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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AURORA BIOSCIENCES CORPORATION
(Exact name of Registrant as specified in its charter)
----------------
DELAWARE 33-0669859
(State or other jurisdiction (I.R.S. Employer
of incorporation Identification Number)
or organization)
11010 TORREYANA ROAD
SAN DIEGO, CA 92121
(858) 404-6600
(Address, including zip code, and
telephone number, including
area code, of Registrant's
principal executive
offices)
----------------
STUART J.M. COLLINSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AURORA BIOSCIENCES CORPORATION
11010 TORREYANA ROAD
SAN DIEGO, CA 92121
(858) 404-6600
(Name, address, including zip code,
and telephone number, including
area code, of agent for service)
----------------
Copies to:
THOMAS A. COLL, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
(858) 550-6000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
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, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. |X|
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, 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. / /
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<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 1,800,000 $83.53 $150,354,000 $39,694
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) of the Securities Act of 1933. The
price per share and aggregate offering price are based upon the average of the
high and low sales price of Aurora's common stock on March 7, 2000 as reported
on the Nasdaq National Market. It is not known how many shares will be purchased
under this registration statement or at what price such shares will be
purchased.
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 WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 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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SUBJECT TO COMPLETION, DATED MARCH 10, 2000
PROSPECTUS
1,800,000 SHARES
AURORA BIOSCIENCES CORPORATION
COMMON STOCK
----------------
We are registering our common stock for resale by the selling stockholders
identified in this prospectus. We will not receive any of the proceeds from the
sale of shares by the selling stockholders. Our common stock is listed on the
Nasdaq National Market under the symbol "ABSC." On March 8, 2000, the last
reported sales price for our common stock, was $93.00 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March __, 2000.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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AURORA BIOSCIENCES CORPORATION
Aurora designs, develops and sells proprietary drug discovery systems,
services and technologies to accelerate and enhance the discovery of new
medicines by the pharmaceutical and biopharmaceutical industries. We are
developing an integrated technology platform comprised of a portfolio of
proprietary technologies and products. Our integrated platform is designed to
accelerate the drug discovery process by shortening the time required to
identify potential drug candidates.
Our goal is to become the leader in the development and
commercialization of technologies to accelerate and enhance the discovery of new
medicines. We diversify our business risk by generating revenue from multiple
collaborators who use our technologies, services and integrated platform in many
different drug discovery programs. To date, we have entered into collaborative
agreements with Bristol-Myers Squibb Pharmaceutical Research Institute, Eli
Lilly and Company, Warner-Lambert Company and Merck & Co., Inc. In addition, we
have developed technologies and/or have provided services to Allelix
Biopharmaceuticals, Inc., Roche Bioscience, Cytovia, Inc., Pharmacia & Upjohn,
Inc. and F. Hoffman-LaRoche Ltd.
Our executive offices are located at 11010 Torreyana Road, San Diego,
California 92121, and our telephone number is (858) 404-6600.
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RISK FACTORS
AN INVESTMENT IN OUR SHARES BEING OFFERED IN THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. THE SEC ALLOWS US TO "INCORPORATE BY REFERENCE" INFORMATION
THAT WE FILE WITH THEM, WHICH MEANS THAT WE CAN DISCLOSE IMPORTANT INFORMATION
TO YOU BY REFERRING YOU TO THOSE DOCUMENTS. THE INFORMATION INCORPORATED BY
REFERENCE IS CONSIDERED TO BE PART OF THIS PROSPECTUS, AND INFORMATION THAT WE
FILE LATER WITH THE SEC WILL PERIODICALLY UPDATE AND SUPERSEDE THIS INFORMATION.
IN DECIDING WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK, YOU SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO OTHER INFORMATION CONTAINED
IN THIS PROSPECTUS, IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND IN ANY
OTHER DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS FROM OUR OTHER
SEC FILINGS. THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE DISCUSSED HERE OR INCORPORATED BY REFERENCE. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO DIFFERENCES IN OUR ACTUAL RESULTS INCLUDE THOSE DISCUSSED IN THIS
SECTION, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS AND IN OTHER
DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
BECAUSE WE DEVELOP AND DEPLOY NEW TECHNOLOGIES, WE MAY NOT SUCCESSFULLY
COMMERCIALIZE OUR TECHNOLOGIES OR PRODUCTS, WHICH COULD CAUSE US TO BE
UNPROFITABLE OR LEAD TO LOSS OF BUSINESS OR CONTRACTUAL DISPUTES.
You must evaluate our business in light of the uncertainties and complexities
affecting a growing technology company. Our existing proprietary technologies
and products are new and in development. In particular, our ultra high
throughput screening system, known as UHTSS, and automated master compound
store, known as AMCS, technology and our methods of screening molecular
targets incorporate new and unproven approaches to the identification of
drug product candidates, commonly referred to as lead compounds, with
therapeutic potential. Our fluorescence assay technologies and instruments
have only recently begun to be used in the drug discovery process and have
never been utilized in the discovery of any compound that has been
commercialized. A fluorescence array is a biochemical or cellular reaction
which provides information about a compound under consideration via the
emission of light. Our UHTSS and AMCS technologies may never be implemented
as fully operational systems. In addition, our UHTSS Platform and AMCS will
require significant additional investment 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. The UHTSS Platform and AMCS are not expected to be
operational until the second half of 2000, which is nine to twelve months
later than originally anticipated. If we are unable to successfully complete
the UHTSS Platform and AMCS, we may not be able to achieve our business
objectives or build a sustainable or profitable business.
IF WE DO NOT SUCCESSFULLY COMPLETE THE DEVELOPMENT OF OUR UHTSS PLATFORM AND
AMCS ON TIME, OUR RELATIONSHIPS WITH OUR CUSTOMERS COULD BE HARMED.
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 impossible 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.
Some of the instrumentation and software expected to comprise our UHTSS Platform
and AMCS 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 UHTSS and AMCS technologies will achieve expected performance levels at
these scales. The complexity of both the UHTSS Platform and AMCS has led to
unexpected delays in developing these platforms that may lead to financial
penalties and contractual disputes regarding the delivery and acceptance of
these platforms by our customers. Contractual disputes with our customers may
not be resolved in our favor and may harm our reputation. The successful
implementation and operation of the UHTSS Platform and AMCS will be a complex
process requiring integration and coordination of a number of factors, including
integration of and successful interface between complex advanced robotics,
2.
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microfluidics, automated storage and retrieval systems and software and
information systems. We may not be able to successfully integrate or implement
all of the instrumentation needed for the UHTSS Platform and AMCS.
As the UHTSS Platform and AMCS are individually 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. Unforeseen complications may arise in the development,
delivery and operation of the UHTSS Platform and AMCS that could materially
delay or limit their use by us and our customers, substantially increase the
anticipated cost of development of the systems, result in our breach of
contractual obligations to our customers and others, or render the systems
unable to perform at the quality and capacity levels required for success. We
may not be able to successfully complete the development of the UHTSS Platform
and AMCS under current delivery timelines, achieve anticipated throughputs, gain
industry acceptance of our approach to the identification of lead compounds or
develop a sustainable profitable business. Any complications or delays could
subject us to litigation and have other material adverse effects on our
business, financial condition or results of operations.
WE DEPEND ON STRATEGIC PARTNERS, AND OUR FAILURE TO SUCCESSFULLY MANAGE OUR
EXISTING AND FUTURE CUSTOMERS COULD PREVENT US FROM COMMERCIALIZING MANY OF OUR
PRODUCTS AND SUSTAINING PROFITABILITY OR REVENUE GROWTH.
Our strategy for the development of the UHTSS Platform includes the
establishment of a syndicate of collaborators to provide us with development
funding, technology and personnel resources and system validation. We have
collaborative agreements with Bristol-Myers Squibb Pharmaceutical Research
Institute, Eli Lilly and Company, Warner-Lambert Company, Merck & Co., Inc. and
Pfizer, Inc. to license our fluorescence assay technologies for their internal
discovery research, to collaborate on screen development and four of these
companies continue to participate in the co-development of the UHTSS Platform
for installation in their own facilities. In addition, we have developed screens
for and/or implemented screening programs for Pharmacia & Upjohn, Inc.,
F.Hoffmann-LaRoche Ltd., American Home Products, Glaxo Wellcome, Roche
Bioscience, Becton-Dickinson, Allelix Biopharmaceuticals, Inc., Cystic Fibrosis
Foundation, and Cytovia, Inc. We have limited or no control over the resources
that any strategic partner may devote to our products or programs. Our
agreements generally may be terminated by the collaborator without cause upon
short notice, which would result in our loss of anticipated revenue. Our
collaborators may not perform their obligations as expected and we may not
derive any additional revenue from these agreements. Termination of our 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 our business, financial condition or results of
operations. Our present or future collaborative relationships could be harmed
if:
- We do not deliver our services or systems when
contractually specified;
- We do not achieve our research and development
objectives under our collaborative agreements;
- We develop products and processes or enter into
additional collaborative agreements that could
conflict with the business objectives of our existing
collaborative partners;
- We disagree with our collaborative partners as to
rights to intellectual property we develop;
- We are unable to manage multiple simultaneous
collaborative relationships;
- Our collaborative partners become competitors of ours
or enter into agreements with our competitors;
- Consolidation in our target markets limits the number
of potential collaborative partners; or
- We are unable to negotiate additional agreements
having terms satisfactory to us.
WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE.
We were profitable in 1997 and 1999 but had an accumulated deficit of $21.6
million as of December 31, 1999. Our ability to sustain profitability will
depend in part on our ability to successfully complete our UHTSS Platform and
AMCS, successfully sell drug discovery services to pharmaceutical and
biotechnology companies and gain industry acceptance of our systems, services
and technologies. We have derived substantially all of our revenue from sales of
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services and technologies, license fees, payments from collaborators and
interest income, and we expect to derive substantially all of our revenue from
these sources. We do not expect to receive royalties or other revenues from
commercial sales of products based upon any compound identified using our
technologies for at least several years, if at all.
