<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
RIGEL PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8731 94-3248524
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
</TABLE>
240 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(650) 624-1100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
JAMES M. GOWER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RIGEL PHARMACEUTICALS, INC.
240 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(650) 624-1100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
PATRICK A. POHLEN, ESQ. RICHARD R. PLUMRIDGE, ESQ.
COOLEY GODWARD LLP JEFF T. HARRIS, ESQ.
FIVE PALO ALTO SQUARE ARUN JHA, ESQ.
3000 EL CAMINO REAL BROBECK, PHLEGER & HARRISON LLP
PALO ALTO, CA 94306-2155 370 INTERLOCKEN BLVD., SUITE 500
(650) 843-5000 BROOMFIELD, CO 80021
(303) 410-2000
</TABLE>
------------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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
number for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration 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, check
the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, par value $.001............................... $100,000,000.00 $26,400.00
</TABLE>
(1) Includes shares of common stock issuable upon exercise of the
underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933, as amended.
------------------------------
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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 WE ARE NOT SOLICITING OFFERS TO BUY.
<PAGE>
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION FEBRUARY , 2000
- --------------------------------------------------------------------------------
SHARES
[LOGO]
RIGEL PHARMACEUTICALS, INC.
COMMON STOCK
- ------------------------------------------------------------
This is an initial public offering of shares of our common stock. No public
market currently exists for our common stock. We expect the public offering
price to be between $ and $ per share.
We applied to have our common stock listed on the Nasdaq National Market under
the symbol "RIGL."
BEFORE BUYING ANY SHARES YOU SHOULD READ THE DISCUSSION OF MATERIAL RISKS OF
INVESTING IN OUR COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE 7.
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.
<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
- ----------------------------------------------------------------------------------
PUBLIC OFFERING PRICE $ $
- ----------------------------------------------------------------------------------
UNDERWRITING DISCOUNT AND COMMISSIONS $ $
- ----------------------------------------------------------------------------------
PROCEEDS, BEFORE EXPENSES, TO RIGEL $ $
- ----------------------------------------------------------------------------------
</TABLE>
The underwriters may also purchase up to shares of common stock from
us at the public offering price, less the underwriting discounts and
commissions, within 30 days from the date of this prospectus. This option may be
exercised only to cover over-allotments, if any. If the option is exercised in
full, the total underwriting discounts and commissions will be $ , and the
total proceeds, before expenses, to Rigel will be $ .
Delivery of the shares will be made on or about .
WARBURG DILLON READ LLC
ROBERTSON STEPHENS
PRUDENTIAL VECTOR HEALTHCARE
A UNIT OF PRUDENTIAL SECURITIES
<PAGE>
Inside Front Cover Graphic
Title: Rigel addresses the key demand of the pharmaceutical industry in the
post-genomics era: determining and validating the role of genes involved
in disease
Description: A schematic diagram showing the integration of combinatorial
biology and pathway mapping technologies used at Rigel.
Inside Gatefold Graphic
Title: Rigel Technology: Rigel's integrated post-genomics combinatorial biology
technologies rapidly identify and validate therapeutic targets for the
development of small molecule drugs.
Description: A schematic diagram of the drug discovery process using Rigel
technologies.
<PAGE>
- --------------------------------------------------------------------------------
Until , 2000 (25 days after the date of this prospectus), all
dealers selling shares of our common stock, whether or not participating in this
offering, may be required to deliver a prospectus. This delivery requirement is
in addition to the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Prospectus summary................... 3
The offering......................... 5
Summary financial and operating
data............................... 6
Risk factors......................... 7
Forward-looking information.......... 20
Use of proceeds...................... 21
Dividend policy...................... 21
Capitalization....................... 22
Dilution............................. 23
Selected financial data.............. 24
Management's discussion and analysis
of financial condition and results
of operations...................... 26
Business............................. 31
Management........................... 49
Related party transactions........... 62
Principal stockholders............... 64
Description of securities............ 65
Shares eligible for future sale...... 68
Underwriting......................... 70
Legal matters........................ 71
Experts.............................. 72
Where you can find more
information........................ 72
Index to financial statements........ F-1
</TABLE>
ABOUT THIS PROSPECTUS
- --------------------------------------------------------------------------------
"Rigel" and the Rigel logo are trademarks of Rigel Pharmaceuticals, Inc. Other
trademarks and trade names appearing in this prospectus are the property of
their holders.
- --------------------------------------------------------------------------------
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. You
should read the entire prospectus carefully, especially the risks of investing
in our common stock discussed under "Risk factors." Our principal executive
offices are located at 240 East Grand Avenue, South San Francisco, California
94080. Our telephone number is (650) 624-1100. Our website is
http://www.rigel.com. The information found on our website is not a part of this
prospectus.
OUR BUSINESS
We are a post-genomics combinatorial biology company which has developed a new
and faster way to find novel drug targets and to validate the role of those
targets in disease without first knowing the identity or sequence of the genes
involved. We can identify targets for drug development by creating a
disease-like setting that can detect a change in the cellular response. By
creating a map of the various protein-protein interactions in cells that are
involved in a disease process, we can select protein targets for drug
development that are specific to the diseases we study and reduce the
probability of selecting targets leading to drugs that produce side effects.
After selecting drug discovery targets, we continue drug development with the
goal of developing small molecule drugs to address large therapeutic areas.
Small molecule drugs provide the advantage that they can generally be
administered orally. In our first three years of research, we have succeeded in
identifying 15 new drug targets in seven of our nine programs and have generated
preclinical candidate compounds in our IgE mast cell, IgE B cell and E-3
ubiquitin ligase programs. We currently have programs in asthma/allergy,
autoimmunity, transplant rejection, rheumatoid arthritis/inflammatory bowel
disease, and tumor growth. We have multi-year collaborations with Cell Genesys,
Janssen, Neurocrine, Novartis and Pfizer.
THE PROBLEM
Pharmaceutical companies face enormous pressure to develop drugs that act on
novel targets within cells. Despite revolutionary advances made in molecular
biology and genomics, only approximately 500 out of thousands of possible
targets have been identified, and there has been no efficient way to identify
additional appropriate targets for drug development. Efforts to sequence the
human genome have generated huge amounts of fundamentally important genetic
information, and functional genomic efforts have provided interesting
information about which particular genes are associated with particular disease
conditions. However, neither has been able to utilize this information to
identify protein drug targets quickly and systematically, or to increase the
probability of discovering new drug candidates. The result is a shortage of
possible drug targets with limited tools to determine which new targets should
be pursued.
OUR SOLUTION
As a post-genomics combinatorial biology company, we bypass the need to know the
identity or sequence of genes in order to discover new drug targets. Instead, we
combine millions of peptide or protein probes with protein pathway members in
cells in a disease-like setting to identify novel proteins as potential targets.
Our two hybrid protein interaction technology establishes a map of the
intracellular signaling pathways controlling cellular responses. We believe that
these technologies provide us with an enhanced ability to identify new drug
targets for drug discovery rapidly and efficiently.
Our post-genomics combinatorial biology technology uses retroviruses to
introduce up to 100 million different peptides or proteins into normal or
diseased cells, stimulates the cells to induce a disease-like behavioral
response, and sorts the cells using our multi-parameter high throughput
fluorescent cell sorters at a rate of up to 60,000 cells per second to collect
data on up to 5 different parameters which
3
<PAGE>
means that a sort of 100 million cells can be completed in approximately half an
hour. By analyzing the approximately 500 million resulting data points, we can
rapidly identify those few cells containing a peptide or protein that interacts
with a protein target in a way that causes a cell to change its behavior from
diseased back to normal. We believe we can identify the relatively few drugable
targets and initially validate them in the context of a disease-specific
cellular response.
Our two hybrid protein interaction technology enables us to map protein-protein
interactions, identify specific proteins which bind with other peptides or
proteins, and select targets for drug development that are specific to the
disease pathway we are seeking to affect, avoiding targets that have a role in
other pathways or cells.
We believe that our technology has a number of advantages: improved target
identification; rapid validation of protein targets; improved intracellular
pathway mapping; better informed target selection; more efficient compound
screening; and reduced risk of failure in the drug development process.
OUR STRATEGY
Our strategy is to develop a portfolio of many drug candidates, out-license drug
candidates at a relatively late stage of development, and focus on diseases that
represent large unmet medical needs. Also, we will focus on developing small
molecule drugs delivered to intracellular targets and establish strategic
collaborations with pharmaceutical and biotechnology companies to enhance
product development and commercialization. We structure our collaboration
agreements to permit multiple collaborations in each disease area by focusing on
disease pathways and targets.
PRODUCT DEVELOPMENT PROGRAMS
We currently have six product development programs in immune disorders and three
in cancer:
IMMUNE DISORDERS
ASTHMA/ALLERGY. We have identified preclinical candidate compounds that inhibit
the IgE-mediated secretion of inflammatory factors from mast cells, which will
enter preclinical studies in animal models. In our second program we have
identified a novel drug target that regulates the production of IgE in B cells
and a preclinical compound in this program.
AUTOIMMUNITY & TRANSPLANT REJECTION. These programs seek selective and specific
immune system therapeutics which do not negatively affect the protective
activities of the immune system. We have identified novel drug targets in
T cells and B cells.
RHEUMATOID ARTHRITIS & INFLAMMATORY BOWEL DISEASE. We are characterizing and
developing specific inhibitors of protein-degrading enzymes, named E-3 ubiquitin
ligases, and have identified preclinical compounds. We also seek to block the
inflammatory signals of the tumor necrosis factor-alpha pathway. We have
identified and validated several novel members of this signaling pathway.
CANCER
TUMOR GROWTH. We have identified and validated two intracellular targets in
our cell cycle checkpoint control program which will enter small molecule
compound screening. We have also identified several compounds which are potent
and non-toxic inhibitors of E-3 ubiquitin ligases. We are also identifying drug
targets in the angiogenesis pathway.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by us................... shares
Common Stock to be outstanding after the
offering................................... shares
Proposed Nasdaq National Market symbol....... RIGL
Use of proceeds.............................. For research and development activities, for
financing possible acquisitions and
investments in technology, for possibly
expanding our facilities as well as for
working capital and general corporate
purposes.
</TABLE>
Except as otherwise indicated, information in this prospectus is based on the
following assumptions:
- - 5,242,004 shares issuable upon the exercise of options outstanding as of
December 31, 1999, at a weighted average exercise price of $0.19 per share;
- - 647,498 shares issuable upon the exercise of warrants as of December 31,
1999, at a weighted average exercise price of $1.30 per share;
- - 3,694,662 additional shares available for future grant as of December 31,
1999, of which options to purchase 1,111,599 shares of common stock were
granted in January 2000 under our equity incentive plan; an additional
400,000 shares made available under our employee stock purchase plan; and
300,000 shares made available under our non-employee directors' stock option
plan;
- - the conversion of 2,508,330 outstanding shares of our preferred stock sold
on February 3, 2000, at a price of $6.00 per share, and the issuance of
50,000 shares of our preferred stock for a license for technology, into
2,558,330 shares of our common stock upon the closing of this offering.
The number of shares of common stock outstanding after this offering is based on
shares outstanding as of December 31, 1999.
5
<PAGE>
SUMMARY FINANCIAL DATA
The following tables summarize our financial data. The pro forma information
contained in the statements of operations data gives effect to the automatic
conversion of all convertible preferred stock into common stock upon the
completion of this offering. The as adjusted balance sheet data reflects the
conversion of our preferred stock into common stock and the sale of shares
of our common stock at an assumed price to the public of $ per share, after
deducting the underwriting discounts, commissions and estimated offering
expenses payable by us.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 14, 1996) YEAR ENDED NINE MONTHS ENDED
TO DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1997(1) 1998 1998 1999
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA
(in thousands, except per share amounts)
- -----------------------------------------------------------------------------------------------------
Contract revenues from collaborations...... $-- $28 $-- $5,898
Total operating expenses................... 5,734 10,522 6,926 13,707
---------- ---------- ------- -------
Net loss................................... (5,649) (10,604) (6,809) (7,929)
========== ========== ======= =======
Net loss per share, basic and diluted...... $(2.25) $(4.01) $(2.59) $(2.87)
========== ========== ======= =======
Weighted average shares used in computing
net loss per share, basic and diluted.... 2,512 2,643 2,633 2,764
Pro forma net loss per share, basic and
diluted.................................. $(0.58) $(0.34)
========== =======
Shares used in computing pro forma net loss
per share, basic and diluted............. 18,334 23,418
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1999
1998 ACTUAL AS ADJUSTED
<S> <C> <C> <C>
BALANCE SHEET DATA (in thousands)
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents.................. $9,493 $7,192
Working capital............................ 3,908 1,269
Total assets............................... 12,956 17,161
Capital lease obligations, less current
portion.................................. 1,652 5,680 $5,680
Deferred stock compensation................ -- (4,164) (4,164)
Accumulated deficit........................ (16,253) (24,182) (24,182)
Total stockholders' equity................. 5,445 4,055
</TABLE>
- ------------
(1) AMOUNTS FOR PERIOD OF INCEPTION TO DECEMBER 31, 1996 ARE IMMATERIAL AND ARE
INCORPORATED INTO 1997 AMOUNTS.
6
<PAGE>
- --------------------------------------------------------------------------------
RISK FACTORS
An investment in our common stock is risky. You should carefully consider the
following risks, as well as the other information contained in this prospectus.
If any of the following risks actually occurs, our business could be harmed. In
that case, the trading price of our common stock could decline and you might
lose all or part of your investment. The risks and uncertainties described below
are not the only ones facing us. Additional risks and uncertainties not
presently known to us, or that we currently see as immaterial, may also harm our
business. If any of these additional risks or uncertainties occur, the trading
price of our common stock could decline and you might lose all or part of your
investment.
RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY, A HISTORY OF OPERATING LOSSES AND
UNCERTAINTY OF FUTURE PROFITABILITY.
Due in large part to the significant research and development expenditures
required to identify and validate new drug candidates, we have not been
profitable and have generated operating losses since we were incorporated in
June 1996. Currently, our revenues are generated solely from research payments
from our collaboration agreements and licenses and are insufficient to generate
profitable operations. As of September 30, 1999, we had an accumulated deficit
of approximately $24.2 million. We expect to incur losses for at least the next
several years and expect that these losses will actually increase as we expand
our research and development activities, incur significant clinical and testing
costs and possibly expand our facilities. Moreover, our losses are expected to
continue even if our current research projects are able to successfully identify
potential drug targets. If the time required to generate revenues and achieve
profitability is longer than anticipated or if we are unable to obtain necessary
capital, we may not be able to fund and continue our operations.
MOST OF OUR EXPECTED FUTURE REVENUES ARE CONTINGENT UPON CERTAIN EVENTS.
Our ability to generate revenues in the near term depends on our ability to
enter into additional collaborative agreements with third parties and to
maintain the agreements we currently have in place. To date, all of our revenue
has been related to the research phase of each of our collaborative agreements,
which is for specified periods and is partially offset by corresponding research
costs. Following the completion of the research phase of each collaborative
agreement, additional revenue may come only from milestone payments and
royalties, which may not be paid, if at all, until some time well into the
future. The risk is heightened due to the fact that unsuccessful research
efforts may preclude us from receiving any contingent funding under these
agreements. Our receipt of revenue from collaborative arrangements is also
significantly affected by the timing of efforts expended by us and our
collaborators and the timing of lead compound identification. Under many
agreements, milestone payments may not be earned until the collaborator has
advanced products into clinical testing, which may never occur or not until some
time well into the future.
Our business plan contemplates that we will need to generate meaningful revenues
from royalties and licensing agreements. To date, we have not yet received any
revenue from royalties for the sale of commercial drugs, and we do not know when
we will receive any such revenue, if at all. Likewise, we have not licensed any
lead compounds or drug development candidates to third parties, and we do not
know whether any such license will be entered into on acceptable terms in the
future, if at all.
- --------------------------------------------------------------------------------
7
<PAGE>
RISK FACTORS
- --------------------------------------------------------------------------------
We are unable to predict when, or if, we will become profitable and even if we
are able to achieve profitability at any point in time, we do not know if our
operations will be able to maintain profitability during any future periods.
THE FOCUS OF OUR RESEARCH RELATES TO EARLY-STAGE DRUG DISCOVERY AND DEVELOPMENT
AND THERE IS A HIGH RISK THAT SUCH RESEARCH MAY NOT SUCCESSFULLY GENERATE
PROFITABLE PRODUCTS.
At the present time, our operations are in the early stages of drug
identification and development. To date, we have only identified a few potential
drug compounds, all of which are still in very early stages of development and
have not yet been put into preclinical or clinical testing. It is statistically
unlikely that the few compounds that we have identified as potential drug
candidates will actually lead to successful drug development efforts and we do
not expect any drugs resulting from our research to be commercially available
for several years, if at all. Our leads for potential drug compounds will be
subject to the risks and failures inherent in the development of pharmaceutical
products based on new technologies. These risks include, but are not limited to,
the inherent difficulty in selecting the right drug target and avoiding unwanted
side effects as well as the unanticipated problems relating to product
development, testing, regulatory compliance, manufacturing, marketing and
competition, and additional costs and expenses that may exceed current
estimates. There is also a risk that competitors and third parties may develop
similar or superior products or have proprietary rights that preclude us from
ultimately marketing our products, as well as the potential risk that our
products may not be accepted by the marketplace.
OUR DRUG DISCOVERY TECHNOLOGY IS NEW AND UNPROVEN AND MAY NOT LEAD TO DISCOVERY
AND DEVELOPMENT OF GOOD DRUG CANDIDATES OR APPROVED DRUGS.
The drug discovery methods we employ based upon our post-genomics combinatorial
biology and two hybrid protein interaction technologies are relatively new and
therefore, untested. We do not know if these methods will lead to the successful
identification of targets, the development of new drug candidates and,
ultimately, the sale of commercially viable drugs.
THERE IS A HIGH DEGREE OF UNCERTAINTY REGARDING THE OUTCOMES OF OUR PRODUCT
CANDIDATE TESTING.
Commercialization of our product candidates depends upon successful completion
of preclinical studies and clinical trials. Preclinical testing and clinical
development are long, expensive and uncertain processes and we do not know
whether we, or any of our collaborative partners, will be permitted to undertake
clinical trials of any potential products. It may take us or our collaborative
partners several years to complete any such testing, and failure can occur at
any stage of testing. Interim results of trials do not necessarily predict final
results, and acceptable results in early trials may not be repeated in later
trials. A number of companies in the pharmaceutical industry, including
biotechnology companies, have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials. Moreover, if and when
our projects reach clinical trials, we or our collaborative partners may decide
to discontinue development of any or all of these projects at any time for
commercial, scientific or other reasons.
WE ARE HIGHLY DEPENDENT UPON THIRD PARTIES FOR THEIR EXPERTISE RELATING TO
MANUFACTURING, SALES AND MARKETING, AND FOR LICENSES TO TECHNOLOGY RIGHTS.
Our strategy depends upon the formation and sustainability of multiple
collaborative arrangements with third parties in the future. We rely on these
arrangements for not only financial resources, but
- --------------------------------------------------------------------------------
8
<PAGE>
RISK FACTORS
- --------------------------------------------------------------------------------
also for expertise that we expect to need in the future relating to
manufacturing, sales and marketing, and for licenses to technology rights. To
date, we have entered into five such arrangements with corporate collaborators;
however, we do not know if such third parties will dedicate sufficient resources
or if any such development or commercialization efforts by third parties will be
successful. Should a collaborative partner fail to develop or commercialize a
compound or product to which it has rights from us, we may not receive any
future milestone payments and will not receive any royalties associated with
such compound or product.
We are a party to various license agreements that give us rights to use
specified technologies in our research and development processes. The agreements
pursuant to which we have in-licensed technology permit our licensors to
terminate the agreements under certain circumstances. If we are not able to
continue to license these and future technologies on commercially reasonable
terms, our product development and research may be delayed.
WE WILL RELY ON THIRD PARTIES FOR THE LATER STAGES OF DRUG DEVELOPMENT AND
CONFLICTS MIGHT RESULT WITH RESPECT TO THESE EFFORTS.
We will rely on third parties for the later stages of the drug development
process outside of our initial drug target identification. If any of our
corporate collaborators were to breach or terminate their agreement with us or
otherwise fail to conduct the collaborative activities successfully and in a
timely manner, the preclinical or clinical development or commercialization of
the affected product candidates or research programs could be delayed or
terminated. We generally do not control the amount and timing of resources that
our corporate collaborators devote to our programs or potential products. We do
not know whether current or future collaborative partners, if any, might pursue
alternative technologies or develop alternative products either on their own or
in collaboration with others, including our competitors, as a means for
developing treatments for the diseases targeted by collaborative arrangements
with us. Conflicts also might arise with collaborative partners concerning
proprietary rights to particular compounds. While our existing collaborative
agreements typically provide that we retain milestone payments and royalty
rights with respect to drugs developed from certain derivative compounds, any
such payments or royalty rights may be at reduced rates and disputes may arise
over the application of derivative payment provisions to such drugs, and we may
not be successful in such disputes.
WE MAY FAIL TO MAINTAIN OR ENTER INTO NEW COLLABORATIVE ARRANGEMENTS WHICH MAY
NEGATIVELY AFFECT OUR BUSINESS.
Although we have established a few collaborative arrangements, we do not know if
we will be able to maintain these existing relationships, establish additional
collaborative arrangements, or whether current or any future collaborative
arrangements will ultimately be successful. In addition, there have been and may
continue to be a significant number of recent business combinations among large
pharmaceutical companies that have resulted and may continue to result in a
reduced number of potential future corporate collaborators, which may limit our
ability to find partners who will work with us in developing and commercializing
our drug targets. If business combinations involving our existing corporate
collaborators were to occur, the effect could be to diminish, terminate or cause
delays in one or more of our corporate collaborations.
The continuation of some of our partnered drug discovery and development
programs may be dependent on the periodic renewal of our corporate
collaborations. Our corporate collaboration agreements may terminate before the
full term of the collaborations or upon a breach or a change of
- --------------------------------------------------------------------------------
9
<PAGE>
RISK FACTORS
- --------------------------------------------------------------------------------
control. We may not be able to renew these collaborations on acceptable terms,
if at all. In addition, we may not be able to negotiate additional corporate
collaborations on acceptable terms, if at all, and any such collaborations may
not be successful.
WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE TO SUFFICIENTLY FUND OUR
OPERATIONS AND RESEARCH.
We will require additional financing in the future to fund our operations. Our
operations require significant additional funding in large part due to our
research and development expenses, future preclinical and clinical-testing
costs, the possibility of expanding our facilities, and the absence of any
meaningful revenues over the foreseeable future. We do not know whether
additional financing will be available when needed, or that, if available, we
will obtain financing on terms favorable to our stockholders or us. We have
consumed substantial amounts of capital to date and operating expenditures are
expected to increase over the next several years as we expand our infrastructure
and research and development activities.
We believe that the net proceeds from this offering, existing cash and
investment securities, and anticipated cash flow from existing and future
collaborations, if any, will be sufficient to support our current operating plan
through at least the next 18 months; however, we have based this estimate on
assumptions that may prove to be wrong. Our future funding requirements will
depend on many factors, including, but not limited to:
- - any changes in the breadth of our research and development programs;
- - the results of research and development, preclinical studies and clinical
trials conducted by us or our collaborative partners or licensees, if any;
- - the acquisition or licensing of technologies or compounds, if any;
- - our ability to maintain and establish new corporate relationships and
research collaborations;
- - our ability to manage growth;
- - competing technological and market developments;
- - the time and costs involved in filing, prosecuting, defending and enforcing
patent and intellectual property claims;
- - the receipt of contingent licensing or milestone fees from our current or
future collaborative and license arrangements, if established; and
- - the timing of regulatory approvals.
To the extent we raise additional capital by issuing equity securities, our
stockholders may experience substantial dilution. To the extent that we raise
additional funds through collaboration and licensing arrangements, we may be
required to relinquish some rights to our technologies or product candidates, or
grant licenses on terms that are not favorable to us. If adequate funds are not
available, we will not be able to continue developing our products.
OUR SUCCESS IS DEPENDENT ON INTELLECTUAL PROPERTY RIGHTS HELD BY US AND THIRD
PARTIES AND SUCH RIGHTS ARE DIFFICULT AND COSTLY TO PROTECT.
Our success will depend to a large part on our own, our licensees' and our
licensors' ability to obtain and defend patents for each party's respective
technologies and the compounds and other products, if any, resulting from the
application of such technologies. The patent positions of pharmaceutical and
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biotechnology companies can be highly uncertain and involve complex legal and
factual questions. No consistent policy regarding the breadth of claims allowed
in biotechnology patents has emerged to date. Accordingly, we cannot predict the
breadth of claims allowed in our or other companies' patents.
