as a penalty, but herein liquidated for all
purposes an amount equal to the sum of (i) any accrued and unpaid Rent as of
the date the loss, theft, damage or destruction occurred ("Date of Loss") plus
the total of any amounts due to Lessor pursuant to Paragraph 3; (ii) the present
value of all future rentals reserved in this Lease and contracted to be paid
over the unexpired term of this Lease discounted at a rate equal to the
discount rate of the Federal Reserve Bank of San Francisco as of the Date of
Loss; (iii) the discounted value of the agreed upon or estimated residual value
of the Equipment as of the expiration of this Lease or any renewal thereof
discounted at a rate equal to the discount rate of the Federal Reserve Bank of
San Francisco as of the Date of Loss; and (iv) any other amount otherwise then
due and owing under this Lease or which otherwise will become due and owing
irrespective of the fact that the Equipment has been damaged, destroyed, lost
or stolen including any additional taxes or other charges that may otherwise
arise by reason of the damage, destruction, loss or theft of the Equipment.
Lessee further agrees to pay late charges calculated in accordance with
Paragraph 3 from the Date of Loss to the date the casualty payment is paid to
Lessor.
9. INSURANCE. Commencing on the date risk of loss passes to
Lessor from the Supplier and continuing until all of Lessee's obligations under
this Lease have been satisfied, Lessee shall, at Lessee's own expense, keep the
Equipment and any replacements thereto insured against such risks, and in such
amounts, in such form and with such companies as are satisfactory to Lessor.
All such insurance policies shall protect Lessor and Lessee, as their
respective interests may appear, and shall provide that all losses shall be
payable to and adjusted solely with Lessor. Lessee shall, at Lessee's own
expense, also maintain public liability insurance, in such amounts, in such
form and with such companies as are satisfactory to Lessor, insuring Lessor
with respect to injury to person or property resulting from the condition,
locations, maintenance, and actual or alleged use of the Equipment. Lessee
shall, prior to the acceptance of a Schedule by Lessor, deliver to Lessor each
of the foregoing policies or satisfactory evidence of such insurance. Each such
policy shall contain an endorsement providing that the insurer will give Lessor
not less than 30 days' prior written notice of the effective date of any
alteration or cancellation of such policy. Lessee shall furnish annually to
Lessor satisfactory evidence of the maintenance of such insurance. Lessee
hereby irrevocably appoints Lessor as Lessee's attorney-in-fact to make claim
for, receive payment of, and execute any and endorse all documents for loss or
damages under any insurance policy as herein specified. In case of the failure
of Lessee to maintain any of such insurance, Lessor shall have the right, but
shall not be obligated, to obtain such insurance, and therefor, Lessee hereby
grants Lessor the irrevocable right to select an insurance broker for the
procurement and maintenance of such insurance coverage herein specified.
10. TAXES. Lessee shall pay directly, or to lessor, all license
fees, registration fees, assessments and taxes which may now or hereafter be
imposed upon the ownership, sale (if authorized), possession or use of the
Equipment, excepting only those based on Lessor's income or any single business
tax of Lessor. All required personal property tax returns relating to the
Equipment shall be filed by Lessor unless otherwise provided in writing. If
Lessee fails to pay any said fees,
- --------------------------------------------------------------------------------
THIS LEASE MAY NOT BE AMENDED EXCEPT BY A WRITING SIGNED BY LESSOR AND LESSEE.
LESSEE'S INITIALS [JH]
-----
Dated: May 17, 1996
------------------------
LESSEE: LESSOR:
AURORA BIOSCIENCES CORPORATION LEASE MANAGEMENT SERVICES, INC.
By /s/ JOHN T. HENDRICK By
------------------------------ ------------------------
John T. Hendrick
Title VP Finance Title
------------------------------ ------------------------
WHITE - LESSOR'S COPY YELLOW - FILE COPY PINK - LESSEE'S COPY
<PAGE> 2
assessments, or taxes, Lessor shall have the right but not the obligation to pay
the same, and such amount, including penalties and costs shall be repayable to
Lessor at the next Rent due date, and if not so paid, shall be the same as
failure to pay any Rent due hereunder. Lessor shall not be responsible for
contesting any valuation of or tax imposed on the Equipment but may do so
strictly as an accommodation to Lessee and shall not be liable or accountable
to Lessee therefor. If Lessee pays any taxes, fees or assessments directly to
the appropriate taxing authority, Lessee agrees to immediately notify Lessor
and to provide Lessor documentary evidence of said payment.
11. LESSEE'S FAILURE TO PAY: LESSOR'S PAYMENT. In the event Lessee
fails to pay any amounts due hereunder, including Lessee's obligation to pay
taxes and insurance, or to perform any of its other obligations under this
Lease, Lessor may, at its option, pay such amounts or perform such obligations,
and Lessee shall reimburse Lessor the amount of such payment or cost of such
performance, including any charges or penalties which have been levied by the
taxing authority or insurance carrier for such late payment. Within ten (10)
days from demand, such reimbursement shall be paid as additional Rent plus late
charges as calculated in accordance with Paragraph 3 from the date of Lessor's
payment to the date of reimbursement.
12. TITLE. The Equipment is, and shall at all times be the sole
and exclusive property of Lessor, and Lessee shall have no right, title or
interest therein or thereto except as expressly set forth in this Lease.
Further, the Equipment shall at all times remain personal property,
notwithstanding that the Equipment or any part thereof may be affixed or
attached to real property or any building thereon.
Lessee shall keep the Equipment free and clear from all liens, charges,
encumbrances, legal process, and claims. Lessee shall not assign, sublet,
hypothecate, sell, transfer or give up possession of the Equipment or any
interest in this Lease, and any such attempt shall be null and void.
13. INDEMNITY. Lessee shall indemnify and hold Lessor harmless
from and against all claims, losses, liabilities (including negligence, tort
and strict liability), damages, judgments, suits, and all legal proceedings,
and any and all costs and expenses in connection therewith (including
attorneys' fees) arising out of or in any manner connected (a) with the
manufacture, purchase, financing, ownership, delivery, rejection, nondelivery,
possession, use, transportation, storage, operation, maintenance, repair,
return or other disposition of the Equipment; or (b) with this Lease,
including, without limitation, claims for injury or death of persons and for
damage to property, and claims for patent, trademark or copyright
infringement, and give Lessor prompt notice of any claim or liability.
14. NON-TERMINABLE LEASE: OBLIGATIONS UNCONDITIONAL. This Lease
cannot be terminated except as expressly provided herein. Lessee hereby agrees
that Lessee's obligation to pay all Rent and any other amounts owing hereunder
shall be absolute and unconditional.
15. HOLDING OVER. Any use of the Equipment by Lessee beyond the
initial Lease term or any renewal thereof shall be an extension of this Lease
term at the then current Rent on a month-to-month basis terminable by Lessor on
ten (10) days' notice to Lessee and all obligations of Lessee herein contained,
including payment of Rent, shall continue during such holding over. Any
holdover period is limited to twelve (12) months without written consent of
Lessor.
16. RETURN OF EQUIPMENT. Upon the expiration or earlier
termination of this Lease, with respect to the Equipment or any part thereof,
Lessee shall return the same to Lessor in good condition and working order,
ordinary wear and tear excepted, in the following manner as selected by Lessor:
(a) By properly packing and delivering the Equipment at Lessee's
cost and expense, to such place as Lessor shall specify within the County in
which the same was delivered to Lessee; or
(b) By properly packing and loading the Equipment, at Lessee's cost
and expense, on board such carrier as Lessor shall specify, and shipping the
same, freight prepaid, to the destination indicated by Lessor.
Lessee agrees to pay for all repair to the Equipment other than
attributable to ordinary wear and tear. Notice of Lessee's intent to return
Equipment must be received by Lessor at least sixty (60) days prior to return.
17. LESSEE'S WAIVERS. To the extent permitted by applicable law,
Lessee hereby waives any and all rights and remedies conferred upon a Lessee by
Sections 10508 through 10522 of the Cal.Com.C., including but not limited to
Lessee's rights to: (i) cancel this Lease; (ii) repudiate this Lease; (iii)
reject the Equipment; (iv) revoke acceptance of the Equipment; (v) recover
damages from Lessor for any breaches of warranty or for any other reason; (vi)
a security interest in the Equipment in Lessee's possession or control for any
reason; (vii) deduct all or any part of any claimed damages resulting from
Lessor's default, if any, under this Lease; (viii) accept partial delivery of
the Equipment; (ix) "cover" by making any purchase or lease of or contract to
purchase or lease Equipment in substitution for Equipment due from Lessor; (x)
recover any general, special, incidental or consequential damages, for any
reason whatsoever; and (xi) specific performance, replevin, detinue,
sequestration, claim and delivery or the like for any Equipment identified to
this Lease. To the extent permitted by applicable law, Lessee also hereby
waives any rights now or hereafter conferred by statute or otherwise which may
require Lessor to sell, lease or otherwise use any Equipment in mitigation of
Lessor's damages as set forth in Paragraph 19 or which may otherwise limit or
modify any of Lessor's rights or remedies under Paragraph 19. Any action by
Lessee against Lessor for any default by Lessor under this Lease, including
breach of warranty or indemnity, shall be commenced within one (1) year after
any such cause of action accrues.
18. DEFAULT. Any of the following events or conditions shall
constitute an event of default ("Event of Default") hereunder:
(a) Lessee's failure to pay when due any Rent or other amount due
hereunder;
(b) Lessee's failure to perform any other term, covenant or
condition hereof or a default under any other agreement between Lessor and
Lessee;
(c) the breach of any representation or warranty made by Lessee or
any guarantor of this Lease;
(d) Seizure of the Equipment under legal process;
(e) A filing by or against Lessee of a Petition for Reorganization
or Liquidation under the Bankruptcy Code or any amendments thereto or any other
insolvency law providing for the relief of debtors;
(f) The voluntary or involuntary making of an assignment of a
substantial portion of its assets by Lessee for the benefit of creditors,
employment of a receiver or trustee for Lessee or for any of Lessee's assets,
the institution of formal or informal proceedings by or against Lessee for
dissolution, liquidation, settlement of claims against or winding up of the
affairs of Lessee, or the making by Lessee of a transfer of all or a material
portion of Lessee's assets or inventory not in the ordinary course of
business;
(g) The value or condition of any collateral furnished by the
Lessee, or any guarantor of this Lease, becomes impaired or diminished as to, in
Lessor's reasonable opinion, increase Lessor's credit risk;
(h) If, in Lessor's reasonable opinion, there should be a material
adverse change in the financial condition of Lessee.
19. REMEDIES. Upon the occurrence of any Event of Default and at
any time thereafter, Lessor may, with or without cancelling this Lease, in its
sole discretion, do any one or more of the following:
(a) upon notice to Lessee cancel this Lease and any or all
Schedules;
(b) continue to be the owner of the equipment and may, but is not
obligated to, take possession of the Equipment, dispose of the Equipment by sale
or otherwise, all of which determinations may be made by Lessor in its absolute
discretion and for its own account;
(c) declare immediately due and payable all Rents due and to become
due hereunder for the full term of this Lease (including any renewal or
purchase obligations);
(d) recover from Lessee damages not as a penalty but herein
liquidated for all purposes and in an amount equal to the sum of (i) any
accrued and unpaid rent as of the date of entry of judgment in favor of Lessor
plus the total of any amounts due to Lessor pursuant to Paragraph 3; (ii) the
present value of all future rentals reserved in this Lease and contracted to be
paid over the unexpired term of this Lease discounted at a rate equal to the
discount rate of the Federal Reserve Bank of San Francisco as of the date of
entry of judgment in favor of Lessor; (iii) all commercially reasonable costs
and expenses incurred by Lessor in any repossession, recovery, storage, repair,
sale, re-lease or other disposition of the Equipment including reasonable
attorneys' fees and costs incurred in connection therewith or otherwise
resulting from Lessee's default; (iv) the present value of the agreed upon or
estimated residual value of the Equipment as of the expiration of this Lease or
any renewal thereof discounted at a rate equal to the discount rate of the
Federal Reserve Bank of San Francisco as of the date of entry of judgment in
favor of Lessor; and (v) any indemnity, if then determinable, plus interest at
eighteen percent (18% per annum;
(e) in its sole discretion, re-lease or sell any or all of the
Equipment at a public or private sale on such terms and notice as Lessor shall
deem reasonable and recover from Lessee damages, not as a penalty, but herein
liquidated for all purposes and in an amount equal to the sum of (i) any
accrued and unpaid rent as of the later of (A) the date of default or (B) the
date that Lessor has obtained possession of the Equipment or such other date as
Lessee has made an effective tender of possession of the Equipment back to
Lessor ("Default Date"): plus rent (at the rate provided for in this Lease) for
the additional period (but in no event longer than two (2) months) that it
takes Lessor to resell or re-let all of the Equipment, plus the total of any
amounts due to Lessor pursuant to Paragraph 3; (ii) the present value of all
future rentals reserved in this Lease and contracted to be paid over the
unexpired term of this Lease discounted at a rate equal to the discount rate of
the Federal Reserve Bank of San Francisco as of the Default Date; (iii) all
commercially reasonable costs and expenses incurred by Lessor in any
repossession, recovery, storage, repair, sale, re-lease or other disposition of
the Equipment including reasonable attorneys' fees and costs incurred in
connection with or otherwise resulting from the Lessee's default; (iv)
estimated residual value of the Equipment as of the expiration of this Lease or
any renewal thereof; and (v) any indemnity, if then determinable, plus
interest at eighteen percent (18%) per annum; LESS the amount received by
Lessor upon such public or private sale or re-lease of such items of Equipment,
if any;
(f) exercise any other right or remedy which may be available to it
under the Uniform Commercial Code or any applicable law.
A cancellation hereunder shall occur only upon notice by Lessor and
only as to such items of Equipment as Lessor specifically elects to cancel and
this Lease shall continue in full force and effect as to the remaining items,
if any. If this Lease is deemed at any time to be one intended as security,
Lessee agrees that the Equipment shall secure; in addition to the indebtedness
set forth herein, all other indebtedness at any time owing by Lessee to Lessor.
No remedy referred to in this Paragraph is intended to be exclusive,
but shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Lessor at law or in equity. No express or implied
waiver by Lessor of any default shall constitute a waiver of any other default
by Lessee or a waiver of any of Lessor's rights.
20. ASSIGNMENT BY LESSOR. LESSOR MAY ASSIGN OR TRANSFER THIS LEASE
OR ANY SCHEDULES OR LESSOR'S INTEREST IN THE EQUIPMENT WITHOUT NOTICE TO
LESSEE. Any assignee or transferee of Lessor shall have the rights, but none
of the obligations, of Lessor under this Lease. Lessee agrees that it will
not assert against any assignee or transferee of Lessor any defense,
counterclaim or offset that Lessee may have against Lessor and that upon
notice, it will pay Rent to such assignee or transferee. Lessee acknowledges
that any assignment or transfer by Lessor shall not materially change Lessee's
duties or obligations under this Lease nor materially increase the burdens or
risks imposed on Lessee.
21. NO ASSIGNMENT BY LESSEE. LESSEE SHALL NOT ASSIGN OR IN ANY WAY
DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR
ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR.
22. FURTHER ASSURANCES. Lessee will promptly and duly execute and
deliver to Lessor such further documents and take such further actions as
Lessor may from time to time deem necessary in order to carry out the intent
and purpose of this Lease and to protect the interests of Lessor under this
Lease. Lessee, at the request of Lessor, agrees to execute and deliver to
Lessor, any financing statements, fixture filings, or other instruments
necessary for perfecting the interest and title of Lessor in this Lease and the
Equipment, agrees that a copy of this Lease may be so filed, and agrees that
all costs incurred in connection therewith (including, without limitation,
filing fees and taxes) shall be paid by Lessee. Lessee hereby appoints Lessor
as Lessee's attorney-in-fact to affix Lessee's signature to any and all such
documents. Lessee will deliver to Lessor monthly financial statements
(unaudited but prepared in accordance with generally accepted accounting
principles) within 30 days of each month-end and audited annual financial
statements within three months of fiscal year-end, which financial statements,
Lessee warrants, shall fully and fairly represent the true financial condition
of Lessee.
23. MISCELLANEOUS. This Lease shall constitute an agreement of
Lease and nothing herein shall be construed as giving to Lessee any right,
title or interest in any of the Equipment except as a Lessee only. If Lessee
is a partnership, then this Lease is executed by a general partner thereof, and
if Lessee is a corporation, then this Lease is executed by a duly authorized
officer of said corporation pursuant to authority granted by the board of
directors of said corporation. This Lease may be executed in several
counterparts, each of which shall constitute an original and in each case, such
counterparts together shall constitute but one and the same instrument.
(a) Law: Jurisdiction, Venue. This Lease shall be deemed to have
been made and accepted in San Mateo County, California, where Lessor's
principal place of business is located, and shall be governed by the laws of
the State of California, except for local recording statutes. Lessee hereby
agrees that all actions and proceedings arising from this Lease may be
litigated, at the election of Lessor, only in courts having sites within the
State of California and Lessee hereby consents to the jurisdiction of any state
or federal court located within the State of California. Lessee agrees that if
any action is brought to enforce the provisions of this Lease by either party,
the County of San Mateo shall be a proper place for the trial of such action.
Lessee agrees to waive trial by jury.
(b) Binding on Successors. The terms and conditions of this Lease
shall, subject only to the provisions as to assignment, be binding upon and
inure to the benefit of Lessor and Lessee and their respective heirs,
executors, administrators and assigns.
(c) Survival. Lessee's indemnities such as given in Paragraphs 13
and in any addenda to this Lease shall survive the expiration or other
termination of this Lease.
(d) Entire Agreement; Non-Waiver; Notices; Severability. This
Lease constitutes the entire understanding between Lessor and Lessee relating to
the subject matter hereof. Any representation, promises or conditions not
contained herein shall not be binding unless in writing and signed by duly
authorized representatives of each party. No covenant or condition of this
Lease can be waived except by the written consent of Lessor. Any notices
required to be given hereunder shall be given in writing at the address of each
party herein set forth, or at such other address as either party may substitute
by written notice to the other. If any condition of this Lease is held
invalid, such an invalidity shall not affect any other provisions hereof.
(e) Gender; Number; Joint and Several Liability; Authorization;
Paragraph Headings. Whenever the content of this Lease requires, the masculine
gender includes the feminine or neuter, and the single number includes the
plural. Whenever the word "Lessor" is used herein, it shall include all
assignees of Lessor. Whenever the word "herein" is used referring to this
Lease, it shall include the applicable Schedules hereto. If there is more than
one lessee named in this Lease, the liability of each shall be joint and
several. Lessee hereby authorizes Lessor to (i) insert serial numbers and
other identification in the Equipment Description when known and (ii) correct
any patent errors or omissions in this Lease. The titles to the Paragraphs of
this Lease are solely for the convenience of the parties and shall in no way be
held to explain, modify, amplify or aid in the interpretation of the terms and
provisions hereof.
<PAGE> 3
LEASE MANAGEMENT SERVICES, INC.
ADDENDUM
MASTER LEASE AGREEMENT NUMBER 10494
BY AND BETWEEN
AURORA BIOSCIENCES CORPORATION, AS LESSEE
AND
LEASE MANAGEMENT SERVICES, INC., AS LESSOR
Attached to and made an integral part of Master Lease Agreement Number 10494,
by and between AURORA BIOSCIENCES CORPORATION, as Lessee, and LEASE MANAGEMENT
SERVICES, INC., as Lessor (the "Master Lease").
In consideration of Lessor acquiring and leasing the equipment as more
fully described in subsequent Lease Schedules of the Master Lease, Lessor
and Lessee hereby agree that at the end of the initial lease term, Lessee
will purchase the leased Equipment at its residual value which the parties
agree is equal to ten percent (10%) of its initial cost. Such initial cost
includes any/all taxes, installation, freight, and other charges
capitalized into the lease
No Lease Schedule may be subdivided. All Equipment subject to a Lease Schedule
shall be treated identically for purposes of purchase or renewal.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Addendum to be duly
executed in their respective names this ______ day of ____________, 1996.
<TABLE>
<S> <C>
LESSEE: LESSOR:
AURORA BIOSCIENCES LEASE MANAGEMENT SERVICES, CORPORATION INC.
By: By:
------------------------------------------- ---------------------------------------------------
Title: Title: EVP/General Manager
----------------------------------------- ------------------------------------------------
</TABLE>
<PAGE> 4
ADDENDUM TO MASTER LEASE NUMBER 10494
BETWEEN AURORA BIOSCIENCES CORPORATION ("LESSEE")
AND LEASE MANAGEMENT SERVICES, INC. ("LESSOR")
The printed form of Master Lease Agreement #10494 between the parties
dated May 17, 1996 is amended as follows:
FIRST: In Section 5, Delete section in its entirety and replace with
"5. ACCEPTANCE. Lessee's acceptance of the Equipment shall be conclusively and
irrevocably evidenced by Lessee signing the Lessor's standard form of
Certificate of Acceptance. If Lessee fails or refuses to sign the Certificate
of Acceptance as to all or any part of the Equipment within a reasonable time
after Lessor pays, or assumes an obligation to pay, for all or any part of the
Equipment, Lessee shall automatically assume all of Lessor's purchase
obligations, if any, for the Equipment and Lessee agrees to indemnify and
defend Lessor from any claims with respect to such Equipment, including any
demand for payment of the purchase price for such Equipment by the
manufacturer, supplier or seller of such Equipment. If Lessor paid for the
Equipment or any part thereof and Lessee has not signed a Certificate of
Acceptance with respect to such Equipment, Lessee shall, immediately upon
demand, repay the Lessor the amount so paid or execute a Certificate of
Acceptance."
SECOND: In Section 7, paragraph 2, line 2, delete the second reference
to the word "or" and insert "and".
THIRD: In Section 8, line 5, after the word "Equipment" insert "prior
to redelivery to Lessor" and then in line 8, after the word "repair" insert
"Lessor shall first consult with Lessee and then".
FOURTH: In Section 8(b), line 15, after the word "charges" insert ", if
applicable,".
FIFTH: In Section 9, delete section in its entirety and replace with
"9. INSURANCE. Commencing on the date risk of loss passes to Lessor from the
Supplier and continuing until all of Lessee's obligations under this Lease have
been satisfied, Lessee shall, at Lessee's own expense, keep the Equipment and
any replacements thereto insured against such risks, in an amount equal to or
exceeding the full replacement value of the Equipment, in such form and with
such companies as are reasonably satisfactory to Lessor. Such insurance policy
or policies shall protect Lessor and Lessee, as their respective interests may
appear, and shall provide that all losses shall be payable to and adjusted with
Lessor, as its interest may appear. Lessee shall, at Lessee's own expense, also
maintain public liability insurance, in such form and with such companies as
are reasonably satisfactory to Lessor, insuring Lessor with respect to injury
to person or property resulting from the condition, locations, maintenance, and
actual or alleged use of the Equipment. Lessee shall, prior to the acceptance
of a Schedule by Lessor, deliver to Lessor each of the foregoing policies or
satisfactory evidence of such insurance. Each such policy shall contain an
endorsement or certificate providing that the insurer will give Lessor not
less than 30 days' prior written notice of the effective date of any alteration
or cancellation of such policy. Lessee shall furnish annually to Lessor
satisfactory evidence of the maintenance of such insurance. Lessee hereby
irrevocably appoints Lessor as Lessee's attorney-in-fact, if an Event of
Default has occurred and is continuing, to make claim for, receive payment of,
and execute any and endorse all documents for loss or damages under any
insurance policy as herein specified. In case of the failure of Lessee to
maintain any of such insurance, Lessor shall have the right, but shall not be
obligated, to obtain such insurance, and therefor, Lessee hereby grants Lessor
irrevocable right to select an insurance broker for the procurement and
maintenance of such insurance coverage herein specified.".
SIXTH: Section 12, at the end of the first paragraph insert "Provided
that Lessee is not in Default hereunder, Lessee shall have the right of quiet
enjoyment of the Equipment" and then in the second paragraph, line 2, after the
word "not" insert ", without Lessor's prior written consent,".
SEVENTH: Section 13, delete section in its entirety and replace with
"13. INDEMNITY. Lessee shall indemnify and hold Lessor harmless from and
against all claims, losses, liabilities (including negligence, tort and strict
liability, but excluding gross negligence or willful misconduct of Lessor),
damages, judgments, suits, and all legal proceedings, and any and all
reasonable costs and expenses in connection therewith (including reasonable
attorneys' fees) arising out of or in any way connected with (a) the purchase,
financing, ownership, delivery, rejection, nondelivery, possession, use,
transportation, storage, operation, maintenance, repair, return or other
disposition of the Equipment by Lessee; or (b) this Lease, including, without
limitation, claims for injury or death of persons and for damage to property,
in each case resulting from the lease of equipment by Lessee from Lessor, and
claims for patent, trademark or copyright infringement, and give Lessor prompt
notice of any claim or liability.".
EIGHTH: Section 15, delete section in its entirety.
NINTH: Section 16, line 2, after the word "Lease" insert "and provided
that (i) the lease is not renewed or (ii) Lessee does not exercise its option
to purchase the Equipment," and then in Section 16(b), line 3, after the word
"Lessor" insert "in California,".
TENTH: Section 17, line 14 delete sentence that reads "To the extent
permitted... remedies under Paragraph 19.".
ELEVENTH: Section 18(a), after the word "hereunder" insert ", which
failure shall not have been cured within ten (10) days:".
TWELFTH: Section 18(b), line 2, after the word "Lessee" insert ", which
failure or default shall not have been cured within 20 days after notice to the
Lessee, except that, Lessee shall not be entitled to any notice of default and
opportunity to cure if the default constitutes a default in (i) maintaining
insurance on or in connection with the Equipment and its use as provided in
Section 9, (ii) the removal of the Equipment in violation of Section 6, or
(iii) the abandonment of the Equipment by Lessee.".
THIRTEENTH: Section 18(c), line 1, before the word "representation"
insert "material".
FOURTEENTH: Section 18(e), after the word "debtors" insert ", provided,
however, with respect to an involuntary petition in bankruptcy, such petition
shall not have been dismissed with in forty-five (45) days after the filing of
such petition;".
FIFTEENTH: Section 18(g), after the word "becomes" insert
"significantly".
SIXTEENTH: Section 18(h), after the word "Lessee," insert "Material
adverse change shall mean a change having a material adverse effect upon the
financial condition of the Lessee or upon the ability of Lessee to perform its
obligations under the Lease or any other agreement relating to the Lease."
SEVENTEENTH: Section 19(e)(iv), before the word "estimated" insert "the
present value of the" and then after the word "thereof" insert "discounted at a
rate equal to the discount rate of the Federal Reserve Bank of San Francisco as
of the Default Date".
IN WITNESS WHEREOF, the undersigned have executed this Addendum this
17th day of May, 1996.
LESSEE: LESSOR:
AURORA BIOSCIENCES CORPORATION LEASE MANAGEMENT SERVICES, INC.
By: /s/ John T. Hendrick By:
-------------------------- ---------------------------
Title: VP Finance Title:
----------------------- ------------------------
1.
<PAGE> 1
EXHIBIT 10.15
LEASE MANAGEMENT SERVICES, INC.
EQUIPMENT FINANCING AGREEMENT
(Number 10794)
THIS EQUIPMENT FINANCING AGREEMENT NUMBER 10794 ("Agreement") is dated as of
the date set forth at the foot hereof and is between LEASE MANAGEMENT SERVICES,
INC., ("Secured Party") and AURORA BIOSCIENCES CORPORATION ("Debtor").
1. EQUIPMENT; SECURITY INTEREST. The terms and conditions of this
Agreement cover each item of machinery, equipment and other property
(individually an "Item" or "Item of Equipment" and collectively the
"Equipment") described in a schedule now or hereafter executed by the parties
hereto and made a part hereof (individually a "Schedule" and collectively the
"Schedules"). Debtor hereby grants Secured Party a security interest in and to
all Debtor's right, title and interest in and to the Equipment under the
Uniform Commercial Code, such grant with respect to an Item of Equipment to be
as of Debtor's execution of a related Equipment Financing Commitment
referencing this Agreement or, if Debtor then has no interest in such Item, as
of such subsequent time as Debtor acquires an interest in the Item. Such
security interest is granted by Debtor to secure performance by Debtor of
Debtor's obligations to Secured Party hereunder and under any other agreements
under which Debtor has or may hereafter have obligations to Secured Party.
Debtor will ensure that such security interest will be and remain a sole and
valid first lien security interest subject only to the lien of current taxes
and assessment not in default but only if such taxes are entitled to priority
as a matter of law.
2. DEBTOR'S OBLIGATIONS. The obligations of Debtor under this Agreement
respecting an Item of Equipment, except the obligation to pay installment
payments with respect thereto which will commence as set forth in Paragraph 3
below, commence upon the grant to Secured Party of a security interest in the
Item. Debtor's obligations hereunder with respect to an Item of Equipment and
Secured Party's security interest therein will continue until payment of all
amounts due, and performance of all terms and conditions required hereunder
provided, however, that if this Agreement is in default said obligations and
security interest will continue during the continuance of said default. Upon
termination of Secured Party's security interest in an Item of Equipment,
Secured Party will execute such release of interest with respect thereto as
Debtor reasonably requests.
3. INSTALLMENT PAYMENTS AND OTHER PAYMENTS. Debtor will repay advances
Secured Party makes on account of the Equipment in installment payments in the
amounts and at the times set forth in the Schedules, whether or not Secured
Party has rendered an invoice therefor, at the office of Secured Party set
forth at the foot hereof, or to such person and/or at such other place as
Secured Party may from time to time designate by notice to Debtor. Any other
amounts required to be paid Secured Party by Debtor hereunder are due upon
Debtor's receipt of Secured Party's invoice therefor and will be payable as
directed in the invoice. Payments under this Agreement may be applied to
Debtor's then accrued obligations to Secured Party in such order as Secured
Party may choose.
4. NET AGREEMENT; NO OFFSET, SURVIVAL. This Agreement is a net
agreement, and Debtor will not be entitled to any abatement of installment
payments or other payments due hereunder or any reduction thereof under any
circumstance or for any reason whatsoever. Debtor hereby waives any and all
existing and future claims, as offsets, against any installment payments or
other payments due hereunder and agrees to pay the installment payments and
other amounts due hereunder as and when due regardless of any offset or claim
which may be asserted by Debtor or on its behalf. The obligations and
liabilities of Debtor hereunder will survive the termination of the Agreement.
5. FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT.
DEBTOR ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND
ACQUIRED SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT SECURED PARTY IS NOT AND
WILL NOT BE THE VENDOR OF ANY
<PAGE> 2
AURORA BIOSCIENCES, CORPORATION
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 2 OF 8
EQUIPMENT AND THAT SECURED PARTY HAS NOT MADE AND WILL NOT MAKE ANY AGREEMENT,
REPRESENTATION OR WARRANTY WITH RESPECT TO THE MERCHANTABILITY, CONDITION,
QUALIFICATION OR FITNESS FOR A PARTICULAR PURPOSE OR VALUE OF THE EQUIPMENT OR
ANY OTHER MATTER WITH RESPECT THERETO IN ANY RESPECT WHATSOEVER.
6. NO AGENCY. DEBTOR ACKNOWLEDGES THAT NO AGENT OF THE MANUFACTURER OR
OTHER SUPPLIER OF AN ITEM OF EQUIPMENT OR OF ANY FINANCIAL INTERMEDIARY IN
CONNECTION WITH THIS AGREEMENT IS AN AGENT OF SECURED PARTY. SECURED PARTY IS
NOT BOUND BY A REPRESENTATION OF ANY SUCH PARTY AND, AS CONTEMPLATED IN
PARAGRAPH 27 BELOW, THE ENTIRE AGREEMENT OF SECURED PARTY AND DEBTOR CONCERNING
THE FINANCING OF THE EQUIPMENT IS CONTAINED IN THIS AGREEMENT AS IT MAY BE
AMENDED ONLY AS PROVIDED IN THAT PARAGRAPH.
7. ACCEPTANCE. Execution by Debtor and Secured Party of a Schedule
covering the Equipment or any Items thereof will conclusively establish that
such Equipment has been included under and will be subject to all the terms and
conditions of this Agreement. If Debtor has not furnished Secured Party with
an executed Schedule by the Earlier of fourteen (14) days after receipt thereof
or expiration of the commitment period set forth in the applicable Equipment
Financing Agreement, Secured Party may terminate its obligation to advance
funds as to the applicable Equipment.
8. LOCATION; INSPECTION; USE. Debtor will keep, or in the case of motor
vehicles, permanently garage and not remove from the United States, as
appropriate, each Item of Equipment in Debtor's possession and control at the
Equipment Location designated in the applicable Schedule, or at such other
location to which such Item may have been moved with the prior written consent
of Secured Party. Whenever requested by Secured Party, Debtor will advise
Secured Party as to the exact location of an Item of Equipment. Secured Party
will have the right to inspect the Equipment and observe its use during normal
business hours, subject to Debtor's security procedures and to enter into and
upon the premises where the Equipment may be located for such purpose. The
Equipment will at all times be used solely for commercial or business purposes
and operated in a careful and proper manner and in compliance with all
applicable laws, ordinances, rules and regulations, all conditions and
requirements of the policy or policies of insurance required to be carried by
Debtor under the terms of this Agreement and all manufacturer's instructions
and warranty requirements. Any modifications or additions to the Equipment
required by any such governmental edict or insurance policy will be promptly
made by Debtor.
9. ALTERATIONS; SECURITY INTEREST COVERAGE. Without the prior written
consent of Secured Party, Debtor will not make any alterations, additions or
improvements to any Item of Equipment which detract from its economic value or
functional utility, except as may be required pursuant to Paragraph 8 above.
Secured Party's security interest in the Equipment will include all
modifications and additions thereto and replacements and substitutions
therefor, in whole or in part. Such reference to replacements and
substitutions will not grant Debtor greater rights to replace or substitute
than are provided in Paragraph 11 below or as may be allowed upon the prior
written consent of Secured Party.
10. MAINTENANCE: Debtor will maintain the Equipment in good repair,
condition and working order. Debtor will also cause each Item of Equipment for
which a service contract is generally available to be covered by such a
contract which provides coverages typical to property of the type involved and
is issued by a competent servicing entity.
11. LOSS AND DAMAGE; CASUALTY VALUE. In the event of the loss of, theft
of, requisition of, damage to or destruction of an Item of Equipment ("Casualty
Occurrence"), Debtor will give Secured Party prompt notice thereof and will
thereafter place such Item in good repair,
<PAGE> 3
AURORA BIOSCIENCES, CORPORATION
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 3 OF 8
condition and working order, provided, however, that if such Item is determined
by Secured Party to be lost, stolen, destroyed or damaged beyond repair, is
requisitioned or suffers a constructive total loss as defined in any applicable
insurance policy carried by Debtor in accordance with Paragraph 14 below,
Debtor, at Secured Party's option, will (a) replace such Item with like
Equipment in good repair, condition and working order whereupon such
replacement equipment will be deemed such Item for all purposes hereof or (b)
pay Secured Party the "Casualty Value" of such Item which will equal the total
of (i) all installment payments and other amounts due from Debtor to Secured
Party at the time of such payment and (ii) future installment payments due
with respect to such Item with each such payment including any final uneven
payment discounted at a rate equal to the discount rate of the Federal Reserve
Bank of San Francisco from the date due to the date of such payment.
Upon such replacement or payment, as appropriate, this Agreement and Secured
Party's security interest will terminate with, and only with, respect to the
Item of Equipment so replaced or as to which such payment is made in accordance
with Paragraph 2 above.
12. TITLING; REGISTRATION. Each item of Equipment subject to title
registration laws will at all times be titled and/or registered by Debtor as
Secured Party's agent and attorney-in-fact with full power and authority to
register (but without power to affect title to) the Equipment in such manner
and in such jurisdiction or jurisdictions as Secured Party directs. Debtor
will promptly notify Secured Party of any necessary or advisable retitling
and/or reregistration of an Item of Equipment in a jurisdiction other than the
one in which such Item is then titled and/or registered. Any and all documents
of title will be furnished or caused to be furnished Secured Party by Debtor
within sixty (60) days of the date any titling or registering or restating or
reregistering, as appropriate, is directed by Secured Party.
13. TAXES. Debtor will make all filings as to and pay when due all
personal property and other ad valorem taxes and all other taxes, fees, charges
and assessments based on the ownership or use of the Equipment and will pay as
directed by Secured Party or reimburse Secured Party for all other taxes,
including, but not limited to, gross receipt taxes (exclusive of federal and
state taxes based on Secured Party's net income, unless such net income taxes
are in substitution for or relieve Debtor from any taxes which Debtor would
otherwise be obligated to pay under the terms of this Paragraph 13), fees,
charges and assessments whatsoever, however designated, whether based on the
installment payments or other amounts due hereunder, levied, assessed or
imposed upon the Equipment or otherwise related hereto or to the Equipment, now
or hereafter levied, assessed or imposed under the authority of a federal,
state, or local taxing jurisdiction, regardless of when and by whom payable.
Filings with respect to such other amounts will, at Secured Party's option, be
made by Secured Party or by Debtor as directed by Secured Party.
14. INSURANCE. Debtor will procure and continuously maintain all risk
insurance against loss or damage to the Equipment from any cause whatsoever for
not less than the full replacement value thereof naming Secured Party as Loss
Payee. Such insurance must be in a form and with companies approved by Secured
Party, must provide at least thirty (30) days advance written notice to Secured
Party of cancellation, change or modification in any term, condition, or amount
of protection provided therein, must provide full breach of warranty protection
and must provide that the coverage is "primary coverage" (does not require
contribution from any other applicable coverage). Debtor will provide Secured
Party with an original policy or certificate evidencing such insurance. In the
event of an assignment of this Agreement of which Debtor has notice, Debtor
will cause such insurance to provide the same protection to the assignee as its
interests may appear. The proceeds of such insurance, at the option of the
Secured Party or such assignee, as appropriate, will be applied toward (a)
repair or replacement of the appropriate Item or Items of Equipment, (b)
payment of the Casualty Value thereof and/or (c) payment of, or as provision
for, satisfaction of any other accrued obligations of Debtor hereunder. Debtor
hereby appoints Secured Party as Debtor's attorney-in-fact with full power and
authority to do all things, including, but not limited to, making claims,
receiving payments and endorsing documents, checks or drafts, necessary to
secure payments due under any policy contemplated hereby on account of a
Casualty
<PAGE> 4
AURORA BIOSCIENCES CORPORATION
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 4 OF 8
Occurrence. Debtor and Secured Party contemplate that the jurisdictions where
the Equipment will be located will not impose any liability upon Secured Party
for personal injury and/or property damage resulting out of the possession,
use, operation or condition of the Equipment. In the event Secured Party
determines that such is not or may not be the case with respect to a given
jurisdiction, Debtor will provide Secured Party with public liability and
property damage coverage applicable to the Equipment in such amounts and in
such form as Secured Party requires.
15. SECURED PARTY'S PAYMENT. If Debtor fails to pay any amounts due
hereunder or to perform any of its other obligations under this Agreement,
Secured Party may, at its option, but without any obligation to do so, pay such
amounts or perform such obligations, and Debtor will reimburse Secured Party
the amount of such payment or cost of such performance, plus interest at 1.5%
per month.
16. INDEMNITY. Debtor does hereby assume liability for and does agree to
indemnify, defend, protect, save and keep harmless Secured Party from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including court costs and legal
expenses, of whatever kind and nature, imposed on, incurred by or asserted
against Secured Party (whether or not also indemnified against by any other
person) in any way relating to or arising out of this Agreement or the
manufacture, financing, ownership, delivery, possession, use, operation,
condition or disposition of the Equipment by Secured Party or Debtor,
including, without limitation, any claim alleging latent and other defects,
whether or not discoverable by Secured Party or Debtor, and any other claim
arising out of strict liability in tort, whether or not in either instance
relating to an event occurring while Debtor remains obligated under this
Agreement, and any claim for patent, trademark or copyright infringement.
Debtor agrees to give Secured Party and Secured Party agrees to give Debtor
notice of any claim or liability hereby indemnified against promptly following
learning thereof.
17. DEFAULT. Any of the following will constitute an event of default
hereunder: (a) Debtor's failure to pay when due any installment payment or
other amount due hereunder, which failure continues for ten (10) days after the
due date thereof; (b) Debtor's default in performing any other obligation,
term or condition of this Agreement or any other agreement between Debtor and
Secured Party or default under any further agreement providing security for the
performance by Debtor of its obligations hereunder provided such default has
continued for more than twenty (20) days, except as provided in (c) and (d)
hereinbelow, or, without limiting the generality of subparagraph (l)
hereinbelow, default under any lease or any mortgage or other instrument
contemplating the provision of financial accommodation applicable to the real
property where an Item of Equipment is located; (c) any writ or order of
attachment or execution or other legal process being levied on or charged
against any Item of Equipment and not being released or satisfied within ten
(10) days; (d) Debtor's failure to comply with its obligations under
Paragraph 14 above or any transfer by Debtor in violation of Paragraph 21
below; (e) a non-appealable judgment for the payment of money in excess of
$100,000 being rendered by a court of record against Debtor which Debtor does
not discharge or make provision for discharge in accordance with the terms
thereof within ninety (90) days from the date of entry thereof; (f) death or
judicial declaration of incompetency of Debtor, if an individual; (g) the
filing by Debtor of a petition under the Bankruptcy Code or any amendment
thereto or under any other insolvency law or law providing for the relief of
debtors, including, without limitation, a petition for reorganization,
arrangement or extension, or the commission by Debtor of an act of bankruptcy;
(h) the filing against Debtor of any such petition not dismissed or
permanently stayed within thirty (30) days of the filing thereof; (i) the
voluntary or involuntary making of an assignment of substantial portion of its
assets by Debtor for the benefit of creditors, appointment of a receiver or
trustee for Debtor or for any of Debtor's assets, institution by or against
Debtor or any other type of insolvency proceeding (under the Bankruptcy Code or
otherwise) or of any formal or informal proceeding for dissolution,
liquidation, settlement of claims against or winding up of the affairs of
Debtor, Debtor's cessation of business activities or the making by Debtor of a
transfer of all or a material portion of Debtor's assets or inventory not in
the ordinary course of business; (j) the occurrence of any event described in
parts (e), (f), (g), (h) or (i) hereinabove with respect to any guarantor or
<PAGE> 5
AURORA BIOSCIENCES, INC.
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 5 OF 8
other party liable for payment or performance of this Agreement; (k) any
certificate, statement, representation, warranty or audit heretofore or
hereafter furnished with respect hereto by or on behalf of Debtor or any
guarantor or other party liable for payment or performance of this Agreement
proving to have been false in any material respect at the time as of which the
facts therein set forth were stated or certified or having omitted any
substantial contingent or unliquidated liability or claim against Debtor or any
such guarantor or other party; (l) breach by Debtor of any lease or other
agreement providing financial accommodation under which Debtor or its property
is bound; or (m) a transfer of effective control of Debtor, if an
organization.
18. REMEDIES. Upon the occurrence of an event of default, Secured Party
will have the rights, options, duties and remedies of a Secured Party, and
Debtor will have the rights and duties of a debtor, under the Uniform
Commercial Code (regardless of whether such Code or a law similar thereto has
been enacted in a jurisdiction wherein the rights or remedies are asserted)
and, without limiting the foregoing, Secured Party may exercise any one or more
of the following remedies: (a) declare the Casualty Value or such lesser
amount as may be set by law immediately due and payable with respect to any or
all Items of Equipment without notice or demand to Debtor; (b) sue from time
to time for and recover all installment payments and other payments then
accrued and which accrue during the pendency of such action with respect to any
or all Items of Equipment; (c) take possession of and, if deemed appropriate,
render unusable any or all Items of Equipment, without demand or notice,
wherever same may be located, without any court order or other process of law
and without liability for any damages occasioned by such taking of possession
and remove, keep and store the same or use and operate or lease the same until
sold; (d) require Debtor to assemble any or all Items of Equipment at the
Equipment Location therefor, or at such location to which such Equipment may
have been moved with the written consent of Secured Party or such other
location in reasonable proximity to either of the foregoing as Secured Party
designates; (e) upon ten (10) days notice to Debtor or such other notice as
may be required by law, sell or otherwise dispose of any Item of Equipment,
whether or not in Secured Party's possession, in a commercially reasonable
manner at public or private sale at any place deemed appropriate and apply the
new proceeds of such sale, after deducting all costs of such sale, including,
but not limited to, costs of transportation, repossession, storage,
refurbishing, advertising and brokers' fees, to the obligations of Debtor to
Secured Party hereunder or otherwise, with Debtor remaining liable for any
deficiency and with any excess being returned to Debtor; (f) upon thirty (30)
days notice to Debtor, retain any repossessed or assembled Items of Equipment
as Secured Party's own property in full satisfaction of Debtor's liability for
the installment payments due hereunder with respect thereto, provided that
Debtor will have the right to redeem such Items by payment in full of its
obligations to Secured Party hereunder or otherwise or to require Secured Party
to sell or otherwise dispose of such Items in the manner set forth in
subparagraph (e) hereinabove upon notice to Secured Party within such thirty
(30) day period; or (g) utilize any other remedy available to Secured Party
under the Uniform Commercial Code or similar provision of law or otherwise at
law or in equity.
No right or remedy conferred herein is exclusive of any other right or remedy
conferred herein or by law; but all such remedies are cumulative of every other
right or remedy conferred hereunder or at law or in equity, by statute or
otherwise, and may be exercised concurrently or separately from time to time.
Any sale contemplated by subparagraph (e) of this Paragraph 18 may be adjourned
from time to time by announcement at the time and place appointed for such
sale, or for any such adjourned sale, without further published notice, Secured
Party may bid and become the purchaser at any such sale. Any sale of an Item
of Equipment, whether under said subparagraph or by virtue of judicial
proceedings, will operate to divest all right, title, interest, claim and
demand whatsoever; either at law or in equity, of Debtor in and to said item
and will be a perpetual bar to any claim against such Item, both at law and in
equity, against Debtor and all persons claiming by, through or under Debtor.
19. DISCONTINUANCE OF REMEDIES. If Secured Party proceeds to enforce any
right under this Agreement and such proceedings are discontinued or abandoned
for any reason or are
<PAGE> 6
AURORA BIOSCIENCES CORPORATION
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 6 OF 8
determined adversely, then and in every such case Debtor and Secured Party will
be restored to their former positions and rights hereunder.
20. SECURED PARTY'S EXPENSES. Debtor will pay Secured Party all costs
and expenses, including attorney's fees and court costs and sales costs not
offset against sales proceeds under Paragraph 18 above, incurred by Secured
Party in exercising any of its rights or remedies hereunder or enforcing any of
the terms, conditions or provisions hereof. This obligation includes the
payment or reimbursement of all such amounts whether an action is ultimately
filed and whether an action is ultimately dismissed.
21. ASSIGNMENT. Without the prior written consent of Secured Party,
Debtor will not sell, lease, pledge or hypothecate, except as provided in this
Agreement, any Item of Equipment or any interest therein or assign, transfer,
pledge, or hypothecate this Agreement or any interest in this Agreement or
permit the Equipment to be subject to any lien, charge or encumbrance of any
nature except the security interest of Secured Party contemplated hereby.
Debtor's interest herein is not assignable and will not be assigned or
transferred by operation of law. Consent to any of the foregoing prohibited
acts applies only in the given instance and is not a consent to any subsequent
like act by Debtor or any other person.
All rights of Secured Party hereunder may be assigned, pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without
notice to Debtor but always, however, subject to the rights of Debtor under
this Agreement. If Debtor is given notice of any such assignment, Debtor will
acknowledge receipt thereof in writing. In the event Secured Party assigns
this Agreement or the installment payments due or to become due hereunder or
any other interest herein, whether as security for any of its indebtedness or
otherwise, no breach or default by Secured Party hereunder or pursuant to any
other agreement between Secured Party and Debtor, should there be one, will
excuse performance by Debtor of any provision hereof, it being understood that
in the event of such default or breach by Secured Party that Debtor will pursue
any rights on account thereof solely against Secured Party. No such assignee,
unless such assignee agrees in writing, will be obligated to perform any duty,
covenant or condition required to be performed by Secured Party in connection
with this Agreement.
Subject always to the foregoing, this Agreement inures to the benefit of, and
is binding upon, the heirs, legatees, personal representative, successors and
assigns of the parties hereto.
22. MARKINGS; PERSONAL PROPERTY. If Secured Party supplies Debtor with
labels, plates, decals or other markings stating that Secured Party has an
interest in the Equipment, Debtor will affix and keep the same prominently
displayed on the Equipment or will otherwise mark the Equipment or its then
location or locations, as appropriate, at Secured Party's request to indicate
Secured Party's security interest in the Equipment. The Equipment is, and at
all times will remain, personal property notwithstanding that the Equipment or
any Item thereof may now be, or hereafter become, in any manner affixed or
attached to, or embedded in, or permanently resting upon real property or any
improvement thereof or attached in any manner to what is permanent as by means
of cement, plaster, nails, bolts, screws or otherwise. If requested by Secured
Party, Debtor will obtain and deliver to Secured Party waivers of interest or
liens in recordable form satisfactory to Secured Party from all persons
claiming any interest in the real property on which an Item of Equipment is or
is to be installed or located.
23. LATE CHARGES. Time is of the essence in this Agreement and if any
Installment Payment is not paid within ten (10) days after the due date
thereof, Secured Party shall have the right to add and collect, and Debtor
agrees to pay: (a) a late charge on and in addition to, such Installment
Payment equal to five percent (5%) of such Installment Payment or a lesser
amount if established by any state or federal statute applicable thereto, and
(b) interest on such Installment Payment from thirty (30) days after the due
date until paid at the highest contract rate enforceable against Debtor under
applicable law but never to exceed eighteen percent (18%) per annum.
<PAGE> 7
AURORA BIOSCIENCES, CORPORATION
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 7 OF 8
24. NON-WAIVER. No covenant or condition of this Agreement can be waived
except by the written consent of Secured Party. Forbearance or indulgence by
Secured Party in regard to any breach hereunder will not constitute a waiver of
the related covenant or condition to be performed by Debtor.
25. ADDITIONAL DOCUMENTS. In connection with and in order to perfect and
evidence the security interest in the Equipment granted Secured Party hereunder
Debtor will execute and deliver to Secured Party such financing statements and
similar documents as Secured Party requests. Debtor authorizes Secured Party
where permitted by law to make filings of such financing statements without
Debtor's signature. Debtor further will furnish Secured Party (a) on a
timely basis, Debtor's future financial statements, including Debtor's most
recent annual report, balance sheet and income statement, prepared in
accordance with generally accepted accounting principles, which reports, Debtor
warrants, shall fully and fairly represent the true financial condition of
Debtor (b) any other information normally provided by Debtor to the public
and (c) such other financial data or information relative to this Agreement
and the Equipment, including, without limitation, copies of vendor proposals
and purchase orders and agreements, listings of serial numbers or other
identification data and confirmations of such information, as Secured Party may
from time to time reasonably request. Debtor will procure and/or execute, have
executed, acknowledge, have acknowledged, deliver to Secured Party, record and
file such other documents and showings as Secured Party deems necessary or
desirable to protect its interest in and rights under this Agreement and
interest in the Equipment. Debtor will pay as directed by Secured Party or
reimburse Secured Party for all filing, search, title report, legal and other
fees incurred by Secured Party in connection with any documents to be provided
by Debtor pursuant to this Paragraph or Paragraph 22 and any further similar
documents Secured Party may procure.
26. DEBTOR'S WARRANTIES. Debtor certifies and warrants that the
financial data and other information which Debtor has submitted, or will
submit, to Secured Party in connection with this Agreement is, or will be at
time of delivery, as appropriate, a true and complete statement of the matters
therein contained. Debtor further certifies and warrants: (a) this
Agreement has been duly authorized by Debtor and when executed and delivered by
the person signing on behalf of Debtor below will constitute the legal, valid
and binding obligation, contract and agreement of Debtor enforceable against
Debtor in accordance with its respective terms; (b) this Agreement and each
and every showing provided by or on behalf of Debtor in connection herewith may
be relied upon by Secured Party in accordance with the terms thereof
notwithstanding the failure of Debtor or other applicable party to ensure
proper attestation thereto, whether by absence of a seal or acknowledgment or
otherwise; (c) Debtor has the right, power and authority to grant a security
interest in the Equipment to Secured Party for the uses and purposes herein set
forth and (d) each Item of Equipment will, at the time such Item becomes
subject hereto, be in good repair, condition and working order.
27. ENTIRE AGREEMENT. This instrument with exhibits and related
documentation constitutes the entire agreement between Secured Party and Debtor
and will not be amended, altered or changed except by a written agreement
signed by the parties.
28. NOTICES. Notices under this Agreement must be in writing and must be
mailed by United States mail, certified mail with return receipt requested,
duly addressed, with postage prepaid, to the party involved at its respective
address set forth at the foot hereof or at such other address as each party may
provide on notice to the other from time to time. Notices will be effective
when deposited. Each party will promptly notify the other of any change in
that party's address.
29. GENDER, NUMBER: JOINT AND SEVERAL LIABILITY. Whenever the context
of this Agreement requires, the neuter gender includes the feminine or
masculine and the singular number includes the plural; and whenever the words
"Secured Party" are used herein, they include all assignees of Secured Party,
it being understood that specific reference to "assignee" in
<PAGE> 8
AURORA BIOSCIENCES CORPORATION
EQUIPMENT FINANCING AGREEMENT NUMBER 10794
PAGE 8 OF 8
Paragraph 14 above is for further emphasis. If there is more than one Debtor
named in this Agreement, the liability of each will be joint and several.
30. TITLES. The titles to the Paragraphs of this Agreement are solely
for the convenience of the parties and are not an aid in the interpretation of
the instrument.
31. GOVERNING LAW; VENUE. This Agreement will be governed by and
construed in accordance with the laws of the State of California. Venue for
any action related to the Agreement will be in an appropriate court in San
Mateo County, California, to which Debtor consents, or in another court
selected by Secured Party which has jurisdiction over the parties. In the
event any provision hereof is declared invalid, such provision will be deemed
severable from the remaining provisions of this Agreement, which will remain in
full force and effect.
32. TIME. Time is of the essence of this Agreement and for each and all
of its provisions.
In WITNESS WHEREOF, the undersigned have executed this Agreement as of
_________________, 1996.
DEBTOR:
AURORA BIOSCIENCES CORPORATION
11149 Torrey Pines Road
La Jolla, CA 92037
By: _______________________________________________
Title: _______________________________________________
SECURED PARTY:
LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
By: _______________________________________________
Title: EVP/ General Manager
_______________________________________________
<PAGE> 9
ADDENDUM TO EQUIPMENT FINANCING AGREEMENT
NUMBER 10794
BETWEEN AURORA BIOSCIENCES CORPORATION
AND LEASE MANAGEMENT SERVICES, INC. ("SECURED PARTY")
The printed form of Equipment Financing Agreement #10794 between the
parties dated May 17, 1996 is amended as follows:
1. In Section 1, line 11 before the word "agreement" insert
"equipment lease or equipment financing."
2. In Section 7, change "fourteen (14) days" to "thirty (30) days"
in the second sentence.
3. In Section 8, line 5, after the first appearance of the words
"Secured Party" insert "which consent shall not be unreasonably withheld,
provided that (i) Debtor is not then in default hereunder, (ii) the Equipment
will continue to be used by and remain under the dominion and control of
Debtor, (iii) the Debtor provides Secured Party with evidence of transit
insurance naming Secured Party as loss payee, (iv) Debtor provides Secured
Party with a Landlord Waiver in form and substance acceptable to Secured Party
and (v) Debtor provides Secured Party with such Financing Statement or
Amendment as Secured Party may reasonably require."
4. In Section 11, line 7, after the word "below" insert "Secured
Party shall first consult with Debtor and then."
5. In Section 12, line 4, after the words "Secured Party" insert
"reasonably."
6. Section 14, delete section in its entirety and replace with
"14. INSURANCE. Debtor will procure and continuously maintain insurance against
loss (other than by reason of war, acts of God, riot, earthquake, flood or the
like) or damage to the Equipment from any reasonable risk whatsoever for not
less than the full replacement value thereof naming Secured Party as Loss Payee
as its interest may appear. Such insurance must be in a form and with companies
approved by Secured Party, must provide at least thirty (30) days advance
written notice to Secured Party of cancellation, change or modification in any
term, condition, or amount of protection provided therein, must provide full
breach of warranty protection and must provide that the coverage is "primary
coverage" (does not require contribution from any other applicable coverage).
Debtor will provide Secured Party with an original policy or certificate
evidencing such insurance. In the event of an assignment of this Agreement of
which Debtor has notice, Debtor will cause such insurance to provide the same
protection to the assignee as its interest may appear. The proceeds of such
insurance, at the option of the Secured Party or such assignee (after
consultation with Debtor), as appropriate, will be applied toward (a) repair or
replacement of the appropriate Item or items of Equipment (b) payment of the
Casualty Value thereof and/or (c) payment of, or as provision for, satisfaction
of any other accrued obligations of Debtor hereunder. Debtor hereby appoints
Secured Party as Debtor's attorney-in-fact will
1.
<PAGE> 10
full power and authority, if an Event of Default has occurred and is
continuing, to do all things, including, but not limited to, making claims,
receiving payments and endorsing documents, checks or drafts, necessary to
secure payments due under any policy contemplated hereby on account of a
Casualty Occurrence. Debtor and Secured Party contemplate that the
jurisdictions where the Equipment will be located will not impose any liability
upon Secured Party for personal injury and/or property damage resulting out of
the possession, use, operation or condition of the Equipment. In the event
Secured Party determines that such is not or may not be the case with respect
to a given jurisdiction, Debtor will provide Secured Party with public
liability and property damage coverage applicable to the Equipment in such
amounts and in such form as Secured Party reasonably requires, provided,
however, that public liability insurance with primary limits of $1,000,000 per
occurrence with an excess policy of $2,000,000, shall be deemed to satisfy this
requirement."
7. Section 15, at the beginning of the section insert "Subject to
Section 23 below,".
8. Section 16, delete section in its entirety and replace with
"16. INDEMNITY. Debtor shall indemnify and hold Secured Party harmless from and
against all claims, losses, liabilities (including negligence, tort and strict
liability, but excluding gross negligence or willful misconduct of Secured
Party), damages, judgments, suits, and all legal proceedings, and any and all
reasonable cost and expenses in connection therewith (including reasonable
attorneys' fees) arising out of or in any way connected with (a) the purchase,
financing, ownership, delivery, rejection, nondelivery, possession, use,
transportation, storage, operation, maintenance, repair, return or other
disposition of the Equipment by Debtor; or (b) this Equipment Financing
Agreement, including, without limitation, claims for injury or death of persons
and for damage to property, in each case resulting from the Equipment financed
by Debtor from Secured Party, and claims for patent, trademark or copyright
infringement, and Debtor shall give Secured Party prompt notice of any claim or
liability."
9. Section 17, delete clause (d) in its entirety and replace it
with "(d) Debtor's continued failure to comply with Paragraph 14 above for
three (3) days after notice thereof from Secured Party or any transfer by
Debtor in violation of Paragraph 21 below;".
10. Section 17, add a new sentence at the end of the section to
read as follows: "Anything in this Agreement to the contrary notwithstanding,
until such time as Secured Party has notified Debtor in writing that it has
commenced the exercise of its remedies under Section 18. Debtor may cure any
event of default under subsections (a), (b) and (l) above and, once any such
event of default is so cured, Secured Party shall have no rights or remedies
with respect to the particular cured event of default, under Section 18 or
otherwise."
11. Section 17(h), delete "thirty (30)" and replace it with
"forty-five (45)."
12. Section 17(k), at the end of the clause insert "in excess of
$50,000 per item or in the aggregate."
2.
<PAGE> 11
13. Section 17(l), delete the section and replace it with "breach, in
excess of $50,000 per item or in the aggregate, by Debtor of any lease or other
agreement providing financial accommodation under which Debtor or its property
is bound, which breach is not cured or with respect to which no provision has
been made to cure within twenty (20) days;".
14. Section 18, line 1, insert the following in front of the beginning of
the first sentence of the section: "Except as provided otherwise in this
Agreement (as amended by this Addendum)."
15. Section 18(d), line 3, after the word "Secured Party" insert ", which
consent shall not be unreasonably withheld."
16. Section 20, line 1, at the beginning of the section insert "Upon the
occurrence of an Event of Default,".
17. Section 20, line 1, insert "reasonable" between "all" and "cost."
18. Section 20, line 2, "reasonable" between "including" and "attorney's."
19. Section 25, line 4, insert "reasonably" before "requests."
20. Section 25, line 5, after "Secured Party" insert "at the Secured
Party's reasonable request."
21. Section 25, line 17, insert "reasonable" between "report," and "legal"
and between "other" and "fees."
22. Section 31, delete the second sentence beginning in line 2 and replace
it with "Venue for any action related to the Agreement will be in an appropriate
court in San Diego County, California."
IN WITNESS WHEREOF, the undersigned have executed this Addendum this 17th
day of May, 1996.
DEBTOR SECURED PARTY:
AURORA BIOSCIENCES CORPORATION LEASE MANAGEMENT SERVICES, INC.
By: /s/ JOHN T. HENDRICK By:
-------------------------- ---------------------------
Title: VP Finance Title:
----------------------- ------------------------
3.
<PAGE> 12
LEASE MANAGEMENT SERVICES, INC.
ADDENDUM TO
EQUIPMENT FINANCING AGREEMENT
NUMBER 10794
BY AND BETWEEN
AURORA BIOSCIENCES CORPORATION, AS DEBTOR,
AND
LEASE MANAGEMENT SERVICES, INC., AS SECURED PARTY
AURORA BIOSCIENCES CORPORATION, as Debtor, hereby acknowledges its
responsibility to pay, and agrees to pay any taxes which may be due to the
State of California or where applicable, for the collateral covered under the
above referenced agreement.
DEBTOR:
AURORA BIOSCIENCES CORPORATION
By: ____________________________________________
Title: ____________________________________________
Date: ____________________________________________
<PAGE> 1
EXHIBIT 10.16
LEASE MANAGEMENT SERVICES, INC.
SECURITY DEPOSIT PLEDGE AGREEMENT
PLEDGEE: LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, California 94025
PLEDGOR: AURORA BIOSCIENCES CORPORATION
11149 No. Torrey Pines Road
La Jolla, CA 92037
In consideration of, and as an inducement for Pledgee to enter into a Master
Lease Agreement Number 10494 and an Equipment Financing Agreement Number 10794
and all Schedules thereunder (hereinafter collectively referred to as the
"Agreements") with Pledgor, and to secure the payment and performance of all
Pledgor's obligations under the Agreements, Pledgor hereby grants and assigns
to Pledgee, its successors and assigns, a security interest in, and hereby
deposits and pledges with Pledgee a Security Deposit in an amount equivalent to
12% of aggregate Equipment cost (including any soft costs) leased or financed
for each Schedule. As used herein, "Security Deposit" shall refer to the
aggregate of all component deposits made under the applicable Schedules. Such
pledge is to be upon the terms and conditions set forth below:
1. Pledgor delivers the Security Deposit to Pledgee to secure the due and
punctual payment and performance of the obligations of Pledgor under
the Agreements. Pledgee will pay 5% simple interest per annum on the
Security Deposit, which interest will be accrued for each respective
component of the Security Deposit from the commencement date of the
applicable Schedule and paid when the Security Deposit is returned to
Pledgor.
2. Upon any default by Pledgor under the Agreements, interest accrual on
the Security Deposit shall cease and Pledgee may, at its option, apply
the Security Deposit and any interest accrued to that date toward the
satisfaction of Pledgor's obligations under the Agreements, and the
payment of all costs and expenses incurred by Pledgee as a result of
such default, including reasonable attorney's fees. Pledgee is liable
to Pledgor only for any surplus remaining from said Security Deposit
after the full satisfaction of the foregoing obligations, costs and
expenses.
3. Pledgor waives any rights to require Pledgee to (i) proceed against
Pledgor or any other party; (ii) proceed against or exhaust any
security held from Pledgor; or (iii) pursue any other remedy in
Pledgee's power whatsoever before enforcing the provisions of, and
proceeding under the provisions of, this Security Deposit Pledge
Agreement. The obligations of Pledgor under this Security Deposit
Pledge Agreement shall be absolute and unconditional, and shall remain
in full force and effect without regard to, and shall not be released
or discharged or in any way affected by (a) any amendment or
modification of or supplement to the Agreements; (b) any exercise or
non-exercise of any right, remedy or privilege under or in respect to
this Security Deposit Pledge Agreement, the Agreements, or any other
instrument provided for in the Agreements, or any waiver, consent,
explanation, indulgence or actions or inaction
<PAGE> 2
SECURITY DEPOSIT PLEDGE AGREEMENT
AURORA BIOSCIENCES CORPORATION
Page 2 of 3
with respect to any such instrument; or (c) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceedings of Pledgor.
4. Pledgee shall have no obligation to segregate said Security Deposit
and Pledgor hereby irrevocably authorizes Pledgee, at Pledgee's sole
election, to commingle said Security Deposit with other assets and
funds held by or belonging to Pledgee. Pledgor may not assign, pledge
or transfer to any party its interest in the Security Deposit and any
attempt to do so shall be null and void.
5. Without notice to Pledgor, Pledgee may freely assign its rights and
obligations hereunder, in whole or in part, at any time and this
Security Deposit Pledge Agreement shall inure to the successors and
assignees of Pledgee. In the event Pledgee assigns or transfers one
or more Schedules under the Agreements without assigning or
transferring the Security Deposit, Pledgor agrees that it will look
solely to Pledgee for the return of the Security Deposit and will not
assert any claim against any assignee of Pledgee for the return of
said Security Deposit and further agrees that it will not assert
against any payments due such assignee of Pledgee any offset that
Pledgor may have against Pledgee for the return of said Security
Deposit. In the event Pledgee assigns or transfers this Security
Deposit Pledge Agreement along with the Schedules under the
Agreements, Pledgor agrees that it shall look solely to the assignee
of Pledgee for the return of said Security Deposit and Pledgee shall
have no further liability to Pledgor with respect thereto.
6. Provided that the Pledgor is not then in default of its obligations to
the Pledgee under the Agreements or otherwise, Pledgee agrees to
return the Security Deposit and accrued interest on a schedule by
schedule basis to Pledgor with Pledgor's achievement of the earlier of
one of the following:
A) At such time, after 12/31/97, that Pledgee's unrestricted cash
balance, less debt, is at least $20,000,000; OR
B) In the event of an acquisition, if acquiror executes an
assignment or guarantee acceptable to Pledgor; OR
C) After receipt of 32 prompt rents per schedule and cash
sufficient in Pledgor's judgment to assure Pledgee's financial
stability through the end of term; OR
D) Pledgor produces 3 consecutive quarters of pre-tax income, net
of extraordinary items, of at least $1,000,000 per quarter.
All accounting terms used herein shall be interpreted in accordance
with generally accepted accounting principles.
7. Any reduction/return of the Security Deposit and any payment of
interest prior to the Termination of the Agreements (as defined below)
is contingent upon the following additional conditions: (a)
verification of all benchmarks is to be acceptable to Pledgee; (b)
Pledgor has made all payments on a timely basis according to the terms
of the Agreements; (c) Pledgor is not, nor ever has been, in default
of any financial obligation; (d) Pledgor, if privately held, has
provided monthly financial statements to Pledgee within 30 days of each
month-end, or if Pledgor is publicly held, has provided quarterly
statements as required to be filed by the Securities and Exchange
Commission (the "SEC"); (e) Pledgor, if privately held, has provided
an annual audited financial statements to Pledgee within 90 days of
Pledgor's fiscal year end or if Pledgor is
<PAGE> 3
SECURITY DEPOSIT PLEDGE AGREEMENT
AURORA BIOSCIENCES CORPORATION
Page 3 of 3
publicly held, has provided Pledgee with annual statements as required
to be filed by the SEC; and (f) Pledgor has not suffered any
material adverse change.
The Termination of the Agreements shall be defined as the satisfaction
of all Pledgor's obligations under the Agreements.
8. If the Security Deposit has not previously been returned, upon the
Termination of the Agreements, Pledgee shall deliver the Security
Deposit and accrued interest (less any portion of same cashed, sold,
assigned or delivered pursuant to, and under the circumstances
specified in, Paragraph 2 hereof) to Pledgor, and this Security
Deposit Pledge Agreement shall thereupon be without further effect.
<TABLE>
<S> <C>
PLEDGOR: PLEDGEE:
AURORA BIOSCIENCES LEASE MANAGEMENT SERVICES, INC.
CORPORATION
By: By:
--------------------------------- ---------------------------------------
Title: Title: EVP/General Manager
------------------------------ ------------------------------------
Date: Date:
------------------------------- -------------------------------------
</TABLE>
<PAGE> 4
LEASE MANAGEMENT SERVICES, INC.
CERTIFICATE OF INCUMBENCY AND AUTHORITY
I, Timothy J. Rink, do hereby certify that I am the duly elected, qualified and
acting Chief Executive Officer of AURORA BIOSCIENCES CORPORATION,
(Lessee/Debtor), a Delaware corporation; that the persons whose names, titles
and signatures appear below are duly elected (or appointed) qualified and
acting officers of said corporation and hold on the date of this Certificate,
and on the date of execution of the Master Lease documents and/or Equipment
Financing documents, the offices set opposite their respective names; that the
signatures appearing opposite their respective names are the genuine signatures
of such officers; that each such officer is duly authorized for and on behalf
of said corporation to execute and deliver any Equipment Lease and/or Equipment
Financing Agreement between said corporation and said Lessor/Secured Party,
LEASE MANAGEMENT SERVICES, INC., and all agreements, documents, and instruments
in connection therewith, including without limitation, Rental Schedules and
Certificates of Equipment Acceptance, and that the execution and delivery of
any such equipment lease and/or financing agreement, and all agreements,
documents, and instruments in connection therewith for and on behalf of said
corporation is not prohibited by or in any manner restricted by the terms of
said corporation's Certificate of Incorporation, its by-laws, or of any loan
agreement, indenture or contract to which said corporation is a party or under
which it is bound. I do further certify that the foregoing authority shall
remain in full force and effect, and LEASE MANAGEMENT SERVICES, INC. shall be
entitled to rely upon the same, until written notice of the modification,
rescission or revocation of same, in whole or in part, has been delivered to
LEASE MANAGEMENT SERVICES, INC., but no such modification, rescission or
revocation shall, in any event, be effective with respect to any documents
executed or actions taken in reliance upon the foregoing authority prior to the
delivery to LEASE MANAGEMENT SERVICES, INC. of said written notice of said
modification, rescission or revocation.
<TABLE>
<S> <C> <C>
NAME OF OFFICER TITLE OF OFFICER SIGNATURE OF OFFICER
Deborah J. Tower Director, Finance
-----------------------------------
& Administration
</TABLE>
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day of ________,
1996.
Lessee/Debtor:
AURORA BIOSCIENCES CORPORATION
By: _______________________________________________________
Title: Chief Executive Officer
_______________________________________________________
<PAGE> 5
LEASE MANAGEMENT SERVICES, INC.
CERTIFIED COPY OF RESOLUTIONS OF
BOARD OF DIRECTORS
I, John T. Hendrick, hereby certify that I am the Corporate Secretary and
official custodian of certain records including the Charter, By-Laws, and the
Minutes of the Meetings of the Board of Directors of AURORA BIOSCIENCES
CORPORATION, a Corporation duly organized and existing under the laws of the
State of Delaware, that the following is a true, accurate and compared
transcript of the Resolutions contained in the Minute Book of the Corporation,
duly adopted by the Board of Directors of said Corporation at a Meeting of the
Board of Directors of said Corporation duly held on the ______ day of
__________, 19____, at which time a quorum was present and acted throughout and
authorized its officers to transact the business hereinafter described, and
that the proceedings of said meeting were in accordance with the Charter and
By-Laws of said Corporation and that said Resolutions have not been rescinded
or amended and are in full force and effect:
RESOLVED, that this Corporation enter into a Lease Agreement and/or an
Equipment Financing Agreement with LEASE MANAGEMENT SERVICES, INC. for the
funding of that certain property as is set forth in the Master Equipment Lease
Agreement and/or Equipment Financing Agreement, and it is further
RESOLVED, that any officers of this Corporation be and they are hereby
authorized and empowered in the name of and on behalf of this Corporation to
execute any and all documents as may be required by LEASE MANAGEMENT SERVICES,
INC. to effectuate the provisions hereof.
I CERTIFY, that I have examined the Articles of Incorporation, the
By-Laws of the Corporation, and all amendments therewith and I am fully
familiar with all of said documents and that there are no restrictions imposed
on the power and authority of the Board of Directors of said Corporation to
adopt the foregoing resolutions whereupon the Corporation and its officers are
authorized to act in accordance therewith.
IN WITNESS WHEREOF, I have hereupon subscribed my name on the ________
day of_______________ , 1996.
By: ______________________________________
Corporate Secretary
ATTEST:
___________________________________________
Title: ____________________________________
<PAGE> 6
LEASE MANAGEMENT SERVICES, INC.
REQUEST FOR CERTIFICATE OF INSURANCE
Stephen Downey
ISU Downey Insurance Co.
844 Prospect Street
La Jolla, CA 92037
We, as Lessee/Debtor, have entered into a Master Equipment Lease Agreement
and/or an Equipment Financing Agreement with LEASE MANAGEMENT SERVICES, INC.,
as Lessor/Secured Party, to finance the purchase of equipment.
Accordingly, you are hereby authorized to:
1. Insure said equipment in the name of LEASE MANAGEMENT SERVICES, INC.
2. Issue a written endorsement naming LEASE MANAGEMENT SERVICES, INC., as
Additional Insured and First Loss Payee, and provide LMSI with thirty
(30) day written notice of material change of coverage, cancellation
or non-renewal. LMSI shall have the right to name additional parties
as Additional Insured and First Loss Payee and notices will also be
provided to those parties upon LMSI's request.
3. INSURANCE MUST INCLUDE COVERAGE AS INDICATED BELOW:
(x) Bodily Injury and Property Damage Insurance with
limits of no less than $3,500,000
(x) Physical Damage (all risk) from any cause
whatsoever, except earthquake and flood.
4. Loss, if any, under this endorsement shall be payable SOLELY to LEASE
MANAGEMENT SERVICES, INC., or its assigns and shall not be invalidated
due to any violation of any conditional warranty contained in any
policy or application therefor by Lessee/Debtor, or by reason of any
act of the Lessee/Debtor.
5. THIS POLICY MUST CONTAIN THE FOLLOWING ENDORSEMENT:
The insurance under this policy shall be primary insurance, and the
company insurer shall be liable under this policy for the full amount
of the loss up to and including the total limits of liability herein
without right of contribution from any other insurance effected by
LEASE MANAGEMENT SERVICES, INC., under any policy with any insurance
company covering a loss covered under this policy.
Forward evidence of coverage to: LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, California 94025
Attn: Insurance Administrator
LESSEE/DEBTOR:
AURORA BIOSCIENCES CORPORATION
By: ________________________________________________________
Title: ______________________________________________________
Date: _______________________________________________________
<PAGE> 7
LEASE MANAGEMENT SERVICES, INC.
LANDLORD WAIVER
WHEREAS, Nexus Development Corporation a _______________ corporation
("Landlord"), being the owner and landlord of the premises described as 11149
No. Torrey Pines Road, La Jolla, San Diego County, CA 92037; and
WHEREAS Landlord and AURORA BIOSCIENCES CORPORATION ("Tenant") have entered
into a real property lease wherein Tenant has leased approximately ___________
square feet of space in the building located at 11149 No. Torrey Pines Road, La
Jolla, San Diego County, CA 92037; and ("Premises") and
WHEREAS, Landlord acknowledges that notice has been received that Tenant has
entered into an equipment lease and/or financing agreement that provides a
security interest in the personal property leased or to be leased, and/or
pledged or to be pledged, from LEASE MANAGEMENT SERVICES, INC. ("Lessor/Secured
Party"), under a Master Lease Agreement Number 00000 and all its schedules
thereunder, and/or under an Equipment Financing Agreement Number 00000 and all
its schedules thereunder, (hereinafter referred to collectively as the
"Agreements") for the better utilization of said Premises by said Tenant;
NOW, THEREFORE, the Landlord, as an inducement to said Lessor/Secured Party to
lease such personal property for said Tenant and/or to finance the acquisition
of personal property to said Tenant, and in consideration of the benefit to the
undersigned resulting from such better utilization of said Premises, and for
other valuable considerations, hereby acknowledged by the undersigned, does
hereby agree that:
1. Each and all items of personal property so leased/financed by said
Lessor/Secured Party to said Tenant, under said Agreements, or any
renewal, extension, or modification thereof, shall not, by reason of
its installation or being placed in or upon said Premises, be
construed as real property, or as forming part of any building leased
by the Landlord to said Tenant, but shall remain personal property at
all times, be severable from said Premises and not be construed as a
fixture by being placed in or upon, or in any manner annexed, attached
or connected to said Premises.
2. Title to, ownership of, and/or the right of possession as provided in
the Agreements covering said personal property, shall be and shall
remain at all times with said Lessor/Secured Party, its successors and
assigns, free of any claim or right of the Landlord.
3. Lessor/Secured Party may enter the Premises at any time or from time
to time for purposes of inspecting and/or removing any and all of the
personal property in the exercise of its rights and remedies arising
from aforesaid Agreements. If it becomes necessary to remove personal
property from the Premises, Lessor/Secured Party will take all
reasonable care to avoid damage to the Premises. If damage, resulting
solely from the Lessor/Secured Party's, and/or its agent(s) act(s) of
removing personal property, does occur, then the Lessor/Secured Party
will be responsible to pay a reasonable sum, agreed upon by both the
Landlord and Lessor/Secured Party, to repair damages resulting to the
Premises.