We expect to spend significant amounts to fund our expansion of operations and
continued development of products, systems and fluorescence assay and genomics
technologies. As a result, we expect that our operating expenses will increase
in the near term and, consequently, we will need to generate additional revenue
to sustain profitability. Future revenue is uncertain because our ability to
generate revenue will depend upon our ability to enter into new collaborative,
service and license agreements, and to meet research, development and
commercialization objectives under new and existing agreements. Even if we do
achieve profitability, we may not be able to sustain or increase profitability
on a quarterly or annual basis.
OUR BUSINESS MODEL IS NOVEL, WHICH MAY DISCOURAGE THIRD PARTIES FROM USING OUR
TECHNOLOGIES AND SERVICES.
We intend to use our UHTSS Platform and fluorescence assay technologies to
rapidly identify for ourselves and our collaborators as many compounds with
commercial potential as possible. Historically, because of the highly
proprietary nature of these discovery 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. Our ability to succeed will be dependent, in part, upon
the willingness of multiple collaborators to accept our business model and to
use our systems, services and technologies as a tool in the discovery and
development of compounds with commercial potential. Because of the potential
overlap of compounds and targets provided to us by our collaborators, conflicts
may arise among collaborators as to rights to particular products developed as a
result of being identified through the use of our technologies. Our 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 our
business, financial condition or results of operations.
WE MAY USE SUBSTANTIAL FUNDS AND MANAGEMENT EFFORT TO PURSUE ADDITIONAL
COLLABORATIVE ARRANGEMENTS WITH NO ASSURANCE OF SUCCESSFULLY SELLING OUR
PRODUCTS OR SERVICES OR ENTERING INTO A COLLABORATIVE AGREEMENT.
Our ability to enter into agreements with additional collaborators or to expand
our agreements with existing collaborators depends in part upon potential
collaborators being convinced that our technologies can help accelerate drug
discovery efforts. This may require substantial time and effort on our part to
educate potential collaborators and other users of our services and technologies
on the efficiencies and potential benefits presented by our services and
technologies. In addition, many of the collaborations involve the negotiation of
customized terms regarding licensing, scope of agreement and types of services
required. We may expend substantial funds and management effort to pursue
collaborative opportunities with no assurance that a collaboration will result.
COMPETITION IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES MAY RESULT IN
COMPETING PRODUCTS AND TECHNOLOGIES THAT MAKE OURS OBSOLETE.
The biotechnology industry is characterized by rapid technological change.
Competition is intense among pharmaceutical and biotechnology companies that
attempt to identify compounds for development or support drug discovery efforts.
Because the UHTSS instrumentation is designed to integrate a number of different
technologies, we compete in many areas, including instrumentation, assay
development, high throughput screening and functional genomics. We compete with
instrumentation companies, the research departments of pharmaceutical and
biotechnology companies and other commercial enterprises, as well as numerous
academic and research institutions. Another technology provider may develop a
product to compete with the UHTSS Platform or AMCS. Pharmaceutical,
biotechnology and instrumentation companies that currently compete with us may
merge or enter into alliances with other companies and become substantial
multi-point competitors. Our collaborators may assemble their own ultra-high
throughput screening systems by purchasing components or contracting for
services from
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competitors. Genomics and combinatorial chemistry companies may also expand
their business to include compound screening or screen development. Many of
these pharmaceutical and biotechnology companies, which represent the greatest
potential market for our 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. Our technological approaches, in particular
the UHTSS Platform and AMCS, may be rendered obsolete or uneconomical by
advances in existing technological approaches or the development of different
approaches by our current or future competitors.
WE MAY NEED TO INITIATE LAWSUITS TO PROTECT OR ENFORCE OUR PATENTS OR OTHER
PROPRIETARY RIGHTS, WHICH WOULD BE EXPENSIVE AND, IF WE LOSE, MAY CAUSE US TO
LOSE SOME OF OUR INTELLECTUAL PROPERTY RIGHTS, WHICH WOULD REDUCE OUR ABILITY TO
COMPETE IN THE MARKET AND MAY CAUSE OUR STOCK PRICE TO DECLINE.
We rely on patents to protect a large part of our intellectual property and our
competitive position. Our patents, which have been or may be issued, may not
afford meaningful protection for our technology and products. In addition, our
current and future patent applications may not result in the issue of patents in
the United States or foreign countries. Competitors of ours may develop products
and technologies similar to ours that do not conflict with our patents. In order
to protect or enforce our patent rights, we may initiate patent litigation
against third parties, such as infringement suits or interference proceedings.
These lawsuits could be expensive, take significant time, and could divert
management's attention from other business concerns. They would put our patents
at risk of being invalidated or interpreted narrowly and our patent applications
at risk of not issuing. We may also provoke these third parties to assert claims
against us. The patent position of biotechnology firms generally is highly
uncertain, involves complex legal and factual questions, and has recently been
the subject of much litigation. We cannot assure you that we will prevail in any
of these suits or that the damages or other remedies awarded to us, if any, will
be commercially valuable. During the course of these suits, there may be public
announcements of the results of hearings, motions and other interim proceedings
or developments in the litigation. If securities analysts or others perceive any
of these results to be negative, it could cause our stock price to decline.
BECAUSE OUR PRODUCTS AND SERVICES CURRENTLY DEPEND ON COMPONENTS AND
TECHNOLOGIES LICENSED FROM THIRD PARTIES, A BREACH BY US OF ANY OF THE TERMS OF
THESE LICENSES COULD RESULT IN THE LOSS OF ACCESS TO THESE COMPONENTS AND
TECHNOLOGIES AND COULD DELAY OR SUSPEND OUR RESEARCH AND DEVELOPMENT PLANS.
Some aspects of our technology and products have been licensed from third
parties. A failure by us to maintain the right to use these components could
seriously harm our business, financial condition and results of operation. In
particular, we are dependent, in part, on the patent rights licensed from third
parties with respect to our fluorescence assay and screening technologies.
Patent applications filed by us or our licensors may not result in patents being
issued with respect to intellectual property we have licensed, claims of those
patents may not offer sufficient protection, and any patents licensed by us may
be challenged, narrowed, invalidated, or circumvented. We may also be subject to
legal proceedings that result in the revocation of patent rights previously
licensed to us, as a result of which we may be required to obtain licenses from
others to continue to develop, test or commercialize our systems, services or
technologies. We may not be able to obtain such licenses on acceptable terms, if
at all, which would result in delays or a suspension of our research and
development plans.
OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON
OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.
We may be sued for infringing on the patent rights of others. We may have to pay
substantial damages, including treble damages, for past infringement if it is
ultimately determined that our products infringe a third party's proprietary
rights. 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. A number of patents
have issued and may issue on certain targets or their use in screening assays
that could prevent us and our collaborators from developing screens using such
targets, or relate to certain other aspects of technology that we utilize or
expect to utilize. From time to time we receive invitations from third parties
to license patents owned or controlled by third parties. We evaluate these
requests and intend to obtain licenses that are compatible with our business
objectives. We may not be able to obtain any licenses on acceptable terms, if at
all. Our inability to obtain
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or maintain patent protection or necessary licenses could have a material
adverse effect on our business, financial condition or results of operations.
OTHER METHODS OF PROTECTING OUR TRADE SECRETS AND OTHER INTELLECTUAL PROPERTY,
INCLUDING CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS, MAY NOT
ADEQUATELY PREVENT DISCLOSURE OF PROPRIETARY INFORMATION.
In addition to patent protection, we rely on a combination of copyright and
trademark laws, trade secrets, know-how, and other contractual provisions and
technical measures to protect our intellectual property rights. In an effort to
maintain the confidentiality and ownership of trade secrets and proprietary
information, we require employees, consultants and collaborators to execute
confidentiality and invention assignment agreements upon commencement of a
relationship with us. These measures may not provide meaningful protection for
our trade secrets or other confidential information and technology. We may not
have adequate remedies in the event of unauthorized use or disclosure of our
confidential and proprietary information. In addition, third parties may
independently discover trade secrets and proprietary information. Costly and
time-consuming litigation could be necessary to enforce and determine the scope
of our proprietary rights, and failure to obtain and maintain trade secret
protection could adversely affect our competitive position.
IF OUR CONTRACTORS AND VENDORS FAIL TO PROVIDE US WITH ESSENTIAL COMPONENTS THAT
WE NEED IN ORDER TO CONTINUE RESEARCH AND DEVELOPMENT, WE WOULD EXPERIENCE
DELAYS AND ADDITIONAL EXPENSES.
We rely on a limited number of contractors, suppliers and vendors for the
development, manufacture and supply of certain components in the areas of
informatics, robotics, automated storage and retrieval, liquid handling systems,
microfluidics and detection devices. Although we believe that alternative
sources for these components are available, any interruption in the development,
manufacture or supply of a single-sourced component could have a material
adverse effect on our ability to develop the UHTSS Platform or other systems
until a new source of supply is qualified, could subject us to penalties for
delays in delivery of the UHTSS Platform and, as a result, could have a material
adverse effect on our business, financial condition or results of operations. In
addition, our current or future technology suppliers may not meet our
requirements for quality, quantity or timeliness. If any of our current or
future technology suppliers fails to deliver components, including mechanical
components of the UHTSS Platform or our automated master compound store, that
meet required specifications in a timely manner, or at all, it could
significantly affect our ability to meet our contractual obligations to the
UHTSS syndicate members and expose us to significant potential liabilities.
IF WE LOSE OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED
PERSONNEL AS NECESSARY, IT COULD HARM OUR RESEARCH AND DEVELOPMENT EFFORTS AND
WOULD IMPAIR OUT ABILITY TO COMPETE.
Our success depends to a significant degree upon the continued contributions of
our executive officers, management and staff. If we lose the services of one or
more of these people, we may be unable to achieve our business objectives, meet
our commitments under existing agreements and our stock price could decline. We
may not be able to attract or retain qualified employees in the future due to
intense competition for qualified personnel among biotechnology and other
technology-based businesses, particularly in the San Diego area. If we are
unable to attract and retain the necessary personnel to accomplish our business
objectives, we may experience resource constraints that will adversely affect
our ability to meet the demands of our strategic partners in a timely fashion or
to support our ability to attract and retain highly skilled scientists,
including individuals with holding doctoral degrees in the basic sciences and
engineers. All of our employees are at-will employees, which means that either
the employee or Aurora may terminate their employment at any time.