The degree of future protection for our proprietary rights is uncertain and we
cannot ensure that:
- - we were the first to make the inventions covered by each of our pending
patent applications;
- - we were the first to file patent applications for these inventions;
- - others will not independently develop similar or alternative technologies or
duplicate any of our technologies;
- - any of our pending patent applications will result in issued patents;
- - any patents issued to us or our collaborators will provide a basis for
commercially viable products or will provide us with any competitive
advantages or will not be challenged by third parties;
- - we will develop additional proprietary technologies that are patentable; or
- - the patents of others will not have a negative effect on our ability to do
business.
We rely on trade secrets to protect technology where we believe patent
protection is not appropriate or obtainable. However, trade secrets are
difficult to protect. While we require employees, collaborators and consultants
to enter into confidentiality agreements, we may not be able to adequately
protect our trade secrets or other proprietary information in the event of any
unauthorized use or disclosure or the lawful development by others of such
information.
We are a party to certain in-license agreements which are important to our
business and we generally do not control the prosecution of in-licensed
technology. Accordingly, we are unable to exercise the same degree of control
over this intellectual property as we exercise over our internally developed
technology. Moreover, some of our academic institution licensors, research
collaborators and scientific advisors have rights to publish data and
information in which we have rights. If we cannot maintain the confidentiality
of our technology and other confidential information in connection with our
collaborations, then our ability to receive patent protection or protect our
proprietary information will be impaired. In addition, some of the technology we
have licensed relies on patented inventions developed using U.S. government
resources. The U.S. government retains certain rights, as defined by law, in
such patents, and may choose to exercise such rights.
OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON
OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.
Our success will also depend, in part, on our ability to operate without
infringing on or misappropriating the proprietary rights of others. There are
many issued patents and patent applications filed by third parties relating to
products or processes that are similar or identical to ours or our licensors,
and others may be filed in the future. There can be no assurance that our
activities, or those of our licensors, will not infringe patents owned by
others. We believe that there may be significant litigation in the industry
regarding patent and other intellectual property rights and we do not know if we
or our collaborators would be successful in any such litigation. Any legal
action
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against our collaborators or us claiming damages or seeking to enjoin commercial
activities relating to the affected products, our methods or processes could:
- - require our collaborators or us to obtain a license to continue to use,
manufacture or market the affected products, methods or processes, which may
not be available on commercially reasonable terms, if at all;
- - prevent us from using the subject matter claimed in the patents held by
others;
- - subject us to potential liability for damages;
- - consume a substantial portion of our managerial and financial resources; and
- - result in litigation or administrative proceedings which may be costly,
whether we win or lose.
BECAUSE REGULATORY APPROVAL MUST BE OBTAINED TO MARKET PRODUCTS IN THE UNITED
STATES AND FOREIGN JURISDICTIONS, WE CANNOT PREDICT IF OR WHEN WE, OR OUR
COLLABORATIVE PARTNERS, WILL BE PERMITTED TO COMMERCIALIZE PRODUCTS FROM OUR
RESEARCH.
The pharmaceutical industry is subject to stringent regulation by a wide range
of authorities. We cannot predict whether regulatory clearance will be obtained
for any product we or our collaborative partners hope to develop. A
pharmaceutical product cannot be marketed in the United States until it has
completed rigorous preclinical testing and clinical trials and an extensive
regulatory clearance process implemented by the FDA. Satisfaction of regulatory
requirements typically takes many years, is dependent upon the type, complexity
and novelty of the product and requires the expenditure of substantial
resources. Of particular significance are the requirements covering research and
development, testing, manufacturing, quality control, labeling and promotion of
drugs for human use.
Before commencing clinical trials in humans, we, or our collaborative partners,
must submit and receive approval from the FDA of an Investigational New Drug
application, or IND. Clinical trials are subject to oversight by institutional
review boards and the FDA and:
- - must be conducted in conformance with the FDA's good laboratory practice
regulations;
- - must meet requirements for institutional review board oversight;
- - must meet requirements for informed consent;
- - must meet requirements for good clinical practices;
- - are subject to continuing FDA oversight;
- - may require large numbers of participants; and
- - may be suspended by us, our strategic partners, or the FDA at any time if it
is believed that the subjects participating in these trials are being
exposed to unacceptable health risks or if the FDA finds deficiencies in the
IND or the conduct of these trials.
Even if we are able to achieve success in our clinical testing, we, or our
collaborative partners, must provide the FDA and foreign regulatory authorities
with clinical data that demonstrates the safety and efficacy of our products in
humans before they can be approved for commercial sale. None of the product
candidates that we have internally developed has advanced to the stage of human
testing designed to determine safety, known as Phase I clinical trials. We do
not know when or if clinical trials will begin and, once begun, will not know
whether any such clinical trials will be successful or if such trials will be
completed on schedule or at all. We do not know whether any future clinical
trials will demonstrate sufficient safety and efficacy necessary to obtain the
requisite regulatory approvals or will
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result in marketable products. Our failure, or the failure of our strategic
partners, to adequately demonstrate the safety and efficacy of our products
under development will prevent receipt of FDA and similar foreign regulatory
approval and, ultimately, commercialization of our products.
Any clinical trial may fail to produce results satisfactory to the FDA.
Preclinical and clinical data can be interpreted in different ways, which could
delay, limit or prevent regulatory approval. Negative or inconclusive results or
adverse medical events during a clinical trial could cause a clinical trial to
be repeated or a program to be terminated. In addition, delays or rejections may
be encountered based upon additional government regulation from future
legislation or administrative action or changes in FDA policy or interpretation
during the period of product development, clinical trials and FDA regulatory
review. Failure to comply with applicable FDA or other applicable regulatory
requirements may result in criminal prosecution, civil penalties, recall or
seizure of products, total or partial suspension of production or injunction, as
well as other regulatory action against our potential products, collaborative
partners or us. Additionally, we have no experience in working with our partners
in conducting and managing the clinical trials necessary to obtain regulatory
approval.
If regulatory clearance of a product is granted, this clearance will be limited
to those disease states and conditions for which the product is demonstrated
through clinical trials to be safe and efficacious. We cannot ensure that any
compound developed by us, alone or with others, will prove to be safe and
efficacious in clinical trials and will meet all of the applicable regulatory
requirements needed to receive marketing clearance.
Outside the United States, our ability or that of our collaborative partners to
market a product is contingent upon receiving a marketing authorization from the
appropriate regulatory authorities. This foreign regulatory approval process
typically includes all of the risks associated with FDA clearance described
above and may also include additional risks.
WE MAY ENCOUNTER DIFFICULTIES IN MANAGING OUR GROWTH AND THESE DIFFICULTIES
COULD INCREASE OUR LOSSES.
We have experienced a period of rapid and substantial growth that has placed and
will continue to place a strain on our human and capital resources. The number
of our employees increased from 31 at December 31, 1997 to 83 at December 31,
1999. Our ability to manage our operations and growth effectively requires us to
continue to use funds to improve our operational, financial and management
controls, reporting systems and procedures and to attract and retain sufficient
numbers of talented employees. If we are unable to manage this growth
effectively, our losses will increase.
IF OUR COMPETITORS DEVELOP TECHNOLOGIES THAT ARE MORE EFFECTIVE THAN OURS, OUR
COMMERCIAL OPPORTUNITY WILL BE REDUCED OR ELIMINATED.
The biotechnology and pharmaceutical industries are intensely competitive and
subject to rapid and significant technological change. Many of the drugs that we
are attempting to discover will be competing with existing therapies. In
addition, a number of companies are pursuing the development of pharmaceuticals
that target the same diseases and conditions that we are targeting. We face
competition from pharmaceutical and biotechnology companies both in the United
States and abroad. Our competitors may utilize discovery technologies and
techniques or partner with collaborators in order to develop products more
rapidly or successfully than we or our collaborators are able to do. Many of our
competitors, particularly large pharmaceutical companies, have substantially
greater financial, technical and human resources than we do. In addition,
academic institutions, government agencies, and other public and private
organizations conducting research may seek patent protection
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with respect to potentially competitive products or technologies and may
establish exclusive collaborative or licensing relationships with our
competitors.
We believe that our ability to compete is dependent, in part, upon our ability
to create, maintain and license scientifically advanced technology and upon our
and our strategic partners' ability to develop and commercialize pharmaceutical
products based on this technology, as well as our ability to attract and retain
qualified personnel, obtain patent protection or otherwise develop proprietary
technology or processes and secure sufficient capital resources for the expected
substantial time period between technological conception and commercial sales of
products based upon our technology. The failure by us or any of our
collaborators in any of those areas may prevent the successful commercialization
of our potential drug targets.
Our competitors might develop technologies and drugs that are more effective or
less costly than any which are being developed by us or which would render our
technology and potential drugs obsolete and noncompetitive. In addition, our
competitors may succeed in obtaining the approval of the FDA or other regulatory
approvals for drug candidates more rapidly than us or our strategic partners.
Companies that complete clinical trials, obtain required regulatory agency
approvals and commence commercial sale of their drugs before their competitors
may achieve a significant competitive advantage, including certain patent and
FDA marketing exclusivity rights that would delay or prevent our ability to
market certain products. Any drugs resulting from our research and development
efforts, or from our joint efforts with our existing or future collaborative
partners, might not be able to compete successfully with competitors' existing
or future products or products under development or obtain regulatory approval
in the United States or elsewhere.
OUR ABILITY TO GENERATE REVENUES WILL BE DIMINISHED IF OUR COLLABORATIVE
PARTNERS FAIL TO OBTAIN ACCEPTABLE PRICES OR AN ADEQUATE LEVEL OF REIMBURSEMENT
FOR PRODUCTS FROM THIRD-PARTY PAYORS.
The drugs we hope to develop may be rejected by the marketplace due to many
factors, including cost. Our ability to commercially exploit a drug may be
limited due to the continuing efforts of government and third-party payors to
contain or reduce the costs of health care through various means. For example,
in some foreign markets, pricing and profitability of prescription
pharmaceuticals are subject to government control. In the United States, we
expect that there will continue to be a number of federal and state proposals to
implement similar government control. In addition, increasing emphasis on
managed care in the United States will likely continue to put pressure on the
pricing of pharmaceutical products. Cost control initiatives could decrease the
price that any of our collaborators would receive for any products in the
future. Further, cost control initiatives could adversely affect our
collaborators' ability to commercialize our products, and our ability to realize
royalties from this commercialization.
Our ability to commercialize pharmaceutical products with collaborators may
depend in part on the extent to which reimbursement for the products will be
available from:
- - government and health administration authorities;
- - private health insurers; and
- - other third-party payors.
Significant uncertainty exists as to the reimbursement status of newly approved
healthcare products. Third-party payors, including Medicare, are challenging the
prices charged for medical products and services. Government and other
third-party payors increasingly are attempting to contain healthcare costs by
limiting both coverage and the level of reimbursement for new drugs and by
refusing, in some
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cases, to provide coverage for uses of approved products for disease indications
for which the FDA has not granted labeling approval. Third-party insurance
coverage may not be available to patients for any products we discover and
develop, alone or with collaborators. If government and other third-party payors
do not provide adequate coverage and reimbursement levels for our products, the
market acceptance of these products may be reduced.
IF CONFLICTS ARISE BETWEEN OUR COLLABORATORS, ADVISORS OR DIRECTORS AND US, ANY
OF THEM MAY ACT IN THEIR SELF-INTEREST, WHICH MAY BE ADVERSE TO YOUR INTERESTS.
If conflicts arise between us and our corporate collaborators or scientific
advisors, the other party may act in its self-interest and not in the interest
of our stockholders. Some of our corporate collaborators are conducting multiple
product development efforts within each disease area that is the subject of the
collaboration with us. In some of our collaborations, we have agreed not to
conduct independently, or with any third party, any research that is competitive
with the research conducted under our collaborations. Our collaborators,
however, may develop, either alone or with others, products in related fields
that are competitive with the products or potential products that are the
subject of these collaborations. Competing products, either developed by the
collaborators or to which the collaborators have rights, may result in their
withdrawal of support for our product candidates.
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE MAY INCUR
SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT COMMERCIALIZATION OF OUR
PRODUCTS.
The testing and marketing of medical products entail an inherent risk of product
liability. If we cannot successfully defend ourselves against product liability
claims, we may incur substantial liabilities or be required to limit
commercialization of our products. We currently do not have product liability
insurance and our inability to obtain sufficient product liability insurance at
an acceptable cost to protect against potential product liability claims could
prevent or inhibit the commercialization of pharmaceutical products we develop,
alone or with corporate collaborators. We or our corporate collaborators might
not be able to obtain insurance at a reasonable cost, if at all. While under
various circumstances we are entitled to be indemnified against losses by our
corporate collaborators, indemnification may not be available or adequate should
any claim arise.
OUR RESEARCH AND DEVELOPMENT EFFORTS WILL BE SERIOUSLY JEOPARDIZED IF WE ARE
UNABLE TO ATTRACT AND RETAIN KEY EMPLOYEES.
Being a small company with only approximately 83 employees, our success depends
on the continued contributions of our principal management and scientific
personnel and on our ability to develop and maintain important relationships
with leading academic institutions, scientists and companies in the face of
intense competition for such personnel. In particular, our research programs
depend on our ability to attract and retain highly skilled chemists and other
scientists. If we lose the services of any of our personnel, in particular,
Donald Payan, our research and development efforts could be seriously and
adversely affected. We also expect to encounter increasing difficulty in
attracting enough qualified personnel as our operations expand and the demand
for these professionals increases, and this difficulty could impede
significantly the achievement of our research and development objectives.
WE DEPEND ON OUR SCIENTIFIC ADVISORS FOR THE SUCCESS AND CONTINUATION OF OUR
RESEARCH EFFORTS.
We are dependent on the members of our Scientific Advisory Board ("SAB") and
Clinical Advisory Board ("CAB") who conduct research and provide us with access
to technology developed by them.
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The potential success of our drug discovery programs depends in part on
continued collaborations with these advisors. We and various members of our
management and research staff rely heavily on members of the SAB and CAB for
expertise in screening research. Our scientific advisors are not employees of
ours and may have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to us. All members of the SAB
and CAB have entered into scientific advisory agreements with us. These
agreements provide for indefinite terms of service on the SAB and CAB and are
generally terminable at any time by written notice by either us or the advisor.
Certain members of the SAB and CAB also have entered into separate consulting
agreements with us. We do not know if we will be able to maintain such
consulting agreements or that such scientific advisors will not enter into
consulting arrangements, exclusive or otherwise, with competing pharmaceutical
or biotechnology companies, any of which would have a detrimental impact on our
research objectives and could have a material adverse effect on our business,
financial condition and results of operations.
IF WE USE BIOLOGICAL AND HAZARDOUS MATERIALS IN A MANNER THAT CAUSES INJURY OR
VIOLATES LAWS, WE MAY BE LIABLE FOR DAMAGES.
Our research and development activities involve the controlled use of
potentially harmful biological materials as well as hazardous materials,
chemicals and various radioactive compounds. We cannot completely eliminate the
risk of accidental contamination or injury from the use, storage, handling or
disposal of these materials. In the event of contamination or injury, we could
be held liable for damages that result, and any liability could exceed our
resources. We are subject to federal, state and local laws and regulations
governing the use, storage, handling and disposal of these materials and
specified waste products. The cost of compliance with, or any potential
violation of, these laws and regulations could be significant.
WE MAY INCUR SIGNIFICANT COSTS IF YEAR 2000 COMPLIANCE ISSUES ARE NOT PROPERLY
ADDRESSED.
We use and rely on a wide variety of information technologies, computer systems
and scientific equipment containing computer chips dedicated to a specific task.
Some of our older computer software programs and equipment might be unable to
distinguish between the year 1900 and the year 2000. While we have not
experienced difficulties to date, time-sensitive functions of those software
programs and equipment may misinterpret dates after January 1, 2000 to refer to
the twentieth century rather than the twenty-first century. This could cause
system or equipment shutdowns, failures or miscalculations resulting in
inaccuracies in computer output or disruptions of operations, including
inaccurate processing of financial information and/or temporary inabilities to
engage in normal business activities. In addition to risks associated with our
own computer systems and equipment, we have relationships with, and are to
varying degrees dependent upon, a large number of third parties that provide
information, goods and services to us. These include financial institutions,
suppliers, vendors, research partners and governmental entities. Year 2000
issues, if any, affecting our business, if not adequately addressed by us, our
significant suppliers and our significant service providers could have a number
of "worst case" consequences. These might include the loss of historical data,
interruption of our research efforts and our inability to continue our research
efforts, any of which could materially disrupt our business, financial condition
and results of operations.
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OUR FACILITIES ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES, AND THE OCCURRENCE
OF AN EARTHQUAKE OR OTHER CATASTROPHIC DISASTER COULD CAUSE DAMAGE TO OUR
FACILITIES AND EQUIPMENT, WHICH COULD REQUIRE US TO CEASE OR CURTAIL OPERATIONS.
Our facilities are located in the San Francisco Bay Area near known earthquake
fault zones and are vulnerable to significant damage from earthquakes. We are
also vulnerable to damage from other types of disasters, including fires,
floods, power loss, communications failures and similar events. If any disaster
were to occur, our ability to operate our business at our facilities would be
seriously, or potentially completely, impaired and our research could be lost or
destroyed. In addition, the unique nature of our research activities and of much
of our equipment could make it difficult for us to recover from a disaster. The
insurance we maintain may not be adequate to cover our losses resulting from
disasters or other business interruptions.
RISKS RELATED TO THE OFFERING
WE MAY ALLOCATE THE NET PROCEEDS FROM THIS OFFERING IN WAYS THAT YOU AND OTHER
STOCKHOLDERS MAY NOT APPROVE.
Management will have significant flexibility in applying the net proceeds of
this offering and could use these proceeds for purposes other than those
contemplated at the time of the offering.
IF OUR OFFICERS, DIRECTORS AND LARGEST STOCKHOLDERS CHOOSE TO ACT TOGETHER, THEY
MAY BE ABLE TO CONTROL OUR MANAGEMENT AND OPERATIONS, ACTING IN THEIR BEST
INTERESTS AND NOT NECESSARILY THOSE OF OTHER STOCKHOLDERS.
Following completion of the offering, our directors, executive officers and
principal stockholders and their affiliates will beneficially own approximately
% of our common stock, based on their beneficial ownership as of
December 31, 1999. Accordingly, they collectively will have the ability to
determine the election of all of our directors and to determine the outcome of
most corporate actions requiring stockholder approval. They may exercise this
ability in a manner that advances their best interests and not necessarily those
of other stockholders.
THERE MAY NOT BE AN ACTIVE, LIQUID TRADING MARKET FOR OUR COMMON STOCK.
An active trading market for our common stock may not develop following this
offering. You may not be able to sell your stock quickly or at the market price
if trading in our stock is not active. The initial public offering price will be
determined by negotiations between us and the representatives of the
underwriters based upon a number of factors. The initial public offering price
may not be indicative of prices that will prevail in the trading market.
OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN OUR STOCK COULD DECLINE
IN VALUE.
Prior to this offering, there has been no public market for our common stock and
an active public market for our common stock may not develop or be sustained
after the offering. The initial public offering price will be determined by
negotiations between the representatives of the underwriters and us and may not
be indicative of future market prices. Among the factors to be considered in
determining the initial public offering price of the common stock, in addition
to prevailing market conditions, will be:
- - estimates of our business potential and earnings prospects;
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- - an assessment of our management; and
- - the consideration of the above factors in relation to market valuations of
companies in related businesses.
The market prices for securities of biotechnology companies in general have been
highly volatile and may continue to be highly volatile in the future. The
following factors, in addition to other risk factors described in this section,
may have a significant impact on the market price of our common stock:
- - announcements of technological innovations or new commercial products by our
competitors or us;
- - developments concerning proprietary rights, including patents;
- - developments concerning our collaborations;
- - publicity regarding actual or potential medical results relating to products
under development by our competitors or us;
- - regulatory developments in the United States and foreign countries;
- - litigation;
- - economic and other external factors or other disaster or crisis; or
- - period-to-period fluctuations in financial results.
IF OUR STOCKHOLDERS SELL SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK AFTER THE
OFFERING, THE MARKET PRICE OF OUR COMMON STOCK MAY FALL.
If our stockholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options and warrants, the market
price of our common stock may fall. These sales also might make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate. After completion of the offering, we
will have outstanding shares of common stock, which assumes no exercise
of outstanding options or warrants after December 31, 1999 and no exercise of
the underwriters' over-allotment options.
We intend to file a registration statement on Form S-8 covering an aggregate of
9,636,666 shares issuable upon exercise of options to purchase common stock and
common stock reserved for issuance under our stock plans within 90 days after
the effective date of the Registration Statement of which this prospectus is a
part.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE AN ACQUISITION OF US, WHICH MAY BE BENEFICIAL TO OUR STOCKHOLDERS, MORE
DIFFICULT.
Provisions of our amended and restated certificate of incorporation and bylaws,
as well as provisions of Delaware law, could make it more difficult for a third
party to acquire us, even if doing so would benefit our stockholders. These
provisions:
- - establish that members of the board of directors may be removed only for
cause upon the affirmative vote of stockholders owning at least two-thirds
of our capital stock;
- - authorize the issuance of "blank check" preferred stock that could be issued
by our board of directors to increase the number of outstanding shares and
thwart a takeover attempt;
- - limit who may call a special meeting of stockholders;
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- - prohibit stockholder action by written consent, thereby requiring all
stockholder actions to be taken at a meeting of our stockholders; and
- - establish advance notice requirements for nominations for election to the
board of directors or for proposing matters that can be acted upon at
stockholder meetings.
In addition, Section 203 of the Delaware General Corporation Law may discourage,
delay or prevent a third party from acquiring us.
THE OFFERING WILL CAUSE DILUTION IN NET TANGIBLE BOOK VALUE.
Purchasers in the public offerings will experience immediate and substantial
dilution in the net tangible book value of the common stock from the initial
public offering price. Additional dilution is likely to occur upon exercise of
options and warrants granted by us.
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FORWARD-LOOKING INFORMATION
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. This prospectus is not an offer to sell or a
solicitation of an offer to buy our common stock in any jurisdiction where it is
unlawful. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock. This preliminary prospectus is
subject to completion prior to this offering.
Some of the statements under the captions "Prospectus summary," "Risk factors,"
"Use of proceeds," "Management's discussion and analysis of financial condition
and results of operations" and "Business" and elsewhere in this prospectus are
"Forward-looking statements." These forward-looking statements include, but are
not limited to, statements about our plans, objectives, expectations and
intentions and other statements contained in the prospectus that are not
historical facts. When used in this prospectus, the words "anticipates,"
"believes," "continue," "could," "estimates," "expects," "intends," "may,"
"plans," "seeks," "should", "will" or "would" or the negative of these terms or
similar expressions are generally intended to identify forward-looking
statements. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by these forward-looking
statements, including our plans, objectives, expectations and intentions and
other factors discussed under "Risk factors."
Some statements contained in this prospectus are forward-looking statements
concerning our operations, economic performance and financial condition.
Forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, are included, for example, in the discussions
about:
- - our strategy; sufficiency of our cash resources;
- - revenues from existing and new collaborations;
- - product development;
- - our research and development and other expenses; and
- - our operational and legal risks.
These statements involve risks and uncertainties. Actual results may differ
materially from those expressed or implied in those statements. Factors that
could cause these differences include, but are not limited to, those discussed
under "Risk factors" and "Management's discussion and analysis of financial
condition and results of operations."
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USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of common
stock that we are selling in the offering will be approximately $ , or
approximately $ if the underwriters' over-allotment option is exercised in
full, based on an assumed initial public offering price of $ per share and
after deducting the estimated underwriting discount, commissions and estimated
offering expenses payable by us.
We intend to use the net proceeds for research and development activities, for
financing possible acquisitions and investments in technology, for possibly
expanding our facilities as well as for working capital and general corporate
purposes. We may also use a portion of the net proceeds to acquire or invest in
businesses, products and technologies that are complementary to our own,
although no acquisitions are planned or being negotiated as of the date of this
prospectus, and no portion of the net proceeds has been allocated for any
specific acquisition. Pending these uses, the net proceeds will be invested in
investment-grade, interest-bearing securities.
The principal purposes of this offering are to increase our capitalization and
financial flexibility, to provide a public market for our common stock and to
facilitate access to public equity markets. As of the date of this prospectus,
we cannot specify with certainty all of the particular uses for the net proceeds
we will have upon completion of the offering. Accordingly, our management will
have broad discretion in the application of net proceeds.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain earnings, if any, to support the development of our
business and do not anticipate paying cash dividends for the foreseeable future.