4. Landlord waives and releases any and all rights, however arising,
including without limitation, the right to levy, seize, sue, execute
or sell for unpaid rent, which Landlord now has or may hereafter
acquire with respect to the personal property, whether such property
is now or hereafter located on or in the Premises or otherwise, and
all claims and demands of every kind against the personal property,
during the term of the aforesaid Agreements and any renewal, extension
or modification therefor or substitution thereof.
<PAGE> 8
LANDLORD WAIVER
Aurora Biosciences Corporation
Page 2 of 2
5. Landlord agrees to make this Waiver known to any transferee of the
Premises and any person who may have any interest or right in the
Premises or personal property.
6. Landlord agrees to make best efforts to promptly notify in writing,
said Lessor/Secured Party, of any default or termination of its lease
with Tenant for any reason or any event which, with the giving of
notice or passage of time or both, could result in the creation of the
right of Landlord to terminate any lease covering all or any part of
the Premises or to accelerate any rent due thereunder.
7. If Landlord notifies Lessor/Secured Party that Tenant has abandoned
the personal property and/or that Tenant has defaulted on the real
property lease and has been evicted and/or vacated the Premises
leaving the personal property thereon; Lessor/Secured Party upon
notification of such action from Landlord, will use its best efforts
with the Landlord to remove the personal property in a timely manner.
Should a timely removal not be possible due to the size or nature of
the personal property, or other factors, Lessor/Secured Party and
Landlord will make mutually acceptable rental and/or on-site storage
arrangements if required.
8. Any disputes arising out of the terms and conditions of this Waiver,
shall be resolved before the American Arbitration Association in the
City of San Francisco, pursuant to the rules of such Arbitration.
9. Each party represents to the others that it has full power and
authority to execute and deliver this Agreement.
This waiver shall be binding upon the heirs, administrators, executors,
successors and assigns of the Landlord, and shall inure to the benefit of the
successors and assigns of said Lessor/Secured Party.
In WITNESS WHEREOF, the undersigned has executed, sealed and delivered this
Waiver this ________ day of ________________, 1996.
<TABLE>
<S> <C>
LANDLORD: PERSONAL PROPERTY LESSOR/SECURED PARTY:
NEXUS DEVELOPMENT LEASE MANAGEMENT SERVICES, INC.
CORPORATION
By: By:
---------------------------------------- ----------------------------------------------------------
Name: Title: EVP/General Manager
-------------------------------------- -------------------------------------------------------
(typed or printed)
Title:
-------------------------------------
Address: 6333 Greenwich Dr, Suite 150
San Diego, CA 92122
Phone:
--------------------------------
</TABLE>
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.17
Exclusive License Agreement
between
The Regents of the University of California
and
Aurora Biosciences, Corp.
for
Fluorescent Assay Technologies
U.C. Case Nos. 93-289, 95-110, 95-219, 96-044, 96-160, 96-161, 96-162, 96-191
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
ARTICLE PAGE
------- ----
<S> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. License Issue Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6. Progress and Royalty Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. Life of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. Termination by The Regents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. Termination by Licensee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11. Supply of the Biological Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12. Maintenance of the Biological Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13. Disposition of the Biological Materials, Biological Products, . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14. Use of Names and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15. Limited Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16. Patent Prosecution and Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
17. Patent Marking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
18. Patent Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
19. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
21. Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22. Late Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
23. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
24. Failure to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25. Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
26. Government Approval or Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
27. Export Control Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
28. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
29. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
30. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
<PAGE> 3
U.C. Case Nos. 93-289, 95-110, 95-219, 96-044, 96-160, 96-161, 96-162, and
96-191
Exclusive License Agreement
for
Fluorescent Assay Technologies
This license agreement ("Agreement") is effective this ______ day of
____________, 1996, (the Effective Date") by and between The Regents of the
University of California ("The Regents"), a California corporation, having its
statewide administrative offices at 300 Lakeside Drive, 22nd Floor, Oakland,
California 94612-3550 and Aurora Biosciences Corporation ("Licensee"), a
Delaware corporation, having a principal place of business at 11149 North
Torrey Pines Road, La Jolla, CA 92037.
Recitals
Whereas, certain inventions, generally characterized as fluorescent
assay technologies, including DNA encoding a green fluorescent protein and
fluorogenic substrates for Beta-lactamase ("Inventions"), useful for cell
screening, were made at the University of California, San Diego ("UCSD") by Dr.
Roger Tsien, et al., and are claimed in Patent Rights or within the Property
Rights as defined below;
Whereas, Licensee entered into secrecy agreements ("Secrecy
Agreements") with The Regents covering UC Case Nos. *** on August 10, 1994; ***
on January 1, 1995; *** on December 8 1995; and *** on February 22, 1996 for the
purpose of evaluating the Invention;
***CONFIDENTIAL TREATMENT REQUESTED
1
<PAGE> 4
Whereas, Licensee entered into an option agreement ("Option
Agreement") with The Regents on June 1, 1995 and ending on December 1, 1995 in
order to evaluate its commercial interest in the Invention;
Whereas, Licensee entered into a letter agreement with The Regents on
March 6, 1996 covering certain negotiated provisions that are contained in this
Agreement and a letter agreement with The Regents on April 26, 1996, with
respect to the Biological Materials ("Letter Agreements");
Whereas, the Invention was made under research funding provided in
part by the Department of Health and Human Services (DHHS) and in part by the
Howard Hughes Medical Institute (HHMI), and as a consequence, this Agreement is
subject to overriding obligations to the federal government and to HHMI;
Whereas, under 35 USC Section 200-212, The Regents may elect to retain
title to any invention (including the Invention) made by it under U.S.
Government funding;
Whereas, if The Regents elects to retain title to the Invention, then
the law requires that The Regents grant to the U.S. Government a
nontransferable, paid-up, nonexclusive, irrevocable license to use the
Invention by or on behalf of the U.S. Government throughout the world;
Whereas, The Regents elected to retain title to the Invention covered
by UC Case Nos. *** on November 19, 1993; *** on February 5, 1996; ***
on October 25, 1995; and *** and *** on January 8, 1996, and granted the
required licenses to the U.S. Government;
Whereas, The Regents has acquired the right to grant this license from
the Howard Hughes Medical Institute (HHMI) under the terms of the
interinstitutional agreement ("Interinstitutional Agreement"), having UC
Control No. 86-18-0017;
*** CONFIDENTIAL TREATMENT REQUESTED
2
<PAGE> 5
Whereas, The Regents is required under the terms of Interinstitutional
Agreement to grant to the HHMI a paid-up, non-exclusive, irrevocable license to
use the Invention for its non-commercial purposes, but with no right to
sublicense;
Whereas, the Licensee is a "small entity" as defined in 37 CFR Section
1.9 and a "small-business concern" defined in 15 U.S.C. Section 632;
Whereas, it is the intent of the parties to this Agreement to create a
bailment (as provided for in Sections 2.2, 2.3 and 2.4 herein), among other
things, for the Biological Materials as defined below subject to Licensee's
rights as set forth herein;
Whereas, both parties recognize that royalties due under this
Agreement will be paid on pending patent applications and issued patents;
Whereas, Licensee requested certain rights from The Regents to
commercialize the Invention; and
Whereas, The Regents responded to the request of Licensee by granting
the following rights to Licensee so that the products and other benefits
derived from the Invention can be enjoyed by the general public.
- - oo 0 oo - -
The parties agree as follows:
1. Definitions
As used in this Agreement, the following terms will have the meaning
set forth below:
3
<PAGE> 6
1.1 "Patent Rights" means all U.S. patents and patent applications
and foreign patents and patent applications assigned to The Regents, and in the
case of foreign patents and patent applications, those requested under Section
16.4 herein, including any reissues, extensions, substitutions, continuations,
divisions, and continuation-in-part applications (only to the extent, however,
1) that such continuation-in-part applications are covered in Section 1.1.9
below; or 2) that claims in the continuation-in-part applications are entitled
to the priority filing date of one or more of the following patent
applications listed in Sections 1.1.1 through 1.1.8 below) based on and
including any subject matter claimed in or covered by the following:
1.1.1. Pending U.S. Patent Application Serial No. ***,
entitled *** filed ***, by Dr. Roger Tsien, et al.
and assigned to The Regents ***;
1.1.2. Pending U.S. Patent Application Serial No. *** filed
***, by Dr. Roger Tsien, et al. and assigned to The
Regents ***;
1.1.3. Pending U.S. Patent Application Serial No. *** filed
***, by Dr. Roger Tsien, et al. and assigned to The
Regents ***.
1.1.4. Pending PCT Application Serial No. ***, filed *** by
Dr. Roger Tsien, et al. and assigned to The Regents
***;
1.1.5. Pending U.S. Patent Application Serial No. *** filed
***, by Dr. Roger Tsien, et al. and assigned to The
Regents ***;
1.1.6. Any U.S. Patent Application based on subject matter
described in UC Case Number ***
*** CONFIDENTIAL TREATMENT REQUESTED
4
<PAGE> 7
*** disclosed by Dr. Roger Tsien, et al. and assigned
to The Regents; and
1.1.7. Any U.S. Patent Application based on subject matter
described in *** disclosed by Dr. Roger Tsien, et al.
and assigned to The Regents; and
1.1.8. Any U.S. Patent Application based on subject matter
described in ***************************************
*********************************," disclosed by Dr.
Roger Tsien, et al. and assigned to The Regents.
1.1.9 Any continuation-in-part applications that are filed
by *** where such continuation-in-part applications
disclosed Inventions at UCSD and name Roger Tsien or
an employee of The Regents in Roger Tsien's laboratory
at UCSD as an inventor, and are based on one or more
of the patent applications described in Sections
1.1.1 through 1.1.8 immediately above.
1.2. "Biological Materials" means ***
1.3. "Biological Product" means any product containing: (a) a
plasmid, a protein structure, a cDNA clone, a promoter, a gene or a chimeric
gene, antibodies, or fragments thereof and their sequences derived from or
containing the Biological Materials; (b) any protein structure produced or
encoded by the Biological Materials; or (c) a compound (substantially similar
or identical to a compound in (a) or (b) above), produced by chemical synthesis
or by any other method which could not have been produced but for the use of
the Biological Materials. Biological Products may either be Patent Products or
Proprietary Products.
1.4. "Identified Product" means any product, compound, biological
agent, or other material not claimed by the Patent Rights and not comprising a
Biological Product,
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but identified by Licensee or a sublicensee using the Biological Materials or
Biological Products.
1.5. "Patent Products" means:
1.5.1. any kit, composition of matter, material, product, or
Biological Product;
1.5.2. any kit, composition of matter, material, product, or
Biological Product to be used in a manner requiring
the performance of the Patent Method; or
1.5.3. any kit, composition of matter, material, product, or
Biological Product produced by the Patent Method;
the extent that the manufacture, use, or sale of such kit, composition of
matter, material, product, or Biological Product, in a particular country,
would be covered by or infringe, but for the license granted to Licensee
pursuant to this Agreement, an unexpired claim of a patent or pending claim of
a patent application were it issued as a claim in a patent under Patent Rights
in that country in which such patent has issued or application is pending.
1.6. "Patent Method" means any process or method covered by the
claims of a patent application or patent within Patent Rights or the use or
practice of which would constitute in a particular country, but for the license
granted to Licensee pursuant to this Agreement, an infringement of an unexpired
claim of a patent or pending claim of a patent application were it issued as a
claim in a patent within Patent Rights in that country in which the Patent
Method is used or practiced.
1.7. "Proprietary Products" means any kit, composition of matter,
material, or product containing a Biological Product, the manufacture, use, or
sale of which in a particular country is not within an unexpired, valid claim
of a patent or a pending claim of a patent application under Patent Rights in
such country.
1.8. "Products" means Patent Products, Identified Product,
Proprietary Products, and Services.
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<PAGE> 9
1.9. "Property Rights" means all personal proprietary rights of The
Regents covering the tangible personal property in the Biological Materials.
In no case, however, will Property Rights include Patent Rights.
1.10. "Research Reagent" means the *** . A Research Reagent may be a
Patent Product or a Proprietary Product.
1.11. "Net Sales" means the *** . Where Licensee distributes
Products to an Affiliate, a Joint Venture, or a sublicensee for end use by such
Affiliate, Joint Venture, or sublicensee, then such distribution will be
considered a sale at list price normally charged to independent third parties,
and The Regents will be entitled to collect a royalty on such sale in accordance
with Article 4. (Royalties).
1.12. "Services" means services provided by Licensee or its
sublicensees to its customers when such services require the use of the Patent
Rights or Property Rights.
1.13. "Service Revenues" means revenues paid to Licensee or its
sublicensees for Services.
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1.14. "Affiliate(s)" of Licensee means any entity which, directly or
indirectly, controls Licensee, is controlled by Licensee, or is under common
control with Licensee ("control" for these purposes being defined as the
actual, present capacity to elect a majority of the directors of such
affiliate, or if not, the capacity to elect the members that control forty
percent of the outstanding stock or other voting rights entitled to elect
directors) provided, however, that in any country where the local law will not
permit foreign equity participation of a majority, then an "Affiliate" will
include any company in which Licensee will own or control, directly or
indirectly, the maximum percentage of such outstanding stock or voting rights
permitted by local law. Each reference to Licensee herein will be meant to
include its Affiliates.
1.15. "Joint Venture" means any separate entity established pursuant
to an agreement between a third party and Licensee to constitute a vehicle for
a joint venture, in which the separate entity manufactures, uses, purchases,
sells, or acquires Products from Licensee. Each reference to Licensee herein
will be meant to include its Joint Venture(s).
2. Grant
2.1. Subject to the limitations set forth in this Agreement and
subject to the license granted to the U.S. Government and to HHMI as set forth
in the Recitals above, where Patent Rights exists, The Regents hereby *** .
2.2. Subject to the limitations set forth in this Agreement and
subject to the licenses granted to the U.S. Government and to HHMI as set forth
in the Recitals above, where The Regents may lawfully grant such a license, The
Regents hereby
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<PAGE> 11
grants to Licensee ***.
2.3. Licensee acknowledges that title to the tangible material
comprising the Biological Materials is owned by The Regents and is not
transferred to Licensee under this Agreement, except that Licensee may transfer
title of such Biological Materials as are sold as Biological Products or
Research Reagents under the terms of this Agreement.
2.4. The licenses granted under Property Rights set forth in
Section 2.2 above expressly limit the rights granted to Licensee to those
licenses expressly stated in this Agreement and for no other purpose.
2.5. The licenses granted hereunder will be subject to the
overriding obligations to the U.S. Government including those set forth in 35
U.S.C. Section 200-212 and applicable governmental implementing regulations.
2.6. The manufacture of Products and the practice of the Patent
Method will be subject to applicable government importation laws and
regulations.
2.7. The Regents also grants to Licensee the right to issue
sublicenses under the rights granted in Sections 2.1 and 2.2 above to third
parties, provided Licensee retains current exclusive rights thereto under this
Agreement. To the extent applicable, such sublicenses will include all of the
rights of and obligations due to The Regents (and, if applicable, the United
States Government) that are contained in this Agreement including payment of
fees and royalties at the rates provided for in Section 3.2 and Article 4.
(Royalties).
2.8. Licensee will notify The Regents of each sublicense granted
hereunder and provide The Regents with a copy of each sublicense, which shall
be treated as
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 12
Proprietary Information of Licensee as defined in Article 29.
(Confidentiality). Licensee will collect and pay all such fees and royalties
due The Regents from sublicensees as set forth in Sections 3.2 and 4.1 below
(and guarantee all such payments due from sublicensees). Licensee will require
sublicensees to provide it with progress and royalty reports in accordance with
the provisions herein, and Licensee will collect and deliver to The Regents all
such reports due from sublicensees.
2.9. Upon termination of this Agreement for any reason, all
sublicenses granted by Licensee in accordance with this Agreement will remain
subject to the terms of such sublicenses in effect, and shall be assigned to
and assumed by The Regents except that sublicenses which: (i) are in a state of
breach as yet uncured by the sublicensee; or (ii) sublicenses which conflict
with state, or federal law, or the previously established written policy of The
Regents, shall not be assigned to and assumed by The Regents. The Regents will
not be bound by any duties and obligations contained in the sublicenses that
extend beyond the duties and obligations assumed by The Regents in this
Agreement and shall have no right to receive any payment from such sublicensees
except the amounts due under this Agreement for the activities of such
sublicensees.
2.10. The Regents may, at its own discretion, disclose to Licensee
certain chemical and biological materials relating to the Patent Rights and
Property Rights that are developed in Dr. Roger Tsien's laboratory at UCSD.
The Regents hereby grants to Licensee the right to elect to include under this
Agreement any or all of such chemicals and biological materials.
2.11. In accordance with Section 2.10, Licensee will notify The
Regents in writing within 60 days of the disclosure by The Regents of any such
further chemicals and/or biological materials which Licensee elects to be
included under this Agreement, and such chemicals and biological materials
shall be Biological Materials for all purposes of this Agreement.
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<PAGE> 13
2.12. Because this Agreement grants the exclusive right to use or
sell the Products in the United States, Licensee acknowledges that any
component of a Product which embodies a patented Invention or is produced
through the use thereof for sale in the United States will be manufactured
substantially in the United States to the extent required by 35 U.S.C. Section
204.
2.13. Nothing in this Agreement will be deemed to limit the right of
The Regents to publish any and all technical data resulting from any research
performed by The Regents relating to the Invention, Biological Materials,
Biological Products, and Patent Methods and to make and use the Invention,
Biological Materials, Biological Products, and Patent Methods, and associated
technology owned by The Regents solely for educational and research purposes.
3. License Issue Fee
3.1. As partial consideration for all the rights and licenses
granted to Licensee, Licensee will pay to The Regents a license issue fee of
***, payable according to the following schedule:
3.1.1. *** will be sent by Licensee to The Regents together
with two copies of this Agreement executed by
Licensee;
3.1.2. *** will be sent by Licensee to The Regents on or
before ***;
3.1.3. *** will be sent by Licensee to The Regents on or
before ***;
3.1.4. *** will be sent by Licensee to The Regents on or
before ***;
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11
<PAGE> 14
3.1.5. *** will be sent by Licensee to The Regents on or
before ***;
3.1.6. *** will be sent by Licensee to The Regents on or
before ***;
3.1.7. *** will be sent by Licensee to The Regents on or
before ***; and
3.1.8. *** will be sent by Licensee to The Regents on or
before ***.
3.2. Licensee will also pay to The Regents fees equal to *** of
Service Revenues and *** of the Service Revenues *** received by Licensee from
each third party with which it enters into a corporate alliance for screening
services using Patent Rights and Property Rights. Notwithstanding the above,
Licensee shall have no obligation to pay to The Regents any amounts it receives
from a third party for the purchase of equity, research funding, debt financing,
reimbursement of patent filing, prosecution, and/or maintenance expenses or
other expenses.
3.3. ***
4. Royalties
4.1. As further consideration for all the rights and licenses
granted to Licensee, Licensee will also pay to The Regents an earned royalty
based on Net Sales according to the following:
4.1.1. (a) A royalty rate of *** of the Net Sales paid to
Licensee and its sublicensees with respect to each
Identified Product ***
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<PAGE> 15
*** for each Identified Product, and a royalty rate of
*** of the Net Sales paid to Licensee and its
sublicensees of each Identified Product *** for each
such Identified Product.
(b) Notwithstanding Section 4.1.1(a) above, if
Licensee and a particular sublicensee are unable to
agree on a royalty *** of Identified Products by such
sublicensee *** and a royalty rate *** of Identified
Products for ***, then the royalty due to The Regents
*** will be equal to ***, if any, agreed to between
Licensee and such sublicensee *** of such Identified
Product by such sublicensee.
(c) In the event Licensee is unable to negotiate
with a particular sublicensee any royalty on the Net
Sales of Identified Products, then in such case
Licensee will not be entitled to take, in lieu of
royalties on Net Sales by such sublicensee of
Identified Products, consideration in any form for:
(i) equity in Licensee above fair market value; (ii)
research funding for screening to identify Identified
Products in excess of fully burdened direct and
indirect costs therefore; or (iii) reimbursement of
patent filing, prosecution, and maintenance expenses;
and
(d) For the avoidance of doubt, it is understood
and agreed that, except as provided in Section
4.1.1(a) and (b) above, The Regents shall not be
entitled to any royalty on Net Sales of Identified
Products, and if Section 4.1.1(c) applies to a
particular sublicense, the consideration received by
Licensee from such sublicensee will be in the form of
Service Revenues, and the only amounts due The
Regents under this Agreement with respect thereto
shall be the amounts set forth in Section 3.2, and
not a royalty based on the Net Sales of Identified
Products.
4.1.2. (a) A royalty rate *** by Licensee and its
sublicensees of Research Reagents and any other
Product that is not an Identified Product or Services.
Licensee will be entitled to reduce the royalty due
The Regents
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13
<PAGE> 16
on the Net Sales of such Research Reagents and other
Products if Licensee must pay a royalty to The
Regents on Patent Rights and Property Rights and a
third party with respect to intellectual property
rights in which The Regents has no ownership
interest. In such event, if the combined royalties
due The Regents and the third party(s) ***, Licensee
may reduce the royalty due The Regents ***, provided,
however, that in no event will the royalty rate due
The Regents on the Research Reagent or such Product
be ***.
(b) For the avoidance of doubt, it is understood
and agreed that Licensee shall have no obligation to
sell or have sold any Research Reagents except those
listed on Appendix E hereto.
4.2. Licensee will not be entitled to apply the royalty reduction
specified in Section 4.1.2(a) of this section to royalties due The Regents
under Section 4.1.1 of this Article 4. (Royalties) or any other provisions of
this Agreement except the provisions set forth in Section 4.1.2(a).
4.3. Sections 1.1, 1.5, and 1.6 define Patent Rights, Patent
Products, and Patent Methods so that royalties will be payable on Patent
Products and Patent Methods covered by both pending patent applications and
issued patents. Earned royalties will accrue on Patent Products on a
Product-by-Product basis in each country for the duration of Patent Rights in
that country and will be payable to The Regents when Patent Products are
invoiced, or if not invoiced, when delivered to a third party or to itself, an
Affiliate, Joint Venture, or sublicensee in the case where such delivery of the
Patent Products to Licensee, an Affiliate, Joint Venture, or sublicensee is
intended for end use. If no Patent Rights exist in a country, earned royalties
will accrue on a Proprietary Product, on a Product-by-Product basis, until the
*** CONFIDENTIAL TREATMENT REQUESTED
14
<PAGE> 17
tenth anniversary of the first commercial sale of a particular Proprietary
Product in such country. Earned royalties will accrue on Identified Products,
on a Product-by-Product basis, until the tenth anniversary of the first
commercial sale of a particular Identified Product in such country.
4.4. Royalties accruing to The Regents will be paid to The Regents
***:
# ***
# ***
# ***
# ***
Each such payment will be for royalties which accrued ***.
4.5. Beginning ***, and in each succeeding calendar year ***,
Licensee will pay *** and thereafter for the life of this Agreement. This ***
will be paid to The Regents by *** of each year and will be credited against the
earned royalty due and owing for the calendar year in which the minimum payment
was made.
4.6. All monies due The Regents will be payable in United States
funds collectible at par in San Francisco, California. When Products are sold
for monies other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such Products were
sold and then converted into equivalent United States funds. The exchange rate
will be that rate quoted in the Wall Street Journal on the last business day of
the reporting period.
4.7. *** Notwithstanding the foregoing, if the Regents
*** CONFIDENTIAL TREATMENT REQUESTED
15
<PAGE> 18
is required to pay taxes on its royalties under the laws of any country, then
Licensee will pay such amounts to the proper authorities, withhold such amounts
from royalties paid to The Regents, and provide The Regents with all documents
and assistance reasonably necessary to enable The Regents to recover all or
part of such amounts pursuant to any double taxation treaty or otherwise.
Licensee will also be responsible for all bank transfer charges.
4.8. Notwithstanding the provisions of Article 28. (Force Majeure),
if at any time legal restrictions prevent prompt remittance of part or all
royalties owed to The Regents by Licensee with respect to any country where a
Product is sold or distributed, Licensee will convert the amount owed to The
Regents into United States funds and will pay The Regents directly from another
source of funds for the amount impounded.
4.9. In the event that any patent or any claim thereof included
within the Patent Rights is held invalid or unenforceable in a final decision
by a court of competent jurisdiction and last resort and from which no appeal
has or can be taken, all obligation to pay royalties based on such patent or
claim or any claim patentably indistinct therefrom will cease as of the date of
such final decision. Licensee will not, however, be relieved from paying any
royalties that accrued before such decision or that are based on another patent
or claim that has not expired or that is not involved in such decision or that
are based on Property Rights.
4.10. No royalties will be collected or paid hereunder to The
Regents on Products sold to the account of the U.S. Government. Licensee and
its sublicensee will reduce the amount charged for Products distributed to the
United States Government by an amount equal to the royalty for such Products
otherwise due The Regents as provided herein.
4.11. ***
*** CONFIDENTIAL TREATMENT REQUESTED
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************************. No royalty shall be payable under Section 4.1 above
with respect to sales of Products among Licensee and its sublicensees where such
sales are not for end use by such Licensee or its sublicensees, nor shall a
royalty be payable under this Article 4. (Royalties) with respect to Products
distributed for use in research and/or development in clinical trials, or as
promotional samples.
5. Due Diligence
5.1. Licensee, upon execution of this Agreement, will diligently
proceed to develop and provide Services, and to develop, manufacture, and sell
Research Reagents and will earnestly and diligently market the same after
execution of this Agreement and in quantities sufficient to meet the market
demands therefor.
5.2. Licensee will be entitled to exercise prudent and reasonable
business judgment in the manner in which it meets its due diligence obligations
hereunder. In no case, however, will Licensee be relieved of its obligations
to meet the due diligence provisions of this Article 5. (Due Diligence).
5.3. Licensee will obtain all necessary governmental approvals in
each country in which Licensee elects to manufacture or commercialize Research
Reagents and provide Services.
5.4. If Licensee is unable to perform any of the following:
5.4.1. ***
5.4.2. ***
5.4.3. ***
*** CONFIDENTIAL TREATMENT REQUESTED
17
<PAGE> 20
then The Regents will have the right and option, subject to Section 5.7 below,
to terminate this Agreement or reduce the exclusive licenses granted to
Licensee to non-exclusive licenses in accordance with Section 5.6 hereof. The
exercise of this right and option by The Regents will supersede the rights
granted in Article 2 (Grant).
5.5. In addition to the provisions of Section 5.4 above, Licensee
shall also market each of the Research Reagents listed on Appendix E attached
hereto to nonprofit/academic institutions solely for their internal,
noncommercial research use either within: (i) two years following the Effective
Date of this Agreement; or (ii) six months following the publication of the
first paper describing the use of the Research Reagent, whichever is earlier.
This Section 5.5 may be satisified by Licensee or its sublicenseees.
5.6. If Licensee fails to market a particular Research Reagent in
accordance with Section 5.5 above, then The Regents will have the right and
option, subject to Section 5.7 below, to terminate all rights granted to
Licensee under this Agreement with respect to that particular Research Reagent.
This termination includes Licensee's right to use the particular Research
Reagent for its own internal use. The Regents will thereafter be free to
dispose of the particular Research Reagent as it wishes. The exercise of this
right and option by The Regents will supersede the rights granted in Article 2
(Grant).
5.7. To exercise either the right to terminate this Agreement in
whole or with respect to any portion of Patent Rights or Property Rights, or
reduce the exclusive licenses granted to Licensee to non-exclusive licenses for
lack of diligence required in this Article 5. (Due Diligence), The Regents will
give Licensee written notice of the deficiency stating its intent to terminate
this Agreement in whole or with respect to any portion of Patent Rights or
Property Rights, or to reduce the licenses to non-exclusive licenses. Licensee
thereafter shall have 60 days to cure the deficiency. If The Regents
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<PAGE> 21
has not received written tangible evidence satisfactory to The Regents that the
deficiency has been cured by the end of the 60-day period, then The Regents
may, at its option, terminate this Agreement in whole or with respect to any
portion of Patent Rights or Property Rights, or reduce the exclusive licenses
granted to Licensee to non-exclusive licenses by giving written notice to
Licensee. These notices will be subject to Article 20. (Notices).
6. Progress and Royalty Reports
6.1. Beginning August 31, 1996, and semi-annually thereafter,
Licensee will submit to The Regents a progress report covering activities by
Licensee and its sublicensees related to the development and testing of all
their Products and the obtaining of the governmental approvals necessary for
marketing them, but Licensee will not be required to report on Products for
which a royalty is not due The Regents. These progress reports will be
provided to The Regents to cover the progress of the research and development
of the Products until the first commercial sale of Products in the United
States.
6.2. The progress reports submitted under Section 6.1 will include,
but not be limited to, the following topics so that The Regents may be able to
determine the progress of the development of Products on which a royalty is due
The Regents and may also be able to determine whether or not Licensee has met
its diligence obligations set forth in Article 5. (Due Diligence) above:
# summary of work in progress in anticipation of providing
Services and Research Reagents
# summary of work completed in anticipation of providing
Services and Research Reagents
# summary of Services completed
# current schedule of anticipated events or milestones
specified in Section 5.4 and 5.5
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<PAGE> 22
# anticipated market introduction date of Products on which
a royalty is due The Regents
# sublicenses granted, if any
6.3. Licensee also will report to The Regents in its immediately
subsequent progress and royalty report the date of first commercial sale of
each Product for which a royalty is due to The Regents in each country.
6.4. After the first commercial sale of a Product on which a
royalty is due The Regents, Licensee will provide The Regents with quarterly
royalty reports to The Regents on or before each February 28, May 31, August
31, and November 30 of each year. Each such royalty report will cover the most
recently completed calendar quarter of Licensee (October through December,
January through March, April through June, and July through September) and will
show:
6.4.1. the gross sales and Net Sales of such Products sold
by Licensee and reported to Licensee as sold by its
sublicensees during the most recently completed
calendar quarter;
6.4.2. the number of such Products sold or distributed by
Licensee and reported to Licensee as sold or
distributed by its sublicensees;
6.4.3. the royalties, in U.S. dollars, payable hereunder
with respect to Net Sales; and
6.4.4. the exchange rates used, if any.
6.5. If no sales of Products for which a royalty is due to The
Regents have been made during any reporting period after the first commercial
sale of such Product, then a statement to this effect is required.
7. Books and Records
7.1. Licensee will keep books and records accurately showing all
Products manufactured, used, and/or sold with respect to which Licensee owes
royalties to The Regents under the terms of this Agreement. Such books and
records will be preserved
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<PAGE> 23
for at least five years after the date of the royalty payment to which they
pertain and will be open to inspection by representatives or agents of The
Regents during normal business hours at agreed upon times to determine the
accuracy of the books and records and to determine compliance by Licensee with
the terms of this Agreement. Such independent certified public accountant
shall be bound to hold all information in confidence except as necessary to
communicate Licensee's non-compliance with this Agreement to The Regents. The
only purpose of any inspection and audit pursuant to this Paragraph 7.1 shall
be to verify Licensee's royalty statement or payment under this Agreement and
to determine Licensee's compliance with the other provisions thereunder.
7.2. The fees and expenses of representatives of The Regents
performing such an examination will be borne by The Regents. However, if an
error in royalties of *** of the total royalties due for any year is
discovered, then the fees and expenses of these representatives will be borne
by Licensee.
8. Life of the Agreement
8.1. Unless otherwise terminated by operation of law or by acts of
the parties in accordance with the terms of this Agreement, this Agreement will
be in force from the Effective Date and will remain in effect for the life of
the last-to-expire patent licensed under this Agreement, or until the last
patent application licensed under this Agreement is abandoned, or in the event
no patent issues, for a period of fifteen (15) years from market introduction
for the last to be introduced Proprietary Product in the United States.
8.2. In the event this Agreement remains in effect for the entire
term specified in Paragraph 8.1 above, and is not otherwise terminated under
the provisions of Articles 5. (Due Diligence), 9. (Termination by The Regents),
or 10. (Termination by Licensee), Licensee is hereby granted an option for
renewal of this Agreement for a period of *** from the date of its termination.
Said option for renewal shall be
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21
<PAGE> 24
automatically exercised provided that the Licensee has not notified The Regents
to the contrary prior to the option renewal date. The renewal licenses will be
for the same terms and conditions as set forth in this Agreement, *** .
8.3. Any termination of this Agreement will not affect the rights
and obligations set forth in the following Articles:
Article 7 Books and Records
Article 13 Disposition of Products on Hand Upon Termination
Article 14 Use of Names and Trademarks
Article 19 Indemnification
Article 22 Late Payments
Article 24 Failure to Perform
Article 29 Confidentiality
8.4. 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, or 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.
9. Termination by The Regents
9.1. If Licensee should violate or fail to perform any term or
covenant of this Agreement, then The Regents may give written notice of such
default ("Notice of Default") to Licensee. If Licensee should fail to repair
such default within 60 days after the date of such notice takes effect, The
Regents will have the right to terminate this Agreement and the licenses herein
by a second written notice ("Notice of Termination") to Licensee. If a Notice
of Termination is sent to Licensee, this Agreement will
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22
<PAGE> 25
automatically terminate on the date such notice takes effect. Such termination
will not relieve Licensee of its obligation to pay any royalty or license fees
owing at the time of such termination and will not impair any accrued right of
The Regents. These notices will be subject to Article 20. (Notices).
10. Termination by Licensee
10.1. Licensee will have the right at any time to terminate this
Agreement in whole or as to any portion of Patent Rights or Property Rights by
giving notice in writing to The Regents. Such Notice of Termination will be
subject to Article 20. (Notices) and termination of this Agreement in whole or
with respect to any portion of the Patent Rights or Property Rights will be
effective 60 days after the effective date thereof.
10.2. Any termination pursuant to the above paragraph will not
relieve Licensee of any obligation or liability accrued hereunder prior to such
termination or rescind anything done by Licensee or any payments made to The
Regents hereunder prior to the time such termination becomes effective, and
such termination will not affect in any manner any rights of The Regents
arising under this Agreement prior to such termination.
11. Supply of the Biological Materials
and Biological Products
11.1. The Regents will initially supply Licensee with viable samples
of the Biological Materials set forth in Appendix D within thirty (30) days of
the Effective Date or as soon as reasonably practicable, and additional
Biological Materials elected by Licensee pursuant to Section 2.11 promptly
after Licensee's notice to The Regents pursuant to such Section. To the extent
Licensee requires and requests additional samples from The Regents during the
term hereof (due to failure of the initial supply of Biological Material(s)),
and The Regents has such additional samples in its possession,
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<PAGE> 26
The Regents agrees to supply such additional samples. Licensee will pay the
actual handling and shipping costs for any additional samples provided.
12. Maintenance of the Biological Materials
12.1. The Regents shall instruct Dr. Roger Tsien that if The Regents
circulates any of the Biological Materials to third parties for noncommercial
research purposes, it shall only do so under the terms and conditions set forth
in the biological material transmission letter attached hereto as Appendix A.
The Regents expressly reserves the right to transfer the Biological Materials
to non-profit entities strictly for noncommercial research purposes in the
manner set forth above. The Regents agrees that it will not otherwise transfer
the Biological Materials. The Licensee acknowledges that The Regents' right to
so transfer the Biological Materials could lead to the inadvertent loss or
diminution of the proprietary commercial value of the Biological Materials.
13. Disposition of the Biological Materials, Biological Products,
and Products on Hand Upon Termination
13.1. Upon termination of this Agreement prior to the expiration of
its full term, the Licensee shall have the privilege of disposing all
previously made or partially made Products, but no more, for a period of one
hundred and twenty (120) days following the effective date of termination,
provided, however, that the sale of such Products shall be subject to the terms
of this Agreement including, but not limited to, the payment of royalties at
the rate and at the time provided herein and the rendering of reports in
connection therewith.
13.2. Upon termination of this Agreement for any reason, Licensee,
at its sole discretion, shall destroy or transfer to The Regents any Biological
Materials in its possession within thirty (30) days following the effective
date of termination. Licensee
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<PAGE> 27
shall provide The Regents within sixty (60) days following said termination
date with written notice that the Biological Materials have been destroyed.
14. Use of Names and Trademarks
14.1. Nothing contained in this Agreement will be construed as
conferring any right to use in advertising, publicity, or other promotional
activities any name, trade name, trademark, or other designation of either
party hereto by the other (including contraction, abbreviation or simulation of
any of the foregoing). Unless required by law, the use by Licensee of the name
"The Regents of the University of California" or the name of any campus of the
University of California for use in advertising, publicity, or other
promotional activities is expressly prohibited.
14.2. It is understood that The Regents will be free to release to
the inventors, HHMI, and senior administrative officials employed by The
Regents the terms of this Agreement upon their request. If such release is
made, The Regents will request that such terms will be kept in confidence in
accordance with the provisions of Article 29. (Confidentiality) and not be
disclosed to others. It is further understood that should a third party
inquire whether a license to Patent Rights is available, The Regents may
disclose the existence of this Agreement and the extent of the grant in Article
2. (Grant) to such third party, but will not disclose the name of Licensee,
except where The Regents is required to release such information under either
the California Public Records Act or other applicable law.
15. Limited Warranty
15.1. The Regents warrants to Licensee that it has the lawful right
to grant these licenses and bailment.
15.2. This license and the associated Invention, Biological
Materials, Products, and Patent Method are provided WITHOUT WARRANTY OF
MERCHANTABILITY OR
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<PAGE> 28
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.
THE REGENTS MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION, BIOLOGICAL
MATERIALS, PRODUCTS, OR PATENT METHOD WILL NOT INFRINGE ANY PATENT OR OTHER
PROPRIETARY RIGHT.
15.3. IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR
THE USE OF THE INVENTION, BIOLOGICAL MATERIALS, PRODUCTS, OR PATENT METHOD.
15.4. Nothing in this Agreement will be construed as:
15.4.1. a warranty or representation by The Regents as to the
validity, enforceability, or scope of any Patent
Rights or Property Rights; or
15.4.2. a warranty or representation that anything made,
used, sold, or otherwise disposed of under any
license granted in this Agreement is or will be
free from infringement of patents of third parties;
or
15.4.3. an obligation to bring or prosecute actions or suits
against third parties for patent infringement
except as provided in Article 18. (Patent
Infringement); or
15.4.4. conferring by implication, estoppel, or otherwise any
license or rights under any patents of The Regents
other than Patent Rights as defined herein,
regardless of whether such patents are dominant or
subordinate to Patent Rights; or
15.4.5. an obligation to furnish any know-how not provided in
Patent Rights and Property Rights.
16. Patent Prosecution and Maintenance
16.1. The Regents will diligently prosecute and maintain the United
States and foreign patents comprising Patent Rights using counsel of its
choice. The Regents will promptly provide Licensee with copies of all relevant
documentation so that Licensee
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<PAGE> 29
may be currently and promptly informed and apprised of the continuing
prosecution, and may comment upon such documentation sufficiently in advance of
any initial deadline for filing a response, provided, however, that if Licensee
has not commented upon such documentation prior to the initial deadline for
filing a response with the relevant government patent office or The Regents
must act to preserve Patent Rights, The Regents will be free to respond
appropriately without consideration of comments by Licensee, if any. Both
parties hereto will keep this documentation in confidence in accordance with
the provisions of Article 29. (Confidentiality) herein. Counsel for The
Regents will take instructions only from The Regents.
16.2. The Regents will use all reasonable efforts to amend any
patent application to include claims requested by Licensee and required to
protect the Products contemplated to be sold or Patent Method to be practiced
under this Agreement.
16.3. The Regents and Licensee will cooperate in applying for an
extension of the term of any patent included within Patent Rights, if
appropriate, under the Drug Price Competition and Patent Term Restoration Act
of 1984. Licensee will prepare all such documents, and The Regents will
execute such documents and will take such additional action as Licensee may
reasonably request in connection therewith.
16.4. The Regents will, at the request of Licensee, file, prosecute,
and maintain patent applications and patents covered by Patent Rights in
foreign countries if available. Licensee must notify The Regents within seven
months of the filing of the corresponding United States application of its
decision to request The Regents to file foreign counterpart patent
applications. This notice concerning foreign filing must be in writing and must
identify the countries desired. The absence of such a notice from Licensee to
The
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<PAGE> 30
Regents within the seven-month period will be considered an election by
Licensee not to request The Regents to secure foreign patent rights on behalf
of Licensee; provided, however, that the absence of such notice from Licensee
to The Regents within the seven-month period with respect to United States
applications filed within eight months prior to the Effective Date of this
Agreement will not be considered an election by licensee not to request The
Regents not to secure foreign patent rights. In such event, Licensee must
notify The Regents of its decision to request The Regents to file foreign
counterpart patent applications within ninety (90) days of the conventional
filing date of such applications. The Regents will have the right to file
patent applications at its own expense in any country Licensee has not included
in its list of desired countries, and such applications and resultant patents,
if any, will not be included in the licenses granted under this Agreement.
16.5. All past, present and future costs of preparing, filing,
prosecuting and maintaining all United States and foreign patent applications
and all costs and fees relating to the preparation and filing of patents
covered by Patent Rights in Section 1.1 will be borne by Licensee. This
includes patent preparation and prosecution costs for this Invention incurred
by The Regents prior to the execution of this Agreement. Such costs will be
due upon execution of this Agreement and will be payable at the time that the
license issue fee is payable. The costs of all interferences and oppositions
will be considered prosecution expenses and also will be borne by Licensee.
Licensee will reimburse The Regents for all costs and charges within 30 days
following receipt of an itemized invoice from The Regents for same.
16.6. The obligation of Licensee to underwrite and to pay patent
preparation, filing, prosecution, maintenance, and related costs will continue
for costs incurred until three months after receipt by either party of a Notice
of Termination with respect to a particular patent application or patent within
the Patent Rights provided, however, that The Regents provides Licensee with
written notification, at least three months prior to the effective date of the
termination, that such costs are anticipated. Licensee will reimburse The
Regents for all patent costs incurred during the term of the Agreement and for
three months thereafter whether or not invoices for such costs are received
during the three-month period after receipt of a Notice of Termination.
Licensee may
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with respect to any particular patent application or patent terminate its
obligations with the patent application or patent in any or all designated
countries upon three months written notice to The Regents. The Regents may
continue prosecution and/or maintenance of such application(s) or patent(s) at
its sole discretion and expense, provided, however, that Licensee will have no
further right or licenses thereunder.
16.7. Licensee will notify The Regents of any change of its status
as a small entity (as defined by the United States Patent and Trademark Office)
and of the first sublicense granted to an entity that does not qualify as a
small entity as defined therein.
16.8. The Regents acknowledges that Licensee will be conducting
independent research and development activities with respect to the Biological
Materials, Biological Products, and/or the Patent Rights, and recognizes that
such independent research and development may result in patentable inventions
and other intellectual property owned by Licensee. The Regents hereby consents
to the filing of any patent applications, even if any Biological Materials or
Biological Products are within the scope of one or more claims of any such
patent application.
17. Patent Marking
17.1. Licensee will mark all Products made, used, or sold under the
terms of this Agreement, or their containers, in accordance with the applicable
patent marking laws.
18. Patent Infringement
18.1. In the event that Licensee, or The Regents' licensing
associate responsible for administering this Agreement, or Resident Counsel of
the Regents' Office of Technology Transfer learns of the substantial
infringement of any patent licensed under this Agreement, to the extent
contractually able to, it will call the attention to the other party hereto in
writing and will provide reasonable evidence of
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<PAGE> 32
such infringement. Both parties to this Agreement acknowledge that during the
period and in a jurisdiction where Licensee has exclusive rights under this
Agreement, neither will notify a third party of the infringement of any of
Patent Rights without first obtaining consent of the other party, which consent
will not be unreasonably withheld. Both parties will use their best efforts in
cooperation with each other to terminate such infringement without litigation.
18.2. Licensee may request that The Regents take legal action
against the infringement of Patent Rights. Such request must be made in
writing and must include reasonable evidence of such infringement and damages
to Licensee. If the infringing activity has not been abated within 90 days
following the effective date of such request, The Regents will have the right
to elect to:
18.2.1. commence suit on its own account; or
18.2.2. refuse to participate in such suit.
18.3. The Regents will give notice of its election in writing to
Licensee by the end of the 100th day after receiving notice of such request
from Licensee. Licensee may thereafter bring suit for patent infringement if
and only if The Regents elects not to commence suit and if the infringement
occurred during the period and in a jurisdiction where Licensee had exclusive
rights under this Agreement. However, in the event Licensee elects to bring
suit in accordance with this paragraph, The Regents may thereafter join such
suit at its own expense.
18.4. Such legal action as is decided upon will be at the expense of
the party on account of whom suit is brought and all recoveries recovered
thereby will belong to such party, provided, however, that legal action brought
jointly by The Regents and Licensee and participated in by both will be at the
joint expense of the parties and all recoveries will be allocated in the
following order: ***
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 33
***
18.5. Each party will cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the party on account of
whom suit is brought. Such litigation will be controlled by the party bringing
the suit, except that The Regents may be represented by counsel of its choice
in any suit brought by Licensee.
19. Indemnification
19.1. Licensee will (and require its sublicensees to) indemnify,
hold harmless, and defend The Regents and HHMI, their officers, employees, and
agents; the sponsors of the research that led to the Invention; the inventors
of any invention covered by patents or patent applications in Patent Rights
(including the Products and Patent Method contemplated thereunder) and their
employers against any and all claims, suits, losses, damage, costs, fees, and
expenses resulting from or arising out of exercise of this license or any
sublicense. This indemnification will include, but will not be limited to, any
product liability.
19.2. Licensee, at its sole cost and expense, will insure its
activities in connection with the work under this Agreement and obtain, keep in
force, and maintain insurance as follows: (or an equivalent program of self
insurance)
Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
# Each Occurrence $1,000,000
# Products/Completed Operations Aggregate $1,000,000
*** CONFIDENTIAL TREATMENT REQUESTED
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# Personal and Advertising Injury $1,000,000
# General Aggregate (commercial form only) $1,000,000
19.3. As of and following the date of commencement of any clinical
trial with respect to a Product marketed by Licensee, Licensee shall increase
insurance coverage under Section 19.2 immediately above from $1,000,000 to an
aggregate of $3,000,000. As of and following the date of commencement of any
sales of such Products, Licensee shall increase insurance coverage under
Section 19.2 to an aggregate of $5,000,000. It should be expressly understood,
however, that the coverages and limits referred to under the above will not in
any way limit the liability of Licensee. Licensee will furnish The Regents
with certificates of insurance evidencing compliance with all requirements.
Such certificates will:
19.3.1. Provide for 30 day advance written notice to The
Regents of any modification;
19.3.2. Indicate that The Regents has been endorsed as an
additional Insured under the coverages referred
to under the above; and
19.3.3. Include a provision that the coverages will be
primary and will not participate with nor will be
excess over any valid and collectable insurance
or program of self-insurance carried or
maintained by The Regents.
19.4. The Regents will promptly notify Licensee in writing of any
claim or suit brought against The Regents in respect of which The Regents
intends to invoke the provisions of this Article 19. (Indemnification).
Licensee will keep The Regents informed on a current basis of its defense of
any claims pursuant to this Article 19. (Indemnification). It is understood
that Licensee shall have the right to control the defense and settlement of any
such claim or suit, except Licensee shall not enter into any settlement which
(i) makes any admission of wrongdoing on the part of The Regents, or (ii)
admits that any of the Patent Rights of The Regents are invalid, unenforceable,
or not infringed without prior written consent of The Regents.
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20. Notices
20.1. Any notice or payment required to be given to either party
will be deemed to have been properly given and to be effective (a) on the date
of delivery if delivered in person or (b) five days after mailing if mailed by
first-class certified mail, postage paid, to the respective addresses given
below, or to another address as it may designate by written notice given to the
other party.
In the case of Licensee: AURORA BIOSCIENCES, CORP.
11149 North Torrey Pines Road
La Jolla, CA 92037
Attention: President
(619) 452-5000
In the case of The Regents: THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
1320 Harbor Bay Parkway, Suite 150
Alameda, California 94502
Tel: (510) 748-6600
Fax: (510) 748-6639
Attention: Executive Director;
Research Administration
and Office of Technology
Transfer
Referring to: U.C. Case Nos. 93-289,
95-110, 95-219, 96-044, 96-160, 96-161,
96-162, and 96-191
21. Assignability
21.1. This Agreement is binding upon and will inure to the benefit
of The Regents, its successors and assigns, but shall be personal to Licensee
and assignable by Licensee only with the written consent of The Regents, which
consent shall not be unreasonably withheld; provided, however, Licensee may
assign this Agreement to an Affiliate or Joint Venture or in connection with
the sale or transfer of substantially all the
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<PAGE> 36
assets of Licensee relating to the subject matter of this Agreement, without
written consent of The Regents.
22. Late Payments
22.1. In the event royalty payments or fees or patent prosecution
costs are not received by The Regents when due, Licensee will pay to The
Regents interest charges at a rate of ten percent (10%) simple interest per
annum. Such interest will be calculated from the date payment was due until
actually received by The Regents. Acceptance by The Regents of any late
payment interest from Licensee under this Section 22.1 will in no way affect
the provision of Article 23. (Waiver) herein.
23. Waiver
23.1. It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth will
be deemed a waiver as to any subsequent and/or similar breach or default.
24. Failure to Perform
24.1. In the event of a failure of performance due under the terms
of this Agreement and if it becomes necessary for either party to undertake
legal action against the other on account thereof, then the prevailing party
will be entitled to reasonable attorney's fees in addition to costs and
necessary disbursements.
25. Governing Laws
25.1. THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules
that would direct the application of the laws of another jurisdiction,
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<PAGE> 37
but the scope and validity of any patent or patent application will be governed
by the applicable laws of the country of such patent or patent application.
26. Government Approval or Registration
26.1. If this Agreement or any associated transaction is required by
the law of any nation to be either approved or registered with any governmental
agency, Licensee will assume all legal obligations to do so. Licensee will
notify The Regents if it becomes aware that this Agreement is subject to a
United States or foreign government reporting or approval requirement.
Licensee will make all necessary filings and pay all costs including fees,
penalties, and all other out-of-pocket costs associated with such reporting or
approval process.
27. Export Control Laws
27.1. Licensee will observe all applicable United States and foreign
laws with respect to the transfer of Products and related technical data to
foreign countries, including, without limitation, the International Traffic in
Arms Regulations (ITAR) and the Export Administration Regulations.
28. Force Majeure
28.1. The parties to this Agreement will be excused from any
performance required hereunder if such performance is rendered impossible or
unfeasible due to any acts of God, catastrophes, or other major events beyond
their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and floods, fires, explosions, or
other natural disasters. However, any party to this Agreement will have the
right to terminate this Agreement upon 30 days' prior written notice if either
party is unable to fulfill its obligations under this Agreement due to any of
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the causes mentioned above and such inability continues for a period of one
year. Notices will be subject to Article 20. (Notices). When such events
have abated, the parties' respective obligations hereunder shall resume.
29. Confidentiality
29.1. Licensee and The Regents respectively will treat and maintain
the proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information
("Proprietary Information") of the other party in confidence using at least the
same degree of care as that party uses to protect its own proprietary
information of a like nature for a period from the date of disclosure until
five years after the date of termination of this Agreement. This
confidentiality obligation will apply to the information defined as "Data"
under the Secrecy Agreement, and such Data will be treated as Proprietary
Information hereunder.
29.2. All Proprietary Information will be labeled or marked
confidential or as otherwise similarly appropriate by the disclosing party, or
if the Proprietary Information is orally disclosed, it will be reduced to
writing or some other physically tangible form, marked and labeled as set forth
above by the disclosing party, and delivered to the receiving party within 30
days after the oral disclosure as a record of the disclosure and the
confidential nature thereof. Notwithstanding the foregoing, Licensee and The
Regents may use and disclose Proprietary Information to its employees, agents,
consultants, contractors, and, in the case of Licensee, its sublicensees,
provided that any such parties are bound by a like duty of confidentiality.
29.3. Nothing contained herein will in any way restrict or impair
the right of Licensee or The Regents to use, disclose, or otherwise deal with
any Proprietary Information:
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29.3.1. that recipient can demonstrate by written records was
previously known to it;
29.3.2. that is now, or becomes in the future, public
knowledge other than through acts or omissions of
recipient;
29.3.3. that is lawfully obtained without restrictions by
recipient from sources independent of the disclosing
party;
29.3.4. that is required to be disclosed to a governmental
entity or agency in connection with seeking any
governmental or regulatory approval, or pursuant
to the lawful requirement or request of a
governmental entity or agency;
29.3.5. that is furnished to a third party by the recipient
with similar confidentiality restrictions imposed
on such third party, as evidenced in writing; or
29.3.6. that The Regents is required to disclose pursuant to
the California Public Records Act or other applicable
law.
29.4. Upon termination of this Agreement, Licensee and The Regents
will destroy or return to the disclosing party proprietary information received
from the other in its possession within 15 days following the effective date of
termination. Licensee and The Regents will provide each other, within 30 days
following termination, with a written notice that Proprietary Information has
been returned or destroyed. Each party may, however, retain one copy of
Proprietary Information for archival purposes in nonworking files.
30. Miscellaneous
30.1. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
30.2. This Agreement will not be binding upon the parties until it
has been signed below on behalf of each party, in which event, it will be
effective as of the date recited on page one.
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<PAGE> 40
30.3. No amendment or modification hereof will be valid or binding
upon the parties unless made in writing and signed on behalf of each party.
30.4. This Agreement embodies the entire understanding of the
parties and will supersede all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof. The Letter Agreements, the Option Agreement, and the
Secrecy Agreements specified in the Recitals of this Agreement are hereby
terminated.
30.5. In case any of the provisions contained in this Agreement are
held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability will not affect any other provisions hereof,
but this Agreement will be construed as if such invalid or illegal or
unenforceable provisions had never been contained herein.
The Regents and Licensee execute this Agreement in duplicate originals
by their respective, authorized officers on the date indicated.
Aurora Biosciences Corporation The Regents of the University
of California
By__________________________________ By_________________________________
(Signature) (Signature)
Name________________________________ Name Terence A. Feuerborn
(Please Print)
Title_______________________________ Title Executive Director
Research Administration
and Office of Technology
Transfer
Date________________________________ Date_______________________________
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APPENDIX A - PAGE 1A
University of California/San Diego (UCSD)
Instructions for Standard Letter Transmitting
Biological Materials to Universities and
Non-Profit Institutions
The attached letter is authorized for use by University of California,
UCSD Principal Investigators and Administrators only with Scientists and other
universities and nonprofit research institutions when transmitting cell lines,
plasmids and the like for non-commercial research purposes.
1. Choose the appropriate form of university or nonprofit research
institution in paragraph 2.
2. Choose whether or not to include the phrase "our cooperative" in
paragraph 2.
3. Insert in paragraph 4 the amount of processing charge. If the
material is to be shipped at no charge, insert the words "no charge".
4. Send the letter in duplicate to the other scientists.
5. Do not send biological materials until you receive the duplicate copy
executed by both the scientist and the other institution.
6. Send a copy of the fully executed letter agreement to:
Terence A. Feuerborn
Executive Director
Research Administration
and Technology Transfer
1320 Harbor Bay Parkway
Suite 150
Alameda, CA 94501
7. Any changes in the wording of this standard letter must be reviewed by
the Executive Director of the Office of Technology Transfer before
acceptance.
Note: Do not use this letter for the exchange of living plants. A separate
"Testing Agreement for the Plant Varieties" is available for that purpose.
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<PAGE> 42
APPENDIX A - PAGE 2A
SAMPLE LETTER FOR USE PRIOR TO TRANSMISSION OF BIOLOGICAL
MATERIALS TO INVESTIGATORS AT UNIVERSITIES OR NON-PROFIT
RESEARCH INSTITUTIONS
(date)
IN DUPLICATE
To:_____________________
This is to (acknowledge receipt of your letter) (confirm our telephone
conversation) in which you requested certain research materials developed in
this laboratory be sent to you for scientific research purposes. The materials
concerned, which belong to The Regents of the University of California/San
Diego Campus (UCSD) are _______________.
While I cannot transfer ownership of these materials to you, I will be
pleased to permit your use of these materials within your (university)
(Non-Profit Research Institution) laboratory for (our cooperative) scientific
research. However, before forwarding them to you, I require your agreement
that the materials will be received by you only for use in (our cooperative
work) (scientific research), that you will bear all risk to you or any others
resulting from your use, and that you will not pass these materials, their
progeny or derivatives, on to any other party or use them for commercial
purposes without the express written consent of The Regents of the University
of California. You understand that no other right or license to these
materials, their progeny or derivatives, is granted or implied as a result of
our transmission of these materials to you.
These materials are to be used with caution and prudence in any
experimental work, since all of their characteristics are not known.
As you recognize, there is a processing cost to us involved in
providing these materials to you. We will bill you for our processing costs,
which will amount to $_________________.
If you agree to accept these materials under the above conditions,
please sign the enclosed duplicate copy of this letter, then have it signed by
an authorized representative of your institution, and return it to me. Upon
receipt of that confirmation I will forward the material(s) to you.
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APPENDIX A - PAGE 3A
(Note: other paragraphs discussing the relevant literature, the nature of the
work, hazards relating to materials to be sent etc. may be appropriate. These
will vary depending on the individual circumstances and the relationship
between the two parties previously established. Be sure to retain a signed
copy when received and send a photocopy of the completed agreement to the
University of California Patent Administrator, Office of Technology Transfer,
Systemwide Administration, 1320 Harbor Bay Parkway, Suite 150, Alameda, CA
94502)
Sincerely yours,
ACCEPTED:
RESEARCH INVESTIGATOR
______________________
Printed Name
______________________
(Signature)
______________________
Date
RESEARCH UNIVERSITY OR
NON-PROFIT INSTITUTION
______________________
Printed Name
_______________________
(Signature)
_______________________
Date
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<PAGE> 44
APPENDIX B - PAGE 1B
The INVENTORS listed below understand and agree to abide by the terms
and conditions of Article 12 (MAINTENANCE OF THE BIOLOGICAL MATERIALS) of the
Exclusive License Agreement between The Regents of the University of California
and Aurora Biosciences, Corp. effective ______________________, 1996, and to
instruct all relevant personnel working within their laboratory to act
accordingly. Said paragraph reads, in part, as follows:
"12.1 The Regents shall instruct Roger Tsien that if The Regents
circulates any of the Biological Materials to third parties for noncommercial
research purposes, it shall only do so under the terms and conditions set forth
in the biological material transmission letter attached hereto as Appendix A.
The Regents expressly reserves the right to transfer the Biological Materials
to non-profit entities strictly for noncommercial research purposes in the
manner set forth above. The Regents agrees that it will not otherwise transfer
the Biological Materials. The Licensee acknowledges that The Regents' right to
so transfer the Biological Materials could lead to the inadvertent loss or
diminution of the proprietary commercial value of the Biological Materials."
The Biological Materials is defined in said Agreement as follows:
"1.2 Biological Materials" means (i) the chemical reagents and
biological materials owned by The Regents and listed in Appendix D attached
hereto and provided to Licensee by The Regents pursuant to the April 26, 1996
Letter Agreement, and (ii) any other chemical reagents or biological materials
elected for inclusion under this Agreement by Licensee pursuant to Section 2.11
below."
By:
______________________________ _____________________________
(Inventor) Date
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APPENDIX C - PAGE 1C
CHANCELLOR APPROVAL OF COMMERCIAL RESTRICTIONS OF TANGIBLE RESEARCH PRODUCTS
In May 1989, the University of California issued the Guidelines on
University-Industry Relations ("Guidelines"). Guideline 10 entitled "Tangible
Research Products" requires that when the commercial availability of tangible
research products resulting from the conduct of research are restricted by a
license, approval must be obtained from the Chancellor of the campus where the
research took place.
The License Agreement between THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA ("The Regents") and AURORA BIOSCIENCES, CORP. ("Licensee") entitled
"Fluorescent Assay Technologies" contains provisions that restrict the transfer
of certain tangible research products to commercial competitors of the Aurora
Biosciences, Corp. and requires that tangible research products transferred for
educational and research purposes be conveyed under a biological material
transfer agreement that permits the University to retain the discretion to
publish any results of research at any time and to disseminate the tangible
materials for educational and research purposes.
Approval of the provisions of the License Agreement that restrict the
commercial availability of tangible research products is indicated below.
Approval:
______________________________ _____________________________
Majorie C. Caserio Date
Interim Chancellor
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APPENDIX D - PAGE 1D
*** CONFIDENTIAL TREATMENT REQUESTED
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APPENDIX D - PAGE 2D
*** CONFIDENTIAL TREATMENT REQUESTED
45
<PAGE> 48
APPENDIX D - PAGE 3D
*** CONFIDENTIAL TREATMENT REQUESTED
46
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APPENDIX D - PAGE 4D
***CONFIDENTIAL TREATMENT REQUESTED
47
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APPENDIX D - PAGE 5D
***CONFIDENTIAL TREATMENT REQUESTED
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APPENDIX E - PAGE 1E
Research Reagents
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<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.18
LICENSE AGREEMENT
This AGREEMENT (the "Agreement") is effective as of the 2nd day of
August, 1996 (the "Effective Date"), between California Institute of
Technology, 1201 East California Boulevard, Pasadena, California 91125
("CALTECH") and Aurora Biosciences Corporation, a Delaware corporation, having
a principal place of business at 11149 North Torrey Pines Road, La Jolla,
California 92037 (hereinafter called "LICENSEE").
WHEREAS, CALTECH has been engaged in basic research in biotechnology
conducted for the National Institutes of Health ("NIH") under Grant No. GM
34236 between CALTECH and NIH;
WHEREAS, that research led to that United States provisional patent
application described in Paragraph 1.6.2, which is owned by CALTECH;
WHEREAS, LICENSEE is desirous of obtaining, and CALTECH wishes to
grant to LICENSEE, an exclusive license to the Licensed Patent Rights (as
defined in Paragraph 1.6); and
WHEREAS, on an even date herewith LICENSEE and CALTECH have entered
into a Stock Transfer Agreement pursuant to which CALTECH shall receive shares
of LICENSEE's common stock.
<PAGE> 2
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
I.1 "Confidential Information" means (i) any proprietary or
confidential nformation or material in tangible form disclosed hereunder that
is marked as "Confidential" at the time it is delivered to the receiving party,
or (ii) proprietary or confidential information disclosed orally hereunder
which is identified as confidential or proprietary when disclosed and such
disclosure of confidential information is confirmed in writing within thirty
(30) days by the disclosing party. To protect the confidentiality of such
information, LICENSEE may request the Principal Investigator, who has the right
to refuse to accept such information, to sign a confidentiality agreement with
LICENSEE in the form of Exhibit B hereto.
I.2 "Dominating Patent" means an unexpired patent that has not
been invalidated by a court or governmental agency which is owned by a third
party under circumstances such that the LICENSEE or its sublicensee has no
commercially reasonable alternative to obtaining a royalty-bearing license
under such patent in order to practice the Licensed Methods or make, use, sell
or otherwise commercialize Licensed Products.
I.3 "Field" means ***
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candidates.
I.4 "Licensed Method" means any method, procedure, or process, the
use of which is covered by any Valid Claim.
I.5 "Licensed Product" means *** .
I.6 "Licensed Technology" means Licensed Know-How and Licensed
Patent Rights.
I.6.1 "Licensed Know-How" means all information and data,
processes, formulas, and materials, including but not limited to those which
relate to nucleic acid constructions, genes, DNA or RNA fragments, gene
sequences, bacterial or yeast strains, mammalian cell lines, biological
material, chemical compounds, proteins, products, substances, experimental
plans, formulations, techniques, methods, designs, and drawings which are
conceived, reduced to practice, or otherwise developed (i) in the laboratory of
Dr. Melvin I. Simon ("Dr. Simon"), a faculty member CALTECH, or by Dr. Simon or
another person employed by or affiliated with CALTECH who is working under Dr.
Simon's supervision, or (ii) jointly by any of the foregoing and any person
employed by or affiliated with LICENSEE, and which are specifically and
directly related to experiments or embodiments of inventions covered by or
within the scope of a Valid Claim of the Licensed Patent Rights.
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I.6.2 "Licensed Patent Rights" means (i) U.S. provisional
patent application ***, filed ***, and entitled ***; (ii) any patent application
claiming an invention useful in the Field which is conceived, reduced to
practice, or otherwise developed on or before *** in Dr. Simon's laboratory or
by Dr. Simon and/or another person employed by or affiliated with CALTECH who is
working under Dr. Simon's supervision; (iii) any patent application claiming an
invention useful in the Field which is conceived, reduced to practice, or
otherwise developed on or before *** in jointly by Dr. Simon and/or another
person employed by or affiliated with CALTECH who is working under Dr. Simon's
supervision and any person employed by or affiliated with LICENSEE; (iv) any
substitution, provisional, regular utility application, division, or
continuation (in whole or in part) claiming priority to any patent application
in (i), (ii), or (iii); (v) any patent issuing on any of the preceding,
including without limitation any reissue, re-examination, or extension; and (vi)
any foreign patent application or patent claiming priority to any of the
foregoing, including any confirmation, registration, revalidation, or addition.
I.7 "Related Company" means any corporation or other entity which
is directly or indirectly controlling, controlled by, or under the common
control with LICENSEE. For the purpose of this Agreement, "control" shall mean
the direct or indirect ownership of at least fifty percent (50%) of the
outstanding shares or other voting rights of the subject entity to elect
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directors, or if not meeting the preceding, any entity owned or controlled by
or owning or controlling at the maximum control or ownership right permitted in
the country where such entity exists.
I.8 "Stock Transfer Agreement" means that certain Stock Transfer
Agreement entered into by the parties on an even date herewith, a copy of which
is appended hereto as Exhibit A.
I.9 "Valid Claim" means a claim of (i) a pending patent
application within the Licensed Patent Rights, or (ii) an issued and unexpired
patent included within the Licensed Patent Rights.
ARTICLE II
PATENT LICENSE GRANT
II.1 CALTECH hereby grants to LICENSEE an ***
II.1.1 the reservation of CALTECH's right, on the part of
itself and the Jet
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Propulsion Laboratory ("JPL"), to make, have made, and use Licensed Methods for
noncommercial educational and research purposes, but not for sale, licensure,
or other distribution to third parties;
II.1.2 the rights of the U.S. Government under Title 35,
United States Code, Sections 203-204, including but not limited to the grant to
the U.S. Government of a nonexclusive, nontransferable, irrevocable, paid-up
license to practice or have practiced any invention conceived or first actually
reduced to practice in the performance of work under NIH Grant GM 34236 for or
on behalf of the U.S. Government throughout the world; and
II.1.3 with respect to any technology developed after the
effective date, the right of any third party which sponsors research in Dr.
Simon's laboratory at CALTECH. It is understood and agreed that CALTECH will
use all reasonable efforts to assist LICENSEE in obtaining an exclusive license
or other transfer of such third party rights in and to the results and related
intellectual property which arise from or in connection with the research
sponsored by such third party.
II.2 This license is not transferable by LICENSEE except as
provided in Paragraph 13.2, but LICENSEE shall have the right to grant and
authorize nonexclusive and/or exclusive sublicenses hereunder, provided that
LICENSEE shall furnish CALTECH within thirty (30) days of the execution thereof
a true and complete copy of each sublicense and any changes or additions
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thereto. Any such sublicense (including, without limitation, any non-exclusive
sublicense) shall remain in effect in the event of any termination of this
Agreement.
II.3 The license granted herein, and the term of this Agreement,
shall commence on the Effective Date and continue, unless terminated in
accordance with the provisions of this Agreement, until the last of the patents
within the Licensed Patent Rights expires.
II.4 LICENSEE shall have a paid-up option to acquire, upon mutually
agreeable terms, *** license, including the right to sublicense, to make, have
made, use, lease, and sell products and services embodying or produced through
the use of any inventions, discoveries, or improvements in the Field conceived,
reduced to practice or otherwise developed in Dr. Simon's laboratory at CALTECH
in the period from *** until ***, subject to the rights of any third party which
sponsors research in Dr. Simon's laboratory at CALTECH. Said option must be
exercised by written notice to CALTECH ***. If LICENSEE elects to exercise its
option to acquire a license on mutually agreeable terms within the prescribed
time period, both parties agree to negotiate license terms in good faith. All
such negotiations, including the execution of a license agreement, shall be
completed within six (6) months of written notice to CALTECH of LICENSEE's
exercise of said option. If LICENSEE fails to agree to terms and conditions
within the six (6) month time period, LICENSEE shall be
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deemed to have waived said option, and CALTECH shall be free to license a third
party; provided, however, that for a period of ***, CALTECH shall not agree to
license a third party on more favorable terms than were last offered to LICENSEE
without first offering LICENSEE a license on those more favorable terms and
providing LICENSEE with ninety (90) days in which to accept such offer. If
LICENSEE fails to notify CALTECH within the ninety (90) days that it has
accepted such terms, LICENSEE shall be deemed to have rejected the offer, and
CALTECH shall, thereafter, be free to license its rights in such invention,
discovery, or improvement to other parties. If LICENSEE notifies CALTECH within
the ninety (90) days that it accepts such an offer, CALTECH shall be deemed to
have entered into a binding license agreement with LICENSEE with respect to such
terms.
ARTICLE III
USE OF NAME
III.1 LICENSEE agrees that it shall not use the name of CALTECH, the
California Institute of Technology, the Jet Propulsion Laboratory, or JPL in
any advertising or publicity material, or make any form of representation or
statement which would constitute an express or implied endorsement by CALTECH
of any Licensed Product, and that it shall not authorize others to do so,
without first having obtained written approval from CALTECH. LICENSEE may make
further disclosures containing information previously approved for release by
CALTECH without
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any need for further approvals by CALTECH.
III.2 Notwithstanding Paragraph 3.1, LICENSEE may make such
disclosures as may be required by law or court order, and disclose to its
professional advisors and actual and prospective investors that it has entered
into this Agreement with CALTECH.
ARTICLE IV
DUE DILIGENCE
IV.1 LICENSEE shall have discretion over the commercialization of
Licensed Methods and Licensed Products. LICENSEE shall be deemed to have
satisfied its obligations under this Paragraph if LICENSEE has an ongoing and
active research program or marketing program, as appropriate, directed toward
the use of Licensed Methods in the Field. Any efforts of LICENSEE's
sublicensees shall be considered efforts of LICENSEE for the purpose of
determining LICENSEE's compliance with its obligation under this Paragraph.
IV.2 ***, CALTECH shall have the right, exercisable no more often
than ***, to require LICENSEE to report to CALTECH in writing on its progress in
using Licensed Methods in the United States.
ARTICLE V
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INFRINGEMENT BY THIRD PARTY
V.1 CALTECH shall, at its expense, have the initial right, but not
the obligation, to protect Licensed Technology solely owned by CALTECH from
infringement or misappropriation and prosecute infringers or others when, in
its sole judgment, such action may be reasonably necessary, proper, and
justified. Notwithstanding the foregoing, LICENSEE shall have the right to
sublicense any alleged infringer pursuant to Paragraph 2.2. LICENSEE shall, at
its expense, have the initial right, but not the obligation, to protect
Licensed Technology jointly owned by CALTECH and LICENSEE from infringement or
misappropriation and prosecute infringers or others when, in its sole judgment,
such action may be reasonably necessary, proper, and justified.
V.2 If LICENSEE shall have supplied CALTECH with evidence of
infringement or misappropriation by a third party of Licensed Technology solely
owned by CALTECH, LICENSEE may by notice request CALTECH to take steps to
enforce such Licensed Technology. If LICENSEE does so, and CALTECH does not,
within three (3) months of the receipt of such notice, either (i) cause the
infringement or misappropriation to terminate or (ii) initiate a legal action
against the infringer or misappropriating third party, LICENSEE may, upon
notice to CALTECH, initiate an action against the infringer or misappropriating
third party at LICENSEE's expense, either in LICENSEE's name or in CALTECH's
name if so required by law. If LICENSEE does so for infringement or
misappropriation within the Field, LICENSEE shall have sole control of the
action.
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V.3 If a declaratory judgment action alleging invalidity,
unenforceability, or noninfringement of any of the Licensed Patent Rights is
brought against LICENSEE and/or CALTECH, LICENSEE shall have sole control of
the action if LICENSEE agrees to bear all the costs of the action.
V.4 In the event one party shall carry on a legal action pursuant
to Paragraph 5.2 or 5.3, the other party shall fully cooperate with and supply
all assistance reasonably requested by the party carrying on such action,
including by using its best efforts to have its employees testify when
requested and to make available relevant records, papers, information, samples,
specimens, and the like. A party controlling an action pursuant to Paragraph
5.2 or 5.3 shall bear the reasonable expenses incurred by said other party in
providing such assistance and cooperation as is requested pursuant to this
Paragraph. A party controlling such an action shall keep the other party
informed of the progress of such action, and said other party shall be entitled
to be represented by counsel in connection with such action at its own expense.
V.5 The party controlling any action referred to in this Article V
shall have the right to settle any claim, but only upon terms and conditions
that are reasonably acceptable to the other party. Should either party elect
to abandon such an action other than pursuant to a settlement with the alleged
infringer that is reasonably acceptable to the other party, the party
controlling the action shall give timely notice to the other party who, if it
so desires, may continue the action; provided, however, that the sharing of
expenses and any recovery in such suit shall be as agreed
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upon between the parties.
V.6 Any amounts paid to a party hereto by a third party as the
result of such an action (such as in satisfaction of a judgment or pursuant to
a settlement) shall first be applied to reimbursement of the unreimbursed
expenses (including, without limitation, attorneys' and expert fees) incurred
by either party. Any remainder shall be divided between the parties as follows:
V.6.1 ***
V.6.2 ***
ARTICLE VI
ALLEGATION OF INFRINGEMENT AGAINST LICENSEE
VI.1 If the practice by LICENSEE of the license granted herein
results in any allegation or claim of infringement of an intellectual property
right of third party against LICENSEE, LICENSEE shall have the exclusive right
to defend any such claim, suit, or proceeding, at its own expense, by counsel
of its own choice, and shall have the sole right and authority to settle any
such suit; provided, however, that CALTECH shall cooperate with
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LICENSEE, at LICENSEE's reasonable request, in connection with the defense of
such claim.
ARTICLE VII
PAYMENT OF PATENT COSTS
VII.1 Starting from the Effective Date, LICENSEE shall, in
connection with the preparation, filing, prosecution, issuance, and maintenance
of the Licensed Patent Rights both in the United States and foreign
jurisdictions:
VII.1.1 pay all reasonable attorneys fees for services
performed to obtain the issuance of the Licensed Patent Rights, and all patent
and government fees for services performed after the issuance of Licensed
Patent Rights, and
VII.1.2 pay all domestic and foreign patent office
maintenance fees.
VII.2 Payment shall be made to CALTECH within thirty (30) days
following receipt by LICENSEE from CALTECH of (i) an invoice covering such fees
and (ii) evidence reasonably satisfactory to LICENSEE that such fees were paid.
To the extent that LICENSEE terminates this Agreement pursuant to Paragraph
9.1, LICENSEE shall have no further liability under Paragraph 7.1 for fees
relating to applications or patents affected by the termination.
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VII.3 CALTECH shall apply for, prosecute, and maintain during the
term of this Agreement the Licensed Patent Rights; provided, however, that
LICENSEE shall have reasonable opportunity to advise and consult with CALTECH
on such matters and may instruct CALTECH to take such action as LICENSEE
reasonably believes necessary to protect the Licensed Patent Rights. The
preparation, filing, prosecution, maintenance, and payment of all fees and
expenses, including legal fees, relating to such Licensed Patent Rights shall
be the responsibility of CALTECH, provided that LICENSEE shall reimburse
CALTECH for all reasonable fees and expenses, including reasonable legal fees,
incurred by CALTECH in such application preparation filing, prosecution, and
maintenance preparation, as provided in Paragraph 7.1. Patent attorneys chosen
by CALTECH and acceptable to LICENSEE shall handle all patent preparation,
filing, prosecution, and maintenance on behalf of CALTECH; provided, however,
that LICENSEE shall be entitled to review and comment upon and approve all
actions undertaken in the prosecution of all patents and applications. Patent
counsel shall concurrently provide CALTECH and LICENSEE with copies of all
material correspondence related to the prosecution and maintenance of the
patent applications and patents within the Licensed Patent Rights. In the
event CALTECH declines to apply for, prosecute, or maintain any Licensed Patent
Rights as requested by LICENSEE, LICENSEE shall have the right to pursue the
same in CALTECH's name and at LICENSEE's expense, and CALTECH shall give
sufficient and timely notice to LICENSEE so as to permit LICENSEE to apply for,
prosecute, and/or maintain such Licensed Patent Rights.
ARTICLE VIII
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CONFIDENTIALITY
VIII.1 Dr. Simon shall provide to LICENSEE copies of any proposed
publication or abstract relating to Licensed Technology prior to the submission
of such documents. Proposed publications and abstracts shall be supplied at
least thirty (30) days in advance of submission to a journal, editor, or third
party. In addition, if Dr. Simon submits a copy of the proposed publication to
LICENSEE less than thirty (30) days prior to submission for publication, then
LICENSEE can request CALTECH to file, at CALTECH's expense, a provisisonal
patent application enabling the technology disclosed in the proposed
publication at the United States Patent and Trademark Office, and shall provide
LICENSEE with evidence of the filing of such provisional patent application.
All such documents are to be forwarded to the address given in Paragraph 13.8.