WE MAY ENCOUNTER DIFFICULTIES MANAGING OUR GROWTH, WHICH COULD ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS.
Our success will depend on our ability to expand and manage our operations and
facilities. To be cost-effective and timely in the development and installation
of our systems, services and technologies, we must coordinate the integration of
multiple technologies in complex systems, both internally and for our
collaborators. We may not be able to manage our growth, to meet the staffing
requirements of additional collaborative relationships or successfully
assimilate and train new employees. If we continue to grow, our existing
management skills and systems may not be
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adequate and we may not be able to manage any additional growth effectively. If
we fail to achieve any of these goals, there could be a material adverse effect
on our business, financial condition or results of operations.
IF WE ENGAGE IN ANY MERGER OR ACQUISITION TRANSACTIONS, WE WILL INCUR A VARIETY
OF COSTS AND MAY POTENTIALLY FACE OTHER RISKS THAT COULD ADVERSELY AFFECT OUR
BUSINESS OPERATIONS.
If appropriate opportunities become available, we may consider acquiring
businesses, technologies or products that we believe are a strategic fit with
our business. We currently have no commitments or agreements with respect to any
material acquisitions. If we do pursue an acquisition strategy, we could:
- Issue equity securities which could dilute current stockholders'
percentage ownership;
- Incur substantial debt; or
- Assume contingent liabilities.
We may not be able to successfully integrate any businesses, products,
technologies or personnel that we might acquire in the future without a
significant expenditure of operating, financial and management resources, if at
all. In addition, future acquisitions might negatively impact our business
relations with our collaborators. Further, recent proposed accounting changes
could result in a negative impact on our results of operations as well as the
resulting cost of the acquisition. Any of these adverse consequences could harm
our business.
IF WE REQUIRE ADDITIONAL CAPITAL TO FUND OUR OPERATIONS, WE MAY NEED TO ENTER
INTO FINANCING ARRANGEMENTS WITH UNFAVORABLE TERMS OR WHICH COULD ADVERSELY
AFFECT YOUR OWNERSHIP INTEREST AND RIGHTS AS COMPARED TO OTHER STOCKHOLDERS.
We may be required to raise additional capital over a period of several years in
order to expand our operations or acquire new technology. We may raise this
additional capital through additional public or private equity financings,
borrowings and other available sources. Our business or operations may change in
a manner that would consume available resources more rapidly than anticipated,
or substantial additional funding may be required before we can sustain
profitable operations. If additional financing is required to operate our
business, we cannot assure you that additional financing will be available on
terms favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, our ability to fund our operations, take
advantage of opportunities, develop products or technologies or otherwise
respond to competitive pressures could be significantly limited.
If we raise additional funds through the issuance of equity securities, the
percentage ownership of our stockholders will be reduced, stockholders may
experience additional dilution or such equity securities may provide for rights,
preferences or privileges senior to those of the holders of our common stock. If
we raise additional funds through the issuance of debt securities, the debt
securities would have rights, preferences and privileges senior to holders of
common stock and the terms of that debt could impose restrictions on our
operations.
OUR TECHNOLOGIES AND PRODUCTS MAY NOT RESULT IN THE DISCOVERY AND
COMMERCIALIZATION OF DRUG PRODUCTS AND WE MAY NOT GENERATE REVENUES FROM
MILESTONES OR ROYALTIES IN THE FUTURE.
Many of our agreements with collaborators and technology licensees provide that
we may receive milestone payments or royalties based on future sales of drug
products discovered through the use of our services, technologies and products.
Use of our services, technologies or products may not result in the discovery of
[lead compounds] that will be safe or effective. Our screens may result in
developed and commercialized pharmaceutical products that could generate
milestone payments and royalties only after lengthy and costly pre-clinical and
clinical development efforts, the receipt of necessary regulatory approvals,
including approvals by the FDA and equivalent foreign authorities, and the
integration of manufacturing capabilities and successful marketing efforts, all
of which must be performed by our collaborators. We do not currently intend to
perform any of these activities. Our collaborators may decide not to develop or
commercialize lead compounds identified through the use of our technologies.
Development and commercialization of lead compounds depend not only on the
achievement of research objectives by us and our collaborators, but also on each
collaborator's own financial, competitive, marketing and strategic
considerations, all
<PAGE>
of which are outside our control. Our collaborators may not successfully perform
their development, regulatory, compliance, manufacturing or marketing functions.
Products may not be developed and commercialized as a result of our
collaborations and any development or commercialization may not be successful.
If commercialization of lead compounds is successful, disputes may arise over
payments to us. We do not expect to receive royalties or other revenues from
commercial sales of products based upon any compound identified using our
technologies for at least several years, if at all.
DRUG PRODUCTS DEVELOPED AND COMMERCIALIZED BY OUR COLLABORATIVE PARTNERS WILL
LIKELY REQUIRE REGULATORY APPROVALS, WHICH MAY REDUCE OUR POTENTIAL REVENUES
FROM MILESTONES OR ROYALTIES.
If a collaborator successfully identifies a drug product for development and
commercialization, it will likely be subject to extensive government regulation.
Regulation by 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. We do not
currently plan to develop our own pharmaceutical products. Pharmaceutical
products developed by our collaborators will require lengthy and costly
pre-clinical and clinical trials and regulatory approval by governmental
agencies prior to commercialization. Approvals may not be granted despite
substantial time and resources required to obtain approvals and comply with
appropriate statutes and regulations. Delays in obtaining regulatory approvals
would adversely affect the marketing of any drugs developed by our
collaborators, diminish any competitive advantages that our collaborators may
attain and therefore adversely affect our ability to receive royalties or
milestone payments.
WE MAY BE SUED FOR PRODUCT LIABILITY.
We may be held liable if any product we develop, or any product which is made
with the use of any of our technologies, causes injury or is found otherwise
unsuitable during product testing, manufacturing, marketing or sale. Although we
currently maintain product liability insurance, we may not have sufficient
insurance coverage against potential liabilities and we may not be able to
obtain sufficient coverage at a reasonable cost. Furthermore, product liability
insurance is becoming increasingly expensive. As a result, we may not be able to
maintain current amounts of insurance coverage, obtain additional insurance, or
obtain insurance at a reasonable cost, which could prevent or inhibit the our
commercialization of products or technologies. If we are sued for any injury
caused by our technology or products, our liability could exceed our total
assets.
OUR ACTIVITIES INVOLVE THE USE OF HAZARDOUS MATERIALS, WHICH SUBJECT US TO
REGULATION, RELATED COSTS AND DELAYS AND POTENTIAL LIABILITIES.
Our business involves the controlled storage, use and disposal of hazardous
materials, including chemical, biological and radioactive materials. We are
subject to federal, state and local regulations governing the use, manufacture,
storage, handling and disposal of materials and waste products. Although we
believe that our safety procedures for handling and disposing of these hazardous
materials comply with the standards prescribed by law and regulation, we cannot
completely eliminate the risk of accidental contamination or injury from those
hazardous materials. In the event of an accident, we could be held liable for
any damages that result, and any liability could exceed the limits or fall
outside the coverage of our insurance. We may not be able to maintain insurance
on acceptable terms, or at all. We could incur significant costs or impairment
of our research, development or production efforts in order to comply with
current or future environmental laws and regulations.
OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY AND ANY FAILURE TO MEET FINANCIAL
EXPECTATIONS MAY DISAPPOINT SECURITIES ANALYSTS OR INVESTORS AND RESULT IN A
DECLINE IN OUR STOCK PRICE.
Our quarterly operating results have fluctuated in the past and are likely to do
so in the future as a result of many factors, many of which are out of our
control. For example, our revenues have varied dramatically as a result of the
timing of fees we obtain under our various collaborative, technology licensing
and services agreements, as these payments are frequently comparatively large
and are recognized unevenly over time. It is possible that in some future
quarter or quarters, our operating results will be below the expectations of
securities analysts or investors. In this event, the market price of our common
stock may fall abruptly and significantly. Because our revenue and operating
results are difficult to predict, we believe that period-to-period comparisons
of our results of operations are not a
<PAGE>
good indication of our future performance. Some of the factors that could cause
our operating results to fluctuate include:
- Termination of collaborative agreements;
- Our ability to enter into new agreements with collaborative
partners or technology licensees;
- Our ability to complete delivery requirements under existing
collaborative agreements;
- Our acquisition of complimentary businesses or technologies; and
- General and industry specific economic conditions, which may
affect our customers' research and development expenditures.
If revenue declines in a quarter, whether due to a delay in recognizing expected
revenue or otherwise, our earnings will decline because many of our expenses are
relatively fixed.
OUR STOCK PRICE MAY BE PARTICULARLY VOLATILE BECAUSE OF THE INDUSTRY IN WHICH WE
OPERATE.
The market prices for securities of comparable technology companies,
particularly life science 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 us 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 us, 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
our revenue and financial results and other factors may have a significant
impact on the market price of our 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 the market price of our Common Stock. In the past,
following periods of volatility in the market price of a company's securities,
securities class-action litigation has often been instituted against those
companies. This type of litigation, if instituted, could result in substantial
costs and a diversion of management's attention and resources, which could
materially affect our business, financial condition or results of operations.
WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION,
BYLAWS AND DELAWARE LAW THAT COULD DELAY OR PREVENT AN ACQUISITION OF OUR
COMPANY, EVEN IF THE ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.
Provisions of our certificate of incorporation, our bylaws and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our stockholders. These provisions could discourage
potential take-over attempts and could adversely affect the market price for our
common stock. Because of these provisions, you may not be able to receive a
premium on your investment.
FUTURE SALES OF OUR COMMON STOCK BY EXISTING STOCKHOLDERS OR BY US COULD CAUSE
OUR STOCK PRICE TO DECLINE.
Sales by existing stockholders of a large number of shares of our common stock
in the public market or the perception that sales could occur could cause the
market price of our common stock to drop. Likewise, additional equity financings
or other share issuances by us could adversely affect the market price of our
common stock.