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CAPITALIZATION
The following table shows our capitalization as of September 30, 1999:
- - on an actual basis; and
- - on a pro forma basis to give effect to the sale of 2,508,330 shares of
preferred stock on February 3, 2000 at a price of $6.00 per share, less
expenses, the issuance of 50,000 shares of preferred stock for a technology
license and after reflecting the conversion of all outstanding shares of
preferred stock into common stock upon the closing of this offering; and
- - on a pro forma as adjusted basis to give effect to the sale of shares
of common stock by us in this offering at an assumed price of $ per
share less the estimated underwriting discounts and offering expenses.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
<S> <C> <C> <C>
(in thousands, except share data)
- -----------------------------------------------------------------------------------------------
Long-term obligations, less current portion............. $5,680 $5,680 $5,680
Stockholders' equity:
Convertible preferred stock, $0.001 par value;
24,000,000 authorized, 22,053,707, shares issued and
outstanding, actual, none issued pro forma and pro
forma as adjusted................................... 22 -- --
Common stock, $0.001 par value; 37,500,000 shares
(100,000,000 pro forma) authorized, 2,898,857 shares
issued and outstanding, 27,510,894 shares issued and
outstanding, pro forma and shares issued and
outstanding, pro forma as adjusted.................. 3 28
Deferred compensation................................... (4,164) (4,164) (4,164)
Additional paid-in capital.............................. 32,376 47,674
Accumulated deficit and accumulated comprehensive
loss.................................................. (24,182) (24,182) (24,182)
--------- --------- ---------
Total stockholders' equity.............................. 4,055 19,356
--------- --------- ---------
Total capitalization................................ $9,735 $25,036
========= ========= =========
</TABLE>
This table above excludes:
- - 5,242,004 shares issuable upon the exercise of options outstanding as of
December 31, 1999 at a weighted average exercise price of $0.19 per share;
- - 647,498 shares issuable upon the exercise of warrants outstanding as of
December 31, 1999 at a weighted average exercise price of $1.30 per share;
- - 3,694,662 additional shares available for future grant under our equity
incentive plan, of which options to purchase 1,111,599 shares of common
stock were granted in January 2000; an additional 400,000 shares made
available for future grant under our employee stock purchase plan; and
300,000 shares made available for future grant under our non-employee
directors' stock option plan; and
- - the amendment to our certificate of incorporation upon completion of this
offering to increase our authorized common stock.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
DILUTION
The pro forma net tangible book value of our common stock on September 30, 1999,
giving effect to the sale of shares of preferred stock and the issuance of
shares of preferred stock for a technology license, and reflecting the
conversion of all outstanding shares of preferred stock into shares of common
stock upon the closing of this offering, was approximately $19.4 million, or
approximately $0.70 per share. Pro forma net tangible book value per share
represents the amount of our total tangible assets less total liabilities
divided by the number of shares of common stock outstanding. Dilution in pro
forma net tangible book value per share represents the difference between the
amount per share paid by purchasers of shares of common stock in this offering
and the net tangible book value per share of our common stock immediately
afterwards. Assuming our sale of shares of common stock offered by this
prospectus at an assumed initial public offering price of $ per share, and
after deducting estimated underwriting discounts and commissions and estimated
offering expenses, our net tangible book value at September 30, 1999 would have
been approximately $ million or $ per share. This represents an
immediate decrease in net tangible book value of $ per share to new
investors purchasing shares of common stock in this offering. The following
table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $--
Pro forma net tangible book value per share at September 30,
1999...................................................... $0.70
Increase per share attributable to new investors.......... --
--------- ---------
Pro forma net tangible book value per share after this
offering.................................................. --
Dilution per share to new investors......................... $--
=========
</TABLE>
The following table summarizes, on a pro forma basis as of September 30, 1999,
the differences between the total consideration paid and the average price per
share paid by the existing stockholders and the new investors with respect to
the number of shares of common stock purchased from us. We have assumed an
initial public offering price of $ per share and have not deducted estimated
underwriting discounts and commissions and estimated offering expenses in our
calculations.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New investors.............. -- 0.0% $-- 0.0%
Existing investors......... 27,510,894 100.0 42,358,000 100.0 $1.54
----------- ----------- ------------ -----------
Total.................. 100.0% $42,358,000 100.0%
=========== =========== ============ ===========
</TABLE>
The foregoing discussion and tables assume no exercise of any outstanding stock
options or warrants. The exercise of all options and warrants outstanding as of
September 30, 1999 having an exercise price less than the offering price would
increase the dilutive effect to new investors to $ per share.
If the underwriters exercise their over-allotment option in full, the following
will occur:
- - the pro forma net tangible book value per share after the offerings would be
$ per share, the increase in net tangible book value per share to
existing stockholders would be $ per share and the dilution in net
tangible book value to new investors would be $ per share;
- - the number of shares of common stock held by existing stockholders will
decrease to approximately % of the total number of shares of our common
stock outstanding; and
- - the number of shares held by new investors will increase to shares, or
approximately % of the total number of our common stock outstanding
after this offering.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with the
financial statements and the notes to such statements and "Management's
discussion and analysis of financial condition and results of operations." The
selected data in this section is not intended to replace the financial
statements.
The statements of operations data for the year ended December 31, 1998 and the
period from inception (June 14, 1996) to December 31, 1997 have been derived
from our audited financial statements included elsewhere in this prospectus
which have been audited by Ernst & Young LLP, our independent auditors. Our
results of operations from June 14, 1996 to December 31, 1996 were immaterial.
The statements of operations data for the nine months ended September 30, 1998
and 1999 and the balance sheet data as of September 30, 1999 are derived from
our unaudited financial statements included in this prospectus, but have been
prepared on a basis consistent with our audited financial statements and the
notes thereto and include all adjustments (consisting only of normal recurring
adjustments) that we consider necessary for a fair presentation of the
information. Historical results are not necessarily indicative of future
results. See notes to the financial statements for an explanation of the method
used to determine the number of shares used in computing pro forma basic and
diluted loss per share.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 14, 1996)
THROUGH YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA: (in thousands, except per share amounts)
- ---------------------------------------------------------------------------------------------------------------------------
Revenue:
Contract revenues from collaborations....... $-- $28 $-- $5,898
Costs and expenses:
Research and development.................... 4,568 8,305 5,071 10,165
General and administrative.................. 1,166 2,217 1,855 2,979
Amortization of deferred compensation....... -- -- -- 563
----------------- ----------------- ----------------- -----------------
5,734 10,522 6,926 13,707
----------------- ----------------- ----------------- -----------------
Loss from operations........................ (5,734) (10,494) (6,926) (7,809)
Interest income (expense), net.............. 85 (110) 117 (120)
----------------- ----------------- ----------------- -----------------
Net loss.................................... $(5,649) $(10,604) $(6,809) $(7,929)
================= ================= ================= =================
Net loss per share, basic and diluted....... $(2.25) $(4.01) $(2.59) $(2.87)
================= ================= ================= =================
Weighted average shares used in computing
basic and diluted net loss per share...... 2,512 2,643 2,633 2,764
Pro forma basic and diluted net loss per
share..................................... $(0.58) $(0.34)
================= =================
Shares used in computing pro forma net loss
per share, basic and diluted.............. 18,334 23,418
</TABLE>
- --------------------------------------------------------------------------------
24
<PAGE>
SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance sheet data:
Cash and cash equivalents................................... $9,144 $9,493 $7,192
Working capital............................................. 8,109 3,908 1,269
Total assets................................................ 11,330 12,956 17,161
Capital lease obligations, less current portion............. 1,172 1,652 5,680
Deferred stock compensation................................. -- -- (4,164)
Accumulated deficit......................................... (5,649) (16,253) (24,182)
Total stockholders equity................................... 8,819 5,445 4,055
</TABLE>
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ WITH "SELECTED FINANCIAL
AND OPERATING DATA" AND OUR FINANCIAL STATEMENTS AND NOTES INCLUDED ELSEWHERE IN
THIS PROSPECTUS. THE DISCUSSION IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS STATEMENTS OF OUR
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE
IN THIS PROSPECTUS SHOULD BE READ AS APPLYING TO ALL RELATED FORWARD-LOOKING
STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. OUR ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO THESE DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK FACTORS," AS
WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
We are a post-genomics combinatorial biology company that has developed a new
and faster way to find novel drug targets and to validate the role of those
targets in disease. We intend to develop a portfolio of novel drug candidates
and commercialize the resulting drug products in partnership with corporate
collaborators. We have incurred net losses since inception and expect to incur
substantial and increasing losses for the next several years as we expand our
research and development activities and move our pre-clinical drug candidates
into later stages of development. To date, we have funded our operations
primarily through the sale of equity securities, non-equity payments from
collaborative partners and capital asset lease financings. We received our first
funding from our collaborative partners in December 1998. Including both
research funding and the issuance of equity investments, we received an
aggregate of $6.5 million in 1998 and an aggregate amount of $14.9 million in
1999 from our collaborative partners. As of September 30, 1999, our accumulated
deficit was approximately $24.2 million.
We expect our sources of revenue for the next several years to consist primarily
of payments under our current and future corporate collaborations. Under these
arrangements, sources of revenue may include up front payments, funded research,
milestone payments and royalties. The process of carrying out our research
programs for our collaborative partners and the development of our own
non-partnered products to the later stages of development may require
significant additional research and development expenditures including
preclinical testing and clinical trials. These activities, together with our
general and administrative expenses, are expected to result in substantial
operating losses for the foreseeable future. We will not receive product revenue
unless we or our collaborative partners complete clinical trials, obtain
regulatory approval and successfully commercialize one or more of our products.
To date, we have entered into three collaborative partnerships with major
pharmaceutical companies that are currently contributing to our revenues. A
summary of these partnerships is as follows:
<TABLE>
<CAPTION>
PARTNER RESEARCH PROGRAM COMMENCEMENT DATE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janssen Tumor Growth--Cell Cycle Inhibition December 4, 1998
Pfizer Asthma/Allergies--IgE Production in B Cells January 31, 1999
Novartis Transplant Rejection--T Cell Activation May 26, 1999
Autoimmunity Disease--B Cell Activation August 1, 1999
Pulmonary Lung Inflammation January 1, 2000
</TABLE>
Under the terms of the existing collaborations identified above, our partners
have agreed to provide future research funding of up to approximately
$37 million over the next five-years, $19 million of which is subject to
possible cancellation. In addition, we may receive additional payments upon the
- --------------------------------------------------------------------------------
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
achievement of specific research and development milestones and royalties upon
commercialization of any products.
In order to maintain and increase proceeds from collaborations, we are
addressing several alternatives, including the exploration of new opportunities
with existing and new potential collaborators. All of our partnerships to date
have focused on the early stages of drug discovery, specifically target
discovery and validation. We may continue to engage in collaborations focused on
the early stages of drug discovery. In addition, we currently anticipate that we
will self-fund some of our own research programs to later stages of development
prior to partnering with collaborative partners. Therefore, it is expected that
any future collaborative partnerships will have an expanded focus and could
include high-throughput screening, combinatorial chemistry and/or pre-clinical
evaluations. For some programs, we may also seek to enter into collaborations
for the development of compounds that we have discovered. The timing, the amount
of funds received and the scope of any new collaborations are uncertain and any
compound collaboration will depend on the successful progress of clinical
trials. In addition, as our existing collaborations reach termination, we will
evaluate the status of the collaboration and, if appropriate, seek to negotiate
extensions as long as an extension is determined to be in our best interest.
We recognize revenues from our research collaboration agreements as earned upon
the achievement of performance requirements of the agreements. In addition,
these agreements provide for research funding for a specified number of full
time researchers working on their associated projects. Payments received that
are related to future performance are deferred and recognized as revenue as the
related work is performed. As of September 30, 1999, we have deferred revenues
of approximately $4.4 million.
DEFERRED COMPENSATION
During the year ended December 31, 1998 and the nine months ended September 30,
1999, in connection with the grant of stock options to employees, we recorded
deferred stock compensation totaling $4.7 million, representing the difference
between the deemed fair value of our common stock for financial reporting
purposes on the date these options were granted and the exercise price. This
amount has been reflected as components of stockholders' equity and the deferred
expense is being amortized to expense over the vesting period of the individual
options, generally five years, using the graded vesting method. We recorded
compensation expense of $563,000 for the nine months ended September 30, 1999.
At September 30, 1999, we had a total of $4.2 million remaining to be amortized
over the vesting periods of the stock options. We anticipate that additional
deferred compensation will be recorded for options granted after September 30,
1999 and have recorded deferred stock compensation of approximately
$2.4 million for additional stock options granted in December 1999.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
REVENUES
Contract revenues from collaborations were $5.9 million for the nine months
ended September 30, 1999, compared with no revenues during the nine months ended
September 30, 1998. This increase in 1999 was due to the initiation of our three
corporate collaborations. The collaboration with Janssen was signed in
December 1998 with research support beginning on January 1, 1999 while the
Pfizer collaboration was initiated on January 31, 1999. The Novartis
collaboration, which was signed on May 26, 1999, consists of five research
programs. Of these five programs, one was started on May 26, 1999 with a second
program initiated on August 1, 1999. We expect contract revenue from
collaborations to be a significant component of our total revenues for the
foreseeable future.
- --------------------------------------------------------------------------------
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased to $10.2 million in the first nine
months of 1999, from $5.1 million in the first nine months of 1998, an increase
of $5.1 million. This increase was primarily attributable to increases in
employee costs as our scientific headcount increased from 36 to 58 individuals
and the higher occupancy costs associated with the new building in South San
Francisco, California, which we occupied in March 1999. We expect research and
development expenses to increase in future periods in connection with the
addition of new collaborative partner research programs. In addition, we
anticipate research and development expenses will increase with the advancement
of our non-partnered research programs into later stages of development.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $3.0 million in the first nine months
of 1999, compared with $1.9 million in the first nine months of 1998, an
increase of $1.1 million. This increase was primarily attributable to higher
employee and occupancy costs. We expect that general and administrative expenses
will increase in the future to support the continued growth of our research and
development efforts and to accommodate the new demands associated with operating
as a public company.
NET INTEREST EXPENSE
Net interest expense was $120,000 for the nine months ended September 30, 1999,
compared with a net interest income of $117,000 during the corresponding period
in 1998. Interest income results from our interest bearing balances while
interest expense is the result of our debt associated with fixed asset
purchases.
YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUES
Contract revenue from collaborations was $28,000 in 1998 compared to 1997 in
which we had no collaborative revenue. The revenue is the result of the
initiation of the Janssen collaborative agreement in late December 1998.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased to $8.3 million in 1998, from
$4.6 million in 1997, an increase of $3.7 million. The increase in 1998 was
primarily attributable to increases in employee costs as scientific headcount
increased from 22 individuals to 41 individuals.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses to $2.2 million in 1998, from $1.2 million
in 1997, an increase of $1.0 million. This increase reflects the increase in
higher employee and infrastructure costs required to support the growing
research and development activities.
NET INTEREST EXPENSE
Net interest expense was $110,000 compared to a net interest income of $85,000
in 1997.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations from inception primarily through sales of
preferred stock, contract payments payable to us under our collaboration
agreements and equipment financing arrangements. As of September 30, 1999, we
have received $27.3 million from the sale of equity securities, including
$9.2 million from collaborators, and received $11.5 million in non-equity
payments from
- --------------------------------------------------------------------------------
28
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
collaborators. In addition, we have financed through leases and loans the
purchase of equipment and leasehold improvements totaling approximately
$9.5 million through September 30, 1999.
As of September 30, 1999, we had $7.2 million in cash and cash equivalents as
compared to $9.5 million as of December 31, 1998, a decrease in cash balances of
$2.3 million. This decline in cash balances is derived from our net loss of
$7.9 million and the funding of working capital of $0.9 million offset in part
by the non-cash charges for depreciation and amortization of $1.6 million. We
invested $6.3 million in capital equipment and leasehold improvements, made
$1.0 million in payments associated with our equipment financing arrangements
offset by the receipt of $6.2 million from our equipment financing arrangements.
We received $6.0 million in proceeds from equity securities.
As of September 30, 1999, we had $7.6 million in capitalized lease obligations
in association with our financed purchase of equipment and leasehold
improvements. These obligations are secured by the equipment financed, bear
interest rates in a range of 7% to 15%, and are due in monthly installments
through September 2003. Under the terms of our three equipment financing
agreements, two of these have balloon payments at the end of each loan term
while the other agreement allows us to purchase the assets financed at the fair
market value or 20% of the original acquisition cost at the end of the financing
term. As of September 30, 1999 we had $1.6 million available under equipment
financing arrangements which we expect to utilize during the fourth quarter 1999
and early 2000.
On February 3, 2000, we received approximately $15.0 million, net of issuance
costs, in a private placement in which we sold 2,508,330 shares of preferred
stock at $6.00 per share. In addition, we currently anticipate receiving an
additional $10.0 million after we exercise our right within the Novartis
collaboration agreement in which Novartis will purchase shares in a private
placement at the IPO price. We believe our existing cash resources, including
the proceeds from the private placement and the funds received from the Novartis
investment, plus the proceeds of this offering and anticipated proceeds from
corporate collaborations will be sufficient to satisfy our anticipated cash
requirements through at least 18 months. Our future capital uses and
requirements depend on numerous forward-looking factors. These factors include
and are not limited to the following:
- - our ability to maintain our existing collaboration partnerships;
- - our ability to establish and the scope of our new collaborations;
- - the progress and number of research programs carried out at Rigel;
- - our ability to meet the milestones identified in our collaborative
agreements which trigger payments;
- - the progress and success of preclinical and clinical trials of our drug
candidates;
- - the costs and timing of obtaining, enforcing and defending our patent and
intellectual rights;
- - the costs and timing of regulatory approvals; and
- - expenses associated with unforeseen litigation.
In addition, we are constantly reviewing potential opportunities to expand our
technologies or add to our portfolio of drug candidates. In the future, we may
need further capital in order to acquire or invest in technologies, products or
businesses. For the next several years, we do not expect the cash generated from
our operations to generate the amounts of cash required by our future cash
needs. In order to finance our cash needs, we expect to finance future cash
needs through the sale of equity securities, strategic collaborations and debt
financing. We cannot assure you that additional financing or collaboration and
licensing arrangements will be available when needed or that, if available, this
- --------------------------------------------------------------------------------
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
financing will be obtained on terms favorable to us or our stockholders.
Insufficient funds may require us to delay, scale back or eliminate some or all
of our research or development programs, to lose rights under existing licenses
or to relinquish greater or all rights to product candidates at an earlier stage
of development or on less favorable terms than we would otherwise choose or may
adversely affect our ability to operate as a going concern. If additional funds
are obtained by issuing equity securities, substantial dilution to existing
stockholders may result.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our investment activities is to preserve principal
while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we invest in
may have market risk. This means that a change in prevailing interest rates may
cause the principal amount of the investment to fluctuate. For example, if we
hold a security that was issued with a fixed interest rate at the
then-prevailing rate and the prevailing interest rate later rises, the principal
amount of our investment will decline. To minimize this risk in the future, we
intend to maintain our portfolio of cash equivalents and short-term investments
in a variety of securities, including commercial paper, money market funds,
government and non-government debt securities. In 1998 and 1999, we maintained
an investment portfolio primarily in depository accounts. Due to the short term
nature of these investments, we believe we have no material exposure to interest
rate risk arising from our investments. Therefore, no quantitative tabular
disclosure is provided.
We have operated primarily in the United States and all funding activities with
our collaborators to date have been made in U.S. dollars. Accordingly, we have
not had any exposure to foreign currency rate fluctuations.
IMPACT OF THE YEAR 2000
We use and rely on a wide variety of information technologies, computer systems
and scientific equipment containing computer chips dedicated to a specific task.
Some of our older computer software programs and equipment may not be able to
distinguish between the year 1900 and the year 2000. While we have not
experienced difficulties to date, time-sensitive functions of those software
programs and equipment may misinterpret dates after January 1, 2000 to refer to
the twentieth century rather than the twenty-first century. This could cause
system or equipment shutdowns, failures or miscalculations resulting in
inaccuracies in computer output or disruptions of operations, including
inaccurate processing of financial information and/or temporary inabilities to
engage in normal business activities. In addition to risks associated with our
own computer systems and equipment, we have relationships with, and are to
varying degrees dependent upon, a large number of third parties that provide
information, goods and services to us. These include financial institutions,
suppliers, vendors, research partners and governmental entities. Year 2000
issues affecting our business, if not adequately addressed by us, our
significant suppliers and our significant service providers could have a number
of "worst case" consequences. These include the loss of historical data,
interruption of our research efforts and our inability to continue our research
efforts, any of which could materially disrupt our business, financial condition
and results of operations.
- --------------------------------------------------------------------------------
30
<PAGE>
- --------------------------------------------------------------------------------
BUSINESS
OVERVIEW
We are a post-genomics combinatorial biology company which has developed a new
and faster way to find novel drug targets and to validate the role of those
targets in disease without first knowing the identity or sequence of the genes
involved. We can identify targets for drug development by creating a
disease-like setting that can detect a change in the cellular response. By
creating a map of the various protein-protein interactions in cells that are
involved in a disease process, we can select protein targets for drug
development that are specific to relevant diseases and reduce the probability of
selecting targets leading to drugs that produce side effects. After selecting
drug discovery targets, we continue drug development with the goal of developing
small molecule drugs to address large therapeutic areas. Small molecule drugs
provide the advantage that they can generally be administered orally. In our
first three years of research, we have succeeded in identifying 15 new drug
targets in seven of our nine programs and have generated preclinical candidate
compounds in our IgE mast cell, IgE B cell and E-3 ubiquitin ligase programs. We
currently have programs in asthma/allergy, autoimmunity, transplant rejection,
rheumatoid arthritis/inflammatory bowel disease and cancerous tumor growth. We
have multi-year collaborations with Cell Genesys, Inc. (Cell Genesys), Janssen
Pharmaceutica N.V., a Johnson & Johnson company (Janssen), Neurocrine
Biosciences, Inc. (Neurocrine), Novartis Pharma AG (Novartis) and Pfizer Inc.
(Pfizer).
BACKGROUND
PHARMACEUTICAL INDUSTRY NEED FOR NEW DRUGS AND NOVEL TARGETS
In order to sustain growth, major pharmaceutical companies need to bring
approximately two or more new drugs to market each year. However, it is
currently estimated that, using traditional drug discovery and development
methodologies, pharmaceutical companies are bringing to market, on average, less
than one new drug per year. As a result, major pharmaceutical companies have a
discovery and product pipeline gap. In addition, we believe this demand for new
products will be compounded by the expiration in coming years of patents on
numerous significant revenue-generating drugs.
We believe that several thousand of the more than 100,000 genes in the human
genome will provide potential drug targets directed at specific diseases.
Despite this potential, researchers have only identified and validated
approximately 500 distinct targets for existing drug interventions which serve
as the basis for many pharmaceutical products today. We feel that the existing,
relatively small pool of potential targets limits pharmaceutical companies'
opportunities to develop new drug candidates to satisfy their growth objectives.
Moreover, we believe this situation creates a critical need for tools directed
at novel ways to expand the pool of targets by rapidly identifying and
successfully validating new targets which lead to new chemical entities.
TRADITIONAL DRUG DISCOVERY
The traditional drug discovery process involves testing or screening compounds
in disease models. The process is often undertaken with little knowledge of the
intracellular processes underlying the disease or the specific drug target
within the cell. Consequently, it is necessary to screen a very large number of
arbitrarily-selected compounds in order to obtain a desired change in a disease
model. While this approach sometimes successfully produces drugs, it has a
number of disadvantages:
- - INEFFICIENCY: it is labor intensive, time consuming and inefficient at
identifying and validating targets;
- - LACK OF PRODUCTIVITY: it results in relatively few new drug candidates, or
"hits";
- --------------------------------------------------------------------------------
31
<PAGE>
BUSINESS
- --------------------------------------------------------------------------------
- - LACK OF INFORMATION: it produces limited information about the intracellular
processes or targets to guide target selection and subsequent drug
development; and
- - RISK OF SIDE EFFECTS: it often produces drug candidates with a high risk of
serious side effects, including toxicity.
SUBSEQUENT BIOLOGICAL ADVANCES AND GENOMICS
Beginning in the mid 1970's, pharmaceutical companies began to use a growing
knowledge of cellular and molecular biology to enlarge their understanding of
biochemical interactions within and between cells in order to understand the
cellular basis for disease processes. For example, researchers equipped with a
more thorough understanding of cellular mechanisms relating to blood pressure
regulation were able to identify proteins called angiotensin converting enzymes
(ACE) which regulate molecules causing high blood pressure. By identifying
compounds that act as ACE inhibitors, the researchers developed a family of
highly specific drugs that lower blood pressure without causing serious side
effects.
More recently, pharmaceutical companies have begun to look at the genetic basis
for disease. For example, the Human Genome Project was undertaken to identify
the DNA sequence of all the genes in the human genome, with the hope that
knowledge of the human genome would enable a comprehensive understanding of the
molecular causes of all diseases, and therefore provide a source of targets for
drug discovery. However, merely developing sequence data with respect to genes
does not, on its own, provide information about the cellular function of the
proteins encoded by the genes expressed in a particular tissue at a particular
time under particular disease circumstances. In addition, it fails to tell us
which proteins might make useful targets for compound screening to identify drug
candidates to modulate any of these functions. With more than 100,000 genes in
the human genome, the number of possible combinations of expressed proteins in a
cell and the number of possible interactions of those proteins produce a volume
of information which often obscures rather than illuminates the functional role
of any particular gene in a disease process.
Later efforts to link genes to disease, or functional genomics, have focused on
which genes are responsible for changes in the behavior of cells under disease
conditions. However, the functional connection between particular genes and
their expressed proteins on the one hand, and cellular behavior seen in disease
conditions on the other hand, has remained unknown in the majority of diseases.