LICENSEE may request reasonable changes and/or deletions be made in any
proposed publication. The Principal Investigator will consider such changes
but retains the sole right to determine whether such changes or deletions will
be made. Dr. Simon agrees that he will honor LICENSEE's reasonable requests to
remove Confidential Information of LICENSEE included in any such public
disclosure. If LICENSEE believes that the subject matter to be published
warrants patent protection, it will identify the subject matter requiring
protection and notify CALTECH. CALTECH agrees to use its best efforts to file
a U.S. patent application prior to any date that would result in preventing the
obtaining of valid patent rights throughout the world when LICENSEE so
identifies subject matter requiring patent protection from a review of the
planned publication. Notwithstanding any other provision of this Paragraph
8.1, if CALTECH is unable to
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file a U.S. patent application in accordance with the preceding sentence,
CALTECH shall file a U.S. provisional patent application prior to the date
that would result in preventing the obtaining of valid patent rights throughout
the world when LICENSEE so identifies subject matter requiring patent
protection from a review of a planned publication.
VIII.2 Except as expressly provided herein, each party agrees not to
disclose any terms of this Agreement to any third party without the consent of
the other party; provided, however, that disclosures may be made as required by
securities or other applicable laws, or to actual or prospective investors or
corporate partners, or to a party's accountants, attorneys, and other
professional advisors.
ARTICLE IX
TERMINATION
IX.1 If either party materially breaches this Agreement, the other
party may elect to give the breaching party written notice describing the
alleged breach. If the breaching party has not cured such breach within sixty
(60) days after receipt of such notice, the notifying party will be entitled,
in addition to any other rights it may have under this Agreement, to terminate
this Agreement effective immediately; provided, however, that if either party
receives notification from the other of a material breach and if the party
alleged to be in default notifies the other party in writing within thirty (30)
days of receipt of such default notice that it disputes the asserted
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default, the matter will be submitted to arbitration as provided in Article XI
of this Agreement. In such event, the nonbreaching party shall not have the
right to terminate this Agreement until it has been determined in such
arbitration proceeding that the other party materially breached this Agreement,
and the breaching party fails to cure such breach within ninety (90) days after
the conclusion of such arbitration proceeding.
IX.2 LICENSEE shall have the right to terminate this Agreement
either in its entirety or as to any jurisdiction or any part of the Licensed
Technology upon sixty (60) days written notice.
IX.3 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.
IX.4 In the event of any termination of this Agreement, it is
understood that LICENSEE shall retain its ownership interest in any jointly
owned intellectual property within the Licensed Technology and shall have the
right to exploit the same for any purpose without having to account to CALTECH
therefor.
IX.5 The last sentence of Paragraph 2.2, Paragraphs 9.3, 9.4, and 9.5, and
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Articles III, VIII, XI, XII, and XIII of this Agreement shall survive
termination of this Agreement for any reason.
ARTICLE X
WARRANTIES AND NEGATION OF
WARRANTIES, IMPLIED LICENSES AND AGENCY
X.1 CALTECH represents and warrants that: (i) it owns all right,
title, and interest in and to the Licensed Technology, subject to the license
and march-in rights of the United States Government under Title 35, United
States Code, Sections 203-204, and ARPA Grant No. MDA972-93-1-0009, except as
for such right, title, and interest as may be owned by LICENSEE; (ii) it has
complied with all of its obligations under NIH Grant No. GM 34236, such as
those described in Title 35, United States Code, Section 202, with respect to
all of the Licensed Patent Rights; (iii) it has not granted and during the term
of this Agreement will not grant any right or interest in any of the Licensed
Technology that is inconsistent with the rights granted to LICENSEE herein;
(iv) the execution, delivery, and performance of this Agreement have been duly
authorized by all necessary corporate action on the part of CALTECH; (v) it is
the sole and exclusive owner of all right, title, and interest in the Licensed
Technology, except for such right, title, and interest therein as may be owned
by LICENSEE; (vi) it has the right to grant the rights and licenses granted
herein, and the Licensed Technology is free and clear of any lien, encumbrance,
security interest, or restriction on license; and (vii) there are no threatened
or pending actions, suits, investigations, claims, or proceedings in any way
relating to the Licensed
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Technology.
X.2 Nothing in this Agreement shall be construed as:
X.2.1 a representation or warranty of CALTECH as to the
validity or scope of Licensed Patent Rights or any claim thereof; or
X.2.2 a representation or warranty that any Licensed
Product is or will be free from infringement of rights of third parties; or
X.2.3 an obligation to bring or prosecute actions or suits
against third parties for infringement; or
X.2.4 conferring by implication, estoppel, or otherwise any
license or rights under any patents of CALTECH other than Licensed Patent
Rights, regardless of whether such other patents are dominant or subordinate to
the Licensed Patent Rights.
X.3 CALTECH MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ASSUMES NO
RESPONSIBILITIES WHATEVER WITH RESPECT TO THE USE, SALE, OR OTHER DISPOSITION
BY LICENSEE OF LICENSED PRODUCT(S).
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ARTICLE XI
ARBITRATION
XI.1 CALTECH and LICENSEE agree that any dispute or controversy
arising out of, in relation to, or in connection with this Agreement, or the
validity, enforceability, construction, performance or breach hereof, shall be
settled by binding arbitration in Los Angeles, California, United States of
America, under the then-current Commercial Arbitration Agreement Rules of the
American Arbitration Association by one (1) arbitrator appointed in accordance
with such Rules. The arbitrators shall determine what discovery will be
permitted, based on the principle of limiting the cost and time which the
parties must expend on discovery; provided, however, that the arbitrator shall
permit such discovery as he/she deems necessary to achieve an equitable
resolution of the dispute. The decision and/or award rendered by the
arbitrator shall be written, final, and non-appealable and may be entered in
any court of competent jurisdiction. The parties agree that, any provision of
applicable law notwithstanding, they will not request, and the arbitrator shall
have no authority to award, punitive or exemplary damages against any party.
The costs of any arbitration, including administrative fees and fees of the
arbitrator, shall be shared equally by the parties. Each party shall bear the
cost of its own attorneys' fees and expert fees.
ARTICLE XII
PRODUCT LIABILITY
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XII.1 LICENSEE agrees that CALTECH shall have no liability to
LICENSEE or to any purchasers or users of Licensed Products made or sold by
LICENSEE or its sublicensees for any claims, demands, losses, costs, or damages
suffered by LICENSEE, or purchasers or users of Licensed Products, or any other
party, which may result from personal injury, death, or property damage related
to the manufacture, use, or sale of such Licensed Products ("Claims").
LICENSEE agrees to defend, indemnify, and hold harmless CALTECH, its trustees,
officers, agents, and employees from any such Claims, provided that (i)
LICENSEE is notified promptly of any Claims, (ii) LICENSEE has the sole right
to control and defend or settle any litigation within the scope of this
indemnity, and (iii) all indemnified parties cooperate fully in the defense of
any Claims. No indemnified party shall voluntarily make any payment or incur
any expense with respect to any claims without the prior written consent of
LICENSEE.
XII.2 At such time as LICENSEE begins to sell or distribute or
sublicense Licensed Products (other than for the purpose of obtaining
regulatory approvals) based upon use of Licensed Methods, LICENSEE shall, at
its sole expense, procure and maintain policies of comprehensive general
liability insurance in amounts not less than $2,000,000 per incident and
$2,000,000 in annual aggregate and naming those indemnified under Paragraph
12.1 as additional insureds. Such comprehensive general liability insurance
shall provide (i) product liability coverage and (ii) broad form contractual
liability coverage for LICENSEE's indemnification under Paragraph 12.1. In the
event the aforesaid product liability coverage does not provide for
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occurrence liability, LICENSEE shall maintain such comprehensive general
liability insurance for a reasonable period of not more than seven (7) years
after it has ceased commercial distribution or use of any Licensed Product or
Licensed Method.
XII.3 LICENSEE shall provide CALTECH with written evidence of such
insurance upon request of CALTECH. LICENSEE shall provide CALTECH with notice
at least fifteen (15) days prior to any cancellation, non-renewal, or material
change in such insurance, to the extent LICENSEE receives advance notice of
such matters from its insurer. If LICENSEE does not obtain replacement
insurance providing comparable coverage within sixty (60) days following the
date of such cancellation, non-renewal, or material change, CALTECH shall have
the right to terminate this Agreement effective at the end of such sixty (60)
day period without any additional waiting period; provided, however, that if
LICENSEE uses reasonable efforts but is unable to obtain the required insurance
at commercially reasonable rates, CALTECH shall not have the right to terminate
this Agreement, and CALTECH instead shall cooperate with LICENSEE to either
grant a waiver of LICENSEE's obligations under this Article XII, assist
LICENSEE in identifying a carrier to provide such insurance, or in developing a
program for self-insurance or other alternative measures.
ARTICLE XIII
MISCELLANEOUS
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XIII.1 This Agreement sets forth the complete agreement of the
parties concerning the subject matter hereof. No claimed oral agreement in
respect thereto shall be considered as any part hereof. No waiver of or change
in any of the terms hereof subsequent to the execution hereof claimed to have
been made by any representative of either party shall have any force or effect
unless in writing, signed by duly authorized representatives of the parties.
XIII.2 This Agreement shall be binding upon and inure to the benefit
of any successor or assignee of CALTECH. This Agreement is not assignable by
LICENSEE without the prior written consent of CALTECH, except that LICENSEE may
assign this Agreement without the prior written consent of CALTECH to (i) any
Related Company, or (ii) any successor or purchaser of a substantial part of
the assets of the business to which this Agreement pertains. Any permitted
assignee shall succeed to all of the rights and obligations of LICENSEE under
this Agreement.
XIII.3 CALTECH and LICENSEE are independent parties in this
Agreement. Accordingly, there is no agency relationship between CALTECH and
LICENSEE under this Agreement with respect to any products made or sold, or any
methods used, by LICENSEE under this Agreement.
XIII.4 Nothing in this Agreement will impair LICENSEE's right to
independently acquire, license, develop for itself, or have others develop for
it, intellectual property and technology performing similar functions as the
Licensed Technology or to market and distribute
-23-
<PAGE> 24
products other than Licensed Products based on such other intellectual property
and technology.
XIII.5 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT,
HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
XIII.6 This Agreement is subject in all respects to the laws and
regulations of the United States of America, including the Export
Administration Act of 1979, as amended, and any regulations thereunder.
XIII.7 This Agreement shall be deemed to have been entered into in
California and shall be construed and enforced in accordance with California
law.
XIII.8 Any notice or communication required or permitted to be given
or made under this Agreement shall be addressed as follows:
CALTECH: Office of Technology Transfer
California Institute of Technology
1201 East California Boulevard (MC 315-6)
Pasadena, California 91125
FAX No.: (818) 577-2528
LICENSEE: Aurora Biosciences Corporation
11149 Torrey Pines Road
La Jolla, CA 92037
Phone No.: (619) 452-5000
FAX No.: (619) 452-5723
-24-
<PAGE> 25
Either party may notify the other in writing of a change of address or FAX
number, in which event any subsequent communication relative to this Agreement
shall be sent to the last said notified address or number. All notices and
communications relating to this Agreement shall be deemed to have been given
when received.
XIII.9 Neither party shall lose any rights hereunder or be liable to
the other party for damages or losses (except for payment obligations) on
account of failure of performance by the defaulting party if the failure is
occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
embargo, governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the reasonable control and
not caused by the negligence or intentional conduct or misconduct of the
nonperforming party, and such party has exerted all reasonable efforts to avoid
or remedy such force majeure; provided, however, that in no event shall a party
be required to settle any labor dispute or disturbance.
XIII.10 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.
XIII.11 This Agreement may not be altered, amended, or modified in any
way except by a writing signed by both parties. The failure of a party to
enforce any provision of
-25-
<PAGE> 26
the Agreement shall not be construed to be a waiver of the right of such party
to thereafter enforce that provision or any other provision or right.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed:
CALIFORNIA INSTITUTE OF TECHNOLOGY
(CALTECH)
Date: _______________ By:
------------------------------------
Name: Lawrence Gilbert
Title: Director, Office of Technology
Transfer
AURORA BIOSCIENCES CORPORATION
Date: _______________ By:
------------------------------------
Name: Tim Rink
Title: President and CEO
-26-
<PAGE> 27
EXHIBIT A
STOCK TRANSFER AGREEMENT
<PAGE> 28
AURORA BIOSCIENCES CORPORATION
STOCK TRANSFER AGREEMENT
THIS AGREEMENT is made as of August , 1996 in San Diego, California,
between AURORA BIOSCIENCES CORPORATION, a Delaware corporation (the "Company"),
and the California Institute of Technology (the "Purchaser").
WHEREAS, The Company and Purchaser have entered into a license
agreement of even date herewith regarding the use of certain Promiscuous
G-protein technology (the "License Agreement"); and
WHEREAS, as partial consideration for Purchaser's execution of the
License Agreement, the Company has agreed to issue shares of the Company's
Common Stock to Purchaser according to the terms and conditions contained
herein.
NOW, THEREFORE, the parties agree as follows:
1. ISSUANCE OF STOCK. As partial consideration for Purchaser's
execution of the License Agreement and the Company's rights thereunder, the
Company hereby agrees to issue to Purchaser an aggregate of 35,000 shares of the
Company's Common Stock (the "Shares"). Upon execution of this Agreement, the
Company shall promptly issue and deliver to Purchaser a share certificate
evidencing the Shares in accordance with the terms of this Agreement.
2. RESTRICTIONS ON TRANSFER.
(a) The Shares may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred in the absence of an effective
registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to such Shares or an opinion of counsel
reasonably acceptable to the Company that such registration is not required. The
Company shall not be required to transfer on its books any portion of such
Shares purchased hereunder which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement, or to treat as
the owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
(b) The Purchaser hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under Section 7 of
the Securities Act, the Purchaser shall not sell, transfer or otherwise dispose
of any Shares or other securities of the Company during a period of up to 180
days (as specified by such representative) following the effective date of a
registration statement of the Company filed under the Securities Act; provided,
however, that such restriction shall only apply to the first two registration
statements of the Company to become effective
1
<PAGE> 29
under the Securities Act which include securities to be sold on behalf of the
Company to the public in an underwritten public offering under the Securities
Act. The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such 180-day
period.
(c) The Shares are subject to a Right of First Refusal as set
forth in Article XIV of the Company's Bylaws.
3. ADJUSTMENT FOR STOCK SPLIT. All references to the number of Shares
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
4. GENERAL PROVISIONS.
(a) Purchaser acknowledges that it is aware that the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Act") and that the Shares are deemed to constitute "restricted securities"
under Rule 144 and Rule 701 promulgated under the Act. In this connection,
Purchaser warrants and represents to the Company that Purchaser is purchasing
the Shares for Purchaser's own account and Purchaser has no present intention of
distributing or selling said Shares except as permitted under the Act and
Section 25102(f) of the California Corporations Code. Purchaser further warrants
and represents that Purchaser has either (i) preexisting personal or business
relationships with the Company or any of its officers, directors or controlling
persons, or (ii) the capacity to protect its own interests in connection with
the purchase of the Shares by virtue of the business or financial expertise of
Purchaser or of any professional advisors to Purchaser who are unaffiliated with
and who are not compensated by the Company or any of its affiliates, directly or
indirectly. Purchaser further acknowledges that the exemption from registration
under Rule 144 will not be available for at least three years from the date of
sale of the Shares unless at least two years from the date of sale (i) a public
trading market then exists for the Common Stock of the Company, (ii) adequate
information concerning the Company is then available to the public, and (iii)
other terms and conditions of Rule 144 are complied with; and that any sale of
the Shares may be made only in limited amounts in accordance with such terms and
conditions.
(b) All certificates representing any shares of Common Stock
of the Company subject to the provisions of this Agreement shall have endorsed
thereon legends in substantially the following form:
(i) The securities represented by this certificate
have not been registered under the Act. They may not be sold or offered for sale
or otherwise distributed unless the securities are registered under the Act or
an exemption therefrom is available.
2
<PAGE> 30
(ii) Any other legend required to be placed thereon
by the Company's Bylaws or applicable state, federal or foreign securities laws.
(c) This Agreement shall inure to the benefit of, and be
enforceable by, the successors and assigns of the Company, and, subject to the
restrictions on transfer herein set forth, shall be binding upon Purchaser, its
successors and assigns.
(d) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. Mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
(e) The Purchaser agrees to execute upon request any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(f) This Agreement shall be governed by and determined and
interpreted in accordance with the laws of the State of California as such laws
are applied by California courts to contracts made and to be performed entirely
in California by residents of that state.
(g) This Agreement sets forth the entire understanding between
the Company and Purchaser regarding shares of the Company's securities, and
supersedes all prior agreements and/or understandings regarding the same.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first set forth above.
AURORA BIOSCIENCES CORPORATION CALIFORNIA INSTITUTE OF TECHNOLOGY
By:___________________________________ By:_________________________
Timothy J. Rink
President Name:_______________________
11149 North Torrey Pines Road Address:____________________
La Jolla, CA 92037 ____________________________
3
<PAGE> 31
EXHIBIT B
CONFIDENTIALITY AGREEMENT
<PAGE> 32
CONFIDENTIAL
MUTUAL NONDISCLOSURE AGREEMENT
This MUTUAL NONDISCLOSURE AGREEMENT ("Agreement") is made effective as
of the ______________, 1997, by and between AURORA BIOSCIENCES CORPORATION AND
MELVIN I. SIMON, PH.D., to assure the protection and preservation of the
confidential and/or proprietary nature of information to be disclosed or made
available between the parties in connection with certain negotiations or
discussions in contemplation or furtherance of a business or scientific
relationship between the parties.
WHEREAS, in order to pursue these negotiations or discussions, the
parties have agreed to mutual disclosures of certain data and other information
which are of a proprietary and confidential nature (as defined in paragraph 1
below and referred to herein as "Confidential Information").
NOW, THEREFORE, in reliance upon and in consideration of the following
undertakings, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Subject to the limitations set forth in Paragraph 2, Confidential
Information shall mean any information, process, technique, compound, library,
bioreagents, chemical probes, instrumentation, imaging technology, software,
biological assays, high throughput and ultra-high throughput synthesis and
screening, method of synthesis, program, design, drawing, formula or test data
relating to any research project, work in process, development, engineering,
manufacturing, marketing, servicing, financing or personnel matter relating to
the disclosing party, its present or future products, suppliers, employees,
investors, or business. In order to be deemed Confidential Information
hereunder, all information disclosed shall be in some type of written form,
including graphic or electronic, and marked "Confidential" or; if disclosed
orally, visually and/or in another tangible form, shall be identified as
confidential prior to, or within a reasonable time of, disclosure and summarized
in a writing marked "Confidential" and provided by the disclosing party to the
recipient within forty-five (45) days of the initial disclosure.
2. The term "Confidential Information" shall not be deemed to include
information which, to the extent that the recipient can establish by competent
written proof:
a. at the time of disclosure is in the public domain;
b. after disclosure, becomes part of the public domain by
publication or otherwise, except by (i) breach of this
Agreement by the recipient or (ii) disclosure by any person or
affiliate company to whom Confidential Information was
disclosed under this Agreement.
<PAGE> 33
CONFIDENTIAL
c. was (i) in recipient's possession in documentary form at the
time of disclosure by the disclosing party or (ii)
independently developed by or for recipient by people who had
no knowledge of or access to the Confidential Information.
d. recipient received from a third party who had the lawful right
to disclose the Confidential Information and who did not
obtain the Confidential Information either directly or
indirectly from the disclosing party; or
e. is required by law or regulation to be disclosed.
In the event that Confidential Information is required to be disclosed
pursuant to subsection (e), the party required to make disclosure shall notify
the other party to allow that other party to assess whatever exclusions or
exemptions may be available to the other party under such law or regulation.
3. Each party shall maintain in trust and confidence and not disclose
to any third party or use for any unauthorized purpose any Confidential
Information received from the other party. Each party may use such Confidential
Information only to the extent required for the purposes described herein.
Confidential Information shall not be used for any purpose or in any manner that
would constitute a violation of any laws or regulations, including, without
limitation, the export control laws of the United States. No other rights or
licenses to trademarks, inventions, copyrights, or patents are implied or
granted under this Agreement and no Confidential Information disclosed by Aurora
Biosciences Corporation will be used by Melvin I. Simon, Ph.D. to file a patent
application.
4. Confidential Information supplied shall not be reproduced in any
form, except as required to continue discussions or to accomplish the purposes
described herein.
5. The responsibilities of the parties are limited to using their
reasonable and best efforts to protect the Confidential Information from
unauthorized use or disclosure. Both parties shall advise their employees or
agents who might have access to such Confidential Information of the
confidential nature thereof. No Confidential Information shall be disclosed to
any officer, employee or agent of either party who does not have a need to know
such information for the purposes described herein and who is not bound by a
written agreement with that party to maintain Confidential Information in
confidence.
6. All Confidential Information (including copies thereof) shall remain
the property of the disclosing party, and shall be returned to the disclosing
party after the recipient's need for it to accomplish the purposes of this
Agreement has expired, or within twenty (20) days of a written request by the
disclosing party. However, the recipient may retain one complete copy of the
Confidential Information in a secure location for recipient's archival purposes
to assure compliance with this Agreement.
2.
<PAGE> 34
CONFIDENTIAL
7. This Agreement may be terminated at any time upon ten (10) days
written notice to the other party. The termination of this Agreement shall not
relieve either party of the obligations imposed by this Agreement with respect
to Confidential Information disclosed prior to the effective date of such
termination and the provisions hereof shall survive for a period of seven (7)
years from the date hereof.
8. This Agreement shall be governed by the laws of the State of
California as those laws are applied to contracts entered into and to be
performed in California.
9. Neither party shall reveal the fact that Confidential Information
has been disclosed pursuant to this Agreement, nor that either party is
conducting, or has conducted, discussions or negotiations in contemplation or
furtherance of a business relationship. It is understood that disclosure
pursuant to this Agreement is not a public disclosure or sale or offer for sale
of any product, but is made for the limited purposes relating to potential joint
business activities stated herein.
10. This Agreement contains the entire agreement of the parties and may
not be changed, modified, amended or supplemented, except by a written
instrument signed by both parties. The unenforceability of any provision on this
Agreement shall not affect the enforceability of any provision of this
Agreement. Neither this Agreement nor the disclosure of any Confidential
Information pursuant to this Agreement by any party shall restrict such party
from disclosing any of its Confidential Information to any third party.
11. Each party hereby acknowledges and agrees that in the event of any
breach of this Agreement, including, without limitation, the actual or
threatened disclosure of a disclosing party's Confidential Information without
the prior express written consent of the disclosing party, the disclosing party
will suffer an irreparable injury, such that no remedy at law will afford it
adequate protection against, or appropriate compensation for, such injury.
Accordingly, each party hereby agrees that the other party shall be entitled to
specified performance of recipient's obligations under this Agreement, as well
as such further injunctive relief as may be granted by a court of competent
jurisdiction.
AGREED TO AS OF THE FIRST DATE ABOVE:
AURORA BIOSCIENCES CORPORATION MELVIN I. SIMON, PH.D.
11149 N. Torrey Pines Road
La Jolla, CA 92037
By: __________________________ By: __________________________
Print Name: __________________ Print Name: __________________
Title: _______________________ Title: _______________________
Initial if authorized to bind the Company:
3
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.19
EXCLUSIVE LICENSE AGREEMENT
BETWEEN
THE UNIVERSITY OF OREGON
AND
AURORA BIOSCIENCES CORPORATION
FOR
LONG WAVELENGTH ENGINEERED FLUORESCENT PROTEINS
<PAGE> 2
CONFIDENTIAL
LICENSE AGREEMENT
This Agreement is made this 4th day of October, 1996, by and between the State
of Oregon, acting by and through the State Board of Higher Education on behalf
of the University of Oregon, an institute of higher education located in
Eugene, Oregon ("OREGON"), and Aurora Biosciences Corporation ("LICENSEE"), a
Delaware corporation with principal offices at 11149 North Torrey Pines Road,
La Jolla, CA 92037 to license certain technology.
RECITALS
WHEREAS, OREGON and LICENSEE seek commercialization of certain inventions,
technology, and intellectual property owned by OREGON and LICENSEE which form
the basis of U.S. Patent Application; *** and
WHEREAS, LICENSEE is well-positioned in the Biotechnology industry and intends
to use its best efforts to utilize the licensed technology; and
WHEREAS, UNIVERSITY wishes to grant LICENSEE and LICENSEE wishes to accept from
UNIVERSITY a license under any and all inventions embodied in the patent
application(s).
The parties do agree as follows:
1.0 DEFINITIONS
1.1 The term "INVENTIONS" means the novel useful ideas, reduced to
practice, which form the basis of U.S. Patent Application ***, filed
on ***, any follow-on patent applications, patents issuing worldwide,
and patents claiming priority based thereon.
1.2 "Licensed Product" means ***
1.3 The term "Field of Use" means ***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
CONFIDENTIAL
applications, domestically and internationally, to which the
INVENTIONS may be put.
1.5 "Affiliate" or "Affiliated Company" means any corporation or
other business entity controlled by or in common control of LICENSEE.
Control as used herein means the ownership directly or indirectly of
fifty percent (50%) or the maximum interest permitted by local law of
the voting stock of the corporation or fifty percent (50%) or greater
interest in the income of such corporation or other business entity or
the ability otherwise of LICENSEE to secure that the affairs of such
corporation or other business entity are managed in accordance with
LICENSEE's wishes.
2.0 LICENSE
2.1 Grant. OREGON grants ***
2.2 Royalties. Royalties shall be payable as follows:
2.2.1 An up-front fee of *** .
Payments due under this paragraph shall be paid to OREGON in
addition to any other royalty payments arising under this
Agreement and may not be credited toward, or made in lieu of,
any other such payments.
2.2.2 An *** until
*** the first such payment being due on
*** . Upon *** , an
*** of *** payable ***
2.2.3 Upon *** LICENSEE grants OREGON the rights to
*** shares of common stock in LICENSEE. LICENSEE will issue these shares at
OREGON's direction to OREGON's
*** CONFIDENTIAL TREATMENT REQUESTED
3
<PAGE> 4
CONFIDENTIAL
institution foundation for the benefit of OREGON, or to such other person or
entity as OREGON may designate. LICENSEE may require OREGON's designee to sign
such representations as will demonstrate compliance with securities laws.
2.3 Due Diligence. LICENSEE shall use reasonable efforts to bring
Licensed Products to market or provide services using the Licensed
Products in an expedient and timely fashion (in the context of
necessary regulatory approvals) or to sublicense entities which will
use their reasonable efforts to bring Licensed Products to market on
the same timely basis, and to provide Licensed Products in quantities
sufficient to meet the market demands therefor.
2.3.1 At least annually, beginning one year after the date
this Agreement is signed, LICENSEE shall report to OREGON
concerning the commercialization of Licensed Products. All
reports given by LICENSEE to OREGON shall be regarded as
Confidential Information hereunder.
2.5 Residual Rights. Notwithstanding any grant provision to the
contrary in this Agreement, OREGON retains the non-transferable right
to use the INVENTIONS for its instructional and noncommercial research
purposes.
2.6 Infringement
2.6.1 Should a third party appear to infringe any of the
intellectual property rights embodied in the INVENTIONS
licensed herein, LICENSEE shall have the right, fully at its
expense, to challenge such infringement, and may use OREGON's
name if required by applicable law, and may retain the
proceeds recovered thereby. However, that should LICENSEE fail
to challenge a commercially significant instance of alleged
infringement within six (6) months from its initial discovery
by or disclosure to LICENSEE, OREGON shall have the right to
challenge such infringement and
4
<PAGE> 5
CONFIDENTIAL
retain all proceeds recovered thereby; provided further that
the parties can agree to proceed jointly against such an
infringer on terms to be negotiated.
2.6.2 Should a third party claim that any patents, know-how,
or intellectual property licensed to LICENSEE under or as a
result of the terms of this Agreement infringes its
intellectual property rights, at Licensee's request LICENSEE
and OREGON shall (i) engage in negotiations for a settlement
and license, (ii) use their best efforts to obtain for
LICENSEE all rights necessary for it to continue using the
INVENTIONS and licensed patent rights, and (iii) otherwise
assist each other in resolving reasonably any such dispute.
LICENSEE shall pay all reasonable out-of-pocket expenses
related to these endeavors including related license fees.
5
<PAGE> 6
CONFIDENTIAL
2.7 Warranty Disclosure and Limitation of Liability
2.7.1 OREGON MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AND
HEREBY DISCLAIMS ALL SUCH WARRANTIES, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY INVENTION(S) OR
LICENSED PRODUCTS, WHETHER TANGIBLE OR INTANGIBLE, SUBJECT TO
THIS AGREEMENT AND INCLUDING THE OWNERSHIP, MERCHANTABILITY,
OR FITNESS FOR A PARTICULAR PURPOSE OF THE RESEARCH OR ANY
SUCH INVENTION OR PRODUCT OR THAT THE USE OF LICENSED PRODUCT
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER
RIGHTS. OREGON SHALL NOT BE LIABLE FOR ANY DIRECT,
CONSEQUENTIAL OR OTHER DAMAGES SUFFERED BY ANY LICENSEE,
INCLUDING SUBLICENSEE, OR ANY THIRD PARTIES TO THE EXTENT THAT
THEY RESULT FROM THE USE OF THE INVENTION AND DISCOVERY,
PROVIDED THAT THE INVENTION AND DISCOVERY WAS NOT PROVIDED TO
THE THIRD PARTY BY OREGON. NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR
INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT.
2.7.2 The provisions of this paragraph shall survive the
termination of this Agreement.
2.7.3 At the time of the execution of this Agreement,
LICENSEE represents and warrants to OREGON as follows:
2.7.3.1 LICENSEE is a corporation duly organized,
validly existing and in good standing under the laws
of the State of Delaware. LICENSEE has all requisite
corporate power and authority to carry on business,
to execute and deliver this Agreement, and to perform
its obligations hereunder. The execution and
delivery of this Agreement by LICENSEE and the
consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary
corporate action on the part of LICENSEE, and this
Agreement constitutes a valid and legally binding
obligation of LICENSEE enforceable against it in
accordance with its respective terms.
6
<PAGE> 7
CONFIDENTIAL
2.7.4 OREGON represents and warrants that: (i)it owns all
rights, title, and interest in and to the INVENTIONS, except
as for such right, title, and interest as may be owned by
LICENSEE and the University of California, (ii) it has not
granted and during the term of this Agreement will not grant
any right or interest in any of the Licensed Products that is
inconsistent with the rights granted to LICENSEE herein; (iii)
the execution, delivery, and performance of this Agreement
have been duly authorized by all necessary corporate action on
the part of OREGON; (iv) it is the sole and exclusive owner of
all right, title, and interest therein as may be owned by
LICENSEE and the University of California; (v) it has the
right to grant the rights and licenses granted herein, and the
Licensed Products is free and clear of any lien, encumbrance,
security interest, or restriction on license; and (vi) there
are no threatened or pending actions, suits, investigations,
claims, or proceedings in any way relating to the Licensed
Products.
2.8 Indemnification and Insurance
2.8.1 LICENSEE shall indemnify and hold OREGON and its
officers, employees and agents harmless against all costs,
damages, judgments, attorney fees, license fees, settlement
costs, and other defense expenses incurred, arising out of
claims brought by third parties, including, but not limited
to, personal injury, property damage, intellectual property
infringement, dilution, or misappropriation, due to LICENSEE'S
development, manufacture, use, clinical trials, testing,
marketing or sale of Licensed Products, or sublicensing of
INVENTIONS.
2.8.2 In the event any third-party claim is made or lawsuit
is initiated, the party against whom such lawsuit is brought
or claim is made shall promptly notify the other party hereto
in writing, and shall cooperate fully in the defense of such
lawsuit.
7
<PAGE> 8
CONFIDENTIAL
2.8.3 During the term of this Agreement, LICENSEE shall
maintain in effect commercial general liability insurance and
(in any period when LICENSEE is commercially transferring
Licensed Products to third parties) products liability
insurance in the combined amount of One Million Dollars
($1,000,000) per occurrence, or such greater amount as may be
usual and customary for companies selling or testing similar
products. The general liability insurance required hereunder
shall cover contractual liability and bodily injury, death and
property damage against any claims, demands, or causes of
action or damages, including reasonable attorney fees. The
products liability insurance shall cover similar claims and
forms of damage arising out of negligent design or
manufacture, including without limitation failure to warn,
deficient use instruction or any alleged defects in Licensed
Products or the use or possession of Licensed Products. The
policy(ies) shall name OREGON as a co-insured, and provide
that notice shall be given to OREGON at least thirty (30) days
prior to cancellation, non-renewal or material change in the
form of such policy(ies). If any of the required liability
insurance is arranged on a "claims made" basis, "tail"
coverage will be required at the completion of that insurance
contract for a duration of 24 months or the maximum time
period the insurer will provide if less than 24 months.
2.8.4 The provisions of this section shall survive the
termination of this Agreement.
2.9 Protection and Maintenance of Patent Rights
2.9.1 LICENSEE shall use all reasonable efforts to continue to
prosecute Patent Application ***, to file continuations-in-part
("CIP's") based upon that Application, and to pay all
maintenance fees necessary to protect the INVENTIONS where
patents have issued.
2.9.2 LICENSEE shall control the prosecution of all patent
applications related to the Inventions. OREGON may provide
the Licensee with comments on the
*** CONFIDENTIAL TREATMENT REQUESTED
8
<PAGE> 9
CONFIDENTIAL
prosecution of the patent applications.
2.9.3 LICENSEE agrees to keep OREGON informed in a timely
manner of the contents, status and progress of all amended
patent applications and CIP's filed by LICENSEE. LICENSEE
agrees to notify OREGON in writing in a timely manner that it
does not desire to support the continued prosecution or
appeals or maintenance of such amended application, CIP or
patent. In the event LICENSEE declines to provide, or is
delinquent in providing, support for filing, prosecution, and
maintenance of any Patent Rights in any country other than the
U.S.A., LICENSEE forfeits its associated licensing rights and
OREGON shall have the right, but not an obligation, to file
for, prosecute and maintain such patent rights at Oregon's
expense.
2.10 Sublicenses. Any sublicenses shall not be inconsistent with the
terms of this license (including, but not limited to, OREGON's
disclaimers and rights to terminate) and in case of conflict, the
rights of OREGON as against any sublicensee shall be governed by this
license. Any sublicenses granted by LICENSEE shall survive the
expiration of this agreement and be assigned to OREGON.
2.11 Termination
2.11.1 This Agreement shall be continued on a country by
country basis, unless sooner terminated as provided in this
Section 2.11, until the last expiration date of all patents
licensed under this Agreement.
2.11.2 If LICENSEE materially breaches any term, condition or
agreement hereof, or if LICENSEE fails to pay the minimum
royalties due under clause 2.3.1, OREGON may serve written
notice of a breach upon LICENSEE and unless such breach is
fully cured within ninety (90) days from the receipt of notice
by LICENSEE, OREGON may thereupon, at its option, serve notice
of cancellation on LICENSEE, whereupon this Agreement shall
immediately terminate.
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2.11.3 Termination of this Agreement for any reason
whatsoever shall not excuse LICENSEE from paying to OREGON all
royalties earned and all patent costs incurred prior to the
date of such termination, and all royalties thus earned, but
unpaid, shall immediately become due and payable. LICENSEE may
terminate at will with respect to any country or patent with
sixty (60) days notice OREGON.
2.11.4 Upon expiration of this license or termination as
outlined in this 2.11, OREGON shall be free to license its
INVENTIONS to any other party.
3.0 MISCELLANEOUS
3.1 Merger Clause. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter
within and supersedes all previous agreements, whether written or
oral, relating to the subject matter herein. Amendments to this
Agreement shall be effective only if in writing and signed by an
authorized representative of both OREGON and LICENSEE.
3.2 Assignment. This Agreement shall not be assignable by either
party without the prior written consent of the other party, except
that LICENSEE may assign this Agreement to an Affiliate or any
successor to substantially all the assets and business of LICENSEE,
whether by sale, merger or otherwise.
3.3 Relationship of the Parties. For the purposes of this Agreement,
the parties shall be deemed to be independent contractors and not
agents or employees of the other party. Neither party shall have
authority to make any representations or commitments of any kind or to
take any action which shall be binding on the other party, except as
may be explicitly provided for herein or authorized by the other party
in writing and except as required by law.
3.4 Manufacturing. LICENSEE agrees that, to the extent required
by Federal laws or regulations then in effect and
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to the extent Licensed Products are sold within the United States, if
such Licensed Products are based upon INVENTIONS developed through
research supported by a Federal Agency, such Licensed Products will be
manufactured substantially in the United States.
3.5 Exporting. LICENSEE assures OREGON it does not intend and
will not knowingly, without prior written consent and approvals (if
required) of the Office of Export Administration of the U.S.
Department of Commerce, transmit, transfer, sell, give, or deliver
directly or indirectly any INVENTIONS or Licensed Products to any
foreign government, or to any company or entity operating under the
aegis of, or on behalf of, any foreign government, or to any other
entity whose purpose is to facilitate the transfer of INVENTIONS or
Licensed Products to any foreign government, in any manner contrary to
or in violation of the Export Administration Regulations of the U.S.
Department of Commerce or the International Traffic in Arms
Regulations of the U.S. Department of Defense or the U.S. State
Department. The obligations under this clause shall survive
notwithstanding termination of this Agreement.
3.6 Effect of Waiver. No waiver of any default, condition,
provisions or breach of this Agreement shall be deemed to imply or
constitute a waiver of any other like default, condition, provision or
breach of this Agreement.
3.7 Confidential Information. To the extent permitted by law, each
party shall use the same degree of care as it employs in protecting
its own confidential information to maintain in confidence and not use
or disclose, other than for purposes in accordance with this
Agreement, all information provided by the other party that are
identified in writing as confidential and acknowledged to be
confidential, except to the extent the party receiving the information
establishes that such information or materials (a) are already in the
public domain or (b) otherwise became known to the receiving party
from a third party who has the right to disclose such information.
The foregoing obligations of the parties with respect to any
confidential information shall survive any termination of this
Agreement
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and shall continue for a period of three (3) years from the date such
confidential information was disclosed hereunder.
3.7.1 If the inventor or OREGON desires to disclose any
confidential information received from LICENSEE in
publications or presentations at scientific meetings, the
inventor or OREGON shall provide LICENSEE a copy of such
manuscript to be published or presented. Upon receipt of the
manuscript, LICENSEE shall have thirty (30) days to review and
determine whether or not to seek a patent therefor. If
LICENSEE determines that it does wish to seek a patent, it may
require delay in publication or presentation to permit filing
of the patent, provided that such delay will not exceed thirty
days after notifying OREGON of its desire to patent the
disclosed invention. LICENSEE will work with OREGON in good
faith to accommodate shorter deadlines, if needed by OREGON
and reasonably possible for LICENSEE.
3.8 Notices. All Notices under this Agreement shall be given in
writing and shall be addressed to the parties at the following
addresses:
For OREGON:
Director, Technology Transfer
1238 University of Oregon
Eugene, OR 97403-1238
For LICENSEE:
Director, Business Development
11149 North Torrey Pines Road
La Jolla California
3.8.1 Notices shall be in writing and shall be deemed
delivered when received, if delivered by a courier, or
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on the second business day following mailing, if sent by
first-class certified or registered mail, postage prepaid.
3.9 Governing Law. This Agreement shall be governed by the laws
of the state of OREGON.
3.10 Use of Names. LICENSEE shall not use OREGON'S name in any
advertising, promotional or sales literature without the prior written
assent to such use by OREGON.
3.11 Severability. In the event that any provision hereof is found
to be invalid or unenforceable pursuant to a final judgment or decree,
the remainder of this Agreement shall remain valid and enforceable
according to its terms.
3.12 OREGON and LICENSEE agree that any dispute or controversy
arising out of, in relation to, or in connection with this Agreement,
or the validity, enforceability, construction, performance or breach
hereof, shall be settled by binding arbitration under the then-
current American Arbitration Association by one (1) arbitrator
appointed in accordance with such Rules. The arbitrator shall permit
such discovery as he/she deems necessary to achieve an equitable
resolution of this dispute. The decision and/or award rendered by the
abritrator shall be written, final, and non-appealable and may be
entered in any court of competent jurisdiction. The parties agree
that, any provision of applicable law notwithstanding, they will not
request, and the arbitrator shall have no authority to award, punitive
or exemplary damages against any party. The cost of any arbitration,
including administrative fees and fees of the arbitrator, shall be
shared equally by the parties. Each party shall bear the cost of its
own attorney's fees and expert fees.
3.13 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTIAL, OR INDIRECT DAMAGES ARISING OUT OF THIS
AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
3.14 Neither party shall lose any rights hereunder or be
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liable to the other party for damages or losses (except for payment
obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, Act of God
earthquake, flood, lockout, embargo, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure
to perform is beyond the reasonable control and not caused by the
negligence or intentional conduct or misconduct of the nonperforming
party, and such party has exerted all reasonable efforts to avoid or
remedy such force majeure; provided, however, that in no event shall a
party be required to settle any labor dispute or disturbance. IN
WITNESS WHEREOF, the parties have executed this Agreement.
By:__________________________
Timothy J. Rink
President, CEO and Chairman
Aurora Bioscience Corporation
Date:________________________
STATE OF OREGON, ACTING BY
AND THROUGH THE OREGON STATE
BOARD OF HIGHER EDUCATION ON
BEHALF OF THE UNIVERSITY OF
OREGON
By:___________________________
Melinda Grier
OSSHE Contracts Officer
Date:________________________
By:___________________________
Steadman Upham
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CONFIDENTIAL
Vice Provost for Research
and Graduate Education
Date:__________________________
15
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.20
RESEARCH AGREEMENT
THIS RESEARCH AGREEMENT("Agreement") is entered into as of this 2nd
day of April 1996 (the "Effective Date") by and between AURORA BIOSCIENCES
CORPORATION, a company organized under the laws of the State of Delaware,
having an office at 1020 Prospect Street, Suite 405, La Jolla, CA 92037
(hereinafter referred to as "Aurora"), and SEQUANA THERAPEUTICS, INC., a
California corporation having its principal place of business at 11099 North
Torrey Pines Road, Suite 160, La Jolla, CA 92037 (hereinafter referred to as
"Sequana").
RECITALS
WHEREAS, Aurora is a start-up drug discovery company focused on
exploiting novel, highly sensitive fluorescence assays for use in genetically
engineered mammalian cells and the development of ultra-high throughput
screening systems. Aurora desires to obtain additional capital resources and
customers with novel genomic based targets for developing cell-based assays in
high-throughput screens.
WHEREAS, Sequana is a company engaged in the discovery,
characterization and positional cloning of disease genes, which desires to
extend its discovery capabilities into functional analysis of newly identified
genes, cell-based or other systems for screening such gene targets and methods
for high throughput screening of potential drug candidates.
WHEREAS, In connection with the execution of this Agreement, Sequana
will purchase Preferred Stock of Aurora as set forth in a separate Stock
Purchase Agreement between the parties of even date herewith (the "Stock
Purchase Agreement").
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
ARTICLE 1 - DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings.
1.1 "AFFILIATE" shall mean any entity that directly or indirectly
owns, is owned by, or is under common ownership, with a party, where "owns" or
"ownership" means direct or indirect possession and/or control of at least 50%
of the outstanding voting securities of a corporation or a comparable equity
interest in any other type of entity.
1.
<PAGE> 2
1.2 "AURORA PATENT" means the rights granted by any governmental
authority under a Patent which covers a Product or a method of use, apparatus,
material or manufacture useful in the discovery, development, manufacture, use
or sale of a Product, which Patent Aurora (i) owns, controls or has a license
to (with a right to sublicense) as of the Effective Date or (ii) acquires
ownership, control or license rights to (with a right to sublicense) during the
term of the Agreement or in the course of carrying out the Research Program.
1.3 "AURORA TECHNOLOGY" shall mean the ***
1.4 "COMPOUND" means a compound provided by Sequana to Aurora to
be used in screening activities in the Research Program.
1.5 "FTE" means 1880 hours of work per year by a full time
equivalent scientific or technical researcher, appropriately qualified for the
tasks assigned under the Research Plan.
1.6 "FUNCTIONAL ANALYSIS" means background research ***
1.7 "NET SALES" means the ***
1.8 "PATENT" means (i) unexpired letters patent (including
inventor's certificates and utility models, petty patents and similar
intellectual property rights) which have not been held invalid or unenforceable
by a court of competent jurisdiction from which no appeal can be taken or has
been taken within the required time period, including without limitation any
substitution, extension, registration, confirmation, reissue, re-examination,
renewal or any like filing thereof and (ii) pending applications for letters
patent, including without limitation any continuation, division or
continuation-in-part thereof and any provisional applications.
1.9 "PRODUCT" shall have the meaning assigned in Section 4.2.
1.10 "RESEARCH PLAN" shall mean the plan established pursuant to
Section 3.3 describing the research activities to be undertaken regarding a
particular Target.
1.11 "RESEARCH PROGRAM" means the program described in Article 3.
***CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 3
1.12 "SEQUANA PATENT" means the rights granted by any governmental
authority under a Patent which covers a Product or a method of use, apparatus,
material or manufacture useful in the discovery development, manufacture, use
or sale of a Product, which Patent Sequana (i) owns, controls or has a license
to (with a right to sublicense) as of the Effective Date or (ii) acquires
ownership, control or license rights to (with a right to sublicense) during the
term of the Agreement or in the course of carrying out the Research Program.
1.13 "SEQUANA TECHNOLOGY" shall mean the Sequana Patents and all
know-how, technology, trade secrets, processes, data, methods or other
information and any physical, chemical or biological material that is useful in
the discovery development, manufacture, use or sale of Products which Sequana
(i) owns, controls or has a license to (with a right to sublicense) as of the
Effective Date or (ii) acquires ownership, control or license rights to (with a
right to sublicense) in the course of carrying out the Research Program.
1.14 "TARGET" means a positionally cloned disease gene referred to
in Section 2.1 or an additional target gene referred to in Section 2.2, or the
protein-encoded by such a gene.
1.15 "TECHNICAL COMMITTEE" shall have the meaning assigned in
Section 3.2.
ARTICLE 2 - SELECTION OF TARGETS
2.1 POSITIONALLY CLONED DISEASE GENES. Sequana may select ***
genes or genetically validated molecular targets, discovered as a result of
positional cloning or statistical genetics of specified familial lineages, to
which Aurora will apply all scientifically applicable Aurora Technology,
including Functional Analysis, screen development and screening, pursuant to
an agreed Research Plan as provided in Section 3.2, during the term of this
Agreement.
2.2 ADDITIONAL TARGET GENES. During the term of this Agreement,
Aurora will also apply all scientifically applicable Aurora Technology
including, related to Functional Analysis, screen development and screening for
*** additional newly identified genes or genetically validated molecular
targets, discovered by any method, including but not limited to positional
cloning, provided that: (i) Sequana specifies each such Target in writing to
Aurora; (ii) notwithstanding any other provision of this Agreement (including
but not limited to Section 3.3), within of the date of such notice the parties
agree on an appropriate Research Plan for such Target (which agreement shall not
be unreasonably withheld by Aurora); and (iii) prior to Sequana's delivery of
any such notice Aurora has not already commenced work for, or good faith
negotiations with, another party, as demonstrated by written correspondence,
with respect to such Target. With regard to the foregoing clause (iii), if
negotiations are not concluded with such a third party within months of delivery
of Sequana's notice, Sequana shall be entitled to include the relevant
additional target gene in the Research Program subject to the terms of this
Agreement.
2.3 CHANGE IN CONTROL. Notwithstanding Section 2.2, in the event
of a Sequana change in control (defined below) at any time during the term of
this Agreement, Sequana's rights
***CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 4
and Aurora's obligations to include Targets in the Research Program shall
thereafter be limited to Targets discovered by positional cloning or
statistical genetics of specified familial lineages. In such event, new
Targets not discovered by positional cloning or statistical genetics of
specified familial lineages may not be added to the Research Program. Work in
progress under the Research Program on Targets not discovered by positional
cloning or statistical genetics of specified familial lineages shall continue
according to the agreed Research Plan. Each party's rights and obligations
under this Agreement shall continue following an Aurora change in control.
For purposes of this Section 2.3, "change in control" of an entity
shall mean (i) a merger or consolidation in which the shareholders of such
entity immediately prior to such merger or consolidation do not own at least
fifty percent (50%) of the surviving entity, (ii) the sale, transfer or other
disposition of all or substantially all of the assets of such entity, or (iii)
any transaction or series of related transactions in which a third party
acquires the beneficial ownership (as defined under the Securities Exchange Act
of 1934, as amended) of more than fifty percent (50%) of the voting power of
such entity's outstanding voting securities.
ARTICLE 3 - RESEARCH PROGRAM
3.1 OBJECTIVES; DILIGENCE. Following the selection of Targets in
accordance with Article 2, the parties agree to conduct a research program (the
"Research Program") in accordance with this Article 3 involving Functional
Analysis by Aurora of Targets, development of screens for such Targets,
screening of Compounds or any combination thereof. Aurora shall use
commercially reasonable diligence to pursue work under the Research Program so
long as Sequana is in compliance with its funding commitments under Section
4.1.
3.2 TECHNICAL COMMITTEE. A technical committee (the "Technical
Committee") consisting of two senior research and development executives from
each of Sequana and Aurora shall review opportunities for research projects to
be conducted under this Agreement and monitor and assess the status of work
being conducted pursuant to this Agreement. The Technical Committee shall
provide a quarterly written report regarding such matters to each party. The
Technical Committee shall meet at least quarterly at such times and places as
shall be mutually agreed upon by the members of the Technical Committee.
3.3 RESEARCH PLANS. The Research Program will be conducted in
accordance with a research plan (the "Research Plan") for each Target. Each
Research Plan shall by devised by the Technical Committee in accordance with
the terms of this Agreement, but Sequana shall have the determining vote on
disputed decisions (subject to clause (ii) of Section 2.2 and except with
respect to the allocation of work among Aurora, Sequana and/or third parties
under Research Plans as provided in Section 3.4 below). Each Research Plan
shall provide for *** to perform such work through the term of such
Research Plan, however in the event of early completion of the Research Plan or
a determination by Sequana that a Target is not commercially viable, Sequana
will have the right to substitute a new Target under the Research Plan. Work
may additionally be done by Sequana scientists or third parties to the extent
the parties agree that such work is more appropriately done by Sequana or such
third parties, and Sequana and/or such
*** CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 5
third parties shall have a non-exclusive, non-assignable, royalty-free license
for the term of the applicable research contract to Aurora Technology to the
extent necessary to perform such work. It is the understanding of the parties,
however, that Aurora will be primarily responsible for performing research
under applicable Research Plans. Notwithstanding the foregoing, however, to
the extent any Research Plan with respect to Targets selected under Section 2.1
or Section 2.2 is directed solely toward Functional Analysis, then such
Research Plan shall involve *** through the term of such Research Plan,
however in the event of early completion of the Research Plan, or a
determination by Sequana that a Target is not commercially viable, Sequana will
have the right to substitute a new Target under the Research Plan.
3.4 RESEARCH COMMITMENTS. Aurora shall not be required to
provide, at any one time, *** Aurora appropriately qualified scientists at any
one time under this Agreement for research programs directed to Targets
selected under Section 2.1 above or *** Aurora appropriately qualified
scientists at any one time under this Agreement for research programs directed
to Targets selected under Section 2.2 above. Further, Aurora shall not be
obligated to provide *** appropriately qualified scientists at any one time
under this Agreement for Functional Analysis of Targets where the Research
Plans under which such scientists are working are directed solely toward
Function Analysis.
3.5 SPECIAL EQUIPMENT. Aurora may require Sequana to provide to
Aurora, at Sequana's expense (including but not limited to delivery charges to
and from Aurora's facilities, and insurance costs), any specific equipment (to
be owned by Sequana) that Aurora requires for work under a Research Plan.
Aurora shall not use such equipment for other purpose except with the consent
of Sequana.
3.6 ***
3.7 RESEARCH LICENSE TO AURORA. Sequana hereby grants to Aurora a
non-exclusive, non-transferable, fully-paid license under the Sequana
Technology solely for the purpose of carrying out the Research Program in
accordance with this Agreement.
***CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 6
ARTICLE 4 - COMPENSATION
4.1 RESEARCH PAYMENTS. Sequana shall make research funding
payments to Aurora a rate equal to *** per FTE for each FTE provided for
in any Research Plan. Such payments shall be made on a quarterly basis in
advance.
If the Agreement is extended as provided in Section 7.1, the research
funding rate per FTE for such extension years will be ***
4.2 MILESTONES AND ROYALTIES.
(A) If any Compound screened by Aurora under the Research
Program, or any derivative thereof, is developed and commercialized as a drug
product, or any assay development or screening work performed by Aurora under
this Agreement otherwise directly or indirectly leads to the development and
commercialization of any drug products (collectively, "Products"), Aurora shall
be entitled to receive from Sequana, subject to paragraph (c) below, *** of all
license fees, milestone payments and other fees and compensation received by
Sequana from third parties (if any) with respect to such Products and (ii)
royalties on Net Sales of such Products equal to the *** (if any) with respect
to such Products; provided, however, that with respect to any Product, the
amounts to which the percentages under the foregoing clauses (i) and (ii) are
applied shall be *** in connection with the discovery, development or
commercialization of such Product.
(B) With respect to any Target on which Aurora performs
Functional Analysis but not screening or assay development work referred to
under Section 4.2(a), if the Functional Analyses of any such Targets performed
by Aurora under this Agreement directly or indirectly lead to the development or
commercialization of any Products acting substantially on any such Target,
Aurora shall be entitled to receive from Sequana, subject to paragraph (c)
below, (i) *** of all license fees, milestone fees and other fees and
compensation received by Sequana from third parties (if any) with respect to
such Products and (ii) royalties on Net Sales of such Products equal to *** (if
any) with respect to such Products; provided, however, that the amounts to which
the percentages under the foregoing clauses (i) and (ii) are applied shall be
********* in connection with the discovery, development or commercialization
of such Products.
In no event shall any license fees, milestone payments,
royalties or other payments paid by Sequana and referred to in the provisos in
Sections 4.2(a) and 4.2(b) be applied on more than one occasion to reduce the
amounts upon which percentages are payable to Aurora under this Section 4.2.
***CONFIDENTIAL TREATMENT REQUESTED
6.
<PAGE> 7
(C) Aurora shall not be entitled to receive any amount of
(i) license fees, milestone payments, royalties or other fees or compensation
received by Sequana from third party collaborators to the extent such payments
are received solely and specifically in consideration of Sequana's research
activities in connection with and including discovering the gene with respect
to which screening services are being provided by Aurora to Sequana, or (ii)
payments from third party collaborators (a) for research or development work
performed by Sequana or (b) as reimbursement of patient collection costs, or
(iii) equity investments in Sequana even if at a premium to market price. The
provisions of this paragraph (c) and the provisos contained in Sections 4.2(a)
and 4.2(b) shall not apply to the extent the parties shall both otherwise agree
in writing to an alternative compensation arrangement with respect to any
Products, such as in the event that Sequana has not entered into a separate
gene discovery agreement with a commercial partner, after considering in good
faith the relative contributions by the parties (Aurora, Sequana and third
parties) of intellectual property, specialist know how and prior work done and
any unusual or special features of the contractual arrangements to which
Sequana is subject for a particular project, including but not limited to the
fact that no substantial milestones or royalties are payable to Sequana
pursuant to such arrangements. Notwithstanding anything in this Agreement to
the contrary, Aurora shall not be entitled to receive any amounts of any
payments received by Sequana under the following agreements as in effect on the
date hereof: (i) the Collaborative Research Agreement between Sequana and
Glaxo Wellcome Inc. dated July 27, 1994; (ii) the Collaborative Research
Agreement dated June 30, 1995 between Sequana and Corange International, Ltd.;
and (iii) the Collaborative Research Agreement dated June 12, 1995 between
Sequana and Boehringer Ingelheim International GmbH; provided, however, that
notwithstanding any other provision of this Agreement, Aurora shall not be
required to provide screening or assay development services or Functional
Analysis under this Agreement with respect to any genes or molecular targets
identified (or with respect to which Sequana may otherwise receive
compensation) under such agreements unless, with respect to any such gene or
molecular target under any such agreement, such agreement is hereafter amended
to provide for the payment of compensation to Sequana for the provision of such
services or Functional Analysis, in which case this sentence shall no longer
apply with respect to such agreement (it being understood that the payments
payable to Sequana under such agreements as in effect on the date hereof shall
be deemed to be payments referred to under clauses (i), (ii) and (iii) of this
Section 4.2(c)).
4.3 PAYMENTS. Sequana shall provide reports to Aurora within 60
days after the end of each calendar quarter during this Agreement stating the
quantity and description of Products subject to royalty sold the preceding
calendar half year, the Net Sales thereof and the calculation of the royalty
due, as well the amount of any other payments due under Section 4.2 and the
basis for determining such amount. All payments due hereunder shall be paid
simultaneously with the submission of such reports. Payments shall be made in
United States Dollars. If any taxes are imposed and required to be withheld
from such payments, the taxes withheld shall be for the account of Aurora and
shall reduce the payments required to be made hereunder. Sequana shall make
any required withholding payments to appropriate tax authorities and forward to
Aurora all appropriate receipts and other documents necessary to enable Aurora
to recover such withheld taxes to the extent permissible under applicable law.
7.
<PAGE> 8
4.4 RECORDS AND AUDITS. Sequana shall keep true and accurate
records and/or books of account containing information reasonably required for
the computation and verification of all payments to be made hereunder, which
records and/or books shall at all reasonable and mutually convenient times
during ordinary business hours be open for periodic inspection, not more than
once each calendar year and for inspection of no more than the three prior years
of records and/or books, by an independently certified public accounting firm of
nationally recognized standing selected by Aurora who is reasonably acceptable
to Sequana, for the sole purpose of and only to the extent reasonably necessary
for verification of the amounts due and payable under this Agreement. The
accounting firm shall disclose to Sequana all information gathered or concluded,
and to Aurora only whether the records are correct or not and the specific
details concerning any discrepancies. The expense of the audit shall be borne
by Aurora, unless the audit reveals a deficiency *** in payments due hereunder,
in which case Sequana shall bear the expenses of the audit. The results of the
audit shall be binding on both parties. Any deficiency in payments revealed by
the audit shall be due and payable within thirty (30) days of the audit results
being disclosed to the parties, with simple interest from the date originally
due at a rate of eight percent (8%) per annum.
ARTICLE 5 - INTELLECTUAL PROPERTY RIGHTS
5.1 INVENTIONS AND DATA. Inventions made by Aurora using
Compounds supplied by Sequana under this Agreement, all data generated by
Aurora in connection with the evaluation of Compounds pursuant to this
Agreement and all rights in such inventions and data shall be owned by Sequana
and Sequana shall have the right to obtain Patents thereon at its own expense
and using counsel of its selection. Inventions made by Aurora pertaining
generally to assay development technology and screening technology shall be
owned by Aurora and Aurora shall have the right to obtain Patents thereon at
its own expense and using counsel of its selection. Aurora's rights shall,
however, be subject to any Patent rights owned by Sequana and no rights or
license under Sequana Patents shall inure to Aurora except as expressly
provided in this Agreement. All inventions made by Sequana in connection with
the Research Program shall be owned by Seqana.
For the avoidance of doubt, as between Aurora and Sequana, Sequana
shall own all rights to any Compounds identified as potential drug candidates,
and any assays containing a Target developed, in the course of the Research
Program.
5.2 COMMERCIAL LICENSE TO SEQUANA. Sequana shall use commercially
reasonable diligence to pursue product opportunities arising out of the
Research Program. Subject to the terms of this Agreement, Aurora hereby grants
to Sequana a worldwide, exclusive license under the Aurora Technology to
develop, make, use and sell Products covered by Section 4.2. Sequana may
sublicense such rights to third parties, provided that payments received by
Sequana pursuant to such sublicenses shall be covered by Section 4.2.
5.3 ***
***CONFIDENTIAL TREATMENT REQUESTED
8.
<PAGE> 9
***
The licenses granted under this Section 5.3 shall terminate upon the
expiration of the Agreement, provided that following the expiration of the
Agreement, Aurora and Sequana shall negotiate in good faith with regard to
extending the licenses set forth above on reasonable terms to be mutually
agreed upon by the parties.
5.4 PATENT ENFORCEMENT. Each party shall have the right at its
own expense to protect the Patents owned by it and licensed to the other party
under this Agreement from infringement by third parties and to control any
litigation initiated to prosecute such infringers. The decision to undertake
litigation shall be in the sole discretion of such party and its decision to
enter into litigation shall be binding on the other party. In the event that
party shall recover profits and/or damages from an infringer based upon the
infringer's sales of a Product, such party agrees to pay the other party a
percentage of such profit and/or damages equal to the percentage the other
party would have received hereunder in the absence of infringement, after
deducting the recovering party's expenses of litigation, including costs and
legal fees incurred therein.
***CONFIDENTIAL TREATMENT REQUESTED
9.
<PAGE> 10
ARTICLE 6 - CONFIDENTIALITY
6.1 The parties contemplate that during the course of their
relationship arising under this Agreement, it may be necessary to provide the
other with confidential information to facilitate the performance of their
obligations pursuant to this Agreement. The parties agree, therefore, that
information received from the other shall be maintained in confidence and that
reasonable and prudent practices shall be followed to maintain the information
in confidence, including, where necessary, obtaining written confidentiality
agreement from employees and consultants not already bound by such agreements
who have access to the confidential information. Information received in
confidence shall be used by a party only for the purpose of and in connection
with its performance of this Agreement. The obligation to maintain information
in confidence shall survive expiration or termination of this Agreement for a
period of five (5) years thereafter.
However, a party shall not be obliged to maintain information in
confidence which it can show by written documentation: (a) to have been
publicly known prior to submission to it by the other party; (b) to have been
known or available to it prior to submission by the other party; (c) to have
become publicly known without fault on its part subsequent to submission by the
other party; (d) to have been received by it from a third party having
possession of the information without obligations of confidentiality; (e) to
have independently developed it without reference to or use of the confidential
information; or (f) to be required to be disclosed pursuant to applicable law
or the order of any court or governmental agency having jurisdiction thereof
after notice to the other party sufficient to afford it an opportunity to
intervene in the proceeding where disclosure is required.
ARTICLE 7 - TERM AND TERMINATION
7.1 TERM OF AGREEMENT; OPTION TO EXTEND. The term of the Agreement
shall be three years from the effective date of the UC License Agreement,
subject to Sequana's right to extend such term *** for a fee of *** (but
only for an additional *** Targets discovered by Sequana as a result of
positional cloning or statistical genetics of specified familial lineages under
Section 2.1 and an additional *** under Section 2.2 per *** ; *** of such
extension fee *** . In the event that Aurora has not established fluorescence-
based screening equipment referred to in the Recitals to this Agreement with a
capacity of tests per week within months of the Effective Date, no fee will be
payable upon any extension of the Agreement under this Section 7.1. Following
the expiration of the initial three year term, or any extension thereof, Sequana
shall retain the license granted in Section 5.2 of this Agreement and shall
remain subject to the terms of Section 4.2, 4.3 and 4.4, as well as Articles 6
and 8.
7.2 TERMINATION FOR MATERIAL BREACH. Each party can terminate
this Agreement in the event of a material breach of this Agreement by the other
party by giving the other party notice of its intention to terminate if within
ninety (90) days of such notice such party does not cure the breach.
*** CONFIDENTIAL TREATMENT REQUESTED
10.
<PAGE> 11
7.3 CONSEQUENCES OF TERMINATION FOR MATERIAL BREACH.
(A) BREACH BY SEQUANA. If Aurora terminates this
Agreement pursuant to Section 7.2, then in addition to any other remedies that
may be available, all rights and obligations of the parties under this
Agreement (including but not limited to all licenses) shall terminate as of the
effective date of such termination and each party shall promptly return to the
other party all documentation and materials in such party's possession;
provided, however, that Sequana shall remain obligated to pay milestones and
royalties under this Agreement, and the provisions of Sections 4.2, 4.3, 4.4
and 5.2 of this Agreement shall survive such termination, with respect to work
done hereunder by Aurora through the effective date of such termination, and
nothing shall relieve any party of any payment obligations accrued prior to the
effective date of such termination.
(B) BREACH BY AURORA. If Sequana terminates this
Agreement pursuant to Section 7.2, then in addition to any other remedies that
may be available, all rights and obligations of the parties under this
Agreement (including but not limited to all licenses) shall terminate as of the
effective date of such termination and each party shall promptly return to the
other party all documentation and materials in such party's possession;
provided, however, that (i) the provisions of Sections 4.2, 4.3, 4.4, and 5.2
of this Agreement shall survive such termination, with respect to work done
hereunder by Aurora through the effective date of such termination (Section 5.3
shall survive for 3 years from the effective date of the UC License Agreement
and thereafter as Sequana may elect subject to clause (ii) of this Section
7.3(b) below) and (ii) Sequana may elect to continue the license grant under
Section 5.3 and Aurora's exclusivity obligation under Section 3.6 *** after
expiration of the initial 3 year period after the effective date of the UC
License Agreement following such termination by delivery to Aurora on or prior
to the effective date of such termination cash in the amount of *** for
*** and (iii) nothing shall relieve any party of any payment
obligations accrued prior to the effective date of such termination.
The provisions of Sections 5.1, 5.2, 5.4, 6.1, this 7.3 and 8.1 and Article 9
shall in any event survive termination of this Agreement.
7.4 DISPUTE RESOLUTION. In the event of any disputes under this
Agreement, the Technical Committee shall first attempt to resolve such disputes
in gook faith. If the members of the Technical Committee cannot resolve such
matters, such matters shall be referred to the Chief Executive Officers of each
party for resolution. If such persons are unable to resolve such matters, then
such matters shall be resolved by Arbitration pursuant to Section 9.6.
ARTICLE 8 - INDEMNIFICATION
8.1 INDEMNIFICATION. Sequana shall defend, indemnify and hold
Aurora harmless from and against all claims and expenses, including reasonable
attorneys' fees, arising out of the development, manufacture, use or sale of
Products by Sequana and its Affiliates and sublicensees, except to the extent
caused by the negligence or misconduct of Aurora; provided that (i) Aurora
*** CONFIDENTIAL TREATMENT REQUESTED
11.
<PAGE> 12
provides Sequana prompt notice of any such claim, (ii) Sequana shall not be
obligated to indemnify Aurora for any loss in connection with any settlement
unless Sequana consents in writing to such settlement and (iii) Sequana shall
have the exclusive right to defend and settle any such claim.
8.2 INDEMNIFICATION. Aurora shall defend, indemnify and hold
Sequana harmless from and against all claims and expenses, including reasonable
attorneys' fees, arising out of the development, manufacture, use or sale of
Products by Aurora and its Affiliates and sublicensees, except to the extent
caused by the negligence or misconduct of Sequana; provided that (i) Sequana
provides Aurora prompt notice of any such claim, (ii) Aurora shall not be
obligated to indemnify Sequana for any loss in connection with any settlement
unless Aurora consents in writing to such settlement and (iii) Aurora shall
have the exclusive right to defend and settle any such claim.
ARTICLE 9 - MISCELLANEOUS
9.1 NO AGENCY OR PARTNERSHIP. Neither party shall be deemed to be
an agent of the other party as the result of any transaction under or related
to this Agreement and shall not in any way incur any obligations on behalf of
the other party. This Agreement shall not constitute a partnership or a joint
venture, and neither party may be bound by the other to any contract,
arrangement or understanding except as specifically stated herein.
9.2 PUBLICITY. Neither party shall, in connection with its
activities under this Agreement, use the name of the other party in any
advertising, promotional sales literature, or other publicity without prior
written consent obtained from the other party, which consent shall not be
unreasonably withheld.
9.3 NOTICES. All written notices, payment, reports and the like
required or permitted hereunder shall be deemed to be effective when mailed,
postage prepaid, by first class, registered or certified mail to the address of
the applicable party set forth above or to such other person or by such other
means as to which the parties may from time to time have agreed.
9.4 ASSIGNMENT. This Agreement, in whole or in part, shall be
assignable by each party in the case of a transfer of all the assets of such
party or to a successor entity by merger, acquisition or other reorganization.
Any other assignment shall require the consent of the other party, which
consent shall not be unreasonably withheld, and any attempted assignment other
than is provided herein without such consent shall be void.
9.5 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California among California residents.
9.6 ARBITRATION. Subject to Section 7.4, any and all disputes
arising hereunder shall be resolved through binding and nonappealable
arbitration to be held in San Diego County administered by the American
Arbitration Association ("AAA"). Any such arbitration shall be
12.
<PAGE> 13
conducted before a single arbitrator to be appointed by the parties from the
AAA roster. If the parties fail to agree as to the identity of the single
arbitrator within fifteen (15) days after notice by any party of any dispute
hereunder, the AAA shall make such appointment within ten (10) days of the
expiration of such fifteen (15) day period, provided that in any event the
arbitrator shall be an active member of the California bar who is reasonably
familiar with the biotechnology industry and is experienced with transactions
of this type. The conduct of the arbitration hearing and discovery prior
thereto shall be in accordance with the California Code of Civil Procedure,
California Rules of Court, and California Rules of Evidence. The arbitrator
shall be empowered to make appropriate orders and rulings and shall be
empowered to award legal and equitable relief deemed appropriate thereby;
provided that notwithstanding any other provision of this Agreement, in no
event shall punitive damages be awarded. The parties shall complete any and
all discovery with respect to any such dispute within thirty (30) days after
the selection of the arbitrator and the arbitrator shall be instructed to issue
any and all orders and/or rulings within sixty (60) days after selection of the
arbitrator (subject in each case to extension if the arbitrator determines
extenuating circumstances exist which justify such extension). Notwithstanding
the foregoing provisions of this paragraph 9.6 however, the parties shall be
entitled to seek and obtain appropriate injunctive relief with respect to
Article 6 in any court of competent jurisdiction pending the results of the
arbitration.
9.7 NO WAIVER. The failure of either party to enforce at any time
any of the provisions of this Agreement, or any rights in respect thereto, or
to exercise any election herein provided, shall in no way be considered to be a
waiver of such provisions, rights or elections, or in any way to affect the
validity of this Agreement. Exercise by either party any of its rights herein
or any of its elections under the terms or covenants herein shall not preclude
either party from exercising the same or any other rights in this Agreement,
irrespective of any previous action or proceeding taken by either party
hereunder.
9.8 SEVERABILITY. If any provision of this Agreement is
judicially determined to be void or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain in full force and effect. Either party may request that a provision
otherwise void or unenforceable be reformed so as to be valid and enforceable
to the maximum extent permitted by law.
9.9 FORCE MAJEURE. No liability hereunder shall result to a party
by reason of delay in performance caused by force majeure, that is,
circumstances beyond the reasonable control of the party, including, without
limitation, acts of God, fire, flood, war, civil unrest, labor unrest, or
shortage of or inability to obtain material as equipment.
9.10 ASSURANCES AND WARRANTIES. The parties agree to execute,
acknowledge and deliver all such further instruments, and to do all such other
acts, as may be necessary or appropriate in order to carry out the intent and
purpose of this Agreement. Each party warrants that it has the authority to
enter into this Agreement on the basis of the terms and conditions herein and
that it has not made any other Agreement inconsistent with its obligations
under this Agreement.
13.
<PAGE> 14
9.11 ENTIRE AGREEMENT; AMENDMENTS. The terms and conditions herein
constitute the entire Agreement between the parties and shall supersede all
previous Agreements, either oral or written, between the parties hereto with
respect to the subject matter hereof. No amendment, modification or other
understanding bearing on this Agreement shall be binding upon either party
hereto unless it shall be in writing and signed by the duly authorized officer
or representative of each of the parties and shall expressly refer to this
Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
IN WITNESS WHEREO, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
AURORA BIOSCIENCES CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
SEQUANA THERAPEUTICS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
14.
<PAGE> 1
EXHIBIT 10.21
COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT, effective as of April 24, 1996 ("Effective Date"), is
made by and between:
PACKARD INSTRUMENT COMPANY, INC., a State of Delaware corporation,
having its principal office at 800 Research Parkway, Meriden, Connecticut 06450
(hereinafter referred to as "PACKARD").
and
AURORA BIOSCIENCES CORPORATION, a State of Delaware corporation, with
its principal office at 11149 Torrey Pines Road, La Jolla, California 92037
(hereinafter referred to as "AURORA").
RECITALS
WHEREAS, AURORA possesses bioreagents, chemical probes,
instrumentation and imaging technology for miniaturization and high-throughput
analysis of cell-based and biochemical assays.
WHEREAS, PACKARD possesses instrumentation, reagents and assay
technology for the high-throughput sample preparation and analysis of
biological assays.
WHEREAS, PACKARD and AURORA desire to collaborate to develop and
commercialize high-throughput systems using miniaturized automated screens.
In consideration for the payments and mutual undertakings detailed
herein, PACKARD and AURORA agree as follows:
I. DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
1.1 "AFFILIATE" shall mean any entity which controls, is controlled
or is under common control with AURORA or PACKARD. An entity shall be regarded
as in control of another entity if it owns or controls at least fifty percent
(50%) of the shares of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority).
1.2 "ASSAY" shall mean any ***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 2
1.3 "AURORA REAGENTS" shall mean *** *** *** . For purposes
of the foregoing, "controlled by" means possession of the ability to grant a
license or sublicense as provided for herein without violating the terms of any
agreement with or other arrangement with any third party.
1.4 "AURORA TECHNOLOGY" shall mean ***. For purposes of the
foregoing, "controlled by" means possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement
with or other arrangement with any third party.
1.5 "AURORA UC REAGENTS" shall mean ***
1.6 ***
1.7 "CONFIDENTIAL INFORMATION" shall mean (i) any proprietary or
confidential information or material in tangible form disclosed hereunder that
is marked as "Confidential" at the time it is delivered to the receiving party,
or (ii) proprietary or confidential information disclosed orally hereunder
which is identified as confidential or proprietary when disclosed and such
disclosure of confidential information is confirmed in writing within thirty
(30) days by the disclosing party.
1.8 "DETECTOR" shall mean a ***
1.9 "HTS" shall mean the ***
1.10 "IMAGER" shall mean a high resolution fluorescence imager and
associated software.
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
1.11 "JOINT TECHNOLOGY" shall have the meaning set forth in Article
8.1.2.
1.12 "LIQUID-HANDLING HEAD" shall mean a device containing arrays
of two (2) or more PIEZO-DEVICES.
1.13 "NANO-PLATE" shall mean ***
1.14 "NET SALES" shall mean the *** . A "sale" shall also include a
transfer or other disposition for consideration other than cash, in which case
such consideration shall be valued at the fair market value thereof.
1.15 "PACKARD TECHNOLOGY" shall mean *** . For purposes of the
foregoing, "controlled by" means possession of the ability to grant a license
or sublicense as provided for herein without violating the terms of any
agreement with or other arrangement with any third party.
1.16 "PIEZO-DEVICE" shall mean ***
1.17 "PRODUCT(S)" shall mean the LIQUID-HANDLING HEADS, DETECTORS,
and NANO-PLATES which are jointly developed by AURORA and PACKARD under this
Agreement.
1.18 "UC LICENSE" shall mean a license agreement entered by AURORA
and the Regents of the University of California ("UC") which shall be attached
hereto as Addendum 2, based on that certain Letter Agreement dated March 4,
1996 between AURORA and UC, a copy of which is attached as Addendum 1.
II. COLLABORATION PROGRAM
2.1 OBJECTIVE. PACKARD and AURORA hereby commit to undertake and
pursue a collaboration program with the primary objective to develop and
commercialize
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
high-throughput screening systems using PRODUCTS and ASSAYS for the purpose of
drug or agrochemical discovery in the pharmaceutical, biotechnology and
agrochemical market sectors (the "Collaboration Program"). It is understood
that the initial goal of the Collaboration Program shall be the development of
PRODUCTS, but the parties anticipate that the Collaboration Program will be
expanded to include the development of improved versions of the initial
PRODUCTS.
2.2 STANDARD. AURORA and PACKARD each will use commercially
reasonable efforts to achieve the objectives of the Collaboration Program as
specified in this Agreement.
2.3 MANAGEMENT.
2.3.1 A research and development steering committee (the
"R&D Steering Committee") and a marketing steering committee (the "Marketing
Steering Committee") will be established after the Effective Date. Each
Committee shall consist of two (2) members from each of AURORA and PACKARD, and
each of the parties may replace their respective Committee members at any time,
upon written notice to the other party. With respect to each Committee, AURORA
and PACKARD shall have one vote on the respective Committee and decisions of
each Committee shall be made by unanimous vote; provided, however, that any
matter that a Committee is unable to resolve shall be referred to the president
of each of AURORA and PACKARD, who shall meet within thirty (30) days to
resolve such matter.
2.3.2 The R&D Steering Committee shall annually prepare a
written description and plan of the research and development activities to be
conducted pursuant to the Collaboration Program, oversee the implementation of
the research and development to be undertaken, monitor and review the progress
thereof, and redirect the activities of the Collaboration Program as may be
required during the term of this Agreement. The Marketing Steering Committee
shall be responsible for providing guidance, support and coordination of the
PRODUCT commercialization activities of the parties and the activities of
PACKARD with regard to AURORA UC REAGENTS.
2.3.3 During the term of this Agreement, each Committee
shall meet at least quarterly, or as otherwise agreed. Such meetings shall
alternate between the parties' principal places of business, or may be held at
such other locations as the parties agree. Each party shall pay its own
expenses associated with such meetings.
2.3.4 AURORA and PACKARD will each designate a liaison
officer, each of whom shall be a member of the R&D Steering Committee to lead
an alliance management team to ensure effective communication and
collaboration. The alliance management team will submit a quarterly written
report to the Board of Directors of each company.