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. Any statements about
our expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
like "anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. Accordingly, these
statements involve estimates, assumptions and uncertainties which could cause
actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed in this prospectus or incorporated by reference.
Because the factors discussed in this prospectus or incorporated by
reference could cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements made by us or on behalf of the
company, you should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of the date on
which it is made, and we undertake no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to
predict which will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy these reports, proxy statements and other information at the SEC's public
reference rooms in Washington, D.C., New York, NY and Chicago, IL. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference rooms. Our SEC filings are also available
at the SEC's Web site at "http://www.sec.gov."
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Section 13 (a), 13(c), 14 or 15 (d) of
the Securities Exchange Act of 1934:
- Annual Report on Form 10-K for the year ended December 31, 1999;
- Notice of Annual Meeting and Proxy Statement for the 1999 Annual
Meeting of Stockholders held on May 4, 1999; and
- Registration statement on Form S-1, as amended, which includes a
description of our common stock.
You may request a copy of these filings at no cost, by writing or telephoning us
at the following address or telephone number:
Aurora Biosciences Corporation
11010 Torreyana Road
San Diego, CA 92121
Attn: Investor Relations
(858) 404-6600
<PAGE>
SELLING STOCKHOLDERS
We are registering for resale certain shares of our common stock held
by the selling stockholders identified below. The following table sets forth:
- the name of the selling stockholders;
- the number and percent of shares of our common stock that the
selling stockholders beneficially owned prior to the offering for
resale of any of the shares of our common stock being registered
by the registration statement of which this prospectus is a part;
- the number of shares of our common stock that may be offered for
resale for the account of the selling stockholders pursuant to
this prospectus; and
- the number and percent of shares of our common stock to be held
by the selling stockholders after the offering of the resale
shares (assuming all of the resale shares are sold by the Selling
Securityholders).
This information is based upon information provided by each respective selling
stockholder, schedules 13G and other public documents filed with the SEC, and
assumes the sale of all of the resale shares by the selling stockholders. The
term "selling stockholders" includes the stockholders listed below and their
transferees, pledgees, donees or other successors. The applicable percentages of
ownership are based on an aggregate of 19,633,183 shares of common stock issued
and outstanding as of February 29, 2000.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
-------------------- SHARES BEING ---------------------------
SELLING STOCKHOLDERS NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------------------------- ---------- -------- ------------- ---------------------------
<S> <C> <C> <C> <C> <C>
Funds Managed by 1,300,000 6.6% 1,300,000 -- *
Janus Capital Corporation (1)
100 Fillmore Street
Denver, CO 80206
Funds Managed by 539,200 2.8% 400,000 139,200 *
Blackrock Financial Management, Inc. (2)
1600 Market Street, 28th Floor
Philadelphia, PA 19103
Funds Managed by 100,000 * 100,000 -- *
Tisch Financial Management (3)
655 Madison Avenue, 8th Floor
New York, New York 10021
</TABLE>
- ---------------------------------------------
* Less than 1%
(1) Includes 919,050 shares held by Bouybreese & Co., a registered investment
company managed by Janus Capital Corporation and 380,950 shares
beneficially owned by Bookbond & Co., a registered investment company
managed by Janus Capital Corporation.
(2) Includes 400,000 shares held by Barnett and Co. and beneficially owned by
BlackRock Funds, Small Cap Growth Equity Portfolio. Also includes 139,200
shares beneficially owned by BlackRock Funds, Micro-Cap Equity Portfolio.
(3) Includes 50,000 shares held by Baker Bros. Investments, LLC and 50,000
shares held by Four Partners.
<PAGE>
PLAN OF DISTRIBUTION
The resale shares of common stock may be sold from time to time by the
selling stockholders in one or more transactions at:
- fixed prices;
- market prices at the time of sale;
- varying prices determined at the time of sale; or
- negotiated prices
The selling stockholders may offer their resale shares in one or more
of the following transactions:
- on any national securities exchange or quotation service at which the
Aurora common stock may be listed or quoted at the time of sale,
including the Nasdaq National Market;
- in the over-the-counter market;
- in private transactions;
- through options; and
- by pledge to secure debts and other obligations, or a combination of
any of the above transactions.
If required, we will distribute a supplement to this prospectus to
describe material changes in the terms of the offering.
The resale shares of common stock described in this prospectus may be
sold from time to time directly by the selling stockholders. Alternatively, the
selling stockholders may from time to time offer shares of common stock to or
through underwriters, broker/dealers or agents. The selling stockholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act. Any profits on the resale of shares of common stock and
any compensation received by any underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any shares covered by this prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act of 1933 may be sold under rule 144 rather
than under the terms of this prospectus. The selling stockholders may transfer,
will or gift such shares by other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the common stock may not simultaneously
engage in market-making activities with respect to the common stock for nine
business days prior to the start of the distribution. In addition, each selling
stockholder and any other person participating in a distribution will be subject
to applicable provisions of the Exchange Act which may limit the timing of
purchases and sales of common stock by the selling stockholders or any other
person. These factors may affect the marketability of the common stock and the
ability of brokers or dealers to engage in market-making activities.
We will pay all costs and expenses associated with the registration of
the resale shares. These expenses include the SEC's filing fees and fees under
state securities or "blue sky" laws. We estimate that our expenses in connection
with this offering will be approximately $159,694. All expenses for the issuance
of a supplement to this prospectus, when requested by selling stockholder(s),
will be paid by the requesting stockholder(s). The selling
<PAGE>
stockholders will pay all underwriting discounts, commissions, transfer taxes
and other expenses associated with the sale of the resale shares by them.
USE OF PROCEEDS
We will not receive any proceeds from the resale of the shares of
common stock offered by the selling stockholders.
LEGAL MATTERS
Cooley Godward LLP will pass upon the validity of the issuance of the
common stock offered by this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our annual report on Form 10-K for the year ended
December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and registration statement. Our financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. THIS PROSPECTUS IS
1,800,000 SHARES NOT AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE
AN OFFER AND SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS COMMON STOCK PROSPECTUS,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF OUR
COMMON STOCK.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
AURORA BIOSCIENCES CORPORATION .....................1
RISK FACTORS .......................................2
DISCLOSURE REGARDING FORWARD
LOOKING STATEMENTS.................................10
WHERE YOU CAN GET MORE INFORMATION.................10
SELLING STOCKHOLDERS...............................11
PLAN OF DISTRIBUTION...............................12
USE OF PROCEEDS....................................13
LEGAL MATTERS......................................13
EXPERTS ...........................................13
</TABLE>
-------------------
1,800,000 Shares
Common Stock
AURORA BIOSCIENCES
CORPORATION
-------------------
PROSPECTUS
-------------------
__________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee and the listing fee are estimated):
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee ...................... 39,694
Nasdaq National Market Listing Fee.......... 17,500
Legal fees and expenses ................... 75,000
Accounting fees and expenses .............. 20,000
Printing and engraving expenses ........... 5,000
Transfer agent fees ....................... 2,500
-------------------------
Total ............................ 159,694
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant's Certificate of Incorporation and 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 DGCL and (ii) require the Registrant to indemnify
its directors and officers to the fullest extent permitted by applicable law,
including circumstances in which indemnification is otherwise discretionary.
Pursuant to Section 145 of the DGCL, 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' or officers' duty of care, and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under the DGCL. In addition,
each director will continue to be subject to liability pursuant to Section 174
of the DGCL, 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 omission 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 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.
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 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.
II-1
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or officer 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 16. EXHIBITS.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Form of Common Stock Purchase Agreement between the Registrant
and each selling stockholder dated February 4, 2000.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24 Power of Attorney. Reference is made to page II-4.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period during which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or any decrease in volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low end or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for purposes of determining liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities to be offered therein, and the
offering of such securities at that time shall be deemed to be an initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which shall remain unsold at the
termination of the offering.
II-2
<PAGE>
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) 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.
Insofar as indemnification for liabilities arising under the Securities
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 Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities 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 Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
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-3 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, State of California, on March 9, 2000.
AURORA BIOSCIENCES CORPORATION
By: /s/ Stuart J. M. Collinson
----------------------------------
Stuart J. M. Collinson
Chief Executive Officer
and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stuart J. M. Collinson and John
Pashkowsky, and each of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) 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 or she might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or any of them, or his or her substitutes or
substitute, 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>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Stuart J. M. Collinson Chief Executive Officer, President March 9, 2000
- -------------------------------- and Director
Stuart J. M. Collinson (PRINCIPAL EXECUTIVE OFFICER)
/s/ John Pashkowsky Vice President, Finance March 9, 2000
- -------------------------------- (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
John Pashkowsky
/s/ James C. Blair Director March 9, 2000
- --------------------------------
James C. Blair
/s/ Hugh Y. Rienhoff, Jr. Director March 9, 2000
- --------------------------------
Hugh Y. Rienhoff, Jr.
/s/ Timothy J. Rink Director March 9, 2000
- --------------------------------
Timothy J. Rink
/s/ Roy A. Whitfield Director March 9, 2000
- --------------------------------
Roy A. Whitfield
/s/ Timothy J. Wollaeger Director March 9, 2000
- --------------------------------
Timothy J. Wollaeger
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Form of Common Stock Purchase Agreement between the Registrant
and each selling stockholder dated February 4, 2000.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT
Aurora Biosciences Corporation
11010 Torreyana Road
San Diego, California 92121
The undersigned (the "Investor"), hereby confirms its agreement with you as
follows:
1. This Stock Purchase Agreement (the "Agreement") is made as of the date set
forth below between Aurora Biosciences Corporation, a Delaware corporation (the
"Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to
_______________________ shares (the "Shares") of common stock of the Company,
$.001 par value per share (the "Common Stock"), subject to adjustment by the
Company's Board of Directors, to certain investors in a private placement (the
"Offering").
3. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor ____________
shares, for a purchase price of $_________________ per share, or an aggregate
purchase price of $____________________, pursuant to the Terms and Conditions
for Purchase of Shares attached hereto as Annex I and incorporated herein by
this reference as if fully set forth herein. Unless otherwise requested by
the Investor, certificates representing the Shares purchased by the Investor
will be registered in the Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or its affiliates, (b) neither it, nor any group of which it is a
member or to which it is related, beneficially owns (including the right to
acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any NASD member. Exceptions:
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(If no exceptions, write "none." If left blank, response will be
deemed to be "none.")
Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
DATED AS OF: ___________________, 2000
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"INVESTOR"
By:
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Print Name:
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Title:
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Address:
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AGREED AND ACCEPTED:
AURORA BIOSCIENCES CORPORATION
By:
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Title:
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. AUTHORIZATION AND SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the Shares.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES; SUBSCRIPTION DATE.
2.1 At the Closing (as defined in Section 3), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of Shares set forth on
the signature page to which these Terms and Conditions for Purchase of Shares
are attached as Annex I (the "Signature Page") at the purchase price set forth
on such Signature Page.
2.2 The Company proposes to enter into this same form of Stock
Purchase Agreement with certain other investors (the "Other Investors") and
expects to complete sales of Shares to them. (The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Stock Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements.") The Company will accept executed Agreements from Investors for
the purchase of Shares commencing upon the date on which the Company provides
the Investors with the proposed purchase price per Share and concluding upon the
date (the "Subscription Date") on which the Company has (i) executed Agreements
with Investors each for the purchase of Shares in the amount of at least
$10,000,000 and (ii) notified Deutsche Bank Securities, Inc. (in its capacity as
Placement Agent for the Shares, the "Placement Agent") in writing that it is no
longer accepting Agreements from Investors for the purchase of Shares.
2.3 Investor acknowledges that the Company intends to pay the
Placement Agent a fee in respect of the sale of Shares to the Investor.
3. DELIVERY OF THE SHARES AT CLOSING. The completion of the purchase
and sale of the Shares (the "Closing") shall occur on Thursday, February 10,
2000 or, at the Company's discretion, on such other date within ten (10) days
thereafter at a place and time (the "Closing Date") to be specified by the
Company and the Placement Agent, and of which the Investors will be notified in
advance by the Placement Agent. At the Closing, (i) the Company shall deliver to
the Investor one or more stock certificates representing the number of Shares
set forth on the signature page hereto, each such certificate to be registered
in the name of the Investor or, if so indicated on the Stock Certificate
Questionnaire attached hereto as Exhibit A, in the name of a nominee designated
by the Investor and (ii) the Investor shall deliver immediately available funds
in the amount of the aggregate purchase price for the Shares by wire transfer to
an account designated by the Placement Agent.
The Company's obligation to issue the Shares to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of the purchase price for the Shares
being purchased hereunder as set forth on the Signature Page hereto; (b)
completion of purchases and sales under the Agreements with the
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Other Investors; and (c) the accuracy of the representations and warranties
made by the Investors and the fulfillment of those undertakings of the
Investors to be fulfilled prior to the Closing.
The Investor's obligation to purchase the Shares shall be subject to
the following conditions, any one or more of which may be waived by the
Investor: (a) Investors shall have executed Agreements each for the purchase of
Shares in the amount of at least $10,000,000; and (b) the satisfaction of all of
the conditions set forth in the Engagement Letter between the Company and the
Placement Agent. Subject to clause (a) above, the Investor's obligations are
expressly not conditioned on the purchase by any or all of the other Investors
of the Shares that they have agreed to purchase from the Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. Except as
otherwise described in the Company's regular reports on Form 10-Q and 10-K as
filed by the Company with the Securities and Exchange Commission in 1999 (the
"SEC Documents"), in the Company's press releases since September 30, 1999, and
in the other Proprietary Information disclosed by the Company to the Investor in
contemplation of this offering (including the documents incorporated by
reference therein, the "Company Information"), which qualifies the following
representations and warranties in their entirety, the Company hereby represents
and warrants to, and covenants with, the Investor, as follows:
4.1 ORGANIZATION. The Company is duly incorporated and
validly existing in good standing under the laws of the jurisdiction of its
organization. The Company has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and
is registered or qualified to do business and in good standing in each
jurisdiction in which it owns or leases property or transacts business and
where the failure to be so qualified would have a material adverse effect
upon the business, financial condition, properties or operations of the
Company ("Material Adverse Effect"), and no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification.
4.2 DUE AUTHORIZATION. The Company has all requisite power
and authority to execute, deliver and perform its obligations under the
Agreements, and the Agreements have been duly authorized and validly executed
and delivered by the Company and constitute legal, valid and binding
agreements of the Company enforceable against the Company in accordance with
their terms, except as rights to indemnity and contribution may be limited by
state or federal securities laws or the public policy underlying such laws,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.3 NON-CONTRAVENTION. The execution and delivery of the
Agreements, the issuance and sale of the Shares to be sold by the Company under
the Agreements, the fulfillment of the terms of the Agreements and the
consummation of the transactions contemplated thereby will not (A) conflict with
or constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
or any material lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or
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other agreement or instrument to which the Company is a party or by which it
or its property is bound, where such conflict, violation or default is likely
to result in a Material Adverse Effect, (ii) the charter, by-laws or other
organizational documents of the Company, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency,
arbitration panel or authority binding upon the Company or its property,
where such conflict, violation or default is likely to result in a Material
Adverse Effect, or (B) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of
the material properties or assets of the Company or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in
any material bond, debenture, note or any other evidence of indebtedness or
any material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company is a party or by which it is bound or to
which any of the property or assets of the Company is subject. No consent,
approval, authorization or other order of, or registration, qualification or
filing with, any regulatory body, administrative agency, or other
governmental body in the United States is required for the execution and
delivery of the Agreements and the valid issuance and sale of the Shares to
be sold pursuant to the Agreements, other than such as have been made or
obtained, and except for any securities filings required to be made under
federal or state securities laws.
4.4 CAPITALIZATION. The capitalization of the Company is
described in the Company's SEC Documents. The Company has not issued any capital
stock since September 30, 1999 other than pursuant to employee benefit plans
disclosed in the Company's SEC Documents. The Shares to be sold pursuant to the
Agreements have been duly authorized, and when issued and paid for in accordance
with the terms of the Agreements, will be duly and validly issued, fully paid
and nonassessable. The outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Except as set forth in or contemplated by the Company's
SEC Documents, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party and relating to the
issuance or sale of any capital stock of the Company, any such convertible or
exchangeable securities or any such rights, warrants or options. Without
limiting the foregoing, no preemptive right, co-sale right, registration right,
right of first refusal or other similar right exists with respect to the
issuance and sale of the Shares. Except as disclosed in the Company's SEC
Documents, there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a
party.
4.5 LEGAL PROCEEDINGS. There is no material legal or
governmental proceeding pending to which the Company is a party or of which the
business or property of the Company is subject that is not disclosed in the
Company's SEC Documents.
4.6 NO VIOLATIONS. The Company is not in violation of its
charter, bylaws or other organizational document, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to
have a
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Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in
the performance of any material bond, debenture, note or any other evidence
of indebtedness in any indenture, mortgage, deed of trust or any other
material agreement or instrument to which the Company is a party or by which
the Company is bound or by which the property of the Company is bound, which
would be reasonably likely to have a Material Adverse Effect.
4.7 GOVERNMENTAL PERMITS, ETC. With the exception of the
matters which are dealt with separately in Sections 4.1, 4.12, and 4.13, the
Company has all necessary franchises, licenses, certificates and other
authorizations from any foreign, federal, state or local government or
governmental agency, department or body that are currently necessary for the
operation of the business of the Company as currently conducted except where the
failure to currently possess could not reasonably be expected to have a Material
Adverse Effect.
4.8 INTELLECTUAL PROPERTY.
(a) The Company has ownership or license or legal right
to use all patent, copyright, trade secret, trademark, customer lists,
designs, manufacturing or other processes, computer software, systems, data
compilation, research results or other proprietary rights used in the
business of the Company and material to the Company (collectively,
"Intellectual Property") other than Intellectual Property generally available
on commercial terms from other sources. All of such patents, trademarks and
registered copyrights have been duly registered in, filed in or issued by the
United States Patent and Trademark Office, the United States Register of
Copyrights or the corresponding offices of other jurisdictions and have been
maintained and renewed in accordance with all applicable provisions of law
and administrative regulations in the United States and all such
jurisdictions.
(b) All material licenses or other material agreements
under which (i) the Company is granted rights in Intellectual Property, other
than Intellectual Property generally available on commercial terms from other
sources, and (ii) the Company has granted rights to others in Intellectual
Property owned or licensed by the Company, are in full force and effect and,
to the knowledge of the Company, there is no material default by the Company
thereto.
(c) The Company believes it has taken all steps required
in accordance with sound business practice and business judgment to establish
and preserve its ownership of all material copyright, trade secret and other
proprietary rights with respect to its products and technology.
(d) To the knowledge of the Company, the present
business, activities and products of the Company do not infringe any
intellectual property of any other person, except where such infringement
would not have a Material Adverse Effect on the Company. Except as described
in the Company's SEC Documents, no proceeding charging the Company with
infringement of any adversely held Intellectual Property has been filed. To
the Company's knowledge, there exists no unexpired patent or patent
application which includes claims that would be infringed by or otherwise
have a Material Adverse Effect on the Company. To the knowledge of the
Company, the Company is not making unauthorized use of any confidential
information or trade secrets of any person. Neither the Company nor, to the
knowledge of the
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Company, any of its employees have any agreements or arrangements with any
persons other than the Company related to confidential information or trade
secrets of such persons or restricting any such employee's engagement in
business activities of any nature. To the Company's knowledge, the activities
of the Company or any of its employees on behalf of the Company do not
violate any such agreements or arrangements known to the Company which any
such employees have with other persons, if any.
(e) No proceedings have been instituted or are pending
which challenge in a material manner the rights of the Company in respect to
the Company's right to the use of the Intellectual Property. The Company has
the right to use, free and clear of material claims or rights of other
persons, all of its customer lists, designs, computer software, systems, data
compilations, and other information that are required for its products or its
business as presently conducted.