For this reason, pharmaceutical companies have sought better means to identify
the genes which are important to cellular behavior and to understand their role
in causing or preventing disease. Whether through gene sequencing or functional
genomics, understanding the functional role of a gene is critical to
understanding, identifying and validating a gene's expressed protein as a target
for compound screening. We believe that there remains a critical need for
research methods which will be able to utilize the information currently
available to identify protein targets quickly and systematically, with increased
probability of discovering new drug candidates.
ROLE OF TARGET VALIDATION
The identification of intracellular protein targets is an important step in the
process of identifying potential drugs. Most drugs are discovered today by
screening collections of libraries of chemical compounds against protein targets
which are part of signaling, or information-transmitting, pathways within cells.
These signaling pathways participate in the regulation of cell behavior in both
normal and diseased cells. However, drug discovery and development often occurs
without first validating the drug target and mechanism of action. If
pharmaceutical companies were to validate a target's role in a disease at an
early stage, they would reduce risks involved in the drug development process,
such as the pursuit of unsuccessful discovery pathways, regulatory delay and
drug side effects.
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A target is regarded as validated if a causal link is established between an
intracellular protein target and a cellular response important in a disease
process. Each drug discovery company has its own standards for deciding whether
a target has been sufficiently validated.
OUR SOLUTION
Our post-genomics combinatorial biology technology addresses the shortcomings of
traditional and genomics-based drug discovery. It is designed to identify
protein targets for compound screening and validate the functional role of those
targets in the disease process. Rather than traditional genomics approaches,
which begin by identifying genes and then search for their functions, we have
developed technologies designed to identify proteins that are demonstrated to
have an important role in a disease pathway. By understanding the disease
pathway, we attempt to avoid studying genes that will not make good drug targets
and focus only on the sub-set of expressed proteins of genes that we believe are
specifically implicated in the disease process.
We begin by developing assays which model the key events in a disease process at
the cellular level. We then use retroviral probes in hundreds of millions of
cells to identify potential protein targets. In addition, we use our two hybrid
protein interaction technology to identify each of the other proteins involved
in the intracellular process and prepare a map of their interactions, thus
giving us a comprehensive picture of the intracellular disease pathway. We
believe that our post-genomics combinatorial biology technology, together with
our two hybrid protein interaction technology, has a number of advantages:
- - IMPROVED TARGET IDENTIFICATION: it focuses only on the sub-set of expressed
proteins of genes believed to be specifically implicated in the disease
process;
- - RAPID VALIDATION OF PROTEIN TARGETS: it produces validated protein targets
more quickly because it uses key events in the disease process as the basis
to design the functional, disease-based screen;
- - IMPROVED DISEASE PATHWAY MAPPING: it produces a comprehensive map of the
intracellular disease pathway enabling the identification of a larger number
of potential protein targets;
- - BETTER INFORMED TARGET SELECTION: it provides a variety of different types
of targets and information concerning the role each plays to better select
targets more susceptible to pharmaceutical intervention;
- - MORE EFFICIENT COMPOUND SCREENING: it increases the probability and speed
that compound screening will identify "hits" because it provides more
detailed knowledge of the target which can be used to guide the design of
the compound screen; and
- - RISK REDUCTION: it may reduce the risk of failure in the drug development
process due to serious side effects, including toxicity or other reasons, by
selecting only targets that are specific to the disease in question and
which have no role in other cell types or signaling pathways.
TECHNOLOGY
We have developed two technologies: post-genomics combinatorial biology and two
hybrid protein interaction. These technologies help us identify and validate new
protein targets and establish a map of the intracellular proteins that define a
specific signaling pathway controlling cellular responses. We believe that,
together, these technologies allow for rapid pathway mapping of complex
biological processes and increase our ability to identify targets for drug
discovery.
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POST-GENOMICS COMBINATORIAL BIOLOGY
Our post-genomics combinatorial biology technology first uses retroviruses to
introduce up to 100 million different peptides or proteins into an equal number
of normal or diseased cells. Each retrovirus delivers a specific gene into an
individual cell, causing the cell to produce a specific peptide or protein.
Then, we stimulate the cells in a manner known to produce a disease-like
behavioral response or phenotype of the disease process. Once in the cell, the
expressed peptide or protein interacts with potential protein targets in the
cell. Then, we sort the cells using our multi-parameter high throughput
fluorescent cell sorters (FACS) at a rate of up to 60,000 cells/second to
collect data on up to 5 different parameters which means that a sort of
100 million cells can be completed in approximately half an hour. By analyzing
the approximately 500 million resulting data points, we can rapidly identify
those few cells containing a peptide or protein that has interacted with a
protein target in a way that causes the cell to change its behavior from
diseased back to normal. Using this method we believe that we can identify the
relatively few targets that are validated in the context of a disease-specific
cellular response.
TWO HYBRID PROTEIN INTERACTION
Our two hybrid protein interaction technology identifies specific proteins that
bind with other peptides or proteins that are known to be part of a signaling
pathway, either because we identified them using our post-genomics combinatorial
biology technology or because the peptides or proteins have been described in
the scientific literature. This two hybrid protein interaction technology is
directed at:
- - mapping an entire protein-protein intracellular functional pathway in
disease relevant cells;
- - finding new proteins interacting with other new and known proteins; and
- - eliminating potential targets rapidly because they interact with multiple
signaling pathways, thus identifying the protein as a less desirable target.
Using this technology, a protein that gives a detectable signal (reporter
protein), such as fluorescence, is split into two inactive parts. One part of
the reporter protein is fused with a specific protein known to be involved in a
signaling disease-relevant pathway (bait protein). Multiple copies of the other
part of the reporter protein are fused one by one with all the proteins known to
be present in the cell type being studied (library protein). When the bait
protein binds to a specific library protein, the two parts of the reporter
protein reunite and become active again, thereby generating a detectable signal.
We employ an improved version of the two hybrid protein interaction method in
yeast cells. In addition, we have developed a proprietary method of employing
the two hybrid protein interaction technology in mammalian cells. Mammalian
cells offer the opportunity to monitor protein-protein interactions in a
potentially more relevant cellular environment.
We also use our two hybrid protein interaction technology to screen identified
protein targets against a library of peptides in order to identify each active
protein-peptide interaction site on the target. This information is useful in
directing our combinatorial chemistry efforts to identify compounds specifically
designed to bind to the functional site on the target.
TARGET VALIDATION
Our target validation begins with our post-genomics combinatorial biology
technology. In contrast to traditional approaches, the first step of our target
validation occurs very early in the research process, saving time and enhancing
the probability that those targets which are identified and pursued are
disease-relevant. Using our post-genomics combinatorial biology, we design a
screen that reflects a key event in the disease process. When one of our
peptides or proteins changes the behavior of a specific cell, this indicates
that we have identified an interaction with a cellular target that is important
to a
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specific disease response. Therefore, this interaction provides immediate
validation of the target in the context of a disease specific cellular response.
This approach also tells us that the peptide or protein interacts with a
functional site on the target since the interaction results in a change in the
behavior of the cell. We further validate the function of specific targets by:
- - using technology to knock out the target from specific cells and see if the
loss of the target from the cell alters the cell's responses to
disease-causing stimuli;
- - altering the structure of the target in order to identify which part of the
target is functionally important; and
- - using peptides that attach to specific sites on the target to change the way
the target works inside the cell.
OUR DISCOVERY PROGRESS: 1997 - 1999
Since 1997, we have detected more than 500 million protein-protein interactions
in cells. We have also discovered more than 10,000 novel protein-protein
interactions in signaling pathways which modify cellular function. We have
mapped the protein interactions of over 150 disease modifying protein targets in
seven disease relevant pathways. We have identified 15 new drugable targets in
our programs: asthma/allergy, autoimmunity, transplant rejection, rheumatoid
arthritis (both E-3 ubiquitin ligase and TNF pathway) and tumor growth (both
cell cycle inhibition and E-3 ubiquitin ligase). We have identified small
molecule lead compounds in three of our programs.
[GRAPHIC]
OTHER TECHNOLOGIES
Our integrated drug discovery platform utilizes the following additional
technologies:
HIGH THROUGHPUT COMPOUND SCREENING (HTS)
Using our FACS System, we conduct screening of small molecule compounds in the
same cell-based disease-specific screens that are used to identify the protein
targets by our post-genomics combinatorial biology technology. This enables us
to screen thousands of compounds in a matter of a few hours, while
simultaneously examining multiple physiological parameters. In addition, we have
established conventional high throughput screens of small molecule compounds on
our validated protein targets
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using biochemical methods similar to those widely used in the biotechnology and
pharmaceutical industry. We have a library of approximately 150,000 synthetic
small molecule compounds having highly diverse molecular structures for our
compound screening activities.
We select for compound screening only those protein drug targets we judge to be
drugable; that is, that meet several criteria:
- - the target's causal relationship to the disease of interest is established;
- - the target's activity is determined to be specific to the disease of
interest;
- - the target is of a protein type, such as an enzyme, for which there is
experience indicating that intervention by a synthetic small molecule
compound would be an effective therapeutic; and
- - the target is novel and provides us freedom of action to pursue drug
discovery without interference from the rights of third parties.
PROTEOMICS
Our proteomics program is an integral part of our target discovery and
validation effort. In contrast to our two hybrid protein interaction technology
which can be used to find single protein-protein interactions, proteomics
techniques can be used to find protein complexes comprised of several protein
targets and to study protein-protein interactions in order to map active
interaction sites on potential protein targets. To this end, our protein
chemistry group uses the most advanced proteomic technologies, including high
resolution two dimensional gel electrophoresis in conjunction with in-gel
tryptic digests followed by mass spectrometry, in order to identify specific
drug targets. In addition, we design and test the effects of different
presentation structures in our peptide libraries, based on the function of
active peptides in cellular assays used in our post-genomics combinatorial
biology technology.
MEDICINAL AND COMBINATORIAL CHEMISTRIES
Our medicinal chemistry activities carry out traditional structure-activity
relationship studies of potential lead compounds and conducts lead optimization
utilizing chemistry techniques to synthesize new analogs of a lead compound with
improved properties. Our combinatorial chemistry activities synthesize compounds
incorporating desirable molecular features.
OUR STRATEGY
Our strategy is to employ our technologies to discover a portfolio of many drug
candidates that may be developed into small molecule therapeutics. We believe
that producing a portfolio of many drug candidates and working in conjunction
with pharmaceutical companies to further develop the candidates greatly
increases our probability of commercial success. By utilizing our technology to
rapidly discover and validate new targets and drug candidates that regulate
them, we believe that we are well positioned to help fill the product pipeline
gap of major pharmaceutical companies.
The key elements of our scientific and business strategy are to:
- - expand, enhance and protect our post-genomics combinatorial biology and our
two hybrid protein interaction technologies;
- - focus on diseases that represent large medical markets with significant
populations that are currently underserved;
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- - structure corporate partnering agreements to permit multiple collaborations
in each disease area by focusing on disease pathways and targets;
- - establish strategic collaborations with pharmaceutical and biotechnology
companies to enhance product development and commercialization and to
partner our future research programs in the later stages of drug
development; and
- - develop small molecule drugs, delivered to intracellular targets.
PRODUCT DEVELOPMENT
We believe that, with a steadily aging population, the main focus of medicine in
the United States and other developed countries is shifting to a greater
emphasis on the prevention and treatment of chronic diseases such as asthma and
rheumatoid arthritis. The parallel trends of the increasing knowledge of drug
targets and the increasing incidence of the diseases treated with small molecule
compounds allow us to exploit our technology for large and fast growing segments
of the pharmaceutical marketplace on a worldwide basis. Our programs address
asthma, allergy, autoimmunity, transplant rejection, rheumatoid arthritis and
inflammatory bowel disease affecting the immune system as well as cancerous
tumor growth. These programs offer potential opportunities to develop drugs for
many therapeutic indications. We believe that there are significant unmet
medical and quality-of-life needs for these diseases that represent large
commercial markets.
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The following table summarizes key information in our nine programs that focus
on specific disease mechanisms:
<TABLE>
<CAPTION>
COLLABORATIVE
DISORDER/DISEASE MECHANISM STATUS KEY ACHIEVEMENTS PARTNER
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
IMMUNE DISORDERS
----------------------------------------------------------------------------------------------------------------------------
Asthma/Allergy IgE receptor on mast cells Preclinical -Preclinical candidate None
development (1) compounds identified
-Cell based high
throughput screening
(HTS) underway
-Protein interaction
pathway map established
IgE production in B cells Target -Preclinical candidate Pfizer
screening (2) compounds identified
-HTS underway
-Protein interaction
pathway map established
-Novel drug targets
identified
----------------------------------------------------------------------------------------------------------------------------
Autoimmunity B cell activation Target -Novel drug targets Novartis
screening (2) identified
----------------------------------------------------------------------------------------------------------------------------
Transplant rejection T cell activation Target -Novel drug targets Novartis
screening (2) identified
----------------------------------------------------------------------------------------------------------------------------
Rheumatoid arthritis/ E-3 ubiquitin ligase Compound -Novel drug targets None
inflammatory bowel screening (3) identified and validated
disease -Preclinical candidate
compounds identified
TNF pathway Target -Protein interaction None
validation (4) pathway map established
-Novel drug targets
identified and validated
----------------------------------------------------------------------------------------------------------------------------
CANCER
----------------------------------------------------------------------------------------------------------------------------
Tumor growth Cell cycle inhibition Target -Protein interaction Janssen
Validation (4) pathway map established
-Novel drug targets
identified and validated
E-3 ubiquitin ligase Compound -Novel drug targets None
screening (3) identified and validated
-Preclinical candidate
compounds identified
Angiogenesis Target -HTS underway Cell Genesys
screening (2)
</TABLE>
- ------------
(1) "PRECLINICAL DEVELOPMENT": PHARMACOLOGY AND TOXICOLOGY TESTING IN ANIMAL
MODELS TO GATHER DATA NECESSARY TO COMPLY WITH APPLICABLE REGULATORY
PROTOCOLS PRIOR TO SUBMISSION OF AN INVESTIGATIONAL NEW DRUG APPLICATION TO
THE FDA.
(2) "TARGET SCREENING": DISEASE MODELED SCREENING IN CELLS USING OUR
POST-GENOMICS COMBINATORIAL BIOLOGY TECHNOLOGY.
(3) "COMPOUND SCREENING": SCREENING OF SMALL MOLECULE COMPOUNDS IN BIOCHEMICAL
AND FACS ASSAYS TO IDENTIFY A COMPOUND WHICH BINDS TO A FUNCTIONALLY ACTIVE
SITE OF A VALIDATED TARGET.
(4) "TARGET VALIDATION": TESTING TO ESTABLISH A CAUSAL LINK BETWEEN AN
INTRACELLULAR PROTEIN TARGET AND A CELLULAR RESPONSE IMPORTANT IN A DISEASE
PROCESS.
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IMMUNE DISORDERS
Many diseases and disorders result from defects in the immune system. Over 50
million people in the United States suffered from allergic and asthmatic
disorders in 1999. Anti-asthmatic and allergy relief medications exceeded $5
billion in worldwide sales in 1997 and have been growing at a 5% annual growth
rate. In 1999, another 3 million to 5 million patients in the United States were
treated for other immune disorders. We currently have six programs in immunology
focused on asthma/allergy (two programs), autoimmunity, transplant rejection,
rheumatoid arthritis and inflammatory bowel disease and three programs in cancer
focused on tumor growth.
ASTHMA/ALLERGY
IgE receptor on mast cells
The goal of this program is to identify compounds that inhibit the secretion of
inflammatory factors resulting from IgE binding to its receptor on mast cells.
IgE is one of several immunoglobulins produced by the body's immune system.
Currently, we have several preclinical candidate compounds which will enter
preclinical studies in animal models. Preliminary studies demonstrate that these
compounds inhibit the ability of IgE to activate its receptor on mast cells.
There is evidence in animal models and early clinical studies that blocking IgE
from binding to mast cells can reduce allergic symptoms in multiple species,
including humans. However, most programs in development today are intravenous
therapeutic antibodies. We believe that small molecule inhibitors of IgE could
play an important role in treatment of such chronic disorders.
IgE production in B cells
In this program, we have been working with our partner, Pfizer, since
January 1999 to identify intracellular drug targets that control the production
of IgE in B cells. We have identified a protein target that appears to regulate
a key event in this pathway that leads to allergic and asthmatic symptoms and a
preclinical candidate compound in this program.
AUTOIMMUNITY & TRANSPLANT REJECTION
Autoimmunity disorders and organ transplant rejection are the result of
inappropriate activation of the immune system. Most existing therapies for
inflammatory diseases also have toxic side effects. A challenge facing all
research groups in this field has been the design of selective and specific
immune system therapeutics that affect only the pathological activities without
negatively affecting the protective activities of the immune system.
Our programs are designed to identify and validate novel molecules which
specifically signal cell activation and cell death, or apoptosis, of T cells and
B cells. Activation and apoptosis determine the quality, magnitude, and duration
of immune responses. Activation pathways are initiated by the binding of antigen
(foreign protein) to specific surface receptors on T cells or B cells. This sets
off an intracellular cascade of signals, resulting in changes in gene expression
and the production of proteins that drive the immune response or lead to
antibody production and secretion in B cells. The apoptosis signals prevent
overactivation or prolonged activation of the T and B cells, which can lead to
disease or organ rejection. We are identifying T cell and B cell-specific drug
targets that are effective in modulating immune-mediated processes.
B cell activation
The goal of the B cell activation program is to prevent antibody secretion by
activated B cells, an important mechanism in autoimmunity. We have commenced
screening using our post-genomics combinatorial biology technology and have
identified novel drug targets. This program has been partnered with Novartis
since August 1999.
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T cell activation
The goal of our T cell program is to identify early steps in the process of T
cell activation. We have commenced screening using our post-genomics
combinatorial biology technology and have identified novel drug targets. This
program has been partnered with Novartis since May 1999.
RHEUMATOID ARTHRITIS & INFLAMMATORY BOWEL DISEASE
We have programs directed at two different cellular pathways for these
inflammatory diseases:
E-3 ubiquitin ligase
This program is focused on characterizing and developing specific inhibitors of
protein-degrading enzymes, named E-3 ubiquitin ligases, in inflammation. The
levels of many intracellular proteins that play a critical role in signaling
pathways are regulated by this protein-degrading process. Many signaling
proteins control cell function through active intermediates whose levels vary
rapidly during different phases of a physiologic response. Disease processes can
be treated by up-regulating or down-regulating these key signaling proteins as a
way to enhance or dampen specific cellular responses. This principle has been
successfully used in the design of a number of therapeutics for the treatment of
inflammation. We also anticipate that, as the field of E-3 ubiquitin ligase
biology evolves, inhibitors can be identified which will have clinical utility
in metabolic diseases and possibly in neurodegenerative processes. We have
screened over 60,000 small molecules against several members of the E-3
ubiquitin ligase family, and have identified several small molecule compounds
which, based on preliminary data, appear to be potent and non-toxic inhibitors.
TNF pathway
This second program focuses on blocking the inflammatory signals of the tumor
necrosis factor-alpha (TNFa) pathway, a pathway validated by existing antibody
therapies as an important site for therapeutic intervention. We have identified
and validated several novel members of this signaling pathway which are moving
into both biochemical and cell based high throughput compound screens. Our
preliminary results suggest that the targets we have identified in the TNFa
pathway regulate inflammatory responses in specific cell types, thus potentially
making small molecule compounds directed at these targets more disease specific.
In addition, these small molecules will be less likely to exhibit the side
effects of chronic administration of anti-TNF antibodies or antibodies directed
at the TNFa receptor.
Additionally, our scientists have identified potential drug targets in the TNF
pathway that protect T cells from apoptotic signals, and have used those
interactions to identify a protective protein termed Toso. When T cells are
activated, Toso production is activated and in turn causes other intracellular
proteins to block apoptotic signals. Thus Toso may protect activated T cells
from apoptosis. We are investigating Toso inhibition as a method of selectively
killing activated disease-causing T cells.
CANCER
Cancer is a group of diseases characterized by the uncontrolled growth and
proliferation of cells. This growth invades vital organs and often results in
death. The United States market for branded cancer drugs totaled approximately
$7.0 billion in 1999 and is projected to grow at an 11% annual growth rate.
Cancer is the second leading cause of death in the United States, exceeded only
by cardiovascular disease. In 1999, an estimated 1.2 million people were
diagnosed with cancer, and more than 500,000 patients died of cancer in the
United States. Although there have been improvements in cancer therapies over
the last decade, there remains a significant medical need for the development of
both more effective and less toxic drugs for these diseases.
We are currently pursuing three important pathways directed against tumor
growth:
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Cell cycle inhibition
This program is directed toward the cell cycle checkpoint pathway. The
proliferation of normal cells is controlled by built-in safety mechanisms in the
cell cycle, termed checkpoints, that ensure that only cells with normal genetic
material can progress through the cell cycle and divide. Cells with genetic
mutations are recognized and shunted into the apoptosis pathway to protect the
organism from cancer and other genetic disorders. It is estimated that more than
50 percent of all human tumors contain cancer cells that have lost one or more
crucial checkpoint genes. Cancer cells also can carry mutations in another group
of normal cell genes that mimic extracellular proliferation signals, causing
tumor cells to continue to divide even in the absence of normal cell growth
signals. The net result of these genetic mutations is uncontrolled cell division
and disease. We have collaborated with our partner Janssen since December 1998
to identify intracellular drug targets involved in cell cycle control. We have
identified two validated targets in this program which are expected to enter
small molecule screens.
E-3 ubiquitin ligase
Our second antitumor program is focused on the E-3 ubiquitin ligase pathway. The
goal of this program is to examine specific inhibitors of ubiquitin ligases
implicated in regulating mitosis, or cell division, in a number of transformed
cell lines and normal cells. We also have identified several small molecule
compounds in this program.
Angiogenesis
Our third antitumor program is directed toward the angiogenesis pathway.
Angiogenesis is defined as the growth of new blood vessels. In diseased
circumstances or in oxygen deficient conditions, angiogenesis is stimulated by
the synthesis and release of specific pro-angiogenic factors. In contrast to
normal angiogenesis, tumor angiogenesis is a continuous process. As a
significant proportion of tumors are dependent on continued angiogenesis,
inhibition of this process blocks tumor growth which often leads to complete
tumor deterioration. Thus, we believe therapeutic intervention of tumor-promoted
angiogenesis represents an important form of anti-tumor therapy. We have
established and initiated two screens in capillary endothelial cells using our
post-genomics combinatorial biology technology in order to identify targets in
the angiogenesis pathway.
RESEARCH AND DEVELOPMENT EXPENSES
Our research and development expenses were $10.2 million for the nine months
ended September 30, 1999, $8.3 million in 1998 and $4.6 million in 1997.
CORPORATE COLLABORATIONS
To fund a wide array of research and development programs, we have established
and will continue to pursue corporate collaborations with pharmaceutical and
biotechnology companies. We currently have collaborations on six of our nine
research programs, including one with Janssen relating to oncology therapeutics
and diagnostics, one with Pfizer relating to asthma and allergy therapeutics,
three with Novartis relating to immunology, and one with Cell Genesys relating
to angiogenesis.
As of December 31, 1999, we had received a total of $21.4 million, including
$9.0 million in research funding from these collaborators. In addition, we have
a number of scientific collaborations with academic institutions and
biotechnology companies under which we have in-licensed technology. We intend to
pursue further collaborations as appropriate.
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In most of our collaborations, inventions are intended to be owned by the
employer of the inventor or inventors thereof in accordance with United States
patent law, subject to licenses or assignments granted in the agreements.
JANSSEN
Effective December 1998, we entered into a three-year research collaboration
with Janssen, a Johnson & Johnson company, to identify, discover, and validate
novel drug targets that regulate cell cycle, and, specifically, the
identification of drug targets and the active peptides that bind to them that
can restore a mutated cell's ability to stop uncontrolled cell division. Under
the agreement, we will provide certain assays and associated technology to
Janssen for the assessment of the alteration or normalization of the
dysfunctional cell cycles of cancer cells for Janssen's internal research
purposes.
Once a drug target and the associated active peptide are identified and
validated, Janssen shall have the exclusive right to conduct compound screening
on such drug target and associated active peptide for three years thereafter. If
Janssen fails to initiate compound screening with the drug target and associated
active peptide during this three year period, or if screening is initiated by
Janssen but Janssen fails to pursue such screening in a manner consistent with
its normal business practices, Janssen will lose its rights to the drug target
and associated active peptide, and we shall have an exclusive license to the
drug target and associated active peptide on a worldwide, royalty-free basis.