2.3.5 During the term of this Agreement, the president of
each of AURORA and PACKARD will meet annually at a mutually agreed location.
The R&D Steering
<PAGE> 5
Committee and Marketing Steering Committee shall each make a presentation at
such meeting describing their activities in the past year and proposed
activities in the next year.
2.4 RECORDS. Each party shall maintain records of the
Collaboration Program (or cause such records to be maintained) in sufficient
detail so as to properly reflect all work done and results achieved in the
performance of the Collaboration Program.
2.5 INVENTIONS AND DISCOVERIES. During the term of this
Agreement and for a period of one (1) year thereafter, each party shall
promptly notify the other party in writing of any invention or discovery,
whether or not patentable, conceived, reduced to practice, or otherwise
developed in connection with the Collaboration Program. In addition, each
party shall promptly provide the R&D Steering Committee with a detailed written
description of any such invention or discovery.
III. OBLIGATIONS
3.1 OBLIGATIONS OF AURORA.
3.1.1 AURORA shall use commercially reasonable efforts to
achieve the objectives of the Collaboration Program and, shall cooperate with
and assist PACKARD in the performance of its obligations hereunder. Without
limiting the generality of the foregoing, AURORA shall seek to achieve the
following milestones:
(a) ***.
(b) *** after the Effective Date, *** or more.
(c) ***
3.1.2 UC REAGENT SUPPLY. AURORA will supply PACKARD with
initial aliquots of the AURORA UC REAGENTS listed on Addendum 4 hereto, and
such other AURORA UC REAGENTS as the parties may agree in writing, in
sufficient amounts to facilitate the manufacture and commercialization of such
AURORA UC REAGENTS by PACKARD under this Agreement.
3.2 OBLIGATIONS OF PACKARD.
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
3.2.1 PACKARD shall use commercially reasonable efforts to
achieve the objective of the Collaboration Program and, to that end, shall
cooperate with and assist AURORA in the performance of AURORA's obligations
hereunder. Without limiting the generality of the foregoing, PACKARD shall
seek to achieve the following milestones:
(a) ***, as specified in and subject to the conditions
of this Agreement.
(b) ***
(c) ***
(i) ***
(ii) ***
(iii) ***
(iv) ***
In addition, PACKARD shall ***
As used herein, a "functional prototype" shall mean a prototype instrument
which (i) is fully operational and (ii) meets sufficient performance
specifications to permit effective beta-testing by AURORA or a third party.
As soon as practicable, but in any case within ninety (90) days following the
delivery of a functional prototype for a particular PRODUCT, AURORA shall
notify PACKARD (a) that the
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 7
functional prototype conforms in all respects to the applicable PRODUCT
performance specifications set forth in Addendum 3, in which case such
prototype design shall be deemed an "accepted functional prototype", or (b)
that the functional prototype fails to perform in accordance with the
applicable performance specifications, identifying specific deficiencies. In
the event that AURORA provides PACKARD notice pursuant to (a) above, the date
of dispatch of such notice shall be the Acceptance Date for such accepted
functional prototype PRODUCT. PACKARD shall use its best efforts to correct
any deficiencies identified by AURORA pursuant to (b) above and provide AURORA
a corrected functional prototype within such period , but in the event that
despite such efforts PACKARD is unable to provide AURORA with an accepted
functional prototype within such ninety (90) day period, then the parties shall
negotiate appropriate and reasonable changes to the Development Program
Schedule, pursuant to Section 3.4.
All prototypes delivered by PACKARD pursuant to this Article 3.2.1(c) shall be
deemed for all purposes to have been consigned by PACKARD to AURORA and title
and ownership thereto shall remain with PACKARD. At PACKARD's election, AURORA
shall execute and deliver to PACKARD such financing statements or other notices
or other documentation required to reflect PACKARD's interest and to reflect
and secure PACKARD's interest.
3.2.2 PACKARD shall provide AURORA, at AURORA's request,
with a reasonable quantity (of at least six (6) and such greater quantity as
may be mutually agreed) of additional accepted functional prototypes of
LIQUID-HANDLING HEADS and DETECTORS for development, evaluation, and use by
AURORA or its customers, at ***.
3.2.3 Upon delivery of a subsequent generation of functional
prototype for a particular PRODUCT or PACKARD's notice of availability of a
production model of a particular PRODUCT, the previous generation functional
prototype of such PRODUCT provided under Article 3.2.1 shall within ninety (90)
days, at AURORA's election, be returned to PACKARD or purchased by AURORA at
PACKARD's fully burdened manufacturing cost.
3.3 JOINT OBLIGATIONS. AURORA and PACKARD will use commercially
reasonable efforts to have designed and arranged for evaluation, production and
delivery of experimental NANO-PLATES to AURORA *** after the Effective Date and
to arrange for commencement of manufacture of NANO-PLATES *** after the
Effective Date. PACKARD and AURORA contemplate that the development and
production of NANO-PLATES will be outsourced to a suitable manufacturer
acceptable to both AURORA and PACKARD. PACKARD shall be responsible for any
costs associated with such development and manufacture. It is understood and
agreed that AURORA and PACKARD will each own an undivided one-half interest in
all intellectual property relating to the NANO-PLATES.
3.4 MODIFICATIONS TO DEVELOPMENT SCHEDULE. The parties recognize
that circumstances may require adjustment to or modification of the development
schedules set forth
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 8
above. Any such adjustment or modification shall be subject to mutual
agreement by AURORA and PACKARD.
3.5 SPECIFICATIONS. The parties shall use commercially reasonable
efforts to ensure that the PRODUCTS will meet AURORA's requirements as defined
in Addendum 3 hereto.
3.6 STAFF. The projects may involve AURORA staff being temporarily
assigned to work at PACKARD facilities and/or PACKARD staff being temporarily
assigned to work at AURORA facilities. Each party will bear the costs of its
own staff and any liabilities incurred thereby.
IV. FINANCING
4.1 GENERAL. Except as expressly provided herein, AURORA and
PACKARD each agrees to bear all costs and expenses incurred in complying with
its obligations under this Agreement.
4.2 PACKARD CONTRIBUTION. On the Effective Date, PACKARD will
purchase *** of AURORA preferred stock *** ***, per the Preferred Stock Purchase
Agreement attached as Addendum 5.
4.3 AURORA CONTRIBUTIONS. AURORA shall pay to PACKARD the
following amounts during the Collaboration Program:
4.3.1 *** shall be paid *** the ***.
4.3.2 *** shall be paid ***.
4.3.3 *** the *** for *** shall be paid *** the *** shall be
paid ***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 9
4.3.4 If the scope of the Collaboration Program shall be
modified by mutual agreement, for example, to encompass the development of a
technically distinct imaging system for NANO-PLATES, then the parties shall
negotiate on a case-by-case basis such further contributions by AURORA as may
be mutually agreed. Any agreement by AURORA to make additional contributions
may include such other terms as shall be mutually agreed, such as, for example,
the payment of additional negotiated royalties.
V. LICENSES
5.1 UC LICENSE. AURORA agrees to use its best efforts to negotiate
and execute on or before June 30, 1996 an exclusive license agreement with UC
as contemplated by the Letter Agreement attached as Addendum 1. Within seven
(7) days after execution thereof, AURORA shall deliver to PACKARD a true copy
of such UC LICENSE and the parties shall also cause a true copy thereof to be
attached to this Agreement as Addendum 2.
5.2 UC REAGENTS.
5.21 SUBLICENSE. Subject to the terms and conditions of
this Agreement and the execution of the UC License, effective upon execution of
the UC LICENSE, AURORA ***
5.2.2 RUNNING ROYALTIES. In consideration of the foregoing
sublicense, PACKARD hereby agrees to pay to AURORA royalties on the sale of
AURORA UC REAGENTS to non-profit organizations pursuant to this sublicense equal
to *** *** of such AURORA UC REAGENTS. It is understood and agreed that AURORA
shall be solely responsible for all royalties and other payments due or payable
to the UC under the UC LICENSE, and AURORA hereby agrees to indemnify, defend,
and hold PACKARD harmless from and against any claim or liability arising from
any failure of AURORA to fulfill its obligations to the UC, except if caused by
any action or inaction by PACKARD.
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 10
5.2.3 *** ROYALTIES. PACKARD shall exercise reasonable
diligence to market AURORA UC REAGENTS hereunder and, for so long as the
sublicense remains exclusive, agrees to pay to AURORA *** royalties according to
the following schedule:
***
Such amounts shall be paid on the applicable anniversary of the UC License
Effective Date, and shall be fully creditable against running royalties due in
the year such minimum annual royalty payment is made.
5.2.4 ***
5.3 ADDITIONAL RIGHTS. PACKARD will have the right of first
negotiation with respect to:
5.3.1 the right to make, have made and/or sell AURORA UC
REAGENTS to for-profit organizations; and
5.3.2 the right to make, have made and/or sell AURORA
REAGENTS other than AURORA UC REAGENTS, including, but not limited to,
promiscuous G-proteins which AURORA may own or otherwise control, in the event
that AURORA wishes such AURORA REAGENTS to be sold and does not wish to conduct
such activities itself.
5.3.3 If PACKARD wishes to exercise its right of first
negotiation with respect to a particular AURORA REAGENT, including any AURORA
UC REAGENT, it shall notify AURORA, and in such event AURORA and PACKARD shall
negotiate exclusively in good faith for a period of ninety (90) days with
respect to an agreement with respect thereto. If AURORA and PACKARD fail to
enter into a written letter of intent for such an agreement or agreement within
such period, or such longer period as the parties may agree, then AURORA shall
be free to enter into negotiations and definitive agreements with a third party
regarding such a license to such AURORA REAGENTS, and PACKARD shall have no
further rights with respect thereto.
5.4 CROSS LICENSES.
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 11
5.4.1 AURORA hereby grants ***
***
***
5.4.2 PACKARD hereby grants ***
VI. PRODUCT COMMERCIALIZATION AND EXCLUSIVITY
6.1 MANUFACTURING RIGHTS. During the term of this Agreement,
PACKARD shall *** During the term of this Agreement, the parties agree that
production quality NANO-PLATES shall be produced by a mutually agreed
independent third party manufacturer.
6.2 SUPPLY AGREEMENT. During the term of this Agreement, PACKARD
agrees to sell to AURORA such PRODUCTS as AURORA may wish to purchase. At
least three (3) months prior to the launch of any PRODUCT, AURORA and PACKARD
shall negotiate in good faith and enter into a Supply Agreement which shall
contain reasonable terms for the purchase by AURORA of PRODUCTS from PACKARD
including warranties, indemnities and the like.
6.3 PRODUCT COMMERCIALIZATION.
6.3.1 Unless otherwise agreed by the parties, all
production PRODUCTS purchased by AURORA from PACKARD shall be sold by PACKARD
***
6.3.2 PACKARD will have responsibility for distribution,
installation, and service support for all production PRODUCTS in line with
PACKARD's customary practice in territories where PACKARD has a subsidiary as
of the Effective Date, or as otherwise mutually agreed. The parties agree that
PACKARD shall have responsibility for such activities in Korea.
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 12
6.4 LIQUID-HANDLING HEADS.
6.4.1 For a period of *** from and after the Acceptance Date
of an accepted functional prototype LIQUID-HANDLING HEAD containing arrays of
ninety-six (96) or more PIEZO-DEVICES, AURORA shall have the *** After the
foregoing *** , PACKARD and AURORA ***
6.4.2 If within ***
6.4.3 Except as provided in Articles 6.4.1 and 6.4.2,
PACKARD shall ***
6.4.4 For purposes of this Article 6.4, "accepted functional
prototype" shall have the meaning set forth in the last paragraph of
Article 3.2.1.
6.5 DETECTOR.
6.5.1 For a period of ***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 13
***. For purposes of this Article 6.5, "accepted functional prototype" shall
have the meaning set forth in the last paragraph of Article 3.2.1.
6.5.2 Except as provided in Article 6.5.1, PACKARD shall
have the exclusive worldwide rights to make, have made and sell (including the
right to sublicense others) DETECTORS for all assays, applications, sample
densities and markets.
6.6 NANO-PLATES.
6.6.1 For a period of ***. After the foregoing ***. During
the initial term of this Agreement, neither party may grant any third party a
license with respect to any intellectual property relating to the NANO-PLATES or
have the NANO-PLATES made by a third party, without the prior written consent of
the other party hereto.
6.6.2 PACKARD shall pay royalties to AURORA of *** of
NANO-PLATES to third parties.
6.6.3 AURORA and PACKARD will equally share ownership and
the right to use the "NANO-PLATE" trademark and any variant thereof. Each
party shall notify the other and provide the other samples of any intended use
of such trademarks, and agrees to make any changes reasonably requested by the
other party in order to protect the value of such trademarks. Neither party
shall grant any third party any right to use any such trademarks without the
prior written consent of the other party, and neither shall attempt to solely
register any trademarks, service marks, logos or tradenames confusingly similar
to the "NANO-PLATE" or any variant thereof.
6.7 AURORA RIGHTS.
6.7.1 If a DETECTOR which does not use any AURORA
TECHNOLOGY, including, without limitation, any AURORA patent rights, is
developed based upon JOINT TECHNOLOGY, and if AURORA shall contribute
financially, as mutually agreed, in excess of its initial financial
contribution set forth in Article 4.3, PACKARD shall pay to AURORA royalties
on the Net Sales of such DETECTORS in an amount to be negotiated in
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 14
good faith and agreed to by the parties at the time of such further
contribution, ***. ***.
6.7.2 If the parties shall co-develop IMAGERS or DETECTORS
that substantially use any AURORA TECHNOLOGY, which the parties agree may
require a further financial contribution from AURORA in excess of its initial
contribution set forth in Article 4.3, PACKARD shall pay to AURORA royalties on
the Net Sales of such IMAGERS or DETECTORS in an amount to be negotiated in
good faith and agreed to by the parties ***
6.7.3 If PACKARD decides within six (6) months of delivery
of a DETECTOR which meets agreed performance specifications not to
commercialize such DETECTOR, AURORA shall have a right, exercisable for a
period of three (3) months, to obtain from PACKARD an exclusive license, with
the right to grant and authorize sublicenses, to make, have made and sell such
DETECTOR. Such license shall provide for payment of royalties to PACKARD on
net sales of such DETECTORS by AURORA, its AFFILIATES and sublicensees in an
amount to be mutually agreed upon equal to the sum of *** to ***. In the event
of exercise of such right, PACKARD will provide, at AURORA's cost, all
specifications, plans, protocols, technical drawings, component lists, etc.
required for the manufacture, quality control and service support of the
DETECTOR.
6.7.4 AURORA will have the right of first negotiation with
respect to the co-development or commercialization of any PRODUCT which PACKARD
does not wish to commercialize for HTS or AUTOMATED CHEMISTRY which utilizes
any PACKARD TECHNOLOGY, provided AURORA shall have made a contribution to
development costs of those new technologies as mutually agreed. If AURORA
wishes to exercise its right of first negotiation, it shall notify PACKARD, and
in such event PACKARD and AURORA shall negotiate exclusively in good faith for
a period of ninety (90) days with respect to an agreement with respect thereto.
If PACKARD and AURORA fail to enter into a written letter of intent for such an
agreement or agreement within such period, or such longer period as the parties
may agree, then PACKARD shall be free to enter into negotiations and definitive
agreements with a third party regarding a co-development or commercialization
of such technology and AURORA shall have no further rights with respect
thereto.
6.7.5 If AURORA desires to purchase PACKARD's proprietary
reagents for its *** be ***. AURORA's access to such PACKARD reagents
will not be subject to a licensing fee or royalty. On a case-by-case basis,
AURORA will have first right of negotiation for exclusive rights for the use,
market and sell PACKARD'S HTRF homogenous time resolved fluorescence
technology, associated reagents, and instrumentation and/or luminescent
technology and associated reagents for HTS in NANO PLATES for a period of ***
from the
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 15
Effective Date, but AURORA may not sublicense such intellectual property
without prior written consent from PACKARD.
6.8 RESIDUAL RIGHTS. Except as hereinabove expressly granted to
AURORA, PACKARD shall have the exclusive rights with respect to the PRODUCTS.
VII. ROYALTY REPORTS AND PAYMENTS
7.1 After the first commercial sale of a PRODUCT or AURORA'S UC
REAGENTS on which royalties are required hereunder, PACKARD shall make
quarterly written reports to AURORA within thirty (30) days after the end of
each calendar quarter, stating in each such report the aggregate Net Sales of
the PRODUCTS and AURORA UC REAGENTS sold during the calendar quarter upon which
a royalty is payable hereunder, and an annual report on or before February 28
of each year stating the number, description and aggregate Net Sales of
PRODUCTS and AURORA UC REAGENTS sold during the preceding calendar year.
AURORA shall treat all such reports as confidential information of PACKARD.
Concurrently with the making of such reports, PACKARD shall pay to AURORA the
applicable royalties specified in this Agreement.
7.2 Royalties due hereunder shall be paid in U.S. dollars. All
checks and bank drafts shall be drawn on United States banks and shall be
payable to AURORA at the address listed herein.
7.3 If any currency conversion shall be required in connection
with the calculation of royalties hereunder, such conversion shall be made
using the selling exchange rate for conversion of the foreign currency into
U.S. dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
7.4 PACKARD shall keep complete, true, and accurate books of account
and records, including number and description of PRODUCTS and AURORA UC REAGENTS
sold, for the purpose of determining the royalty amounts payable under this
Agreement. Such books and records shall be kept at the principal place of
business of PACKARD for at least three (3) years following the end of the
calendar quarter to which such books and records pertain. Such books and
records shall be open for inspection at the principal place of business of
PACKARD during such three (3) year period by a representative selected by AURORA
for the purpose of verifying the royalty statements. Such inspections shall be
made at reasonable times as mutually agreed. The representative will be obliged
to execute a reasonable confidentiality agreement on terms consistent with the
terms of this Agreement prior to commencing any such inspection. Inspections
conducted under this Article shall be at the expense of AURORA, unless a
variation or error producing *** of the amount stated as having been due by
PACKARD for any period covered by the inspection is established in the course of
any such inspection, or through arbitration under Article 12.1, whereupon all
costs relating to the inspection for such period and any unpaid amounts that are
so established shall be paid by PACKARD.
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 16
VIII. INTELLECTUAL PROPERTY RIGHTS
8.1 OWNERSHIP.
8.1.1 Except as otherwise expressly provided in this
Agreement, AURORA shall retain all right, title and interest in and to any
intellectual property invented, developed or acquired solely by AURORA
employees during the term of this Agreement, and PACKARD shall retain all
right, title and interest in and to any intellectual property invented,
developed or acquired solely by PACKARD employees during the term of this
Agreement.
8.1.2 Except as provided in Article 8.1.3, all right, title
and interest in and to intellectual property, whether or not patentable, that
is invented or developed by at least one employee or agent of AURORA and at
least one employee or agent of PACKARD in connection with the Collaboration
Program shall be owned jointly by PACKARD and AURORA ("JOINT TECHNOLOGY").
Inventorship of inventions and other intellectual property conceived and
reduced to practice in connection with the Collaboration Program, and the
rights of ownership with respect to such inventions and other intellectual
property, whether such JOINT TECHNOLOGY is patentable or not, shall be
determined in accordance with United States patent law.
8.1.3 All right, title and interest to the JOINT TECHNOLOGY
having specific and direct application only to the PACKARD TECHNOLOGY and any
new techniques and methods used to apply the PACKARD TECHNOLOGY and having
specific and direct application only to the PACKARD TECHNOLOGY, whether made
solely by PACKARD or by AURORA, or jointly by any employees or agents of any of
PACKARD and AURORA, and resulting from the collaboration hereunder shall be
owned exclusively by PACKARD, and all rights, title and interests to any JOINT
TECHNOLOGY having specific and direct application only to the AURORA TECHNOLOGY
and any new techniques and methods used to apply the AURORA TECHNOLOGY and
having specific and direct application only to the AURORA TECHNOLOGY, whether
made solely by AURORA or by PACKARD, or jointly by any employees or agents of
any of AURORA and PACKARD, and resulting from the collaboration hereunder shall
be owned exclusively by AURORA. Each party shall, upon the request of the
other, execute and deliver to the requesting party an assignment and release,
or other appropriate document, with respect to all such rights owned by the
requesting party.
8.2 PATENT PROSECUTION.
8.2.1 AURORA will be responsible for the preparation,
prosecution and maintenance of the AURORA TECHNOLOGY and conducting
oppositions, re-examination and interferences with respect thereto, using
patent counsel of its choice and according to AURORA's reasonable business and
scientific judgment. AURORA will pay all costs of conducting such activities
with respect to the AURORA TECHNOLOGY.
8.2.2 PACKARD will be responsible for the preparation,
prosecution and maintenance of the PACKARD TECHNOLOGY and conducting
oppositions,
<PAGE> 17
re-examination and interferences with respect thereto, using patent counsel of
its choice and according to PACKARD's reasonable business and scientific
judgment. PACKARD will pay all costs of conducting such activities with
respect to the PACKARD TECHNOLOGY.
8.2.3 Each party will cooperate with the other as reasonably
requested in obtaining patent protection for JOINT TECHNOLOGY and shall agree
on which party shall have principal authority for conducting such activities
with respect to such patent application. Each party shall keep the other
informed as to material developments in this regard. AURORA and PACKARD shall
equally share the expenses related to obtaining and maintaining patents with
regard to any inventions within the JOINT TECHNOLOGY in the names of AURORA
and PACKARD; provided, with ninety (90) days notice either party may decline
to fund such activities with regard to any patent application or patent within
the JOINT TECHNOLOGY, in which event the other party shall have ninety (90)
days to decide to pursue such patent application or patent at its expense.
8.3 PATENT ENFORCEMENT.
8.3.1 AURORA and PACKARD will immediately inform each other
of any actual or suspected infringement of the AURORA TECHNOLOGY, PACKARD
TECHNOLOGY or JOINT TECHNOLOGY by third parties which such party hereto would
reasonably believe would effect the commercial success of a PRODUCT or an
AURORA REAGENT.
8.3.2 Unless otherwise agreed between the parties, each
shall have the right, but not the obligation, to bring proceedings against any
infringer of the technology solely owned by it, at its risk and expense, and
shall be entitled to retain any award or damages obtained in any such suit or
proceeding. At the request and expense of either party, the other party shall
give the requesting party all reasonable assistance required to institute and
carry on any such suit or proceeding.
8.3.3 The parties shall confer to determine how to abate
any infringement with respect to JOINT TECHNOLOGY, and how any recovery from
such an action shall be allocated between the parties.
8.4 COOPERATION. The parties shall cooperate with each other and
keep each other informed of all material developments regarding activities
relating to preparation, filing, prosecution and maintenance of patents and
patent applications in the JOINT TECHNOLOGY and in AURORA TECHNOLOGY and
PACKARD TECHNOLOGY, to the extent such technology was conceived, reduced to
practice, or otherwise developed after the Effective Date and which relates to
the Collaboration Program.
8.5 INFRINGEMENT CLAIMS.
8.5.1 If the manufacture, sale or use of a UC REAGENT
results in any claim, suit or proceeding brought by a third party alleging
patent infringement against a party
<PAGE> 18
hereto, such party shall promptly notify the other party. AURORA shall have
the initial right, but not the obligation, to defend and control the defense of
any such claim, suit or proceeding, using counsel of its own choice, and at its
expense. If any such claim, suit or proceeding is made or brought against
PACKARD, AURORA shall promptly confirm to PACKARD in writing that it is
undertaking the defense thereof hereunder. If AURORA shall not elect to defend
any claim, suit or proceeding, or fails to so confirm to PACKARD, PACKARD may
elect to defend and control the defense of such claim, suit or proceeding at
its expense and with counsel of its choice, but shall have no obligation to
provide a defense for AURORA. Each party shall cooperate with the other in any
matter arising hereunder and shall keep the other reasonably informed of all
material developments in connection with any such claim, suit or proceeding.
8.5.2 If the manufacture, sale or use of a PRODUCT results
in any claim, suit or proceeding alleging patent infringement against a party
hereto, such party shall promptly notify the other party. PACKARD shall defend
and control the defense of any such claim, suit or proceeding, using counsel of
its own choice, and shall keep AURORA reasonably informed of all material
developments in connection with any such claim, suit or proceeding.
IX. INDEMNITY
9.1 AURORA. AURORA shall indemnify, defend and hold harmless
PACKARD and its AFFILIATES, and the directors, officers, employees, agents and
counsel of PACKARD and such AFFILIATES, and the successors and assigns of any
of the foregoing (the "PACKARD Indemnitees"), from and against any and all
liabilities, damages, losses, costs or expenses (including reasonable
attorneys' and professional fees and other expenses of litigation and/or
arbitration) resulting from a claim, suit or proceeding brought by a third
party against a PACKARD Indemnitee, arising from or occurring as a result of
(a) activities performed by AURORA in the Collaboration Program, except to the
extent caused by the negligence or willful misconduct of a PACKARD Indemnitee;
or (b) use by PACKARD of AURORA TECHNOLOGY (other than patent rights subject to
the UC LICENSE as to which no indemnification is provided); or (c) the use by
PACKARD of, or the manufacture or commercialization by PACKARD of, any AURORA
REAGENTS (other than AURORA UC REAGENTS as to which no indemnification is
provided) or any PRODUCT to the extent it embodies AURORA TECHNOLOGY (other
than patent rights subject to the UC LICENSE as to which no indemnification is
provided).
9.2 PACKARD. PACKARD shall indemnify, defend and hold harmless
AURORA and its AFFILIATES and the directors, officers, employees, agents and
counsel of AURORA and such AFFILIATES and the successors and assigns of any of
the foregoing (the "AURORA Indemnitees"), from and against any and all
liabilities, damages, losses, costs or expenses (including reasonable
attorneys' and professional fees and other expenses of litigation and/or
arbitration) resulting from a claim, suit or proceeding brought by a third
party against a AURORA Indemnitee, arising from or occurring as a result of (a)
activities performed by PACKARD in the Collaboration Program, except to the
extent caused by the negligence or willful misconduct of an AURORA Indemnitee;
or (b) use by AURORA of PACKARD
<PAGE> 19
TECHNOLOGY; or (c) the use by AURORA of, or the commercialization by AURORA of,
any PRODUCT to the extent it embodies PACKARD TECHNOLOGY.
9.3 PROCEDURE. If any party intends to claim indemnification
under this Article IX, it shall promptly notify the other party (the
"Indemnitor") in writing of any loss, claim, damage, liability or action and
the Indemnitor shall have the right to assume the defense thereof with counsel
mutually satisfactory to the parties. The indemnity agreement in this Article
IX shall not apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld unreasonably. 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 IX. At the Indemnitor's request, the Indemnitee under this
Article IX, and its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification and provide full information
with respect thereto.
X. TERM; TERMINATION
10.1 TERM.
10.1.1 The initial term of this Agreement shall be for ten
(10) years from the Effective Date, unless terminated earlier pursuant to
Section 10.2. The parties may renew the Agreement beyond ten (10) years if key
objectives are substantially achieved, on terms to be negotiated in good faith.
10.1.2 If this Agreement is not terminated pursuant to
Section 10.2 or the mutual consent of the parties prior to the end of the
initial term, at the end of the initial term, except as otherwise expressly set
forth herein, all rights granted under this Agreement shall terminate;
provided, the license granted PACKARD under Section 5.2.1 shall convert to a
non-exclusive license and shall remain in effect, subject to the royalty and
other obligations set forth in this Agreement, until the expiration of the last
to expire patent within the UC LICENSE relating to the AURORA UC REAGENTS being
sold at the end of the initial term.
10.2 TERMINATION FOR BREACH.
10.2.1 Either party shall have the right to terminate this
Agreement at any time for a material breach of this Agreement by the other
party, provided that the non-breaching party shall have first given ninety (90)
days prior written notice to the breaching party describing such breach and
stating the non-breaching party's intention to terminate this Agreement if such
breach remains uncured, and the breaching party thereafter fails to cure same.
Upon any such termination of this Agreement, all licenses and sublicenses in
force at the time of termination shall terminate concurrently.
<PAGE> 20
10.2.2 Either party shall have the right to terminate this
Agreement pursuant to this Section 10.2 if the other party has failed to meet
any milestone applicable to it as specified in Article 3.1.1 or 3.2.1 above and
the parties fail to reach a mutually satisfactory resolution after good faith
negotiation within ninety (90) days after such failure; provided, in the event
that the party which failed to meet the milestone used reasonable good faith
efforts to accomplish such milestone, then the Agreement shall not terminate,
but, at the election of the non-breaching party may be modified as follows:
(a) ***
(b) ***
10.3 SURVIVAL. No termination hereunder shall constitute a waiver
of any rights or causes of action that either party may have for any acts or
omissions or breach hereunder by the other party prior to the termination date.
Articles 2.5, 4.1, 6.6.3, 6.8, 8.1, 8.2, 8.4, 8.5, and VII, IX, X, XI and XII
(all paragraphs) shall survive any termination of this Agreement.
10.4 RETURN OF MATERIALS. Upon any termination of this Agreement,
each party shall promptly return to the other party all CONFIDENTIAL
INFORMATION received from the other party (except one copy of which may be
retained for archival purposes).
10.5 FORCE MAJEURE. Except as expressly provided otherwise herein,
any delays in or failures of performance by either party under this Agreement
shall not be considered a breach of this Agreement if and to the extent caused
by occurrences beyond the reasonable control of the party affected, including
but not limited to: acts of God, earthquake, new regulations or laws of any
government; strikes or other concerted acts of workers; fire, floods,
explosions; riots; wars; rebellion; and, sabotage, and any time for
performances hereunder shall be extended by the time of delay reasonable
occasioned by such occurrence.
XI. CONFIDENTIALITY
11.1 CONFIDENTIAL INFORMATION. Except as expressly provided
herein, the parties agree that, for the term of this Agreement and for five (5)
years thereafter, the receiving party shall keep completely confidential and
shall not publish or otherwise disclose and shall not use for any purpose
except for the purposes contemplated by this Agreement any CONFIDENTIAL
INFORMATION furnished to it by the disclosing party hereto pursuant to this
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 21
Agreement, except that to the extent that it can be established by the
receiving party by competent proof that such CONFIDENTIAL INFORMATION:
11.1.1 was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure;
11.1.2 was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the receiving party;
11.1.3 became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act
or omission of the receiving party in breach of this Agreement; or
11.1.4 was subsequently lawfully disclosed to the receiving
party by a person other than a party hereto.
11.2 PERMITTED USE AND DISCLOSURES. Each party hereto may use or
disclose CONFIDENTIAL INFORMATION disclosed to it by the other party to the
extent such use or disclosure is reasonably necessary in prosecuting or
defending litigation, or complying with applicable governmental regulations or
otherwise submitting information to tax or other governmental authorities,
provided that if a party is required to make any such disclosure of another
party's confidential information, other than pursuant to a confidentiality
agreement, it will give reasonable advance notice to the latter party of such
disclosure and, save to the extent inappropriate in the case of patent
applications, will use its best efforts to secure confidential treatment of
such information prior to its disclosure (whether through protective orders or
otherwise).
11.3 PUBLICITY. Neither party shall, in connection with its
activities under this Agreement, use the name of the other party in any
advertising, promotional or sales literature, or other publicity, without prior
written consent obtained from the other party, which consent shall not be
unreasonably withheld; provided, once consent is obtained with respect to a
particular disclosure, further disclosures which do not materially differ may
be made without any requirement for the further consent of the other party.
11.4 CONFIDENTIAL TERMS. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party; provided, disclosures may be made as
required by securities or other applicable laws, or to actual or prospective
investors or corporate partners, or to a party's accountants, attorneys and
other professional advisors.
XII. GENERAL
12.1 ARBITRATION. Except as otherwise provided specifically
herein, any controversy or claim under this Agreement shall be settled by
arbitration by one arbitrator pursuant to the Commercial Arbitration Rules of
the Association of the American Arbitration Association (the
<PAGE> 22
"Association"); provided that the parties shall first use their best efforts to
resolve such dispute by negotiation. The arbitration shall be conducted in
Dallas, Texas, or such other site as may be agreed by the parties. The
arbitrator shall be selected by the joint agreement of the parties, but if they
do not so agree within twenty (20) days of the date of a request for
arbitration, the selection shall be made pursuant to the rules of the
Association. The decision reached by the arbitrator shall be conclusive and
binding upon the parties hereto and may be filed with the clerk of any court of
competent jurisdiction, and a judgment confirming such decision may, if desired
by any party to the arbitration, be entered in such court. Each of the parties
shall pay its own expenses of arbitration and the expenses of the arbitrator(s)
shall be equally shared; provided, however, that if in the opinion of the
arbitrator(s) any claim hereunder or any defense or objection thereto was
unreasonable, the arbitrator(s) may assess, as part of the award, all or any
part of the arbitration expenses (including reasonable attorneys' fees) against
the party raising such unreasonable claim, defense or objection. Nothing
herein set forth shall prevent the parties from settling any dispute by mutual
agreement at any time.
12.2 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon the parties' respective successors and permitted assigns. Neither party
may assign this Agreement or any of its rights or obligations hereunder without
the prior written consent of the other party (not to be unreasonably withheld),
and any such attempted assignment shall be void; provided, that either party
may assign this Agreement as part of a merger or consolidation in which the
surviving entity assumes all of such party's rights and obligations hereunder
or a sale of substantially all of the assets of such party to which this
Agreement relates.
12.3 NOTICES. Any legal or other formal notices under this
Agreement shall be in writing and shall be hand delivered, or sent either by
registered mail, return receipt requested, or other method capable of providing
reasonable proof of receipt thereof, to the attention of the party receiving
such communication at the address first set forth or at such other address as
either party may in the future specify to the other party.
12.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
regard or giving effect to its principles of conflict of laws.
12.5 AMENDMENT. No modification, supplement to or waiver of this
Agreement or any Addendum hereto or any of their provisions shall be binding
upon a party hereto unless made in writing and duty signed by the party to be
charged herewith. In no event may the terms of this Agreement be changed,
deleted, supplemented or waived by any notice, purchase order, receipt,
acceptance, bill of lading or other similar form of document. A failure of
either party to exercise any right or remedy hereunder, in whole or in party,
or on one or more occasions, shall not be deemed either a waiver of such right
or remedy to the extent not exercised, or of any other right or remedy, on such
occasion or a waiver of any right or remedy on any succeeding occasion.
12.6 ENTIRE AGREEMENT. This Agreement, and each Addendum attached
hereto, and each supplemental written agreement contemplated hereunder, sets
forth the entire understanding and agreement of the parties as to the subject
matter thereof, and there are no other
<PAGE> 23
understandings, representations or promises, written or verbal, not set forth
therein or on which either party has relied. If any provisions of any such
Addendum or supplemental written agreement conflict with any provisions set
forth in this Agreement, the provisions of this Agreement shall take
precedence, unless such Addendum or supplemental written agreement expressly
refers to the specific provision(s) of this Agreement that it is intended to
replace or modify (and which shall be limited in force and effect to such
Addendum or supplemental written agreement only).
12.7 SEVERABILITY. This Agreement is intended to be severable. If
any provision(s) of this Agreement are or become invalid, are ruled illegal by
a court of competent jurisdiction or are deemed unenforceable under the current
applicable law from time to time in effect during the term hereof, it is the
intention of the parties that the remainder of the Agreement shall not be
affected thereby and shall continue to be construed to the maximum extent
permitted by law at such time. It is further the intention of the parties that
in lieu of each such provision which is invalid, illegal, or unenforceable,
there shall be substituted or added as part of this Agreement by such court of
competent jurisdiction a provision which shall be as similar as possible, in
economic and business objectives as intended by the parties to such invalid,
illegal or unenforceable provision, but shall be valid, legal and enforceable.
12.8 INDEPENDENT CONTRACTORS. The parties hereto are acting as
independent contractors and shall not be considered partners, joint venturers
or agents of the other. Neither shall have the right to act on behalf of, or
to bind, the other.
12.9 PATENT MARKING. PACKARD agrees to mark all AURORA UC REAGENTS
sold pursuant to this Agreement in accordance with the applicable statute or
regulations relating to patent marking in the country or countries of
manufacture and sale thereof.
12.10 HEADINGS. Captions and paragraph headings are for convenience
only and shall not form an interpretative part of this Agreement. Unless
otherwise specifically provided, all references to an Article incorporate all
Articles or subsections thereunder. This Agreement shall not be strictly
construed against either party hereto.
<PAGE> 24
IN WITNESS WHEREOF, the undersigned parties, acting through their duly
authorized representatives, have executed this Agreement in multiple
counterparts.
PACKARD INSTRUMENT COMPANY, INC.
By:____________________________________
Name: _________________________________
Title: __________________________________
Date: __________________________________
AURORA BIOSCIENCES CORPORATION
By: ____________________________________
Name: __________________________________
Title: __________________________________
Date: ___________________________________
<PAGE> 25
APPENDIX A
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 26
ADDENDUM 1
[UNIVERSITY OF CALIFORNIA LETTERHEAD]
OFFICE OF THE SENIOR VICE-PRESIDENT-- OFFICE OF TECHNOLOGY TRANSFER
BUSINESS AND FINANCE 1320 Harbor Bay Parkway,Suite 150
Alameda, California 94302
tel.: (510) 748-6600
fax: (510) 748-6639
March 4 1996
Michael Rabson, Esq.
Wilson, Sonsini, Goodrich, & Rosati
Two Palo Alto Square
Palo Alto, CA 94304
Re: Roger Tsien's Technologies
UCC Case No. ***
Dear Michael:
The purpose of this letter agreement ("Letter Agreement") is to confirm the
offer by The Regents of the University of California ("The Regents") to license
Aurora Biosciences Corporation. ("Aurora") the exclusive patent rights of
The Regents in the inventions described in *** generally referred
to as GFP and Beta Lactamase technologies ("Regents' Patent Rights") and
property rights covering the associated biological materials owned by The
Regents ("Regents' Property Rights"), under, but not limited to, those terms and
conditions specified in this Letter Agreement. During the period that this
Letter Agreement is in effect, The Regents will not license Regents' Patent
Rights and Regents' Property Rights to any other party other than the U.S.
Government, and will otherwise not encumber Regents' Patent Rights and Regents'
Property Rights in a manner inconsistent with the provisions of this Letter
Agreement.
The license agreement resulting from the negotiations will contain the following
terms and conditions:
GRANT: ***
U.C. AGREEMENT
CONTROL NUMBER
96-30-0558
**CONFIDENTIAL TREATMENT REQUIRED
<PAGE> 27
***
License Issue Fee: Aurora will pay to The Regents a license issue fee of
[***] payable according to the following schedule:
[***]
[***]
[***]
[***]
Such amounts paid to The Regents will not be
refundable, creditable, or reimbursable against any
other fees, royalties, and reimbursements due The
Regents.
Milestone Payments: Aurora will pay to The Regents [***] and [***] from
each third party with which it enters into a corporate
alliance for screening services utilizing Regents'
Patent Rights and Regents' Property Rights. Aurora
will not pay to The Regents any royalty on any amounts
it receives for equity, research funding, debt
financing, reimbursement of patent filing, prosecution,
and maintenance expenses, or other expenses (as agreed
upon by the parties). The amounts paid to The Regents
under this section will not be creditable or
reimbursable against any other royalties and fees due
The Regents.
Royalties: Aurora will pay to The Regents the following royalties:
A. A royalty of [***] by Aurora or its sublicensees of
each product identified with the use of the
technology covered by Regents' Patent Rights and
Regents' Property Rights, and a royalty of [***] of
each such product; provided, however, that *** [***]
as specified immediately above, then the royalty due
to The Regents will be [***]. In the event Aurora is
unable to negotiate a royalty based on the net sales
of a product identified with the use of the
technology covered by Regents' Patent Rights and
Regents' Property Rights, then in no case will Aurora
be entitled to take, in lieu of royalties on net
sales of identified products, consideration in any
form for equity in Aurora above fair market value,
research funding for screening to identify products
in excess of fully
*** CONFIDENTIAL TREATMENT REQUESTED
2
<PAGE> 28
burdened direct and indirect costs therefore, or reimbursement
of patent filing, prosecution, and maintenance expenses, or
other expenses (as agreed upon by the parties.)
B. A royalty of *** and its sublicensees of a research reagent and
any other product covered by Regents' Patent Rights and Regents'
Property Rights. Aurora will be entitled to reduce the royalty
due The Regents on the sale of such products if Aurora must
license Regents' Patent Rights, Regents' Property Rights, and
intellectual property rights in which The Regents has no
ownership interest from a third party. In such event, *** Aurora
may *** provided, however, that *** .
Aurora will not be entitled to apply the royalty reduction
specified in Paragraph B of this section to royalties due The
Regents under Paragraph A of this section or any other sections of
the Letter Agreement.
Minimum Annual
Royalties: Beginning *** of the license agreement, Aurora will pay
to The Regents ***. The *** will be paid to The Regents
whether or not a product covered by the license
agreement is available for sale in any country on that
date. Such amount will be credited against earned
royalties due The Regents.
Patent Prosecution
Reimbursement: Aurora will reimburse The Regents for all legal costs
associated with obtaining U.S. and foreign patent
protection comprising The Regents' Patent Rights.
Research Reagents: The Parties have also agreed to the following:
A. Aurora will make available, or have made available, the
research reagents listed on Exhibit A which comprise
biological materials covered by Regents' Property Rights
to nonprofit/academic institutions solely for this
internal, noncommercial research use within one year
following the effective date of the license agreement or
six months after
*** CONFIDENTIAL TREATMENT REQUESTED
3
<PAGE> 29
publication of the first paper describing the use of the
reagent, whichever is later.
B. The Regents will initially supply Aurora with aliquots of
chemical and biological materials and reagents covered by the
Regents' Patent Rights and Regents' Property Rights currently
held in Dr. Tsien's laboratory at UCSD, in sufficient amounts
(to be agreed upon by the parties), to facilitate the
development and commercialization by Aurora of products and
services contemplated under the license agreement.
In addition to the terms and conditions specified in this Letter Agreement, the
license agreement will also contain other terms and conditions agreed upon by
the parties that are normally found in exclusive license agreements executed by
The Regents.
Unless otherwise terminated by the parties hereto, the term of this Letter
Agreement will be for a period commencing on February 6, 1996, and terminating
on June 30, 1996, unless terminated by Aurora prior to that date. If Aurora and
The Regents have not executed the licence agreement on or before June 30, 1996,
The Regents will withdraw its offer to license Aurora under the terms and
conditions specified in this Letter Agreement on that date without further
obligation to Aurora.
If you accept The Regents' offer under the terms and conditions stated herein,
please execute this Letter Agreement, signifying your acceptance, below and
return both fully-executed originals of this Letter Agreement to me. We will
co-execute the Letter Agreement and return one fully-executed original to you.
Agreed to by:
AURORA BIOSCIENCES CORPORATION THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA
By Timothy V. Rink By Candace Voelker
--------------------------- ---------------------------------
(Signature) (Signature)
Name: Timothy V. Rink Name: Candace Voelker
-------------------------
(Please Print)
Title: President and CEO Title: Licensing Manager
------------------------ Office of Technology Transfer
Date: 3/6/96 Date: 3/6/96
------------------------- -----------------------------
<PAGE> 30
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
Exclusive License Agreement
between
The Regents of the University of California
and
Aurora Biosciences, Corp.
for
Fluorescent Assay Technologies
U.C. Case Nos. 93-289, 95-110, 95-219, 96-044, 96-160, 96-161, 96-162, 96-191
<PAGE> 31
Table of Contents
<TABLE>
<CAPTION>
ARTICLE PAGE
------- ----
<S> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. License Issue Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6. Progress and Royalty Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. Life of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. Termination by The Regents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. Termination by Licensee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11. Supply of the Biological Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12. Maintenance of the Biological Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13. Disposition of the Biological Materials, Biological Products, . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14. Use of Names and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15. Limited Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16. Patent Prosecution and Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
17. Patent Marking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
18. Patent Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
19. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
21. Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22. Late Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
23. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
24. Failure to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25. Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
26. Government Approval or Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
27. Export Control Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
28. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
29. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
30. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
<PAGE> 32
U.C. Case Nos. 93-289, 95-110, 95-219, 96-044, 96-160, 96-161, 96-162, and
96-191
Exclusive License Agreement
for
Fluorescent Assay Technologies
This license agreement ("Agreement") is effective this ______ day of
____________, 1996, (the Effective Date") by and between The Regents of the
University of California ("The Regents"), a California corporation, having its
statewide administrative offices at 300 Lakeside Drive, 22nd Floor, Oakland,
California 94612-3550 and Aurora Biosciences Corporation ("Licensee"), a
Delaware corporation, having a principal place of business at 11149 North
Torrey Pines Road, La Jolla, CA 92037.
Recitals
Whereas, certain inventions, generally characterized as fluorescent
assay technologies, including DNA encoding a green fluorescent protein and
fluorogenic substrates for Beta-lactamase ("Inventions"), useful for cell
screening, were made at the University of California, San Diego ("UCSD") by Dr.
Roger Tsien, et al., and are claimed in Patent Rights or within the Property
Rights as defined below;
Whereas, Licensee entered into secrecy agreements ("Secrecy
Agreements") with The Regents covering UC Case Nos. *** on August 10, 1994; ***
on January 1, 1995; *** on December 8 1995; and *** on February 22, 1996 for the
purpose of evaluating the Invention;
***CONFIDENTIAL TREATMENT REQUESTED
1
<PAGE> 33
Whereas, Licensee entered into an option agreement ("Option
Agreement") with The Regents on June 1, 1995 and ending on December 1, 1995 in
order to evaluate its commercial interest in the Invention;
Whereas, Licensee entered into a letter agreement with The Regents on
March 6, 1996 covering certain negotiated provisions that are contained in this
Agreement and a letter agreement with The Regents on April 26, 1996, with
respect to the Biological Materials ("Letter Agreements");
Whereas, the Invention was made under research funding provided in
part by the Department of Health and Human Services (DHHS) and in part by the
Howard Hughes Medical Institute (HHMI), and as a consequence, this Agreement is
subject to overriding obligations to the federal government and to HHMI;
Whereas, under 35 USC Section 200-212, The Regents may elect to retain
title to any invention (including the Invention) made by it under U.S.
Government funding;
Whereas, if The Regents elects to retain title to the Invention, then
the law requires that The Regents grant to the U.S. Government a
nontransferable, paid-up, nonexclusive, irrevocable license to use the
Invention by or on behalf of the U.S. Government throughout the world;
Whereas, The Regents elected to retain title to the Invention covered
by UC Case Nos. *** on November 19, 1993; *** on February 5, 1996; ***
on October 25, 1995; and *** and *** on January 8, 1996, and granted the
required licenses to the U.S. Government;
Whereas, The Regents has acquired the right to grant this license from
the Howard Hughes Medical Institute (HHMI) under the terms of the
interinstitutional agreement ("Interinstitutional Agreement"), having UC
Control No. 86-18-0017;
*** CONFIDENTIAL TREATMENT REQUESTED
2
<PAGE> 34
Whereas, The Regents is required under the terms of Interinstitutional
Agreement to grant to the HHMI a paid-up, non-exclusive, irrevocable license to
use the Invention for its non-commercial purposes, but with no right to
sublicense;
Whereas, the Licensee is a "small entity" as defined in 37 CFR Section
1.9 and a "small-business concern" defined in 15 U.S.C. Section 632;
Whereas, it is the intent of the parties to this Agreement to create a
bailment (as provided for in Sections 2.2, 2.3 and 2.4 herein), among other
things, for the Biological Materials as defined below subject to Licensee's
rights as set forth herein;
Whereas, both parties recognize that royalties due under this
Agreement will be paid on pending patent applications and issued patents;
Whereas, Licensee requested certain rights from The Regents to
commercialize the Invention; and
Whereas, The Regents responded to the request of Licensee by granting
the following rights to Licensee so that the products and other benefits
derived from the Invention can be enjoyed by the general public.
- - oo 0 oo - -
The parties agree as follows:
1. Definitions
As used in this Agreement, the following terms will have the meaning
set forth below:
3
<PAGE> 35
1.1 "Patent Rights" means all U.S. patents and patent applications
and foreign patents and patent applications assigned to The Regents, and in the
case of foreign patents and patent applications, those requested under Section
16.4 herein, including any reissues, extensions, substitutions, continuations,
divisions, and continuation-in-part applications (only to the extent, however,
1) that such continuation-in-part applications are covered in Section 1.1.9
below; or 2) that claims in the continuation-in-part applications are entitled
to the priority filing date of one or more of the following patent
applications listed in Sections 1.1.1 through 1.1.8 below) based on and
including any subject matter claimed in or covered by the following:
1.1.1. Pending U.S. Patent Application Serial No. ***,
entitled *** filed ***, by Dr. Roger Tsien, et al.
and assigned to The Regents ***;
1.1.2. Pending U.S. Patent Application Serial No. *** filed
***, by Dr. Roger Tsien, et al. and assigned to The
Regents ***;
1.1.3. Pending U.S. Patent Application Serial No. *** filed
***, by Dr. Roger Tsien, et al. and assigned to The
Regents ***.
1.1.4. Pending PCT Application Serial No. ***, filed *** by
Dr. Roger Tsien, et al. and assigned to The Regents
***;
1.1.5. Pending U.S. Patent Application Serial No. *** filed
***, by Dr. Roger Tsien, et al. and assigned to The
Regents ***;
1.1.6. Any U.S. Patent Application based on subject matter
described in UC Case Number ***
*** CONFIDENTIAL TREATMENT REQUESTED
4
<PAGE> 36
*** disclosed by Dr. Roger Tsien, et al. and assigned
to The Regents; and
1.1.7. Any U.S. Patent Application based on subject matter
described in *** disclosed by Dr. Roger Tsien, et al.
and assigned to The Regents; and
1.1.8. Any U.S. Patent Application based on subject matter
described in ***************************************
*********************************," disclosed by Dr.
Roger Tsien, et al. and assigned to The Regents.
1.1.9 Any continuation-in-part applications that are filed
by *** where such continuation-in-part applications
disclosed Inventions at UCSD and name Roger Tsien or
an employee of The Regents in Roger Tsien's laboratory
at UCSD as an inventor, and are based on one or more
of the patent applications described in Sections
1.1.1 through 1.1.8 immediately above.
1.2. "Biological Materials" means ***
1.3. "Biological Product" means any product containing: (a) a
plasmid, a protein structure, a cDNA clone, a promoter, a gene or a chimeric
gene, antibodies, or fragments thereof and their sequences derived from or
containing the Biological Materials; (b) any protein structure produced or
encoded by the Biological Materials; or (c) a compound (substantially similar
or identical to a compound in (a) or (b) above), produced by chemical synthesis
or by any other method which could not have been produced but for the use of
the Biological Materials. Biological Products may either be Patent Products or
Proprietary Products.
1.4. "Identified Product" means any product, compound, biological
agent, or other material not claimed by the Patent Rights and not comprising a
Biological Product,
***CONFIDENTIAL TREATMENT REQUESTED
5
<PAGE> 37
but identified by Licensee or a sublicensee using the Biological Materials or
Biological Products.
1.5. "Patent Products" means:
1.5.1. any kit, composition of matter, material, product, or
Biological Product;
1.5.2. any kit, composition of matter, material, product, or
Biological Product to be used in a manner requiring
the performance of the Patent Method; or
1.5.3. any kit, composition of matter, material, product, or
Biological Product produced by the Patent Method;
the extent that the manufacture, use, or sale of such kit, composition of
matter, material, product, or Biological Product, in a particular country,
would be covered by or infringe, but for the license granted to Licensee
pursuant to this Agreement, an unexpired claim of a patent or pending claim of
a patent application were it issued as a claim in a patent under Patent Rights
in that country in which such patent has issued or application is pending.
1.6. "Patent Method" means any process or method covered by the
claims of a patent application or patent within Patent Rights or the use or
practice of which would constitute in a particular country, but for the license
granted to Licensee pursuant to this Agreement, an infringement of an unexpired
claim of a patent or pending claim of a patent application were it issued as a
claim in a patent within Patent Rights in that country in which the Patent
Method is used or practiced.
1.7. "Proprietary Products" means any kit, composition of matter,
material, or product containing a Biological Product, the manufacture, use, or
sale of which in a particular country is not within an unexpired, valid claim
of a patent or a pending claim of a patent application under Patent Rights in
such country.
1.8. "Products" means Patent Products, Identified Product,
Proprietary Products, and Services.
6
<PAGE> 38
1.9. "Property Rights" means all personal proprietary rights of The
Regents covering the tangible personal property in the Biological Materials.
In no case, however, will Property Rights include Patent Rights.
1.10. "Research Reagent" means the *** . A Research Reagent may be a
Patent Product or a Proprietary Product.
1.11. "Net Sales" means the *** . Where Licensee distributes
Products to an Affiliate, a Joint Venture, or a sublicensee for end use by such
Affiliate, Joint Venture, or sublicensee, then such distribution will be
considered a sale at list price normally charged to independent third parties,
and The Regents will be entitled to collect a royalty on such sale in accordance
with Article 4. (Royalties).
1.12. "Services" means services provided by Licensee or its
sublicensees to its customers when such services require the use of the Patent
Rights or Property Rights.
1.13. "Service Revenues" means revenues paid to Licensee or its
sublicensees for Services.
***CONFIDENTIAL TREATMENT REQUESTED
7
<PAGE> 39
1.14. "Affiliate(s)" of Licensee means any entity which, directly or
indirectly, controls Licensee, is controlled by Licensee, or is under common
control with Licensee ("control" for these purposes being defined as the
actual, present capacity to elect a majority of the directors of such
affiliate, or if not, the capacity to elect the members that control forty
percent of the outstanding stock or other voting rights entitled to elect
directors) provided, however, that in any country where the local law will not
permit foreign equity participation of a majority, then an "Affiliate" will
include any company in which Licensee will own or control, directly or
indirectly, the maximum percentage of such outstanding stock or voting rights
permitted by local law. Each reference to Licensee herein will be meant to
include its Affiliates.
1.15. "Joint Venture" means any separate entity established pursuant
to an agreement between a third party and Licensee to constitute a vehicle for
a joint venture, in which the separate entity manufactures, uses, purchases,
sells, or acquires Products from Licensee. Each reference to Licensee herein
will be meant to include its Joint Venture(s).
2. Grant
2.1. Subject to the limitations set forth in this Agreement and
subject to the license granted to the U.S. Government and to HHMI as set forth
in the Recitals above, where Patent Rights exists, The Regents hereby *** .
2.2. Subject to the limitations set forth in this Agreement and
subject to the licenses granted to the U.S. Government and to HHMI as set forth
in the Recitals above, where The Regents may lawfully grant such a license, The
Regents hereby
***CONFIDENTIAL TREATMENT REQUESTED
8
<PAGE> 40
grants to Licensee ***.
2.3. Licensee acknowledges that title to the tangible material
comprising the Biological Materials is owned by The Regents and is not
transferred to Licensee under this Agreement, except that Licensee may transfer
title of such Biological Materials as are sold as Biological Products or
Research Reagents under the terms of this Agreement.
2.4. The licenses granted under Property Rights set forth in
Section 2.2 above expressly limit the rights granted to Licensee to those
licenses expressly stated in this Agreement and for no other purpose.
2.5. The licenses granted hereunder will be subject to the
overriding obligations to the U.S. Government including those set forth in 35
U.S.C. Section 200-212 and applicable governmental implementing regulations.
2.6. The manufacture of Products and the practice of the Patent
Method will be subject to applicable government importation laws and
regulations.
2.7. The Regents also grants to Licensee the right to issue
sublicenses under the rights granted in Sections 2.1 and 2.2 above to third
parties, provided Licensee retains current exclusive rights thereto under this
Agreement. To the extent applicable, such sublicenses will include all of the
rights of and obligations due to The Regents (and, if applicable, the United
States Government) that are contained in this Agreement including payment of
fees and royalties at the rates provided for in Section 3.2 and Article 4.
(Royalties).
2.8. Licensee will notify The Regents of each sublicense granted
hereunder and provide The Regents with a copy of each sublicense, which shall
be treated as
***CONFIDENTIAL TREATMENT REQUESTED
9
<PAGE> 41
Proprietary Information of Licensee as defined in Article 29.
(Confidentiality). Licensee will collect and pay all such fees and royalties
due The Regents from sublicensees as set forth in Sections 3.2 and 4.1 below
(and guarantee all such payments due from sublicensees). Licensee will require
sublicensees to provide it with progress and royalty reports in accordance with
the provisions herein, and Licensee will collect and deliver to The Regents all
such reports due from sublicensees.
2.9. Upon termination of this Agreement for any reason, all
sublicenses granted by Licensee in accordance with this Agreement will remain
subject to the terms of such sublicenses in effect, and shall be assigned to
and assumed by The Regents except that sublicenses which: (i) are in a state of
breach as yet uncured by the sublicensee; or (ii) sublicenses which conflict
with state, or federal law, or the previously established written policy of The
Regents, shall not be assigned to and assumed by The Regents. The Regents will
not be bound by any duties and obligations contained in the sublicenses that
extend beyond the duties and obligations assumed by The Regents in this
Agreement and shall have no right to receive any payment from such sublicensees
except the amounts due under this Agreement for the activities of such
sublicensees.
2.10. The Regents may, at its own discretion, disclose to Licensee
certain chemical and biological materials relating to the Patent Rights and
Property Rights that are developed in Dr. Roger Tsien's laboratory at UCSD.
The Regents hereby grants to Licensee the right to elect to include under this
Agreement any or all of such chemicals and biological materials.
2.11. In accordance with Section 2.10, Licensee will notify The
Regents in writing within 60 days of the disclosure by The Regents of any such
further chemicals and/or biological materials which Licensee elects to be
included under this Agreement, and such chemicals and biological materials
shall be Biological Materials for all purposes of this Agreement.
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2.12. Because this Agreement grants the exclusive right to use or
sell the Products in the United States, Licensee acknowledges that any
component of a Product which embodies a patented Invention or is produced
through the use thereof for sale in the United States will be manufactured
substantially in the United States to the extent required by 35 U.S.C. Section
204.
2.13. Nothing in this Agreement will be deemed to limit the right of
The Regents to publish any and all technical data resulting from any research
performed by The Regents relating to the Invention, Biological Materials,
Biological Products, and Patent Methods and to make and use the Invention,
Biological Materials, Biological Products, and Patent Methods, and associated
technology owned by The Regents solely for educational and research purposes.
3. License Issue Fee
3.1. As partial consideration for all the rights and licenses
granted to Licensee, Licensee will pay to The Regents a license issue fee of
***, payable according to the following schedule:
3.1.1. *** will be sent by Licensee to The Regents together
with two copies of this Agreement executed by
Licensee;
3.1.2. *** will be sent by Licensee to The Regents on or
before ***;
3.1.3. *** will be sent by Licensee to The Regents on or
before ***;
3.1.4. *** will be sent by Licensee to The Regents on or
before ***;
***CONFIDENTIAL TREATMENT REQUESTED
11
<PAGE> 43
3.1.5. *** will be sent by Licensee to The Regents on or
before ***;
3.1.6. *** will be sent by Licensee to The Regents on or
before ***;
3.1.7. *** will be sent by Licensee to The Regents on or
before ***; and
3.1.8. *** will be sent by Licensee to The Regents on or
before ***.
3.2. Licensee will also pay to The Regents fees equal to *** of
Service Revenues and *** of the Service Revenues *** received by Licensee from
each third party with which it enters into a corporate alliance for screening
services using Patent Rights and Property Rights. Notwithstanding the above,
Licensee shall have no obligation to pay to The Regents any amounts it receives
from a third party for the purchase of equity, research funding, debt financing,
reimbursement of patent filing, prosecution, and/or maintenance expenses or
other expenses.
3.3. ***
4. Royalties
4.1. As further consideration for all the rights and licenses
granted to Licensee, Licensee will also pay to The Regents an earned royalty
based on Net Sales according to the following:
4.1.1. (a) A royalty rate of *** of the Net Sales paid to
Licensee and its sublicensees with respect to each
Identified Product ***
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 44
*** for each Identified Product, and a royalty rate of
*** of the Net Sales paid to Licensee and its
sublicensees of each Identified Product *** for each
such Identified Product.
(b) Notwithstanding Section 4.1.1(a) above, if
Licensee and a particular sublicensee are unable to
agree on a royalty *** of Identified Products by such
sublicensee *** and a royalty rate *** of Identified
Products for ***, then the royalty due to The Regents
*** will be equal to ***, if any, agreed to between
Licensee and such sublicensee *** of such Identified
Product by such sublicensee.
(c) In the event Licensee is unable to negotiate
with a particular sublicensee any royalty on the Net
Sales of Identified Products, then in such case
Licensee will not be entitled to take, in lieu of
royalties on Net Sales by such sublicensee of
Identified Products, consideration in any form for:
(i) equity in Licensee above fair market value; (ii)
research funding for screening to identify Identified
Products in excess of fully burdened direct and
indirect costs therefore; or (iii) reimbursement of
patent filing, prosecution, and maintenance expenses;
and
(d) For the avoidance of doubt, it is understood
and agreed that, except as provided in Section
4.1.1(a) and (b) above, The Regents shall not be
entitled to any royalty on Net Sales of Identified
Products, and if Section 4.1.1(c) applies to a
particular sublicense, the consideration received by
Licensee from such sublicensee will be in the form of
Service Revenues, and the only amounts due The
Regents under this Agreement with respect thereto
shall be the amounts set forth in Section 3.2, and
not a royalty based on the Net Sales of Identified
Products.
4.1.2. (a) A royalty rate *** by Licensee and its
sublicensees of Research Reagents and any other
Product that is not an Identified Product or Services.
Licensee will be entitled to reduce the royalty due
The Regents
***CONFIDENTIAL TREATMENT REQUESTED
13
<PAGE> 45
on the Net Sales of such Research Reagents and other
Products if Licensee must pay a royalty to The
Regents on Patent Rights and Property Rights and a
third party with respect to intellectual property
rights in which The Regents has no ownership
interest. In such event, if the combined royalties
due The Regents and the third party(s) ***, Licensee
may reduce the royalty due The Regents ***, provided,
however, that in no event will the royalty rate due
The Regents on the Research Reagent or such Product
be ***.
(b) For the avoidance of doubt, it is understood
and agreed that Licensee shall have no obligation to
sell or have sold any Research Reagents except those
listed on Appendix E hereto.
4.2. Licensee will not be entitled to apply the royalty reduction
specified in Section 4.1.2(a) of this section to royalties due The Regents
under Section 4.1.1 of this Article 4. (Royalties) or any other provisions of
this Agreement except the provisions set forth in Section 4.1.2(a).
4.3. Sections 1.1, 1.5, and 1.6 define Patent Rights, Patent
Products, and Patent Methods so that royalties will be payable on Patent
Products and Patent Methods covered by both pending patent applications and
issued patents. Earned royalties will accrue on Patent Products on a
Product-by-Product basis in each country for the duration of Patent Rights in
that country and will be payable to The Regents when Patent Products are
invoiced, or if not invoiced, when delivered to a third party or to itself, an
Affiliate, Joint Venture, or sublicensee in the case where such delivery of the
Patent Products to Licensee, an Affiliate, Joint Venture, or sublicensee is
intended for end use. If no Patent Rights exist in a country, earned royalties
will accrue on a Proprietary Product, on a Product-by-Product basis, until the
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 46
tenth anniversary of the first commercial sale of a particular Proprietary
Product in such country. Earned royalties will accrue on Identified Products,
on a Product-by-Product basis, until the tenth anniversary of the first
commercial sale of a particular Identified Product in such country.
4.4. Royalties accruing to The Regents will be paid to The Regents
***:
# ***
# ***
# ***
# ***
Each such payment will be for royalties which accrued ***.
4.5. Beginning ***, and in each succeeding calendar year ***,
Licensee will pay *** and thereafter for the life of this Agreement. This ***
will be paid to The Regents by *** of each year and will be credited against the
earned royalty due and owing for the calendar year in which the minimum payment
was made.
4.6. All monies due The Regents will be payable in United States
funds collectible at par in San Francisco, California. When Products are sold
for monies other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such Products were
sold and then converted into equivalent United States funds. The exchange rate
will be that rate quoted in the Wall Street Journal on the last business day of
the reporting period.
4.7. *** Notwithstanding the foregoing, if the Regents
*** CONFIDENTIAL TREATMENT REQUESTED
15
<PAGE> 47
is required to pay taxes on its royalties under the laws of any country, then
Licensee will pay such amounts to the proper authorities, withhold such amounts
from royalties paid to The Regents, and provide The Regents with all documents
and assistance reasonably necessary to enable The Regents to recover all or
part of such amounts pursuant to any double taxation treaty or otherwise.
Licensee will also be responsible for all bank transfer charges.
4.8. Notwithstanding the provisions of Article 28. (Force Majeure),
if at any time legal restrictions prevent prompt remittance of part or all
royalties owed to The Regents by Licensee with respect to any country where a
Product is sold or distributed, Licensee will convert the amount owed to The
Regents into United States funds and will pay The Regents directly from another
source of funds for the amount impounded.
4.9. In the event that any patent or any claim thereof included
within the Patent Rights is held invalid or unenforceable in a final decision
by a court of competent jurisdiction and last resort and from which no appeal
has or can be taken, all obligation to pay royalties based on such patent or
claim or any claim patentably indistinct therefrom will cease as of the date of
such final decision. Licensee will not, however, be relieved from paying any
royalties that accrued before such decision or that are based on another patent
or claim that has not expired or that is not involved in such decision or that
are based on Property Rights.
4.10. No royalties will be collected or paid hereunder to The
Regents on Products sold to the account of the U.S. Government. Licensee and
its sublicensee will reduce the amount charged for Products distributed to the
United States Government by an amount equal to the royalty for such Products
otherwise due The Regents as provided herein.
4.11. ***
*** CONFIDENTIAL TREATMENT REQUESTED
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************************. No royalty shall be payable under Section 4.1 above
with respect to sales of Products among Licensee and its sublicensees where such
sales are not for end use by such Licensee or its sublicensees, nor shall a
royalty be payable under this Article 4. (Royalties) with respect to Products
distributed for use in research and/or development in clinical trials, or as
promotional samples.
5. Due Diligence
5.1. Licensee, upon execution of this Agreement, will diligently
proceed to develop and provide Services, and to develop, manufacture, and sell
Research Reagents and will earnestly and diligently market the same after
execution of this Agreement and in quantities sufficient to meet the market
demands therefor.
5.2. Licensee will be entitled to exercise prudent and reasonable
business judgment in the manner in which it meets its due diligence obligations
hereunder. In no case, however, will Licensee be relieved of its obligations
to meet the due diligence provisions of this Article 5. (Due Diligence).
5.3. Licensee will obtain all necessary governmental approvals in
each country in which Licensee elects to manufacture or commercialize Research
Reagents and provide Services.
5.4. If Licensee is unable to perform any of the following:
5.4.1. ***
5.4.2. ***
5.4.3. ***
*** CONFIDENTIAL TREATMENT REQUESTED
17
<PAGE> 49
then The Regents will have the right and option, subject to Section 5.7 below,
to terminate this Agreement or reduce the exclusive licenses granted to
Licensee to non-exclusive licenses in accordance with Section 5.6 hereof. The
exercise of this right and option by The Regents will supersede the rights
granted in Article 2 (Grant).
5.5. In addition to the provisions of Section 5.4 above, Licensee
shall also market each of the Research Reagents listed on Appendix E attached
hereto to nonprofit/academic institutions solely for their internal,
noncommercial research use either within: (i) two years following the Effective
Date of this Agreement; or (ii) six months following the publication of the
first paper describing the use of the Research Reagent, whichever is earlier.
This Section 5.5 may be satisified by Licensee or its sublicenseees.
5.6. If Licensee fails to market a particular Research Reagent in
accordance with Section 5.5 above, then The Regents will have the right and
option, subject to Section 5.7 below, to terminate all rights granted to
Licensee under this Agreement with respect to that particular Research Reagent.
This termination includes Licensee's right to use the particular Research
Reagent for its own internal use. The Regents will thereafter be free to
dispose of the particular Research Reagent as it wishes. The exercise of this
right and option by The Regents will supersede the rights granted in Article 2
(Grant).
5.7. To exercise either the right to terminate this Agreement in
whole or with respect to any portion of Patent Rights or Property Rights, or
reduce the exclusive licenses granted to Licensee to non-exclusive licenses for
lack of diligence required in this Article 5. (Due Diligence), The Regents will
give Licensee written notice of the deficiency stating its intent to terminate
this Agreement in whole or with respect to any portion of Patent Rights or
Property Rights, or to reduce the licenses to non-exclusive licenses. Licensee
thereafter shall have 60 days to cure the deficiency. If The Regents
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<PAGE> 50
has not received written tangible evidence satisfactory to The Regents that the
deficiency has been cured by the end of the 60-day period, then The Regents
may, at its option, terminate this Agreement in whole or with respect to any
portion of Patent Rights or Property Rights, or reduce the exclusive licenses
granted to Licensee to non-exclusive licenses by giving written notice to
Licensee. These notices will be subject to Article 20. (Notices).
6. Progress and Royalty Reports
6.1. Beginning August 31, 1996, and semi-annually thereafter,
Licensee will submit to The Regents a progress report covering activities by
Licensee and its sublicensees related to the development and testing of all
their Products and the obtaining of the governmental approvals necessary for
marketing them, but Licensee will not be required to report on Products for
which a royalty is not due The Regents. These progress reports will be
provided to The Regents to cover the progress of the research and development
of the Products until the first commercial sale of Products in the United
States.
6.2. The progress reports submitted under Section 6.1 will include,
but not be limited to, the following topics so that The Regents may be able to
determine the progress of the development of Products on which a royalty is due
The Regents and may also be able to determine whether or not Licensee has met
its diligence obligations set forth in Article 5. (Due Diligence) above:
# summary of work in progress in anticipation of providing
Services and Research Reagents
# summary of work completed in anticipation of providing
Services and Research Reagents
# summary of Services completed
# current schedule of anticipated events or milestones
specified in Section 5.4 and 5.5
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<PAGE> 51
# anticipated market introduction date of Products on which
a royalty is due The Regents
# sublicenses granted, if any
6.3. Licensee also will report to The Regents in its immediately
subsequent progress and royalty report the date of first commercial sale of
each Product for which a royalty is due to The Regents in each country.
6.4. After the first commercial sale of a Product on which a
royalty is due The Regents, Licensee will provide The Regents with quarterly
royalty reports to The Regents on or before each February 28, May 31, August
31, and November 30 of each year. Each such royalty report will cover the most
recently completed calendar quarter of Licensee (October through December,
January through March, April through June, and July through September) and will
show:
6.4.1. the gross sales and Net Sales of such Products sold
by Licensee and reported to Licensee as sold by its
sublicensees during the most recently completed
calendar quarter;
6.4.2. the number of such Products sold or distributed by
Licensee and reported to Licensee as sold or
distributed by its sublicensees;
6.4.3. the royalties, in U.S. dollars, payable hereunder
with respect to Net Sales; and
6.4.4. the exchange rates used, if any.
6.5. If no sales of Products for which a royalty is due to The
Regents have been made during any reporting period after the first commercial
sale of such Product, then a statement to this effect is required.
7. Books and Records
7.1. Licensee will keep books and records accurately showing all
Products manufactured, used, and/or sold with respect to which Licensee owes
royalties to The Regents under the terms of this Agreement. Such books and
records will be preserved
20
<PAGE> 52
for at least five years after the date of the royalty payment to which they
pertain and will be open to inspection by representatives or agents of The
Regents during normal business hours at agreed upon times to determine the
accuracy of the books and records and to determine compliance by Licensee with
the terms of this Agreement. Such independent certified public accountant
shall be bound to hold all information in confidence except as necessary to
communicate Licensee's non-compliance with this Agreement to The Regents. The
only purpose of any inspection and audit pursuant to this Paragraph 7.1 shall
be to verify Licensee's royalty statement or payment under this Agreement and
to determine Licensee's compliance with the other provisions thereunder.
7.2. The fees and expenses of representatives of The Regents
performing such an examination will be borne by The Regents. However, if an
error in royalties of *** of the total royalties due for any year is
discovered, then the fees and expenses of these representatives will be borne
by Licensee.
8. Life of the Agreement
8.1. Unless otherwise terminated by operation of law or by acts of
the parties in accordance with the terms of this Agreement, this Agreement will
be in force from the Effective Date and will remain in effect for the life of
the last-to-expire patent licensed under this Agreement, or until the last
patent application licensed under this Agreement is abandoned, or in the event
no patent issues, for a period of fifteen (15) years from market introduction
for the last to be introduced Proprietary Product in the United States.
8.2. In the event this Agreement remains in effect for the entire
term specified in Paragraph 8.1 above, and is not otherwise terminated under
the provisions of Articles 5. (Due Diligence), 9. (Termination by The Regents),
or 10. (Termination by Licensee), Licensee is hereby granted an option for
renewal of this Agreement for a period of *** from the date of its termination.
Said option for renewal shall be
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 53
automatically exercised provided that the Licensee has not notified The Regents
to the contrary prior to the option renewal date. The renewal licenses will be
for the same terms and conditions as set forth in this Agreement, *** .
8.3. Any termination of this Agreement will not affect the rights
and obligations set forth in the following Articles:
Article 7 Books and Records
Article 13 Disposition of Products on Hand Upon Termination
Article 14 Use of Names and Trademarks
Article 19 Indemnification
Article 22 Late Payments
Article 24 Failure to Perform
Article 29 Confidentiality
8.4. 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, or 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.
9. Termination by The Regents
9.1. If Licensee should violate or fail to perform any term or
covenant of this Agreement, then The Regents may give written notice of such
default ("Notice of Default") to Licensee. If Licensee should fail to repair
such default within 60 days after the date of such notice takes effect, The
Regents will have the right to terminate this Agreement and the licenses herein
by a second written notice ("Notice of Termination") to Licensee. If a Notice
of Termination is sent to Licensee, this Agreement will
*** CONFIDENTIAL TREATMENT REQUESTED
22
<PAGE> 54
automatically terminate on the date such notice takes effect. Such termination
will not relieve Licensee of its obligation to pay any royalty or license fees
owing at the time of such termination and will not impair any accrued right of
The Regents. These notices will be subject to Article 20. (Notices).
10. Termination by Licensee
10.1. Licensee will have the right at any time to terminate this
Agreement in whole or as to any portion of Patent Rights or Property Rights by
giving notice in writing to The Regents. Such Notice of Termination will be
subject to Article 20. (Notices) and termination of this Agreement in whole or
with respect to any portion of the Patent Rights or Property Rights will be
effective 60 days after the effective date thereof.
10.2. Any termination pursuant to the above paragraph will not
relieve Licensee of any obligation or liability accrued hereunder prior to such
termination or rescind anything done by Licensee or any payments made to The
Regents hereunder prior to the time such termination becomes effective, and
such termination will not affect in any manner any rights of The Regents
arising under this Agreement prior to such termination.
11. Supply of the Biological Materials
and Biological Products
11.1. The Regents will initially supply Licensee with viable samples
of the Biological Materials set forth in Appendix D within thirty (30) days of
the Effective Date or as soon as reasonably practicable, and additional
Biological Materials elected by Licensee pursuant to Section 2.11 promptly
after Licensee's notice to The Regents pursuant to such Section. To the extent
Licensee requires and requests additional samples from The Regents during the
term hereof (due to failure of the initial supply of Biological Material(s)),
and The Regents has such additional samples in its possession,
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<PAGE> 55
The Regents agrees to supply such additional samples. Licensee will pay the
actual handling and shipping costs for any additional samples provided.
12. Maintenance of the Biological Materials
12.1. The Regents shall instruct Dr. Roger Tsien that if The Regents
circulates any of the Biological Materials to third parties for noncommercial
research purposes, it shall only do so under the terms and conditions set forth
in the biological material transmission letter attached hereto as Appendix A.
The Regents expressly reserves the right to transfer the Biological Materials
to non-profit entities strictly for noncommercial research purposes in the
manner set forth above. The Regents agrees that it will not otherwise transfer
the Biological Materials. The Licensee acknowledges that The Regents' right to
so transfer the Biological Materials could lead to the inadvertent loss or
diminution of the proprietary commercial value of the Biological Materials.
13. Disposition of the Biological Materials, Biological Products,
and Products on Hand Upon Termination
13.1. Upon termination of this Agreement prior to the expiration of
its full term, the Licensee shall have the privilege of disposing all
previously made or partially made Products, but no more, for a period of one
hundred and twenty (120) days following the effective date of termination,
provided, however, that the sale of such Products shall be subject to the terms
of this Agreement including, but not limited to, the payment of royalties at
the rate and at the time provided herein and the rendering of reports in
connection therewith.
13.2. Upon termination of this Agreement for any reason, Licensee,
at its sole discretion, shall destroy or transfer to The Regents any Biological
Materials in its possession within thirty (30) days following the effective
date of termination. Licensee
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shall provide The Regents within sixty (60) days following said termination
date with written notice that the Biological Materials have been destroyed.
14. Use of Names and Trademarks
14.1. Nothing contained in this Agreement will be construed as
conferring any right to use in advertising, publicity, or other promotional
activities any name, trade name, trademark, or other designation of either
party hereto by the other (including contraction, abbreviation or simulation of
any of the foregoing). Unless required by law, the use by Licensee of the name
"The Regents of the University of California" or the name of any campus of the
University of California for use in advertising, publicity, or other
promotional activities is expressly prohibited.
14.2. It is understood that The Regents will be free to release to
the inventors, HHMI, and senior administrative officials employed by The
Regents the terms of this Agreement upon their request. If such release is
made, The Regents will request that such terms will be kept in confidence in
accordance with the provisions of Article 29. (Confidentiality) and not be
disclosed to others. It is further understood that should a third party
inquire whether a license to Patent Rights is available, The Regents may
disclose the existence of this Agreement and the extent of the grant in Article
2. (Grant) to such third party, but will not disclose the name of Licensee,
except where The Regents is required to release such information under either
the California Public Records Act or other applicable law.