4.9 FINANCIAL STATEMENTS. The financial statements of the
Company and the related notes contained in the Company's SEC Documents
present fairly, in accordance with generally accepted accounting principles,
the financial position of the Company as of the dates indicated, and the
results of its operations and cash flows for the periods therein specified.
Such financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods therein specified, except as
disclosed in the Company's SEC Documents.
4.10 NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
Company's press releases or other Proprietary Information provided to the
Investor in contemplation of this Offering, since September 30, 1999, there
has not been (i) any Material Adverse Effect affecting the Company, (ii) any
obligation, direct or contingent, that is material to the Company considered
as one enterprise, incurred by the Company, except obligations incurred in
the ordinary course of business, (iii) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company, or (iv) any
loss or damage (whether or not insured) to the physical property of the
Company which has been sustained which has a Material Adverse Effect.
4.11 NASDAQ COMPLIANCE. The Company's Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on The
Nasdaq National Market (the "Nasdaq Stock Market"), and the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq Stock Market.
4.12 REPORTING STATUS. The Company has filed in a timely
manner all documents that the Company was required to file under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the
12 months preceding the date of this Agreement. The following documents
complied in all material respects with the SEC's requirements as of their
respective filing dates, and the information contained therein as of the date
thereof did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under where they were made
not misleading:
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(a) The Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (the "10-K");
(b) The Company's Quarterly Reports on Form 10-Q for
each of the quarters ended March 31, 1999, June 30, 1999 and September 30,
1999; and
(c) All other documents, if any, filed by the Company
with the Securities and Exchange Commission since December 31, 1998 pursuant to
the reporting requirements of the Exchange Act.
4.13 LISTING. The Company shall comply with all
requirements of the National Association of Securities Dealers, Inc. with
respect to the issuance of the Shares and the listing thereof on the Nasdaq
Stock Market.
4.14 FOREIGN CORRUPT PRACTICES. Neither the Company nor, to
the knowledge of the Company, any agent or other person acting on behalf of
the Company, have (i) directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company or made
by any person acting on its behalf and of which the Company is aware in
violation of law or (iv) violated in any material respect any provision of
the Foreign Corrupt Practices Act of 1977, as amended.
4.15 NO MANIPULATION OF STOCK. The Company has not taken and
will not, in violation of applicable law, take, any action outside the ordinary
course of business designed to or that might reasonably be expected to cause or
result in unlawful manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares.
4.16 ACCOUNTANTS. Ernst & Young LLP, who the Company expects
will express their opinion with respect to the financial statements to be
incorporated by reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 into the Registration Statement (as defined below)
and the Prospectus which forms a part thereof, are independent accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder (the "Rules and Regulations").
4.17 CONTRACTS. The contracts described in the SEC Documents
or incorporated by reference therein that are material to the Company are in
full force and effect on the date hereof, and neither the Company nor, to the
Company's knowledge, any other party to such contracts is in breach of or
default under any of such contracts which would have a Material Adverse Effect.
4.18 TAXES. The Company has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been or might be asserted or threatened against it which would have a
Material Adverse Effect.
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4.19 TRANSFER TAXES. On the Closing Date, all stock
transfer or other taxes (other than income taxes) which are required to be
paid in connection with the sale and transfer of the Shares to be sold to the
Investor hereunder will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been fully
complied with.
4.20 INVESTMENT COMPANY. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an investment company, within the meaning of the Investment
Company Act of 1940, as amended.
4.21 INSURANCE. The Company maintains and will continue to
maintain insurance of the types and in the amounts that the Company
reasonably believes is adequate for its business, including, but not limited
to, insurance covering all real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of
which insurance is in full force and effect.
4.22 LEGAL OPINION. The Company shall cause to be delivered
to the Investors and the Placement Agent by counsel to the Company a
customary legal opinion pertaining to Rule 10b-5 under the Securities
Exchange Act of 1934 and to the availability of an exemption from the
registration provisions of the Securities Act.
4.23 OFFERING MATERIALS. Other than the SEC Documents (the
"Offering Materials"), the Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares. The Company has not in the past nor will
it hereafter take any action independent of the Placement Agent to sell,
offer for sale or solicit offers to buy any securities of the Company which
would bring the offer, issuance or sale of the Shares, as contemplated by
this Agreement, within the provisions of Section 5 of the Securities Act,
unless such offer, issuance or sale was or shall be within the exemptions of
Section 4 of the Securities Act.
4.24 DISCLOSURE. The information contained in the SEC
Documents as of the date of such information did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
5.1 The Investor represents and warrants to, and covenants
with, the Company that: (i) the Investor is an "accredited investor" as
defined in Regulation D under the Securities Act and the Investor is also
knowledgeable, sophisticated and experienced in making, and is qualified to
make decisions with respect to, investments in shares presenting an
investment decision like that involved in the purchase of the Shares,
including investments in securities issued by the Company and investments in
comparable companies, and has requested, received, reviewed and considered
all information it deemed relevant in making an informed decision to purchase
the Shares; (ii) the Investor is acquiring the number of Shares set forth on
the Signature Page hereto in the ordinary course of its business and for its
own account for investment only
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and with no present intention of distributing any of such Shares or any
arrangement or understanding with any other persons regarding the
distribution of such Shares; (iii) the Investor will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of
the Shares except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated
thereunder; (iv) the Investor has answered all questions on the Signature
Page hereto and the Investor Questionnaire attached hereto as Exhibit B for
use in preparation of the Registration Statement and the answers thereto are
true and correct as of the date hereof and will be true and correct as of the
Closing Date; (v) the Investor will notify the Company immediately of any
change in any of such information until such time as the Investor has sold
all of its Shares or until the Company is no longer required to keep the
Registration Statement effective; and (vi) the Investor has, in connection
with its decision to purchase the number of Shares set forth on the signature
page hereto, relied only upon the Company Information provided to the
Investor by the Company in contemplation of this offering and the
representations and warranties of the Company contained herein. Investor
understands that its acquisition of the Shares has not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or registered
or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things,
the bona fide nature of the Investor's investment intent as expressed herein.
Investor has completed or caused to be completed and delivered to the Company
the Investor Questionnaire attached hereto Exhibit B, which questionnaire is
true and correct in all material respects.
5.2 The Investor acknowledges, represents and agrees that
no action has been or will be taken in any jurisdiction outside the United
States by the Company or the Placement Agent that would permit an offering of
the Shares, or possession or distribution of offering materials in connection
with the issue of the Shares, in any jurisdiction outside the United States
where action for that purpose is required. Each Investor outside the United
States will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Shares or has
in its possession or distributes any offering material, in all cases at its
own expense. The Placement Agent is not authorized to make any representation
or use any information in connection with the issue, placement, purchase and
sale of the Shares.
5.3 The Investor hereby covenants with the Company not to
make any sale of the Shares without complying with the provisions of this
Agreement, including Section 7.2 hereof, and without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied, and
the Investor acknowledges that the certificates evidencing the Shares will be
imprinted with a legend that prohibits their transfer except in accordance
therewith. The Investor acknowledges that there may occasionally be times
when the Company, based on the advice of its counsel, determines that it must
suspend the use of the Prospectus forming a part of the Registration
Statement until such time as an amendment to the Registration Statement has
been filed by the Company and declared effective by the SEC or until the
Company has amended or supplemented such Prospectus.
5.4 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and (ii)
this
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Agreement constitutes a valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except
as the indemnification agreements of the Investors herein may be legally
unenforceable.
5.5 Investor will not, prior to the effectiveness of the
Registration Statement, sell, offer to sell, solicit offers to buy, dispose
of, loan, pledge or grant any right with respect to (collectively, a
"Disposition"), the Common Stock of the Company, nor will Investor engage in
any hedging or other transaction which is designed to or could reasonably be
expected to lead to or result in a Disposition of Common Stock of the Company
by the Investor or any other person or entity. Such prohibited hedging or
other transactions would include, without limitation, effecting any short
sale or having in effect any short position (whether or not such sale or
position is against the box and regardless of when such position was entered
into) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to the Common Stock of the
Company or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the Common Stock of the Company.
5.6 The Investor understands that nothing in this Agreement
or any other materials presented to the Investor in connection with the
purchase and sale of the Shares constitutes legal, tax or investment advice.
The Investor has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with
its purchase of Shares.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by
the Placement Agent, all covenants, agreements, representations and
warranties made by the Company and the Investor herein shall survive the
execution of this Agreement, the delivery to the Investor of the Shares being
purchased and the payment therefor.
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) subject to receipt of necessary information from the
Investors, prepare and file with the SEC, as soon as practicable, but in no
event later than thirty (30) days after the Closing Date, a registration
statement on Form S-3 (the "Registration Statement") to enable the resale of
the Shares by the Investors from time to time through the automated quotation
system of the Nasdaq Stock Market or in privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of
necessary information from the Investors, to cause the Registration Statement
to become effective as soon as practicable, but in no event later than ninety
(90) days after the Registration Statement is filed by the Company.
Notwithstanding the foregoing, if the Registration Statement is not declared
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effective by June 15, 2000 and does not remain effective for 45 continuous
days thereafter, the Investor shall be entitled to a stock dividend in the
amount of 5% of the Shares purchased by such Investor hereunder.
(c) use its reasonable efforts to prepare and file with
the SEC such amendments and supplements to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement current and effective for a period not exceeding, with
respect to each Investor's Shares purchased hereunder, the earlier of (i) the
second anniversary of the Closing Date, (ii) the date on which the Investor
may sell all Shares then held by the Investor without restriction by the
volume limitations of Rule 144(e) of the Securities Act or (iii) such time as
all Shares purchased by such Investor in this Offering have been sold
pursuant to a registration statement.