Under the collaboration, Janssen has the exclusive right to utilize our
technology and technology developed during the collaboration to discover,
develop, identify, make, and commercialize certain products on a worldwide
basis. These products are:
- - diagnostic products which are either a component of a drug target and
associated active peptide, identified by or on behalf of us or Janssen in an
assay developed during the collaboration, or identified in a Janssen
screening assay as a result of Janssen's internal research;
- - products identified by or on behalf of Janssen as a result of Janssen's
internal research;
- - products identified by or on behalf of either us or Janssen in an assay
which incorporates a drug target and associated active peptide delivered to
Janssen by us; and
- - products which contain a component of a drug target and associated active
peptide, or the functional equivalent of a component.
Janssen also has a non-exclusive right to use our technology, and technology
developed during the research collaboration, to the extent necessary to use the
assays we transfer to Janssen for internal research. Janssen's rights are
subject to its obligation to provide research funding for the collaboration,
make milestone payments and up-front payments to us, and pay royalties to us on
the sales of products, as described above.
We will have the non-exclusive right to use any technology developed by Janssen
during the research collaboration, and any improvements to our technology
developed by Janssen during its internal research, on a royalty-free and
worldwide basis. However, during the first 18 months after the signing date of
the agreement, we may not enter into a research collaboration with a third party
to identify drug targets and the associated active peptides which cause
alterations in the cell cycle of human tumor cells.
The research collaboration will terminate (three years after the effective date
of the agreement) unless the agreement is terminated, or the research
collaboration is extended for up to two additional one year periods at Janssen's
option.
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The Johnson & Johnson Development Corporation, the investment entity affiliated
with Janssen, purchased 1,500,000 shares of our Series D preferred stock at a
price per share of $2.00 in connection with our Series D financing and purchased
166,666 shares of our Series E preferred stock at a price per share of $6.00 in
connection with our Series E financing.
PFIZER
Effective January 1999, we entered into a two-year research collaboration with
Pfizer, renewable by Pfizer for an additional year, to identify intracellular
drug targets that control the production of IgE, a key mediator in allergic
reactions and asthma in B cells. We will provide the following technology
developed or identified during and pursuant to the research collaboration to
Pfizer:
- - drug targets;
- - technology associated with identified drug targets;
- - technology necessary for Pfizer's performance of its research collaboration
obligations; and
- - technology necessary for Pfizer's performance of HTS on identified drug
targets.
Pfizer will exclusively own drug targets for which it has initiated HTS. We will
have no obligation to Pfizer with regard to any drug target Pfizer does not
select for HTS. During the research collaboration, we may not conduct research
within the scope of the research collaboration by ourselves or with any third
party except in connection with the research collaboration with Pfizer.
We and Pfizer each have the non-exclusive right to use for research purposes the
technology of the other which is disclosed or developed during the research
collaboration, excluding our peptide libraries and proprietary cell lines. Under
the collaboration, Pfizer also has the exclusive, worldwide right to develop and
market diagnostic and therapeutic products for humans and animals which were
identified by Pfizer in HTS and modulate the activity of a drug target
identified in the research collaboration. Pfizer's rights to develop and market
such products are subject to its obligation to provide research funding to us
for a minimum of two years, as well as cash, up front payments, research
milestones, and royalties on the sales of these products.
In addition to typical termination events, Pfizer may terminate this agreement
if Dr. Donald Payan's association with us as our chief scientific officer or
similar role ends and we and Pfizer cannot agree on a successor acceptable to
Pfizer.
Pfizer purchased 1,000,000 shares of Series D preferred stock at a price per
share of $2.00 in connection with our Series D financing.
NOVARTIS
In May 1999, we signed an agreement for the establishment of a broad
collaboration with Novartis, whereby the two companies will work together on
five different five-year research projects to identify drug targets for products
that can treat, prevent, or diagnose the effects of human disease. Two of the
research projects will be conducted jointly by Novartis and us, and the other
three research projects will be conducted at Novartis. The first research
project, a joint research project, is focused on identifying small molecule drug
targets that regulate T cells. The second research project, also a joint
research project, relates to the identification and validation of small molecule
drug targets that can mediate specific functions of B cells. The third research
project, a project carried out at Novartis, is focused on identifying small
molecule drug targets that regulate pulmonary inflammation. Novartis will select
the remaining two projects by May 2001.
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BUSINESS
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Once a drug target from any of the five research projects has been identified
and validated, Novartis shall have the right to conduct compound screening on
such drug target on an exclusive basis for two years thereafter. Novartis will
have the option to extend this exclusive right for up to five additional
one-year periods so long as Novartis pays us an annual fee for such right and
satisfies certain diligence conditions. Upon the expiration or termination of
this right, both we and Novartis shall have the non-exclusive right to use, and
allow others to use, such drug target for compound screening.
Under the collaboration, Novartis has the non-exclusive right to utilize our
post-genomics combinatorial biology technology and two hybrid protein
interaction technology for confirmational and similar uses relating to validated
drug targets, including uses necessary for the further development,
registration, and commercialization of products whose principal mechanism of
action is based upon, derived or discovered from, or discovered with the use of,
a drug target. Novartis also has the exclusive right to utilize other of our
technology and technology developed during the collaboration, to make and
commercialize these products. Novartis' rights are subject to its obligation to
provide research funding for the joint research projects, to pay milestone
payments and up front payments to us, and to pay third party royalties
associated with Novartis' use of certain of our technology.
Under the collaboration, we will have the non-exclusive right to use any
improvements to our post-genomics combinatorial biology technology and two
hybrid protein interaction technology developed during a research project on a
royalty-free and worldwide basis.
Novartis may terminate the joint research projects two years after the
applicable commencement date, or three and one half years after the applicable
commencement date if Novartis gives six months prior notice of its termination.
In some circumstances, Novartis also may terminate either of the joint research
projects after the expiration of 12 months after the applicable commencement
date. Novartis may terminate the research projects to be conducted at Novartis
at any time.
Novartis purchased two million shares of our Series D preferred stock at a per
share purchase price of $2.00 in connection with our Series D financing.
Novartis also entered into an agreement with us which provides that, in certain
circumstances, we may elect to sell Novartis up to $10.0 million of our stock.
Such sale may be made in a private placement of our securities or as part of our
initial public offering.
CELL GENESYS
In September 1999, we established a research collaboration and license agreement
with Cell Genesys. The goal of the research collaboration is to use our
post-genomics combinatorial biology technology to identify novel therapeutic
peptide, protein, and gene products in the field of gene therapy. Cell Genesys
also will be granted exclusive, royalty-free worldwide rights to make, use, and
commercialize therapeutic peptide, protein and gene products in the field of
gene therapy. Cell Genesys also will be granted the right to make and use the
intracellular drug targets with which their gene therapy products bind for the
sole purpose of the research and development of gene therapy products. Cell
Genesys also has the option to obtain rights under some of our cell lines and
associated technology to make and commercialize gene therapy products.
In exchange for our performance of the research and the license granted to Cell
Genesys, we were granted a royalty-free, worldwide right to some Cell Genesys
patents and technology pertaining to retroviral gene delivery technology for use
in the field of our post-genomics combinatorial biology. Each company will pay
to the other company third-party sublicensing fees and royalties associated with
the grant of the licenses discussed above, and fund their own research.
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NEUROCRINE BIOSCIENCES
In addition to our nine programs focusing on specific disease mechanisms,
effective December 1997, we entered into a two-year research collaboration with
Neurocrine, renewable for additional one-year periods, to discover novel
molecular targets involved in glial cell activation and to discover small
molecule inhibitors of protein interactions which are not involved in glial cell
activation. We will use our unique intracellular combinatorial libraries
designed to allow screening of glial cell signaling pathways, to discover drug
targets involved in glial cell activation. Neurocrine will use several of its
technologies and proprietary chemical libraries to screen drug targets delivered
to it by us which are not involved in glial cell activation.
Under the terms of the agreement, Neurocrine has the exclusive, royalty-free
right to utilize our technology and technology developed during the research
collaboration to develop, make, and commercialize on a worldwide basis, products
which incorporate or are discovered using a drug target involved in glial cell
activation or a peptide identified or produced by us which binds to this type of
drug target. We have the exclusive, royalty-free right to utilize Neurocrine
technology and technology developed during the research collaboration to
develop, make, and commercialize on a worldwide basis, products which
incorporate or are discovered using a drug target not involved in glial cell
activation or a peptide identified or produced by Neurocrine which binds to this
type of drug target. Each company will assign to the other company its rights in
proprietary technology and technology developed during the research
collaboration which is related to the other company's products described above.
Each company will fund their own research under the collaboration.
INTELLECTUAL PROPERTY
We will be able to protect our technology from unauthorized use by third parties
only to the extent that it is covered by valid and enforceable patents or are
effectively maintained as trade secrets. Accordingly, patents or other
proprietary rights are an essential element of our business. As of December 31,
1999, we have 56 pending patent applications in the United States and
corresponding foreign patent applications. At the same date, at least seven
patent applications had been filed in the United States by or on behalf of
universities which had granted us exclusive license rights to the technology. To
date, no patents have issued to us but we have received notification from the
United States Patent Office that it intends to allow claims in one of our patent
applications. Our policy is to file patent applications to protect technology,
inventions and improvements to inventions that are commercially important to the
development of our business. We seek United States and international patent
protection for a variety of technologies, including: new screening methodologies
and other research tools; target molecules that are associated with disease
states identified in our screens; and lead compounds that can affect disease
pathways. We also intend to seek patent protection or rely upon trade secret
rights to protect other technologies that may be used to discover and validate
targets and that may be used to identify and develop novel drugs. We seek
protection, in part, through confidentiality and proprietary information
agreements. We are a party to various other license agreements that give us
rights to use technologies in our research and development.
COMPETITION
We face, and will continue to face intense competition from pharmaceutical and
biotechnology companies, as well as academic and research institutions and
government agencies, both in the United States and abroad. Some of these
competitors are pursuing the development of pharmaceuticals that target the same
diseases and conditions as our research programs. Our major competitors include
fully integrated pharmaceutical companies that have extensive drug discovery
efforts and are developing
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novel small molecule pharmaceuticals. We face significant competition from
organizations that are pursuing the same or similar technologies, including the
discovery of targets that are useful in compound screening, as the technologies
used by us in our drug discovery efforts. Our competitors or their collaborative
partners may utilize discovery technologies and techniques or partner more
rapidly or successfully than we or our collaborators are able to do.
Many of these companies and institutions, either alone or together with their
collaborative partners, have substantially greater financial resources and
larger research and development staffs than we do. In addition, many of these
competitors, either alone or together with their collaborative partners, have
significantly greater experience than we do in:
- - identifying and validating targets;
- - screening compounds against targets; and
- - undertaking preclinical testing and clinical trials.
Accordingly, our competitors may succeed in obtaining patent protection,
identifying or validating new targets or discovering new drug compounds before
us.
Competition may also arise from:
- - new or better methods of target identification or validation;
- - other drug development technologies and methods of preventing or reducing
the incidence of disease;
- - new small molecules; or
- - other classes of therapeutic agents.
Developments by others may render our product candidates or technologies
obsolete or noncompetitive. We face and will continue to face intense
competition from other companies for collaborative arrangements with
pharmaceutical and biotechnology companies, for establishing relationships with
academic and research institutions and for licenses to additional technologies.
These competitors, either alone or with their collaborative partners, may
succeed in developing technologies or products that are more effective than
ours.
Our ability to compete successfully will depend, in part, on our ability to:
- - identify and validate targets;
- - discover candidate drug compounds which interact with the targets we
identify;
- - attract and retain scientific and product development personnel;
- - obtain patent or other proprietary protection for our new drug compounds and
technologies; and
- - enter commercialization agreements for our new drug compounds.
GOVERNMENT REGULATION
If our potential preclinical compounds become ready to enter clinical testing,
our ongoing development activities will be subject to extensive regulation by
numerous governmental authorities in the United States and other countries,
including the FDA under the federal Food, Drug and Cosmetic Act. The regulatory
review and approval process is expensive and uncertain. Securing FDA approval
requires the submission of extensive preclinical and clinical data and
supporting information to the FDA for each
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indication to establish a product candidate's safety and efficacy. The approval
process takes many years, requires the expenditure of substantial resources and
may involve ongoing requirements for post-marketing studies. Before commencing
clinical investigations in humans, we must submit to, and receive approval from,
the FDA of an IND. We expect to rely on some of our collaborative partners to
file IND applications and generally direct the regulatory approval process for
certain of our products. If we succeed in developing products that receive
regulatory approval for marketing in the United States or abroad, the
manufacturing and marketing of our products will also be subject to extensive
governmental regulation.
Outside the United States, our ability to market a product is contingent upon
receiving a marketing authorization from the appropriate regulatory authorities.
The requirements governing the conduct of clinical trials, marketing
authorization, pricing and reimbursement vary widely from country to country. At
present, foreign marketing authorizations are applied for at a national level,
although within the European Community, or EC, registration procedures are
available to companies wishing to market a product in more than one EC member
state. If the regulatory authority is satisfied that adequate evidence of
safety, quality and efficacy has been presented, a marketing authorization will
be granted. This foreign regulatory approval process involves all of the risks
associated with FDA clearance.
EMPLOYEES
As of December 31, 1999, we employed 83 persons, of whom 23 hold Ph.D. or M.D.
degrees and 3 hold other advanced degrees. Approximately 66 employees are
engaged in research and development, and 17 support administration, finance,
management information systems, facilities and human resources. None of our
employees is represented by a collective bargaining agreement, nor have we
experienced work stoppages. We believe that our relations with our employees are
good.
FACILITIES
Our facilities consist of approximately 61,000 square feet of research and
office space located at 240 East Grand Avenue, South San Francisco, California
that is leased to us until 2015. We have options to renew these leases for 2
additional periods of 5 years each. We believe our facility will meet our space
requirements for research and development and administration functions through
the year 2001.
SCIENTIFIC ADVISORY BOARD
We utilize scientists and physicians to advise us on scientific and medical
matters as part of our Scientific Advisory Board including, experts in human
genetics, mouse genetics, molecular biology, biochemistry, cell biology,
chemistry, infectious diseases, immunology and structural biology. Generally,
each of our scientific and medical advisors and consultants receives an option
to purchase our common stock and an honorarium for time spent assisting us. The
following is a list of our Scientific Advisory Board members:
GARRY P. NOLAN, PHD, our co-founder and Chairman of the Scientific Advisory
Board, is Assistant Professor in the Department of Molecular Pharmacology and
Department of Microbiology and Immunology at Stanford University Medical Center.
ROBIN G. COOPER, DSC, PHD, is former Research Advisor at Eli Lilly and Co, and
presently President of Cooper Consulting Inc.
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CHARLES S. CRAIK, PHD, is Professor of Pharmaceutical Chemistry and
Pharmacology, Biochemistry and Biophysics, and Director of the Chemistry and
Chemical Biology Graduate Group at the University of California San Francisco.
DANIEL R. LITTMAN, MD, PHD, is the Coordinator of the Molecular Pathogenesis
Program, Skirball Institute of Biomolecular Medicine, Professor of Microbiology
and Pathology at the New York University School of Medicine and Investigator,
Howard Hughes Medical Institute.
RICHARD LOCKSLEY, MD, is Professor, Departments of Medicine and
Microbiology/Immunology, Chief of the Division of Infectious Diseases, and
Investigator, Howard Hughes Medical Institute, at the University of California
San Francisco.
RICHARD SCHELLER, PHD, is Professor of Molecular and Cellular Physiology and
Investigator, Howard Hughes Medical Institute at Stanford University.
KEVAN M. SHOKAT, PHD, is Associate Professor of Cellular and Molecular
Pharmacology at the University of California San Francisco, and Department of
Chemistry at University of California Berkeley.
BRANIMIR I. SIKIC, MD, is Professor of Medicine at Stanford University School of
Medicine, Director of the General Clinical Research Center at Stanford, and
Director of the Clinical Trials Office of the Stanford Clinical Cancer Center.
RICHARD ULEVITCH, PHD, is Chairman of the Department of Immunology at the
Scripps Research Institute.
MATTHIAS WABL, PHD, is Professor of Microbiology and Immunology in the
Department of Microbiology and Immunology at the University of California San
Francisco.
CLINICAL ADVISORY BOARD
In addition to our Scientific Advisory Board, we utilize a number of scientists
and physicians to advise us on the scientific and medical matters associated
with clinical trials. This group is known as our Clinical Advisory Board. The
following is a list of our Clinical Advisory Board members:
THOMAS A. RAFFIN, MD, Chairman of our Clinical Advisory Board, is Colleen and
Robert Haas Professor of Medicine and Biomedical Ethics, Chief of the Division
of Pulmonary and Critical Care Medicine, and Co-Director of the Center for
Biomedical Ethics at Stanford University Medical Center.
DENNIS A. CARSON, MD, is Professor of Medicine in the Department of Medicine at
the University of California San Diego and Director of the Sam and Rose Stein
Institute on Aging.
ALAN R. LEFF, MD, is Professor of Medicine, Neurobiology, Pharmacology and
Physiology, Pediatrics, Anesthesia and Critical Care, Clinical Pharmacology and
Cell Physiology and Chief of the Division Pulmonary and Critical Care Medicine
at the University of Chicago, Chicago, Illinois.
ROBERT S. MUNFORD, MD, is Professor of Internal Medicine and Microbiology at the
University of Texas Southwestern Medicine Center in Dallas, Texas.
GLENN D. ROSEN, MD, is Assistant Professor in the Division of Pulmonary and
Critical Care Medicine at Stanford University Medical Center.
LEGAL PROCEEDINGS
We are not a party to any pending material litigation.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below is the name, age, position and a brief account of the business
experience of each of our executive officers and directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
James M. Gower.......................... 51 President, Chief Executive Officer and
Director
Donald G. Payan, MD..................... 51 Executive Vice President and Chief
Scientific Officer and Director
Brian C. Cunningham..................... 56 Senior Vice President, Chief Operating
Officer, Chief Financial Officer and
Secretary
James H. Welch.......................... 42 Vice President, Finance and
Administration and Assistant Secretary
Jean Deleage, PhD(1).................... 59 Director
Alan D. Frazier(1)(2)................... 48 Director
Tak W. Mak, PhD......................... 53 Director
Walter H. Moos, PhD(1)(2)............... 45 Director
</TABLE>
- ------------
(1) MEMBER OF THE AUDIT COMMITTEE.
(2) MEMBER OF THE COMPENSATION COMMITTEE.
JAMES M. GOWER Mr. Gower joined us as our President, Chief Executive Officer and
as a member of our board of directors in January 1997. From 1992 to March 1996,
Mr. Gower was President and Chief Executive Officer of Tularik, Inc., a
biotechnology company developing small-molecule drugs regulating gene
expression. Prior to Tularik, Mr. Gower spent 10 years at Genentech, Inc., a
biopharmaceutical company, where he most recently served as Senior Vice
President. During his ten years at Genentech, Mr. Gower was responsible for
business development and sales and marketing functions. In addition, he
established and managed Genentech's foreign operations in Canada and Japan and
served as President of Genentech Development Corporation. Mr. Gower serves on
the board of directors of Cell Genesys, Inc. He holds a BS and an MBA in
operations research from the University of Tennessee.
DONALD G. PAYAN, MD Dr. Payan is our co-founder, and has been a member of our
board of directors since July 1996 and has served as our Executive Vice
President and Chief Scientific Officer since January 1997. From January 1997 to
July 1998, he also served as our Chief Operating Officer. From July 1996 to
January 1997, Dr. Payan served as our President and Chief Executive Officer.
From December 1995 to May 1996, Dr. Payan was Vice President of AxyS
Pharmaceuticals, Inc., a biopharmaceutical company. From September 1993 to
December 1995, Dr. Payan was the founder and Executive Vice President and Chief
Scientific Officer of Khepri Pharmaceuticals, Inc. which merged with AxyS
Pharmaceuticals. Dr. Payan continues his association with the University of
California, San Francisco, which began in 1982, where he is currently an Adjunct
Professor of Medicine and Surgery. Dr. Payan holds a BS and an MD from Stanford
University.
BRIAN C. CUNNINGHAM Mr. Cunningham has been our Secretary since July 1996. In
July 1998, he joined us as Senior Vice President and Chief Operating Officer and
in February 1999, he also became our Chief Financial Officer. From January 1989
to September 1998, Mr. Cunningham was a partner in
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MANAGEMENT
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the law firm Cooley Godward LLP where he was head of the Life Sciences Group and
the Health Care Group and is currently Of Counsel. From May 1982 to
December 1989, he served as Vice President, Secretary and General Counsel of
Genentech Inc. Mr. Cunningham holds a BS in engineering science and a JD from
Washington University.
JAMES H. WELCH Mr. Welch joined us as our Vice President, Finance and
Administration, and Assistant Secretary in May 1999. From June 1998 to
May 1999, he served as an independent consultant at various companies. From
February 1997 to June 1998, Mr. Welch served as Chief Financial Officer of
Biocircuits Corporation, a manufacturer of medical diagnostic equipment, and
from June 1992 to February 1997, he served as Corporate Controller of
Biocircuits. Previously, Mr. Welch held various positions at NeXT
Computer, Inc., most recently as Division Controller. Mr. Welch holds a BA in
business administration from Whitworth College and an MBA from Washington State
University.
JEAN DELEAGE, PHD Dr. Deleage joined us as a director in January 1997.
Mr. Deleage is a founder and managing general partner of Alta Partners, a
venture capital partnership investing in information technologies and life
science companies. From 1979 to 1996, Dr. Deleage was a managing partner of
Burr, Egan, Deleage & Co., a venture capital firm. Dr. Deleage was the founder
of Sofinnova, a venture capital organization in France, and Sofinnova, Inc., the
U.S. subsidiary of Sofinnova. Dr. Deleage currently serves on the board of
directors of Flamel Technologies S.A. Dr. Deleage received a Baccalaureate in
France, a Masters Degree in electrical engineering from the Ecole Superieure
d'Electricite, and a PhD in Economics from the Sorbonne.
ALAN D. FRAZIER Mr. Frazier joined us as a director in October 1997. In 1991,
Mr. Frazier founded Frazier & Company, a venture capital firm, and has served as
the managing principal since its inception. From 1983 to 1991, Mr. Frazier
served as Executive Vice President, Chief Financial Officer and Treasurer of
Immunex Corporation, a biopharmaceutical company. From 1980 to 1983,
Mr. Frazier was a principal in the Audit Department of Arthur Young & Company
(now Ernst & Young). He also serves on the board of trustees of the Fred
Hutchinson Cancer Research Center, the Technology Alliance of Washington,
Voyager Capital's Advisory Board and the Washington Venture Capital Association.
Mr. Frazier holds a BA in economics from the University of Washington.
TAK W. MAK, PHD Dr. Mak joined us as a director since January 1997. Dr. Mak is
currently the Vice President of Research and Director of the Amgen Institute in
Toronto. Dr. Mak is also a professor for the Departments of Medical Biophysics
and Immunology at the University of Toronto where he was appointed professorship
in 1997. Since July 1974, Dr. Mak has been associated with the Ontario Cancer
Institute/Princess Margaret Hospital in Toronto as a staff scientist including
serving as Head of the Division of Cellular and Molecular Biology from April
1991 to February 1993. Dr. Mak holds a BS and an MS in biochemistry from the
University of Wisconsin, and a PhD in biochemistry from the University of
Alberta.
WALTER H. MOOS, PHD Dr. Moos joined us as a director since March 1997. Since
1997, Dr. Moos has served as the Chairman and Chief Executive Officer of
MitoKor, a biotechnology company. From 1991 to 1997, he served as Corporate Vice
President and Vice President, Research and Development in the Technologies
Division of Chiron Corporation, a biotechnology company. From 1982 to 1991,
Dr. Moos held several positions at the Parke-Davis Pharmaceutical Research
Division of the Warner-Lambert Company, last holding the position of Vice
President, Neuroscience and Biological Chemistry. He has been an Adjunct
Professor at the University of California, San Francisco, since 1992. Dr. Moos
holds an AB from Harvard University and a PhD in chemistry from the University
of California, Berkeley.
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Our executive officers are appointed by our board of directors and serve until
their successors are elected or appointed. There are no family relationships
among any of our directors or executive officers. No director has a contractual
right to serve as a member of our board of directors.
BOARD COMMITTEES
AUDIT COMMITTEE
Our audit committee, consisting of Drs. Deleage and Moos and Mr. Frazier,
reviews our internal accounting procedures and the services provided by our
independent auditors.
COMPENSATION COMMITTEE
Our compensation committee, consisting of Mr. Frazier and Dr. Moos, reviews and
recommends to our board of directors the compensation and benefits of all our
officers and establishes and reviews general policies relating to compensation
and benefits of our employees.
DIRECTOR COMPENSATION
We do not provide cash compensation to members of our board of directors for
serving on our board of directors or for attendance at committee meetings.
Members of our board of directors are reimbursed for some expenses in connection
with attendance at board and committee meetings. In consideration for services
as non-employee directors, on November 12, 1998, we granted an option to
purchase 20,000 shares of common stock to each of Drs. Mak and Moos at an
exercise price of $0.20 per share. The $0.20 per share exercise price for these
options was equal to the fair market value of the common stock on the date of
grant as determined by our board of directors. These options vest in a series of
equal monthly installments beginning on the grant date of the option and
extending through the next two years of service. In January 2000, the Company
granted Dr. Mak 50,000 shares of common stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our compensation committee currently consists of Mr. Frazier and Dr. Moos.