15. Limited Warranty
15.1. The Regents warrants to Licensee that it has the lawful right
to grant these licenses and bailment.
15.2. This license and the associated Invention, Biological
Materials, Products, and Patent Method are provided WITHOUT WARRANTY OF
MERCHANTABILITY OR
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<PAGE> 57
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.
THE REGENTS MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION, BIOLOGICAL
MATERIALS, PRODUCTS, OR PATENT METHOD WILL NOT INFRINGE ANY PATENT OR OTHER
PROPRIETARY RIGHT.
15.3. IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR
THE USE OF THE INVENTION, BIOLOGICAL MATERIALS, PRODUCTS, OR PATENT METHOD.
15.4. Nothing in this Agreement will be construed as:
15.4.1. a warranty or representation by The Regents as to the
validity, enforceability, or scope of any Patent
Rights or Property Rights; or
15.4.2. a warranty or representation that anything made,
used, sold, or otherwise disposed of under any
license granted in this Agreement is or will be
free from infringement of patents of third parties;
or
15.4.3. an obligation to bring or prosecute actions or suits
against third parties for patent infringement
except as provided in Article 18. (Patent
Infringement); or
15.4.4. conferring by implication, estoppel, or otherwise any
license or rights under any patents of The Regents
other than Patent Rights as defined herein,
regardless of whether such patents are dominant or
subordinate to Patent Rights; or
15.4.5. an obligation to furnish any know-how not provided in
Patent Rights and Property Rights.
16. Patent Prosecution and Maintenance
16.1. The Regents will diligently prosecute and maintain the United
States and foreign patents comprising Patent Rights using counsel of its
choice. The Regents will promptly provide Licensee with copies of all relevant
documentation so that Licensee
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<PAGE> 58
may be currently and promptly informed and apprised of the continuing
prosecution, and may comment upon such documentation sufficiently in advance of
any initial deadline for filing a response, provided, however, that if Licensee
has not commented upon such documentation prior to the initial deadline for
filing a response with the relevant government patent office or The Regents
must act to preserve Patent Rights, The Regents will be free to respond
appropriately without consideration of comments by Licensee, if any. Both
parties hereto will keep this documentation in confidence in accordance with
the provisions of Article 29. (Confidentiality) herein. Counsel for The
Regents will take instructions only from The Regents.
16.2. The Regents will use all reasonable efforts to amend any
patent application to include claims requested by Licensee and required to
protect the Products contemplated to be sold or Patent Method to be practiced
under this Agreement.
16.3. The Regents and Licensee will cooperate in applying for an
extension of the term of any patent included within Patent Rights, if
appropriate, under the Drug Price Competition and Patent Term Restoration Act
of 1984. Licensee will prepare all such documents, and The Regents will
execute such documents and will take such additional action as Licensee may
reasonably request in connection therewith.
16.4. The Regents will, at the request of Licensee, file, prosecute,
and maintain patent applications and patents covered by Patent Rights in
foreign countries if available. Licensee must notify The Regents within seven
months of the filing of the corresponding United States application of its
decision to request The Regents to file foreign counterpart patent
applications. This notice concerning foreign filing must be in writing and must
identify the countries desired. The absence of such a notice from Licensee to
The
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Regents within the seven-month period will be considered an election by
Licensee not to request The Regents to secure foreign patent rights on behalf
of Licensee; provided, however, that the absence of such notice from Licensee
to The Regents within the seven-month period with respect to United States
applications filed within eight months prior to the Effective Date of this
Agreement will not be considered an election by licensee not to request The
Regents not to secure foreign patent rights. In such event, Licensee must
notify The Regents of its decision to request The Regents to file foreign
counterpart patent applications within ninety (90) days of the conventional
filing date of such applications. The Regents will have the right to file
patent applications at its own expense in any country Licensee has not included
in its list of desired countries, and such applications and resultant patents,
if any, will not be included in the licenses granted under this Agreement.
16.5. All past, present and future costs of preparing, filing,
prosecuting and maintaining all United States and foreign patent applications
and all costs and fees relating to the preparation and filing of patents
covered by Patent Rights in Section 1.1 will be borne by Licensee. This
includes patent preparation and prosecution costs for this Invention incurred
by The Regents prior to the execution of this Agreement. Such costs will be
due upon execution of this Agreement and will be payable at the time that the
license issue fee is payable. The costs of all interferences and oppositions
will be considered prosecution expenses and also will be borne by Licensee.
Licensee will reimburse The Regents for all costs and charges within 30 days
following receipt of an itemized invoice from The Regents for same.
16.6. The obligation of Licensee to underwrite and to pay patent
preparation, filing, prosecution, maintenance, and related costs will continue
for costs incurred until three months after receipt by either party of a Notice
of Termination with respect to a particular patent application or patent within
the Patent Rights provided, however, that The Regents provides Licensee with
written notification, at least three months prior to the effective date of the
termination, that such costs are anticipated. Licensee will reimburse The
Regents for all patent costs incurred during the term of the Agreement and for
three months thereafter whether or not invoices for such costs are received
during the three-month period after receipt of a Notice of Termination.
Licensee may
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with respect to any particular patent application or patent terminate its
obligations with the patent application or patent in any or all designated
countries upon three months written notice to The Regents. The Regents may
continue prosecution and/or maintenance of such application(s) or patent(s) at
its sole discretion and expense, provided, however, that Licensee will have no
further right or licenses thereunder.
16.7. Licensee will notify The Regents of any change of its status
as a small entity (as defined by the United States Patent and Trademark Office)
and of the first sublicense granted to an entity that does not qualify as a
small entity as defined therein.
16.8. The Regents acknowledges that Licensee will be conducting
independent research and development activities with respect to the Biological
Materials, Biological Products, and/or the Patent Rights, and recognizes that
such independent research and development may result in patentable inventions
and other intellectual property owned by Licensee. The Regents hereby consents
to the filing of any patent applications, even if any Biological Materials or
Biological Products are within the scope of one or more claims of any such
patent application.
17. Patent Marking
17.1. Licensee will mark all Products made, used, or sold under the
terms of this Agreement, or their containers, in accordance with the applicable
patent marking laws.
18. Patent Infringement
18.1. In the event that Licensee, or The Regents' licensing
associate responsible for administering this Agreement, or Resident Counsel of
the Regents' Office of Technology Transfer learns of the substantial
infringement of any patent licensed under this Agreement, to the extent
contractually able to, it will call the attention to the other party hereto in
writing and will provide reasonable evidence of
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such infringement. Both parties to this Agreement acknowledge that during the
period and in a jurisdiction where Licensee has exclusive rights under this
Agreement, neither will notify a third party of the infringement of any of
Patent Rights without first obtaining consent of the other party, which consent
will not be unreasonably withheld. Both parties will use their best efforts in
cooperation with each other to terminate such infringement without litigation.
18.2. Licensee may request that The Regents take legal action
against the infringement of Patent Rights. Such request must be made in
writing and must include reasonable evidence of such infringement and damages
to Licensee. If the infringing activity has not been abated within 90 days
following the effective date of such request, The Regents will have the right
to elect to:
18.2.1. commence suit on its own account; or
18.2.2. refuse to participate in such suit.
18.3. The Regents will give notice of its election in writing to
Licensee by the end of the 100th day after receiving notice of such request
from Licensee. Licensee may thereafter bring suit for patent infringement if
and only if The Regents elects not to commence suit and if the infringement
occurred during the period and in a jurisdiction where Licensee had exclusive
rights under this Agreement. However, in the event Licensee elects to bring
suit in accordance with this paragraph, The Regents may thereafter join such
suit at its own expense.
18.4. Such legal action as is decided upon will be at the expense of
the party on account of whom suit is brought and all recoveries recovered
thereby will belong to such party, provided, however, that legal action brought
jointly by The Regents and Licensee and participated in by both will be at the
joint expense of the parties and all recoveries will be allocated in the
following order: ***
*** CONFIDENTIAL TREATMENT REQUESTED
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***
18.5. Each party will cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the party on account of
whom suit is brought. Such litigation will be controlled by the party bringing
the suit, except that The Regents may be represented by counsel of its choice
in any suit brought by Licensee.
19. Indemnification
19.1. Licensee will (and require its sublicensees to) indemnify,
hold harmless, and defend The Regents and HHMI, their officers, employees, and
agents; the sponsors of the research that led to the Invention; the inventors
of any invention covered by patents or patent applications in Patent Rights
(including the Products and Patent Method contemplated thereunder) and their
employers against any and all claims, suits, losses, damage, costs, fees, and
expenses resulting from or arising out of exercise of this license or any
sublicense. This indemnification will include, but will not be limited to, any
product liability.
19.2. Licensee, at its sole cost and expense, will insure its
activities in connection with the work under this Agreement and obtain, keep in
force, and maintain insurance as follows: (or an equivalent program of self
insurance)
Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
# Each Occurrence $1,000,000
# Products/Completed Operations Aggregate $1,000,000
*** CONFIDENTIAL TREATMENT REQUESTED
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# Personal and Advertising Injury $1,000,000
# General Aggregate (commercial form only) $1,000,000
19.3. As of and following the date of commencement of any clinical
trial with respect to a Product marketed by Licensee, Licensee shall increase
insurance coverage under Section 19.2 immediately above from $1,000,000 to an
aggregate of $3,000,000. As of and following the date of commencement of any
sales of such Products, Licensee shall increase insurance coverage under
Section 19.2 to an aggregate of $5,000,000. It should be expressly understood,
however, that the coverages and limits referred to under the above will not in
any way limit the liability of Licensee. Licensee will furnish The Regents
with certificates of insurance evidencing compliance with all requirements.
Such certificates will:
19.3.1. Provide for 30 day advance written notice to The
Regents of any modification;
19.3.2. Indicate that The Regents has been endorsed as an
additional Insured under the coverages referred
to under the above; and
19.3.3. Include a provision that the coverages will be
primary and will not participate with nor will be
excess over any valid and collectable insurance
or program of self-insurance carried or
maintained by The Regents.
19.4. The Regents will promptly notify Licensee in writing of any
claim or suit brought against The Regents in respect of which The Regents
intends to invoke the provisions of this Article 19. (Indemnification).
Licensee will keep The Regents informed on a current basis of its defense of
any claims pursuant to this Article 19. (Indemnification). It is understood
that Licensee shall have the right to control the defense and settlement of any
such claim or suit, except Licensee shall not enter into any settlement which
(i) makes any admission of wrongdoing on the part of The Regents, or (ii)
admits that any of the Patent Rights of The Regents are invalid, unenforceable,
or not infringed without prior written consent of The Regents.
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20. Notices
20.1. Any notice or payment required to be given to either party
will be deemed to have been properly given and to be effective (a) on the date
of delivery if delivered in person or (b) five days after mailing if mailed by
first-class certified mail, postage paid, to the respective addresses given
below, or to another address as it may designate by written notice given to the
other party.
In the case of Licensee: AURORA BIOSCIENCES, CORP.
11149 North Torrey Pines Road
La Jolla, CA 92037
Attention: President
(619) 452-5000
In the case of The Regents: THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
1320 Harbor Bay Parkway, Suite 150
Alameda, California 94502
Tel: (510) 748-6600
Fax: (510) 748-6639
Attention: Executive Director;
Research Administration
and Office of Technology
Transfer
Referring to: U.C. Case Nos. 93-289,
95-110, 95-219, 96-044, 96-160, 96-161,
96-162, and 96-191
21. Assignability
21.1. This Agreement is binding upon and will inure to the benefit
of The Regents, its successors and assigns, but shall be personal to Licensee
and assignable by Licensee only with the written consent of The Regents, which
consent shall not be unreasonably withheld; provided, however, Licensee may
assign this Agreement to an Affiliate or Joint Venture or in connection with
the sale or transfer of substantially all the
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assets of Licensee relating to the subject matter of this Agreement, without
written consent of The Regents.
22. Late Payments
22.1. In the event royalty payments or fees or patent prosecution
costs are not received by The Regents when due, Licensee will pay to The
Regents interest charges at a rate of ten percent (10%) simple interest per
annum. Such interest will be calculated from the date payment was due until
actually received by The Regents. Acceptance by The Regents of any late
payment interest from Licensee under this Section 22.1 will in no way affect
the provision of Article 23. (Waiver) herein.
23. Waiver
23.1. It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth will
be deemed a waiver as to any subsequent and/or similar breach or default.
24. Failure to Perform
24.1. In the event of a failure of performance due under the terms
of this Agreement and if it becomes necessary for either party to undertake
legal action against the other on account thereof, then the prevailing party
will be entitled to reasonable attorney's fees in addition to costs and
necessary disbursements.
25. Governing Laws
25.1. THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules
that would direct the application of the laws of another jurisdiction,
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<PAGE> 66
but the scope and validity of any patent or patent application will be governed
by the applicable laws of the country of such patent or patent application.
26. Government Approval or Registration
26.1. If this Agreement or any associated transaction is required by
the law of any nation to be either approved or registered with any governmental
agency, Licensee will assume all legal obligations to do so. Licensee will
notify The Regents if it becomes aware that this Agreement is subject to a
United States or foreign government reporting or approval requirement.
Licensee will make all necessary filings and pay all costs including fees,
penalties, and all other out-of-pocket costs associated with such reporting or
approval process.
27. Export Control Laws
27.1. Licensee will observe all applicable United States and foreign
laws with respect to the transfer of Products and related technical data to
foreign countries, including, without limitation, the International Traffic in
Arms Regulations (ITAR) and the Export Administration Regulations.
28. Force Majeure
28.1. The parties to this Agreement will be excused from any
performance required hereunder if such performance is rendered impossible or
unfeasible due to any acts of God, catastrophes, or other major events beyond
their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and floods, fires, explosions, or
other natural disasters. However, any party to this Agreement will have the
right to terminate this Agreement upon 30 days' prior written notice if either
party is unable to fulfill its obligations under this Agreement due to any of
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<PAGE> 67
the causes mentioned above and such inability continues for a period of one
year. Notices will be subject to Article 20. (Notices). When such events
have abated, the parties' respective obligations hereunder shall resume.
29. Confidentiality
29.1. Licensee and The Regents respectively will treat and maintain
the proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information
("Proprietary Information") of the other party in confidence using at least the
same degree of care as that party uses to protect its own proprietary
information of a like nature for a period from the date of disclosure until
five years after the date of termination of this Agreement. This
confidentiality obligation will apply to the information defined as "Data"
under the Secrecy Agreement, and such Data will be treated as Proprietary
Information hereunder.
29.2. All Proprietary Information will be labeled or marked
confidential or as otherwise similarly appropriate by the disclosing party, or
if the Proprietary Information is orally disclosed, it will be reduced to
writing or some other physically tangible form, marked and labeled as set forth
above by the disclosing party, and delivered to the receiving party within 30
days after the oral disclosure as a record of the disclosure and the
confidential nature thereof. Notwithstanding the foregoing, Licensee and The
Regents may use and disclose Proprietary Information to its employees, agents,
consultants, contractors, and, in the case of Licensee, its sublicensees,
provided that any such parties are bound by a like duty of confidentiality.
29.3. Nothing contained herein will in any way restrict or impair
the right of Licensee or The Regents to use, disclose, or otherwise deal with
any Proprietary Information:
36
<PAGE> 68
29.3.1. that recipient can demonstrate by written records was
previously known to it;
29.3.2. that is now, or becomes in the future, public
knowledge other than through acts or omissions of
recipient;
29.3.3. that is lawfully obtained without restrictions by
recipient from sources independent of the disclosing
party;
29.3.4. that is required to be disclosed to a governmental
entity or agency in connection with seeking any
governmental or regulatory approval, or pursuant
to the lawful requirement or request of a
governmental entity or agency;
29.3.5. that is furnished to a third party by the recipient
with similar confidentiality restrictions imposed
on such third party, as evidenced in writing; or
29.3.6. that The Regents is required to disclose pursuant to
the California Public Records Act or other applicable
law.
29.4. Upon termination of this Agreement, Licensee and The Regents
will destroy or return to the disclosing party proprietary information received
from the other in its possession within 15 days following the effective date of
termination. Licensee and The Regents will provide each other, within 30 days
following termination, with a written notice that Proprietary Information has
been returned or destroyed. Each party may, however, retain one copy of
Proprietary Information for archival purposes in nonworking files.
30. Miscellaneous
30.1. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
30.2. This Agreement will not be binding upon the parties until it
has been signed below on behalf of each party, in which event, it will be
effective as of the date recited on page one.
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<PAGE> 69
30.3. No amendment or modification hereof will be valid or binding
upon the parties unless made in writing and signed on behalf of each party.
30.4. This Agreement embodies the entire understanding of the
parties and will supersede all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof. The Letter Agreements, the Option Agreement, and the
Secrecy Agreements specified in the Recitals of this Agreement are hereby
terminated.
30.5. In case any of the provisions contained in this Agreement are
held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability will not affect any other provisions hereof,
but this Agreement will be construed as if such invalid or illegal or
unenforceable provisions had never been contained herein.
The Regents and Licensee execute this Agreement in duplicate originals
by their respective, authorized officers on the date indicated.
Aurora Biosciences Corporation The Regents of the University
of California
By__________________________________ By_________________________________
(Signature) (Signature)
Name________________________________ Name Terence A. Feuerborn
(Please Print)
Title_______________________________ Title Executive Director
Research Administration
and Office of Technology
Transfer
Date________________________________ Date_______________________________
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APPENDIX A - PAGE 1A
University of California/San Diego (UCSD)
Instructions for Standard Letter Transmitting
Biological Materials to Universities and
Non-Profit Institutions
The attached letter is authorized for use by University of California,
UCSD Principal Investigators and Administrators only with Scientists and other
universities and nonprofit research institutions when transmitting cell lines,
plasmids and the like for non-commercial research purposes.
1. Choose the appropriate form of university or nonprofit research
institution in paragraph 2.
2. Choose whether or not to include the phrase "our cooperative" in
paragraph 2.
3. Insert in paragraph 4 the amount of processing charge. If the
material is to be shipped at no charge, insert the words "no charge".
4. Send the letter in duplicate to the other scientists.
5. Do not send biological materials until you receive the duplicate copy
executed by both the scientist and the other institution.
6. Send a copy of the fully executed letter agreement to:
Terence A. Feuerborn
Executive Director
Research Administration
and Technology Transfer
1320 Harbor Bay Parkway
Suite 150
Alameda, CA 94501
7. Any changes in the wording of this standard letter must be reviewed by
the Executive Director of the Office of Technology Transfer before
acceptance.
Note: Do not use this letter for the exchange of living plants. A separate
"Testing Agreement for the Plant Varieties" is available for that purpose.
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<PAGE> 71
APPENDIX A - PAGE 2A
SAMPLE LETTER FOR USE PRIOR TO TRANSMISSION OF BIOLOGICAL
MATERIALS TO INVESTIGATORS AT UNIVERSITIES OR NON-PROFIT
RESEARCH INSTITUTIONS
(date)
IN DUPLICATE
To:_____________________
This is to (acknowledge receipt of your letter) (confirm our telephone
conversation) in which you requested certain research materials developed in
this laboratory be sent to you for scientific research purposes. The materials
concerned, which belong to The Regents of the University of California/San
Diego Campus (UCSD) are _______________.
While I cannot transfer ownership of these materials to you, I will be
pleased to permit your use of these materials within your (university)
(Non-Profit Research Institution) laboratory for (our cooperative) scientific
research. However, before forwarding them to you, I require your agreement
that the materials will be received by you only for use in (our cooperative
work) (scientific research), that you will bear all risk to you or any others
resulting from your use, and that you will not pass these materials, their
progeny or derivatives, on to any other party or use them for commercial
purposes without the express written consent of The Regents of the University
of California. You understand that no other right or license to these
materials, their progeny or derivatives, is granted or implied as a result of
our transmission of these materials to you.
These materials are to be used with caution and prudence in any
experimental work, since all of their characteristics are not known.
As you recognize, there is a processing cost to us involved in
providing these materials to you. We will bill you for our processing costs,
which will amount to $_________________.
If you agree to accept these materials under the above conditions,
please sign the enclosed duplicate copy of this letter, then have it signed by
an authorized representative of your institution, and return it to me. Upon
receipt of that confirmation I will forward the material(s) to you.
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<PAGE> 72
APPENDIX A - PAGE 3A
(Note: other paragraphs discussing the relevant literature, the nature of the
work, hazards relating to materials to be sent etc. may be appropriate. These
will vary depending on the individual circumstances and the relationship
between the two parties previously established. Be sure to retain a signed
copy when received and send a photocopy of the completed agreement to the
University of California Patent Administrator, Office of Technology Transfer,
Systemwide Administration, 1320 Harbor Bay Parkway, Suite 150, Alameda, CA
94502)
Sincerely yours,
ACCEPTED:
RESEARCH INVESTIGATOR
______________________
Printed Name
______________________
(Signature)
______________________
Date
RESEARCH UNIVERSITY OR
NON-PROFIT INSTITUTION
______________________
Printed Name
_______________________
(Signature)
_______________________
Date
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<PAGE> 73
APPENDIX B - PAGE 1B
The INVENTORS listed below understand and agree to abide by the terms
and conditions of Article 12 (MAINTENANCE OF THE BIOLOGICAL MATERIALS) of the
Exclusive License Agreement between The Regents of the University of California
and Aurora Biosciences, Corp. effective ______________________, 1996, and to
instruct all relevant personnel working within their laboratory to act
accordingly. Said paragraph reads, in part, as follows:
"12.1 The Regents shall instruct Roger Tsien that if The Regents
circulates any of the Biological Materials to third parties for noncommercial
research purposes, it shall only do so under the terms and conditions set forth
in the biological material transmission letter attached hereto as Appendix A.
The Regents expressly reserves the right to transfer the Biological Materials
to non-profit entities strictly for noncommercial research purposes in the
manner set forth above. The Regents agrees that it will not otherwise transfer
the Biological Materials. The Licensee acknowledges that The Regents' right to
so transfer the Biological Materials could lead to the inadvertent loss or
diminution of the proprietary commercial value of the Biological Materials."
The Biological Materials is defined in said Agreement as follows:
"1.2 Biological Materials" means (i) the chemical reagents and
biological materials owned by The Regents and listed in Appendix D attached
hereto and provided to Licensee by The Regents pursuant to the April 26, 1996
Letter Agreement, and (ii) any other chemical reagents or biological materials
elected for inclusion under this Agreement by Licensee pursuant to Section 2.11
below."
By:
______________________________ _____________________________
(Inventor) Date
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<PAGE> 74
APPENDIX C - PAGE 1C
CHANCELLOR APPROVAL OF COMMERCIAL RESTRICTIONS OF TANGIBLE RESEARCH PRODUCTS
In May 1989, the University of California issued the Guidelines on
University-Industry Relations ("Guidelines"). Guideline 10 entitled "Tangible
Research Products" requires that when the commercial availability of tangible
research products resulting from the conduct of research are restricted by a
license, approval must be obtained from the Chancellor of the campus where the
research took place.
The License Agreement between THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA ("The Regents") and AURORA BIOSCIENCES, CORP. ("Licensee") entitled
"Fluorescent Assay Technologies" contains provisions that restrict the transfer
of certain tangible research products to commercial competitors of the Aurora
Biosciences, Corp. and requires that tangible research products transferred for
educational and research purposes be conveyed under a biological material
transfer agreement that permits the University to retain the discretion to
publish any results of research at any time and to disseminate the tangible
materials for educational and research purposes.
Approval of the provisions of the License Agreement that restrict the
commercial availability of tangible research products is indicated below.
Approval:
______________________________ _____________________________
Majorie C. Caserio Date
Interim Chancellor
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APPENDIX D - PAGE 1D
*** CONFIDENTIAL TREATMENT REQUESTED
44
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APPENDIX D - PAGE 2D
*** CONFIDENTIAL TREATMENT REQUESTED
45
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APPENDIX D - PAGE 3D
*** CONFIDENTIAL TREATMENT REQUESTED
46
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APPENDIX D - PAGE 4D
***CONFIDENTIAL TREATMENT REQUESTED
47
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APPENDIX D - PAGE 5D
***CONFIDENTIAL TREATMENT REQUESTED
48
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APPENDIX D - PAGE 6D
***CONFIDENTIAL TREATMENT REQUESTED
49
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APPENDIX D - PAGE 7D
***CONFIDENTIAL TREATMENT REQUESTED
50
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APPENDIX D - PAGE 8D
***CONFIDENTIAL TREATMENT REQUESTED
51
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APPENDIX D - PAGE 9D
***CONFIDENTIAL TREATMENT REQUESTED
52
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APPENDIX D - PAGE 10D
***CONFIDENTIAL TREATMENT REQUESTED
53
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APPENDIX D - PAGE 11D
***CONFIDENTIAL TREATMENT REQUESTED
54
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APPENDIX D - PAGE 12D
***CONFIDENTIAL TREATMENT REQUESTED
55
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APPENDIX D - PAGE 13D
***CONFIDENTIAL TREATMENT REQUESTED
56
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APPENDIX D - PAGE 14D
***CONFIDENTIAL TREATMENT REQUESTED
57
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APPENDIX D - PAGE 15D
***CONFIDENTIAL TREATMENT REQUESTED
58
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APPENDIX D - PAGE 16D
***CONFIDENTIAL TREATMENT REQUESTED
59
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APPENDIX D - PAGE 17D
***CONFIDENTIAL TREATMENT REQUESTED
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APPENDIX D - PAGE 18D
***CONFIDENTIAL TREATMENT REQUESTED
61
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APPENDIX D - PAGE 19D
***CONFIDENTIAL TREATMENT REQUESTED
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APPENDIX D - PAGE 20D
***CONFIDENTIAL TREATMENT REQUESTED
63
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APPENDIX D - PAGE 21D
***CONFIDENTIAL TREATMENT REQUESTED
64
<PAGE> 96
APPENDIX E - PAGE 1E
Research Reagents
***
060596
***CONFIDENTIAL TREATMENT REQUESTED
66
<PAGE> 97
ADDENDUM 3A
"LIQUID HANDLING HEAD"
PRODUCT REQUIREMENT SPECIFICATIONS
I. GENERAL
A. The specifications set forth herein are preliminary and reflect the
parties' expectations as of the Effective Date of the minimum performance
requirements for the PRODUCTS. However, the parties recognize that in the
course of the Collaboration Program the specifications herein may need to be
revised in consideration of (i) engineering or manufacturing difficulties or
costs, and/or (ii) to fulfill commercial expectations of demands.
B. ***
C. ***
D. It is understood that "Best Effort..." statements imply optimization of
desirable characteristics of performance. The efforts surrounding any one
parameter may be inconsistent with, and in some cases detrimental to, the
performance of other features of the system. PACKARD will make every effort to
keep AURORA informed of these tradeoffs and negotiate improvement goals in good
faith.
II. PIEZO-DEVICE SPECIFICATIONS
A. ***
B. ***
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 98
***
*** CONFIDENTIAL TREATMENT REQUESTED
4
<PAGE> 99
ADDENDUM 3B
"DETECTOR"
PRODUCT REQUIREMENT SPECIFICATIONS
I. GENERAL
A. The specifications set forth herein are preliminary and reflect the
parties' expectations as of the Effective Date of the minimum
performance requirements for the PRODUCTS. However, the parties
recognize that in the course of the Collaboration Program the
specifications herein may need to be revised in considerations of (i)
engineering or manufacturing difficulties or costs, and/or (ii) to
fulfill commercial expectations of demands.
B. [***]
C. It is understood that "Best Effort" statements imply optimization of
desirable characteristics of performance. These efforts surrounding one
parameter may be inconsistent with, and in some cases detrimental to,
the performance of other features of the system. PACKARD will make every
effort to keep AURORA informed of such possible tradeoffs and negotiate
improvements goals in good faith.
II. CAMERA
A. [***]
B. [***]
C. [***]
D. [***]
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 100
III. OPTICS
A. ***
B. [***]
C. [***]
D. [***]
E. [***]
F. [***]
G. [***]
IV. DETECTOR
A. [***]
B. [***]
C. [***]
D. [***]
E. [***]
***CONFIDENTIAL TREATMENT REQUESTED
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ADDENDUM 3C
"NANO-PLATES"
PRODUCT REQUIREMENT SPECIFICATIONS
I. GENERAL
A. The specifications set forth herein are preliminary and reflect the
parties' expectations as of the Effective Date of the minimum
performance requirements for the PRODUCTS. However, the parties
recognize that in the course of the Collaboration Program the
specifications herein may need to be revised in consideration of (i)
engineering or manufacturing difficulties or costs, and/or (ii) to
fulfill commercial expectations of demands.
B. Since the NANO-PLATE will be jointly developed by AURORA and PACKARD,
both will jointly define the final NANO-PLATE specification.
C. ***
II. REQUIREMENTS
A. ***
B. ***
C. ***
D. ***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 102
ADDENDUM 4
AURORA UC REAGENTS
***
***
***
***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 103
ADDENDUM 5
<PAGE> 104
EXHIBIT 10.11
AURORA BIOSCIENCES CORPORATION
PREFERRED STOCK PURCHASE AGREEMENT
MARCH 8, 1996
<PAGE> 105
<TABLE>
<S> <C>
SECTION 1 Sale of Shares....................................................1
1.2 Closing Date.......................................................1
1.3 Delivery...........................................................2
SECTION 2 Representations and Warranties of the Company.....................2
2.1 Organization and Standing..........................................2
2.2 Corporate Power....................................................3
2.3 Subsidiaries.......................................................3
2.4 Capitalization.....................................................3
2.5 Authorization......................................................4
2.6 Contracts and Other Commitments....................................5
2.7 Compliance with Other Instruments, etc.............................5
2.8 Litigation, etc....................................................5
2.9 Registration Rights................................................6
2.10 Permits...........................................................6
2.11 Governmental Consent, etc.........................................6
2.12 Disclosure........................................................6
2.13 Offering..........................................................7
2.14 Liabilities.......................................................7
2.15 Changes...........................................................7
2.16 Title to Properties and Assets; Liens, Leases, etc................9
2.17 Patents and Trademarks............................................9
2.18 Tax Returns; Taxes...............................................10
2.19 Employees........................................................10
2.20 No Defaults......................................................11
2.21 Insurance........................................................11
2.22 Brokers or Finders...............................................12
2.23 Environmental and Safety Laws....................................12
2.24 No Dividends.....................................................12
2.25 Employee Benefit Plan Obligations................................12
2.26 Qualification as a Qualified Small Business......................12
2.27 Financial Statements.............................................12
2.28 Transactions with Affiliates.....................................12
2.29 Proprietary Information and Inventions Agreements................13
2.30 U.S. Real Property Holding Corporation...........................13
SECTION 3 Investment Representations.......................................13
3.1 Power and Authority...............................................13
3.2 Due Execution.....................................................13
3.3 Experience; Accredited Investor...................................14
3.4 Investment........................................................14
3.5 Rule 144..........................................................14
3.6 No Public Market..................................................14
</TABLE>
i.
<PAGE> 106
<TABLE>
<S> <C>
3.7 Disclosure of Information.........................................14
SECTION 4 Conditions of the Purchaser's Obligations at Closing ............15
4.1 Representations and Warranties....................................15
4.2 Covenants.........................................................15
4.3 No Material Adverse Change........................................15
4.4 Securities Laws...................................................15
4.5 Compliance Certificate............................................15
4.6 Opinion of Counsel................................................15
4.7 Investors' Rights Agreement.......................................15
4.8 Proceedings and Documents.........................................15
4.9 Supporting Documents..............................................16
4.10 Management Rights Agreements.....................................16
4.11 Voting Agreement.................................................16
4.12 Amendment to Employment Agreement................................17
4.13 Charter..........................................................17
4.14 Bylaws...........................................................17
4.14 Proprietary Information Agreements...............................17
4.15 Election of Directors............................................17
4.16 Certificate as to Disqualified Persons...........................17
4.18 Fees of Purchasers' Counsel......................................17
SECTION 5 Conditions of the Company's Obligations at Closing...............18
5.1 Representations and Warranties....................................18
5.2 Covenants.........................................................18
SECTION 6 Miscellaneous....................................................18
6.1 Governing Law.....................................................18
6.2 Successors and Assigns............................................18
6.3 Entire Agreement..................................................18
6.4 Notices, etc......................................................18
6.5 Expenses..........................................................19
6.6 Counterparts......................................................19
6.7 Severability......................................................19
6.8 Survival of Agreements............................................19
6.9 Brokerage.........................................................19
6.10 Amendments.......................................................20
</TABLE>
ii.
<PAGE> 107
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
A RESTATED CERTIFICATE OF INCORPORATION
B SCHEDULE OF EXCEPTIONS
C INVESTORS' RIGHTS AGREEMENT
D FORM OF MANAGEMENT RIGHTS LETTER
E FORM OF VOTING AGREEMENT
F FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
G FORM OF LEGAL OPINION OF COMPANY COUNSEL
</TABLE>
iii.
<PAGE> 108
AURORA BIOSCIENCES CORPORATION
PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of March 8, 1996 between Aurora Biosciences
Corporation, a Delaware corporation (the "COMPANY"), with its principal office
at 1020 Prospect Street, Suite 405, La Jolla, California 92037, and the
purchasers listed on Schedule A hereto who execute this Agreement (each a
"Purchaser", and collectively, the "Purchasers").
WHEREAS, the Company has authorized the issuance and sale of up to
10,239,115 shares of its Series A Preferred Stock (the "SERIES A PREFERRED"),
555,555 shares of Series B Preferred Stock (the "SERIES B PREFERRED"), and
750,000 shares of Series C Preferred Stock (the "SERIES C PREFERRED")
(collectively, the "SHARES") having the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company in the form attached to this Agreement as Exhibit A (the "RESTATED
CERTIFICATE").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:
SECTION 1
SALE OF SHARES
1.1 SALE OF SHARES. Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined), each Purchaser (severally but not jointly)
agrees to purchase from the Company, and the Company agrees to sell and issue,
shares of Preferred Stock of the Company being of the number, Series, and price
per share as set forth opposite each Purchaser's name on Schedule A hereto.
1.2 CLOSING DATE. The purchase and sale of the Shares hereunder shall take
place in up to three (3) closings, each of which shall be held at the law
offices of Cooley Godward Castro Huddleson & Tatum, 4365 Executive Drive, Suite
1100, San Diego, California 92121. The first closing of such purchase and sale
hereunder, at which the shares of Series A Preferred to be purchased and sold
hereunder shall be so purchased and sold (the "FIRST CLOSING"), shall be held on
the date of this Agreement or at such other time upon which the Company and the
Purchasers participating in the First Closing shall agree. The closing of the
purchase and sale of the Series B Preferred hereunder (the "SERIES B CLOSING")
and the closing of the purchase and sale of the Series C Preferred hereunder
(the "SERIES C CLOSING") (the Series B Closing and the Series C Closing are
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hereinafter collectively referred to as the "SUBSEQUENT Closings" and the First
Closing and the Subsequent Closings are hereinafter collectively referred to as
the "Closings") shall be held as soon as practicable but in each case not more
than thirty (30) days following the date hereof as agreed upon by the Company
and Purchasers purchasing at least a majority of the Shares to be purchased and
sold in such Subsequent closing.
Upon delivery of a duly executed copy of this Agreement, the Investor's
Rights Agreement (defined below) and the Voting Agreement (defined below), any
purchaser of Shares at a Subsequent Closing shall be deemed to be a party to
this Agreement, the Investors' Rights Agreement and the Voting Agreement, such
purchaser shall be deemed to be a "Purchaser" for purposes of this Agreement, a
"Stockholder" for purposes of the Investor's Rights Agreement and a "Purchaser"
for purposes of the Voting Agreement, and the Shares acquired by such purchaser
shall be deemed to have been acquired pursuant to this Agreement.
1.3 DELIVERY. At each Closing, the Company will deliver to each Purchaser
purchasing Shares in such Closing a certificate representing the Shares being
purchased upon payment of the aggregate purchase price therefor (as set forth
opposite each Purchaser's name on Schedule A hereto) by (i) check payable to the
order of the Company, (ii) wire transfer of immediately available funds made
payable to the order of the Company or (iii) cancellation of outstanding
principal and accrued interest under promissory notes issued by the Company, or
any combination of the foregoing, as provided on Schedule A.
Section 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedule of Exceptions attached
hereto as Exhibit B, the Company hereby represents and warrants to the
Purchasers as follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has all requisite
corporate power to own and operate its assets and to carry on its business as
presently conducted and as proposed to be conducted. The Company is qualified to
do business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
or where the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, "Material Adverse Effect" shall mean material adverse effect
on the Company's business as presently conducted or planned to be conducted or
the Company's financial condition, operations or prospects.
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<PAGE> 110
2.2 CORPORATE POWER. The Company has, and at the time of each Closing
will have, all requisite legal and corporate power to execute and deliver this
Agreement, the Investors' Rights Agreement in substantially the form attached
hereto as Exhibit C (the "INVESTORS' RIGHTS AGREEMENT"), the Management Rights
letter agreements between the Company and certain of the Purchasers
substantially in the form attached hereto as Exhibit D (the "MANAGEMENT RIGHTS
AGREEMENTS") and the Voting Agreement in substantially the form attached hereto
as Exhibit E (this Agreement, the Investors' Rights Agreement, the Management
Rights Agreements and the Voting Agreement are hereinafter collectively referred
to as the "AGREEMENTS"), to sell and issue the Shares under this Agreement, to
issue the Common Stock issuable upon conversion of the Shares and to carry out
and perform its obligations under the terms of the Agreements, including all
exhibits and schedules hereto and thereto.
2.3 SUBSIDIARIES. The Company does not own (of record or beneficially)
or control, directly or indirectly, any equity interest in any other
corporation, association or business entity (other than investments in
marketable securities). The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, of which 2,508,500 shares will be
issued and outstanding immediately prior to the First Closing, and 25,000,000
shares of Preferred Stock, of which 10,500,000 are designated Series A Preferred
Stock, 600,000 are designated Series B Preferred Stock, and 800,000 are
designated Series C Preferred Stock, none of which will be issued and
outstanding immediately prior to the First Closing. No other shares of capital
stock or other securities of the Company are outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable and have been offered, issued, sold and delivered by the
Company in compliance with applicable federal and state securities laws. The
Shares have the rights, preferences and privileges set forth in the Restated
Certificate, and all such rights, preferences and privileges are valid, binding
and enforceable in accordance with all applicable laws. The stockholders of
record and holders of subscriptions, warrants, options, convertible securities
and other rights to purchase or otherwise acquire equity securities of the
Company, and the number of shares of Common Stock and the number of such
subscriptions, warrants, options, convertible securities, and other such rights
held by each are as set forth in Exhibit B. All of the outstanding shares of
stock held by each such holder are subject to vesting as described in Exhibit B,
and the Company has the right to repurchase unvested shares upon the termination
of such holder's employment or other business relationship with the Company at
the original purchase price per share paid to the Company by such holder. The
Company has reserved 1,000,000 shares of its Common Stock (the "Reserved
Shares") for issuance pursuant to the Company's 1996 Stock Plan. Except for the
transactions contemplated in the Agreements, the conversion privileges of the
Company's
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<PAGE> 111
Series A, Series B and Series C Preferred Stock specified in the Restated
Certificate, and as set forth in Exhibit B, there are no options, warrants,
conversion privileges or other rights or agreements presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company and there is no
commitment by the Company to issue shares, options, warrants, convertible
securities or other rights to purchase or otherwise acquire shares of the
Company's capital stock or other securities of the Company. Except as set forth
in Section 45 of the Company's Bylaws and as contemplated by the Agreements or
as provided for in Exhibit B, to the best of the Company's knowledge, there are
no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to securities of the Company (whether or not the Company is a party
thereto). The Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities.
2.5 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) and the performance of the Company's obligations under
the Agreements has been taken or will be taken prior to the First Closing. The
Agreements, when executed and delivered by the Company, will constitute valid
and binding obligations of the Company enforceable in accordance with their
terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors, general equity principles and limitations
upon rights to indemnity. This Agreement has been duly executed and delivered by
the Company. The Shares, when issued in compliance with the provisions of this
Agreement, will be duly and validly issued, fully paid and nonassessable and
will be free and clear of all liens, encumbrances or restrictions imposed by or
through the Company. The Common Stock issuable upon conversion of the Shares has
been duly and validly reserved and, when issued in compliance with the
provisions of the Restated Certificate, will be duly and validly issued, fully
paid and nonassessable and will be free and clear of all liens, encumbrances or
restrictions imposed by or through the Company. The issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) is not subject to any
preemptive rights, rights of first refusal or similar rights that have not been
waived; provided, however, that the Shares (and the Common Stock issuable upon
conversion of the Shares) are subject to a right of first refusal as set forth
in Section 45 of the Company's Bylaws, and may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein.
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<PAGE> 112
2.6 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, other than contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $25,000 individually or $50,000 in the aggregate. For
the purpose of this paragraph, employment and consulting contracts (including
any severance arrangements), license agreements and any other agreements
relating to the acquisition or disposition of the Company's technology (other
than pursuant to the Company's standard form of Proprietary Information and
Inventions Agreement (the "PROPRIETARY INFORMATION AGREEMENT")) shall not be
considered to be contracts entered into in the ordinary course of business. The
Company is not a party to or bound by any judgment, order, writ or decree
restricting or affecting the development, manufacture or distribution of the
Company's products or services or proposed products or services or limiting or
restricting the Company's right to compete with any person in any respect.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation (with or without the
passage of time or giving of notice or both) of any term of the Restated
Certificate or its Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any material order, statute, rule or regulation applicable
to the Company, other than any of the foregoing such violations that do not
impair the Company's ability to enter into or perform its obligations under the
Agreements or which, either individually or in the aggregate, do not have a
Material Adverse Effect. Entering into and performing the Agreements and the
transactions contemplated thereunder by the Company will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to the Company or its properties or business.
2.8 LITIGATION, ETC. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding, investigation,
governmental inquiry, or claim, or any basis therefor or threat thereof, whether
or not purportedly on behalf of the Company, to which the Company is or may be
named as a party or its property is or may be subject or, to the Company's
knowledge, to which any officer, key employee, key consultant, or principal
shareholder of the Company is subject; and the Company has no knowledge (i) of
any unasserted claim, the assertion of which is likely and which, if asserted,
will seek damages, an injunction or other legal, equitable, monetary or
nonmonetary relief, which claim individually or collectively with other such
unasserted claims if granted would have a Material Adverse Effect, or (ii) that
there exists, or there is
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<PAGE> 113
pending or planned, any patent, trademark, tradename, invention, device,
application or principle, or any statute, rule, law, regulation, standard or
code which would result in a Material Adverse Effect. There is no pending or, to
the Company's knowledge and belief, threatened claim or litigation against or
affecting the Company contesting, or which if adversely determined might
materially impair, its right to produce, manufacture, sell or use any product,
process, method, substance, part or other material presently produced,
manufactured, sold or used or planned to be produced, manufactured, sold or used
by the Company in connection with the operations of the Company. The Company has
no current plans to initiate any action, suit or proceeding.
2.9 REGISTRATION RIGHTS. Except as set forth in the Investors' Rights
Agreement, the Company is not under any obligation to register (as defined in
the Investors' Rights Agreement), and has not granted any rights to register,
any of its presently outstanding securities or any of its securities that may
hereafter be issued.
2.10 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it and as proposed to be conducted, the lack of which would have a
Material Adverse Effect. The Company is not in default or violation in any
material respect under any of such franchises, permits, licenses, or other
similar authority, and the execution and delivery of the Agreements will not
result in any such default or violation, with or without the passage of time or
giving of notice or both.
2.11 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) or the consummation of
any other transaction contemplated thereby, except the filing of the Restated
Certificate in the Office of the Secretary of State of the State of Delaware and
the qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the Shares
(and the Common Stock issuable upon conversion of the Shares) under the
California Corporate Securities Law, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the First Closing.
2.12 DISCLOSURE. The Company has provided each Purchaser with all the
information reasonably available to it without undue expense that such Purchaser
has requested or could reasonably be expected to be material in deciding whether
to purchase the Shares. The Agreements and the Exhibits thereto as well as any
other document, certificate, schedule, financial, business or other statement
furnished to such Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby,
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<PAGE> 114
including, without limitation, the Business Plan dated January 8, 1996, do not
contain any untrue statement of a material fact and do not omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading; provided, however, that with respect to any projections,
expressions of opinion, forecasts, predictions or the like (collectively,
"Projections") contained in such Business Plan, the Company represents only that
such Projections were made in good faith and that the Company believes there is
a reasonable basis therefor.
2.13 OFFERING. Subject to the accuracy of the representations set forth in
Section 3 hereof, the offer, sale and issuance of the Shares pursuant to this
Agreement and the issuance of the Common Stock to be issued upon conversion of
the Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemption.
2.14 LIABILITIES. The Company has no indebtedness for borrowed money that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than obligations not in excess of $25,000
individually or in the aggregate. The Company has not assumed, guaranteed,
endorsed or otherwise become directly or contingently liable on any indebtedness
of any other person (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor, or otherwise to assure the
creditor against loss), except for guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business.
2.15 CHANGES. Since December 31, 1995, there has not been:
(a) any change in the assets, liabilities, financial condition, or
operating results of the Company except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
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<PAGE> 115
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(e) to the best of the Company's knowledge, any material change to a
material contract or arrangement by which the Company or any of its assets is
bound or subject;
(f) any material change in any compensation arrangement or agreement
with any employee, consultant, officer, director or shareholder;
(g) any sale, assignment, license or transfer of any patents,
trademarks, copyrights, trade secrets, Proprietary Information (as defined
herein) or other intangible assets;
(h) any resignation or termination of employment of any key officer of
the Company or termination of engagement of any key consultant of the Company;
and the Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer or termination of
engagement of any such consultant;
(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or lien
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the benefit
of any person, other than travel advances to employees and/or consultants and
other advances to employees and/or consultants made in the ordinary course of
its business;
(l) to the best of the Company's knowledge, any other event or
condition of any character that might, individually or in the aggregate,
materially and adversely affect the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(m) any amount borrowed or any liability (absolute, accrued or
contingent) incurred, or to which the Company has become subject, except
liabilities not in excess of $25,000 individually or $50,000 in the aggregate
and except current liabilities incurred
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<PAGE> 116
and liabilities under contracts entered into in the ordinary course of business
which have not been, individually or in the aggregate materially adverse;
(n) any transaction except in the ordinary course of business or as
otherwise contemplated hereby; or
(o) any agreement or commitment by the Company to do any of the things
described in this paragraph 2.15.
2.16 TITLE TO PROPERTIES AND ASSETS; LIENS, LEASES, ETC. The Company has
good and marketable title to its properties and assets and has good title to all
of its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances that do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have not arisen
otherwise than in the ordinary course of business.
Set forth on Exhibit B is a correct and complete list (including the
amount of rents called for and a description of the leased property) of all
material leases (involving more than $25,000 either individually or in the
aggregate if such leases are of a similar nature or with the same lessor) under
which the Company is a lessee. The Company enjoys peaceful and undisturbed
possession under all such leases, all of such leases are valid and subsisting
and, except as would not result in a Material Adverse Effect, the Company and,
to the Company's knowledge, each other party to such leases is not in default
thereunder.
2.17 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, applications for each of
the foregoing, trade names, copyrights, trade secrets, information, proprietary
rights and processes (collectively "PROPRIETARY INFORMATION"), or has, or
believes to the best of its knowledge that it has the ability to acquire on
comercially reasonable terms, valid licenses to such Proprietary Information (as
described further on Exhibit B), as necessary for its business as now conducted
and as proposed to be conducted without any conflict with or infringement of the
rights of others. The Schedule of Exceptions contains a complete list of patents
and pending patent applications of the Company or of which the Company is a
licensee. There are no outstanding options, licenses, or agreements of any kind
relating to Proprietary Information owned by the Company, 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, applications for each of the
foregoing, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company is
not aware of any impropriety with regard to the granting of any licenses of
Proprietary Information to or from the Company, and no claim is pending or, to
the Company's knowledge, threatened to the effect that any such Property
Information owned or licensed by the Company, or which the Company otherwise has
the right to use, is
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<PAGE> 117
invalid or unenforceable by the Company (and to the Company's knowledge, there
is no basis for any such claim). Neither the Company nor, to the Company's
knowledge, any of its employees or consultants has received any written
communications alleging, nor does the Company know of any grounds for any claims
or allegations now or in the future, that the Company or its employees or
consultants has violated or infringed or that the Company or its employees or
consultants would, by conducting its business as proposed, violate or infringe
any of the patents, trademarks, service marks, applications for each of the
foregoing, 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 or consultants 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, in
the case of employees, interfere with the use of such 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 or, in the case of consultants, which would
conflict with their obligations in serving as consultants to the Company. No
third party, including the employers or former employers of the Company's
employees and consultants, has asserted any rights or claims to the Proprietary
Information or any inventions used or proposed to be used in the Company's
business, and the Company does not believe that any such third party has a right
to assert any such rights or claims, except to the extent that such Proprietary
Information or such inventions are licensed to or from such third party. Except
pursuant to the terms of the Proprietary Information Agreements, there are no
agreements, understandings, instruments, or contracts to which the Company is a
party or by which it is bound that involve the license of any patent, copyright,
trade secret or other similar proprietary right to or from the Company.
2.18 TAX RETURNS; TAXES. The Company has accurately prepared and timely
filed all federal, state and other tax returns which are required to be filed
and has timely paid all taxes covered by such returns which have become due and
payable. The Company has not been advised that any of its returns, federal,
state or other, have been or are being audited as of the date hereof. The
Company is not delinquent in taxes or assessments and has no tax deficiency
proposed or assessed and has made no waiver of the statute of limitations
regarding assessments or collections. All taxes, if any, imposed by law in
connection with the issuance, sale and delivery of the Shares shall have been
paid, and all laws imposing such taxes shall have been fully complied with,
prior to the First Closing. Neither the Company nor any of its present or former
stockholders has ever filed an election pursuant to Section 1362 of the Internal
Revenue Code of 1986, as amended (the "Code"), that the Company be taxed as an S
corporation.
2.19 EMPLOYEES. None of the Company's employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the Company's
knowledge, no employee of or
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consultant to the Company is or will be in violation of any judgment, decree, or
order, or any term of any employment contract, patent disclosure agreement,
proprietary information and inventions agreement, or any restrictive covenant,
or any other common law obligation to a former employer, or any other contract
or agreement relating to the relationship of any such person with the Company,
or any other party, or to the use of trade secrets or proprietary information of
others, because of the nature of the business conducted or to be conducted by
the Company or the use by any such employee of his best efforts with respect to
such business or the performance by any such consultant of his obligations to
the Company. To the knowledge of the Company, no third party has claimed or has
reason to claim that any employee of or consultant to the Company has disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or interfered or
may be interfering in the employment relationship between such third party and
any of its present or former employees and, to the Company's knowledge, no such
person proposes to do any of such things. The Company is not a party to or bound
by any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement, other than with respect to the Company's 1996
Stock Plan, a true and correct copy of which has been provided to each
Purchaser. The Company is not aware that any officer, key employee or key
consultant, or that any group of key employees or key consultants, intends to
terminate their employment or consultancy with the Company, nor does the Company
have a present intention to terminate the employment or engagement as a
consultant of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company. The Company has
delivered to counsel for the Purchasers a copy of each consulting agreement to
which it is a party.
2.20 NO DEFAULTS. The Company has, in all material respects, performed all
material obligations required to be performed by it to date and is not in
default under any of the contracts, loans, notes, mortgages, indentures,
licenses, security agreements, agreements, leases, documents, commitments or
other arrangements to which it is a party or by which it is otherwise bound,
except for such defaults which in the aggregate would not have a Material
Adverse Effect, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.
2.21 INSURANCE. The Company maintains adequate insurance on its properties
of a character and in such amounts and on such terms usually insured by
corporations engaged in the same or a similar business against loss or damage
resulting from fire or other risks insured against by such corporations, and
maintains in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or in
connection with the use of any of its properties, products
11
<PAGE> 119
or services and maintains such other insurance as may be required by law or
other agreement to which the Company is a party.
2.22 BROKERS OR FINDERS. The Company has not incurred, and will not incur,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Agreements.
2.23 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.24 NO DIVIDENDS. The Company has never made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.
2.25 EMPLOYEE BENEFIT PLAN OBLIGATIONS. The Company does not maintain or
have any obligations with respect to any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan
within the meaning of Section 3(37) of ERISA.
2.26 QUALIFICATION AS A QUALIFIED SMALL BUSINESS. The Company is a
"qualified small business," as defined in Section 1202(b) of the Internal
Revenue Code (the "Code") and the Shares constitute "qualified small business
stock" as defined in Section 1202(c) of the Code. The Company covenants and
agrees to comply with the reporting and recordkeeping requirements of Section
1202 of the Code and any regulations promulgated thereunder and to execute and
deliver to the Purchasers and the Internal Revenue Service, from time to time,
such forms, documents, schedules and other instruments as may be reasonably
requested thereby to cause the Shares and the shares of Common Stock issuable
upon conversion of the Shares to qualify as a "qualified small business stock,"
as defined in Section 1202(c) of the Code.
2.27 FINANCIAL STATEMENTS. The Company has furnished to the Purchasers the
unaudited balance sheet of the Company as of January 31, 1996 and the related
unaudited statement of income for the period from the Company's inception
through January 31, 1996. All such financial statements fairly present the
financial position of the Company as of January 31, 1996, and the results of
operations during such period.
2.28 TRANSACTIONS WITH AFFILIATES. No director or officer or, to the
Company's knowledge, employee or stockholder of the Company, or, to the
Company's knowledge,
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<PAGE> 120
member of the family of any such person, or, to the Company's knowledge, any
corporation, partnership, trust or other entity in which any such person, or any
member of the family of any such person, has a substantial interest or is an
officer, director, trustee, partner or holder of more than 5% of the outstanding
capital stock thereof, is a party to any material transaction with the Company,
including any contract, agreement or other arrangement providing for the
employment of, furnishing of services by, rental of real or personal property
from or otherwise requiring payments to any such person or firm, other than
employment-at-will arrangements in the ordinary course of business.
2.29 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each of the
officers of the Company, each key employee and each other employee now employed
by the Company who has access to confidential information of the Company has
executed the Proprietary Information Agreement substantially in the form of
Exhibit F (collectively, the "Proprietary Information Agreements"), and such
agreements are in full force and effect. The Company is not aware that any of
such persons is in violation of any such agreement.
2.30 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now and
has never been a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the Regulations
promulgated by the Internal Revenue Service, and the Company has filed with the
Internal Revenue Service all statements, if any, with its United States income
tax returns which are required under Section 1.897-2(h) of such Regulations.
SECTION 3
INVESTMENT REPRESENTATIONS
Each Purchaser, severally and not jointly, hereby represents and warrants
to the Company as follows:
3.1 POWER AND AUTHORITY. Such Purchaser has the requisite power and
authority to enter into this Agreement, to purchase the Shares hereunder, to
convert the Shares into Common Stock, and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding agreement of such Purchaser,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and general equity principles.
13
<PAGE> 121
3.3 EXPERIENCE; ACCREDITED INVESTOR. Such Purchaser has, from time to
time, evaluated investments in start-up companies and has, either individually
or through the personal experience of one or more of its current officers or
partners, experience in evaluating and investing in start-up companies. Such
Purchaser is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act.
3.4 INVESTMENT. Such Purchaser is acquiring the Shares (and any Common
Stock issuable upon conversion of the Shares) for investment for its own account
and not with the view to, or for resale in connection with, any distribution
thereof. Such Purchaser understands that the Shares (and any Common Stock
issuable upon conversion of the Shares) to be purchased have not been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.
3.5 RULE 144. Such Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than two years
after a party has purchased and paid for the securities to be sold, the sale
being through a "BROKER'S TRANSACTION" or in transactions directly with a
"MARKET MAKER" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations. Such
Purchaser is aware that the conditions for resale set forth in Rule 144 have not
been satisfied and that the Company has no plan to satisfy these conditions in
the foreseeable future.
3.6 NO PUBLIC MARKET. Such Purchaser understands that no public market now
exists for the Shares and that a public market may never exist for the Shares.
3.7 DISCLOSURE OF INFORMATION. Such Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Shares. Such Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares.
14
<PAGE> 122
SECTION 4
CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING
Each Purchaser's obligation to purchase the Shares at each Closing, as
applicable, is subject to the fulfillment on or prior to such Closing of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true when made and on and as of the
date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
4.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to such Closing shall have
been performed or complied with in all material respects.
4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Company's business or financial condition or affairs between the
date of this Agreement and the date of such Closing, if different.
4.4 SECURITIES LAWS. The Company shall have obtained all necessary permits
and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Common
Stock issuable upon conversion of the Shares.
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered on the date
of such Closing a certificate signed by the President and Chief Financial
Officer of the Company certifying that the conditions specified in Sections 4.1,
4.2, 4.3, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 have been
fulfilled.
4.6 OPINION OF COUNSEL. The Purchasers purchasing shares in such Closing
shall have received from Cooley Godward Castro Huddleson & Tatum, counsel for
the Company, an opinion dated as of such Closing in substantially the form
attached hereto as Exhibit G.
4.7 INVESTORS' RIGHTS AGREEMENT. The Company shall have executed and
delivered the Investors' Rights Agreement.
4.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at such Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchasers' counsel,
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<PAGE> 123
which shall have received all such counterpart original and certified or other
copies of such documents as it may reasonably request.
4.9 SUPPORTING DOCUMENTS. The Purchasers purchasing shares in such Closing
and their counsel shall have received copies of the following documents:
(i) (A) the Certificate of Incorporation of the Company,
certified as of a recent date by the Secretary of State of the State of
Delaware and (B) a certificate of said Secretary dated as of a recent
date as to the due incorporation and good standing of the Company, the
payment of all excise taxes by the Company and listing all documents of
the Company on file with said Secretary.
(ii) a certificate of the Secretary or an Assistant Secretary
of the Company dated the date of such Closing and certifying: (A) that
attached thereto is a true and complete copy of the Bylaws of the
Company as in effect on the date of such certification; (B) that
attached thereto is a true and complete copy of all resolutions adopted
by the Board of Directors or the stockholders of the Company
authorizing the execution, delivery and performance of the Agreements,
the issuance, sale and delivery of the Shares, and the reservation,
issuance and delivery of the shares of Common Stock issuable upon
conversion of the Shares, and that all such resolutions are in full
force and effect and are all the resolutions adopted in connection with
the transactions contemplated by the Agreements; (C) that the
Certificate of Incorporation has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to
clause (i)(B) above, except for the filing of the Restated Certificate;
and (D) to the incumbency and specimen signature of each officer of the
Company executing the Agreements, the stock certificates representing
the Shares and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate
referred to in this clause (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Company
as the Purchasers or their counsel reasonably may request.
4.10 MANAGEMENT RIGHTS AGREEMENTS. The Company shall have executed and
delivered the Management Rights Agreements to those Purchasers participating in
such Closing who have made a request to the Company therefor and are subject in
any manner with respect to their investment in the Company to ERISA.
4.11 VOTING AGREEMENT. The Company and the other parties thereto shall
have executed and delivered the Voting Agreement.
16
<PAGE> 124
4.12 AMENDMENT TO EMPLOYMENT AGREEMENT. Timothy J. Rink and the Company
shall have entered into an amendment (the "EMPLOYMENT AMENDMENT") to the terms
of his employment arrangements with the Company in a form satisfactory to Dr.
Rink, the Purchasers and their counsel, and a copy thereof shall have been
delivered to counsel for the Purchasers.
4.13 CHARTER. The Certificate of Incorporation of the Company shall read
in its entirety as set forth in Exhibit A.
4.14 BYLAWS. The Company's Bylaws shall have been amended, if necessary,
to provide that (i) any three directors shall have the right to call a meeting
of the Board of Directors and (ii) the number of directors fixed in accordance
therewith shall in no event conflict with any of the terms or provisions of the
Series A Preferred Stock. Series B Preferred Stock and Series C Preferred Stock
as set forth in the Restated Certificate.
4.15 PROPRIETARY INFORMATION AGREEMENTS. Copies of the Proprietary
Information Agreements shall have been delivered to counsel for the Purchasers.
4.16 ELECTION OF DIRECTORS. The number of directors constituting the
entire Board of Directors shall have been fixed at seven (7) and the following
persons shall have been elected as the directors and shall each hold such
position as of the First Closing: Timothy J. Rink and Lubert Stryer, as the
directors elected solely by the holders of the Common Stock, and Kevin J.
Kinsella, Timothy J. Wollaeger, Stephen Bunting, James C. Blair and Hugh Y.
Rienhoff, Jr., as the directors elected solely by the holders of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.
4.17 CERTIFICATE AS TO DISQUALIFIED PERSONS. The Company shall have
executed and delivered to New Enterprise Associates VI, Limited Partnership
("NEA VI") a Certificate as to Disqualified Persons, as requested by NEA VI,
dated the Closing Date, in form and substance satisfactory to NEA VI.
4.18 FEES OF PURCHASERS' COUNSEL. The Company shall have paid in
accordance with Section 6.5 the reasonable fees and disbursements of Testa,
Hurwitz and Thibeault in connection with this Agreement and related transactions
as specified on a reasonably detailed invoice, detailing all time entries and
costs, submitted to counsel to the Company a reasonable time in advance of such
Closing.
17
<PAGE> 125
SECTION 5
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The Company's obligation to issue and sell the Shares at each Closing
is subject to the fulfillment on or prior to such Closing of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchasers contained in Section 3 shall be true when made and on and as
of the date of such Closing with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the date of such
Closing shall have been performed or complied with in all respects.
SECTION 6
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by residents of California.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
provided, however, that the rights of the Purchasers to purchase the Shares
shall not be assignable (other than to a corporation a majority of whose
outstanding voting shares are owned or controlled, directly or indirectly, by
the Purchaser) without the consent of the Company, and the Company's obligations
hereunder shall not be assignable without the consent of the Purchasers.
6.3 ENTIRE AGREEMENT. This Agreement, its Exhibits, 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.
6.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or mailed
by registered or
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<PAGE> 126
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, to the address set forth on Schedule A hereto,
or at such other address as shall have been furnished to the Company in writing
by such Purchaser, or (b) if to the Company, one copy to its address set forth
above and addressed to the attention of the President, or at such other address
or addresses as the Company shall have furnished in writing to the Purchasers,
and one copy to Cooley Godward Castro Huddleson & Tatum, 4365 Executive Drive,
Suite 1100, San Diego, CA 92121, Attn: Thomas A. Coll, Esq. All notices and
other communications pursuant to the provisions of this Section 6.4 shall be
deemed delivered when mailed or sent by facsimile or delivered by hand or
messenger. Notwithstanding the foregoing, any notice or communication to an
address outside the United States shall be sent by facsimile and confirmed in
writing contemporaneously sent by two-day guaranteed international courier.
6.5 EXPENSES. Each party to this Agreement shall bear its own expenses
and legal fees incurred by it with respect to this Agreement and all related
transactions; provided, however, that the Company shall pay the reasonable fees
and expenses of the Purchasers' special counsel, Testa, Hurwitz and Thibeault,
in connection with this Agreement and such transactions and any subsequent
amendment, waiver, consent or enforcement thereof.
6.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
6.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is 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.
6.8 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations
and warranties made herein or in the other Agreements, or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with the
Agreements, shall survive the execution and delivery of the Agreements, the
issuance, sale and delivery of the Shares, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares, and all
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
6.9 BROKERAGE. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for brokerage or other commissions
relative to this
19
<PAGE> 127
Agreement or to the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.
6.10 AMENDMENTS. This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of the Company and
the holders of at least two-thirds of the shares of Common Stock issued or
issuable upon conversion of the Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
<PAGE> 128
The foregoing Preferred Stock Purchase Agreement is hereby executed as
of the date first above written.
THE COMPANY:
AURORA BIOSCIENCES CORPORATION
By: __________________________
Title: _______________________
THE PURCHASERS:
AVALON MEDICAL PARTNERS, L.P.
By: __________________________
Title: _______________________
AVALON BIOVENTURES II, L.P.
By: __________________________
Title: _______________________
21
<PAGE> 129
KINGSBURY CAPITAL PARTNERS, L.P. II
By: Kingsbury Associates, L.P.
By: __________________________
Title: General Partner
ABINGWORTH BIOVENTURES SICAV
By: __________________________
Title: _______________________
NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership,
its General Partner
By: __________________________
Title: General Partner
NEA VENTURES 1996, L.P.
By: __________________________
Title: Authorized Signatory
22
<PAGE> 130
DP III ASSOCIATES, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: __________________________
General Partner
DOMAIN PARTNERS III, L.P.
By: One Palmer Square Associates III, L.P.,
its General Partner
By: __________________________
General Partner
BIOTECHNOLOGY INVESTMENTS LIMITED
By: Old Court Limited
By: __________________________
Attorney - in - Fact
PACKARD INSTRUMENT COMPANY, INC.
By: __________________________
Title: _______________________
[SIGNATURE PAGE FOR PREFERRED STOCK PURCHASE AGREEMENT]
23
<PAGE> 131
SEQUANA THERAPEUTICS, INC.
By: __________________________
Title: _______________________
GC&H INVESTMENTS
By: __________________________
Title: _______________________
______________________________
KEVIN J. KINSELLA
______________________________
ROGER Y. TSIEN
______________________________
THERESA E. GLOBE
______________________________
CHARLES S. ZUKER
24
<PAGE> 132
______________________________
MICHAEL G. ROSENFELD
______________________________
JOHN A. PORCO, JR.
______________________________
LUBERT STRYER
______________________________
ANDREA S. STRYER
______________________________
WALTER LUETOLF
FOR ADRIAN J.R. LANGINGER
______________________________
NORMAND F. SMITH
______________________________
HUGH Y. RIENHOFF, JR.
______________________________
JANICE THOMPSON
25
<PAGE> 133
THE GREENE FAMILY TRUST
By: __________________________
HOWARD E. GREENE, JR., TRUSTEE
By: __________________________
ARLINE GREENE, TRUSTEE
______________________________
TIMOTHY J. RINK
HAMBRECHT & QUIST GROUP
By: __________________________
Dennis J. Purcell
Title: _______________________
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<PAGE> 134
SCHEDULE A
PURCHASERS OF PREFERRED STOCK
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVALON MEDICAL PARTNERS L.P. $424,998.84 319,548 Ser A $1.33 CD
1020 Prospect Street, Suite 405
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
AVALON BIOVENTURES II L.P. 499,998.87 375,939 Ser A $1.33 CD
1020 Prospect Street, Suite 405
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
KINGSBURY CAPITAL PARTNERS, L.P. II 999,999.07 751,879 Ser A $1.33 C/W
3655 Nobel Drive, Suite 490
San Diego, CA 92122
Fax: (619) 677-0800
- ---------------------------------------------------------------------------------------------------------------------------------
ABINGWORTH BIOVENTURES SICAV 3,499,998.74 2,631,578 Ser A $1.33 C/W
c/o Sanne & Cie
Boite Postale 566
L-2015 Luxemberg
Attn: Karl Sanne
Fax: 352-43-54-10
with a copy to:
Stephen Bunting
Abingworth Management Ltd.
26 St. James Street
London SW1A1HA
Fax: 44-171-930-1891
Daniel P. Finkelman
Testa Hurwitz & Thibeault
125 High Street
Boston, MA 02110
Fax: (617) 248-7100
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 135
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEW ENTERPRISE ASSOCIATES VI 2,749,999.77 2,067,669 Ser A $1.33 C/W
LIMITED PARTNERSHIP
1119 St. Paul Street
Baltimore, MD 21202
Fax: (410) 752-7721
- ---------------------------------------------------------------------------------------------------------------------------------
NEA VENTURES 1996, L.P. 9,998.94 7,518 Ser A $1.33 C/W
1119 St. Paul Street
Baltimore, MD 21202
Fax: (410) 752-7721
- ---------------------------------------------------------------------------------------------------------------------------------
DP III ASSOCIATES, L.P. 95,301.15 71,655 Ser A $1.33 C/W
One Palmer Square, Suite 515
Princeton, NJ 08542
Fax: (609) 683-9789
- ---------------------------------------------------------------------------------------------------------------------------------
DOMAIN PARTNERS III., L.P. 2,754,698.66 2,071,202 Ser A $1.33 C/W
One Palmer Square, Suite 515
Princeton, NJ 08542
Fax: (609) 683-9789
- ---------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY INVESTMENTS LIMITED 1,899,999.43 1,428,571 Ser A $1.33 C/W
One Palmer Square, Suite 515
Princeton, NJ 08542
Fax: (609)683-9789
- ---------------------------------------------------------------------------------------------------------------------------------
KEVIN J. KINSELLA 49,998.69 37,593 Ser A $1.33 C/W
Avalon Ventures
1020 Prospect Street, Suite 405
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
ROGER Y. TSIEN 199,500.00 150,000 Ser A $1.33 C/W
8535 Nottingham Place
La Jolla, CA 92037
Fax: (619) 534-5270
- ---------------------------------------------------------------------------------------------------------------------------------
THERESA E. GLOBE 50,540.00 38,000 Ser A $1.33 C/W
142 Bessborough Drive
Toronto, Ontario M4G3J6
Fax: (416) 864-3361
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 136
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CHARLES S. ZUKER 79,800.00 60,000 Ser A $1.33 C/W
UCSD
Cellular & Molecular Medicine West
La Jolla, CA 92037
Fax: (619) 534-8510
- ---------------------------------------------------------------------------------------------------------------------------------
MICHAEL G. ROSENFELD 29,999.48 22,556 Ser A $1.33 C/W
UCSD
Eukaryotic Regulatory Biology Program
Room 345 C.M.M.
9500 Gilman Drive
La Jolla, CA 92093
Fax: (619) 534-8180
- ---------------------------------------------------------------------------------------------------------------------------------
JOHN A. PORCO, JR. 4,999.47 3,759 Ser A $1.33 C/W
Argonaut Technologies, Inc.
887-G Industrial Rd., Ste. G
San Carlos, CA 94070-3305
Fax: (415) 598-1359
- ---------------------------------------------------------------------------------------------------------------------------------
LUBERT STRYER 37,499.35 28,195 Ser A $1.33 C/W
843 Sonoma Terrace
Stanford, CA 94305
Fax: (415) 498-5351
- ---------------------------------------------------------------------------------------------------------------------------------
ANDREA S. STRYER 37,499.35 28,195 Ser A $1.33 C/W
843 Sonoma Terrace
Stanford, CA 94305
Fax: (415) 498-5351
- ---------------------------------------------------------------------------------------------------------------------------------
ADRIAN J.R. LANGINGER 53,200.00 40,000 Ser A $1.33 C/W
c/o WALTER LUTOLF
ATAG Vermogensverwaltung AG
8022 Zurich
Bleicherweg 21
Postfach 5272
Fax: 01-202 33 49
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GC&H INVESTMENTS 49,998.69 37,593 Ser A $1.33 C/W
Cooley Godward Castro Huddleson & Tatum
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Fax: (619) 453-3555
- ---------------------------------------------------------------------------------------------------------------------------------
NORMAND F. SMITH 24,998.68 18,796 Ser A $1.33 C/W
Perkins, Smith & Cohen
One Beacon Street
Boston, MA 02108-3106
Fax: (617) 854-4040
- ---------------------------------------------------------------------------------------------------------------------------------
HUGH Y. RIENHOFF, JR. 4,999.47 3,759 Ser A $1.33 C/W
New Enterprise Associates
1119 St. Paul Street
Baltimore, MD 21202
Fax: (410) 752-7721
- ---------------------------------------------------------------------------------------------------------------------------------
JANICE THOMPSON 9,998.94 7,518 Ser A $1.33 C/W
P.O. Box 3471
16360 La Gracia
Rancho Santa Fe, CA 92067
Fax: (619) 756-4320
- ---------------------------------------------------------------------------------------------------------------------------------
THE GREENE FAMILY TRUST 24,998.68 18,796 Ser A $1.33 C/W
C/O HOWARD E. GREENE, JR.
9373 Towne Centre Drive
San Diego, CA 92121
Fax: (619) 552-2212
- ---------------------------------------------------------------------------------------------------------------------------------
TIMOTHY J. RINK 24,998.68 18,796 Ser A $1.33 C/W
5666 La Jolla Boulevard, #5
La Jolla, CA 92037
Fax: (619) 454-5329
- ---------------------------------------------------------------------------------------------------------------------------------
PACKARD INSTRUMENT COMPANY, INC. 999,999.00 555,555 Ser B $1.80 C/W
800 Research Parkway
Meriden, CT 06450
Fax: (203) 235-1347
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SEQUANA THERAPEUTICS, INC. 1,500,000.00 750,000 Ser C $2.00 C/W
11099 North Torrey Pines Rd., Ste. 160
La Jolla, CA 92037
Fax: (619) 452-6653
- ---------------------------------------------------------------------------------------------------------------------------------
HAMBRECHT & QUIST GROUP 499,998.60 277,777 Ser B $1.80 C/W
230 Park Ave., 21st Fl.
New York, NY 10169
Attn: Dennis J. Purcell
Fax: (212) 207-1519
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS $16,618,020.55 11,822,447
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 "C/W" indicates check or wire transfer; "CD" indicates cancellation of
indebtedness.
<PAGE> 139
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
<PAGE> 140
EXHIBIT B
SCHEDULE OF EXCEPTIONS
<PAGE> 141
EXHIBIT C
INVESTORS' RIGHTS AGREEMENT
<PAGE> 142
EXHIBIT D
FORM OF MANAGEMENT RIGHTS LETTER
<PAGE> 143
EXHIBIT E
FORM OF VOTING AGREEMENT
<PAGE> 144
EXHIBIT F
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
<PAGE> 145
EXHIBIT G
FORM OF LEGAL OPINION OF COMPANY COUNSEL
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.22
COLLABORATIVE RESEARCH
AND LICENSE AGREEMENT
between
BRISTOL-MYERS SQUIBB PHARMACEUTICAL RESEARCH INSTITUTE
and
AURORA BIOSCIENCES CORPORATION
<PAGE> 2
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS AGREEMENT is entered into as of the Effective Date (as defined
below) by and between BRISTOL-MYERS SQUIBB PHARMACEUTICAL RESEARCH INSTITUTE, a
division of E.R. Squibb & Sons, Inc., a Delaware corporation, having offices at
Route 206 at Province Line Road, P.O. Box 4000, Princeton, New Jersey
08543-4000 ("BMS"), and between AURORA BIOSCIENCES CORPORATION, a Delaware
corporation having offices at 11149 North Torrey Pines Road, La Jolla,
California 92037 ("Aurora").
RECITALS
WHEREAS, Aurora has expertise in the development of automated
ultra-high throughput screening systems and screening biologies/chemistries
used therein; and
WHEREAS, Aurora has the scientific expertise and capacity to undertake
the alliance activities described below; and
WHEREAS, BMS has the capability to undertake screening and development
of drug products for the prevention, treatment and diagnosis of diseases and
disorders.
NOW, THEREFORE, in consideration of the foregoing premises and of the
covenants, representations and agreements set forth below, the parties agree as
follows:
1.0 DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Acceptance" has the meaning set forth in section 2.1.3.
"Activity" means, with ***
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of another Person
if it/he/she owns, or directly or indirectly controls, more than fifty percent
(50%) of the voting securities (or comparable equity interests) or other
ownership interests of the other Person, or if it/he/she directly or indirectly
possesses the power to direct or cause the direction of the management or
policies of the other Person, whether through the ownership of voting
securities, by contract or any other means whatsoever.
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
"Agreement" means this agreement, together with all appendices,
exhibits and schedules hereto, and as the same may be amended or supplemented
from time to time hereafter by a written agreement duly executed by authorized
representatives of each party hereto.
"Analog" of a compound shall mean any other compound created by or for
BMS in which ***
"Aurora Copyrights" means all copyright rights ***
"Aurora Patent Rights" means the Aurora Reporter System Patent Rights
and the Aurora UHTSS Patent Rights.
"Aurora Reporter System Technology" means all Technology ***
"Aurora Reporter System Patent Rights" means all Patent Rights which
are owned by or come under the Control of Aurora or its Affiliates during the
term of this Agreement which relate to the Reporter System or to the full
exercise of the rights and benefits accorded BMS under this Agreement
pertaining to the Reporter System.
"Aurora Technology" means the Aurora Reporter System Technology and
the Aurora UHTSS Technology.
"Aurora UHTSS Patent Rights" means all Patent Rights ***
"Aurora UHTSS Technology" means all Technology under the Control of
Aurora or any of its Affiliates during the term of this Agreement which relates
to the UHTSS or to the full exercise of the rights and benefits accorded BMS
under this Agreement pertaining to the UHTSS.
"BMS Materials Library" means the ***
"BMS Test Materials" means samples selected by BMS from its Materials
Library.
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
"Confidential Information" means all information, compounds, data, and
materials received by either party from the other party pursuant to this
Agreement and all information, compounds, data, and materials developed in the
course of the Collaboration, including, without limitation, Know-How and
Technology of each party, subject to the exceptions set forth in Article 9.1.
"Contract Term" means the period beginning on the Effective Date and
ending on the date on which this Agreement terminates.
"Control" means possession by a party or its Affiliates of the ability
to grant a license or sublicense or to provide Materials or Technology in
accordance with the terms of this Agreement, and without violating the terms of
any agreement by such party with any Third Party.
"Covered Product" means a Product approved for marketing in a country
for the diagnosis, treatment or prevention of human disease indications, other
than a Product:
***
"Deliverables" has the meaning set forth in section 2.1.2.1 hereof.