(d) furnish to the Placement Agent and to the Investor
with respect to the Shares registered under the Registration Statement such
number of copies of the Registration Statement, Prospectuses and Preliminary
Prospectuses in conformity with the requirements of the Securities Act and
such other documents as the Investor may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the Shares
by the Investor, provided, however, that the obligation of the Company to
deliver copies of Prospectuses or Preliminary Prospectuses to the Investor
shall be subject to the receipt by the Company of reasonable assurances from
the Investor that the Investor will comply with the applicable provisions of
the Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses;
(e) file documents required of the Company for normal
blue sky clearance in states specified in writing by the Investor, provided,
however, that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented;
(f) bear all expenses in connection with the procedures
in paragraph (a) through (e) of this Section 7.1 and the registration of the
Shares pursuant to the Registration Statement; and
(g) advise the Investors, promptly after it shall
receive notice or obtain knowledge of the issuance of any stop order by the
SEC delaying or suspending the effectiveness of the Registration Statement or
of the initiation of any proceeding for that purpose; and it will promptly
use its commercially reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
(h) With a view to making available to the Investor the
benefits of Rule 144 (or its successor rule) and any other rule or regulation
of the SEC that may at any time permit the Investor to sell Shares to the
public without registration, the Company covenants and agrees to: (i) make
and keep public information available, as those terms are understood and
defined in Rule 144, until the earlier of (A) such date as all of the
Investor's Shares may be resold pursuant to Rule 144(k) or any other rule of
similar effect or (B) such date as all of the Investor's Shares shall have
been resold; (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and under the
Exchange Act;
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<PAGE>
and (iii) furnish to the Investor upon request, as long as the Investor owns
any Shares, (A) a written statement by the Company that it has complied with
the reporting requirements of the Securities Act and the Exchange Act, (B) a
copy of the Company's most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, and (C) such other information as may be reasonably
requested in order to avail the Investor of any rule or regulation of the SEC
that permits the selling of any such Shares without registration.
It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Section 7.1 that the Investor shall
furnish to the Company such information regarding itself, the Shares to be
sold by Investor, and the intended method of disposition of such securities
as shall be required to effect the registration of the Shares.
The Company understands that the Investor disclaims being an
underwriter, but the Investor being deemed an underwriter by the SEC shall
not relieve the Company of any obligations it has hereunder, provided,
however, that if the Company receives notification from the SEC that the
Investor is deemed an underwriter, then the period by which the Company is
obligated to submit an acceleration request to the SEC shall be extended to
the earlier of (i) the 90th day after such SEC notification, or (ii) 120 days
after the initial filing of the Registration Statement with the SEC.
7.2 TRANSFER OF SHARES AFTER REGISTRATION; SUSPENSION.
(a) The Investor agrees that it will not effect any
Disposition of the Shares or its right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 7.1 and as
described below, and that it will promptly notify the Company of any changes
in the information set forth in the Registration Statement regarding the
Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below
applies, the Company shall: (i) if deemed necessary by the Company, prepare
and file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that such Registration Statement will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and so that, as thereafter delivered to purchasers of
the Shares being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii) provide the
Investor copies of any documents filed pursuant to Section 7.2(b)(i); and
(iii) inform each Investor that the Company has complied with its obligations
in Section 7.2(b)(i) (or that, if the Company has filed a post-effective
amendment to the Registration Statement which has not yet been declared
effective, the Company will notify the Investor to that effect, will use its
reasonable efforts to secure the effectiveness of such post-effective
amendment as promptly as possible and will promptly notify the Investor
pursuant to Section 7.2(b)(i) hereof when the amendment has become effective).
11
<PAGE>
(c) Subject to paragraph (d) below, in the event: (i) of
any request by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for
amendments or supplements to a Registration Statement or related Prospectus
or for additional information; (ii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose; or (iv) of any event or
circumstance which necessitates the making of any changes in the Registration
Statement or Prospectus, or any document incorporated or deemed to be
incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material fact or
any omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; then the Company shall deliver a
certificate in writing to the Investor (the "Suspension Notice") to the
effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Shares pursuant to the Registration
Statement (a "Suspension") until the Investor's receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may
be used, and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in any such
Prospectus. In the event of any Suspension, the Company will use its
reasonable efforts to cause the use of the Prospectus so suspended to be
resumed as soon as reasonably practicable within 20 business days after
delivery of a Suspension Notice to the Investors. In addition to and without
limiting any other remedies (including, without limitation, at law or at
equity) available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions
of this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor shall not be prohibited from selling Shares under
the Registration Statement as a result of Suspensions on more than three
occasions of not more than 30 days each in any twelve month period, unless,
in the good faith judgment of the Company's Board of Directors, upon advice
of counsel, the sale of Shares under the Registration Statement in reliance
on this paragraph 7.2(d) would be reasonably likely to cause a violation of
the Securities Act or the Exchange Act and result in potential liability to
the Company.
(e) Provided that a Suspension is not then in effect the
Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such
Shares. Upon receipt of a request therefor, the Company has agreed to provide
an adequate number of current Prospectuses to the Investor and to supply
copies to any other parties requiring such Prospectuses.
(f) In the event of a sale of Shares by the Investor,
the Investor must also deliver to the Company's transfer agent, with a copy
to the Company, a Certificate of
12
<PAGE>
Subsequent Sale substantially in the form attached hereto as Exhibit C, so
that the shares may be properly transferred.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3:
(a) the term "Selling Stockholder" shall include the
Investor and any affiliate of such Investor;
(b) the term "Registration Statement" shall include
any final Prospectus, exhibit, supplement or amendment included in or relating
to the Registration Statement referred to in Section 7.1; and
(c) the term "untrue statement" shall include any
untrue statement or alleged untrue statement, or any omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) The Company agrees to indemnify and
hold harmless each Selling Stockholder from and against any losses, claims,
damages or liabilities to which such Selling Stockholder may become subject
(under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out of, or are based upon (i) any untrue statement of a material fact
contained in the Registration Statement, or (ii) any failure by the Company
to fulfill any undertaking included in the Registration Statement, and the
Company will reimburse such Selling Stockholder for any reasonable legal or
other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim, provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue
statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of such Selling Stockholder specifically for use in preparation of the
Registration Statement or the failure of such Selling Stockholder to comply
with its covenants and agreements contained in Sections 5.1, 5.2, 5.3 or 7.2
hereof or any statement or omission in any Prospectus that is corrected in
any subsequent Prospectus that was delivered to the Investor prior to the
pertinent sale or sales by the Investor.
(ii) The Investor agrees to indemnify and
hold harmless the Company (and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, each officer of the
Company who signs the Registration Statement and each director of the
Company) from and against any losses, claims, damages or liabilities to which
the Company (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, (i) any failure to comply with the covenants
and agreements contained in Section 5.1, 5.2, 5.3 or 7.2 hereof, or (ii) any
untrue statement of a material fact contained in the Registration Statement
if such untrue statement was made in reliance upon and in conformity with
written information furnished by or on behalf of the Investor specifically
for use in preparation of the Registration Statement, and the Investor will
reimburse the Company (or such officer, director or controlling person), as
the case
13
<PAGE>
may be, for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim.
(iii) Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 7.3, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party under this
Section 7.3 (except to the extent that such omission materially and adversely
affects the indemnifying party's ability to defend such action) or from any
liability otherwise than under this Section 7.3. Subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from
such indemnified party, shall be entitled to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to assume
the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the reasonable opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified person and
such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense
of such indemnifying person; provided, however, that no indemnifying person
shall be responsible for the fees and expenses of more than one separate
counsel (together with appropriate local counsel) for all indemnified
parties. In no event shall any indemnifying person be liable in respect of
any amounts paid in settlement of any action unless the indemnifying person
shall have approved the terms of such settlement; provided that such consent
shall not be unreasonably withheld. No indemnifying person shall, without the
prior written consent of the indemnified person, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified person
is or could have been a party and indemnification could have been sought
hereunder by such indemnified person, unless such settlement includes an
unconditional release of such indemnified person from all liability on claims
that are the subject matter of such proceeding.
(iv) If the indemnification provided for
in this Section 7.3 is unavailable to or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and the Investors on the other in connection with the statements
or omissions or other matters which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, in the case of an untrue statement, whether the
untrue statement relates to information supplied by the Company on the one
hand or an Investor on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investors agree
14
<PAGE>
that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Investors
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Investor shall be required to contribute any amount in excess of the amount
by which the gross amount received by the Investor from the sale of the
Shares to which such loss relates exceeds the amount of any damages which
such Investor has otherwise been required to pay by reason of such untrue
statement. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Investors' obligations in this subsection to
contribute are several in proportion to their sales of Shares to which such
loss relates and not joint.
(v) The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented
by counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7.3, and are fully
informed regarding said provisions. They further acknowledge that the
provisions of this Section 7.3 fairly allocate the risks in light of the
ability of the parties to investigate the Company and its business in order
to assure that adequate disclosure is made in the Registration Statement as
required by the Act and the Exchange Act. The parties are advised that
federal or state public policy as interpreted by the courts in certain
jurisdictions may be contrary to certain of the provisions of this Section
7.3, and the parties hereto hereby expressly waive and relinquish any right
or ability to assert such public policy as a defense to a claim under this
Section 7.3 and further agree not to attempt to assert any such defense.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The
conditions precedent imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares when such Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are
not necessary in order to comply with the Securities Act.
7.5 INFORMATION AVAILABLE. So long as the Registration
Statement is effective covering the resale of Shares owned by the Investor, the
Company will furnish to the Investor:
(a) as soon as practicable after it is available, one
copy of (i) its Annual Report to Stockholders (which Annual Report shall
contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants) and
(ii) if not included in substance in the Annual Report to Stockholders, its
Annual Report on Form 10-K (the foregoing, in each case, excluding exhibits);
15
<PAGE>
(b) upon the reasonable request of the Investor, all
exhibits excluded by the parenthetical to subparagraph (a)(ii) of this
Section 7.5 as filed with the SEC and all other information that is made
available to shareholders; and
(c) upon the reasonable request of the Investor, an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and the Company, upon the reasonable request of
the Investor, will meet with the Investor or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in
the Registration Statement covering the Shares and will otherwise cooperate
with any Investor conducting an investigation for the purpose of reducing or
eliminating such Investor's exposure to liability under the Securities Act,
including the reasonable production of information at the Company's
headquarters; provided, that the Company shall not be required to disclose
any confidential information to or meet at its headquarters with any Investor
until and unless the Investor shall have entered into a confidentiality
agreement in form and substance reasonably satisfactory to the Company with
the Company with respect thereto.