Mr. Gower served on our compensation committee from February 1998 to January
2000. No current member of the compensation committee has been an officer or
employee of ours at any time. None of our executive officers serve as a member
of the board of directors or compensation committee of any other company that
has one or more executive officers serving as a member of our board of directors
or compensation committee. Prior to the formation of a compensation committee in
February 1998, the board of directors as a whole made decisions relating to
compensation of our executive officers.
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EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation that we
paid during 1999 to our Chief Executive Officer and each of the four other most
highly compensated executive officers that earned more than $100,000 during
1999. All option grants were made under our 1997 Stock Option Plan.
SUMMARY COMPENSATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James G. Gower ...................................... $255,000 -- 450,000
President, Chief Executive Officer
and Director
Donald G. Payan ..................................... 235,417 -- 150,000
Executive Vice President and Chief
Scientific Officer and Director
Brian C. Cunningham ................................. 250,000 -- (1)
Senior Vice President, Chief Operating
Officer, Chief Financial Officer and Secretary
James H. Welch(2) ................................... 100,000 $25,000 150,000(3)
Vice President, Finance and
Administration and Assistant Secretary
Donald W. Perryman(4) ............................... 140,000 -- --
Former Vice President, Business Development
</TABLE>
- ------------
(1) IN JANUARY 2000, WE GRANTED MR. CUNNINGHAM AN OPTION TO PURCHASE 200,000
SHARES OF COMMON STOCK AT AN EXERCISE PRICE OF $4.50 PER SHARE, WHICH WAS
EQUAL TO THE FAIR MARKET VALUE OF THE COMMON STOCK ON THE DATE OF GRANT AS
DETERMINED BY THE BOARD OF DIRECTORS. THESE OPTIONS VEST MONTHLY OVER A
FOUR-YEAR PERIOD FROM THE DATE OF GRANT.
(2) MR. WELCH JOINED RIGEL IN MAY 1999. HIS ANNUALIZED 1999 SALARY WAS $150,000.
(3) IN JANUARY 2000, WE GRANTED MR. WELCH AN OPTION TO PURCHASE 50,000 SHARES OF
COMMON STOCK AT AN EXERCISE PRICE OF $4.50 SHARE, WHICH WAS EQUAL TO THE
FAIR MARKET VALUE OF THE COMMON STOCK, ON THE DATE OF GRANT AS DETERMINED BY
THE BOARD OF DIRECTORS. THESE OPTIONS VEST MONTHLY OVER A FOUR-YEAR PERIOD.
(4) MR. PERRYMAN RESIGNED AS VICE PRESIDENT, BUSINESS DEVELOPMENT, EFFECTIVE
JANUARY 15, 2000.
The following table sets forth summary information regarding the option grants
made to our Chief Executive Officer and each of our four other most highly paid
executive officers during 1999. Options granted to purchase shares of our common
stock under our 1997 Stock Option Plan generally vest over a four-year or
five-year period. The exercise price per share is equal to the fair market value
of our common stock on the date of grant as determined by our board of
directors. The percentage of total options was calculated based on options to
purchase an aggregate of 2,783,000 shares of common stock granted to employees
under our stock option plan in 1999. The potential realizable value was
calculated based on the ten-year term of the options and assumed rates of stock
appreciation of 5% and 10%, compounded annually from the date the options were
granted to their expiration date based on the fair market value of the common
stock on the date of grant.
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MANAGEMENT
- --------------------------------------------------------------------------------
OPTION GRANTS IN 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE APPRECIATION OF STOCK
OPTIONS EMPLOYEES IN PRICE/PER EXPIRATION PRICE FOR OPTION TERM
NAME GRANTED 1999 SHARE DATE 5% 10%
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James M. Gower............ 450,000 16.2% $0.20 2/11/09 $ $
Donald G. Payan........... 150,000 5.4 0.20 2/11/09
Brian C. Cunningham....... -- -- -- --
James H. Welch............ 150,000 5.4 0.20 5/11/09
Donald W. Perryman........ -- -- -- --
</TABLE>
The following table sets forth summary information regarding the number and
value of options held as of December 31, 1999 for our Chief Executive Officer
and each of our four most highly compensated executive officers. Our Chief
Executive Officer and each of our four most highly compensated executive
officers did not acquire any shares upon exercise of options in 1999. Amounts
shown in the value of unexercised in-the-money options at December 31, 1999
column are based on an initial public offering price of per share without
taking into account any taxes that may be payable in connection with the
transaction, multiplied by the number of shares underlying the option, less the
aggregate exercise price payable for these shares.
YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1999 DECEMBER 31, 1999
NAME VESTED UNVESTED VESTED UNVESTED
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James G. Gower.............................. 75,000 375,000 $ $
Donald G. Payan............................. 25,000 125,000
Brian C. Cunningham......................... 141,666 358,334
James H. Welch.............................. 0 150,000
Donald W. Perryman.......................... 58,333 41,667
</TABLE>
EMPLOYEE BENEFIT PLANS
2000 EQUITY INCENTIVE PLAN
Our board of directors adopted our 2000 Equity Incentive Plan on January 27,
2000, subject to stockholder approval. The 2000 Equity Incentive Plan is an
amendment and restatement of our 1997 Stock Option Plan.
SHARE RESERVE
We have reserved a total of 9,525,000 shares of our common stock for issuance
under the incentive plan. If the recipient of a stock award does not purchase
the shares subject to such stock award before the stock award expires or
otherwise terminates, the shares that are not purchased will again become
available for issuance under the incentive plan.
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MANAGEMENT
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ADMINISTRATION
The board administers the incentive plan unless it delegates administration to a
committee. The board has the authority to construe, interpret and amend the
incentive plan as well as to determine:
- - who will receive awards under the incentive plan;
- - the dates on which such awards will be granted;
- - the number of shares subject to the awards;
- - the vesting and/or exercisability of the awards;
- - the exercise price of the awards;
- - the type of consideration that may be used to satisfy the exercise price;
and
- - the other terms of the awards.
ELIGIBILITY
The board may grant incentive stock options that qualify under Section 422 of
the Internal Revenue Code to our employees and to the employees of our
affiliates. The board also may grant nonstatutory stock options, stock bonuses
and restricted stock purchase awards to our employees, directors and consultants
as well as to the employees, directors and consultants of our affiliates.
Our incentive plan includes the following features:
- - a stock option is a contractual right to purchase a specified number of our
shares at a specified price (exercise price) during a specified period of
time.
- - an incentive stock option is a stock option that meets the requirements of
Section 422 of the Internal Revenue Code. The holder of such an option will
not be required to pay tax on either the date of grant or the date of
exercise. If two holding period tests are met--more than two years between
grant date and sale date and more than one year between exercise date and
sale date--the optionholder will be taxed on the profit received on the
subsequent disposition of the option stock as long-term capital gain. If the
holding periods are not met, there has been a disqualifying disposition, and
the difference between the exercise price and the fair market value of the
shares on the exercise date will be taxed at ordinary income rates. The
difference between the fair market value on date of exercise and the
exercise price is an item of adjustment for purposes of the alternative
minimum tax unless there is a disqualifying disposition in the year of
exercise.
- - a nonstatutory stock option is a stock option that does not meet the
Internal Revenue Code criteria for qualifying as an incentive stock option.
Upon exercise of a nonstatutory option, the option holder will be required
to pay state and federal income tax and, if applicable, federal employment
taxes on the difference between the exercise price and the fair market value
on the exercise date.
- - a restricted stock purchase award is an offer to purchase shares at a price
that is at or near the fair market value of the shares. A stock bonus, on
the other hand, is a grant of our shares at no cost to the recipient in
consideration for past services rendered. Such awards generally are subject
to a vesting schedule pursuant to which we may reacquire the shares subject
to either type of award at the original purchase price (which is zero in the
case of a stock bonus) if the recipient's service to us and our affiliates
terminates before the shares vest.
The board may not grant an incentive stock option to any person who, at the time
of the grant, owns or is deemed to own stock possessing more than 10% of our
total combined voting power or the total
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- --------------------------------------------------------------------------------
combined voting power of an affiliate of ours, unless the exercise price is at
least 110% of the fair market value of the stock on the grant date and the
option term is no more than five years.
LIMITS ON OPTION GRANTS
There are limits on the number of shares that the board may grant under an
option.
- - section 162(m) of the Internal Revenue Code denies a deduction to publicly
held corporations for compensation paid to the corporation's chief executive
officer and its four highest compensated officers in a taxable year to the
extent that the compensation for each such officer exceeds $1,000,000. When
we become subject to Section 162(m), in order to prevent options granted
under the incentive plan from being included in such compensation, the
incentive plan provides that the board may not grant options under the
incentive plan to any employee covering an aggregate of more than 1,500,000
shares in any calendar year.
- - an employee may not receive incentive stock options that exceed the $100,000
per year limitation set forth in Section 422(d) of the Internal Revenue
Code. In calculating the $100,000 per year limitation, we consider the
aggregate number of shares under all incentive stock options granted to that
employee that will become exercisable for the first time during a calendar
year. For this purpose, we include incentive stock options granted under the
incentive plan as well as under any other stock plans that we and our
affiliates maintain. We then determine the aggregate fair market value of
shares subject to all such incentive stock options as of the grant date of
the options. Taking the options into account in the order in which they were
granted, we treat only the options covering the first $100,000 worth of
stock as incentive stock options. We treat any options covering stock in
excess of $100,000 as nonstatutory stock options.
OPTION TERMS
The board may grant incentive stock options with an exercise price of 100% or
more of the fair market value of a share of our common stock on the grant date.
It may grant nonstatutory stock options with an exercise price as low as 85% of
the fair market value of a share on the grant date.
THE MAXIMUM OPTION TERM IS 10 YEARS
The board may provide for exercise periods of any length following an
optionholder's termination of service in individual option grants. However,
generally options will provide that they terminate three months after the
optionholder's service to us and our affiliates terminates. If such termination
is due to the optionholder's disability, the exercise period generally is
extended 12 months. If such termination is due to the optionholder's death, or
if the optionholder dies within three months after his or her service
terminates, the exercise period generally is extended to 18 months following the
optionholder's death.
The board may provide for the transferability of nonstatutory stock options but
not incentive stock options. However, the optionholder may designate a
beneficiary to exercise either type of option following the optionholder's
death. If the optionholder does not designate a beneficiary, the optionholder's
option rights will pass to his or her heirs will or the laws of descent and
distribution.
TERMS OF OTHER STOCK AWARDS
The board determines the purchase price of other stock awards, which may not be
less than 85% of the fair market value of our common stock on the grant date.
However, the board may award stock bonuses in consideration of past services
without a cash purchase price. Shares that we sell or award under the incentive
plan may, but need not be, restricted and subject to a repurchase option in our
favor in accordance with a vesting schedule that the board determines. The
board, however, may accelerate the vesting of such awards.
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OTHER PROVISIONS
Transactions not involving our receipt of consideration, such as a merger,
consolidation, reorganization, stock dividend, or stock split, may change the
class and number of shares subject to the incentive plan and to outstanding
awards. In that event, the board will appropriately adjust the incentive plan as
to the class and the maximum number of shares subject to the incentive plan and
to the Section 162(m) limit. It also will adjust outstanding awards as to the
class, number of shares and price per share applicable to such awards.
If we dissolve or liquidate, then outstanding stock awards will terminate
immediately prior to such event. However, we treat outstanding stock awards
differently in the following situations:
- - a sale, lease or other disposition of all or substantially all of our
assets;
- - a merger or consolidation in which we are not the surviving corporation; or
- - a reverse merger in which we are the surviving corporation but the shares of
our common stock outstanding immediately before the merger are converted by
virtue of the merger into other property, such as securities or cash.
In these situations, the surviving corporation may either assume all outstanding
awards under the incentive plan or substitute other awards for the outstanding
awards. If the surviving corporation does not assume or substitute, then, for
award holders who are then providing services to us or our affiliates, the
vesting and exercisability of the awards will accelerate and the awards will
terminate immediately prior to the occurrence of the event described above. The
vesting and exercisability of awards held by award holders who are no longer
providing services to us or one of our affiliates will not accelerate. However,
those awards will also terminate immediately prior to the occurrence of the
event described above.
STOCK AWARDS GRANTED
As of December 31, 1999, 588,334 shares were issued upon the exercise of options
under our equity incentive plan, 2,500 shares of which have been repurchased;
options to purchase 5,242,004 shares were outstanding and 3,694,662 shares
remained available for grant.
PLAN TERMINATION
The incentive plan will terminate in 2010 unless the board terminates it sooner.
2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
We adopted the 2000 Non-Employee Directors' Stock Option Plan on January 27,
2000, subject to stockholder approval. The directors' plan will become effective
on the effective date of this initial public offering. The directors' plan
provides for the automatic grant to our non-employee directors of options to
purchase shares of our common stock.
SHARE RESERVE
We have reserved a total of 300,000 shares of our common stock for issuance
under the directors' plan.
If an optionholder does not purchase the shares subject to such option before
the option expires or otherwise terminates, the shares that are not purchased
again become available for issuance under the directors' plan.
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ADMINISTRATION
The board administers the directors' plan unless it delegates administration to
a committee. The board has the authority to construe, interpret and amend the
directors' plan, but the directors' plan specifies the essential terms of the
options, including:
- - who will receive options under the directors' plan;
- - the dates on which such options will be granted;
- - the number of shares subject to the options;
- - the vesting schedule applicable to the options;
- - the exercise price of the options; and
- - the type of consideration that may be used to satisfy the exercise price.
ELIGIBILITY
Each non-employee director who is serving on the effective date of this offering
will automatically be granted an option to purchase 20,000 shares of common
stock. Each person who is elected or appointed to be a non-employee director for
the first time after the effective date of this offering will be granted an
option to purchase 20,000 shares of common stock upon such election or
appointment. In addition, each non-employee director who continues to serve as a
non-employee director automatically will be granted an option to purchase 5,000
shares of common stock on the day following each annual meeting of our
stockholders. The number of shares subject to the grants to be made following
each annual meeting will be pro-rated for any non-employee director who has not
continuously served as a director for the entire 12-month period prior to the
date of grant. The options will vest over 2 years in equal monthly installments
provided that the non-employee director continues to provide services to us or
one of our affiliates.
OPTION TERMS
Options granted under the directors' plan will have an exercise price equal to
100% of the fair market value of the common stock on the grant date and a term
of 10 years. As long as a non-employee director continues to serve with us or
with an affiliate of ours, whether in the capacity of a director, an employee or
a consultant, the non-employee's option will continue. Options will terminate
three months after the optionholder's service terminates. However, if such
termination is due to the optionholder's disability, the exercise period will be
extended to 12 months. If such termination is due to the optionholder's death or
if the optionholder dies within three months after his or her service
terminates, the exercise period will be extended to 18 months following death.
Optionholders may transfer options granted under the directors' plan by gift to
immediate family or, under certain circumstances, to a trust for estate-planning
purposes. Optionholders also may designate a beneficiary to exercise their
options following the optionholder's death. Otherwise, option exercise rights
will pass by the optionholder's will or by the laws of descent and distribution.
OTHER PROVISIONS
Transactions not involving our receipt of consideration, such as a merger,
consolidation, reorganization, stock dividend, or stock split, may change the
class and number of shares subject to the directors' plan and to outstanding
options. In that event, the board will appropriately adjust the directors' plan
as to the class and the maximum number of shares subject to the directors' plan.
It also will adjust outstanding options as to the class, number of shares and
price per share applicable to such options.
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If we dissolve or liquidate, then outstanding options will terminate immediately
prior to such event. However, we treat outstanding options differently in the
following situations:
- - a sale, lease or other disposition of all or substantially all of our
assets;
- - a merger or consolidation in which we are not the surviving corporation; or
- - a reverse merger in which we are the surviving corporation but the shares of
our common stock outstanding immediately before the merger are converted by
virtue of the merger into other property, such as securities or cash.
In these situations, the surviving corporation will either assume the options
outstanding under the directors' plan or substitute other options for the
outstanding options. If the surviving corporation does not assume or substitute
all outstanding options under the directors' plan, then the vesting and
exercisability of the options will accelerate and the options will terminate if
they are not exercised prior to the event described above.
OPTIONS ISSUED
We have not issued any options under the directors' plan.
PLAN TERMINATION
The directors' plan will terminate in 2010 unless the board terminates it
sooner.
2000 EMPLOYEE STOCK PURCHASE PLAN
Our board adopted the 2000 Employee Stock Purchase Plan on January 27, 2000,
subject to stockholder approval.
SHARE RESERVE
We have authorized the issuance of 400,000 shares of our common stock pursuant
to purchase rights granted to eligible employees under the purchase plan. On the
anniversary of the effective date of this offering, starting with the
anniversary of this offering in 2001, the share reserve will automatically be
increased by a number of shares equal to the lesser of:
- - 1% of our then outstanding shares of common stock;
- - 400,000 shares; or
- - a number determined by our board of directors.
ELIGIBILITY
The purchase plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code. The purchase
plan provides a means by which eligible employees may purchase our common stock
through payroll deductions. We implement the purchase plan by offerings of
purchase rights to eligible employees. Generally, all of our full-time employees
and full-time employees of our affiliates incorporated in the United States may
participate in offerings under the purchase plan. However, no employee may
participate in the purchase plan if, immediately after we grant the employee a
purchase right, the employee has voting power over 5% or more of our outstanding
capital stock. As of the date hereof, no shares of common stock had been
purchased under the purchase plan.
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ADMINISTRATION
Under the purchase plan, the board may specify offerings of up to 27 months.
Unless the board otherwise determines, common stock will be purchased for
accounts of participating employees at a price per share equal to the lower of:
- - 85% of the fair market value of a share on the first day of the offering; or
- - 85% of the fair market value of a share on the purchase date.
For the first offering, which will begin on the effective date of this initial
public offering, we will offer shares registered on a Form S-8 registration
statement. The fair market value of the shares on the first date of this
offering will be the price per share at which our shares are first sold to the
public as specified in the final prospectus with respect to our initial public
offering. Otherwise, fair market value generally means the closing sales price
(rounded up where necessary to the nearest whole cent) for such shares (or the
closing bid, if no sales were reported) as quoted on the Nasdaq National Market
on the trading day prior to the relevant determination date, as reported in The
Wall Street Journal.
The board may provide that employees who become eligible to participate after
the offering period begins nevertheless may enroll in the offering. These
employees will purchase our stock at the lower of:
- - 85% of the fair market value of a share on the day they began participating
in the purchase plan; or
- - 85% of the fair market value of a share on the purchase date.
If authorized by the board, participating employees may authorize payroll
deductions of up to 15% of their base compensation for the purchase of stock
under the purchase plan. Generally employees may end their participation in the
offering at any time up to 10 days before a purchase period ends. Their
participation ends automatically on termination of their employment or loss of
full-time status.
OTHER PROVISIONS
The board may grant eligible employees purchase rights under the purchase plan
only if the purchase rights, together with any other purchase rights granted
under other employee stock purchase plans established by us or by our
affiliates, if any, do not permit the employee's rights to purchase our stock to
accrue at a rate which exceeds $25,000 of fair market value of our stock for
each calendar year in which the purchase rights are outstanding.
Upon a change in control, a surviving corporation may assume outstanding
purchase rights or substitute other purchase rights therefor. If the surviving
corporation does not assume or substitute the purchase rights, the offering
period will be shortened and our stock will be purchased for the participants
immediately before the change in control.
DESCRIPTION OF 401(K) PLAN
We maintain a retirement and deferred savings plan for our U.S. employees. The
retirement and deferred savings plan is intended to qualify as a tax-qualified
plan under Section 401 of the Internal Revenue Code. The retirement and deferred
savings plan provides that each participant may contribute up to 20% of his or
her pre-tax compensation (up to a statutory limit, which is $10,500 in calendar
year 2000). Under the plan, each employee is fully vested in his or her deferred
salary contributions. Employee contributions are held and invested by the plan's
trustee. The retirement and deferred savings plan also permits us to make
discretionary contributions, subject to established limits and a vesting
schedule. To date, we have not made any discretionary contributions to the
retirement and deferred savings plan on behalf of participating employees.
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LIMITATIONS OF LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS
In connection with the consummation of this offering, we will adopt and file an
amended and restated certificate of incorporation and amended and restated
bylaws. As permitted by Delaware law, our amended and restated certificate of
incorporation provides that no director will be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability:
- - for any breach of duty of loyalty to us or to our stockholders;
- - for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- - for unlawful payment of dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law; or
- - for any transaction from which the director derived an improper personal
benefit.
Our amended and restated certificate of incorporation further provides that we
must indemnify our directors to the fullest extent permitted by Delaware law.
In addition, our amended and restated bylaws provide that:
- - we are required to indemnify our directors and officers to the fullest
extent permitted by Delaware law, subject to limited exceptions;
- - we may indemnify our other employees and agents to the extent that we
indemnify our officers and directors, unless otherwise prohibited by law,
our amended and restated certificate of incorporation, our amended and
restated bylaws or agreements;
- - we are required to advance expenses to our directors and executive officers
as incurred in connection with legal proceedings against them for which they
may be indemnified; and
- - the rights conferred in the amended and restated bylaws are not exclusive.
We have entered into indemnification agreements with each of our directors and
officers. These agreements, among other things, require us to indemnify each
director and officer to the fullest extent permitted by Delaware law, including
indemnification for expenses such as attorneys' fees, judgments, fines and
settlement amounts incurred by the director or officer in any action or
proceeding, including any action by or in the right of Rigel, arising out of the
person's services as a director or officer of us, any subsidiary of ours or any
other company or enterprise to which the person provides services at our
request. At present, we are not aware of any pending or threatened litigation or
proceeding involving any of our directors, officers, employees or agents in
which indemnification would be required or permitted. We believe that our
charter provisions and indemnification agreements are necessary to attract and
retain qualified persons as directors and officers.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
We have an employment agreement with Dr. Payan, dated as of January 16, 1997,
and continuing indefinitely. Under the agreement, Dr. Payan is entitled to
receive an annualized base salary of $185,000 and 750,000 shares of our common
stock. As of January 16, 2000, all such shares were fully vested and not subject
to repurchase by us. Either Rigel or Dr. Payan may terminate his employment at
any time for any reason. If we terminate Dr. Payan without cause, he will
receive a severance payment equal to one year's salary.
We have an employment agreement with Donald Perryman dated as of January 16,
1997 and continuing indefinitely. Under the agreement, Mr. Perryman is entitled
to receive an annualized base
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salary of $140,000 and an option to purchase 100,000 shares of our common stock.
These shares vest over a five-year period. If Mr. Perryman's employment is
terminated without cause within five years and if less than one-fifth of the
shares remain unvested, then all shares shall become fully vested. Otherwise,
one-fifth of the total shares shall immediately vest upon termination. Either
Rigel or Mr. Perryman may terminate his employment at any time for any reason.
If we terminate Mr. Perryman without cause, he will receive a severance payment
equal to one year's salary.
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RELATED PARTY TRANSACTIONS
Stock option grants to our executive officers and directors are described in
this prospectus under the heading "Management--Compensation of Directors,
- --Executive Compensation and --Employment Agreements and Termination of
Employment Agreements."
From January 31, 1997, through January 31, 2000, the following executive
officers, directors and holders of more than 5% of our voting securities
purchased securities in the amounts and as of the dates set forth below.
<TABLE>
<CAPTION>
PREFERRED STOCK
EXECUTIVE OFFICERS, ------------------------------------------------------------------------
DIRECTORS AND COMMON SERIES D
5% STOCKHOLDERS(1) STOCK SERIES A SERIES B SERIES C SERIES D WARRANTS SERIES E(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIRECTOR
Tak W. Mak.............. 50,000 -- -- -- -- -- --
FIVE PERCENT STOCKHOLDERS
Entities affiliated with
Alta Partners(3)...... -- -- 2,500,000 1,403,509 558,107 55,640 166,666
Entities affiliated with
Frazier and Company,
Inc.(4)............... -- -- -- 3,649,123 521,596 52,000 125,000
Johnson & Johnson
Development
Corporation........... -- -- -- -- 1,500,000 -- 166,666
Entities affiliated with
Lombard Odier & Cie... -- -- 3,750,000 2,105,263 837,161 83,460 500,000
Novartis Pharma AG...... -- -- -- -- 2,000,000 -- --
Price Per Share........... $4.50 $0.80 $1.14 $2.00 $2.00 $6.00
Date(s) of Purchase....... 01/00 1/97 11/97 12/98-5/99 12/98 2/00
</TABLE>
- ------------
(1) SEE "PRINCIPAL STOCKHOLDERS" FOR MORE DETAIL ON SHARES HELD BY THESE
PURCHASERS.
(2) THE CLOSING OF THE SERIES E PREFERRED STOCK FINANCING OCCURRED ON
FEBRUARY 3, 2000.
(3) MR. DELEAGE, ONE OF OUR DIRECTORS, IS THE MANAGING GENERAL PARTNER OF ALTA
PARTNERS.