"Development Phases" has the meaning set forth in section 2.1.2.1
hereof.
***CONFIDENTIAL TREATMENT REQUESTED
3
<PAGE> 5
"Drug Development Program" means that program conducted by BMS at its
cost and in the exercise of its sole and absolute discretion pertaining to the
pre-clinical and clinical development, regulatory filings, and
commercialization of a Lead Compound.
"Effective Date" means the date that this Agreement is executed by the
last party to so execute.
"Exclusive Screening Program" or "ESP" and "Exclusive Screen" shall
have the meanings set forth in section 3.1.
"FDA" shall mean the United States Food and Drug Administration, or
any successor agency having regulatory jurisdiction over the manufacture,
distribution and sale of drugs in the United States, and its counterpart(s) in
other countries of the world.
"Field" means the use of a compound, Material, or Product by BMS ***
"First Commercial Sale" of a Covered Product shall mean the first
commercial sale for use or consumption of such Covered Product in a country
after required marketing and, if applicable, pricing approval has been granted
by the applicable regulatory authority(ies) of such country.
"Hit" means any BMS Test Material:
***
"IND" means an Investigational New Drug application filed with the
United States Food and Drug Administration ("FDA") or its equivalent, and any
corresponding application filed in any country other than the United States.
"Invention" means any new and useful process, machine, manufacture, or
composition of matter, or improvement thereto, whether or not patentable.
***CONFIDENTIAL TREATMENT REQUESTED
4
<PAGE> 6
"Know-How" means all information and data which is not generally known
to the public, including without limitation, information or data either
pertaining to or comprising: materials and chemicals, Inventions, designs,
concepts, algorithms, formulae, software in any stage of development, supplies,
techniques, practices, machinery and equipment, reagents, processes, methods,
knowledge, know-how, skill, experience and expertise, data (including
preclinical, clinical, technical, analytical, and quality control data),
technical information, patent application data or descriptions, and marketing,
sales and manufacturing data.
"Lead Compound" means a Hit approved by BMS for development in a Lead
Compound Development Program or an Analog of such Lead Compound.
"Lead Compound Development Program" means that program, conducted by
or through BMS for the further characterization and pre-clinical development of
a Lead Compound ***
"Manufacturing Cost" shall mean ***
"Materials" shall mean any material having a biological or chemical
activity, including, but not limited to, reagents, probes, structural genes,
genetic sequences, promoters, enhancers, probes, linkage probes, vectors,
plasmids, transformed cell lines, transgenic animals, proteins and fragments
thereof, peptides, biological modifiers, antigens, antibodies, cell lines,
antagonists, agonists, inhibitors, chemicals, compounds, and other biologically
or chemically active materials or substances.
"NDA" means a New Drug Application or Product License Application, as
appropriate, and all supplements filed pursuant to the requirements of the FDA,
including all documents, data and other information concerning Covered Products
which are necessary for full FDA approval to market a Covered Product, or the
equivalent in any other country.
"Net Sales" of a Covered Product shall mean ***
*** CONFIDENTIAL TREATMENT REQUESTED
5
<PAGE> 7
***
"Nonexclusive Screening Program", "NSP", and "Nonexclusive Screen"
have the meanings set forth in section 3.2 hereof.
*** CONFIDENTIAL TREATMENT REQUESTED
6
<PAGE> 8
"Patent Rights" means all U.S. or foreign (including regional
authorities such as the European Patent Office) regular or provisional patent
applications, including any continuation, continuation-in-part, or division
thereof or any substitute application therefor or equivalent thereof, and any
patent issuing thereon, including any reissue, reexamination or extension
thereof and any confirmation patent or registration patent or patent of
additions based on any such patent, containing one or more claims to an
Invention (and in the case of an issued patent, containing one or more Valid
Claims), and which a party hereto owns or Controls, individually or jointly,
any title thereto or rights thereunder.
"Person" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority, or any other form of entity not
specifically listed herein.
"PLP" means ***
"Product" means any final form or dosage of any drug product that
incorporates a Lead Compound and that will be sold or used within the Field.
"Reporter System" mean a ***
"Royalty Term" means, in the case of any Covered Product ***
*** CONFIDENTIAL TREATMENT REQUESTED
7
<PAGE> 9
***
"Software" has the meaning set forth in Exhibit 4.1.
"Specifications" of the UHTSS shall have the meaning set forth in
section 2.1 hereof.
"Technology" means and includes all inventions, equipment, supplies,
materials (including Materials), software in any stage of development,
technology, Know-How, and trade secrets.
"Territory" means all countries of the world.
"Third Party" means any entity other than (i) Aurora and any of its
Affiliates, and (ii) BMS and any of its Affiliates.
"Third Party Contractee" and "Aurora-Third Party Contracts" have the
meanings set forth in section 11.2.6.
"*** License" means Exclusive License Agreement for *** between Aurora
***a *** (as the same may be amended or supplemented hereafter).
"UHTSS" means the *** .
"UHTSS Target Delivery Date" has the meaning set forth in section
2.1.2.1 hereof.
"Valid Claim" means: (a) an issued claim under an issued patent
within the Patent Rights, which has not (i) expired or been canceled, (ii) been
declared invalid by an unreversed and unappealable decision of a court or other
appropriate body of competent jurisdiction, (iii) been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise, and/or (iv) been
abandoned in accordance with or as permitted by the terms of this Agreement or
by mutual written agreement; or (b) a claim included in a pending patent
application within the Patent Rights that is being actively prosecuted in
accordance with this Agreement and which has not been (v) canceled, (vi)
withdrawn from consideration, (vii) finally determined to be unallowable by the
applicable governmental authority for whatever reason (and from which no appeal
is or can be taken), and/or (viii) abandoned in accordance with or as permitted
by the terms of this Agreement or by mutual written consent.
***CONFIDENTIAL TREATMENT REQUESTED
8
<PAGE> 10
2.0 COLLABORATIVE RESEARCH AND TECHNOLOGY TRANSFER
Aurora and BMS shall collaborate on the development of the UHTSS and
the transfer of the Aurora Technology to BMS, as follows:
2.1 UHTSS Development. Aurora will develop the UHTSS in
collaboration with BMS and in accordance with the terms of this Agreement
(including the work plan and Specifications set forth in Exhibit 1.1 attached
hereto and the development phases set forth below). Aurora will be
responsible for the design, development, manufacture, supply, delivery and
installation of the UHTSS, and will use its best efforts to complete same
within the time frames for each Development Phase set forth below. The
Specifications for the Deliverables to be provided by Aurora, as customized for
BMS, are set forth in Exhibit 1.1 hereto, and may be changed or supplemented
hereafter by mutual written agreement. The parties agree to diligently review
such Specifications from time to time in order to ensure that the
Specifications for the UHTSS will meet the reasonable needs of commercial users
and the specific customizations required by BMS.
2.1.1 Project Management. Each party will designate an employee who
will serve as the principal contact point for such party in order to
ensure due coordination of the effort in the development,
installation, training, and use of the UHTSS. The parties will meet
and confer as needed, but in any event not less frequently than
quarterly, at a location to be chosen by each party alternately to
discuss the development of the UHTSS and resolution of any ongoing
issues. Aurora shall also submit progress reports at such time(s) as
BMS may reasonably request, but in any event will provide a quarterly
written update of its work on the development of the UHTSS (including
discussion of any significant problems encountered and significant
changes in strategy or design). If requested by BMS, such
progress/update reports will detail work performed to date and
estimated time to complete a Development Phase. The parties will
also consult with each other as needed to evaluate and recommend
scientific criteria to be implemented within the UHTSS and the
Exclusive Screening Program.
From time to time during the term of this Agreement, BMS
representatives shall have the right, upon reasonable advance notice
to Aurora and its contractors, to visit the facilities where the UHTSS
development is being performed in order to verify the stage of
completion of the work performed under a schedule and audit compliance
with the terms of this Agreement.
Individuals assigned by Aurora to perform work hereunder at BMS'
premises shall observe the business hours, policies, security rules
and holiday schedule of BMS while working on its premises. Adherence
to BMS' business hours and holiday schedules shall not constitute
justification for the failure to deliver conforming Deliverables
within the applicable time frames.
2.1.2 Development Phases; Priority; Delivery.
9
<PAGE> 11
2.1.2.1 Development Phases. Aurora will design and develop
the UHTSS in accordance with the following development phases
("Development Phases"), as more fully described in Exhibit 1.1
hereto. Aurora will develop and install the deliverables
("Deliverables") contemplated by each such Development Phase
(all such Deliverables for a Development Phase comprising a
"Module") not later than the dates set forth below (each such
date referred to as a "UHTSS Target Delivery Date"):
i) ***
ii) ***
iii) ***
It is understood and agreed that BMS' input on the
design and use of such Modules is an essential element of this
collaboration, and the parties will cooperate to ensure that
such input is solicited and provided on a timely basis. The
parties will cooperate in integrating such Modules and the
Deliverables developed under each Development Phase into the
then current BMS high throughput screening environment until
such time as the UHTSS is fully completed and installed at
BMS, and Aurora will provide BMS with assistance and support
in the use and maintenance of such Modules and Deliverables in
such environment without additional charge (other than the
payments otherwise due under this Agreement).
Aurora will further provide onsite transfer of the Aurora
UHTSS Technology to BMS personnel during the installation and
Acceptance Testing of each Module to be delivered hereunder to
assure BMS' ability to fully operate and maintain the UHTSS
and such Modules. In addition, within a reasonable time
after the Effective Date, Aurora will schedule training
classes, including course materials, for BMS personnel with
respect to the use of the Aurora UHTSS Technology. The number
of such individuals as shall be jointly determined by BMS and
Aurora, but shall be a number sufficient to allow for BMS to
effect rapid scale-up in its use of the Aurora UHTSS
Technology. If more individuals need to be trained than can
be reasonably accommodated in the first training session, the
parties will jointly schedule additional sessions as
reasonably necessary. Each party will bear its own costs in
connection with such training sessions.
All such Modules and other Deliverables to be sold by Aurora
and purchased by BMS hereunder shall be subject to the terms
and conditions of this Agreement, and the parties hereby agree
that the terms and conditions of this Agreement shall
***CONFIDENTIAL TREATMENT REQUESTED
10
<PAGE> 12
supersede and control any conflicting terms in any purchase
order, acknowledgment, invoice, shipping document, or other
preprinted form issued by either party relating to the
purchase and sale of the Modules and any other Deliverables
hereunder.
2.1.2.2 Priority. In allocating its internal resources,
Aurora agrees that BMS will be entitled to priority status
over any Third Party with regard to the development,
manufacture, delivery and installation of the UHTSS.
2.1.2.3 Shipment, Delivery and Installation. Aurora shall be
responsible at its expense for appropriately packaging and
transporting all Deliverables to BMS, all of which shall be
delivered F.O.B. the BMS facility designated by BMS at time of
shipment. All risk of damage or loss to any Deliverable for
whatever reason shall rest with Aurora until such item is
safely set upon the loading dock at BMS's installation site,
at which time it shall pass to BMS. Aurora will give BMS not
less than *** days' written notice of any proposed shipment.
Aurora will be responsible for installing all Deliverables,
unless otherwise mutually agreed to in writing. Aurora will
begin such installation within *** working days of delivery and
will use all reasonable efforts to complete same as promptly as
possible thereafter. *** BMS may also elect that the
Deliverables to be provided under the Development Phase for any
Module (and any additional Module ordered by BMS pursuant to
section 2.1.3.2) shall be held by Aurora until such time as BMS
is prepared to receive the applicable Module (in which event
the Acceptance testing for such Module(s) will be conducted at
Aurora in accordance with section 2.1.3.1 hereof and BMS will
pay for the Module(s) that are Accepted by it); ***. The
parties do not expect that any delay in delivery requested by
BMS for the Deliverables relating to a Module should delay
delivery of any Deliverables to be provided for any future
Module to be provided in a subsequent Development Phase;
provided, however, that where Aurora can demonstrate that any
such delay in such delivery requested by BMS will adversely
affect Aurora's ability to meet any such future time line(s)
set forth in sections 2.1.2.1 and 2.1.5.6 hereof, the pertinent
time line(s) shall be extended by the period of delay
demonstrated by Aurora as is reasonably occasioned by BMS'
request to delay delivery.
***CONFIDENTIAL TREATMENT REQUESTED
11
<PAGE> 13
*** Once all such approvals and permits are received, BMS'
right to delay delivery as provided above shall cease, and any
Modules previously Accepted by BMS that are then being held by
Aurora shall be shipped to BMS.
2.1.3 Acceptance Testing.
2.1.3.1 All Deliverables shall be subject to acceptance
testing by BMS to verify whether such Deliverables meet in all
material respects the Specifications for such Deliverables in
Exhibit 1.1 hereto, as the same may be amended or supplemented
in writing by the parties from time to time hereafter. Aurora
representatives shall have the right to be present at any such
acceptance testing conducted by BMS. BMS will consult with
Aurora regarding the acceptance testing, although the nature
and number of the actual tests to be conducted shall be
determined by BMS. If, *** , (i) Aurora is unable to install
at BMS all of the Deliverables required by a Development Phase
(or is unable to install same at Aurora, where BMS has elected
to test the Deliverables relating to a Module at Aurora as
opposed to conducting such tests following installation at BMS)
and (ii) such Deliverables, if installed, do not meet in all
material respects the Specifications for such Deliverables,
*** .
Acceptance testing shall commence by BMS, using such
acceptance tests as BMS considers necessary, to determine
whether the corrected Deliverables meet in all material
respects the Specifications for such Deliverables, as soon as
practicable following installation by Aurora of all
Deliverables to be provided by Aurora for a Module in a
Development Phase (and delivery of written certification by
Aurora to BMS that such Deliverables are ready for testing),
and shall continue for such period of time as may be
reasonably required by BMS for it to determine whether all
such Deliverables meet in all material respects the
Specifications for such Deliverables; provided, however, that
the acceptance testing following installation of all
Deliverables to be provided for a given Module shall not
exceed *** ***; and provided, further, that BMS may elect, on
written notice setting forth the specific and reasonable basis
for same, to extend the acceptance testing required for the
Deliverables for Module Two and/or Module Three by up to an
additional *** ***, in which event the time periods in section
2.1.5.6 shall be
***CONFIDENTIAL TREATMENT REQUESTED
12
<PAGE> 14
extended by the same amount of additional time requested by
BMS for such acceptance testing.
If any Deliverable does not conform in all material respects
to Specifications for such Deliverables, BMS shall so inform
Aurora in writing promptly and cooperate with Aurora in
identifying in what respects the Deliverable(s) have failed to
conform to the Specifications. Aurora will use its best
efforts to promptly correct any deficiencies which prevent
such Deliverable(s) from so conforming to the Specifications.
Upon completion of the corrective action and installation by
Aurora of the revised Deliverable(s), BMS will again conduct
such acceptance tests as BMS considers necessary to determine
whether the corrected Deliverables has successfully conformed
in all material respects to the Specifications for such
Deliverables, and BMS shall be entitled to use the same amount
of time to test such corrected Deliverable as it was entitled
to use with respect to the previous nonconforming
Deliverables.
When BMS has determined that all Deliverables for a Module
have successfully conformed to or satisfied the Specifications
in all material respects (and regardless of whether such
acceptance testing is conducted at BMS or at Aurora), BMS
shall give Aurora written notice thereof ("Acceptance"), in
which event BMS shall become obligated to pay such amounts as
may be triggered under this Agreement as a result thereof.
Upon receipt of payment by BMS, Aurora shall issue a bill of
sale to BMS, the terms of which shall be consistent with the
terms of this Agreement (including without limitation Article
5 hereof), confirming transfer of title to BMS of the Module
and any other Deliverables so purchased by BMS.
2.1.3.2 Upon payment by BMS for the first Module Two to be
installed hereunder, Aurora shall be obligated to sell and
supply to BMS, and BMS will be deemed to have firm ordered, an
identical Module Two to the first one so purchased and accepted
by BMS. Aurora agrees to manufacture and install such second
Module Two at BMS ***. BMS shall have *** to accept or reject
such Module Two, using the same Specifications and Acceptance
procedures as applied to its testing of the initial Module Two
(except that the acceptance tests must be completed *** , and
that BMS shall have only *** to run such tests again if such
Module Two fails to meet the Specifications therefor during the
initial acceptance testing). Upon Acceptance by BMS of such
second Module Two, BMS shall pay to Aurora *** as the purchase
price therefor within *** days thereafter; provided, however,
that if Aurora shall have failed to install a Second Module Two
that meets the Specifications therefor by not later than ***
following payment by BMS of such initial Module Two (without
regard to any event or circumstance otherwise entitling Aurora
to delay performance under section 14.3), then BMS shall be
entitled to ***
***CONFIDENTIAL TREATMENT REQUESTED
13
<PAGE> 15
*** *** *** The second Module Two shall be shipped F.O.B. the
BMS facility designated by BMS. Upon receipt of payment by
BMS, Aurora shall issue a bill of sale to BMS, the terms of
which shall be consistent with the terms of this Agreement
(including without limitation Article 5 hereof), confirming
transfer of title to BMS of the Second Module Two so purchased
by BMS.
2.1.4 Force Majeure Deadline Limitation. Notwithstanding section
14.3, in no event shall any time frame, due date, or deadline arising
under this Agreement with respect to the development, manufacture,
delivery, installation or acceptance of any Module, Deliverable,
Reporter System component, or Exclusive Screen be extended by Aurora,
by reason of an event or circumstance entitling Aurora otherwise to
extend same under section 14.3, beyond the date that is *** following
the applicable time frame, due date, or deadline.
2.1.5 Payments Relating to Development of the UHTSS. BMS will make
the following payments to Aurora in consideration of the development,
completion, purchase, and installation of the UHTSS:
2.1.5.1 A payment of *** shall be made *** in consideration
of the design and development of the UHTSS by Aurora hereunder.
2.1.5.2 A payment of *** shall be made *** of ***
2.1.5.3 A payment of *** shall be made *** of ***
2.1.5.4 A payment of *** shall be made *** BMS of ***
2.1.5.5 In consideration of the design, development,
manufacture, installation and support of the UHTSS, payments of
*** *** shall be made, the first payment to be made ***
occurring after the Effective Date and *** which payments
shall *** provided, however, that:
***CONFIDENTIAL TREATMENT REQUESTED
14
<PAGE> 16
2.1.5.5.1 If BMS shall have *** under the
preceding sentence and a fully operational and
complete UHTSS has not then been installed and
accepted by BMS, Aurora shall continue to develop
an acceptable UHTSS unless and until BMS withdraws
from further development upon written notice to
Aurora as herein provided, and no further payments
shall be due or payable by BMS under this Agreement
*** that ***in respect of such development, supply,
and installation of an acceptable UHTSS and its use by
BMS in accordance with this Agreement.
2.1.5.5.2 If BMS shall have accepted a fully
operational, complete UHTSS ***, BMS shall pay to
Aurora ***.
2.1.5.5.3 If BMS shall have withdrawn from
development of the UHTSS pursuant to section *** or
*** hereof, any payments to be made thereafter
pursuant to *** shall be governed by the terms of
sections ***.
2.1.5.6 In addition to any payments to be made under sections
*** following payments shall be made ***:
2.1.5.6.1 *** or *** BMS will pay *** to
Aurora ***.
2.1.5.6.2 ***, BMS will pay *** to Aurora ***.
2.1.5.6.3 ***.
2.1.5.6.4 The time periods set forth in
sections 2.1.5.6.1-2.1.5.6.3 shall not be extended by
reason of any event of force majeure referred to in
section 14.3.
*** CONFIDENTIAL TREATMENT REQUESTED
15
<PAGE> 17
2.1.6 ***
2.1.7 Withdrawal by BMS From UHTSS Development Without Cause. BMS
may elect at any time prior to Acceptance to cease further
participation in the development of the UHTSS for any reason without
good cause ("good cause" being defined in section 2.1.8), effective
upon written notice of same to Aurora. In such event:
2.1.7.1 Aurora shall be free to continue further development
of the UHTSS at its discretion and expense, and to change the
design or specifications therefor as Aurora shall determine.
2.1.7.2 *** to ***, BMS shall pay to Aurora the sum of *** and
shall not be required to make any further payments under ***;
otherwise, BMS shall pay to Aurora *** so that BMS will have
***.
2.1.7.3 BMS shall pay to Aurora an amount equal to *** of the
milestone payment that would next have been made under section
*** be). Except for such payment (and any payments not
previously made that were then due and owing under any of ***
as of the date of BMS' withdrawal), no further payments under
any of sections *** shall be due or made.
2.1.7.4 *** provided, however, that
2.1.7.4.1 BMS may, for ***, continue to make
and use any one or more Nonexclusive
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Screen(s) and to use any Aurora Patent Rights and
Copyright rights necessary therefor and any Reporters
provided by Aurora in connection therewith, so long as
BMS gives written notice to Aurora, *** as to the
Nonexclusive Screen(s) so elected for such continued
use by BMS and pays Aurora *** for each such
Nonexclusive Screen so elected. No withdrawal under
this section 2.1.7.4 shall affect or relieve BMS of
*** or, to the extent elected by BMS herein, following
such withdrawal; and
2.1.7.4.2 BMS shall be entitled to use
thereafter in internal research (including screening
and drug development) those Accepted components of the
UHTSS as to which BMS has made the payments required
under *** hereof and to exercise a nonexclusive,
irrevocable, and fully paid-up right and license under
any Aurora UHTSS Patent Rights and Aurora UHTSS
Copyrights existing as of the date of such BMS
withdrawal that are needed in connection therewith,
for so long as BMS may conduct such internal research;
and
2.1.7.4.3 No such withdrawal shall affect BMS'
right to continue to make and use thereafter in
internal research (including screening and drug
development) any Exclusive Screen as was developed
prior to the date of such withdrawal or which the
parties may develop thereafter based on any agreement
to develop same that was agreed upon prior to the date
of such withdrawal or otherwise (and to continue to
use any Aurora Patent Rights and Copyrights covering
the manufacture and use of such Exclusive Screen(s)
that are needed for such purpose), for so long as BMS
may conduct such internal research; provided, that ***
payments that BMS would otherwise be obligated to make
*** shall not be affected thereby and shall continue
to be made by BMS; and provided, further, that no such
withdrawal shall affect either party's obligations and
rights under (including without limitation Aurora's
obligation to develop and supply and BMS' right to use
thereafter any Exclusive Screen developed under) any
ESP Work Plan entered into prior to the date of such
withdrawal; and
2.1.7.4.4 No such withdrawal shall limit or
restrict BMS and its Affiliates in any way from
continuing to research, develop, manufacture, use and
sell Hits identified prior to such withdrawal or
which are identified thereafter in accordance with
the rights retained by BMS under this section 2.1.7.4
(and any Lead Compounds, Approved PLP Compounds, and
Products derived from such Hits), and to use any
Aurora
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Patent Rights and Copyrights as may be needed to
make, use and sell same, provided that BMS shall
remain obligated to pay Aurora ***
2.1.7.4.5 In the event such withdrawal occurs
after BMS has ordered, but not yet accepted, the
second Module Two under paragraph 2.1.3.2 hereof,
then the parties shall continue to fulfill their
obligations under such paragraph without regard to
such withdrawal. If accepted, BMS shall be entitled
to use thereafter in internal research (including
screening and drug development) such second Module
Two so long as BMS shall have made the payment *** of
and to exercise a nonexclusive, irrevocable, and
fully paid-up right and license under any Aurora
UHTSS Patent Rights and Aurora UHTSS Copyrights
existing as of the date of delivery of such second
Module Two that are needed in connection therewith,
for so long as BMS may conduct such internal
research.
2.1.7.5 Nothing in this section 2.1.7 is intended to prevent
or restrict, or shall be construed as preventing or
restricting, BMS and its Affiliates from using in any internal
research (including drug development): (i) any Reporters
supplied to BMS by Aurora prior to such withdrawal, or (ii)
any Aurora Technology disclosed to it by Aurora prior to such
withdrawal to the extent that the manufacture, use or sale of
such Aurora Technology is not covered by a Valid Claim under
the Aurora Patent Rights or the Aurora Copyrights; provided,
however, that notwithstanding the foregoing, BMS may not use
in its internal research thereafter any tangible embodiments
of Aurora's Confidential Information pertaining to the Aurora
Reporter System Technology. It is further understood that
nothing in this section 2.1.7 alters any confidentiality
obligations of the parties under this Agreement with respect
to disclosures to Third Parties.
2.1.8 Withdrawal by BMS From UHTSS Development With Cause. In the
event that BMS elects prior to Acceptance to cease further
participation in the development of the UHTSS for good cause (as
defined below), it shall give written notice of same to Aurora. In
such event:
2.1.8.1 Aurora shall be free to continue further development
of the UHTSS and to change the design or specifications
therefor as Aurora shall determine.
2.1.8.2 BMS shall have no obligation to make any remaining
payments (other than payments already due and owing as of the
date of BMS' withdrawal) under *** .
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2.1.8.3 No further payments under any of sections *** -
*** shall be due or made, other than any payments not
previously made that were then due and owing under such
section(s) as of the date of BMS' withdrawal.
2.1.8.4 All Aurora Patent Rights licensed to BMS under
Article 5 hereof shall terminate (other than such Aurora
Patent Rights and Copyright rights as are necessary to allow
BMS to effectuate its rights under sections
2.1.8.4.1-2.1.8.4.5 below), and BMS shall cease thereafter
development of any new Nonexclusive Screens for which the
manufacture or use of same is covered by such Aurora Patent
Rights or Copyrights; provided, however, that
2.1.8.4.1 BMS shall be entitled without
additional charge therefor to continue to make and
use thereafter in its internal research (including
screening and drug development), and to use any
Aurora Patent Rights and Copyright rights needed to
make and use same, any Nonexclusive Screens
incorporating any Reporters provided by Aurora
and/or that covered by any Aurora Patent Rights or
Copyrights where such Nonexclusive Screens were
developed by BMS prior to such withdrawal date, for
so long as BMS may conduct such internal research.
No good cause withdrawal under this section 2.1.8.4
shall affect or relieve BMS of *** or as permitted
hereunder thereafter following such withdrawal; and
2.1.8.4.2. BMS shall be entitled to use
thereafter in internal research (including screening
and drug development) those Accepted components of the
UHTSS as to which BMS has made the payments required
*** and to exercise a nonexclusive, irrevocable, and
fully paid-up right and license under any Aurora UHTSS
Patent Rights and Aurora UHTSS Copyrights existing as
of the date of such BMS withdrawal that are needed in
connection therewith, for so long as BMS may conduct
such internal research; and
2.1.8.4.3 No such withdrawal shall affect BMS'
right to continue to make and use thereafter in
internal research (including screening and drug
development) any Exclusive Screen as was developed
prior to the date of such withdrawal or which the
parties may develop thereafter based on any agreement
to develop same that was agreed upon prior to the
date of such withdrawal or otherwise (and to continue
to use any Aurora Patent Rights and Copyrights
covering the manufacture and use of such Exclusive
Screen(s) for such purpose), for so long as BMS may
conduct such internal research; provided, that any
*** payments that BMS would otherwise be obligated
to make ***
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shall not be affected thereby and shall continue to
be made by BMS; and provided, further, that no such
withdrawal shall affect either party's obligations
and rights under (including without limitation
Aurora's obligation to develop and supply and BMS'
right to use thereafter any Exclusive Screen
developed under) any ESP Work Plan entered into prior
to the date of such withdrawal; and
2.1.8.4.4 No such withdrawal shall limit or
restrict BMS and its Affiliates in any way from
continuing to research, develop, manufacture, use and
sell Hits identified prior to such withdrawal or
which are identified thereafter in accordance with
the rights retained by BMS under this section 2.1.8.4
(and any Lead Compounds, Approved PLP Compounds, and
Products derived from such Hits), and to use any
Aurora Patent Rights and Copyrights as may be needed
to make, use and sell same; provided, that BMS shall
remain obligated to pay Aurora ***
2.1.8.4.5 In the event such withdrawal occurs
after BMS has ordered, but not yet accepted, the
second Module Two under paragraph 2.1.3.2 hereof,
then the parties shall continue to fulfill their
obligations under such paragraph without regard to
such withdrawal. If accepted, BMS shall be entitled
to use thereafter in internal research (including
screening and drug development) such second Module
Two so long as BMS shall have made the payment
*** and to exercise a nonexclusive, irrevocable, and
fully paid-up right and license under any Aurora UHTSS
Patent Rights and Aurora UHTSS Copyrights existing as
of the date of delivery of such second Module Two that
are needed in connection therewith, for so long as BMS
may conduct such internal research.
2.1.8.5 Nothing in this section 2.1.8 is intended to prevent
or restrict, or shall be construed as preventing or
restricting, BMS and its Affiliates from using for any
internal research (including screening and drug development)
purpose, following any such withdrawal with good cause: (i)
any Reporters supplied to it by Aurora prior to the withdrawal
date or (ii) any Aurora Technology disclosed to it by Aurora
prior to the withdrawal date where the manufacture, use or
sale of such Aurora Technology is not covered by a Valid Claim
under the Aurora Patent Rights or Aurora Copyrights. It is
further understood that nothing in this section 2.1.8 alters
any confidentiality obligations of the parties under this
Agreement with respect to disclosures to Third Parties.
***
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***
2.1.9 Syndicate Formation and Limitations. It is anticipated that
Aurora may seek to collaborate with, develop and supply to, and/or
grant certain license rights to Third Parties with respect to the
development, use and/or supply of a UHTSS to such Third Party.
Notwithstanding the foregoing, Aurora covenants and agrees that, so
long as BMS is not in default of any payment obligation hereunder and
has not terminated its participation in the development of the UHTSS,
then, until the date that is *** following the date that BMS
shall have accepted a fully operational, complete UHTSS pursuant to
section 2.1.3., Aurora will not, without BMS' prior written consent,
(A) enter into agreements with more than *** Third Parties (i)
under which Aurora grant a license rights to such Third Party to use
the Aurora UHTSS Patent Rights or Copyrights or Aurora UHTSS
Technology rights so that such Third Party may make or use any ultra-
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<PAGE> 23
high throughput screening system similar to the UHTSS, and/or (ii)
under which Aurora will develop, sell (whether by purchase, financial
lease, lease with option to purchase, or otherwise), and/or supply,
whether (or not) in collaboration with such Third Party or otherwise,
any ultra-high throughput screening system similar to the UHTSS to
such Third Party, and (B) enter into any operating lease for a UHTSS
with a Third Party or license any Aurora UHTSS Technology or Aurora
UHTSS Patent Rights to a Third Party in order to allow such Third
Party to build its own UHTSS without infringing such rights.
Subject to section 2.1.10 (where applicable), nothing in this section
2.1.9 is intended to limit or restrict:
- the number of parties to whom Aurora may supply or grant
licenses with respect to any Reporters, the Aurora Reporter
System Patent Rights, or the Aurora Reporter System
Technology, and/or
- Aurora's ability to provide screening services using the
Aurora Patent Rights and Aurora Technology to Third Parties,
provided that such screening services do not involve a screen
that is exclusive to BMS under section 3.1.2 hereof or
otherwise conflict with any provisions of this Agreement.
***
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***
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<PAGE> 25
***
2.1.10.3 In the event of any dispute between BMS and
Aurora under this section 2.1.10 as to any financial issue or
determination, the parties agree to use non-binding
arbitration first in an effort to resolve any such dispute, as
follows: Aurora shall select a independent accountant
reasonably acceptable to BMS (who is neither Aurora's nor BMS'
normal independent accountant) who will review the facts and
circumstances surrounding the dispute and render an opinion on
such matter. The parties will reasonably cooperate with such
independent accountant's efforts, and will evenly share the
fees and expenses of such independent accountant during the
pendency of such proceedings, with the loser to be responsible
for all such fees and expenses and to reimburse the winner for
its share paid. The independent accountant will execute a
confidentiality agreement with each party prior to obtaining
each party's relevant confidential information and which will
only be used for the purpose of rendering such accountant's
opinion. Neither party shall have any obligation to provide
any information, however, which would effect a waiver of any
privileges available to either party.
2.1.11 Supply of Reporters and Related Reagents/Tools. So long as BMS
has made payments in accordance with section 2.1.12 hereof, then, at
BMS' request, Aurora will supply to BMS, and will use reasonable
efforts to supply same within 30 days after receipt of a written
purchase order therefor, such Reporters then available to Aurora and
other reagents/tools pertaining thereto (e.g., plasmids) as BMS may
require in order to use the Reporter System in a Nonexclusive Screening
Program conducted by BMS. BMS will be charged for all supplies so
delivered at *** . BMS will pay for all supplies so ordered within
*** days after delivery and acceptance by BMS. All such supplies shall
be delivered F.O.B. the destination point designated by BMS. Any
supplies that BMS receives that are damaged, defective or inactive
shall be returned by BMS (or destroyed if so designated by Aurora), and
an appropriate exchange of, or credit or refund for, same shall be made
by Aurora, as BMS may elect.
2.1.12 Payments in Consideration of the Use of the Aurora Reporter
System Technology and Reporter System Patent Rights.
2.1.12.1 Until such time as BMS shall have accepted, if at all,
a fully operational, complete UHTSS in accordance with the provisions
of this Agreement, BMS' right to continue to use any Reporters supplied
by Aurora and to continue to use the Aurora Reporter System Patent
Rights licensed to BMS hereunder shall be conditioned upon the payment
by BMS, at BMS' election annually, to Aurora of *** . If BMS elects to
continue such rights, such amount
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<PAGE> 26
shall be paid *** during each such calendar year. If BMS
affirmatively notifies Aurora that BMS no longer will exercise
such rights or if it fails to make a payment, then BMS' right
to use the Aurora Reporter System Patent Rights licensed to BMS
hereunder shall terminate; provided, that before any such
termination for nonpayment shall be effective, Aurora shall
have first notified BMS in writing of such failure to pay, and
BMS fails within *** days thereafter to pay the amount required
to maintain such rights.
If and once BMS has accepted a fully operational, complete
UHTSS in accordance with the provisions of this Agreement, BMS'
right to continue to use any Reporters supplied by Aurora and
to continue to use the Aurora Reporter System Patent Rights
licensed to BMS hereunder shall be conditioned upon the payment
by BMS, at BMS' election annually, to Aurora of ***. If
BMS so elects to continue such rights, such amount shall be
paid *** during each such calendar year. If BMS affirmatively
notifies that it no longer will exercise such rights or if it
fails to make a payment, then BMS' right to use the Aurora
Reporter System Patent Rights licensed to BMS hereunder shall
terminate; provided, that before any such termination for
nonpayment shall be effective, Aurora shall have first notified
BMS in writing of such failure to pay, and BMS shall have
failed within *** days thereafter to pay the amount required to
maintain such rights.
2.1.12.2 Nothing in this section 2.1.12 is intended to
prevent or restrict, or shall be construed as preventing or
restricting, BMS and its Affiliates from using for any
internal research (including drug development) purpose,
following any termination of rights pursuant to this section
2.1.12: (i) any Reporters supplied to BMS by Aurora prior to
the applicable termination date or (i) any Aurora Technology
disclosed to it by Aurora prior to the applicable termination
date where the manufacture, use or sale of such Aurora
Technology is not covered by a Valid Claim under the Aurora
Patent Rights or by any Aurora Copyrights. It is further
understood that nothing in this section 2.1.12 alters any
confidentiality obligations of the parties under this
Agreement with respect to disclosures to Third Parties.
2.1.13 Option to Purchase Additional UHTSS Components. BMS and its
Affiliates shall have the right to purchase one or more additional
UHTSS's (or any of the components comprising same) from Aurora, and
Aurora agrees to manufacture and supply same, upon issuance of a firm
purchase order to Aurora for same, subject to the following terms and
conditions:
2.1.13.1 Such option may be exercised by BMS for one
or more additional UHTSS's (or any of the components
comprising same) at any time after payment for the first UHTSS
(or the payment for the components comprising same) under
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section 2.1.5 and prior to the date that is ***.
2.1.13.2 The price of each such additional UHTSS (or
component) shall be ***. In the event that the applicable price
is determined by reference to (C)(i) above, Aurora shall
provide reasonable substantiation of such costs to BMS. BMS
will reimburse Aurora for any reasonable shipping, packaging
and insurance costs as are not included within the foregoing
pricing. The UHTSS (and any such components) shall be shipped
F.O.B. such BMS facility as is designated by BMS and shall be
subject to the terms of the purchase order and to the same
terms and conditions, including Acceptance, as are set forth
herein for the initial UHTSS.
2.1.13.3 BMS will pay to Aurora *** of the estimated
purchase price within *** after *** by Aurora, with another ***
to be paid within *** following *** (or applicable components)
covered by the purchase order, and the balance to be paid
within *** same by BMS. Upon receipt of payment by BMS, Aurora
shall issue a bill of sale to BMS, the terms of which shall be
consistent with the terms of this Agreement (including without
limitation Article 5 hereof), confirming transfer of title to
BMS of any such UHTSS component so purchased by BMS
2.1.13.4 All items so ordered by BMS shall be
manufactured by Aurora and delivered to BMS not later than
*** following receipt of the purchase order for same from BMS;
provided, that the delivery date for such additional UHTSS's or
components so ordered by BMS may not be earlier than ***
following the applicable UHTSS Target Delivery Date
corresponding to same.
2.1.13.5 All items so purchased by BMS under this
section 2.1.13 shall be eligible for maintenance service under
the same terms as apply to the purchase of the UHTSS
components hereunder. Such maintenance shall be provided
*** acceptance of such item by BMS, and thereafter, may be
purchased by BMS at its election *** by *** of such item.
3.0 EXCLUSIVE AND NONEXCLUSIVE SCREENING PROGRAMS
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3.1 Exclusive Screening Program. The parties will collaborate in
developing and conducting an Exclusive Screening Program (ESP), as follows:
3.1.1 Scope. Under the ESP, BMS and Aurora will collaborate, using
the Aurora Screening Technology, to develop high throughput and/or
ultra high throughput screens for BMS' use in accordance with this
Agreement and which will be manufactured by Aurora and delivered to BMS
on *** selected by BMS (which targets must be reasonably acceptable to
Aurora, such consent not to be unreasonably withheld). The parties
will collaborate on the specifications for, and development of, the
particular screens (each screen, together with all of the reagents and
any other materials to be delivered by Aurora in connection therewith,
is referred to hereinafter as an "ESP Screen"), which shall be
manufactured by Aurora and delivered to BMS (the "ESP Collaborative
Activities"). BMS will propose the targets and the parties will use
all reasonable efforts to select two targets within *** following the
Effective Date, and the remaining target within *** after the Effective
Date; provided, however, that BMS shall not be obligated to propose (i)
more than *** targets with respect to the *** targets to be agreed upon
during said *** (and if the parties are unable to agree upon ***
targets from ***, this section 3.1.1 shall apply only to the ***, on
which the parties have been able to agree), and (ii) more than *** with
respect to the *** target to be agreed upon within said *** period (and
if the parties are unable to agree upon such *** target, neither party
shall be under any obligation with respect to the joint development of
an ESP Screen for such *** target).
Promptly following mutual agreement on the selection of each target,
the parties will jointly prepare an "ESP Work Plan", which shall set
forth in detail the respective responsibilities of the parties in the
development of each ESP Screen, and which must be executed by both
parties to be effective. Each such ESP Work Plan will contain, where
applicable, a description of the tasks to be performed by each party,
location, the specific deliverables (including number of reagents and
any other materials to be provided for each ESP Screen and any
specifications therefor) and documentation to be produced by Aurora,
acceptance criteria for each ESP Screen, any warranty periods, a
schedule of performance, fees (as determined in accordance with this
section 3.1.1), a schedule of payments, and any other relevant work
specifications (including the "closely-related target" definition
contemplated by section 3.1.2).
Promptly following the execution of each ESP Work Plan, the parties
will commence their respective duties under the ESP Work Plan for the
development, manufacture, and delivery of the applicable ESP Screen.
All work under an ESP Work Plan shall be performed in accordance with
the provisions of this Agreement, and each party will use its
reasonable best efforts to complete its obligations under the ESP Work
Plan as expeditiously as practicable. If any provisions of any such
ESP Work Plan should conflict with any provisions set forth in this
Agreement, the provisions of this Agreement shall take precedence,
unless such ESP Work Plan expressly refers to the specific
provision(s) of this Agreement that it is intended to replace or
modify (and which shall be
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limited in force and effect to such ESP Work Plan only). During the
development of an ESP Screen, Aurora will update BMS quarterly in
reasonable detail in writing with respect to its development
activities with respect to each such ESP Screen and will update BMS
verbally at more frequent intervals.
In developing each ESP Work Plan, the parties will jointly determine
and agree upon the fee to be paid by BMS to Aurora for development,
manufacture and delivery of an ESP Screen acceptable to BMS for the
target in question. The parties understand and agree that the total
fee for such effort ***. The *** shall be paid within *** following
execution of the ESP Work Plan, the *** shall be reimbursed to Aurora
by BMS monthly in arrears ***, and the *** shall be paid *** following
***.
In the event that BMS pays, in whole or in part, for any work to be
performed and materials to be delivered as part of an ESP Work Plan,
and Aurora is unable to deliver an ESP Screen and related reagents and
other materials acceptable to BMS for the target in question by the
date called for in the ESP Work Plan ***, then BMS may elect in its
sole discretion either:
(i) to extend the delivery date (but only a writing signed by
an officer of BMS shall be sufficient);
(ii) not to continue further development of that target or a
substitute target, in which event the parties will be deemed
to have fulfilled their obligation to develop ***; or
(iii) to propose an additional target in substitution of such
target for which an acceptable ESP Screen could not be
developed (which target shall be reasonably
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acceptable to Aurora), in which event, in determining the fee
to be paid by BMS for such ESP Work Plan, Aurora shall not be
entitled to ***, and BMS shall be entitled to *** of such
unusable ESP Screen against the *** to be charged BMS under
such substitute ESP Work Plan developed for any such other
target.
All Materials provided by BMS in furtherance of a ESP Work Plan shall
be used in accordance with Exhibit 3.1.1 attached hereto.
3.1.2 Exclusivity. Following selection by BMS and Aurora of a
target for an ESP Work Plan and until the date that is ***
following the date that an ESP Screen for such target is delivered to
and accepted by BMS, Aurora agrees that it and its Affiliates will not
provide to any Third Party or use for the benefit of any Third Party,
and will not collaborate or contract with any Third Party on the
development of, any screens for the same target or any target that is
"closely-related" to the target so selected, nor grant license rights
to any Third Party that would conflict with the foregoing by allowing
such Third Party to use any Aurora Patent Rights, Copyrights or Aurora
Technology to make or use any such screen. Notwithstanding anything
that the preceding sentence might imply to the contrary, BMS does not
waive or relinquish any cause of action it may have relating to
infringement of, nor shall the foregoing be construed to imply or
create in any way any rights in Aurora following such *** period
under, any patent rights that may be owned or Controlled by BMS and
its Affiliates pertaining to the manufacture, use or sale of any such
ESP Screen, to any BMS Materials or other substances contained therein
or used to make such ESP Screen, or to any processes used to make
such ESP Screen.
It is understood that, to the extent that Aurora has granted a Third
Party a license to use the Aurora Reporter System Technology and
Aurora Reporter System Patent Rights on an unrestricted basis, Aurora
cannot guarantee or warrant that such Third Party's will not use such
rights in accordance with such grant to develop and use a screen that
competes with an ESP Screen developed by Aurora for BMS hereunder;
provided, that where Aurora and BMS are contemplating or performing an
ESP Work Plan for an ESP Screen that Aurora is aware is also under
development by a Third Party to whom Aurora has licensed unrestricted
rights that allow such Third Party to develop same or with whom Aurora
is then collaborating on the development thereof, Aurora will inform
BMS of such competitive development (but shall not be required to
identify the Third Party) so that BMS may decide whether to pursue
another ESP Screen or to enter into or continue the ESP Work Plan for
such ESP Screen anyway.
For purposes of this section 3.1.2, ***
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3.1.3 Acceptance of Screen. Promptly following receipt of each such
ESP Screen, BMS will test same for acceptability to BMS in terms of
effectiveness, accuracy, reliability, and conformity to specifications
as set forth in the ESP Work Plan. BMS shall notify Aurora in writing
as to whether BMS accepts each such ESP Screen based on the foregoing
criteria *** (and if not, BMS will provide Aurora with a list of the
deficiencies found by BMS so that Aurora may develop an acceptable ESP
Screen). Aurora will promptly remedy such deficiencies and provide an
acceptable ESP Screen within a reasonable time *** thereafter.
If at any time during the Contract Term an ESP Screen for whatever
reason loses its effectiveness or efficacy or is no longer
biologically active, Aurora will replace same as promptly as
practicable at no additional cost to BMS (unless the replacement is
required as a result of negligence on the part of BMS, in which event
BMS will reimburse Aurora ***).
3.1.4 Improvements. Improvements to an ESP Screen that may be made
by Aurora during the Contract Term following delivery to and acceptance
by BMS of such Screen shall be made available to BMS, upon written
request from BMS, for a fee equal to *** incurred by Aurora to
improve and optimize same, plus ***. At BMS' request, and prior to
commencing such work, Aurora will provide BMS with a firm estimate ***
Payment shall be made by BMS following acceptance of same, using the
same acceptance procedure as set forth in section 3.1.3 for the
initial ESP Screen.
3.1.5 Deployment of Screen by BMS. BMS will employ each such
accepted ESP Screen to screen such BMS Test Materials as BMS deems
appropriate for such purpose in the exercise of its sole and absolute
discretion.
3.1.6 Additional Screens. Subject to the same terms and conditions
as are set forth in this section 3.1 (e.g., mutual acceptability of the
target, exclusivity, development of a mutually acceptable ESP Work Plan
for same, etc.), BMS may elect that the number of ESP Screens on which
BMS and Aurora shall collaborate to develop and deliver to BMS be
increased to *** *** during each year of this Agreement until the
date that BMS accepts a complete, fully operational UHTSS pursuant to
section 2.1.3 or the date that is *** following the Effective Date,
whichever is the later date.
3.1.7 Rights in BMS Compounds. All right, title and interest in any
Inventions relating in any way to any BMS Test Materials and any BMS
Hits or Lead Compounds which arise out of, or are conceived or reduced
to practice as a result of, the development or use of an ESP Screen by
or for BMS shall be owned solely by BMS, and to the extent that Aurora
or any of its employees or contractors might be considered a
co-inventor of any such Invention, Aurora hereby assigns to BMS all
rights, title and interest in and to any such Invention made by it,
its employees or contractors. Aurora agrees to execute any
instruments or other documents, at BMS' reasonable request and
expense, to confirm and
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vest same, and agrees to maintain appropriate contractual arrangements
with its employees and contractors to effectuate same.
3.1.8 Payments to Aurora. In addition to such payments as are made
by BMS to Aurora pursuant to section 3.1.1 hereof, the following
payments shall be made to Aurora with respect to the delivery and use
of the ESP Screens by BMS:
3.1.8.1 Milestones. BMS will pay to Aurora:
3.1.8.1.1 Where BMS has determined that a Hit identified
in an ESP Screen should become a Lead Compound and enter a
Lead Compound Development Program conducted by BMS, BMS
will promptly notify Aurora in writing of same and will pay
to Aurora *** for each such Lead Compound. Payments shall
be wired to a bank account specified by Aurora within ***
following such notification from BMS.
3.1.8.1.2 BMS will promptly notify Aurora in writing of
each Approved PLP Compound approved by the BMSPGOC. BMS
will pay Aurora *** for each Approved PLP Compound so
approved for further development by the BMSPGOC; provided,
that if a Hit under section 3.1.8.1.1 should be approved as
an Approved PLP Compound without first having been approved
to enter a Lead Compound Development Program (such that
Aurora did not receive any payment under section
3.1.8.1.1), then BMS shall pay Aurora *** upon any such Hit
so approved for further development as an Approved PLP
Compound by the BMSPGOC. Payments shall be wired to a
bank account specified by Aurora within *** following such
notification from BMS.
3.1.8.1.3 If an Approved PLP Compound should reach the
following milestones, BMS will promptly notify Aurora of
same and will pay the following amounts to Aurora:
Event Payment (US$)
***
*** CONFIDENTIAL TREATMENT REQUESTED
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***
provided, however, that if a Hit identified using a
particular ESP Screen and on which milestones payment(s)
above have been made should be dropped from further
development by BMS, for whatever reason, then no more
milestone payments shall be due with respect to any
subsequent Hit so identified in the same ESP Screen, unless
and until such subsequent Hit reaches the milestone next
following the last milestone on which a payment was made
for the abandoned compound. Payments shall be wired to a
bank account specified by Aurora *** days following the
date that any such milestone is reached.
3.1.8.2 Royalties. With respect to each Covered Product
identified as a Hit in a Exclusive Screen, BMS shall pay a
royalty on Net Sales of such Covered Product during the Royalty
Term for such Covered Product, as follows *** ***
***
; provided, however, that where the potential use or
application for a disease indication of any compound or Analog
thereof (or the active substance therein) was identified
(whether in laboratory notebooks, patent application(s), or
otherwise) by BMS prior to the date that such compound, Analog
or active substance was identified as a Hit hereunder, then no
royalty shall be due on a Covered Product incorporating same
to the extent sold for the treatment or prevention of diseases
or conditions for which such compound, Analog or Product is
being sold, being developed, or planned for development by BMS
at the time of such identification.
*** CONFIDENTIAL TREATMENT REQUESTED
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Royalties for Net Sales of any Covered Product in any given
country shall be due and payable only during the Royalty Term
for such Covered Product in such country; thereafter, BMS
shall be entitled to continue to sell such Covered Product in
such country without further compensation to Aurora.
3.2 Nonexclusive Screening Payments. As part of the rights
licensed under section 5.1.1 hereof, BMS and its Affiliates shall be entitled
to use and practice the Aurora Reporter System Technology and Aurora Reporter
System Patent Rights and Copyrights licensed to it under section 5.1.1 hereof
and to use any Reporters or other reagents/tools covered thereby that are
supplied to BMS by Aurora pursuant to this Agreement for internal research and
drug development, including to develop, make and use in internal research and
drug development any high throughput and ultra high throughput screens
targeting any targets as BMS in its discretion may select (collectively, such
activities referred to as the "Nonexclusive Screening Program" or "NSP", and
any such screen, the manufacture or use of which is covered by the Aurora
Patent Rights or Copyrights or in which the Reporters supplied by Aurora are
used, referred to as a "Nonexclusive Screen"). BMS shall be entitled to
conduct any internal research, development and commercialization thereafter of
any Hits arising out of any such NSP activities as BMS in its discretion may
elect to conduct.
Promptly following the Effective Date, Aurora will commence training
of BMS personnel at Aurora in the use and application of the Aurora Reporter
System Technology and any Reporters or other reagents/tools to be supplied to
BMS by Aurora pursuant to this Agreement so that BMS may develop, make and use
Nonexclusive Screens for use by BMS in accordance with this Agreement. The
number of such individuals shall be jointly determined by BMS and Aurora but
shall be a number sufficient to allow for BMS to effect rapid scale-up in its
use of the Aurora Reporter System Technology. If more individuals need to be
trained than can be reasonably accommodated in the first training session, the
parties will jointly schedule additional sessions as reasonably necessary.
Each party will bear its own costs in connection with such training sessions.
Subject to section 3.2.4 below, BMS shall make milestone payments to
Aurora with respect to such Hits as arise out of any use of a Nonexclusive
Screen by BMS or its Affiliates, as follows:
3.2.1 Where BMS has determined that a Hit identified through the use
of any such Nonexclusive Screen should become a Lead Compound and enter
a Lead Compound Development Program conducted by BMS, BMS will promptly
notify Aurora of same and will pay to Aurora *** for each such Lead
Compound. Payments shall be wired to a bank account specified by
Aurora within *** following such notification from BMS.
3.2.2 BMS will promptly notify Aurora of each Lead Compound arising
out of section 3.2.1 that becomes an Approved PLP Compound, and will
pay Aurora *** for each Approved PLP Compound so approved for further
development by the BMSPGOC; provided, that if a Hit under section 3.2.1
should be approved as an Approved PLP Compound without first having
been approved to enter a
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Lead Compound Development Program (such that Aurora did not receive any
payment under section 3.2.1), then BMS shall pay Aurora *** upon any
such Hit so approved for further development as an Approved PLP
Compound by the BMSPGOC. Payments shall be wired to a bank account
specified by Aurora within *** following such notification from BMS.
3.2.3 If an Approved PLP Compound in section 3.2.2 should reach the
following milestones, BMS will promptly notify Aurora of same and will
pay the following amounts to Aurora:
Event Payment
(US$)
***
; provided, however, that if a Hit identified using a particular
Nonexclusive Screen and on which milestones payment(s) above have been
made should be dropped from further development by BMS, for whatever
reason, then no more milestone payments shall be due with respect to
any subsequent Hit so identified in the same Nonexclusive Screen,
unless and until such subsequent Hit reaches the milestone next
following the last milestone on which a payment was made for the
abandoned compound. Payments shall be wired to a bank account
specified by Aurora within *** following the date that any such
milestone is reached.
3.2.4 The milestone payments in this section 3.2 shall apply only to
Hits obtained prior to the delivery of the complete, fully operational
UHTSS to BMS and only with respect to such Hits as are obtained in the
*** Nonexclusive Screens developed by BMS; provided, however, that
if BMS enters into an agreement with Aurora to develop more than ***
ESP Screens under section 3.1 hereof, then each such additional ESP
Screen in excess of *** shall reduce, by the same excess number, the
number of Nonexclusive Screens under this section 3.2 for which
payments might otherwise be required to be made under sections ***
above. For example, if BMS enters into
*** CONFIDENTIAL TREATMENT REQUESTED
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ESP Work Plans for *** ESP Screens, then the milestone payments under
*** shall apply only to a Hit (that is subsequently approved as a Lead
Compound and that occurs prior to the date that a complete, fully
operational UHTSS is delivered to BMS) in the *** Nonexclusive Screens
developed by BMS.
3.2.5 All right, title and interest in any Inventions relating in
any way to any BMS Test Materials and any Hits or Lead Compounds which
arise out of, or are conceived or reduced to practice as a result of,
the development or use of an Nonexclusive Screen by or for BMS shall
be owned solely by BMS, and to the extent that Aurora or any of its
employees or contractors might be considered a co- inventor of any
such Invention, Aurora hereby assigns to BMS all rights, title and
interest in and to any such Invention made by it, its employees or
contractors. Aurora agrees to execute any instruments or other
documents, at BMS' reasonable request and expense, to confirm and vest
same, and agrees to maintain appropriate contractual arrangements with
its employees and contractors to effectuate same.
3.3 Ownership of Data. All results and data generated by BMS, its
Affiliates and its and their contractors arising out of the use by any of them
of the UHTSS and any ESP Screen or Nonexclusive Screen, the use of any of the
rights licensed under article 5 hereof, or otherwise arising out of this
Agreement with respect to any Hits, Lead Compounds and Approved PLP Compounds
(and Analogs of any of the foregoing made or obtained by BMS) or otherwise out
of the internal research and development conducted by or for BMS and its
Affiliates shall be owned exclusively by BMS and shall be treated as BMS
Confidential Information hereunder.
3.4 Development of Products. BMS will in its sole and absolute
discretion determine which, if any, such Hit(s) will be approved as Lead
Compounds and developed further in a Lead Compound Development Program
conducted by BMS. BMS shall be responsible for all pre-clinical (including
medicinal chemistry) activities during the course of the Lead Compound
Development Program for such Lead Compound, as well as following any approval
of an Approved PLP Compound. The conduct of the Lead Compound Development
Program shall be solely within the control and discretion of BMS, and BMS may
in its discretion suspend or terminate, in whole or in part, the Lead Compound
Development Program for a Lead Compound at any time.
BMS will be responsible for all pre-clinical and clinical development,
including all regulatory filings, of Hits, Lead Compounds, and Approved PLP
Compounds arising out of this Agreement. BMS shall have sole and absolute
discretion and control over the conduct of, and all activities associated with,
the development or abandonment of any Hit or Lead Compound, the approval of a
Lead Compound as an Approved PLP Compound, the development or abandonment of
any Approved PLP Compound, all regulatory activities relating to the
manufacture, use or sale of any Approved PLP Compound or Product, and the
commercialization and marketing of any Product in any country. All INDs, NDAs
and other regulatory filings made or filed by BMS for any Approved PLP Compound
or Product shall be owned solely by BMS. BMS will provide summary annual
reports to Aurora on the development status of any Approved PLP Compound then
in development arising out of the ESP Screening Program and which shall
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 37
be treated as BMS Confidential Information hereunder. Other than royalty
reports required hereunder, no reports shall be required of BMS with respect to
any activities connected with the commercialization of any Product approved for
marketing in any country.
3.5 Laboratory Facilities and Personnel. Aurora and BMS shall
each, at their respective cost and expense, provide suitable and sufficient
laboratory facilities and equipment, and will devote sufficient, experienced
personnel, as is needed to carry out their respective obligations under this
Agreement.
3.6 Payments to Third Parties by Aurora. Aurora shall be solely
responsible for the performance by, and any payments of any nature whatsoever
due to, Third Parties relating to the following:
3.6.1 The use by Aurora and by BMS (where used by BMS in accordance
with this Agreement) of any patent rights, copyrights, Know-How or
other intellectual property rights owned or controlled by such Third
Party that are licensed to Aurora and which are included within the
Aurora Patent Rights and Aurora Technology that are sublicensed to BMS
hereunder; and
3.6.2 Any Third Party used by Aurora to provide goods or services to
make, have made, sell, deliver, install and/or provide maintenance for
the UHTSS and any UHTSS components supplied hereunder; and
3.6.3 Any Third Party used by Aurora to provide goods or services in
connection with the preparation, manufacture, use, sale, and delivery
of an applicable ESP Screen or any Reporters hereunder.
4.0 SERVICE AND SUPPORT
4.1 Service and Support. For a period until (i) *** after
Acceptance of a complete, fully operational UHTSS pursuant to section 2.1.3.1
(including during the period prior to Acceptance of same during which Modules
One and Two of such UHTSS are being installed and used) , (ii) *** after
Acceptance of the Second Module Two pursuant to section 2.1.3.2 (or until
expiration of the *** in (i), whichever is the later), and (iii) for *** after
Acceptance of each additional UHTSS or component thereof as may be ordered by
BMS pursuant to section 2.1.13, Aurora will provide, ***, service and support
for the applicable system and all system components, as such service and support
is more fully described on Exhibit 4.1 attached hereto ("Service and Support").
Aurora will be responsible for providing and paying for this Service and
Support, whether provided by Aurora itself or through third party contractors
(including those providing any UHTSS components to Aurora). Aurora will
designate an appropriate Aurora employee to coordinate such Service and Support.
Following the applicable period pertaining to (i)-(iii) under the
preceding paragraph, BMS may elect to purchase Service and Support annually for
up to *** thereafter (or
*** CONFIDENTIAL TREATMENT REQUESTED
36
<PAGE> 38
such longer period as the parties may mutually agree upon in writing) for such
UHTSS's (or components thereof) for a fee that is *** Maintenance payments
shall be payable in ***. Alternatively, BMS may utilize its own designated
internal resources for some or all of such components, in combination with
additional support provided directly by Aurora and/or Aurora's technology
partners, at Aurora and such partners' then prevailing rates, in which event the
annual maintenance fee shall be equitably prorated for the items still subject
to maintenance. Following such ***.
5.0 INTELLECTUAL PROPERTY RIGHTS
5.1 License Rights.
5.1.1 ***
*** CONFIDENTIAL TREATMENT REQUESTED
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***
Subject to sections 2.1.9, 3.1.2, and 3.1.7 hereof, the rights granted
under this section 5.1.1 shall be non-exclusive and Aurora shall be
entitled to grant licenses to such rights to Third Parties upon such
terms as Aurora shall determine and/or to use such rights for the
benefit of itself or any Third Party. The rights granted hereunder
shall be subject to any and all payments required in articles 2 and 3
hereof, and shall continue until, and to the extent, terminated in
accordance with the provisions of this Agreement.
5.1.2 Notwithstanding section 5.1.1, the rights granted thereunder
do not include:
5.1.2.1 Improvements to the Aurora Reporter System Technology
developed after the date that is the later of *** other than
those improvements that represent incremental improvements to
the existing Aurora Reporter System Technology developed after
such date (for example, a novel Reporter developed after such
date would not fall within the improvements licensed to BMS
after such date); and
5.1.2.2 Inventions pertaining to the Aurora Reporter System
Technology that are made after the date that is *** any *** );
provided, that the foregoing shall not apply to Inventions that
constitute incremental improvements under section 5.1.2.1; and
provided, further, that any Inventions made after such date
that are embodied in a division or substitute application for
an Invention made prior to such date shall be included within
the rights licensed to BMS hereunder.
5.1.2.3 The right to use any Reporter as a drug or tool as
part of any commercial contract service or bureau to treat or
diagnose diseases or conditions or to detect analytes as part
of a diagnostic program for Third Parties; however, the right
to use any Reporter for research (including screening and drug
development) purposes, including as a drug or tool to detect
analytes for research purposes, shall not be limited or
restricted in any way by the foregoing.
5.2 Ownership Rights.
5.2.1 Except as otherwise expressly provided in this Agreement,
nothing in this Agreement is intended to convey or transfer ownership
by one party to the other of any
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 40
rights, title or interest in any Confidential Information, Technology,
or patent rights owned or Controlled by a party. Except as expressly
provided for in this Agreement, nothing in this Agreement shall be
construed as a license or sublicense by one party to the other of any
rights in any Biological Materials, Technology, Copyrights, or Patent
Rights owned or Controlled by a party or its Affiliates.
5.2.2 BMS shall own all Inventions and other Technology made solely
by its employees and agents, and all patent applications and patents
claiming such Inventions. Subject to section 3.1.7, 3.2.5, and 5.2.3,
Aurora shall own all Inventions and other Technology made solely by
its employees and agents, and all patent applications and patents
claiming such Inventions. Subject to Sections 3.1.7, 3.2.5, and
5.2.3, all Inventions and other Technology made jointly by employees
or agents of BMS and employees or agents of Aurora shall be owned
jointly by BMS and Aurora. Subject to the terms of this Agreement,
all joint Inventions (and all patent rights obtained thereon) and all
Technology jointly developed by Aurora and BMS during the Research
Term may be freely exploited by either party without further
obligation to the other. Determinations of inventorship shall be made
in accordance with U.S. patent law.
5.2.3 All rights, title and interests owned or Controlled by Aurora
or its Affiliates in any Inventions and Technology pertaining to any
indication or use of any Hit, Lead Compound, Approved PLP Compound or
Covered Product (or of Analogs of the class of compounds to which the
same may pertain) that may be conceived or reduced to practice at any
time during the Contract Term solely by Aurora employees or by a Third
Party under contract with Aurora, or jointly by any of them with
others, in connection with the activities conducted by Aurora under
this Agreement, and all rights, title and interest Aurora may have in
any Patent Rights that may be obtained on any of the foregoing
(collectively, "Product Invention Rights"), shall be owned exclusively
by BMS, and shall be deemed to be and have been automatically assigned
to BMS by reason of Aurora's execution of this Agreement. Aurora
shall promptly report any such Invention to BMS in sufficient detail
to enable BMS to assess whether a patent application should be filed.
If BMS desires to file patent applications on any such Invention, it
will do so at its option and expense, and Aurora will provide
reasonable cooperation as BMS may request (with BMS reimbursing Aurora
for any out-of-pocket costs so incurred) in obtaining and filing for
any patent protection thereon in BMS' name and will execute any
documents or other instruments as may be reasonably requested by BMS
to fully vest exclusive ownership of such Product Invention Rights in
BMS. BMS shall be under no obligation, express or implied, to
develop, market, or otherwise utilize any such Product Invention
Rights.
5.3 Sublicensing. BMS shall have the right to sublicense any of
the rights licensed to it by Aurora hereunder to any Affiliate of BMS, provided
that such Affiliate is bound by all pertinent terms and conditions of this
Agreement and provided that BMS shall not be relieved of any of its obligations
under this Agreement.
Nothing in this section 5.3 or otherwise in this Agreement shall
restrict, or is intended to restrict, BMS in any way from collaborating with a
Third Party on the development,
39
<PAGE> 41
manufacture, or use of any Non-Exclusive Screen (or with respect to the use of
an Exclusive Screen at BMS); provided, that such Third Party shall have
executed an appropriate confidentiality agreement with BMS to keep in
confidence any disclosures of Aurora Confidential Information that BMS may need
to make in connection therewith, and provided that such Third Party shall have
agreed that the use by such Third Party of any such Aurora Confidential
Information or rights licensed to BMS hereunder is limited solely to
developing, making, supplying, or using any such Non-Exclusive Screens (and
using any such Exclusive Screens) solely in furtherance of BMS' research and
drug development activities or of such collaboration as BMS may have with such
Third Party; and provided, further, that BMS may not provide any Reporters to
any such Third Party without Aurora's prior written consent, and may not
disclose any Confidential Information pertaining to any Aurora Reporter System
Technology to any such Third Party, other than to consultants and contractors
working at BMS facilities who have reason to know same and in accordance with
article 9.
5.4 Software. Aurora shall provide to BMS a copy of the source
code and object code for any Software provided with the UHTSS (or any Module or
other component) to the extent available to and under the Control of Aurora,
and, if such source or object code is licensed to Aurora from a third party,
upon the same terms as apply to Aurora's use of such source or object code.
BMS may, in its discretion, adapt, reproduce, and modify such software and
prepare derivative works based upon the software, as well as enhance or improve
functionality of the software through new modules or subroutines developed by
BMS for use with the software (all of the foregoing collectively,
"Modifications"), all of which, as well as any rights (including copyright
rights therein) shall be owned by BMS. Aurora shall have no ownership interest
in, nor any right to license, use or disclose, or any obligation to support,
any such Modifications developed by BMS, all of which (and the title and rights
therein) shall be owned by BMS; provided, however, that BMS shall not acquire
by reason of the foregoing ownership of any portions of the software code
provided by Aurora or any interest in any copyright owned or held by Aurora or
its licensors therein.
6.0 PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS
6.1 Payment Term. All royalties required to be paid by BMS
hereunder shall be paid with respect to each country of the world from ***
6.2 Payment Dates. Royalties shall be paid by BMS on Net Sales
within *** *** Such payments shall be accompanied by a statement showing all
relevant sales information including the information employed to calculate Net
Sales of each Covered Product in each country, and the calculation of the amount
of royalty due.
6.3 Accounting. The Net Sales used for computing the royalties
payable to Aurora by BMS shall be computed in U.S. dollars and paid by wire
transfer or other mutually acceptable
*** CONFIDENTIAL TREATMENT REQUESTED
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means. For purposes of determining the amount of royalties due, the amount of
Net Sales in any foreign currency shall be computed by converting such amount
into dollars ***
6.4 Records. BMS shall keep for *** complete and accurate records
of sales and all other information necessary to calculate Net Sales of each
Covered Product in sufficient detail to allow the accrued royalties to be
determined accurately. Aurora shall have the right to cause an independent,
certified public accountant (who has executed a confidentiality agreement with
BMS reasonably acceptable to BMS) to audit such records at the place or places
of business where such records are customarily kept in order to verify the
accuracy of the reports of Net Sales and royalty payments for the preceding two
years. Such audits may be exercised during normal business hours *** . Aurora
shall bear the full cost of such audit unless such audit discloses a variance of
*** from the amount of the royalties due under this Agreement, in which event,
*** . Aurora agrees not to disclose confidential information concerning royalty
payments and reports, and all information learned in the course of any audit or
inspection, except to the extent necessary for Aurora to reveal such information
in order to enforce its rights under this Agreement or if disclosure is required
by law.
6.5 Withholding Required by Law. If provision is made in law or
regulation for taxes to be withheld by BMS, such tax shall be deducted from the
royalty or other payment to be made by BMS hereunder and shall be remitted to
the proper taxing authority. Payment of the royalty or other payment due to
Aurora shall be net of such withholding. BMS and Aurora agree to assist the
other party in claiming any exemption available from such deduction or
withholdings under any double taxation or similar agreement or treaty from time
to time in force.
7.0 INFRINGEMENT BY THIRD PARTIES
7.1 Actual or Threatened Infringement of BMS Materials and
Products. If information comes to the attention of BMS or Aurora to the effect
that any patent rights owned or Controlled by BMS or its Affiliates relating to
a BMS Material, Hit, Lead Compound, Approved PLP Compound or Product are being,
have been or are threatened to be infringed by a Third Party not Affiliated
with BMS, BMS shall have the sole right, *** ,to take and control
all action as BMS may deem necessary or appropriate to prosecute or prevent
such unlawful infringement, including the right to bring, defend, settle,
compromise, or appeal any suit, action or proceeding involving any such
infringement. If BMS determines that it is necessary or desirable to bring an
infringement action and for Aurora to join any such suit, action or proceeding,
Aurora shall, *** , execute all papers, provide full cooperation
and assistance to BMS in connection with such proceeding, and, if necessary,
take such other actions as may be reasonably required to permit BMS to act in
Aurora's name (including the furnishing of a power of attorney), and *** ;
provided, however, that BMS may not settle any patent infringement
*** CONFIDENTIAL TREATMENT REQUESTED
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litigation under this Section 7.1 in a manner that adversely affects the scope
or enforceability of Aurora's Patent Rights or that would constitute an
amendment of this Agreement without Aurora's written consent (not to be
unreasonably withheld or delayed). ***
7.2 Actual or Threatened Infringement of Aurora Patent Rights.
7.2.1 BMS and Aurora shall promptly notify the other in writing of
any alleged or threatened infringement of any Aurora Patent Rights
licensed to BMS under this Agreement of which either becomes aware.
Both parties shall use reasonable efforts in cooperating with each
other to terminate such infringement without litigation. Aurora shall
have the first right to bring and control any action or proceeding with
respect to such infringement *** and by counsel of its own choice as to
any such Aurora Patent Rights, and BMS shall have the right, *** to be
represented in any action involving any such Aurora Patent Rights using
counsel of its own choice.
7.2.2 If Aurora fails to bring an action or proceeding within (i) ***
following receipt of written notice from BMS with respect to an alleged
infringement of any Aurora UHTSS Patent Rights or of any Aurora
Reporter System Patent Rights used in an Exclusive Screen hereunder, or
(ii) *** , set forth in the appropriate laws and regulations for the
filing of such actions, whichever comes first, with respect to such
Aurora UHTSS Patent Rights or any such Aurora Reporter System Patent
Rights used in an Exclusive Screen hereunder, BMS shall have the right
to bring and control any such action *** and by counsel of its own
choice, and Aurora shall have the right, *** to be represented in any
such action by counsel of its own choice.
7.2.3 In the event a party brings an infringement action under this
section 7.2, the other party shall provide all reasonable cooperation,
including if required to bring such action, the furnishing of a power
of attorney. Neither party shall have the right to settle any
proceedings under this Section 7.2 in a manner that diminishes the
rights licensed to the other party hereunder or which would constitute
an amendment of this Agreement, without the consent of such other party
(not to be unreasonably withheld or delayed). Except as otherwise
agreed to by the parties as part of a cost sharing arrangement ***
*** CONFIDENTIAL TREATMENT REQUESTED
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***
7.2.4 The parties acknowledge that Aurora's ability to comply with
section 7.2.1-7.2.3 above may be subject to rights and obligations
under Third Party Contracts as of the Effective Date that have
provided patent right, copyrights and Know-How that are included
within the Aurora Patent Rights and Aurora Technology licensed to BMS
hereunder. Such Third Party Contracts and the provisions therein
containing such restrictions are set forth in Exhibit 7.2.4, and
Aurora represents and warrants as of the Effective Date that there are
no other restrictions under any such Third Party Contracts not set
forth on such Exhibit that would affect its ability to perform
sections 7.2.1-7.2.3 hereof and that it will not agree to any changes
to such restrictions hereafter without the prior written consent of
BMS (except where such changes eliminate same or make such
restrictions less restrictive).
8.0 DEFENSE OF INFRINGEMENT CLAIMS
8.1 Defense of Infringement Claims Pertaining to Lead Compounds,
Approved PLP Compounds, and Products. Subject to section 11.4 (to the extent
applicable), Aurora will cooperate with BMS, *** , in the defense
of any suit, action or proceeding against Aurora, BMS, any BMS Affiliate, or
any licensee of BMS alleging the infringement of the intellectual property
rights of a Third Party by reason of the manufacture, use or sale of a BMS
Material, Hit, Lead Compound, Approved PLP Compound, or Product. Aurora shall
give to BMS all authority (including the right to exclusive control of the
defense of any such suit, action or proceeding and the exclusive right to
compromise, litigate, settle or otherwise dispose of any such suit, action or
proceeding), information and assistance necessary to defend or settle any such
suit, action or proceeding; provided, however, BMS shall obtain Aurora's prior
written consent (not to be unreasonably withheld) if any part of any proposed
settlement would have an adverse effect on the scope or enforceability of the
Aurora Patent Rights; ***
8.2 Defense of Infringement Claims Pertaining to Patent Rights
Owned or Controlled by Aurora. Subject to section 11.3 (to the extent
applicable), BMS will cooperate with Aurora, *** , in the
defense of any suit, action or proceeding against Aurora, any Aurora Affiliate,
BMS, any BMS Affiliate, or any licensee of BMS alleging the infringement of the
intellectual property rights of a Third Party by reason of the use of the
UHTSS, the Exclusive or Non-Exclusive Screens or of any Aurora Patent Rights
and Aurora Technology licensed to BMS under this Agreement. Aurora shall give
BMS prompt written notice of the commencement of
*** CONFIDENTIAL TREATMENT REQUESTED
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any such suit, action, proceeding or claim of infringement and will furnish BMS
a copy of each communication relating to the alleged infringement. BMS shall
give to Aurora all authority (including the right to exclusive control of the
defense of any such suit, action or proceeding and the exclusive right, after
consultation with BMS, to compromise, litigate, settle or otherwise dispose of
any such suit, action or proceeding), information and assistance necessary to
defend or settle any such suit, action or proceeding; provided, however, Aurora
shall obtain BMS's prior written consent to all or such part of any settlement
which requires payment or other action by BMS, its Affiliates, or licensees, or
which would conflict with or have an adverse effect on the continuing use of
such Screens or the rights granted hereunder to BMS, its Affiliates or
licensees. ***
9.0 TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY, AND CHANGE OF
CONTROL
9.1 Confidentiality
9.1.1 Subject to the terms and conditions of this Agreement, BMS and
Aurora each agree that, during the term of this Agreement and for five
(5) years thereafter, each will use all reasonable efforts to keep
confidential, and will cause its Affiliates to use reasonable efforts
to keep confidential, all Aurora Confidential Information or BMS
Confidential Information, as the case may be, that is disclosed to it
or to any of its Affiliates by the other party in connection with the
performance of this Agreement. Neither BMS nor Aurora nor any of
their respective Affiliates shall use the other party's Confidential
Information except as expressly permitted in this Agreement.
9.1.2 BMS and Aurora each agree that any disclosure of the other's
Confidential Information to any officer, employee, contractor,
consultant, sublicensee, or agent of the other party or of any of its
Affiliates shall be made only if and to the extent necessary to carry
out its responsibilities under this Agreement and to exercise the
rights granted to it hereunder, shall be limited to the extent
consistent with such responsibilities and rights, and shall be
provided only to such persons or entities who are bound to maintain
same in confidence in a like manner as the party receiving same
hereunder is so required. Each party shall use reasonable efforts to
take such action, and to cause its Affiliates to take such action, to
preserve the confidentiality of each other's Confidential Information,
including not less than such efforts as it would customarily take to
preserve the confidentiality of its own Confidential Information.
Each party, upon the other's request, will return all the Confidential
Information disclosed to the other party pursuant to this Agreement,
including all copies and extracts of documents, within sixty (60) days
of the request of the other party following any termination of this
Agreement, except for one (1)
*** CONFIDENTIAL TREATMENT REQUESTED
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copy which may be kept for the purpose of ascertaining and complying
with continuing confidentiality obligations under this Agreement, and
except for such copies as a party may retain in order to continue to
exercise its rights hereunder (for example, under sections 2.1.7.4,
2.1.7.5, 2.1.8.4, 2.1.8.5, 2.1.12.2, 12.5.2, or 12.5.3) following
termination of this Agreement.
9.1.3 Confidential Information shall not include any information
which the receiving party can prove by competent evidence:
i) is now, or hereafter becomes, through no act
or failure to act on the part of the receiving party,
generally known or available;
ii) is known by the receiving party at the time
of receiving such information, as evidence by its records;
iii) is hereafter furnished to the receiving party
without restriction as to disclosure or use by a Third
Party lawfully entitled to so furnish same;
iv) is independently developed by the employees,
agents or contractors of the receiving party without the
aid, application or use of the disclosing party's
Confidential Information; or
v) is the subject of a written permission to
disclose provided by the disclosing party; or
vi) is provided by the disclosing party to a
Third Party without restriction as to confidentiality.
A party may also disclose Confidential Information of the other where
required to do so by law or legal process, provided that, in such
event, the party required to so disclose shall give maximum practical
advance notice of same to the other party and will cooperate with the
other party's efforts to seek, at the request and expense of the other
party, all confidential treatment and protection for such disclosure
as is permitted by applicable law.
The parties agree that the material financial terms of this Agreement
will be considered Confidential Information of both parties.
Notwithstanding the foregoing, either party may disclose such terms in
legal proceedings or as are required to be disclosed in its financial
statements, by law, or under strictures of confidentiality to bona
fide potential sublicensees. Either party shall have the further
right to disclose the material financial terms of this Agreement under
strictures of confidentiality to any potential acquiror, merger
partner, bank, venture capital firm, or other financial institution to
obtain financing, or other bona fide potential strategic partner or
collaborator.