7.6 The Company will not issue any public statement, press
release or any other public disclosure listing Investor as one of the
purchasers of the Shares without Investor's prior written consent.
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail, or nationally
recognized overnight express courier, postage prepaid, or by facsimile, or
(B) if delivered from outside the United States, by International Federal
Express or facsimile, and shall be deemed given (i) if delivered by
first-class registered or certified mail domestic, three business days after
so mailed, (ii) if delivered by nationally recognized overnight carrier, one
(1) business day after so mailed, (iii) if delivered by International Federal
Express, two (2) business days after so mailed, (iv) if delivered by
facsimile, upon electric confirmation of receipt and shall be delivered as
addressed as follows:
(a) if to the Company, to:
Aurora Biosciences Corporation
11010 Torreyana Road
San Diego, California 92121
Attn: Stuart J.M. Collinson
Chief Executive Officer
Phone: (858) 404-6601
Telecopy: (858) 404-6716
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<PAGE>
(b) with a copy mailed to:
Cooley Godward LLP
4365 Executive Drive
San Diego, CA 92121
Attn: Thomas A. Coll
Phone: (858) 550-6013
Telecopy: (858) 453-3555
(c) if to the Investor, at its address on the
Signature Page hereto, or at such other address or addresses as may have been
furnished to the Company in writing.
9. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
10. HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of California, without giving
effect to the principles of conflicts of law.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
14. CONFIDENTIAL DISCLOSURE AGREEMENT. Notwithstanding any provision of
this Agreement to the contrary, any confidential disclosure agreement previously
executed by the Company and the Investor in connection with the transactions
contemplated by this Agreement shall remain in full force and effect in
accordance with its terms following the execution of this Agreement and the
consummation of the transactions contemplated hereby.
17
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<TABLE>
<CAPTION>
EXHIBIT A
AURORA BIOSCIENCES CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 5 of the Agreement, please provide us with the
following information:
<S> <C> <C>
1. The exact name that your Shares __________________________
are to be registered in (this is the
name that will appear on your stock
certificate(s)). You may use a
nominee name if appropriate:
2. The relationship between the Investor __________________________
and the registered holder listed
in response to item 1 above:
3. The mailing address of the registered __________________________
holder listed in response to
item 1 above:
4. The Social Security Number or Tax __________________________
Identification Number of the
registered holder listed in the
response to item 1 above:
</TABLE>
A-1
<PAGE>
EXHIBIT B
AURORA BIOSCIENCES CORPORATION
INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Aurora Biosciences Corporation
This Investor Questionnaire ("Questionnaire") must be completed by
each potential investor in connection with the offer and sale of the shares
of the common stock, par value $0.001 per share, of Aurora Biosciences
Corporation (the "Securities"). The Securities are being offered and sold by
Aurora Biosciences Corporation (the "Corporation") without registration under
the Securities Act of 1933, as amended (the "Act"), and the securities laws
of certain states, in reliance on the exemptions contained in Section 4(2) of
the Act and on Regulation D promulgated thereunder and in reliance on similar
exemptions under applicable state laws. The Corporation must determine that a
potential investor meets certain suitability requirements before offering or
selling Securities to such investor. The purpose of this Questionnaire is to
assure the Corporation that each investor will meet the applicable
suitability requirements. The information supplied by you will be used in
determining whether you meet such criteria, and reliance upon the private
offering exemption from registration is based in part on the information
herein supplied.
This Questionnaire does not constitute an offer to sell or a
solicitation of an offer to buy any security. Your answers will be kept
strictly confidential. However, by signing this Questionnaire you will be
authorizing the Corporation to provide a completed copy of this Questionnaire
to such parties as the Corporation deems appropriate in order to ensure that
the offer and sale of the Securities will not result in a violation of the
Act or the securities laws of any state and that you otherwise satisfy the
suitability standards applicable to purchasers of the Securities. All
potential investors must answer all applicable questions and complete, date
and sign this Questionnaire. Please print or type your responses and attach
additional sheets of paper if necessary to complete your answers to any item.
A. BACKGROUND INFORMATION
Name:__________________________________________________________________________
Business Address:______________________________________________________________
(Number and Street)
_______________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number:( )_________________________________________________________
Residence Address:_____________________________________________________________
(Number and Street)
_______________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: ( )_______________________________________________________
If an individual:
Age:______ Citizenship:______ Where registered to vote:__________________
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:________________________________________________________________
State of formation:______________ Date of formation:_________________________
Social Security or Taxpayer Identification No.________________________________
Send all correspondence to (check one):___Residence Address __Business Address
B-1
<PAGE>
B. STATUS AS ACCREDITED INVESTOR
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please
initial one or more, as applicable):(1)
_____(1) a bank as defined in Section 3(a)(2) of the Act, or a savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934; an insurance company as defined in Section 2(13) of the Act; an
investment company registered under the Investment Corporation Act of 1940 or
a business development company as defined in Section 2(a)(48) of that Act; a
Small Business Investment Corporation licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with the investment
decisions made solely by persons that are accredited investors;1
_____(2) a private business development company as defined in Section
202(a)(22) of the Investment Adviser Act of 1940;
_____(3) an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the Securities offered, with total assets in excess of $5,000,000;
_____(4) a natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of such person's purchase of the Securities
exceeds $1,000,000;
_____(5) a natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
_____(6) a trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D; and
_____(7) an entity in which all of the equity owners are accredited investors
(as defined above).
- -------------------------------------------------------------------------------
1 As used in this Questionnaire, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, the investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depiction,
contributions to an IRA or KEOGH retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
B-2
<PAGE>
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Corporation as follows:
1. Any purchase of the Securities would be solely for the account of
the undersigned and not for the account of any other person or with a view to
any resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may
be relied upon by the Corporation, and the undersigned will notify the
Corporation immediately of any material change in any of such information
occurring prior to the closing, if any, with respect to the purchase of
Securities by the undersigned or any co-purchaser.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be times
when the Corporation, based on the advice of its counsel, determines that it
must suspend the use of the Prospectus forming a part of the Registration
Statement (as such terms are defined in the Stock Purchase Agreement to which
this Questionnaire is attached) until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Securities and Exchange Commission or until the Corporation has amended or
supplemented such Prospectus. The undersigned is aware that, in such event, the
Securities will not be subject to ready liquidation, and that any Securities
purchased by the undersigned would have to be held during such suspension. The
overall commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned's net worth and financial
circumstances, and any purchase of the Securities will not cause such commitment
to become excessive. The undersigned is able to bear the economic risk of an
investment in the Securities.
5. In addition to reviewing the Corporation's Confidential Offering
Memorandum, the undersigned has carefully considered the potential risks
relating to the Corporation and a purchase of the Securities, and fully
understands that the Securities are speculative investments which involve a
high degree of risk of loss of the undersigned's entire investment. Among
others, the undersigned has carefully considered each of the risks described
under the heading "Risk Factors" in the Corporation's most recent annual
report on Form 10-K.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this _____
day of _____________, 2000, and declares under oath that it is truthful and
correct.
Print Name____________________________________
By:___________________________________________
Signature
Title:________________________________________
(required for any purchaser that is a
corporation, partnership, trust or other
entity)
B-3
<PAGE>
EXHIBIT C
AURORA BIOSCIENCES CORPORATION
CERTIFICATE OF SUBSEQUENT SALE
ChaseMellon Shareholder Services
RE: Sale of Shares of Common Stock of Aurora Biosciences
Corporation (the "Company") pursuant to the Company's
Prospectus dated _______________, 2000 (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Shareholders in
the Prospectus, that the undersigned has sold the Shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended.
Selling Shareholder (the beneficial owner):___________________________
Record Holder (e.g., if held in name of nominee):_____________________
Restricted Stock Certificate No.(s):__________________________________
Number of Shares Sold:________________________________________________
Date of Sale:_________________________________________________________
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
By:_________________________
Print Name:_________________
Title:______________________
Dated:_____________________________
cc: Investor Relations
Aurora Biosciences Corporation
11010 Torreyana Road
San Diego, California 92121
C-1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
LIST OF INVESTORS
<S> <C> <C>
AGGREGATE
NAME AND ADDRESS SHARES PURCHASE PRICE
- --------------------------------------------------------------------- ------------- ---------------------
JANUS INVESTMENT FUND
BY: BOUYBREESE & CO. 919,050 $38,600,100
JANUS INVESTMENT FUND
BY: BOOKBEND & CO. 380,950 $15,999,900
BLACKROCK FUNDS
BY: BARNETT AND CO. 400,000 $16,800,000
TISCH FINANCIAL MANAGEMENT
BY: BAKER BROS. INVESTMENTS, LLC 50,000 $ 2,100,000
TISCH FINANCIAL MANAGEMENT
BY: FOUR PARTNERS 50,000 $ 2,100,000
TOTAL 1,800,000 $75,600,000
</TABLE>
<PAGE>
[LETTERHEAD]
March 10, 2000
Aurora Biosciences Corporation
11010 Torreyana Road
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Aurora Biosciences Corporation, a Delaware corporation (the
"Company"), of a Registration Statement on Form S-3 (the "Registration
Statement") including a related prospectus filed with the Registration Statement
(the "Prospectus"), covering the registration of up to 1,800,000 shares of the
Common Stock, $.001 par value, of the Company (the "Shares") on behalf of
certain selling stockholders.
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Company's Amended and Restated Certificate of
Incorporation and Bylaws, as amended, and such other records, documents,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares are 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.
Very truly yours,
COOLEY GODWARD LLP
/s/ Thomas A. Coll
- ------------------
Thomas A. Coll
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Aurora Biosciences
Corporation for the registration of 1,800,000 shares of its common stock and to
the incorporation by reference therein of our report dated February 10, 2000,
with respect to the financial statements of Aurora Biosciences Corporation
included in its Annual Report (Form 10-K) for the year ended December 31, 1999,
filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Diego, California
March 8, 2000