(4) MR. FRAZIER, ONE OF OUR DIRECTORS, IS THE MANAGING PRINCIPAL OF FRAZIER AND
COMPANY, INC.
We have entered into an Amended and Restated Registration Rights Agreement with
each of the purchasers of preferred stock set forth above, pursuant to which
these and other stockholders will have registration rights with respect to their
shares of common stock issuable upon conversion of their preferred stock
following this offering.
We have entered into indemnification agreements with our directors and certain
officers for the indemnification and advancement of expenses to these persons to
the fullest extent permitted by law. We also intend to enter into those
agreements with our future directors and officers.
In September 1999, we established a research collaboration and license agreement
with Cell Genesys, Inc. James Gower, our President and Chief Executive Officer,
serves on the board of directors of Cell Genesys.
We believe that all of the transactions set forth above were made on terms no
less favorable to us than could have been obtained from unaffiliated third
parties. All future transactions, including loans, between us and our officers,
directors, principal stockholders and their affiliates will be approved by a
majority of our board of directors, including a majority of the independent and
disinterested directors, and will be on terms no less favorable to us than could
be obtained from unaffiliated third parties.
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PRINCIPAL STOCKHOLDERS
The following table shows information known to us with respect to the beneficial
ownership of our common stock as of December 31, 1999, and as adjusted to
reflect the sale of the shares of common stock offered under this prospectus by:
- - each person or group who beneficially owns more than 5% of our common stock;
- - our chief executive officer;
- - each of our four other most highly compensated executive officers whose
compensation exceeded $100,000 during 1999;
- - each of our directors; and
- - all of our directors and executive officers as a group.
Beneficial ownership of shares is determined under the rules of the Securities
and Exchange Commission and generally includes any shares over which a person
exercises sole or shared voting or investment power. Except as indicated by
footnote, and subject to applicable community property laws, each person
identified in the table possesses sole voting and investment power with respect
to all shares of common stock held by them. Shares of common stock subject to
options currently exercisable or exercisable within 60 days of December 31, 1999
and not subject to repurchase as of that date are deemed outstanding for
calculating the percentage of outstanding shares of the person holding these
options, but are not deemed outstanding for calculating the percentage of any
other person. Applicable percentage ownership in the following table is based on
27,708,051 shares of common stock outstanding as of December 31, 1999, after
giving effect to the issuance of 2,558,330 shares of Series E preferred stock on
February 3, 2000, and the conversion of all outstanding shares of preferred
stock into common stock upon the closing of this offering, and shares
of common stock outstanding immediately following the completion of this
offering. Unless otherwise indicated, the address of each of the named
individuals is c/o Rigel Pharmaceuticals, Inc., 240 East Grand Avenue, South San
Francisco, California 94080.
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AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES ISSUABLE
PURSUANT TO
OPTIONS
EXERCISABLE PERCENT OF TOTAL
OUTSTANDING WITHIN 60 DAYS OUTSTANDING SHARES
SHARES OF OF BENEFICIALLY OWNED
COMMON DECEMBER 31, PRIOR THE AFTER THE
BENEFICIAL OWNER STOCK 1999 OFFERING OFFERING
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIVE PERCENT SHAREHOLDERS
Entities affiliated with Lombard Odier & Cie(1)........ 7,275,884 -- 26.2%
11. rue de la Corraterie
1211 Geneve 11
Switzerland
Entities affiliated with Alta Partners(2).............. 4,683,922 -- 16.9
One Embarcadero Center, Suite 4050
San Francisco, CA 94111
Entities affiliated with Frazier and Company, 4,347,719 -- 15.7
Inc.(3)..............................................
601 Union Street, Suite 2110
Seattle, WA 98101
Novartis Pharma AG..................................... 2,000,000 -- 7.2
Head Financial Investments
CH-4002
Basel, Switzerland
Johnson & Johnson Development Corporation(4)........... 1,666,666 -- 6.0
One Johnson & Johnson Plaza
New Brunswick, NJ08933
James M. Gower......................................... 500,000 90,000 2.1
Donald G. Payan........................................ 750,000 30,000 2.8
Brian C. Cunningham.................................... -- 162,499 *
James H. Welch......................................... -- 1,041 *
Donald W. Perryman(5).................................. -- 61,666 *
Jean Deleage(2)........................................ 4,683,922 -- 16.9
Alan D. Frazier(3)..................................... 4,347,719 -- 15.7
Tak W. Mak(6).......................................... 50,000 8,333 *
Walter H. Moos......................................... -- 8,333 *
All executive officers and directors as a 10,331,641 300,206 37.8%
group (8 people) (7).................................
</TABLE>
- ------------
* LESS THAN ONE PERCENT (1%).
(1) INCLUDES 4,587,161 SHARES HELD BY LOMBARD ODIER & CIE AND 2,105,263 SHARES
HELD BY RYCO AND CO. ALSO INCLUDES 83,460 SHARES ISSUABLE UPON THE EXERCISE
OF OUTSTANDING WARRANTS WITHIN 60 DAYS OF DECEMBER 31, 1999. INCLUDES
500,000 SHARES OF SERIES E PREFERRED STOCK ISSUED ON FEBRUARY 3, 2000.
(2) INCLUDES 4,361,961 SHARES HELD BY ALTA CALIFORNIA PARTNERS, L.P. AND 99,655
SHARES HELD BY ALTA EMBARCADERO PARTNERS, LLC. ALSO INCLUDES 54,400 SHARES
AND 1,240 SHARES ISSUABLE UPON THE EXERCISE OF OUTSTANDING WARRANTS WITHIN
60 DAYS OF DECEMBER 31, 1999 BY ALTA CALIFORNIA PARTNERS, L.P. AND ALTA
EMBARCADERO PARTNERS, LLC, RESPECTIVELY. ALSO INCLUDES 162,943 SHARES AND
3,723 SHARES OF SERIES E PREFERRED STOCK ISSUED TO ALTA CALIFORNIA PARTNERS,
L.P. AND ALTA EMBARCADERO PARTNERS, L.P., RESPECTIVELY, ON FEBRUARY 3, 2000.
DR. DELEAGE DISCLAIMS BENEFICIAL OWNERSHIP OF THE SHARES HELD BY FUNDS
AFFILIATED WITH ALTA PARTNERS EXCEPT TO THE EXTENT OF HIS PROPORTIONATE
PECUNIARY INTEREST THEREIN.
(3) INCLUDES 15,144 SHARES HELD BY FRAZIER AND COMPANY, INC. AND 4,155,755
SHARES HELD BY FRAZIER HEALTHCARE II, L.P. ALSO INCLUDES 51,820 SHARES
ISSUABLE UPON THE EXERCISE OF AN OUTSTANDING WARRANT WITHIN 60 DAYS OF
DECEMBER 31, 1999 BY FRAZIER HEALTHCARE II, L.P. ALSO INCLUDES
124,549 SHARES AND 451 SHARES OF SERIES E PREFERRED STOCK ISSUED TO FRAZIER
AND COMPANY, INC. AND FRAZIER HEALTHCARE II, L.P., RESPECTIVELY, ON
FEBRUARY 3, 2000. MR. FRAZIER DISCLAIMS BENEFICIAL OWNERSHIP OF THE SHARES
HELD BY FRAZIER AND COMPANY, INC. AND FRAZIER HEALTHCARE II, L.P. EXCEPT TO
THE EXTENT OF HIS PROPORTIONATE PECUNIARY INTEREST THEREIN.
(4) INCLUDES 166,666 SHARES OF SERIES E PREFERRED STOCK ISSUED ON FEBRUARY 3,
2000.
(5) MR. PERRYMAN RESIGNED AS VICE PRESIDENT, BUSINESS DEVELOPMENT, EFFECTIVE
JANUARY 15, 2000.
(6) REPRESENTS 50,000 SHARES ISSUED TO DR. MAK ON JANUARY 27, 2000.
(7) INCLUDES AN AGGREGATE OF 107,460 SHARES ISSUABLE UPON THE EXERCISE OF
WARRANTS THAT ARE EXERCISABLE WITHIN 60 DAYS OF DECEMBER 31, 1999. ALSO
INCLUDES AN AGGREGATE OF 341,666 SHARES OF SERIES E PREFERRED STOCK AND
50,000 SHARES OF COMMON STOCK ISSUED ON FEBRUARY 3, 2000 AND JANUARY 27,
2000, RESPECTIVELY.
- --------------------------------------------------------------------------------
64
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF SECURITIES
Upon the closing of this offering and the filing of our amended and restated
certificate of incorporation, our authorized capital stock will consist of
shares of common stock, $0.001 par value, and shares of preferred stock,
$0.001 par value.
COMMON STOCK
As of December 31, 1999, there were 25,149,721 shares of common stock
outstanding that were held of record by approximately 54 stockholders after
giving effect to the conversion of our preferred stock into common stock at a
one-to-one ratio. There will be shares of common stock outstanding
(assuming no exercise of the underwriters' over-allotment option and no exercise
of outstanding options) after giving effect to the sale of the shares of common
stock offered by this prospectus.
The holders of common stock are entitled to one vote per share on all matters
submitted to a vote of our stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Subject to preferences that may be applicable to any
preferred stock outstanding at the time, the holders of outstanding shares of
common stock are entitled to receive ratably any dividends out of assets legally
available therefor as our board of directors may from time to time determine.
Upon liquidation, dissolution or winding up of Rigel, holders of our common
stock are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preference of any then outstanding shares of
preferred stock. Holders of common stock have no preemptive or conversion rights
or other subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and nonassessable.
PREFERRED STOCK
Pursuant to our amended and restated certificate of incorporation, our board of
directors will have the authority, without further action by the stockholders,
to issue up to shares of preferred stock, in one or more series. Our board
shall determine the rights, preferences, privileges and restrictions of the
preferred stock, including dividend rights, conversion rights, voting rights,
terms of redemption, liquidation preferences, sinking fund terms and the number
of shares constituting any series or the designation of any series. The issuance
of preferred stock could adversely affect the voting power of holders of common
stock, and the likelihood that holders of preferred stock will receive dividend
payments and payments upon liquidation may have the effect of delaying,
deferring or preventing a change in control of Rigel, which could depress the
market price of our common stock. We have no present plan to issue any shares of
preferred stock.
WARRANTS
As of December 31, 1999, three warrants to purchase an aggregate of 150,000
shares of our common stock were outstanding. These warrants shall expire upon
the earlier of (i) June 1, 2008, or (ii) seven years after the closing of the
initial public offering of our stock and entitle the holders of these warrants
to purchase up to 150,000 shares of our common stock at a price of $1.14 per
share, subject to adjustment in the event of a merger, reorganization or sale of
Rigel. These warrants give the holders the right of a net issue election.
As of December 31, 1999, one warrant to purchase 175,000 shares of our Series B
preferred stock was outstanding. This warrants automatically convert upon the
earlier of (i) April 30, 2004, or (ii) a merger or reorganization involving
Rigel and entitles the holder of this warrant to purchase up to 175,000 shares
of our Series B preferred stock at a price of $0.80 per share, subject to
adjustment in
- --------------------------------------------------------------------------------
65
<PAGE>
DESCRIPTION OF SECURITIES
- --------------------------------------------------------------------------------
the event of a merger, reorganization or sale of Rigel. This warrant gives the
holder the right of a net issue election.
As of December 31, 1999, one warrant to purchase 131,578 shares of our Series C
preferred stock was outstanding. This warrant shall expire upon June 30, 2005
and entitles the holder of this warrant to purchase up to 131,578 shares of our
Series C preferred stock at a price of $1.14 per share, subject to adjustment in
the event of a merger, reorganization or sale of us. This warrants gives the
holder the right of a net issue election.
As of December 31, 1999, four warrants to purchase an aggregate of 190,920
shares of our Series D preferred stock were outstanding. These warrants shall
expire upon the earlier of (i) the closing of the initial public offering of our
stock, (ii) a reorganization, merger or sale of Rigel, or (iii) December 3, 2003
and entitle the holders of these warrants to purchase up to 190,920 shares of
our Series D preferred stock at a price of $2.00 per share, subject to
adjustment in the event of a merger, reorganization or sale of us. These
warrants give the holders the right of a net issue election.
REGISTRATION RIGHTS
Upon completion of this offering, holders of an aggregate of 23,947,217 shares
of common stock and warrants to purchase an aggregate of 497,498 shares of
common stock will be entitled to rights to register these shares under the
Securities Act. These rights are provided under an Amended and Restated
Registration Rights Agreement, dated February 3, 2000, and under agreements with
similar registration rights. If we propose to register any of our securities
under the Securities Act, either for our own account or for the account of
others, the holders of these shares are entitled to notice of the registration
and are entitled to include, at our expense, their shares of common stock in the
registration and any related underwriting, provided, among other conditions,
that the underwriters may limit the number of shares to be included in the
registration and in some cases, including this offering, exclude these shares
entirely. In addition, the holders of these shares may require us, at our
expense and on not more than two occasions at any time beginning six months from
the date of the closing of this offering, to file a registration statement under
the Securities Act with respect to their shares of common stock, and we will be
required to use our best efforts to effect the registration. Further, the
holders may require us at our expense to register their shares on Form S-3 when
this form becomes available.
ANTI-TAKEOVER PROVISIONS OF CERTAIN PROVISIONS OF DELAWARE LAW AND OUR CHARTER
CERTIFICATE OF INCORPORATION AND BYLAWS
We are subject to Section 203 of the Delaware General Corporation Law. In
general, the statute prohibits a publicly held Delaware corporation from
engaging in any business combination with any interested stockholder for a
period of three years following the date that the stockholder became an
interested stockholder unless:
- - prior to the date, our board of directors approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder;
- - upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding those shares owned by persons who are
directors and also officers, and by employee stock plans in which shares
held subject to the plan will be tendered in a tender or exchange offer; or
- - on or subsequent to this date, the business combination is approved by our
board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the
- --------------------------------------------------------------------------------
66
<PAGE>
DESCRIPTION OF SECURITIES
- --------------------------------------------------------------------------------
affirmative vote of at least two-thirds of the outstanding voting stock that
is not owned by the interested stockholder.
Section 203 defines "business combination" to include:
- - any merger or consolidation involving the corporation and the interested
stockholder;
- - any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;
- - subject to exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder; and
- - the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by the entity or person.
Our amended and restated certificate of incorporation requires that upon
completion of the offering, any action required or permitted to be taken by our
stockholders must be effected at a duly called annual or special meeting of
stockholders and may not be effected by a consent in writing. Additionally, our
amended and restated certificate of incorporation:
- - substantially limits the use of cumulative voting in the election of
directors;
- - provides that the authorized number of directors may be changed only by
resolution of our board of directors; and
- - authorizes our board of directors to issue blank check preferred stock to
increase the amount of outstanding shares.
Our amended and restated bylaws provide that candidates for director may be
nominated only by our board of directors or by a stockholder who gives written
notice to us no later than 60 days prior nor earlier than 90 days prior to the
first anniversary of the last annual meeting of stockholders. The authorized
number of directors is fixed in accordance with our amended and restated
certificate of incorporation. Our board of directors currently consists of six
members who will be elected at each annual meeting of our stockholders. Our
board of directors may appoint new directors to fill vacancies or newly created
directorships. Our amended and restated bylaws also limit who may call a special
meeting of stockholders.
Delaware law and these charter provisions may have the effect of deterring
hostile takeovers or delaying changes in control of our management, which could
depress the market price of our common stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Norwest Bank Minnesota,
N.A.
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67
<PAGE>
- --------------------------------------------------------------------------------
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock.
Future sales of substantial amounts of our common stock in the public market
could adversely affect prevailing market prices. Furthermore, since no shares
will be available for sale shortly after this offering because of contractual
and legal restrictions on resale as described below, sales of substantial
amounts of our common stock in the public market after these restrictions lapse
could adversely affect the prevailing market price and our ability to raise
equity capital in the future.
Upon completion of this offering, we will have outstanding an aggregate of
shares of common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants after
December 31, 1999. Of these shares, all of the shares sold in this offering will
be freely tradable without restriction or further registration under the
Securities Act, unless these shares are purchased by affiliates. The remaining
27,708,051 shares of common stock held by existing stockholders are restricted
securities, including the issuance of 2,558,330 shares of Series E preferred
stock on February 3, 2000. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
described below under Rules 144, 144(k) or 701 promulgated under the Securities
Act.
As a result of the contractual restrictions described below and the provisions
of Rules 144, 144(k) and 701, the restricted shares will be available for sale
in the public market as follows:
- - shares will be eligible for sale upon completion of this offering;
- - shares will be eligible for sale upon the expiration of the lock-up
agreements, described below, beginning 180 days after the date of this
prospectus;
- - shares will be eligible for sale at various times after the date of
this prospectus; and
- - shares will be eligible for sale upon the exercise of vested options
180 days after the date of this prospectus.
LOCK-UP AGREEMENTS
All of our officers, directors and some of our stockholders and option holders
have agreed not to transfer or dispose of, directly or indirectly, any shares of
our common stock or any securities convertible into shares or exercisable or
exchangeable for shares of our common stock, for a period of at least 180 days
after the date of this prospectus. Transfers or dispositions can be made sooner
only with the prior written consent of Warburg Dillon Read LLC.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after the
date of this prospectus a person or persons whose shares are aggregated, who has
beneficially owned restricted securities for at least one year, including the
holding period of any prior owner except an affiliate, would be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of:
- - 1% of the number of shares of our common stock then outstanding, which will
equal approximately shares immediately after this offering; or
- - the average weekly trading volume of our common stock on the Nasdaq National
Market during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about Rigel.
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68
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
- --------------------------------------------------------------------------------
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our affiliates
at any time during the 90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, including the holding
period of any prior owner except an affiliate, is entitled to sell these shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144. shares of our common stock will qualify as
"144(k) shares" within 180 days after the date of this prospectus.
RULE 701
In general, under Rule 701 of the Securities Act as currently in effect, any of
our employees, consultants or advisors, other than affiliates, who purchases or
receives shares from us in connection with a compensatory stock purchase plan or
option plan or other written agreement will be eligible to resell their shares
beginning 90 days after the date of this prospectus, subject only to the manner
of sale provisions of Rule 144, and by affiliates under Rule 144 without
compliance with its holding period requirements.
REGISTRATION RIGHTS
Upon completion of this offering, the holders of an aggregate of 23,947,217
shares of our common stock and warrants to purchase an aggregate of 497,498
shares of common stock, or their transferees, will be entitled to rights with
respect to the registration of their shares under the Securities Act.
Registration of their shares under the Securities Act would result in these
shares becoming freely tradeable without restriction under the Securities Act,
except for shares purchased by affiliates, immediately upon the effectiveness of
such registration.
STOCK OPTIONS
Following this offering, we intend to file a registration statement on Form S-8
under the Securities Act covering the shares of common stock reserved for
issuance under our 2000 Equity Incentive Plan, 2000 Employee Stock Purchase Plan
and 2000 Non-Employee Directors' Stock Option Plan that will become effective
upon filing. Accordingly, shares registered under that registration statement
will, subject to Rule 144 volume limitations applicable to affiliates, be
available for sale in the open market after the filing, except those shares
subject to lock-up agreements.
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69
<PAGE>
- --------------------------------------------------------------------------------
UNDERWRITING
We and the underwriters of the offering have entered into an underwriting
agreement concerning the shares being offered. Subject to conditions, each
underwriter has severally agreed to purchase the number of shares indicated in
the following table. Warburg Dillon Read LLC, FleetBoston Roberston
Stephens Inc. and Prudential Securities Incorporated are the representatives of
the underwriters.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ------------------------------------------------------------------------------
<S> <C>
Warburg Dillon Read LLC.....................................
FleetBoston Robertson Stephens Inc..........................
Prudential Securities Incorporated..........................
---------------
Total...................................................
===============
</TABLE>
If the underwriters sell more shares than sell more shares than the total number
set forth in the table above, the underwriters have a 30-day option to by from
us up to an additional shares at the initial public offering prices
less the underwriting discounts and commissions to cover these sales. If any
shares are purchased under this option, the underwriters will severally purchase
shares in approximately the same proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and
commissions we will pay to the underwriters. These amounts are shown assuming
both no exercise and full exercise of the underwriters' option to purchase up to
an additional shares.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Per share................................................... $ $
Total................................................... $ $
</TABLE>
We estimate that the total expenses of the offering payable by us, excluding
underwriting discounts and commissions, will be approximately $ .
Shares sold by the underwriters to the public will initially be offered at the
initial public offering price set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial public offering price. Any of these
securities dealers may resell any shares purchased from the underwriters to
other brokers or dealers at a discount of up to $ per share from the initial
public offering price. If all the shares are not sold at the initial public
offering price, the representative may change the offering price and the other
selling terms.
The underwriters have informed us that they do not expect discretionary sales to
exceed % of the shares of common stock to be offered.
We, our directors, officers, stockholders and optionholders have agreed with the
underwriters not to offer, sell, contract to sell, hedge or otherwise dispose
of, directly or indirectly, or file with the SEC, a registration statement under
the Securities Act relating to any of its common stock or securities convertible
into or exchangeable for shares of common stock during the period from the date
of this prospectus continuing through the date 180 days after the date of this
prospectus, without the prior written consent of Warburg Dillon Read LLC.
- --------------------------------------------------------------------------------
70
<PAGE>
UNDERWRITING
- --------------------------------------------------------------------------------
Prior to this offering, there has been no public market for our common stock.
The initial public offering price will be negotiated by us and the
representatives. The principal factors to be considered in determining the
initial public offering price include:
- - the information set forth in this prospectus and otherwise available to the
representatives;
- - the history and the prospects for the industry in which we compete;
- - the ability of our management;
- - our prospects for future earnings, the present state of our development, and
our current financial position;
- - the general condition of the securities markets at the time of this
offering; and
- - the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.
In connection with the offering, the underwriters may purchase and sell shares
of common stock in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in the offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common stock while the offering
is in progress.
The underwriters also may impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the representatives have repurchased shares sold by or
for the account of that underwriter in stabilizing or short covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise affect
the market price of the common stock. As a result, the price of the common stock
may be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the underwriters at
any time. These transactions may be effected on the Nasdaq National Market, in
the over-the-counter market or otherwise.
We have agreed to indemnify the several underwriters against some liabilities,
including liabilities under the Securities Act of 1933, as amended, and to
contribute to payments that the underwriters may be required to make in respect
thereof.
Prudential Securities Incorporated facilitates the marketing of new issues
online through its PrudentialSecurities.com division. Clients of Prudential
Advisor(SM), a full service brokerage firm program, may view offering terms and
a prospectus online and place orders through their financial advisors.
LEGAL MATTERS
Cooley Godward LLP, Palo Alto, California, will provide us with an opinion as to
the validity of the common stock offered under this prospectus. Brobeck,
Phleger & Harrison LLP, Broomfield, Colorado, will pass upon certain legal
matters related to this offering for the underwriters. As of the date of this
prospectus, certain partners and associates of Cooley Godward LLP own an
aggregate of 78,860 shares of our common stock through investment partnerships.
Brian Cunningham, our Senior Vice President, Chief Operating Officer, Chief
Financial Officer and Secretary, is Of Counsel with Cooley Godward and
participates in their investment partnerships.
- --------------------------------------------------------------------------------
71
<PAGE>
- --------------------------------------------------------------------------------
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements at December 31, 1997 and December 31, 1998, and for the period from
inception (June 14, 1996) through December 31, 1997 and the year ended December
31, 1998, as set forth in their report. We have included our financial
statements in this prospectus and elsewhere in the registration statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-1 under the Securities Act with respect to the
shares of common stock offered under this prospectus. This prospectus does not
contain all of the information in the registration statement and the exhibits
and schedule to the registration statement. For further information with respect
to us and our common stock, we refer you to the registration statement and to
the exhibits and schedule to registration statement. Statements contained in
this prospectus as to the contents of any contract or any other document
referred to are not necessarily complete, and in each instance, we refer you to
the copy of the contract or other document filed as an exhibit to the
registration statement. Each of these statements is qualified in all respects by
this reference. You may inspect a copy of the registration statement without
charge at the SEC's principal office in Washington, D.C., and copies of all or
any part of the registration statement may be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment
of fees prescribed by the SEC. The SEC maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The address of the
Web site is http://www.sec.gov. The SEC's toll free investor information service
can be reached at 1-800-SEC-0330. Information contained on our website does not
constitute part of this prospectus.
Upon completion of the offering, we will be subject to the information reporting
requirements of the Securities Exchange Act of 1934, as amended, and we will
file reports, proxy statements and other information with the SEC.
We intend to furnish our stockholders with annual reports containing financial
statements audited by our independent public accountants and quarterly reports
for the first three fiscal quarters of each fiscal year containing unaudited
interim financial information. Our telephone number is (650) 624-1100.
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72
<PAGE>
Rigel Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
- ----------------------------------------------------------------------
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statement of Stockholders' Equity........................... F-5
Statements of Cash Flows.................................... F-7
Notes to Financial Statements............................... F-8
</TABLE>
- --------------------------------------------------------------------------------
F-1
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Rigel Pharmaceuticals, Inc.