9.2 Publication of Results. Notwithstanding any term in this
Agreement that may state or imply to the contrary, but subject to section 9.1
hereof, results and data obtained by BMS in
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the course of the Exclusive and Nonexclusive Screening Programs or through the
use of the Reporters or the UHTSS may be submitted for publication in
accordance with BMS' customary practices.
9.3 Publicity. Except as required by law and as provided in this
article 9, neither party may make any public announcement or otherwise disclose
the terms of this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
9.4 Change in Control. If, prior to the Acceptance of the first
complete, fully operational UHTSS:
(i) Aurora merges or consolidates with a Third Party, or
(ii) *** or more of Aurora's outstanding voting stock or equity
interests at any time is held, owned or controlled by a Third
Party, or
(iii) Aurora should sell or otherwise transfer all or substantially
all of its assets that are the subject of this Agreement to a
Third Party,
which Third Party, in the good faith determination of BMS, is, or is an
Affiliate of, a substantial competitor of BMS in the manufacture, use or sale
of drugs to prevent or treat diseases in human beings, BMS may elect as
follows:
9.4.1 BMS may elect to treat such event as an event entitling BMS to
withdraw from further development of the UHTSS for good cause; or
9.4.2 BMS may, without affecting or altering Aurora's or BMS'
continuing obligations under this Agreement, elect to require that
Aurora provide, and Aurora agrees in such event to provide, reasonable
assurances that it will continue, and will devote the necessary
resources and efforts to ensure, the conduct of the research
activities contemplated by this Agreement, that Aurora will adopt
appropriate measures to ensure that Confidential Information of BMS is
not disclosed to the acquiring or merging entity (or its Affiliates),
and that, if necessary and appropriate to ensure the due performance
of its obligations under the Research Plan and this Agreement, Aurora
will take such steps and measures as may be reasonably be required to
segregate its business operations and assets to which this Agreement
pertains from the activities to be conducted by it in the future for
the benefit of such acquiring or merging entity. BMS shall also be
entitled to cease the provision of any and all reports thereafter to
Aurora with respect to BMS' ESP and NSP activities and BMS research
and development activities as to any Hit, Lead Compound, Approved PLP
Compound, or Product, except for milestone payments and royalty
reports required hereunder and such other reports as Aurora may
reasonably request for purposes of ascertaining whether any events
have occurred that would require BMS to make any other payment
required of it hereunder.
***CONFIDENTIAL TREATMENT REQUESTED
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10.0 PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF
PATENT RIGHTS; COPYRIGHTS
10.1 Sole Inventions. For Inventions made solely by a party, such
party shall, subject to Sections 3.1.7, 3.2.5, and 5.2.3, be solely responsible
at its expense for making decisions regarding the scope and content of
application(s) to be filed and the prosecution thereof, as well as in what
country(ies) such applications should be filed, prosecuted, and maintained.
With respect to any Aurora Patent Rights licensed to BMS hereunder, Aurora
shall provide to BMS copies of all patent applications, (including any
continuations, continuations- in-part or divisions thereof or any substitute
applications therefor or equivalents thereof) relating thereto, and, shall also
provide to BMS copies of all documents and correspondence received or proposed
to be filed in connection with the filing and prosecution of all such Aurora
Patent Rights in a timely manner. Aurora shall also provide a report every six
(6) months detailing their status.
With respect to any Aurora UHTSS Patent Rights:
10.1.1 Aurora shall provide to BMS' patent counsel any patent
applications pertaining to such Patent Rights and any papers or other
documents pertaining thereto (such as responses to office action,
requests for terminal disclaimer, and requests for reissue or
reexamination of any patent issuing from such application) that Aurora
proposes to file sufficiently in advance of filing for the purpose of
obtaining substantive comment of BMS' patent counsel and shall
consider in good faith the requests and suggestions of BMS with
respect to strategies for filing and prosecuting such patent
applications; and
10.1.2 If Aurora decides not to pursue filing or prosecution of any
Invention conceived or made solely by it pertaining to such Patent
Rights in a given country, it shall give BMS reasonable notice to this
effect, and thereafter BMS may, at its discretion and expense, file,
prosecute, maintain and enforce in Aurora's name a patent application
or patent covering such Invention in such country.
Each party shall fully cooperate with the other party controlling such
filing, prosecution and maintenance, and will execute such documents or other
instruments as may be requested by the controlling party in order to fully vest
the rights associated with any such Invention as set forth herein. The
controlling party will reimburse the other party for any out-of-pocket costs
incurred by the other party in connection therewith.
10.2 Joint Inventions. Subject to sections 3.1.7, 3.2.5, 5.2.3,
and 10.3, for Inventions conceived or made jointly by BMS and Aurora in the
performance of this Agreement, the parties agree to meet and confer in order to
discuss whether, and in what countries, patent rights claiming such Joint
Inventions should be filed and which party(ies) should bear the cost of filing,
prosecuting and maintaining same. With respect to any patent rights filed,
prosecuted or maintained under this section 10.2, each patent application,
office action, response to office action, request for terminal disclaimer,
request for reissue or reexamination of any patent issuing from such
application, and any other papers or documents received or proposed to be filed
in connection therewith shall be provided by the party responsible for the
filing, request or response
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to the other party sufficiently prior to the filing of such application,
response or request to allow for review and comment by the other party. The
parties shall discuss patent filing, prosecution, defense and maintenance costs
from time to time and shall agree in advance before the expenditure of monies
for special transactions (such as the cost of interference, litigation and
appeals).
10.3 Exclusive Screens. It is understood and agreed that all
receptors and other targets provided by BMS to Aurora for use in developing an
Exclusive Screen, and title and all intellectual property rights and interests
in and to such receptors and other targets, shall remain the exclusive property
of BMS. All such Exclusive Screens shall be treated as BMS Confidential
Information hereunder, and Aurora may not transfer such Exclusive Screen to any
Third party or use such Exclusive Screen for the benefit of itself or any Third
Party, without the prior written consent of BMS. Regardless of which party
shall be considered an inventor under applicable patent law of any inventions
pertaining to any such Exclusive Screen, the parties agree to cooperate to file
such patent protection on any such Exclusive Screen on such countries as BMS
may request (in the names of either BMS or Aurora, or jointly, as the parties
respective patent counsel jointly agree is appropriate, or, if no agreement is
reached, then in the names of both parties). For countries that BMS requests
patent applications be filed, BMS will be responsible for, and for the cost of,
filing, prosecuting and maintaining same. With respect to any patent rights
filed, prosecuted or maintained under this section 10.3, each patent
application, office action, response to office action, request for terminal
disclaimer, request for reissue or reexamination of any patent issuing from
such application, and any other papers or documents received or proposed to be
filed in connection therewith shall be provided by the party responsible for
the filing, request or response to the other party sufficiently prior to the
filing of such application, response or request to allow for review and comment
by the other party. Where BMS has not requested a patent application to be
filed in a give country, the parties shall discuss patent filing, prosecution,
defense and maintenance costs from time to time and shall agree in advance
before the expenditure of monies for special transactions (such as the cost of
interference, litigation and appeals).
10.4 Copyrights. For purposes of Articles 5, 7, 8, and 10 hereof,
the parties agree to treat and handle, to the maximum practical extent, any
copyrights owned or Controlled by a party in the same manner as Patent Rights
owned or Controlled by such party.
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11.0 REPRESENTATIONS, WARRANTIES AND COVENANTS
11.1 Mutual Representations and Warranties. The parties make the
following representations and warranties to each other:
11.1.1 Corporate Power. Each party hereby represents and
warrants that such party (a) is duly organized and validly existing
under the laws of the state of its incorporation and has full
corporate power and authority to enter into this Agreement and to
carry out the provisions hereof; (b) has the requisite power and
authority and the legal right to own and operate its property and
assets, to lease the property and assets it operates under lease, and
to carry on its business as it is now being conducted; and (c) is in
compliance with all requirements of applicable law, except to the
extent that any noncompliance would not have a material adverse effect
on the properties, business, financial or other condition of it and
would not materially adversely affect its ability to perform its
obligations under the Agreement.
11.1.2 Due Authorization. Each party hereby represents and
warrants that such party (a) has the requisite power and authority and
the legal right to enter into the Agreement and to perform its
obligations and grant the rights extended by it hereunder; and (b) has
taken all necessary action on its part to authorize the execution and
delivery of the Agreement and to authorize the performance of its
obligations hereunder and the grant of rights extended by it
hereunder.
11.1.3 Binding Agreement. Each party hereby represents and
warrants to the other that: (a) this Agreement has been duly executed
and delivered on its behalf and is a legal and valid obligation
binding upon it and is enforceable in accordance with its terms; (b)
the execution, delivery and performance of this Agreement by such
party does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by which it
may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority
over it; and (c) all necessary consents, approvals and authorizations
of all governmental authorities and other persons required to be
obtained by it in connection with the Agreement have been obtained.
11.2 Aurora Technology Representations and Warranties. Aurora
represents and warrants to BMS as of the Effective Date the following:
11.2.1 The Patent Rights and Copyrights listed on Exhibit 11.2.1 list
all Aurora Patent Rights and registered Copyrights owned or Controlled
by Aurora, and such Exhibits specify the jurisdiction(s) by or in
which each such right has been issued or registered or in which an
application for such issuance or registration has been filed,
including respective registration or application numbers. To the best
knowledge of the current officers and directors of Aurora, the issued
claims under any issued Patent Rights are valid and in full force and
effect.
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11.2.2 Except as disclosed on Exhibit 11.2.1, (i) to the best
knowledge of Aurora's current officers and directors, the use of the
Aurora Technology and any Aurora Patent Rights and Copyrights in the
exercise by BMS of the rights granted to it hereunder will not
infringe upon any patent rights, copyrights or other proprietary
rights of any Affiliate of Aurora or of any Third Party; (ii) Aurora
has no knowledge of any infringement by any Third Party of any of the
Aurora Patent Rights or Copyrights; and (iii) Aurora and each of its
Affiliates are not subject to any outstanding order, judgment or
decree of any court or administrative agency, and each has not entered
into any stipulation or agreement, restricting (A) its use of the
Aurora Patent Rights, Aurora Technology or Copyrights in connection
with the manufacture, development, use, or licensing of the UHTSS, the
Reporter System or any Reporters, any Exclusive Screens, or any
Nonexclusive Screen as contemplated by this Agreement, provided,
however, that the foregoing shall not be construed as encompassing any
representation or warranty either that the receptors or other targets
selected by BMS for use in an Exclusive or Nonexclusive Screen will or
will not infringe the rights of any Third Party pertaining to such
receptors or that assay systems and screening systems components and
methods, instruments, equipment, software, reagents, and other
components (but excluding Reporters covered by Aurora's Patent Rights
or Aurora's Technology) provided by BMS for use in conjunction with
the UHTSS, any Exclusive Screen, or any Nonexclusive Screen will or
will not infringe the rights of any Third Party, or (B) Aurora's
ability to perform its obligations or to grant rights in accordance
with this Agreement.
11.2.3 There is no action, suit or proceeding pending or, to the
knowledge of its current officers and directors, that has been
threatened in writing by any Third Party against Aurora or its
Affiliates which, if adversely determined, would have a material
adverse effect upon Aurora's ability to grant to BMS, or upon the
ability of BMS to fully utilize or exercise, the Aurora Patent Rights,
Copyrights, or Technology licensed or sublicensed to BMS hereunder.
To the knowledge of Aurora's current officers and directors, there is
no action, suit or proceeding pending or that has been threatened in
writing by any Third Party against a Third Party Licensor which, if
adversely determined, would have a material adverse effect upon
Aurora's ability to grant to BMS, or upon the ability of BMS to fully
utilize or exercise, the Aurora Patent Rights, Copyrights, or
Technology licensed or sublicensed to BMS hereunder.
11.2.4 The Aurora Technology and Aurora Patent Rights and Copyrights
licensed or sublicensed by Aurora to BMS pursuant to this Agreement
have not been obtained by Aurora or its Affiliates in violation of any
contractual or fiduciary obligation to which Aurora or any of its
Affiliates or any of its or their employees or, to the best knowledge
of the current officers and directors of Aurora, its or their
contractors or predecessors-in-interest (and the employees of such
contractors or predecessors-in-interests), is or was a party, or by
misappropriation of the trade secrets of any Third Party, and the
exercise by BMS or its Affiliates of the rights licensed or
sublicensed by Aurora to it hereunder will not violate any such
contractual or fiduciary obligation owed by any of the foregoing
persons or entities to any such Third Party or render BMS liable for
the payment of any
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royalty attributable to or arising out of any such contractual or
fiduciary obligation or any such misappropriation.
11.2.5 Aurora has not (i) licensed to any Third Party any Aurora
Technology or Aurora Patent Rights to allow such Third Party to make
or use, nor agreed to supply to a Third Party or otherwise permit a
Third Party to use, any Reporters in substantially the same manner as
BMS is entitled is to use such Reporters hereunder, and (ii) has not
entered into any agreement with a Third Party, which, if such
agreement were entered into after this Agreement is signed, would be
an agreement falling within the scope of section 2.1.10.
11.2.6 Exhibit 11.2.6 lists all agreements as of the Effective Date
between Aurora and a Third Party involving the license to Aurora of
any inventions, patent rights, copyrights, Reporters, tangible
materials, UHTSS components, or Technology to Aurora that are included
within the Aurora Patent Rights, Copyrights and Technology, or that
will be used or incorporated in the development and/or supply of any
Reporters or any UHTSS components, the termination or breach of which
would have a material adverse effect upon (i) Aurora's ability to
grant to BMS, or upon BMS' ability to fully utilize or exercise, in
accordance with this Agreement the Aurora Patent Rights, Copyrights,
or Technology licensed or sublicensed to BMS hereunder or (ii)
Aurora's ability to develop, make or supply, or upon the ability of
BMS to obtain or fully utilize, the UHTSS (or its material components)
or the Reporters in accordance with the terms of this Agreement, or
(iii) Aurora's ability to develop and supply to BMS any Exclusive
Screen or BMS' ability to develop, make and use any Nonexclusive
Screen and to conduct NSP activities in accordance with this Agreement
(all such agreements, referred to collectively, as the "Aurora-Third
Party Contracts" and all such Third Parties referred to as
"Aurora-Third Party Contractees"); provided, however, that the
foregoing shall not be construed as encompassing any representation or
warranty that the receptors or other targets selected by BMS for use
in an Exclusive or Nonexclusive Screen will infringe the rights of any
Third Party pertaining to such receptors or other targets or that
assay systems and screening systems components and methods,
instruments, equipment, software, reagents, and other components (but
excluding Reporters covered by Aurora's Patent Rights or Aurora's
Technology) provided by BMS for use in conjunction with the UHTSS, any
Exclusive Screen, or any Nonexclusive Screen will or will not infringe
the rights of any Third Party.
11.2.7 Except as disclosed on Exhibit 11.2.6: (i) to the best
knowledge of Aurora, each of the Aurora-Third Party Contracts is valid
and enforceable by Aurora in accordance with its terms, except where
(A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (B) the remedy of
specific performance and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court or
arbitrator before which any proceeding therefor may be brought; (ii)
neither Aurora nor, to the best knowledge of Aurora any such Third
Party Contractee, is in default in the performance, observance, or
fulfillment of any material obligation,
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covenant or condition contained therein, and (iii) to the best
knowledge of Aurora, no event has occurred which (with or without the
giving of notice or lapse of time or both) would constitute a default
thereunder entitling such Third Party to terminate same.
11.3 ***
***CONFIDENTIAL TREATMENT REQUESTED
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***
11.4 BMS Product Indemnification. ***
11.5 Enforcement of Aurora-Third Party Contracts. Aurora agrees
that it will not breach, will make all required payments, and will use all
reasonable efforts to maintain and keep in force and effect, all Aurora Third
Party Contracts (including ***
*** CONFIDENTIAL TREATMENT REQUESTED
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*** as the same may exist from time to time during the term of this Agreement.
Notwithstanding the foregoing, Aurora may, following consultation with BMS and
giving due consideration to any comments provided by BMS, terminate any such
Aurora Third Party Contracts where the termination of same would not have a
material adverse effect upon (i) the grant to BMS of, or upon BMS' ability to
fully utilize or exercise, in accordance with this Agreement the Aurora Patent
Rights, Copyrights, or Technology then licensed or sublicensed to BMS hereunder,
or (ii) Aurora's ability to develop, make or supply, or upon the ability of BMS
to obtain or fully utilize, the UHTSS (or its material components) or the
Reporters in accordance with the terms of this Agreement, or (iii) Aurora's
ability to develop and supply to BMS any Exclusive Screen or BMS' ability to
develop, make and use any Nonexclusive Screen, to use any Exclusive Screen, and
to conduct ESP and NSP activities in accordance with this Agreement.
12.0 TERM AND TERMINATION
12.1 Term. The term of this Agreement will begin on the Effective
Date and shall continue until terminated in accordance with the provisions of
Sections 12.2-12.4 hereof.
12.2 Termination By Mutual Agreement. The parties may at any time
terminate this Agreement, in whole or in part, by written agreement executed by
both Aurora and BMS. In such event, the document effecting such termination
shall specify the continuation or termination of any license rights granted
hereunder, as well as any other terms agreed to by both parties.
12.3 Termination for Cause.
12.3.1 Termination by BMS. In the event that Aurora materially
breaches any of the rights granted to it, or any of the duties or
obligations imposed on Aurora, under this Agreement, and such breach
is not cured within 90 days following receipt of written notice from
BMS to Aurora specifying such breach, then:
12.3.1.1 BMS may terminate this Agreement and/or seek
any damages and remedies available to it at law or in
equity, or
12.3.1.2 BMS may seek any damages and remedies
available to it at law or in equity, and/or may, without
affecting or altering Aurora's continuing obligations under
this Agreement and without affecting or altering any rights
granted to or remedies available to BMS under this Agreement:
12.3.1.2.1 terminate any rights licensed by BMS to
Aurora under this Agreement, in whole or in part,
and/or
12.3.1.2.2 if BMS desires that Aurora cease further
development of the UHTSS, terminate all remaining payments
(other than payments already due and owing as of the date
of termination) under section 2.1.5, except that all bonus
payments that BMS might otherwise be required to make to
Aurora under section 2.1.5.6 shall be void and of no
effect.
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12.3.2 Termination by Aurora. In the event that BMS materially
breaches any of the rights granted to it, or any of the material
duties and obligations imposed on it, under this Agreement, and such
breach is not cured within 90 days following receipt of written notice
from Aurora to BMS specifying such breach, then, subject to sections
12.3.2.3 and 12.3.3, Aurora may:
12.3.2.1 pursue any remedies and damages available to
it at law or in equity and/or
12.3.2.2 terminate this Agreement and/or any rights
licensed or sublicensed to BMS hereunder; provided, that in
such event:
12.3.2.2.1 BMS shall not be required to make any further
payments under any provision of this Agreement, other than
those payments that had accrued as of the date of such
termination or which are payable under section 12.3.2.2.2
below; and
12.3.2.2.2 such termination shall not restrict or
preclude BMS and its Affiliates in any way from continuing
to research, develop, manufacture, use and commercialize
any Hits, Lead Compounds, Approved PLP Compounds, Covered
Products and products, provided, that no such termination
shall relieve BMS of, and BMS shall remain obligated to
pay to Aurora, such milestone payments and royalties as
BMS would otherwise have paid to Aurora under article 3
hereof with respect to Hits and Lead Compounds identified
prior to the date of termination; and
12.3.2.2.3 BMS may exercise the same rights as it would
be entitled to exercise under sections 2.1.7.4 and 2.1.7.5
as would apply if BMS had withdrawn from development of
the UHTSS without cause.
12.3.2.3 Notwithstanding the foregoing, where a breach
by BMS entitling Aurora to terminate under this section 12.3.2
involves a breach pertaining to (i) the use of the Reporters,
a Nonexclusive Screen or Exclusive Screen by BMS or the Aurora
Reporter System Patent Rights or Aurora Reporter System
Technology rights licensed or sublicensed to BMS hereunder for
use in connection therewith, but not a breach by BMS involving
(ii) the use or development of the UHTSS or the Aurora UHTSS
Patent Rights or Aurora UHTSS Technology licensed or
sublicensed to BMS hereunder, or vice-versa as the case may
be, then termination of this Agreement and any rights
hereunder shall be limited to those rights granted by Aurora
under this Agreement that pertain to (i) or (ii), as the case
may be, that pertain to such breach but not the rights and
obligations of the parties under (i) or (ii), as the case may
be, that do not pertain to such breach.
12.3.3 In the event that the breach by BMS involves a milestone
payment or royalty payment under any of sections 3.1.8 or 3.2 hereof,
Aurora shall not be entitled to terminate this Agreement or any rights
licensed or sublicensed to BMS hereunder with
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respect thereto pursuant to section 12.3.2.2 or otherwise, but shall
be entitled to exercise any and all other rights that it may exercise
under article 12.3.2.1.
12.4 Effect of Bankruptcy. If a party becomes insolvent or admits
in writing its inability to pay its debts as they mature or applies for or
consents to the appointment of a receiver or trustee for any of its properties;
or a receiver or trustee is appointed for such party or a substantial portion
of its properties and is not discharged within ninety (90) days; or any
bankruptcy, reorganization, debt arrangement, dissolution, liquidation or other
proceeding under any bankruptcy or insolvency law is instituted by or against
such party and, if instituted against such party, it is consented to by such
party or remains undismissed for ninety (90) days, then
12.4.1 Notwithstanding any such event, such party shall remain
obligated to fulfill its obligations and covenants hereunder, and any
failure to do so or other breach hereunder shall entitle the other
party to terminate this Agreement in accordance with section 12.3
hereof; and
12.4.2 It is the parties desire that, if any such receiver, trustee,
judge, arbitrator or other adjudicator conducting or controlling such
proceedings on behalf of a party should hold that any obligations,
covenants or duties of such party hereunder should be suspended or
declared unenforceable, in whole or in part, then the rights and
benefits granted to the other party hereunder shall remain in full
force and effect, and that any such obligations, covenants or duties
shall be reformed by such receiver, trustee, judge, arbitrator or
other adjudicator so as to be enforceable to the maximum extent
permitted by applicable law and to permit any suspension to be lifted
at the earliest practicable time.
12.5 Effect of Expiration or Termination.
12.5.1 Expiration or termination of this Agreement shall not relieve
the parties of any obligation accruing prior to such expiration or
termination. The obligations and rights of the parties under sections
and articles 2.1.7, 2.1.8, 2.1.12.2, 3.1.7, 3.2.5, 3.3, 3.4, 5.2, 6.4,
7, 8, 9.1, 9.2, 9.3, 10, 11.3, 11.4, 12.5.2, 12.5.3, 13. and 14
hereof, as well as any provisions, which, by their intent or meaning
are intended to so survive, shall survive termination or expiration of
this Agreement. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties under sections
5.1 and 5.3 hereof shall terminate and be of no further force or
effect whatsoever upon any termination of this Agreement.
12.5.2 Nothing in this Agreement (including this article 12) is
intended to prevent or restrict, or shall be construed as preventing
or restricting, BMS and its Affiliates from using, following any
termination of this Agreement pursuant to this Article 12, for any
internal research and drug development purpose (i) any Reporters or
other reagents supplied to BMS by Aurora prior to the applicable
termination date or (ii) any Aurora Technology disclosed to it by
Aurora prior to the applicable termination date where the manufacture
or use of such Technology is not covered by a Valid Claim under the
Aurora Patent Rights or by any Aurora Copyrights. It is further
understood that nothing in this
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section 12.5.2 alters any confidentiality obligations of the parties
under this Agreement with respect to disclosure to Third Parties.
12.5.3 Nothing in this Agreement is intended to prevent or restrict,
or shall be construed as preventing or restricting, BMS and its
Affiliates from researching, developing, making, using or selling any
compound, drug or other product for the prevention, diagnosis or
treatment of diseases and disorders following any termination of this
Agreement, where the research, development, manufacture, use or sale
of such compound, drug or other product is not covered by a Valid
Claim under the Aurora Patent Rights and/or restricted by section
2.1.7.5 hereof.
13.0 DISPUTE RESOLUTION
13.1 Disputes. The parties recognize that disputes as to certain
matters may from time to time arise during the term of this Agreement which
relate to either party's rights and/or obligations hereunder or thereunder. It
is the objective of the parties to establish procedures to facilitate the
resolution of disputes arising under or in connection with this Agreement,
including without limitation all financial disputes and any disputes as to the
validity, construction, performance, default, or breach hereof, in an expedient
manner by mutual cooperation and without resort to litigation. To accomplish
this objective, but subject to section 13.2.3 below, the parties agree to
follow the procedures set forth in this Article 13 if and when such disputes
arise under or in connection with this Agreement between the parties.
13.2 Dispute Resolution Procedures.
13.2.1 If the parties cannot resolve the dispute within 30 days of
formal request by either party to the other, any party may, by written
notice to the other, have such dispute referred to their respective
officers designated below or their successors, for attempted
resolution by good faith negotiations within 30 days after such notice
is received. Said designated officers are as follows:
For BMS: President of the BMS Pharmaceutical Research Institute
For Aurora: President
13.2.2 Any such dispute arising out of or relating to this Agreement
which is not resolved between the parties or the designated officers
of the parties pursuant to section 13.2.1 shall be resolved by final
and binding arbitration conducted in Wilmington, Delaware under the
then current Licensing Agreement Arbitration Rules of the American
Arbitration Association ("AAA"). The arbitration shall be conducted
by one arbitrator who is knowledgeable in the subject matter which is
at issue in the dispute and who is selected by mutual agreement of the
parties or, failing such agreement, shall be selected according to the
AAA rules. In conducting the arbitration, the arbitrator shall
determine what discovery will be permitted, consistent with the goal
of limiting the cost and time which the parties must expend for
discovery (and provided that the arbitrators shall
57
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permit such discovery he/she/they deem necessary to permit an
equitable resolution of the dispute), and shall be able to decree any
and all relief of an equitable nature, including but not limited to
such relief as a temporary restraining order, a preliminary
injunction, a permanent injunction, or replevin of property. The
arbitrator shall also be able to award actual, general or
consequential damages, but shall not award any other form of damage
(e.g., punitive or exemplary damages). The parties shall share
equally the arbitrator's fees and expenses pending the resolution of
the arbitration unless the arbitrator, pursuant to its right but not
its obligations, requires the non-prevailing party to bear all or any
portion of the costs of the prevailing party. The decision of the
arbitrator shall be final and may be sued on or enforced by the party
in whose favor it runs in any court of competent jurisdiction at the
option of such party.
13.2.3 Notwithstanding anything to the contrary in this Article 13,
either party may seek immediate injunctive or other interim relief
from any court of competent jurisdiction with respect to any breach of
articles 5 or 9 hereof, or otherwise to enforce and protect the patent
rights, copyrights, trademarks, or other intellectual property rights
owned or controlled by a party or its Affiliates.
14.0 MISCELLANEOUS
14.1 Assignment. Notwithstanding any provision of this Agreement
to the contrary, either party may assign any of its rights or obligations under
this Agreement in any country to any Affiliates; provided, however, that such
assignment shall not relieve the assigning party of its responsibilities for
performance of its obligations under this Agreement.
Subject to section 9.4, either party may also assign its rights or
obligations under this Agreement in connection with the sale of all or
substantially all of its assets, or may otherwise assign its rights or
obligations under this Agreement with the prior written consent of the other
party. Subject to Section 9.4, this Agreement shall survive any merger or
consolidation of either party with or into another party and no consent for any
such merger, consolidation or similar reorganization shall be required
hereunder; provided, that in the event of such merger, consolidation or similar
reorganization or in the event of a sale of substantially all of the assets of
a party, no intellectual property rights of the acquiring or merging
corporation shall be included in the technology licensed hereunder.
14.2 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties.
Any assignment not in accordance with this Agreement shall be void.
14.3 Force Majeure. Subject to section 2.1.4 or as otherwise
expressly provided in a section hereunder, neither party shall lose any rights
hereunder or be liable to the other party for damages or losses on account of
failure of performance by the defaulting party if the failure is occasioned by
war, fire, explosion, flood, strike, lockout, embargo, act of God, or any other
similar cause beyond the control of the defaulting party, provided that the
party claiming force majeure has exerted all reasonable efforts to avoid or
remedy such force majeure and thereafter
58
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takes all reasonable steps to mitigate any such delay in performance hereunder
and any damages that may be incurred by the other party thereby.
14.4 Notices. Any notices or communications provided for in this
Agreement to be made by either of the parties to the other shall be in writing,
in English, and shall be made by prepaid air mail with return receipt addressed
to the other at its address set forth below. Any such notice or communication
may also be given by hand, or facsimile to the appropriate designation.
Notices shall be sent:
If to BMS, to: Bristol-Myers Squibb Pharmaceutical
Research Institute
P.O. Box 4000
Route 206 & Province Line Road
Princeton, NJ 08543-4000
Attention: Senior Vice President, Exploratory
Research & Drug Discovery
If to Aurora, to: Aurora Biosciences Corporation
11149 No. Torrey Pines Road
La Jolla, CA 92037
Attention: President
provided that if such notice or communication relates to an amendment
to this Agreement or to any notice pursuant to section 12 hereof, a
copy shall also be sent to:
If to BMS, to the attention of the Vice President & Senior
Counsel, Pharmaceutical Research Institute and Worldwide
Strategic Business Planning, at the address set forth above
for BMS.
If to Aurora, to the attention of ___________________________
Either party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Notices sent by mail,
facsimile or cable shall be effective upon receipt and notices given by hand
shall be effective when delivered.
14.5 Governing Law. This Agreement shall be governed by the laws
of the State of Delaware, as such laws are applied to contracts entered into
and to be performed within such state.
14.6 Waiver. Except as specifically provided for herein, the
waiver from time to time by either of the parties of any of their rights or
their failure to exercise any remedy shall not operate or be construed as a
continuing waiver of same or of any other of such party's rights or remedies
provided in this Agreement.
14.7 Severability. If any term, covenant or condition of this
Agreement or the application thereof to any party or circumstance shall, to any
extent, be held to be invalid or
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unenforceable, then the remainder of this Agreement, or the application of such
term, covenant or condition to parties or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant or condition of this Agreement shall be valid and be
enforced to the fullest extent permitted by law; and the parties hereto
covenant and agree to renegotiate any such term, covenant or application
thereof in good faith in order to provide a reasonably acceptable alternative
to the term, covenant or condition of this Agreement or the application thereof
that is invalid or unenforceable, it being the intent of the parties that the
basic purposes of this Agreement are to be effectuated.
14.8 Independent Contractors. It is expressly agreed that Aurora
and BMS shall be independent contractors and that the relationship between the
two parties shall not constitute a partnership, joint venture relationship, or
agency of any kind. Neither Aurora nor BMS shall have the authority to make
any statements, representations or commitments of any kind, or to take any
action, which shall be binding on the other, without the prior written
authorization of the party to do so.
14.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.10 Entire Agreement. This Agreement between the parties of even
date herewith set forth all of the covenants, promises, agreements, warranties,
representations, conditions and understandings between the parties hereto, and
supersede and terminate all prior agreements and understanding between the
parties, with respect to the subject matter hereof. There are no covenants,
promises, agreements, warranties, representations conditions or understandings,
either oral or written, between the parties other than as set forth herein and
therein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the parties hereto unless reduced to writing
and signed by the respective authorized officers of the parties. This
Agreement shall not be strictly construed against either party hereto. Any
conflict between the terms set forth in the text of this Agreement and the
terms of any Exhibit hereto shall be resolved in favor of the text of this
Agreement.
14.11 No Third Party Beneficiaries. No third party including any
employee of any party to this Agreement, shall have or acquire any rights by
reason of this Agreement.
14.12 Construction. References to Articles or Sections hereunder
shall be deemed to include the sections and subsections thereunder. The use of
the word "including" shall be deemed to mean "including but not limited to".
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
BRISTOL-MYERS SQUIBB AURORA BIOSCIENCES
PHARMACEUTICAL RESEARCH CORPORATION
60
<PAGE> 62
INSTITUTE
By: By:
------------------------------- ------------------------------------
Title: Title:
---------------------------- ---------------------------------
Date: November ___, 1996 Date: November ___, 1996
----------------------------- ----------------------------------
61
<PAGE> 63
LIST OF EXHIBITS
Exhibit 1.1 - UHTSS Description and Specifications
Exhibit 1.2 - Description of Existing Reporters
Exhibit 3.1.1 - Terms and Conditions Pertaining to Use of BMS
Materials in the Development of ESP Screens
Exhibit 4.1 - Service and Support
Exhibit 7.2.4 - ***
Exhibit 11.2.1 - List of Aurora Patent Rights and ***
Exhibit 11.2.6 - List of Material Third Party Licensor Agreements
*** CONFIDENTIAL TREATMENT REQUESTED
62
<PAGE> 64
EXHIBIT 1.1
* * *
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 65
Exhibit 1.2
***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 66
Exhibit 3.1.1
Use of BMS Materials by Aurora
***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 67
Exhibit 4.1
Service and Support
***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 68
***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 69
***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 70
***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 71
***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 72
***
***CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 73
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1.0 DEFINITIONS 1
2.0 COLLABORATIVE RESEARCH AND TECHNOLOGY TRANSFER 8
2.1 UHTSS Development 9
3.0 EXCLUSIVE AND NONEXCLUSIVE SCREENING PROGRAMS 27
3.1 Exclusive Screening Program 27
3.2 Nonexclusive Screening Payments 33
3.3 Ownership of Data 35
3.4 Development of Products 35
3.5 Laboratory Facilities and Personnel 36
3.6 Payments to Third Parties by Aurora. 36
4.0 SERVICE AND SUPPORT 37
4.1 Service and Support 37
5.0 INTELLECTUAL PROPERTY RIGHTS 37
5.1 License Rights. 37
5.2 Ownership Rights. 39
5.3 Sublicensing. 40
5.4 Software. 40
6.0 PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS 41
6.1 Payment Term. 41
6.2 Payment Dates. 41
6.3 Accounting. 41
6.4 Records. 41
6.5 Withholding Required by Law. 41
7.0 INFRINGEMENT BY THIRD PARTIES 42
7.1 Actual or Threatened Infringement of BMS Materials
and Products. 42
7.2 Actual or Threatened Infringement of Aurora Patent
Rights 42
8.0 DEFENSE OF INFRINGEMENT CLAIMS 43
8.1 Defense of Infringement Claims Pertaining to Lead
Compounds, Approved PLP Compounds, and Products. 43
8.2 Defense of Infringement Claims Pertaining to Patent
Rights Owned or Controlled by Aurora 44
9.0 TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY, AND
CHANGE OF CONTROL 44
9.1 Confidentiality 44
9.2 Publication of Results. 46
9.3 Publicity. 46
</TABLE>
<PAGE> 74
<TABLE>
<S> <C> <C>
9.4 Change in Control 46
10.0 PROVISIONS CONCERNING THE FILING, PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS; COPYRIGHTS 47
10.1 Sole Inventions 47
10.2 Joint Inventions 48
10.3 Exclusive Screens 48
10.4 Copyrights 49
11.0 REPRESENTATIONS, WARRANTIES AND COVENANTS 49
11.1 Mutual Representations and Warranties. 49
11.2 Aurora Technology Representations and Warranties. 50
11.3 Aurora Indemnification. 52
11.4 BMS Product Indemnification. 53
11.5 Enforcement of Aurora-Third Party Contracts 54
12.0 TERM AND TERMINATION 54
12.1 Term. 54
12.2 Termination By Mutual Agreement. 54
12.3 Termination for Cause. 54
12.4 Effect of Bankruptcy. 56
12.5 Effect of Expiration or Termination. 56
13.0 DISPUTE RESOLUTION 57
13.1 Disputes. 57
13.2 Dispute Resolution Procedures. 57
14.0 MISCELLANEOUS 58
14.1 Assignment. 58
14.2 Binding Effect. 59
14.3 Force Majeure. 59
14.4 Notices. 59
14.5 Governing Law. 60
14.6 Waiver. 60
14.7 Severability. 60
14.8 Independent Contractors. 60
14.9 Counterparts. 60
14.10 Entire Agreement. 60
14.11 No Third Party Beneficiaries. 61
14.12 Construction. 61
</TABLE>
<PAGE> 75
EXHIBIT 7.2.4
***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 76
EXHIBIT 11.2.1
***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 77
EXHIBIT 11.2.6
***
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.23
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
BETWEEN
ELI LILLY AND COMPANY
AND
AURORA BIOSCIENCES CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. LILLYUHTSS DEVELOPMENT AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1. LILLYUHTSS Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. COLLABORATIVE SCREENING PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.1. Collaborative Screening Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2. Lilly Screening Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3. Ownership of Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.4. Development of Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.5. Laboratory Facilities and Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4. SERVICE AND SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.1. Service and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5. INTELLECTUAL PROPERTY RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1. Grant of Rights from Aurora to Lilly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.2. Grant of Rights from Lilly to Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3. Ownership of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6. PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES, AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1. Payment and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2. Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3. Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.4. Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7. INTELLECTUAL PROPERTY ENFORCEMENT AND DEFENSE OF INFRINGEMENT CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1. Intellectual Property Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2. Defense of Infringement Claims Pertaining to Lilly Hits, Approved PTAC Compounds, and Covered Products. . . . . . . 34
7.3. Defense of Infringement Claims Pertaining to Aurora Technology and Aurora Patent Rights . . . . . . . . . . . . . . 35
8. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY, AND CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
8.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Publication of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9. PATENT PROSECUTION AND COPYRIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.1. Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2. Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
TABLE OF CONTENTS, CONTINUED
<TABLE>
<S> <C>
10. WARRANTIES AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1. Mutual Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2. Warranties and Aurora Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3. Aurora Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.4. Warranties and Lilly Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.5. Lilly Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11. TERM, PARTIAL PERFORMANCE AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.1. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.2. Termination By Mutual Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.3. Termination Without Cause by Lilly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.4. Partial Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.5. Termination for Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.6. Effect of Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.7. Effect of Expiration or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.1. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.2. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.3. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.5. Governing Law and Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.6. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.7. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.8. Independent Contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.11. No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.12. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.13. Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
3
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4
<PAGE> 5
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS AGREEMENT is entered into as of the Effective Date (as defined below) by
and between ELI LILLY AND COMPANY, an Indiana corporation, having offices at
Lilly Corporate Center, Indianapolis, Indiana 46285 ("Lilly"), and between
AURORA BIOSCIENCES CORPORATION, a Delaware corporation having offices at 11149
North Torrey Pines Road, La Jolla, California 92037 ("Aurora").
RECITALS
WHEREAS, Aurora has expertise in the development of automated ultra-high
throughput screening systems and screening biologies/chemistries used therein;
and
WHEREAS, Aurora has the scientific expertise and capacity to undertake the
alliance activities described below; and
WHEREAS, Lilly has the capability to undertake screening and development of
drug products for the prevention, treatment and diagnosis of diseases and
disorders.
NOW, THEREFORE, in consideration of the foregoing premises and of the
covenants, representations and agreements set forth below, the parties agree as
follows:
1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Activity" means a ***.
"Affiliate" means, with respect to any Person, any other Person which directly
or indirectly controls, is controlled by, or is under common control with, such
Person. A Person shall be regarded as in control of another Person if
it/he/she owns, or directly or indirectly controls, more than fifty percent
(50%) of the voting securities (or comparable equity interests) or other
ownership interests of the other Person, or if it/he/she directly or indirectly
possesses the power to direct or cause the direction of the management or
policies of the other Person, whether through the ownership of voting
securities, by contract or any other means whatsoever.
"Agreement" means this agreement, together with all appendices, exhibits and
schedules hereto, and as the same may be amended or supplemented from time to
time hereafter by a written agreement duly executed by authorized
representatives of each party hereto.
*** CONFIDENTIAL TREATMENT REQUESTED
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"Approved PTAC Compound" means a ***
"Aurora Copyrights" means all copyrights throughout ***
"Aurora Patent Rights" means the Aurora Reporter System Patent Rights and the
Aurora UHTSS Patent Rights.
"Aurora Reporter" means *** The Aurora Reporters available as of the
Effective Date are described on Exhibit 1.2 attached hereto.
"Aurora Reporter System Technology" means all Technology owned or Controlled by
Aurora or its Affiliates that relates to the Aurora Reporter Systems.
"Aurora Reporter System Patent Rights" means all Patent Rights owned or
Controlled by Aurora or its Affiliates which relate to the Aurora Reporter
Systems.
"Aurora Technology" means the Aurora Reporter System Technology and the Aurora
UHTSS Technology.
"Aurora UHTSS Patent Rights" means all Patent Rights ***
"Aurora UHTSS Technology" means all Technology ***
"Collaborative Screening Program" and "Collaborative Screen" shall have the
meanings set forth in Section 3.1.
"Completion" or "Completed" has the meaning set forth in Section 2.1.3.
***CONFIDENTIAL TREATMENT REQUESTED
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"Confidential Information" means all information, compounds, data, and
materials received by either party from the other party pursuant to this
Agreement and all information, compounds, data, and materials developed in the
course of the collaboration, including, without limitation, Technology of each
party, subject to the exceptions set forth in Sections 8.1.
"Control" or "Controlled" means possession by a party or its Affiliates of the
ability to grant a license or sublicense in accordance with the terms of this
Agreement, and without violating the terms of any agreement by such party with
any Third Party.
"Covered Product" means ***
"CSP Steering Committee" shall have the meaning set forth in Section 3.1.1.
"Deliverables" has the meaning set forth in Section 2.1.2.1 hereof.
"Derivative" means ***
"Development Phases" has the meaning set forth in Section 2.1.2.1 hereof.
"Effective Date" means the date that this Agreement is executed by the last
party to so execute.
"FDA" shall mean the United States Food and Drug Administration, or any
successor agency having regulatory jurisdiction over the manufacture,
distribution and sale of drugs in the United States and equivalent in any other
jurisdiction.
"First Commercial Sale" of a Covered Product shall mean the first commercial
sale for use or consumption of such Covered Product in a country after required
marketing and, if applicable, pricing approval has been granted by the
applicable regulatory authority(ies) of such country.
"Hit" means *** ;
***
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 8
***
"IND" means an Investigational New Drug application filed with and accepted by
the FDA and any corresponding application filed in any country other than the
United States.
"Internal Research" means any ***
"Invention" means any new and useful process, machine, manufacture, or
composition of matter, or improvement thereto, whether or not patentable.
"Know-How" means information and data which is not generally known to the
public, comprising: Inventions, designs, concepts, algorithms, formulae,
software, supplies, techniques, practices, processes, methods, knowledge,
skill, experience, expertise and technical information.
"Lilly Patent Rights" means Patent Rights owned or Controlled by Lilly and
relating to the Collaborative Screening Program or Aurora Reporter Systems.
"Lilly Screening Program," "LSP" or "Lilly Screen" have the meanings set forth
in Section 3.2 hereof.
"Lilly Technology" means Technology owned or Controlled by Lilly and relating
to the Collaborative Screening Program.
"Lilly Test Materials" ***
"LILLYUHTSS" means the ***
*** CONFIDENTIAL TREATMENT REQUESTED
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***
"LILLYUHTSS Steering Committee" shall have the meaning set forth in Section
2.1.1.
"LILLYUHTSS Target Delivery Date" has the meaning set forth in Section 2.1.2.1
hereof.
Manufacturing Cost" ***
"Materials" means any reagents, probes, genetic sequences, promoters,
enhancers, probes, linkage probes, vectors, plasmids, proteins and fragments
thereof, peptides, biological modifiers, antigens, antibodies, antagonists,
agonists, inhibitors, chemicals, and compounds.
"Module One" has the meaning set forth in Section 2.1.2.1 (i) hereof.
"Module Two" has the meaning set forth in Section 2.1.2.1 (ii) hereof.
"Module Three" has the meaning set forth in Section 2.1.2.1 (iii) hereof.
"NDA" means a New Drug Application or Product License Application, as
appropriate, and all supplements pursuant to the requirements of the FDA,
including all documents, data and other information concerning Covered Products
which are necessary for full FDA approval to market a Covered Product, or the
equivalent in any other country.
"Net Sales" shall mean, with respect to Covered Product(s), *** ***
*** CONFIDENTIAL TREATMENT REQUESTED
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***
***
Such amounts shall be determined from the books and records of Lilly maintained
in accordance with generally accepted accounting principles ("GAAP")
consistently applied.
***
"Patent Rights" means all U.S. or foreign (including regional authorities such
as the European Patent Office) regular or provisional patent applications,
including any continuation, continuation-in-part, or division thereof or any
substitute application therefor or equivalent thereof, and any patent issuing
thereon, including any reissue, reexamination or extension thereof and any
confirmation patent or registration patent or patent of additions based on any
such patent, containing one or more claims to an Invention (and in the case of
an issued patent, containing one or more Valid Claims), and which a party
hereto owns or Controls, individually or jointly, any title thereto or rights
thereunder.
"Person" shall mean an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint
venture, pool, syndicate, sole
*** CONFIDENTIAL TREATMENT REQUESTED
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proprietorship, unincorporated organization, governmental authority, or any
other form of entity not specifically listed herein.
"Phase III Clinical Trial" means that portion of a clinical development program
which provides for the trial of an Approved PTAC Compound on sufficient numbers
of patients and which is designed to establish the safety and efficacy of such
a product in order to support an NDA.
"PTAC" means *** or its equivalent.
"Product" means any ***
"Royalty Term" means ***
"Specifications" of the LILLYUHTSS shall have the meaning set forth in Section
2.1 hereof.
"Technology" means Materials and Know-How.
"Term" means the period beginning on the Effective Date and terminating in
accordance with this Agreement, as in Section 11.
"Territory" means all countries of the world.
"Third Party" means any entity other than (i) Aurora and any of its Affiliates,
and (ii) Lilly and any of its Affiliates.
"Valid Claim" means: (a) an issued claim under an issued patent within the
Patent Rights, which has not (i) expired or been canceled, (ii) been declared
invalid by an unreversed and unappealable decision of a court or other
appropriate body of competent jurisdiction, (iii) been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise, and/or (iv) been
abandoned; or (b) a claim included in a pending patent application within the
Patent Rights that is being actively prosecuted in accordance with this
Agreement and which has not been (v) canceled, (vi) withdrawn from
consideration, (vii) finally determined to be unallowable by the applicable
governmental authority for whatever reason (and from which no appeal is or can
be taken), and/or (viii) abandoned.
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 12
"Validation" has the meaning set forth in Section 2.1.3.
2. LILLYUHTSS DEVELOPMENT AND DELIVERY
2.1. LILLYUHTSS Development.
Aurora will be responsible for the design, development, manufacture,
supply, delivery and installation of the LILLYUHTSS, and will use its
best efforts to complete same within the time frames for each
Development Phase set forth below. The Specifications for the
Deliverables to be provided by Aurora, as customized for Lilly, are
set forth in Exhibit 1.1 hereto ("Specifications").
12
<PAGE> 13
2.1.1. Project Management.
The parties shall establish a committee that will use
reasonable efforts to coordinate the development, training,
completion, and validation of the LILLYUHTSS (the "LILLYUHTSS
Steering Committee"). The LILLYUHTSS Steering Committee will
be established not later than thirty (30) days after the
Effective Date. The LILLYUHTSS Steering Committee shall
consist of three (3) representatives designated by Lilly and
three (3) representatives designated by Aurora. Each
representative will have one vote and each party will have
exactly three votes. The LILLYUHTSS Steering Committee will
meet at least three times per year at mutually agreed upon
times and locations using mutually agreed upon meeting
formats, including tele- and video- conferencing.
A material change in the Specifications will be approved by
simple majority vote of the LILLYUHTSS Steering Committee. In
the event of a deadlock by the LILLYUHTSS Steering Committee
on the approval of a material change in the Specifications
proposed by Lilly, Aurora shall have the right to approve such
material change to the Specifications. In the event of a
deadlock by the LILLYUHTSS Steering Committee on the approval
of a material change in the Specifications proposed by Aurora,
Lilly shall have the right to approve such material change to
the Specifications. The Validation or Completion of the
LILLYUHTSS will be approved by simple majority vote of the
LILLYUHTSS Steering Committee. In the event of a deadlock by
the LILLYUHTSS Steering Committee of the approval of the
Validation or Completion of the LILLYUHTSS, Lilly's Vice
President of Research Technologies and Proteins and Aurora's
president will meet in person or by video-conferencing to
resolve the approval of the Validation or Completion of the
LILLYUHTSS.
Aurora shall also submit progress reports to the LILLYUHTSS
Steering Committee at such time(s) as Lilly may reasonably
request, but in any event will provide a written update of its
work on the development of the LILLYUHTSS (including
discussion of any significant problems encountered and
significant changes in strategy or design) every six (6)
months.
From time to time during the term of this Agreement, Lilly
representatives shall have the right, upon reasonable advance
written notice to Aurora, to
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<PAGE> 14
visit the facilities where the LILLYUHTSS development is being performed.
14
<PAGE> 15
2.1.2. Development Phases; Delivery.
2.1.2.1. Development Phases.
Aurora will design and develop the LILLYUHTSS in
accordance with the following development phases
("Development Phases"), as more fully described in
Exhibit 1.1 hereto. Aurora will develop and install
the deliverables for the LILLYUHTSS ("Deliverables")
contemplated by each such Development Phase (all such
Deliverables for a Development Phase comprising a
"Module") not later than the dates set forth below
(each such date referred to as a "LILLYUHTSS Target
Delivery Date"):
i) Module One - Automated Storage and Retrieval
- ***; and
ii) Module Two - Liquid handling, Screening
Formats, Detection and Screen Development
Stage - ***; and
iii) Module Three - Informatics and Integration
("Module Three"), and Installation of a Fully
Operational, Complete LILLYUHTSS System - ***
2.1.2.2. Shipment, and Installation.
Aurora shall be responsible for the appropriate
packaging of all Deliverables to be delivered to
Lilly. Lilly will be responsible for associated
delivery charges. Aurora will be responsible for
installing all Deliverables, unless otherwise
mutually agreed to in writing. Aurora will begin
such installation within 15 working days of delivery
to Lilly and will use its best efforts to complete
the same as promptly as possible thereafter and Lilly
will use best efforts to prepare in advance for such
installation and to facilitate such installation
after delivery.
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 16
2.1.3. Validation and Completion Testing.
All Deliverables shall be subject to testing by or for Aurora
prior to delivery to Lilly. When all Deliverables for a
Module have successfully conformed to or satisfied the
Specifications for such Deliverables ("Validation") in
Exhibits 1.1 hereto, or as the same may be amended or
supplemented in writing by mutual agreement of the parties
from time to time hereafter, Aurora shall give Lilly written
notice.
Upon installation by Aurora of all Deliverables for a
particular Development Phase at Lilly, additional testing
shall commence by Aurora and Lilly and shall continue for such
period of time as may be reasonably required to verify in the
opinion of the LILLYUHTSS Steering Committee whether all such
Deliverables meet the Specifications for such Deliverables
("Completion") in Exhibits 1.1 hereto, or as the same may be
amended or supplemented in writing by the parties from time to
time hereafter therefor. Upon Completion of all Deliverables
for a Module at Lilly, Aurora shall give Lilly written notice
thereof, in which event Lilly shall become obligated to pay
such amounts provided in Section 2.1.4. Upon the payment by
Lilly of such amounts, Lilly will take ownership the
associated Deliverable.
2.1.4. Payments Relating to Development of the LILLYUHTSS.
Lilly will make the following payments to Aurora in
consideration of the design, development, delivery,
manufacture, support, Validation and Completion of the
LILLYUHTSS and its modules:
2.1.4.1. A payment *** shall be made within fifteen
(15) business days after the Effective Date
in consideration for the design and
development of the LILLYUHTSS by Aurora
hereunder.
2.1.4.2. Module One: A *** shall be made within
thirty (30) days following Completion of
all Deliverables required by Section
2.1.2.1 (i).
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 17
2.1.4.3. Module Two: *** shall be made within
thirty (30) days following Completion of
all Deliverables required by Section
2.1.2.1 (ii).
2.1.4.4. Module Three: *** *** shall be within
thirty (30) days following Completion of
all Deliverables required by Section
2.1.2.1 (iii).
2.1.4.5. Ongoing payments of *** shall be made for
the design and development of the
LILLYUHTSS, the first payment to be made on
or before January 15, April 15, July 15 or
October 15 occurring after the Effective
Date and then every three months
thereafter, which payments shall cease upon
the first to occur of *** of *** ;
provided, however, that if ***
2.1.4.6. In addition to any payments to be made
under Sections 2.1.4.1-2.1.4.5, the
following payments shall be made depending
upon the date of Completion of Module
Three of the LILLYUHTSS pursuant to
Section 2.1.3:
2.1.4.6.1. ***
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 18
2.1.4.6.2. ***
2.1.4.6.3. ***
2.1.5. Penalty for Late Completion of LILLYUHTSS.
If Completion of the LILLYUHTSS under Section 2.1.2.1 (iii)
occurs more than *** following the Effective Date, then as
penalty therefor, Aurora will pay to Lilly *** even *** for ***
following the date that is *** after the Effective Date until
such Completion occurs (if at all); provided, that such
payments shall not in any case exceed *** .
***
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 19
***
2.1.6.2. Syndicate Formation and Limitations.
It is understood that Aurora is seeking to
collaborate with, and supply to, and grant certain
license rights to Third Parties with respect to the
use and supply of a system similar to the LILLYUHTSS
to such Third Party. Notwithstanding the foregoing,
Aurora covenants and agrees that, so long as Lilly is
not in default of any payment obligation hereunder
and has not
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 20
terminated its participation in the development of the
LILLYUHTSS, then, until the date that is *** following the
date of Completion by Aurora of the fully operational
LILLYUHTSS pursuant to Section 2.1.3, Aurora will not, without
Lilly's prior written consent, provide more than *** Parties
with license rights to the Aurora UHTSS Patent Rights or Aurora
Copyrights or Aurora UHTSS Technology to use any ultra-high
throughput screening system made by Aurora that is similar to
the LILLYUHTSS and the right to purchase such ultra-high
throughput screening system.
2.1.7. Supply of Reporters.
Aurora shall deliver all of the Aurora Reporters listed in
Exhibit 1.2 to Lilly within *** of the Effective Date. So long
as Lilly has made payments in accordance with Section 2.1.8
hereof, then, at Lilly's request, Aurora will use reasonable
efforts to supply within *** receipt of a written purchase
order therefor, reagents/tools pertaining to the Aurora
Reporter Systems as Lilly may require in order to use the
Aurora Reporter Systems in a Lilly Screening Program conducted
by Lilly. Lilly will be charged for all supplies so delivered
*** . Lilly will pay for all supplies so ordered within ***
after delivery to Lilly.
2.1.8. Payments in Consideration of the Use of the Aurora
Reporter System Technology and Aurora Reporter
System Patent Rights.
Lilly's right to use Aurora Reporters requires that Lilly pay
to Aurora *** ). Half of *** will be made within ten (10)
business days of the Effective Date and the second half of ***
shall be made *** after the Effective Date. All other *** for
Aurora Reporters will be distributed as a ***
Three years after the Effective Date, Lilly may elect to renew
its yearly license for Aurora Reporters for an *** and for
consecutive one
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 21
year periods thereafter. Lilly will provide Aurora with sixty
(60) days written notice of Lilly's intent to renew or not renew
its yearly license. *** after the Effective Date, *** ).
2.1.8.1. Option to Additional Aurora Reporters.
So long as Lilly satisfies its payment obligations
under Section 2.1.8 for Aurora Reporters, Aurora
agrees to negotiate in good faith with Lilly to use
additional reporters, which are not listed in Exhibit
1.2 and developed by Aurora, for Lilly's Internal
Research for terms comparable to those offered by
Aurora to a Third Party.
3. COLLABORATIVE SCREENING PROGRAMS
3.1. Collaborative Screening Program
The parties will collaborate in developing and validating
Collaborative Screens as part of a Collaborative Screening Program
(CSP), as follows:
3.1.1. Collaborative Screen Program Management.
Under the CSP, Lilly and Aurora will collaborate to develop
high throughput and/or ultra high throughput screens for
Lilly's use in accordance with this Agreement. Lilly shall
propose *** targets, one molecular target at a time, and
Aurora may, within thirty (30) days of such proposal, choose to
select such molecular target. Lilly shall continue to propose
molecular targets until Aurora has selected a total of ***
targets for screen development. The *** molecular targets
proposed by Lilly shall be targets that Lilly reasonably
believes to be amenable for the development of a high
throughput screen using Aurora Technology. The parties will
use reasonable efforts to select *** following the Effective
Date, and the remaining target *** after the Effective Date.
No later that thirty (30) days after the Effective Date, the
parties shall establish a CSP Steering Committee (the "CSP
Steering Committee"). The CSP Steering Committee shall
consist of three (3) representatives designated by Lilly and
three (3) representatives designated by Aurora.
***CONFIDENTIAL TREATMENT REQUESTED
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Each representative will have one vote and each party will
have exactly three votes. The CSP Steering Committee will
meet at least three times per year at mutually agreed upon
times and locations using mutually agreed upon meeting
formats, including tele- and video-conferencing.
The CSP Steering Committee will coordinate screen development
(including the formation and management of a CSP Work Plan for
each CSP Screen within thirty (30) days of Aurora choosing to
accept a Lilly proposed molecular target), and approve the
validation of each CSP screen. Each screen, together with all
of the reagents to be delivered by Aurora in connection
therewith, is referred to hereinafter as a "CSP Screen", which
shall be manufactured by Aurora and delivered to Lilly. The
validation of each CSP Screen at Aurora will be approved by a
simple majority vote of the CSP Steering Committee. In the
event of a deadlock by the CSP Steering Committee of the
approval of the validation of a CSP Screen, Lilly shall have
the right to approve the validation of the CSP Screen.
Promptly following mutual agreement on the selection of each
target, the CSP Steering Committee will jointly prepare an
"CSP Work Plan", which shall set forth the respective
responsibilities of the in the development of each CSP Screen,
and which must be approved by the CSP Steering Committee.
Each such CSP Work Plan will contain, where applicable, a
description of the tasks to be performed by each party,
location, the specific deliverables and documentation to be
produced by Aurora, validation criteria for each CSP Screen, a
schedule of performance, fees (as determined in accordance
with this Section 3.1.1), a schedule of payments, and any
other relevant work specifications.
Promptly following the approval of each CSP Work Plan, the
parties will commence their respective duties under the CSP
Work Plan for the development of the applicable CSP Screen.
All work under a CSP Work Plan shall be performed in
accordance with the provisions of this Agreement, and each
party will use reasonable efforts to complete its obligations
under the CSP Work Plan as expeditiously as practicable.
In developing each CSP Work Plan, the CSP Steering Committee
will determine and agree upon the fee to be paid by Lilly to
Aurora for development, manufacture and delivery of an CSP
Screen to Lilly for the target in question. The parties
understand and agree that the exact fee per target will be
determined as the sum of the following: ***
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 23
*** In the event of a deadlock by the CSP Steering Committee
of the approval of the CSP Work Plan, Lilly shall have the
right to approve the validation of the CSP Screen.
Alternatively, Aurora may elect to accept to undertake the
development of such CSP Screen for *** . The *** (i) shall be
reimbursed to Aurora by Lilly monthly in arrears *** an *** by
*** , and the *** shall be paid within thirty (30) days
following *** ***. If Aurora elects to undertake the CSP for
*** , such payment shall be paid within thirty (30) days
following the delivery of a validated Collaborative Screen as
per the CSP Work Plan.
If the expenses for an approved CSP Work Plan exceed the
amount approved for such CSP Screen, then a simple majority
vote of the CSP Steering Committee will approve additional
funds for such CSP Work Plan and require Lilly to provide the
same. If the CSP Steering Committee does not approve
additional funds in excess of the amount approved for such CSP
Screen for such CSP Work Plan, then Lilly will notify Aurora
in writing of one of the following options within ten (10)
days:
i) Lilly can elect to not pursue such
Collaborative Screen and Aurora can optionally a)
complete such Collaborative Screen and submit it for
validation to the CSP Steering Committee or b) Aurora
can abandon the Collaborative Screen, in either case
such Collaborative Screen will count as one of the
Collaborative Screens of the CSP,
ii) Lilly can elect to pursue such Collaborative
Screen as a Lilly Screen, provided, however that
Aurora can optionally a) continue to develop such
Collaborative Screen for no more than an additional
three months and submit it for validation to the CSP
Steering Committee or b) Aurora can abandon the
Collaborative
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 24
Screen (in all such cases under 3.1.1 (ii) such
Collaborative Screen will count as one of the
Collaborative Screens of the CSP), or
iii) Lilly can elect to complete such
Collaborative Screen, Aurora will transfer all
Materials developed by Aurora pursuant to the CSP
Work Plan for such Collaborative Screen, and upon
completion will then be submitted to the CSP Steering
Committee for validation, and such Collaborative
Screen will count as one of the Collaborative Screens
of the CSP.
If at any time during the Term a CSP Screen for whatever
reason loses its effectiveness or efficacy or is no longer
biologically active, Aurora will replace same as promptly as
practicable, in which event Lilly will reimburse Aurora for
*** .
3.1.2. Deployment of Screen by Lilly.
Lilly will use reasonable efforts to employ each such accepted
CSP Screen to screen Lilly Test Materials, using Lilly's then
current screening practices.
3.1.3. Additional Screens.
Subject to the same terms and conditions as are set forth in
this Section 3.1, Lilly may elect that the number of CSP
Screens on which Lilly and Aurora shall collaborate to develop
and deliver to Lilly be increased *** .
3.1.4. Rights in Lilly Compounds.
All right, title and interest in any Inventions relating in
any way to any Lilly compounds or any Lilly Test Materials and
which arise out of, or are conceived or reduced to practice as
a result of, the development or use of an CSP Screen by or for
Lilly shall be owned solely by Lilly.
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 25
3.1.5. Payments to Aurora.
In addition to such payments as are made by Lilly to Aurora
pursuant to Section 3.1.1 hereof, the following payments shall
be made to Aurora with respect to the delivery and use of the
CSP Screens by Lilly:
3.1.5.1. Milestones.
Lilly will pay to Aurora:
3.1.5.1.1. ***
3.1.5.1.2. For each Approved PTAC Compound
identified in a CSP Screen that
achieves the following
milestones, Lilly will promptly
notify Aurora of same and will
pay the following amounts to
Aurora:
*** CONFIDIENTIAL TREATMENT REQUESTED
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<PAGE> 26
<TABLE>
<CAPTION>
Event Payment (US$)
----- ----------------
<S> <C>
*** ***
***
***
***
</TABLE>
provided, however, that for a given milestone, Lilly will only
make one such payment per CSP Screen. All payments
shall be paid to Aurora within thirty (30) days following such
notification from Lilly.
3.1.5.2. Royalties.
With respect to each Covered Product based on a
Collaborative Screen Lilly shall pay a royalty on Net
Sales of such Covered Product during the Royalty Term
for such Covered Product, as follows, the sum of the
worldwide Net Sales ***); provided, however, that
cumulative royalties paid for a Covered Product will
not exceed ***.
3.2. Lilly Screening Payments
As part of the rights licensed under Section 5.1.1 hereof, Lilly and
its Affiliates shall have a license and right to use the Aurora
Reporter System Technology and Aurora Reporter System Patent Rights
licensed to it under Section 5.1.1 hereof, and to use any Aurora
Reporters or other reagents/tools supplied to Lilly by Aurora pursuant
to Section 2.1.7, to develop, make and use in Internal Research
targeting any targets as Lilly in its discretion may select
(collectively, such activities referred to as the "Lilly Screening
Program" or "LSP", and any such screen, the manufacture or use of
which is covered by the Aurora Reporter System
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 27
Technology and the Aurora Reporter System Patent Rights or in which
the Reporters supplied by Aurora are used, referred to as a "Lilly
Screen"). Lilly may further conduct any Internal Research,
development and commercialization thereafter of any Hits arising out
of any such LSP activities, or Derivatives of such Hits, as Lilly in
its discretion may elect to conduct. Subject to Section 3.2.3 below,
Lilly shall make milestone payments to Aurora with respect to such
Hits as arise out of any use of a Lilly Screen by Lilly or its
Affiliates, as follows:
3.2.1. Subject to Section 3.2.3, for *** , Lilly shall
promptly notify Aurora of such PTAC approval and
will pay Aurora *** . Payment shall be paid
to Aurora within thirty (30) days following such
notification from Lilly.
3.2.2. If an Approved PTAC Compound for which Lilly has made
a payment to Aurora under Section 3.2.1 reaches the
following milestones, Lilly will promptly notify
Aurora of same and will pay the following amounts to
Aurora:
<TABLE>
<CAPTION>
Event Payment (US$)
----- ----------------
<S> <C>
*** ***
***
***
</TABLE>
Payments shall be made to Aurora within sixty (60) days
following such notification from Lilly.
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 28
3.2.2.1 Royalties.
With respect to each Covered Product based on a Hit
or Derivative identified through the use of any Lilly
Screen and where the development, manufacture, or use
the Lilly Screen is covered by a Valid Claim of the
patent application listed in Exhibit 5.2, Lilly shall
pay a royalty on Net Sales of such Covered Product
during the Royalty Term for such Covered Product, as
follows, ***
3.2.3.
If Lilly enters into an agreement with Aurora to
develop *** CSP Screens under Section 3.1 hereof,
then each such additional CSP Screen in excess of ***
shall reduce the number of Lilly Screens under this
Section 3.2 for which payments may need to be made
under Sections 3.2.1 above. For example, if Lilly
enters into CSP Work Plans for *** *** CSP Screens,
then the milestone payments under Section 3.2.1 shall
apply only to *** PTAC Approved Compounds
identified through the use of any Lilly Screen.
3.3. Ownership of Data.
All results and data solely with respect to any Hits and Approved PTAC
Compounds (and Derivatives of any of the foregoing made or obtained
by Lilly) generated by Lilly, its Affiliates and its and their
contractors arising out of the use by any of them of the LILLYUHTSS
and any CSP Screen or Lilly Screen, the use of any of the rights
licensed under Section 5 hereof, or otherwise arising out of this
Agreement shall be owned exclusively by Lilly and shall be treated as
Lilly Confidential Information hereunder.
3.4. Development of Products
Lilly will in its discretion determine which, if any, such Hit(s), or
Derivative(s) of Hit(s), will be approved as an Approved PTAC
Compound.
Lilly will be responsible for all pre-clinical and clinical
development, including all regulatory filings, of Hits and Approved
PTAC Compounds arising out of this Agreement. Lilly shall have
discretion and control over the conduct of, and all activities
associated with, the development or abandonment of any Approved
*** CONFIDENTIAL TREATMENT REQUESTED
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PTAC Compound, all regulatory activities relating to the manufacture,
use or sale of any Approved PTAC Compound or Product, and the
commercialization and marketing of any Product in any country. All
INDs, NDAs and other regulatory filings made or filed by Lilly for any
Approved PTAC Compound or Product shall be owned solely by Lilly.
Lilly will provide, at a minimum, written notification to Aurora once
every six (6) months on the development status of any Approved PTAC
Compound then in development arising out of any CSP Screening Program
or Lilly Screens that may be subject to milestones or royalties and
which shall be treated as Lilly Confidential Information hereunder.
Other than royalty reports required hereunder, no reports shall be
required of Lilly with respect to any activities connected with the
commercialization of any Covered Product approved for marketing in any
country.
3.5. Laboratory Facilities and Personnel
Aurora and Lilly shall each, at their respective cost and expense,
provide suitable and sufficient laboratory facilities and equipment,
and will devote sufficient, experienced personnel, as is needed to
carry out their respective obligations under this Agreement.
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4. SERVICE AND SUPPORT
4.1. Service and Support
For a period of twelve (12) months after Completion of a complete,
fully operational LILLYUHTSS pursuant to Section 2.1.3, Aurora will
provide, without additional charge to Lilly, service and support for
the applicable system and all system components, as such service and
support is more fully described on Exhibit 4.1 attached hereto
("Service and Support"). Aurora will be responsible for providing and
paying for this Service and Support, whether provided by Aurora itself
or through third party contractors (including those providing any
LILLYUHTSS components to Aurora). Aurora will designate an
appropriate Aurora employee to coordinate such Service and Support.
Following the applicable twelve (12) month period, Lilly may elect to
purchase Service and Support annually thereafter for such LILLYUHTSS
(or component thereof) for fee of *** . This purchased annual
Service and Support will be available to Lilly until *** pursuant to
Section 2.1.3, after which period Lilly and Aurora will negotiate in
good faith for further Service and Support.
5. INTELLECTUAL PROPERTY RIGHTS.
5.1. Grant of Rights from Aurora to Lilly
*** CONFIDENTIAL TREATMENT REQUESTED
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5.1.1. ***
5.2. Grant of Rights from Lilly to Aurora.
5.2.1. Lilly grants to Aurora and its Affiliates a
nonexclusive, worldwide license, without the right to
sublicense, under Lilly Patent Rights and Lilly
Technology to perform its obligations under this
Agreement relating to the Collaborative Screens.
Lilly also grants to Aurora and its Affiliates a
nonexclusive, worldwide license, with the right to
sublicense, under Lilly Patent Rights that are filed
as patent applications or are conceived as inventions
during any given year for which Lilly has made an
annual payment for Aurora Reporters as set forth in
Section 2.1.8, to make, use or sell Aurora Reporters
in any other reporter assays. The rights granted
hereunder shall continue until terminated in
accordance with the provisions of this Agreement.
5.3. Ownership of Intellectual Property
*** CONFIDENTIAL TREATMENT REQUESTED
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5.3.1. Except as otherwise expressly provided in this
Agreement, nothing in this Agreement is intended to
convey or transfer ownership by one party to the
other of any rights, title or interest in any
Confidential Information, Technology, copyrights or
Patent Rights owned or Controlled by a party. Except
as expressly provided for in this Agreement, nothing
in this Agreement shall be construed as a license or
sublicense by one party to the other of any rights in
any Technology, copyrights, or Patent Rights owned or
Controlled by a party or its Affiliates.
5.3.2. Lilly shall own all Inventions and other Technology
made solely by its employees and agents, and all
patent applications and patents claiming such
Inventions. Aurora shall own all Inventions and
other Technology made solely by its employees and
agents, and all patent applications and patents
claiming such Inventions. All Inventions and other
Technology made jointly by employees or agents of
Lilly and employees or agents of Aurora shall be
owned jointly by Lilly and Aurora, provided, however,
that all patentable Inventions shall be owned in
accordance with U.S. patent law.
6. PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES, AND RECORDS
6.1. Payment and Term
In consideration of the rights granted herein to Lilly by Aurora and
services provided to Lilly by Aurora relating to the Collaborative
Screening Program, Lilly agrees to pay Aurora as set forth in Section
3.0 and as follows in Section 6.0. All royalties required to be paid
by Lilly in this Agreement shall be paid ***; thereafter, Lilly shall
be entitled to continue to sell such Covered Product in such country
without further compensation to Aurora hereunder.
If Lilly is required by the United States government or other
authorities to withhold any tax on the amounts payable to Aurora under
this agreement, Lilly shall be allowed to do so, and shall in such
case remit royalty payments to Aurora net of such withheld amount,
provided that Lilly furnishes Aurora with proof of payment of such
withholdings as soon as practicable after such withholding in order
that Aurora may use the withholding tax paid as a tax credit.
*** CONFIDENTIAL TREATMENT REQUESTED
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6.2. Payment Dates.
Royalties shall be paid by Lilly on Net Sales within sixty (60) days
after the end of each calendar quarter in which such Net Sales are
made. Such payments shall be accompanied by a statement showing all
relevant sales information, including the information employed to
calculate Net Sales of each Covered Product in each country, and the
calculation of the amount of royalty due.
6.3. Accounting.
The Net Sales used for computing the royalties payable to Aurora by
Lilly shall be paid in U.S. dollars by wire transfer or other mutually
acceptable means. Lilly's current standard exchange rate methodology
will be employed for the translation of foreign currency sales into
United States dollars. This methodology is used by Lilly in the
translation of its foreign currency operating results for external
reporting, is consistent with generally acceptable accounting
principles, and is approved and reviewed by Lilly's independent
certified public accountants.
To enable Lilly to comply with applicable tax laws and regulation,
Aurora shall provide to Lilly a report, within 60 days following the
close of each calendar year, detailing the dollar amount of the funds
that were expended on CSP research activities during the year for
which the report is made.
6.4. Records.
During the Royalty Term and for one (1) year from the date of each
payment of royalties, Lilly shall keep complete and accurate records of
sales and all other information necessary to calculate Net Sales of
each Covered Product in sufficient detail to allow the accrued
royalties to be determined accurately. Aurora, with reasonable written
notice to Lilly, shall have the right to cause Lilly's independent,
certified public accountant to audit such records at the place or
places of business where such records are customarily kept in order to
verify the accuracy of the reports of Net Sales and royalty payments.
Aurora shall bear the full cost of such audit unless such audit
discloses a variance of *** from the amount of the royalties due under
this Agreement, in which event, Lilly shall bear the full cost of such
audit. Aurora agrees not to disclose confidential information
concerning royalty payments and reports, and all information learned in
the course of any audit or inspection, except to the extent necessary
for Aurora to reveal such information in order to enforce its rights
under this Agreement or if disclosure is required by law. Upon
reasonable request of Aurora and at a minimum once every six (6)
months, Lilly shall provide Aurora
***CONFIDENTIAL TREATMENT REQUESTED
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with a summary of, Approved PTAC Compounds and Covered Products that
are required to calculate Royalties or Milestones.
7. INTELLECTUAL PROPERTY ENFORCEMENT AND DEFENSE OF INFRINGEMENT CLAIMS
7.1. Intellectual Property Enforcement.
Lilly and Aurora shall have the right, but not the obligation, to
bring proceedings against any Third Party for the inappropriate use,
including patent infringement, of Technology or Patent Rights solely
owned or Controlled by it, and at its own risk and expense. Such
party shall be entitled to retain any and all awards or damages
obtained in any such proceeding. At the request and expense of either
party, the other party shall give the requesting party all reasonable
assistance required to file and conduct any such proceeding. For
jointly owned Technology or Patent Rights, Lilly and Aurora shall use
their best efforts to coordinate pursuing a commercially reasonable
action to address inappropriate use, including patent infringement, by
Third Parties of such Technology and Patent Rights and to determine
how expenses and any recovery from such action shall be allocated
between the parties. Lilly, as a non-exclusive licensee, will make
reasonable efforts to provide Aurora with any information known to
Lilly relating to the suspected or actual inappropriate use, including
patent infringement, of Aurora Technology and Aurora Patent Rights.
7.2. Defense of Infringement Claims Pertaining to Lilly Hits,
Approved PTAC Compounds, and Covered Products.
Aurora will cooperate with Lilly, at Lilly's expense, in the defense
of any suit, action or proceeding against Aurora and its Affiliates,
or Lilly and its Affiliates alleging the infringement of the
intellectual property rights of a Third Party by reason of the
manufacture, use or sale of a Covered Product by Lilly. Lilly shall
give Aurora prompt written notice of the commencement of any such
suit, action, proceeding or claim of infringement. Aurora shall give
to Lilly all authority, information and assistance necessary to defend
or settle any such suit, action or proceeding; provided, however, that
if Aurora or its Affiliates or licensees should join in any such suit,
action or proceeding pursuant to this Section 7.2 and at the request
of Lilly, Lilly shall hold Aurora or any such Aurora Affiliate or
licensee, as applicable, free, clear and harmless from any and all
costs and expenses of such litigation, including reasonable attorneys'
fees, and Aurora shall execute all documents, provide pertinent
records, and take all other actions, including
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requiring persons within its control to give testimony, which may be
reasonably required in connection with such litigation.
7.3. Defense of Infringement Claims Pertaining to Aurora Technology
and Aurora Patent Rights
Lilly will cooperate with Aurora, at Aurora's expense, in the defense
of any suit, action or proceeding against Aurora or Aurora Affiliate
alleging the infringement of the intellectual property rights of a
Third Party by reason of Aurora's use any of Aurora Patent Rights and
Aurora Technology licensed to Lilly under this Agreement. Aurora
shall give Lilly prompt written notice of the commencement of any such
suit, action, proceeding or claim of infringement. Lilly shall give
to Aurora all authority, information and assistance necessary to
defend or settle any such suit, action or proceeding; provided,
however, that if Lilly or its Affiliates or licensees should join in
any such suit, action or proceeding pursuant to this Section 7.3 and
at the request of Aurora, Aurora shall hold Lilly, or any such Lilly
Affiliate, free, clear and harmless from any and all costs and
expenses of such litigation, including reasonable attorneys' fees, and
Aurora shall execute all documents, provide pertinent records, and
take all other actions, including requiring persons within its control
to give testimony, which may be reasonably required in connection with
such litigation.
8. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY, AND CHANGE OF
CONTROL
8.1. Confidentiality
8.1.1. Subject to the terms and conditions of this
Agreement, Lilly and Aurora each agree that, during
the term of this Agreement and for five (5) years
thereafter, it will use all reasonable efforts to
keep confidential, and will cause its Affiliates to
use reasonable efforts to keep confidential, all
Aurora Confidential Information or Lilly Confidential
Information, as the case may be, that is disclosed to
it or to any of its Affiliates by the other party in
connection with the performance of this Agreement.
Neither Lilly nor Aurora nor any of their respective
Affiliates shall use the other party's Confidential
Information except as expressly permitted in this
Agreement.
8.1.2. Lilly and Aurora each agree that any disclosure of
the other's Confidential Information to any officer,
employee, contractor,
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consultant, sublicensee, or agent of the other party
or of any of its Affiliates shall be made only if and
to the extent necessary to carry out its
responsibilities under this Agreement and to exercise
the rights granted to it hereunder, shall be limited
to the extent consistent with such responsibilities
and rights, and shall be provided only to such
persons or entities who are bound to maintain same in
confidence in a like manner as the party receiving
same hereunder is so required. Each party shall use
reasonable efforts to take such action, and to cause
its Affiliates to take such action, to preserve the
confidentiality of each other's Confidential
Information, including not less than such efforts as
it would customarily take to preserve the
confidentiality of its own Confidential Information.
Lilly Confidential Information shall not be
disclosed, without Lilly's written consent, in a
patent application filed by Aurora or an Aurora
Affiliate. Aurora Confidential Information shall not
be disclosed, without Aurora's written consent, in a
patent application filed by Lilly or a Lilly
Affiliate. Each party, upon the other's request,
will return all the Confidential Information
disclosed to the other party pursuant to this
Agreement, including all copies and extracts of
documents, within sixty (60) days of the request of
the other party following any termination of this
Agreement, except for one (1) copy which may be kept
for the purpose of ascertaining and complying with
continuing confidentiality obligations under this
Agreement.
8.1.3. Confidential Information shall not include any
information which the receiving party can prove by
competent evidence:
i) is now, or hereafter becomes, through no act
or failure to act on the part of the receiving party,
generally known or available;
ii) is known by the receiving party at the
time of receiving such information, as evidenced
by its records;
iii) is hereafter furnished to the receiving party
without restriction as to disclosure or use by a
Third Party lawfully entitled to so furnish same;
iv) is independently developed by the employees,
agents or contractors of the receiving party without
the aid, application or use of the disclosing party's
Confidential Information; or
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v) is the subject of a written permission to
disclose provided by the disclosing party; or
vi) is provided by the disclosing party to a
Third Party without restriction as to
confidentiality.
A party may also disclose Confidential Information of
the other where required to do so by law or legal
process, provided that, in such event, the party
required to so disclose shall give maximum practical
advance written notice of same to the other party and
will cooperate with the other party's efforts to
seek, at the request and expense of the other party,
all confidential treatment and protection for such
disclosure as is permitted by applicable law.
The parties agree that the material financial terms
of this Agreement will be considered Confidential
Information of both parties. Notwithstanding the
foregoing, either party may disclose such terms in
legal proceedings or as are required to be disclosed
in its financial statements, by law, or under
strictures of confidentiality to bona fide potential
sublicensees. Either party shall have the further
right to disclose the material financial terms of
this Agreement under strictures of confidentiality to
any potential acquirer, merger partner, bank, venture
capital firm, or other financial institution to
obtain financing; provided, further, that either
party shall have the right to disclose the material
financial terms of this Agreement under strictures of
confidentiality to any bona fide potential strategic
partner or collaborator with the prior written notice
of the other.
8.2. Publication of Results
Notwithstanding any term in this Agreement that may state or imply to
the contrary, but subject to Section 8.1 hereof, results and data
obtained by Lilly in the course of the Collaborative Screening Program
and Lilly Screen Program or through Lilly's use of the Aurora
Reporters or the LILLYUHTSS may be submitted for publication in
accordance with Lilly's customary practices, provided, however, that
Lilly credit Aurora in such publication as the provider of the
technology that produced, in part, the published results or data.
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8.3. Publicity
Except as required by law and as provided in this Section 8, neither
party may make any public announcement or otherwise disclose the terms
of this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
9. PATENT PROSECUTION AND COPYRIGHTS
9.1. Patents.
The control and expense of the filing, prosecution (including an
opposition or interference) and maintenance of applications claiming
jointly owned Inventions will be equally shared by Lilly and Aurora.
Both Aurora and Lilly will use their best efforts to coordinate the
filing prosecution and maintenance of applications claiming jointly
owned Inventions. Should one party elect not to share in the control,
filing, prosecution or maintenance of such applications, the other
party with thirty (30) days written notice may elect to gain sole
control of the filing, prosecution or maintenance of such application
or applications and have sole responsibility for prosecution or
maintenance expenses. The control and expense of the filing,
prosecution (including an opposition or interference) and maintenance
of applications claiming solely owned Inventions will be at the
discretion of the owner. At Lilly's reasonable request, not to exceed
more than one request every three months, Aurora shall timely provide
to Lilly updates regarding the patent applications related to Aurora
Patent Rights licensed under Section 5.1.
9.2. Copyrights
The parties agree to treat and handle, to the maximum practical
extent, any copyrights owned or Controlled by a party in the same
manner as Patent Rights owned or Controlled by such party.
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10. WARRANTIES AND INDEMNIFICATION.
10.1. Mutual Representations and Warranties
The parties make the following representations and warranties to each
other:
10.1.1. Corporate Power.
Each party hereby represents and warrants that such party (a)
is duly organized and validly existing under the laws of the
state of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the
provisions hereof; (b) has the requisite power and authority
and the legal right to own and operate its property and
assets, to lease the property and assets it operates under
lease, and to carry on its business as it is now being
conducted; and (c) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance
would not have a material adverse effect on the properties,
business, financial or other condition of it and would not
materially adversely affect its ability to perform its
obligations under the Agreement.
10.1.2. Due Authorization.
Each party hereby represents and warrants that such party (a)
has the requisite power and authority and the legal right to
enter into the Agreement and to perform its obligations and
grant the rights extended by it hereunder; and (b) has taken
all necessary action on its part to authorize the execution
and delivery of the Agreement and to authorize the performance
of its obligations hereunder and the grant of rights extended
by it hereunder.
10.1.3. Binding Agreement.
Each party hereby represents and warrants to the other that:
(a) this Agreement has been duly executed and delivered on its
behalf and is a legal and valid obligation binding upon it and
is enforceable in accordance with its terms; (b) the
execution, delivery and performance of this Agreement by such
party does not conflict with any agreement, instrument
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or understanding, oral or written, to which it is a party or
by which it may be bound, nor violate any law or regulation of
any court, governmental body or administrative or other agency
having authority over it; and (c) all necessary consents,
approvals and authorizations of all governmental authorities
and other persons required to be obtained by it in connection
with the Agreement have been obtained.
10.2 Warranties and Aurora Technology.
Aurora warrants to Lilly as of the Effective Date the following:
10.2.1. To the best knowledge of Aurora ***
10.2.2. Except as set forth in Section 10.2.1 above,
Sections 3.1 and 3.2 relating to
Collaborative Screening Programs and Lilly
Screening Programs and Section 2 relating to
LILLYUHTSS, Aurora (including its officers,
employees and agents) expressly disclaim any
representations and warranties, whether
express or implied, relating to Aurora Patent
Rights and Aurora Technology. Aurora further
disclaims i) any express or implied warranty
of merchantability or fitness for a
particular purpose of Aurora Technology
except as set forth in Sections 2 and 3 to
Collaborative Screening Programs and
LILLYUHTSS, ii) practice of Aurora
Technology or Aurora Patent Rights will not
infringe a patent, copyright, trademark or
other right of a Third Party, and iii) the
patentability of any Aurora Technology,
including Aurora Technology claimed in patent
applications as part of Aurora Patent Rights.
10.3. Aurora Indemnification.
*** CONFIDENTIAL TREATMENT REQUESTED
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Aurora hereby agrees to indemnify, defend and hold Lilly and its
Affiliates, and their respective officers, directors, employees, and
agents (collectively, the "Lilly Indemnitees") harmless from and
against all damages or other amounts payable to a Third Party,
including reasonable attorneys' fees and costs of litigation,
resulting from a suit brought by a Third Party against a Lilly
Indemnitee *** In no event shall Aurora be liable for any incidental
or consequential damages resulting from the exercise of any rights
granted in accordance with this Agreement.
10.4. Warranties and Lilly Technology.
----------------------------------------
Lilly warrants to Aurora as of the Effective Date the following:
10.4.1. To the best knowledge of Lilly as of the Effective
Date, Lilly has the lawful right to license to Aurora
in accordance with this Agreement Lilly Patent RightS
To the best knowledge of Lilly as of the Effective
Date, Lilly Patent Rights were properly filed and
prosecuted and no Third Party suit
exists relating to Lilly Patent Rights.
10.4.2. Except as set forth in Section 10.4.1 above, Sections
3.1 and 3.2 relating to Collaborative Screening
Programs and Lilly Screening Programs and Section 2
relating to LILLYUHTSS, Lilly (including its
officers, employees and agents) expressly disclaim
any representations and warranties, whether express
or implied, relating to Lilly Patent Rights and Lilly
Technology. Lilly further disclaims i) any express or
implied warranty of merchantability or fitness for a
particular purpose of Lilly Technology except as set
forth in Sections 2 and 3 relating to Collaborative
Screening Programs and LILLYUHTSS, ii) practice of
Lilly Technology or
*** CONFIDENTIAL TREATMENT REQUESTED
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Lilly Patent Rights will not infringe a patent,
copyright, trademark or other right of a Third Party,
and iii) the patentability of any Lilly Technology,
including Lilly Technology claimed in patent
applications as part of Lilly Patent Rights.
10.5. Lilly Indemnification.
Lilly hereby agrees to indemnify, defend and hold Aurora and
its Affiliates, and their respective officers, directors,
employees, and agents (collectively, the "Aurora Indemnitees")
harmless from and against all damages or other amounts payable
to a Third Party, including reasonable attorneys' fees and
costs of litigation, resulting from a suit brought by a Third
Party against a Aurora Indemnitee ***; except to the extent
such damages or other amounts payable are attributable to: (i)
a violation of law, regulation or court order by any Aurora
Indemnitee, (ii) a violation of any contractual or fiduciary
duty owed by any Aurora Indemnitee to a Third Party, (iii) the
misappropriation by any such Aurora Indemnitee of the trade
secrets of any Third Party, (iv) any negligent or wrongful act
or omission of any Aurora Indemnitee, (v) any infringement of
any third party intellectual property rights by Aurora or any
Aurora Affiliate, or (vi) any breach of this Agreement by an
Aurora Indemnitee or misrepresentation contained herein. In no
event shall Lilly be liable for any incidental or consequential
damages resulting from the exercise of any rights granted in
accordance with this Agreement.
11. TERM, PARTIAL PERFORMANCE AND TERMINATION.
11.1. Term.
The term of this Agreement will begin on the Effective Date and shall
continue, unless terminated in accordance with the provisions of
Sections 11.2-11.4 hereof, until the later of: (i) the last to expire
Royalty Term; or (ii) Lilly is no longer making payment for Aurora
Reporters under Section 2.1.8.
*** CONFIDENTIAL TREATMENT REQUESTED
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11.2. Termination By Mutual Agreement.
----------------------------------------
The parties may at any time terminate this Agreement, in whole or in
part, by written agreement executed by both Aurora and Lilly. In such
event, the document effecting such termination shall specify the
continuation or termination of any license rights granted hereunder,
as well as any other terms agreed to by both parties.
11.3. Termination Without Cause by Lilly.
-------------------------------------------
Lilly may elect at any time set forth in accordance with this
Agreement to terminate this Agreement for any reason without cause,
provided, however, that Lilly provide Aurora with written notice at
least forty-five (45) days prior to such termination. In the event of
termination without cause by Lilly:
11.3.1. Lilly shall either: (i) pay to Aurora within thirty
days of such notice an amount equal *** ***
***; or (ii) pay to Aurora within thirty days of such
notice an amount equal to the ***
*** CONFIDENTIAL TREATMENT REQUESTED
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*** . In addition to payments made under Section
11.3.1 (i) and Section 11.3.1 (ii), Lilly shall also
pay to Aurora within thirty days of such notice ***
11.3.2. Upon termination of this Agreement without cause by
Lilly, all licenses and sublicenses granted in
accordance with this Agreement shall be terminated
and all Materials transferred in accordance with this
Agreement shall be returned to Aurora or destroyed at
the discretion of Aurora by Lilly; provided, however,
Lilly shall be entitled i) to use thereafter in
Internal Research Completed components of the
LILLYUHTSS that (a) Lilly has determined to be
Completed for at least 60 days prior to written
notice of such termination and to which Lilly has
made the payments required under Section 2 and (b)
to which Lilly has made payments required under
Section 11.3.1 (ii) hereof and ii) to exercise a
nonexclusive, irrevocable, and fully paid-up right
and license under any Aurora UHTSS Patent Rights and
Aurora UHTSS Copyrights existing as of the date of
such written notification of Lilly's termination
without cause or provided under Section 11.3.1 (ii).
11.4. Partial Performance.
----------------------------
Lilly and Aurora agree that Aurora may, under certain circumstances,
partially perform under this Agreement, without terminating the
Agreement, as set forth below:
11.4.1. In the event that Aurora is i) unable to deliver to
Lilly the LILLYUHTSS by the Target Delivery Date as
specified in Section 2.1.2.1 or ii) Aurora is unable
to Complete a Module as specified in Section 2.1.3,
Aurora shall permit Lilly to continue to use the
rights granted in accordance with this Agreement to
conduct the Collaborative Screening Program and the
Lilly Screening Program, so long as Lilly has no
outstanding payments to Aurora, and Lilly continues
to permit Aurora to cure the delivery of the
LILLYUHTSS by the Target Delivery Date as specified
in Section 2.1.2.1 or the Completion of a Module as
specified in Section 2.1.3 and Lilly notifies in
writing Aurora within 30 days of such partial
*** CONFIDENTIAL TREATMENT REQUESTED
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performance that it desires Aurora to cure under this
Section 12.2.3.
11.5. Termination for Cause.
Either party shall have the right to terminate this Agreement at any
time for a material breach of this Agreement by the other party,
provided that the non-breaching party shall have given the breaching
party (90) days written notice of the breach and intention to
terminate this Agreement in the absence of a cure within ninety (90)
days of receipt of such notice by the beaching party. Upon
termination of this Agreement for cause, all licenses and sublicenses
granted in accordance with this Agreement shall be terminated and all
Materials transferred in accordance with this Agreement shall be
returned to the supplying party or destroyed at the discretion of such
party. The non-breaching party, upon termination of this Agreement
may seek actual or general damages and remedies available to it at law
or in equity.
11.6. Effect of Bankruptcy
If a party becomes insolvent or admits in writing its inability to pay
its debts as they mature or applies for or consents to the appointment
of a receiver or trustee for any of its properties; or a receiver or
trustee is appointed for such party or a substantial portion of its
properties and is not discharged within ninety (90) days; or any
bankruptcy, reorganization, debt arrangement, dissolution, liquidation
or other proceeding under any bankruptcy or insolvency law is
instituted by or against such party and, if instituted against such
party, it is consented to by such party or remains undismissed for
ninety (90) days, then
11.6.1. Notwithstanding any such event, such party shall
remain obligated to fulfill its obligations and
covenants hereunder, and any failure to do so or
other breach hereunder shall entitle the other party
to terminate this Agreement in accordance with
Section 12.3 hereof; and
11.6.2. It is the parties desire that, if any such receiver,
trustee, judge, arbitrator or other adjudicator
conducting or controlling such proceedings on behalf
of a party should hold that any obligations,
covenants or duties of such party hereunder should be
suspended or declared unenforceable, in whole or in
part, then the rights and benefits granted to the
other party hereunder shall remain in full force and
effect, and that any such obligations, covenants or
duties
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shall be reformed by such receiver, trustee, judge,
arbitrator or other adjudicator so as to be
enforceable to the maximum extent permitted by
applicable law and to permit any suspension to be
lifted at the earliest practicable time.
11.7. Effect of Expiration or Termination
11.7.1. Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior
to such expiration or termination. The obligations
and rights of the parties under Sections 3.1.5 to
3.2.3, 6.0, 8.0, 9.0, 12.0, and 13.0 thereof, as well
as any provisions, which, by their intent or meaning
are intended to so survive, shall survive termination
or expiration of this Agreement. Except as otherwise
expressly provided in this Agreement, the rights and
obligations of the parties under Sections 5.1, and
5.2 hereof shall terminate and be of no further force
or effect whatsoever upon any termination of this
Agreement.
12. MISCELLANEOUS
12.1. Assignment.
Notwithstanding any provision of this Agreement to the contrary,
either party may assign any of its rights or obligations under this
Agreement in any country to any Affiliates; provided, however, that
such assignment shall not relieve the assigning party of its
responsibilities for performance of its obligations under this
Agreement.
Either party may also assign its rights or obligations under this
Agreement in connection with the sale of all or substantially all of
its assets, or may otherwise assign its rights or obligations under
this Agreement with the prior written consent of the other party.
This Agreement shall survive any merger or consolidation of either
party with or into another party and no consent for any such merger,
consolidation or similar reorganization shall be required hereunder;
provided, that in the event of such merger, consolidation or similar
reorganization or in the event of a sale of all assets, no
intellectual property rights of the acquiring corporation shall be
included in the technology licensed hereunder.
12.2. Binding Effect.
46
<PAGE> 47
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties. Any assignment not
in accordance with this Agreement shall be void.
12.3. Force Majeure.
Neither party shall lose any rights hereunder or be liable to the
other party for damages or losses on account of failure of performance
by the defaulting party if the failure is occasioned by war, fire,
explosion, flood, strike, lockout, embargo, act of God, or any other
similar cause beyond the control of the defaulting party, provided
that the party claiming force majeure has exerted all reasonable
efforts to avoid or remedy such force majeure and thereafter takes all
reasonable steps to mitigate any such delay in performance hereunder
and any damages that may be incurred by the other party thereby.
12.4. Notices.
Any notices or communications provided for in this Agreement to be
made by either of the parties to the other shall be in writing, in
English, and shall be made by prepaid air mail with return receipt
addressed to the other at its address set forth below. Any such
notice or communication may also be given by hand, or
47
<PAGE> 48
facsimile to the appropriate designation. Notices shall be sent:
<TABLE>
<S> <C>
If to Lilly, to: Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attention: Vice President of Research Technologies and Proteins
Copy: General Patent Counsel
If to Aurora, to: Aurora Biosciences Corporation.
11149 N. Torrey Pines Road
La Jolla, CA 92037
Attention: Timothy J. Rink, M.D., Sc.D.
Chairman, CEO, and President
Copy: Paul Grayson
Director, Business Development
</TABLE>
provided that if such notice or communication relates to an amendment
to this Agreement or to any notice pursuant to Section 11 hereof, a
copy shall also be sent to:
<TABLE>
<S> <C>
If to Lilly, to: Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attention: Executive Vice President, Science and Technology
Copy: General Patent Counsel
If to Aurora, to: Timothy J. Rink, M.D., Sc.D.
Chairman, CEO, and President
Copy: Paul Grayson
Director, Business Development
</TABLE>
Either party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Notices sent by
mail, facsimile or cable shall be effective upon receipt and notices
given by hand shall be effective when delivered.
12.5. Governing Law and Jurisdiction.
This Agreement shall be governed by the laws of the State of
California, as such laws are applied to contracts entered into and to
be performed within such state.
48
<PAGE> 49
Any dispute arising from this Agreement, including non-binding
arbitration or litigation, shall be resolved in Denver, Colorado.
12.6. Waiver.
Except as specifically provided for herein, the waiver from time to
time by either of the parties of any of their rights or their failure
to exercise any remedy shall not operate or be construed as a
continuing waiver of same or any of other of such party's rights or
remedies provided in this Agreement.
12.7. Severability.
If any term, covenant or condition of this Agreement or the
application thereof to any party or circumstance shall, to any extent,
be held to be invalid or unenforceable, then the remainder of this
Agreement, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term,
covenant or condition of this Agreement shall be valid and be enforced
to the fullest extent permitted by law; and the parties hereto
covenant and agree to renegotiate any such term, covenant or
application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable,
it being the intent of the parties that the basic purposes of this
Agreement are to effectuated.
12.8. Independent Contractors.
It is expressly agreed that Aurora and Lilly shall be independent
contractors and that the relationship between the two parties shall
not constitute a partnership or agency of any kind. Neither Aurora
nor Lilly shall have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior written
authorization of the party to do so.
12.9. Counterparts
This Agreement shall be executed in two (2) counterparts, each of
which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
49
<PAGE> 50
12.10. Entire Agreement
This Agreement between the parties of even date herewith set forth all
of the covenants, promises, agreements, warranties, representations,
conditions and understandings between the parties hereto, and
supersede and terminate all prior agreements and understanding between
the parties, with respect to the subject matter hereof. There are no
covenants, promises, agreements, warranties, representations
conditions or understandings, either oral or written, between the
parties other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be
binding upon the parties hereto unless reduced to writing and signed
by the respective authorized officers of the parties. This Agreement
shall not be strictly construed against either party hereto. Any
conflict between the terms set forth in the text of this Agreement and
the terms of any Exhibit hereto shall be resolved in favor of the text
of this Agreement.
12.11. No Third Party Beneficiaries.
No third party, including any employee of any party to this Agreement,
shall have or acquire any rights by reason of this Agreement. Nothing
contained in this Agreement shall be deemed to constitute the parties
partners with each other or any third party.
12.12. Construction.
The term "Section" can refer to any single paragraph level found
herein or any collection of multiple paragraphs.
12.13. Dispute Resolution.
The parties recognize that disputes as to certain matters may from
time to time arise during the term of this Agreement which relate to
either party's rights and/or obligations hereunder. It is the
objective of the parties to establish procedures to facilitate the
resolution of disputes arising under this Agreement in an expedient
manner by mutual cooperation and without resort to litigation or
arbitration. The parties agree that prior to any litigation or
arbitration concerning this Agreement, Lilly's Executive Vice
President of Science and Technology and Aurora's
50
<PAGE> 51
president will meet in person or by video-conferencing in a good faith
effort to resolve any disputes concerning this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
<TABLE>
<S> <C>
ELI LILLY AND COMPANY AURORA BIOSCIENCES
CORPORATION
By: By:
---------------------------------------- ----------------------------------------
Title: Title:
------------------------------------- -------------------------------------
Date: Date:
-------------------------------------- --------------------------------------
</TABLE>
51
<PAGE> 52
LIST OF EXHIBITS
EXHIBIT 1.0: PROJECT TEAM APPROVAL COMMITTEE (PTAC) INFORMATION
EXHIBIT 1.1: PERFORMANCE SPECIFICATIONS
EXHIBIT 1.2: EXHIBIT OF REPORTERS
EXHIBIT 4.1: SERVICE AND SUPPORT
EXHIBIT 5.1: LIST OF AURORA PATENT RIGHTS
EXHIBIT 5.2: OTHER AURORA PATENT RIGHTS
52
<PAGE> 53
EXHIBIT 1.0
PROJECT TEAM APPROVAL COMMITTEE (PTAC) INFORMATION
I. ***
II. ***
PROJECT TEAM APPROVAL COMMITTEE (PTAC) INFORMATION
I. ***
II. ***
III. ***
IV. ***
V. ***
*** CONFIDENTIAL TREATMENT REQUESTED
53
<PAGE> 54
EXHIBIT 1.1 - PAGE 1
PERFORMANCE SPECIFICATIONS
MODULE 1 AUTOMATED SAMPLE PRESENTATION SYSTEM (ASPS)
***
*** CONFIDENTIAL TREATMENT REQUESTED
54
<PAGE> 55
EXHIBIT 1.1 - PAGE 2
PERFORMANCE SPECIFICATIONS
MODULE 2
MICROFLUIDICS
***
*** CONFIDENTIAL TREATMENT REQUESTED
55
<PAGE> 56
***
*** CONFIDENTIAL TREATMENT REQUESTED
56
<PAGE> 57
EXHIBIT 1.1 - PAGE 3
PERFORMANCE SPECIFICATIONS
MODULE 2
DETECTOR (CONTINUED)
***
UHTSS ASSAY TYPES
***
SCREEN DEVELOPMENT STAGE ("SDS")
***
*** CONFIDENTIAL TREATMENT REQUESTED
57
<PAGE> 58
***
*** CONFIDENTIAL TREATMENT REQUESTED
58
<PAGE> 59
EXHIBIT 1.1 - PAGE 4
PERFORMANCE SPECIFICATIONS
MODULE 3 (INTEGRATION, INFORMATICS AND CONTROL SYSTEMS)
***
***CONFIDENTIAL TREATMENT REQUESTED
59
<PAGE> 60
EXHIBIT 1.2
DESCRIPTION OF REPORTERS
***
***CONFIDENTIAL TREATMENT REQUESTED
60
<PAGE> 61
EXHIBIT 4.1
SERVICE AND SUPPORT
***
*** CONFIDENTIAL TREATMENT REQUESTED
61
<PAGE> 62
***
*** CONFIDENTIAL TREATMENT REQUESTED
62
<PAGE> 63
***
*** CONFIDENTIAL TREATMENT REQUESTED
63
<PAGE> 64
***
*** CONFIDENTIAL TREATMENT REQUESTED
64
<PAGE> 65
EXHIBIT 5.1
LIST OF AURORA PATENT RIGHTS
***
*** CONFIDENTIAL TREATMENT REQUESTED
65
<PAGE> 66
EXHIBIT 5.2
OTHER AURORA PATENT RIGHTS
***
*** CONFIDENTIAL TREATMENT REQUESTED
66
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.24
COLLABORATION AGREEMENT
BETWEEN
ALLELIX BIOPHARMACEUTICALS INC.
AND
AURORA BIOSCIENCES CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2. SCREEN DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Collaboration Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.1 Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.2 Membership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.3 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.4 CC Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Screen Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.1 Screen Selection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.2 Screen Development Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2.3 Screen Development Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2.4 Screen Validation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Payments for Screen Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3.1 Funding for Two (2) Screens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3.2 Funding for Additional Screens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3. SCREENING PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Screening Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.1 Screening by Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.2 Compound Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1.3 Screening Program Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Screening Supplies for Lead Optimization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.1 Supplies from Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.2 Shipping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2.3 Limited Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Screening Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3.1 Base Screening Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4. DEVELOPMENT AND COMMERCIALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5. LICENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 License to Allelix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 License to Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 No Implied Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Covenant Not to Assert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 6. MILESTONES AND ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Milestone Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Royalties to Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2.1 Sales by Licensees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2.2 Sales by Allelix or its Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2.3 Trade Secret Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2.4 Royalty Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
-2-
<PAGE> 3
<TABLE>
<S> <C> <C>
6.2.5 Other Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 7. PAYMENTS; BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Royalty Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Screen Development and Screening Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3 Payment Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Currency Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5 Records; Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.7 Refunds or Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 8. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1.1 Sole Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1.2 Joint Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1.3 U.S. Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1.4 Retained Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Patent Filing and Prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2.1 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2.2 Failure to Prosecute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4 Defense of Infringement Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4.1 Claims Relating to Agreement Compounds and Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4.2 Claims Relating to Aurora Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Permitted Use and Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Nondisclosure of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 10. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Allelix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.1 Allelix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.3 Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 12. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2 Termination for Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.3 Termination for Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.4 Permissive Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.5 Effect of Breach or Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.5.1 Accrued Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.5.2 Return of Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
-3-
<PAGE> 4
<TABLE>
<S> <C> <C>
12.5.3 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2.1 Mediation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2.2 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.4 Independent Contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.5 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.8 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.9 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.10 Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.11 No Consequential Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.12 Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
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<PAGE> 5
COLLABORATION AGREEMENT
This COLLABORATION AGREEMENT (the "Agreement"), effective as of January 21,
1997, (the "Effective Date"), is made by and between Aurora Biosciences
Corporation, a Delaware corporation, having a principal place of business at
11149 North Torrey Pines Road, La Jolla, California 92037, United States
("Aurora"), and Allelix Biopharmaceuticals Inc., a corporation organized under
the laws of Canada and having a principal place of business at 6850 Goreway
Drive, Mississauga, Ontario, Canada L4V 1V7 ("Allelix").
BACKGROUND
WHEREAS, Aurora designs, develops, and manufactures proprietary fluorescent
bioassay technologies and chemistries used therein for screening systems,
useful for the acceleration of novel drug discovery and to increase the
productivity of drug discovery programs;
WHEREAS, Aurora and Allelix desire to enter into a collaborative research and
development program to develop screens against agreed targets, and use such
screens to identify compounds having activity against one or more of such
targets;
WHEREAS, Allelix will then proceed with a medicinal chemistry program to
develop drug candidates from which pharmaceutical products may be derived, all
in accordance with the terms and conditions set forth below.
NOW, THEREFORE, Aurora and Allelix agree as follows:
ARTICLE 1. DEFINITIONS
The following terms shall have the meanings provided below when used herein:
1.1 "Affiliate" shall mean a person or entity, other than an
entity jointly owned or controlled by the parties, that directly or indirectly
controls, is controlled by, or is under common control with the person or
entity specified. For purposes of this definition, "control" means the direct
or indirect ownership of greater than fifty percent (50%) of the outstanding
shares or other voting rights of the specified entity to elect directors or
other management authority, or if not meeting the preceding, that level of
control which is the maximum ownership right permitted in the jurisdiction
where such entity exists.
1.2 "Agency" shall mean the U.S. Food and Drug Administration
("FDA") or its successor, or an agency of any other government of another
country having jurisdiction over the development, manufacturing, and/or
marketing of pharmaceutical products.
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
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<PAGE> 6
1.3 "Agreement Compound" shall mean any Hit or Derivative.
1.4 "Allelix Technology" shall mean Allelix Patent Rights and
Allelix Know-How.
1.5 "Allelix Patent Rights" shall mean Patent Rights owned,
licensed or Controlled by Allelix (including its Affliates, Licensors or its
Licensees) which relate to Compounds, Agreement Compounds, Aurora Technology,
Derivatives, Hits, Products or Screens.
1.6 "Allelix Know-How" shall mean ***
1.7 "Aurora Technology" shall mean Aurora Reporter Patents and
Aurora Reporter Know-How.
1.8 "Aurora Reporter Patents" shall mean Patent Rights owned or
Controlled by Aurora relating to fluorescent reporters.
1.9 "Aurora Reporter Know-How" shall mean ***
1.10 "Collaboration Committee" or "CC" shall have the meaning set
forth in Section 2.1.
1.11 "Collaboration Period" shall begin on the Effective Date and
last until the third anniversary of the Effective Date, and can extended by
mutual agreement of the parties.
1.12 "Compound" shall mean ***
1.13 "Confidential Information" shall mean information or material
disclosed hereunder by one party (the "Disclosing Party") to the other party
(the "Receiving Party") and as further defined in Section 9.1.
1.14 "Control" or "Controlled" shall mean possession by a party or
its Affiliates of the ability to grant a license or sublicense in accordance
with the terms of this Agreement, and without violating the terms of any
agreement by such party with a Third Party.
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JANUARY 21, 1996
*** CONFIDENTIAL TREAMENT REQUESTED
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<PAGE> 7
1.15 "CPI" shall mean the Consumer Price Index, All Urban
Consumers, as published by the U.S. Bureau of Labor Statistics.
1.16 "Derivative" shall mean *** . It is understood that
"Derivative" shall include any compound derived from another Derivative.
1.17 "Development Candidate" shall mean ***
1.18 "Full Time Equivalent" or "FTE" shall mean the full time
equivalent of one (1) Aurora researcher, based on a minimum of one thousand
seven hundred sixty (1,760) hours per year.
1.19 "Hit" shall mean ***
1.20 "Joint Technology" shall have the meaning set forth in Section
8.1.2.
1.21 "Licensee" shall mean any Third Party (other than an Affiliate
of Allelix) to whom Allelix grants a license, sublicense or other right to
manufacture, use, sell, offer for sale, distribute and/or import one or more
Products or Agreement Compounds.
1.22 "Licensor" shall mean any Third Party that grants Allelix a
license, sublicense or other right to manufacture, use, sell, offer for sale,
distribute and/or import one or more Products or Compounds.
1.23 "Manufacturing Cost" shall mean ***
1.24 "NDA" shall mean a New Drug Application ("NDA") or Product
License Application
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 8
("PLA"), as defined in the U.S. Food, Drug, and Cosmetic Act and the
regulations promulgated thereunder, or any equivalent foreign application.
1.25 "Net Royalty Revenue" shall mean all consideration, including
without limitation, royalties, profit sharing, or other payments of any nature,
whether such consideration is in cash, payment in kind, exchange or another
form, received by Allelix, from a Third Party, Licensor, or Licensee in respect
of the sale or other distribution of any Product.
1.26 "Net Sales" shall mean ***
Net Sales shall also include ***
1.27 "Patent Rights" shall mean all U.S. or foreign jurisdiction
(including the European Patent Convention) patent applications, including any
regular, or provisional applications and any continuation (in whole or in
part), division, or substitute thereof, or any equivalent of any of the
foregoing, and any patent issuing thereon, including any reissue,
re-examination, or extension thereof.
1.28 "Phase I," "Phase II," and "Phase III" shall mean Phase I,
Phase II, or Phase III clinical trials, respectively, in each case as
customarily related to applicable FDA Investigational New Drug ("IND")
regulations, or any corresponding foreign statutes, rules, or regulations.
1.29 "Product" shall mean ***
1.30 "Screen" shall mean ***
1.31 "Screen Development Plan" shall have the meaning set forth
in Section 2.2.2.
1.31 "Screening Program" shall have the meaning set forth in
Section 3.1.1.
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 9
1.32 "Screening Supplies" shall have the meaning set forth in
Section 3.2.1.
1.33 "Term" shall have the meaning set forth in Section 12.1.
1.34 "Third Party" shall mean any person or entity other than (i)
Aurora and any of its Affiliates, and (ii) Allelix and any of its Affiliates.
1.35 "Valid Claim" shall mean (a) an issued claim under an issued
patent within the Patent Rights, which has not (i) expired or been canceled,
(ii) been declared invalid by an unreversed and unappealable decision of a
court or other appropriate body of competent jurisdiction, (iii) been admitted
to be invalid or unenforceable through reissue, disclaimer or otherwise, and/or
(iv) been abandoned; or (b) a claim included in a pending patent application
within the Patent Rights that is being actively prosecuted in accordance with
this Agreement and which has not been (i) canceled, (ii) withdrawn from
consideration, (iii) finally determined to be unallowable by the applicable
governmental authority for whatever reason (and from which no appeal is or can
be taken), and/or (iv) abandoned.
1.36 "Validation Criteria" shall mean criteria established pursuant
to Section 2.2.2 for a particular Screen for the assessment of whether such
Screen is suitable for specifically identifying Hits.
ARTICLE 2. SCREEN DEVELOPMENT
2.1 Collaboration Committee.
2.1.1 Responsibilities.
Within thirty (30) days after the Effective Date, Aurora and
Allelix shall establish a committee (the "Collaboration
Committee" or "CC"), to review and coordinate the design and
development of Screens pursuant to Article 2 and the conduct
of Screening Programs pursuant to Article 3.
2.1.2 Membership.
The CC shall be comprised of two (2) representatives from
Allelix and two (2) representatives from Aurora. Each party
may select and replace its CC representatives at any time,
with written notice to the other party. Each party shall each
appoint one of its CC representatives to be responsible for
coordinating
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
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<PAGE> 10
communications between the parties.
2.1.3 Meetings.
During the Collaboration Period, the CC shall meet at least
quarterly, or more often as mutually agreed, in person, by
telephone or televideo conference. Each party shall pay its
own expenses incurred in connection with participation at CC
meetings. With the consent of the parties, other
representatives of Allelix and/or Aurora may attend CC
meetings as nonvoting observers. On an alternating basis, one
party shall promptly prepare and deliver to the members of the
CC minutes in respect thereof, for review and approval by both
parties.
2.1.4 CC Decisions.
Decisions of the CC shall be made by simple majority approval.
In the event that approval is not obtained within the CC, the
undecided matter will be referred to a Business Development
officer of each party, who shall promptly meet in person or by
telephone or by televideo conference to endeavor to resolve
the dispute. In the event such individuals are unable to
resolve such dispute within thirty (30) days, the matter shall
be referred to the Chief Executive Officers or equivalent of
the parties, who shall promptly meet in person or by televideo
conference to endeavor to resolve the dispute. If such
officers are unable to resolve the dispute in a timely manner,
at the request of either party, it shall be settled by binding
arbitration pursuant to Section 13.2 below, or as otherwise
mutually agreed in writing.
2.2 Screen Development.
2.2.1 Screen Selection.
(i) Target Proposals. Within thirty (30) days of
the Effective Date, Allelix will propose in
writing to Aurora at least one molecular
target for a Screen. During each year of the
Collaboration Period, Allelix will propose in
writing to Aurora additional molecular
targets for a total of ***
Screens per year and possibly ***
Screens per year if expanded pursuant to
Section 2.2.1 (ii). For each proposed
molecular target, Allelix will provide Aurora
with a written proposal describing such
target, and a listing of all Patent Rights
identified by Allelix using its reasonable
efforts, relating to such target. Within
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 11
thirty (30) days of receiving such
information, and further information as
Aurora may reasonably request regarding a
proposed molecular target, Aurora shall
notify Allelix in writing whether Aurora
reasonably believes that the development of a
Screen based on the proposed molecular target
is consistent with Aurora's Third Party
obligations and if it is legally feasible
(e.g., infringement of Third Party patent
rights).
(ii) Number of Screens. Each year, during the
Collaboration Period, Aurora shall use
reasonable efforts to develop *** ) Screens
for Allelix, pursuant to the terms and
conditions herein. During the Collaboration
Period, Allelix may, with notice, request
that *** ) Screens be developed by
Aurora per year pursuant to this Agreement,
and with the agreement of the parties Aurora
shall develop such additional Screens.
2.2.2 Screen Development Plans.
(i) Within thirty (30) days of the date of
notification by Aurora to Allelix that a
molecular target is acceptable to Aurora in
accordance with Section 2.2.1 (i), the CC
will meet to review whether the CC reasonably
believes that it is financially and/or
technically feasible to develop a Screen
based on the proposed molecular target. If
the CC determines that it is not feasible to
develop a Screen based on such proposed
target, it shall notify Allelix in writing
thereof, and in such case Aurora shall have
no obligation to develop a Screen based on
such proposed target. If the CC determines
that it is feasible to develop a Screen based
on such proposed target, the CC will develop
a written research and development program,
and schedule for the Screen (in each case, a
"Screen Development Plan"). Each Screen
Development Plan shall also contain the
validation criteria ("Validation Criteria")
and the Hit rate criteria for each Screen.
(ii) Promptly after development of a Screen
Development Plan, the parties will
collaborate and use reasonable efforts to
develop and validate the Screen relating
thereto within the schedule provided in the
Screen Development Plan. Each party agrees
to conduct its respective activities in a
prudent and skillful manner.
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 12
2.2.3 Screen Development Reports.
During the course of the development of each Screen,
individuals from Allelix and Aurora, to be appointed by the
CC, will discuss and review monthly, if not more frequently,
the progress of and any issues relating to the development of
each Screen. During the Collaboration Period, the CC will
review and, if necessary, prepare quarterly reports for each
Screen in progress at that time. Each progress report shall
provide a written update of work performed, results achieved
in respect of the Screen development activities, and any other
information desired by the CC.
2.2.4 Screen Validation.
When Aurora completes the development of a Screen which meets
the applicable Validation Criteria, it shall provide the CC
with a written report describing the Screen and the data
demonstrating compliance with the Screen Development Plan and
applicable Validation Criteria and Aurora will submit to
Allelix an invoice for *** ). Within thirty (30) days of
receipt of such invoice, provided that Aurora has satisfied its
obligations under this Section 2.2, Allelix will pay Aurora
*** ).
2.3 Payments for Screen Development.
2.3.1 Funding for Two (2) Screens.
In consideration for Aurora's development of *** Screens each
year during the Collaboration Period, Allelix shall pay to
Aurora *** , in *** installments. The first payment shall
be made on the Effective Date, and subsequent payments shall be
paid to Aurora no later than the *** the *** to which such
payment pertains.
2.3.2 Funding for Additional Screens.
If Aurora determines that the expenses which would be incurred
by Aurora with respect to the development of *** ) or more
Screens in any year in the Collaboration Period would exceed
*** ), it shall notify Allelix, and in such event the parties
shall in good faith determine the amount of additional funding
to be provided to Aurora by Allelix for the applicable Screen
development activities. Such additional funding shall be
calculated based on *** in
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 13
*** Such amount shall be ***
ARTICLE 3. SCREENING PROGRAM
3.1 Screening Program.
3.1.1 Screening by Aurora.
During the Collaboration Period, Aurora shall use each Screen
validated pursuant to Section 2.2.2 to test the activity of
Compounds provided by Allelix or agreed by the parties
pursuant to Section 3.1.2. Aurora shall, with regard to each
such Screen, screen Compounds as determined by the CC and
provide retests of Compounds or putative Hits, and
determination of crude IC50's as determined by the CC (the
"Screening Program").
3.1.2 Compound Supply.
Allelix shall, at its expense, supply to Aurora Compounds
selected by Allelix for a Screening Program. In the event
Allelix desires to have Aurora test in a Screening Program a
Compound (including a library of compounds) owned, accessed or
Controlled by Aurora, the parties agree to negotiate in good
faith the terms and conditions under which such compound may
be screened. Any compounds supplied by Allelix for use in a
Screening Program will be provided to Aurora in 96-well
microtiter plates, in the quantities, form and format as
agreed by the CC. Aurora agrees not to transfer any compounds
received from Allelix for use in connection with the Screening
Program to any Third Party or to use such compounds for
purposes not contemplated herein without Allelix's prior
written consent.
3.1.3 Screening Program Reports.
During the course of each Screening Program, individuals from
Allelix and Aurora, appointed by the CC, will discuss and
review monthly, if not more frequently, the progress and any
issues relating to each Screening Program. During the
Collaboration Period, the CC will review and prepare quarterly
reports for each Screening Program in progress at that time.
Each progress report shall provide a
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 14
written update of work performed, any Hits identified, and all
available supporting data.
3.2 Screening Supplies for Lead Optimization.
3.2.1 Supplies from Aurora.
Upon demonstrating compliance with the Screen Development Plan
and applicable Validation Criteria for a Screen and Aurora
receiving the payment provided for under Section 2.2.4 for such
Screen, Aurora will ship the Screen to Allelix, including
biological materials and samples of reagents required for
Allelix to begin lead optimization or characterization of Hits
identified by Aurora in a Screening Program ("Screening
Supplies"). Allelix may request that Aurora supply Allelix
with additional biological materials and reagents required to
conduct lead optimization or characterization of Hits
identified by Aurora in a Screening Program and within thirty
(30) days of receipt of a written purchase order from Allelix
therefor, Aurora will supply to Allelix agreed quantities of
any biological materials and reagents required to conduct such
lead optimization and Hit characterization. Allelix will pay
Aurora for any such additional Screen Supplies based on a ***
***. Such *** *** shall be consistently calculated in
relation to *** for similar quantities and periods of time.
3.2.2 Shipping.
All Screening Supplies delivered pursuant to the terms of this
Agreement shall be suitably packed for surface or air
shipment, in Allelix's discretion, in Aurora's standard
shipping cartons, and delivered to Allelix or its carrier
agent F.O.B. at a shipping location designated by Aurora and
agreed to by Allelix, at which location risk of loss shall
pass to Allelix. All freight, insurance, and other shipping
expenses, and all applicable taxes, duties and similar
charges, as well as any special packing expenses incurred by
Aurora at the request of Allelix shall be paid by Allelix.
3.2.3 Limited Use.
Allelix may use any Screening Supplies provided hereunder for
use with the Screens solely to conduct lead optimization or
characterization of Hits identified by Aurora in a Screening
Program, subject to the terms and conditions herein; provided,
however,
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 15
that in no event shall Allelix use any Screen or Screening
Supplies on behalf of a Third Party without the prior written
consent of Aurora.
3.3 Screening Payments.
3.3.1 Base Screening Fee.
In partial consideration for Aurora's performance of the
Screening Program in accordance with Article 3, Allelix will
pay to Aurora *** per Screening Program within thirty (30) days
of receipt of an invoice from Aurora. Upon receipt of such
payment, Aurora will proceed with testing Compounds in such
Screening Program pursuant to Section 3.1. Such amount shall
be *** to ***. If such Screening Program exceeds thirty (30)
days ***, provided, however, that Aurora notifies Allelix in
writing of the same and Allelix consents in writing to the
same. In the event Allelix does not agree to allow Aurora to
continue the Screen beyond such thirty (30) day period, it
shall so notify Aurora within seven (7) days of the date it
receives the foregoing notice from Aurora. Allelix will be
deemed to have agreed to allow Aurora to continue the Screen
beyond the thirty (30) day period if it fails to provide notice
to Aurora of its decision with respect thereto within the seven
(7) day period. If such Screening Program is completed prior
to thirty (30) days, ***.
Alternatively, Allelix may request in writing to Aurora that
the CC develop and approve an additional screening plan or
lead optimization plan that includes the appropriate amount of
FTE funding for such additional screening or characterization
of Hits. Such request shall be made within seven (7) days of
Aurora's above notification to Allelix.
ARTICLE 4. DEVELOPMENT AND COMMERCIALIZATION
The selection of Hit(s), Derivative(s), Development Candidate(s), and
Product(s) for development and commercialization will be at the discretion of
Allelix. Allelix will, at no expense to Aurora, be responsible for conducting
or arranging all development and commercialization of Product(s).
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 16
Allelix will use reasonable efforts to commercialize Products as expeditiously
as practicable and take such other actions as is necessary and to obtain
government approvals to market the Product(s) in significant markets throughout
the world selected by Allelix, and thereafter to promote or have promoted such
Product(s) and meet the market demand therefor. Allelix will promptly notify
Aurora at such time as any Agreement Compound becomes a Development Candidate,
or otherwise achieves any milestone for which Allelix will owe Aurora a
milestone payment pursuant to Section 6.1. During the period in which an
Agreement Compound or a Product is under development by Allelix (or its
designee), within thirty (30) days of the end of a calendar quarter, or within
fifteen (15) days of receipt of such information from a Third Party, Allelix
agrees to provide Aurora with a written summary of the development progress
made in respect of an Agreement Compound or a Product during such calendar
quarter.
ARTICLE 5. LICENSES
5.1 License to Allelix.
Subject to the terms and conditions of this ***
5.2 License to Aurora.
Subject to the terms and conditions of this Agreement, Allelix grants
to Aurora, on a Screen-by-Screen basis, a world-wide, non-
transferable, nonexclusive, license under Allelix Technology, without
the right to grant sublicenses, to make and use for Allelix any Screen
under Article 2 or 3 and for the Term of Aurora's performance under
Article 2 or 3.
5.3 No Implied Licenses.
Only those licenses expressly granted in Sections 5.1 and 5.2 shall be
of any force and effect. No license or other right in the Aurora
Technology or Allelix Technology shall be created hereunder by
implication, estoppel, or otherwise.
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
***CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 17
5.4 Covenant Not to Assert.
***
ARTICLE 6. MILESTONES AND ROYALTIES
6.1 Milestone Payments.
Allelix will pay to Aurora the following amounts upon achievement of
each of the following milestones by Allelix, its Affiliates, its
Licensors, its Licensees, or any party designated by Allelix to
develop Agreement Compounds with respect to the first Hit, Development
Candidate, or Derivative identified through the use of a particular
Screen to reach such milestone:
<TABLE>
<CAPTION>
Milestone Per Screen Payment
-------------------- -------
<S> <C>
*** ***
*** ***
*** ***
*** ***
*** ***
</TABLE>
Allelix will notify Aurora in writing within fifteen (15) days of the
achievement of, or within fifteen (15) days of Allelix receiving
notification from a Third Party of the achievement of any milestones
with respect to which a payment is due to Aurora pursuant to this
Section 6.1. All payments made by Allelix pursuant to this Section
6.1 shall be made within thirty (30) days after achievement of the
applicable milestone. If in the course of compound
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
*** CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 18
development any of the above Phases are combined, Aurora will receive
the above milestone payments as if each Phase were initiated
separately.
6.2 Royalties to Aurora.
6.2.1 Sales by Licensees.
With respect to Product(s) sold or otherwise distributed by or
on behalf of a Licensee, or a Licensor, Allelix shall pay
Aurora *** of the Net Royalty Revenue received by Allelix from
the Licensee or Licensor in respect of Net Sales; provided,
however, that such amount payable to Aurora pursuant to this
Section 6.2.1 ***
6.2.2 Sales by Allelix or its Affiliates.
Allelix shall pay to Aurora a royalty equal to *** of Net Sales
of Product(s) by Allelix or its Affiliates.
6.2.3 Trade Secret Royalty.
The parties acknowledge that the principal value contributed
by Aurora under this Agreement is the enhanced probability of
identifying leads for human pharmaceutical products (or other
products having commercial value) and the potential to
generate multiple leads, either or both of which the parties
reasonably believe will lessen the time required to bring
pharmaceutical products to market and increase the efficiency
of drug discovery and development processes and technologies.
Additionally, the parties acknowledge that Aurora may not own
or control patent applications or patents covering the
manufacture, sale, use, or importation of a particular
Agreement Compound or Product. Allelix acknowledges and
agrees that the value it receives hereunder is in the access
and use of the Screens and the Aurora Technology.
Accordingly, Allelix agrees to pay those royalties and other
amounts at the applicable rate specified in this Section 6.2,
regardless of whether a Product is covered by a patent
application or patent within the Aurora Technology.
6.2.4 Royalty Term.
Allelix's obligation to pay royalties to Aurora pursuant to
this Section 6.2 shall continue on a Product-by-Product and
country-by-country basis until ***
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***
6.2.5 Other Revenues.
In the event that Allelix or an Allelix Affiliate receives an
up front payment from a Third Party for any rights (including
intellectual property or marketing rights) for Product(s) or
Agreement Compound(s), Aurora may elect one of the following
payment schedules:
(i) Aurora will receive the milestone payments, as
those milestones are satisfied according to
Section 6.1; or
(ii) Aurora will receive *** %) of any up front payment
(including cash, payment in kind, equity in such
Third Party, premium on equity purchased by such
Third Party or any other form) by a Third Party to
Allelix or an Allelix Affiliate for any rights
(including intellectual property or marketing
rights) for Product(s) or Agreement Compound(s).
Provided, however, Allelix shall not be obligated
to pay Aurora any portion of any up front payment
paid to Allelix or an Allelix Affiliate by a Third
Party specifically allocated to the future
research and development of such Product(s) or
Agreement Compound(s); provided, further, that
Allelix shall not be obligated to pay Aurora any
milestone payment under Section 6.1 that is due
after the date Aurora receives such up front
payment under this Section 6.2.5 (ii) and that any
milestone payments paid by Allelix to Aurora for
such Product(s) or Agreement Compound(s) under
Section 6.1 prior to Aurora receiving such up
front payment under this Section 6.2.5 (ii) shall
be deducted from such up front payment to be paid
by Allelix to Aurora.
Allelix will report in writing to Aurora the amount of any
such up front payment within fifteen (15) days of receiving
such payment. After receipt of such report, Aurora will
notify Allelix in writing of its election under this Section
6.2.5 within fifteen (15) days.
ARTICLE 7. PAYMENTS; BOOKS AND RECORDS
7.1 Royalty Reports.
After the first commercial sale of a Product on which royalties are
payable hereunder to
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Aurora by Allelix, Allelix shall make quarterly written reports to
Aurora within thirty (30) days after the end of each calendar quarter
or fifteen (15) days from the receipt of such information from a Third
Party, stating in each such report, on a country-by-country basis, the
number, description, and aggregate Net Sales of each Product sold in a
country during the calendar quarter upon which a royalty is payable
under Section 6.2 above.
7.2 Screen Development and Screening Payments.
Any payments due pursuant to Sections 2.2.4, 3.2.1, 3.3.1, 6.1, or 6.2
shall be paid within thirty (30) days of receipt of an invoice
therefor.
7.3 Payment Method.
All payments due under this Agreement shall be made by bank wire
transfer when due in immediately available funds to an account
designated by Aurora. Any payments that are not paid on the date such
payments are due under this Agreement shall bear interest to the
extent permitted by applicable law at the prime rate as reported by
the Bank of America, San Francisco, on the date such payment is due,
plus an additional two percent (2%) per annum, calculated on the
number of days such payment is delinquent.
7.4 Currency Conversion.
All payments outlined in this Agreement are in U.S. Dollars. If any
currency conversion shall be required in connection with the
calculation of royalties or any other payments hereunder, such
conversion shall be made using the selling exchange rate for
conversion of the foreign currency into U.S. Dollars, quoted for
current transactions as reported in The Wall Street Journal for the
last reported day of the calendar quarter to which such payment
pertains.
7.5 Records; Inspection.
Allelix and its Affiliates shall keep complete, true, and accurate
books of account and records for the purpose of determining the royalty
amounts payable under this Agreement. Such books and records shall be
kept at the principal place of business of such party 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 an accounting firm appointed by Aurora. Such
inspections may be made no more than once each calendar year, at
reasonable times and on reasonable notice. Inspections conducted under
this Section 7.5 shall be at the expense of Aurora, unless a variation
or error producing *** of the amount stated for any period covered by
the inspection is established in the course of any such inspection,
whereupon all costs relating to the inspection for such period and any
unpaid amounts that are discovered will be paid promptly by Allelix,
together
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with interest thereon from the date such payments were due at the
prime rate as reported by the Bank of America, San Francisco,
California, plus an additional two percent (2%) per annum.
7.6 Tax Matters.
All royalty amounts required to be paid to Aurora pursuant to this
Agreement shall be paid without deduction for withholding for or on
account of any taxes, including any sales, use, value added, or
transfer tax, or similar governmental charge imposed by a jurisdiction
other than the United States. Payment of any such tax or similar
governmental charge, including any due in connection with the transfer
of the Screens hereunder, shall be the sole responsibility of Allelix.
In the event that Aurora is required to pay any such tax or other
similar charge, Allelix shall promptly reimburse Aurora for payment of
such amounts.
7.7 Refunds or Credits.
Any payment made to Aurora pursuant to this Agreement shall be
non-refundable and shall be creditable only against another payment
payable hereunder in the case of early completion of a Screening
Program as outlined in Section 3.3.1.
ARTICLE 8. INTELLECTUAL PROPERTY
8.1 Ownership.
8.1.1 Sole Ownership.
Allelix shall be the sole owner of all intellectual property
conceived and reduced to practice or otherwise developed
solely by its employees and agents, and all patent
applications and patents claiming such intellectual property;
provided, however, that intellectual property relating to
improvements to Aurora Technology will be assigned by Allelix
to Aurora. Aurora shall be the sole owner of any intellectual
property conceived and reduced to practice or otherwise
developed solely by its employees and agents and all patent
applications and patents claiming such intellectual property;
provided, however, that intellectual property derived from
Compounds provided by Allelix, including but not limited to
information contained in the quarterly reports prepared by the
CC provided for in Section 3.1.3, and relating to the use of
Agreement Compounds and Products will be assigned by Aurora to
Allelix.
8.1.2 Joint Technology.
If, during the Collaboration Period, one or more employees or
consultants of Aurora,
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together with one or more employees or consultants of Allelix,
jointly conceive any intellectual property (the "Joint
Technology"), each of the parties shall own an undivided
one-half interest in the Joint Technology; provided, however,
that Joint Technology relating to Aurora Technology will be
assigned by Allelix to Aurora; provided, further, that
intellectual property derived from Compounds provided by
Allelix and relating to the use of Agreement Compounds and
Products will be assigned by Aurora to Allelix.
8.1.3 U.S. Law.
Inventorship and rights of ownership with respect to Aurora
Technology, Allelix Technology, and Joint Technology shall be
determined in accordance with the patent laws of the United
States.
8.1.4 Retained Rights.
Except as otherwise expressly provided in this Agreement,
nothing in this Agreement is intended to convey or transfer
ownership by one party to the other of any rights, title or
interest in any Confidential Information, technology or
Patents Rights owned or Controlled by a party. Except as
expressly provided for in this Agreement, nothing in this
Agreement shall be construed as a license or sublicense by one
party to the other of any rights in any technology or Patent
Rights owned or Controlled by a party or its Affiliates.
8.2 Patent Filing and Prosecution.
8.2.1 Cooperation.
Allelix and Aurora shall consult together upon all matters
relating to the filing, prosecution, and maintenance of
patents within Joint Technology. This shall include giving
the other party the opportunity to review and comment upon the
text of any priority application before filing; consultation
about the decision whether or not to foreign file, and if so,
in which countries; and giving the other party the
opportunity, as far in advance of filing dates as feasible, to
fully review and comment on the basic foreign filing text.
Each party shall provide to the other copies of any search
reports and official actions, including notice of all
interferences, reissues, re-examinations, and oppositions
received from the relevant patent offices promptly after
receipt. Each party shall reasonably cooperate with and
assist the other in connection with activities subject to this
Section 8.2.1, at the other's request. Each party shall
execute and procure that its employee inventors shall execute
all documents reasonably required in connection with the
filing, prosecution, or maintenance of patents within the
Joint
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Technology. Patent counsel designated by each party will meet
in person or by telephone or video conference at least on a
semi-annual basis during (i) the Collaboration Period, and
(ii) the pendency of any of the patent applications within the
scope of this Section 8.2.1 to coordinate, discuss, review,
and implement patent filing and prosecution strategy.
8.2.2 Failure to Prosecute.
Either party may elect upon sixty (60) days prior notice to
discontinue prosecution or maintenance of any patent within
Joint Technology in any or all countries. In such case, the
other party shall have the right to prosecute and maintain
such patent applications and patents in such countries it
deems appropriate, at its sole expense.
8.3 Enforcement.
Allelix and Aurora shall separately have the right, but not the
obligation, to bring proceedings against any Third Party for the
inappropriate use, including patent infringement, of technology, trade
secrets or Patent Rights solely owned or Controlled by it, and at its
own risk and expense. Such party shall be entitled to retain any and
all awards or damages obtained in any such proceeding. At the request
and expense of either party, the other party shall give the requesting
party all reasonable assistance required to file and conduct any such
proceeding. For Joint Technology, Allelix and Aurora shall use their
best efforts to coordinate pursuing a commercially reasonable action
to address inappropriate use, including patent infringement, by third
parties of such Joint Technology and to determine how expenses and any
recovery from such action shall be allocated between the parties.
Allelix, as a non-exclusive licensee, will make reasonable efforts to
provide Aurora with any information known to Allelix relating to the
suspected or actual inappropriate use, including patent infringement,
of the Aurora Technology.
8.4 Defense of Infringement Claims.
8.4.1 Claims Relating to Agreement Compounds and Products.
Aurora will cooperate with Allelix, at Allelix's expense, in
the defense of any suit, action or proceeding against Aurora
and its Affiliates, or Allelix and its Affiliates, Licensees
or Licensors alleging the infringement of the intellectual
property rights of a Third Party by reason of the manufacture,
use or sale of a Product by Allelix. Allelix shall give
Aurora prompt written notice of the commencement of any such
suit, action, proceeding or claim of infringement. Aurora
shall give to Allelix all authority, information and
assistance necessary to defend or settle any such suit, action
or proceeding; provided, however, that if Aurora or its
Affiliates or licensees should join in any such suit, action
or proceeding pursuant to this Section 8.4.1 and at
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the request of Allelix but subject to Section 11.2, Allelix
shall hold Aurora or any such Affiliate or licensee, as
applicable, free, clear and harmless from any and all costs
and expenses of such litigation, including reasonable
attorneys' fees. Allelix shall have the right to control the
conduct and settlement of any such litigation; provided,
however, that (i) Allelix shall not enter into any settlement
of such claim, suit, or proceeding which admits or concedes
that any aspect of the Aurora Technology or Joint Technology
is invalid or unenforceable without the prior written consent
of Aurora.
8.4.2 Claims Relating to Aurora Technology.
Allelix will cooperate with Aurora, at Aurora's expense, in
the defense of any suit, action or proceeding against Aurora
or its Affiliates alleging the infringement of the
intellectual property rights of a Third Party by reason of
Aurora's use of any Aurora Patent Rights and Aurora Technology
in performing its obligations to Allelix under this Agreement.
Aurora shall give Allelix prompt written notice of the
commencement of any such suit, action, proceeding or claim of
infringement. Allelix shall give to Aurora all authority,
information and assistance necessary to defend or settle any
such suit, action or proceeding; provided, however, that if
Allelix should join in any such suit, action or proceeding
pursuant to this Section 8.4.2 and at the request of Aurora,
but subject to Section 11.1, Aurora shall hold Allelix free,
clear and harmless from any and all costs and expenses of such
litigation, including reasonable attorneys' fees.
ARTICLE 9. CONFIDENTIALITY
9.1 Confidential Information.
Except as expressly provided herein, the parties agree that, for the
Term of this Agreement and for five (5) years thereafter, the
Receiving Party, except as expressly provided in this Article 9, shall
not disclose to any Third Party or use for any purpose any
Confidential Information of the Disclosing Party, except to the extent
that it can be established by the Receiving Party by competent proof
that such information:
(i) was already known to the Receiving
Party, other than under an
obligation of confidentiality, at
the time of disclosure;
(ii) was generally available to the
public or otherwise part of the
public domain at the time of its
disclosure to the Receiving Party;
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(iii) became generally available to the
public or otherwise part of the
public domain after its disclosure
and other than through any act or
omission of the Receiving Party in
breach of this Agreement;
(iv) was independently developed by the
Receiving Party;
(v) was, subsequently, lawfully
disclosed to the Receiving Party by
a person other than the Disclosing
Party; or
(vi) was approved in writing by the
Disclosing Party for public
disclosure by the Receiving Party.
9.2 Permitted Use and Disclosures.
Each party hereto may use or disclose Confidential Information
disclosed to it by the other party to the extent such information is
included in the Aurora Technology, Allelix Technology or Joint
Technology, and to the extent such use or disclosure is reasonably
necessary and permitted in the exercise of the rights granted
hereunder in filing or prosecuting patent applications, prosecuting or
defending litigation, complying with applicable governmental
regulations, or court orders or otherwise submitting information to
tax or other governmental authorities, conducting clinical trials, or
making a permitted sublicense or otherwise exercising license rights
expressly granted to the other party pursuant to the terms of this
Agreement, provided that if a party is required to make any such
disclosure of the other party's Confidential Information, other than
pursuant to a confidentiality agreement, it will give reasonable
advance notice of such disclosure to the other party and, save to the
extent inappropriate in the case of patent applications, will use its
reasonable efforts to secure confidential treatment of such
Confidential Information in consultation with the other party prior to
such disclosure (whether through protective orders or otherwise) and
disclose only the minimum necessary to comply with such requirements.
9.3 Nondisclosure of Terms.
Each of the parties hereto agrees not to disclose to any Third Party
the terms of this Agreement without the prior written consent of the
other party hereto, except to such party's attorneys, advisors,
investors, and others on a need-to-know basis under circumstances that
reasonably ensure the confidentiality thereof, or to the extent
required by law. Notwithstanding the foregoing, the parties shall
agree upon a press release to announce the execution of this
Agreement. Thereafter, Aurora and Allelix may each disclose to Third
Parties the information contained in such press release without the
need for further approval
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by the other. In addition, Aurora may (i) make public statements
regarding Development Candidates or Products by announcing the
achievement of milestones and fees therefor, following consultation
with Allelix and with the written consent of Allelix to the form and
content of the public statement, and (ii) without the prior consent of
Allelix, make public statements regarding the overall success rate(s)
achieved by and/or for its customers with the use of Aurora
Technology, and Allelix Technology, provided it may not disclose any
Screens or Allelix's identity. Allelix shall be free to make public
statements, press releases, and the like with respect to Agreement
Compounds, Development Candidates, and Products.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
10.1 Allelix.
As of the Effective Date, Allelix warrants and represents on its own
behalf and on behalf of its Affiliates that: (i) it has the legal
power, authority and right to enter into this Agreement, and to
perform all of its obligations hereunder; (ii) it has the legal right
and power to extend to Aurora the rights granted in this Agreement;
and (iii) to the best of its knowledge as of the Effective Date, there
are no existing or threatened actions, suits, or claims pending
against it with respect to the Allelix Technology.
10.2 Aurora.
As of the Effective Date, Aurora represents and warrants that: (i) it
has the full legal power, authority, and right to enter into this
Agreement, and to perform all of its obligations hereunder; (ii) it
has the legal right and power to extend the rights to Allelix granted
in this Agreement; and (iii) to the best of its knowledge as of the
Effective Date, there are no existing or threatened actions, suits, or
claims pending against it with respect to the Aurora Technology.
10.3 Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, AURORA AND
ALLELIX MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS
OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH
RESPECT TO AURORA TECHNOLOGY, ALLELIX TECHNOLOGY, SCREENS, COMPOUNDS,
AGENTS, DEVELOPMENT CANDIDATES, DERIVATIVES, PRODUCTS, OR INFORMATION
DISCLOSED INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY
AURORA TECHNOLOGY OR ALLELIX TECHNOLOGY, PATENTED OR UNPATENTED, OR
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NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
ARTICLE 11. INDEMNIFICATION
11.1 Allelix.
Allelix agrees to indemnify, defend, and hold Aurora, its Affiliates,
and the directors, officers, employees, and agents of each of them
(the "Aurora Indemnitees") harmless from and against any losses,
costs, claims, damages, liabilities or expenses (including reasonable
attorneys' and professional fees and court and other expenses of
litigation) (collectively, "Liabilities") arising out of or in
connection with Third Party claims relating to (i) any Agreement
Compounds or Products developed, manufactured, used, sold, or
otherwise distributed by or on behalf of Allelix, its Affiliates,
Licensors, Licensees, or other designees (including, without
limitation, product liability claims), (ii) the possession and/or use
by Aurora of any Compounds or Compound libraries provided by Allelix
to Aurora hereunder; (iii) the performance (by any party other than
Aurora) of Screens by or on behalf of Allelix; or (iv) any breach by
Allelix of its obligations under or the representations and warranties
made in this Agreement, except, in each case, to the extent such
Liabilities result from the negligence or intentional misconduct of
Aurora.
11.2 Aurora.
Aurora agrees to indemnify, defend, and hold Allelix, its Affiliates,
Licensors and Licensees, and the directors, officers, employees, and
agents of each of them (the "Allelix Indemnitees") harmless from and
against any Liabilities arising out of or in connection with Third
Party claims relating to ***
11.3 Procedure.
In the event that any Indemnitee intends to claim indemnification
under this Article 11, it shall promptly notify the other party in
writing of such alleged Liability. The indemnifying party shall have
the right to control the defense thereof using counsel of its choice;
provided,
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however, that any Indemnitee shall have the right to retain its own
counsel at its own expense, for any reason, including if
representation of any Indemnitee by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnitee and any other party
reasonably represented by such counsel in such proceeding. The
affected Indemnitees shall cooperate with the indemnifying party and
its legal representatives in the investigation of any action, claim,
or liability covered by this Article 11. The indemnified party shall
not, except at its own cost, voluntarily make any payment or incur any
expense with respect to any claim or suit without the prior written
consent of the indemnifying party, which such party shall not be
required to give.
ARTICLE 12. TERM AND TERMINATION
12.1 Term.
The term of this Agreement shall begin as of the Effective Date and,
unless terminated earlier as provided in this Article 12, continue in
full force and effect until the expiration of the royalty payments due
under this Agreement (the "Term").
12.2 Termination for Cause.
Either party hereto may terminate this Agreement in the event the
other party has materially breached or defaulted in the performance of
any of its material obligations hereunder, and such default shall have
continued for thirty (30) days after written notice thereof was
provided to the breaching party by the nonbreaching party. Any
termination shall become effective at the end of such thirty (30) day
period, unless the breaching party has cured any such breach or
default prior to the expiration of the thirty (30) day cure period or
has provided a written plan to cure any such breach or default that is
acceptable to the other party.
12.3 Termination for Insolvency.
If voluntary or involuntary proceedings by or against a party are
instituted in bankruptcy under any insolvency law, or a receiver or
custodian is appointed for such party, or proceedings are instituted
by or against such party for corporate reorganization or the
dissolution of such party, which proceedings, if involuntary, shall
not have been dismissed within sixty (60) days after the date of
filing, or if such party makes an assignment for the benefit of
creditors, or substantially all of the assets of such party are seized
or attached and not released within sixty (60) days thereafter, the
other party may immediately terminate this
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Agreement effective upon giving notice of such termination to such
party.
12.4 Permissive Termination.
During the Collaboration Period, Allelix shall have the right to
terminate this Agreement with six (6) months written notice. Upon
such notice, Aurora's obligations to provide screen development and
screening services will be fulfilled, and all Screen Development Plans
and Screening Programs in progress shall terminate.
12.5 Effect of Breach or Termination.
12.5.1 Accrued 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 all rights and remedies it
may have hereunder or at law or in equity with respect to any
breach of this Agreement.
12.5.2 Return of Confidential Information.
In the event of termination, but not expiration, of this
Agreement, Aurora and Allelix shall promptly return to the
other party all Confidential Information received from the
other party (except one (1) copy of which may be retained for
archival purposes), and neither party shall be entitled to use
any Confidential Information of the other party for any
purpose during the Term such Confidential Information is to
remain confidential, as provided in Section 9.1. Upon any
such termination all materials provided by Allelix to Aurora,
including but not limited to Compounds, shall be returned to
Allelix or destroyed at the discretion of Allelix. For any
termination by Aurora for cause, all materials provided by
Aurora to Allelix shall be returned to Aurora or destroyed at
the discretion of Aurora.
12.5.3 Licenses.
The licenses granted to Allelix and Aurora hereunder shall
terminate in the event of termination of this Agreement;
provided, however, that in the event that Allelix shall
terminate with cause under Section12.2 or permissive
termination under Section 12.4, the licenses granted by Aurora
to Allelix under Section 5.1 shall remain in effect.
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12.6 Survival.
Sections 5.3, 5.4, 10.3, 12.5 and 12.6, and Articles 1, 6, 7, 8, 9, 11
and 13 shall survive expiration or termination of this Agreement for
any reason.
ARTICLE 13. MISCELLANEOUS
13.1 Governing Law.
This Agreement and any dispute arising from the construction,
performance, or breach hereof shall be governed by, construed, and
enforced in accordance with the laws of the State of Colorado, without
reference to conflicts of laws principles.
13.2 Dispute Resolution.
13.2.1 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 Denver,
Colorado, in accordance with the American Arbitration
Association Commercial Mediation Rules. Nothing herein,
however, shall prohibit either party from initiating
arbitration proceedings pursuant to Section 13.2.2, 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 costs of mediation shall be shared equally by the parties
to the mediation.
13.2.2 Arbitration.
Any dispute or claim arising out of or related to this
Agreement, or the interpretation, making, performance, breach,
validity, or termination hereof, which has not been resolved
by negotiation or mediation as set forth above, shall be
finally settled by binding arbitration in Denver, Colorado
under the Commercial Arbitration Rules and the Supplementary
Procedures for Large Complex Disputes of the American
Arbitration Association (together the "AAA Rules") by one
arbitrator appointed in accordance with the AAA Rules. The
arbitration proceedings shall be governed procedurally by
federal arbitration law and by the AAA Rules, without
reference to
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state arbitration law, and 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. The
judgment of the arbitrator shall be in the form of a reasoned,
written opinion, and shall be issued within sixty (60) days of
the conclusion of the arbitration proceeding. Judgment on the
award rendered by the arbitrator may be entered in any court
of competent jurisdiction. The parties may apply to any court
of competent jurisdiction for a temporary restraining order,
preliminary injunction, or other interim relief, as necessary,
without breach of this arbitration provision 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, its costs and fees, including, without
limitation, AAA administrative fees, arbitrator fees, travel
expenses, out-of-pocket expenses, witness fees, and
reasonable attorneys' fees.
13.3 Assignment.
This Agreement shall not be assignable by either party to any Third
Party without the written consent of the other party hereto; provided,
however, that either party may assign this Agreement, without the
other's consent, to 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, operation of law,
acquisition, sale, or otherwise. In the event that Aurora assigns
this Agreement, without Allelix's consent, to an entity that acquires
all or substantially all of the business or assets of Aurora, whether
by merger, reorganization, operation of law, acquisition, sale or
otherwise, Allelix may terminate this Agreement immediately by notice
in writing to Aurora. This Agreement shall be binding upon and inure
to the benefit of any permitted assignee or other transferee, and any
such party shall agree to perform the obligations of the assignor or
transferor.
13.4 Independent Contractors.
The relationship of the parties hereto is that of independent
contractors. Neither party hereto is to be deemed to be an agent,
partner, or joint venturer of the other party for any purpose as a
result of this Agreement or the transactions contemplated thereby.
13.5 Compliance with Laws.
In exercising their rights under this Agreement, the parties shall
fully comply in all material respects with the requirements of any and
all applicable laws, regulations, rules, and orders of any
governmental body having jurisdiction over the exercise of rights
under this Agreement,
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
-31-
<PAGE> 32
including, without limitation, those applicable to the discovery,
development, manufacture, distribution, import and export, and sale of
pharmaceutical products.
13.6 Notices.
Legal notices, requests, and other communications hereunder shall be
in writing and shall be delivered personally or by 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 party hereto, and shall be
deemed to have been given upon receipt:
If to Aurora: Aurora Biosciences Corporation
11149 North Torrey Pines Road
La Jolla, CA 92037 U.S.A.
Attn.: President and CEO
CC: Legal and Business Development
If to Allelix: Allelix Biopharmaceuticals Inc.
6850 Goreway Drive
Mississauga, Ontario L4V 1V7 Canada
Attn.: President and CEO
13.7 Severability.
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect to the fullest extent permitted by law without said provision,
and the parties shall amend the Agreement to the extent feasible to
lawfully include the substance of the excluded term to as fully as
possible realize the intent of the parties and their commercial
bargain.
13.8 Waiver.
It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or
default. No waiver shall be effective unless in a writing signed by
the party having the waived right.
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
-32-
<PAGE> 33
13.9 Force Majeure.
Nonperformance of any party shall be excused to the extent that
performance is rendered impossible by strike, fire, earthquake, flood,
governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the reasonable
control and not caused by the negligence or intentional conduct or
misconduct of the nonperforming party, provided such party uses its
best efforts to resume performance as promptly as possible.
13.10 Advice of Counsel.
This Agreement has been negotiated by the parties 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 or against either party.
13.11 No Consequential Damages.
IN NO EVENT SHALL EITHER PARTY TO THIS AGREEMENT HAVE ANY LIABILITY TO
THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES
ARISING UNDER THIS AGREEMENT UNDER ANY THEORY OF LIABILITY.
13.12 Complete Agreement.
This Agreement, constitutes the entire agreement, both written and
oral, between the parties with respect to the subject matter hereof,
and all prior agreements respecting the subject matter hereof, either
written or oral, expressed or implied, shall be abrogated, canceled,
and are null and void and of no effect. No amendment or change hereof
or addition hereto shall be effective or binding on either of the
parties unless reduced to writing and executed by a duly authorized
representative of each of Aurora and Allelix.
13.13 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to
be one and the same agreement.
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
-33-
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.
AURORA BIOSCIENCES CORPORATION ALLELIX BIOPHARMACEUTICALS INC.
By: By:
---------------------- --------------------------
Name: J. Gordon Foulkes Name: Graham Strachan
Title: Chief Technical Officer Title: President and CEO
ALLELIX.AURORA COLLABORATION AGREEMENT
JANUARY 21, 1996
-34-
<PAGE> 1
EXHIBIT 11.1
AURORA BIOSCIENCES CORPORATION
STATEMENT RE COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
Period from
May 8, 1995
(inception) to Year ended
December 31, 1995 December 31, 1996
----------------- -----------------
<S> <C> <C>
Net loss ................................................................... $ (411,727) $(2,933,480)
Computation of common and common equivalent
shares outstanding:
Weighted average common shares outstanding ............................... 0 1,710,515
Convertible preferred stock assuming
conversion from date of issuance ........................................ 0 6,669,412
---------- ----------
8,379,927
Shares related to SAB 83 (1):
Common stock ............................................................. 994,043 994,043
Convertible preferred stock .............................................. 1,319,804 1,319,804
Warrants (2) ............................................................. 47,095 47,095
Common stock options granted (2) ......................................... 519,327 519,327
---------- ----------
2,880,269 2,880,269
Shares used in computing pro forma net loss per
share ....................................................................... 2,880,269 11,260,196
========= ==========
Pro forma net loss per share ................................................. $ (.14) $ (.26)
========== ==========
</TABLE>
- ------------
(1) Using the treasury stock method.
(2) All warrants and common stock options were granted after March 14, 1996 and
are included in this calculation as SAB 83 shares.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated March 13, 1997
(except Note 11, as to which the date is ), in the Registration
Statement (Form S-1) and related Prospectus of Aurora Biosciences Corporation
for the registration of 3,450,000 shares of its common stock.
ERNST & YOUNG LLP
San Diego, California
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the
completion of the four-for-five reverse stock split discussed in Note 11 to the
financial statements.
ERNST & YOUNG LLP
San Diego, California
March 13, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF FISH & RICHARDSON P.C.
March 14, 1997
The Board of Directors and Stockholders of
Aurora Biosciences Corporation:
We consent to the reference to our firm under the caption "Experts"
and to the use of our name wherever appearing in the Registration Statement
(Form S-1 dated March 14, 1997) and related Prospectus of Aurora Biosciences
Corporation, and any amendment thereto.
------------------------
FISH & RICHARDSON P.C.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> MAY-08-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 DEC-31-1996
<CASH> 11 3,914
<SECURITIES> 0 9,253
<RECEIVABLES> 0 1,117
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 99 14,681
<PP&E> 11 2,060
<DEPRECIATION> (2) (159)
<TOTAL-ASSETS> 115 17,515
<CURRENT-LIABILITIES> 527 1,219
<BONDS> 0 0
0 0
0 10
<COMMON> 0 3
<OTHER-SE> 0 18,516
<TOTAL-LIABILITY-AND-EQUITY> 115 17,515
<SALES> 0 0
<TOTAL-REVENUES> 0 2,217
<CGS> 0 0
<TOTAL-COSTS> 412 5,671
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 59
<INCOME-PRETAX> (412) (2,933)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (412) (2,933)
<EPS-PRIMARY> (.14) (.26)
<EPS-DILUTED> 0 0
</TABLE>