We have audited the accompanying balance sheets of Rigel Pharmaceuticals, Inc.
as of December 31, 1998 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for the year ended December 31, 1998 and
the period from inception (June 14, 1996) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rigel Pharmaceuticals, Inc. at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the year ended December 31, 1998 and the period from inception (June 14,
1996) to December 31, 1997 in conformity with generally accepted accounting
principles.
Palo Alto, California /s/ ERNST & YOUNG LLP
February 19, 1999
- --------------------------------------------------------------------------------
F-2
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1999 1999
- -------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $9,144 $9,493 $7,192
Accounts receivable................................. -- -- 1,160
Prepaid expenses and other current assets........... 104 112 343
--------- --------- ----------------
Total current assets.............................. 9,248 9,605 8,695
Property and equipment, net........................... 1,932 3,218 8,387
Other assets.......................................... 150 133 79
--------- --------- ----------------
$11,330 $12,956 $17,161
========= ========= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $250 $484 $420
Accrued compensation................................ 44 104 193
Accrued liabilities................................. 413 916 514
Deferred revenue.................................... -- 3,472 4,386
Capital lease obligations........................... 432 721 1,913
--------- --------- ----------------
Total current liabilities......................... 1,139 5,697 7,426
Capital lease obligations............................. 1,172 1,652 5,680
Other long-term liabilities........................... 200 162 --
Commitments
Stockholders' equity:
Convertible preferred stock, $0.001 par value;
16,750,000, 22,000,000, and 24,000,000 shares
authorized in 1997, 1998, and 1999 respectively,
(none pro forma) issuable in series, 15,551,843,
19,033,707, and 22,053,707 shares issued and
outstanding in 1997, 1998, and 1999, respectively
(none pro forma) (aggregate liquidation preference
at December 31, 1997 and 1998 of $14,488 and
$21,451, respectively and September 30, 1999 of
$27,474).......................................... 16 19 22 $--
Common stock, $0.001 par value; 28,000,000,
35,000,000, and 37,500,000 shares authorized in
1997, 1998, and 1999, respectively, (100,000,000
pro forma), 2,556,667, 2,675,333, and
2,898,857 shares issued and outstanding in 1997,
1998, and 1999, respectively, and (24,952,564
pro forma)........................................ 3 3 3 25
Additional paid-in capital............................ 14,449 21,676 32,376 32,376
Deferred stock compensation........................... -- -- (4,164) (4,164)
Accumulated deficit................................... (5,649) (16,253) (24,182) (24,182)
--------- --------- ---------------- ----------------
Total stockholders' equity............................ 8,819 5,445 4,055 $4,055
--------- --------- ---------------- ================
$11,330 $12,956 $17,161
========= ========= ================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-3
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 14, 1996) TO YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999
- -------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Contract revenues from collaborations....... $-- $28 $-- $5,898
Costs and expenses:
Research and development.................... 4,568 8,305 5,071 10,165
General and administrative.................. 1,166 2,217 1,855 2,979
Amortization of deferred compensation....... -- -- -- 563
------------------- --------------- ------------ ------------
5,734 10,522 6,926 13,707
------------------- --------------- ------------ ------------
Loss from operations.......................... (5,734) (10,494) (6,926) (7,809)
Interest income (expense), net................ 85 (110) 117 (120)
------------------- --------------- ------------ ------------
Net loss...................................... $(5,649) $(10,604) $(6,809) $(7,929)
=================== =============== ============ ============
Net loss per share, basic and diluted......... $(2.25) $(4.01) $(2.59) $(2.87)
=================== =============== ============ ============
Weighted average shares used in computing
basic and diluted net loss per share........ 2,512 2,643 2,633 2,764
Pro forma net loss per share (unaudited),
basic and diluted........................... $(0.58) $(0.34)
=============== ============
Weighted average shares used in computing pro
forma net loss per share (unaudited), basic
and diluted................................. 18,334 23,418
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-4
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
CONVERTIBLE ADDITIONAL DEFERRED TOTAL
PREFERRED STOCK COMMON STOCK PAID-IN STOCK ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock to
founders at $0.001 per share
for cash in July
1996........................ -- 2,400,000 $3 $-- $-- $-- $3
Issuance of Series A
convertible preferred stock
at $0.10 per share in July
1996 for cash, net of
issuance cost............... 600,000 1 -- -- 51 -- -- 52
Issuance of Series A
convertible preferred stock
at $0.10 per share in
October 1996 for license
rights...................... 65,000 -- -- -- 7 -- -- 7
Issuance of common stock at
$0.001 per share for cash in
January 1997................ -- -- 110,000 -- -- -- -- --
Issuance of Series B
convertible preferred stock
at $0.80 per share in
January 1997 for cash, net
of issuance cost............ 7,500,000 8 -- -- 5,961 -- -- 5,969
Issuance of warrants to
purchase Series B preferred
stock for financing
arrangement................. -- -- -- -- 47 -- -- 47
Issuance of Series C preferred
stock at $1.14 per share in
November 1997 for cash, net
of issuance cost............ 7,236,843 7 -- -- 8,202 -- -- 8,209
Issuance of Series C preferred
stock at $1.14 per share in
August 1997 for license
rights...................... 150,000 -- -- -- 171 -- -- 171
Issuance of options to
consultants for services.... -- -- -- -- 5 -- -- 5
Issuance of common stock upon
exercise of options......... -- -- 46,667 -- 5 -- -- 5
Net loss and comprehensive
loss........................ -- -- -- -- -- -- (5,649) (5,649)
---------- ------ --------- ------ ---------- ------------ ----------- -------------
Balance at December 31, 1997.... 15,551,843 16 2,556,667 3 14,449 -- (5,649) 8,819
</TABLE>
(TABLE CONTINUED ON FOLLOWING PAGE.)
- --------------------------------------------------------------------------------
F-5
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
CONVERTIBLE ADDITIONAL DEFERRED TOTAL
PREFERRED STOCK COMMON STOCK PAID-IN STOCK ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of warrants to
purchase Series C preferred
stock for financing
arrangement................. -- -- -- -- 86 -- -- 86
Issuance of Series D
preferred stock at $2.00 per
share in December 1998 for
cash, net of issuance
costs....................... 3,481,864 3 -- -- 6,938 -- -- 6,941
Issuance of warrants to
purchase Series D preferred
stock for financing
arrangement................. -- -- -- -- 185 -- -- 185
Compensation expense related
to options granted to
consultants................. -- -- -- -- 6 -- -- 6
Issuance of common stock upon
exercise of options......... -- -- 118,666 -- 12 -- -- 12
Net loss and comprehensive
loss........................ -- -- -- -- -- -- (10,604) (10,604)
---------- ------ --------- ------ ---------- ------------ ----------- -------------
Balance at December 31, 1998.... 19,033,707 19 2,675,333 3 21,676 -- (16,253) 5,445
Issuance of Series C preferred
stock at $1.14 per share for
financing arrangement, net
of issuance cost
(unaudited)................. 20,000 -- -- -- 23 -- -- 23
Issuance of Series D
preferred stock at $2.00 per
share for cash, net of
issuance cost (unaudited)... 3,000,000 3 -- -- 5,925 -- -- 5,928
Issuance of common stock upon
exercise of options
(unaudited)................. -- -- 223,524 -- 25 -- -- 25
Deferred stock compensation
(unaudited)................. -- -- -- -- 4,727 (4,727) -- --
Amortization of deferred stock
compensation (unaudited).... -- -- -- -- -- 563 -- 563
Net loss and comprehensive
loss (unaudited)............ -- -- -- -- -- -- (7,929) (7,929)
---------- ------ --------- ------ ---------- ------------ ----------- -------------
Balance at September 30, 1999
(unaudited)................... 22,053,707 $22 2,898,857 $3 $32,376 $(4,164) $(24,182) $4,055
========== ====== ========= ====== ========== ============ =========== =============
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-6
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 14, 1996) YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999
- ---------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................................ $(5,649) $(10,604) $(6,809) $(7,929)
Adjustments to reconcile net loss to net cash used in
Operating activities:
Depreciation and amortization......................... 409 1,103 771 1,086
Amortization of deferred stock compensation........... 563
Issuances of equity instruments for noncash
benefits............................................ 230 192 -- 23
Changes in assets and liabilities:
Accounts receivable................................. -- -- -- (1,160)
Prepaid expenses and other current assets........... (104) (9) (44) (231)
Other assets........................................ (149) 17 38 54
Accounts payable.................................... 250 234 203 (64)
Accrued compensation................................ 44 60 30 89
Accrued liabilities................................. 412 503 (168) (402)
Deferred revenue.................................... -- 3,472 -- 914
Long-term liabilities............................... 200 (39) -- (162)
---------------- --------------- ------------ ------------
Net cash used in operating activities............. (4,357) (5,071) (5,979) (7,219)
---------------- --------------- ------------ ------------
INVESTING ACTIVITIES
Capital expenditures.................................... (2,341) (2,389) (1,658) (6,255)
---------------- --------------- ------------ ------------
Net cash used in investing activities............. (2,341) (2,389) (1,658) (6,255)
---------------- --------------- ------------ ------------
FINANCING ACTIVITIES
Proceeds from capital lease financing..................... 1,846 1,426 1,020 6,231
Principal payments on capital lease obligations........... (242) (571) (388) (1,011)
Net proceeds from issuances of common stock............... 7 12 9 25
Net proceeds from issuances of convertible preferred
stock................................................... 14,231 6,942 -- 5,928
---------------- --------------- ------------ ------------
Net cash provided by financing activities......... 15,842 7,809 641 11,173
---------------- --------------- ------------ ------------
Net increase in cash and cash equivalents................. 9,144 349 (6,996) (2,301)
Cash and cash equivalents at beginning of period.......... -- 9,144 9,144 9,493
---------------- --------------- ------------ ------------
Cash and cash equivalents at end of period........ $9,144 $9,493 $2,148 $7,192
================ =============== ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid........................................... $71 $161 $102 $433
================ =============== ============ ============
SCHEDULE OF NON CASH TRANSACTIONS
Deferred stock compensation............................. $-- $-- $-- $4,727
================ =============== ============ ============
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-7
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Rigel Pharmaceuticals, Inc. ("Rigel" or the "Company") was incorporated in the
state of Delaware on June 14, 1996. The Company is engaged in the discovery and
development of a broad range of new small molecule drug candidates. The
Company's results of operations from June 14, 1996 to December 31, 1996 were
immaterial.
The Company matured from its development stage to an operating company in 1998.
As such, its financial statements are no longer prepared on a development stage
basis. The Company's current operating plan anticipates that the Company will
require additional capital to fund its operations and continue its research and
development programs. As of September 30, 1999, the Company has funded its
operations primarily through the sale of private equity securities, payments
from corporate collaborators and capital asset lease financings. The Company
plans to seek additional funding through public or private financing
arrangements with third parties.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
INTERIM FINANCIAL INFORMATION
The financial information at September 30, 1999 and for the nine months ended
September 30, 1998 and 1999 is unaudited but, in the opinion of management, has
been prepared on the same basis as the annual financial statements and includes
all adjustments (consisting only of normal recurring adjustments) that Rigel
considers necessary for a fair presentation of the financial position at such
date and the operating results and cash flow for such periods. Results for the
nine months ended September 30, 1999 are not necessarily indicative of the
results to be expected for any subsequent period.
UNAUDITED PRO FORMA INFORMATION
If Rigel's initial public offering as described in Note 8 is consummated, all of
the preferred stock outstanding will automatically be converted into common
stock. The unaudited pro forma convertible preferred stock and stockholders'
equity at September 30, 1999 has been adjusted for the assumed conversion of
preferred stock based on the shares of preferred stock outstanding at
September 30, 1999.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
90 days or less, when purchased, to be cash equivalents. For the periods
presented, cash equivalents consist of money market funds. Rigel has established
guidelines regarding diversification of its investments and their maturities
that should maintain safety and liquidity.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments, including cash and cash equivalents, accounts receivable,
accounts payable, accrued liabilities and accrued compensation are carried at
cost, which management believes approximates fair value.
- --------------------------------------------------------------------------------
F-8
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets, which range
from two to seven years. Leasehold improvements are amortized using the
straight-line method over the estimated useful lives of the assets or the term
of the lease, whichever is shorter.
REVENUE RECOGNITION
The Company's research and development collaboration agreements provide for
periodic payments in support of the Company's research activities. The Company
recognizes revenues from these agreements as earned based upon the performance
requirements of the agreements and payments for up front technology access fees
are recognized ratably over the period of the research program. Payments
received, which are related to future performance, are deferred and recognized
as revenue when earned over future performance periods.
RESEARCH AND DEVELOPMENT
Research and development expenditures, including direct and allocated expenses,
are charged to expense as incurred. Collaboration agreements generally specify
minimum levels of research effort required to be performed by the Company.
COMPREHENSIVE LOSS
Effective January 1, 1998, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standard No. 130, "REPORTING
COMPREHENSIVE INCOME" ("SFAS 130"). SFAS 130 establishes new rules for the
reporting and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net loss or
stockholders' equity. The comprehensive loss is equal to the net loss and has
been disclosed in the statement of stockholders' equity.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with the provisions of Statement of Financial Accounting Standards
No. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF" ("SFAS 121"), the Company reviews long-lived assets,
including property and equipment, for impairment whenever events or changes in
business circumstances indicate that the carrying amount of the assets may not
be fully recoverable. Under SFAS 121, an impairment loss would be recognized
when estimated undiscounted future cash flows expected to result from the use of
the asset and its eventual disposition is less than its carrying amount.
Impairment, if any, is assessed using discounted cash flows. Through
September 30, 1999, there have been no such losses.
SEGMENT REPORTING
Effective in January 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION" ("SFAS 131"). SFAS 131 establishes annual and interim reporting
standards for an enterprise's operating segments and related disclosures about
its products, services, geographic areas, and major customers. The Company has
determined that it operates in only one segment. Accordingly, the adoption of
SFAS 131 had no impact on the Companies financial statements.
- --------------------------------------------------------------------------------
F-9
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ACCOUNTING FOR STOCK-BASED COMPENSATION
As permitted by Statement of Financial Accounting Standards No. 123, "ACCOUNTING
FOR STOCK-BASED COMPENSATION" ("SFAS 123"), the Company has elected to follow
Accounting Principles Board Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES" and related interpretations in accounting for its employee stock
option grants ("APB 25") and to disclose the pro forma effect of SFAS 123 (see
Note 6). Pro forma net loss information, as required by ("SFAS 123"), is
included in Note 6. Options granted to consultants are accounted for using the
Black-Scholes method prescribed by SFAS 123 and in accordance with Emerging
Issues Task Force Consensus No. 96-18 ("EITF 96-18") the options are subject to
periodic re-valuation over their vesting terms.
NET LOSS PER SHARE
Net loss per share has been computed according to the Financial Accounting
Standards Board Statement No. 128, "EARNINGS PER SHARE," which requires
disclosure of basic and diluted earnings per share. Basic earnings per share
excludes any dilutive effects of options, shares subject to repurchase,
warrants, and convertible securities. Diluted earnings per share includes the
impact of potentially dilutive securities. Following the guidance given by the
Securities and Exchange Commission Staff Accounting Bulletin No. 98, common
stock and preferred stock that has been issued or granted for nominal
consideration prior to the anticipated effective date of the initial public
offering must be included in the calculation of basic and dilutied net loss per
common shares as of these shares had been outstanding for all periods presented.
To date, the Company has not issued or granted shares for nominal consideration.
Pro forma net loss per share includes shares issuable upon the conversion of
outstanding shares of preferred stock (using the as if method) from the original
date of issuance.
A reconciliation of shares used in the calculations is as follows (in
thousands):
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 14, 1996) TO YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999
- -------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Basic and diluted:
Weighted-average shares of common stock
outstanding................................. 2,152 2,643 2,633 2,764
=================== ============
Adjustment to reflect weighted-average effect
of assumed conversions of preferred stock
(unaudited)................................. 15,691 20,654
--------------- ------------
Weighted-average shares used in pro forma
basic and diluted net loss per share
(unaudited)................................. 18,334 23,418
=============== ============
</TABLE>
During all periods presented, the Company had securities outstanding which could
potentially dilute basic earnings per share in the future, but were excluded
from the computation of diluted net loss per
- --------------------------------------------------------------------------------
F-10
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
share, as their effect would have been antidilutive. These outstanding
securities consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible Preferred Stock....................... 15,552 19,034 15,552 22,034
Outstanding Options............................... 1,475 3,354 3,058 5,132
Warrants.......................................... 175 648 457 648
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "ACCOUNTING FOR DERIVATIVE FINANCIAL
INSTRUMENTS AND FOR HEDGING ACTIVITIES" ("SFAS 133") which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. SFAS 133 is effective for fiscal years
beginning after June 15, 1999 and is not anticipated to have an impact on the
Company's results of operations of financial condition when adopted as the
Company holds no derivative financial instruments and does not currently engage
in hedging activities.
In March 1998, the AICPA issued Statement of Position 98-1, "ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE"
("SOP 98-1"). SOP 98-1 requires that entities capitalize certain costs related
to internal use software once certain criteria have been met. The Company
adopted the provisions of SOP 98-1 on January 1, 1999. Through September 30,
1999, the Company had not capitalized any costs related to internal use
software.
2. SPONSORED RESEARCH AND LICENSE AGREEMENTS
RESEARCH AGREEMENTS
In April 1997, Rigel entered into a two-year sponsored research agreement with
Leland Stanford Junior University ("Stanford") for certain patent rights,
materials and other know-how relating to the discovery of viral delivery
systems. Under the terms of this agreement, Rigel is required to pay research
funding fees to be used for salaries and for costs associated with supplies and
equipment necessary to perform the research. Stanford retains ownership of all
technologies discovered under this agreement, and Rigel has an option to extend
the agreement by one year and to acquire all such technologies.
On December 4, 1998, the Company entered into a research collaboration agreement
with Janssen Pharmaceutica NV ("Janssen") to research and identify novel targets
for drug discovery. Under the terms of the contract, Janssen paid an one time
fee and will provide support for research activities during the three-year
research period, as well as various milestones and royalties. As part of this
collaborative research agreement, Johnson & Johnson ("J&J"), a related company
to Janssen, participated in the Company's Series D preferred stock financing.
J&J contributed $3,000,000 for 1,500,000 shares of Series D preferred stock.
On January 31, 1999, the Company entered into a two-year collaborative research
agreement with Pfizer Inc. to discover and develop various molecular targets.
Upon signing of the agreement, Pfizer was obligated to pay a one-time,
nonrefundable, noncreditable fee. Under the terms of the contract, Pfizer will
provide support for research for two years, as well as payment for various
milestones and royalty if certain conditions are met. In conjunction with the
agreement, Pfizer contributed an additional $2,000,000 in exchange for 1,000,000
shares of Series D preferred stock.
- --------------------------------------------------------------------------------
F-11
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On May 28, 1999, the Company entered into a broad collaboration with Novartis
Pharma AG, whereby the Company and Novartis agreed to work on five different
research programs to identify various targets for drug development. Two of the
five programs were initiated in 1999, with the third program initiated on
January 1, 2000. The remaining two programs will be initiated no later than
May 28, 2001. Upon the initiation of each research program, Novartis is
obligated to pay a one-time, non-refundable, noncreditable fee. For each of the
first two programs, Novartis will provide support for research activities for a
period of five years. For all programs, Novartis will provide payment for
various milestones and royalties if certain conditions, as denoted in the
collaboration agreement, are met. In conjunction with the agreement, Novartis
contributed an additional $4,000,000 in exchange for 2,000,000 shares of
Series D preferred stock The agreement also allows for an additional equity
investment of up to $10,000,000 which is callable by the Company up through an
Initial Public Offering ("IPO"). The price of this additional equity investment
is to be determined by the most recent private financing price or IPO price.
LICENSE AGREEMENTS
In October 1996, Rigel entered into a license agreement with Stanford for
certain patent rights and other know-how relating to the use of retrovirally
produced peptide and protein libraries. Under the terms of this agreement, Rigel
is required to pay a nonrefundable license fee, minimum royalties and to issue
Stanford 65,000 shares of Series A preferred stock. The agreement terminates at
the earlier of 20 years or 10 years after the date of the first commercial sale.
In August 1997, Rigel signed a three-year agreement relating to the 1996
agreement to provide the Company with exclusivity to these patents. Under this
agreement, Rigel is required to pay a nonrefundable fee and an exclusivity fee
over the next three years and issued Stanford 150,000 shares of Series C
preferred stock.
3. SIGNIFICANT CONCENTRATIONS
In 1998, Pfizer represented 100% of total revenues. For the nine months ended
September 30, 1999, Pfizer, Janssen and Novartis accounted for 38%, 36% and 26%,
respectively. For the nine months ended September 30, 1998, no revenues were
recorded.
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Laboratory and office equipment............................. $2,129 $4,010 $7,992
Leasehold improvements...................................... 212 720 2,993
------------ ------------ --------------
2,341 4,730 10,985
Less accumulated depreciation and amortization.............. (409) (1,512) (2,598)
------------ ------------ --------------
Property and equipment, net................................. $1,932 $3,218 $8,387
============ ============ ==============
</TABLE>
5. LONG-TERM OBLIGATIONS
On March 1, 1999, the Company moved its facilities from Sunnyvale, California to
South San Francisco. At December 31, 1998, the Company recorded an accrual of
$142,495 for early termination of its Sunnyvale lease.
- --------------------------------------------------------------------------------
F-12
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At December 31, 1998 future minimum lease payments under all noncancelable
leases are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
DECEMBER 31, 1998 LEASES LEASES
- -----------------------------------------------------------------------------------------
<S> <C> <C>
1999........................................................ $ 926 $ 1,564
2000........................................................ 926 1,463
2001........................................................ 613 2,018
2002........................................................ 196 2,263
2003........................................................ -- 2,333
2004 and thereafter......................................... -- 25,388
------------ ------------
Total minimum payment required.............................. 2,661 $35,029
============
Less amount representing interest........................... (288)
------------
Present value of future lease payments...................... 2,373
Less current portion........................................ (721)
Noncurrent obligations under capital leases................. $1,652
============
</TABLE>
The Company leases its San Francisco office and research facility under a
noncancelable operating lease which expires in February 2016. Rent expense under
all operating leases amounted to approximately $385,000, $381,000 and $1,247,000
for the period from inception (June 14, 1996) to December 31, 1997, the year
ended December 31, 1998 and the nine months ended September 30, 1999,
respectively.
In 1997, the Company entered into an equipment lease line agreement for up to
$2,000,000. This was fully utilized in 1998. In June 1998, the Company entered
into a second equipment lease line agreement for up to $3,000,000, which was
fully utilized in June 1999.
In June 1999 and August 1999, the Company entered into two additional equipment
lease line agreements for an aggregate total of $6,000,000, or $3,000,000 each.
As of September 30, 1999, approximately $1,581,000 was available for future draw
downs.
The lease periods for all leases are for four years. The 1997 and 1998 leases
have an option to purchase the equipment at fair value at the end of the periods
or to renew the leases upon the terms and conditions of the original lease
agreement while the 1999 leases have a balloon payment at the end of the term of
10% of the original acquisition price. The interest on each lease is fixed at
the time of the draw down with the interest rates ranging from 7% to 15%.
Obligations under all leases are secured by the assets financed under the
leases.
6. STOCKHOLDERS' EQUITY
All series of preferred stock are convertible at the stockholders' option at any
time into common stock on a one-for-one basis, subject to adjustment for
antidilution, and carry voting rights equivalent to common stock. Conversion is
automatic upon the closing of an underwritten public offering with aggregate
offering proceeds exceeding $15,000,000 and an offering price of at least $3.50
per share (appropriately adjusted for any stock splits, stock dividends,
recapitalization or similar events) or upon agreement of the majority of holders
of the outstanding shares.
Holders of Series A, B, C, and D convertible preferred stock are entitled to
noncumulative dividends of $0.008, $0.064, $0.0912, and $0.16 per share,
respectively, if and when declared by the board of
- --------------------------------------------------------------------------------
F-13
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
directors. These dividends are to be paid in advance of any distributions to
common stockholders. In addition, dividends are to be paid to Series B, C, and D
stockholders in advance of Series A stockholders. No dividends have been
declared through September 30, 1999.
In the event of a liquidation or winding up of the Company, holders of
Series A, B, C, and D convertible preferred stock shall have a liquidation
preference of $0.10, $0.80, $1.14, and $2.00 per share, respectively, together
with any declared but unpaid dividends, over holders of common shares.
Preference shall be given to Series B, C, and D stockholders over Series A
stockholders.
Preferred stockholders are entitled to the number of votes they would have upon
conversion of their preferred shares into common stock.
The authorized, issued and outstanding Series A, B, C, and D shares of
convertible preferred stock were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1998
SHARES AGGREGATE SHARES AGGREGATE
SHARES ISSUED AND LIQUIDATION SHARES ISSUED AND LIQUIDATION
AUTHORIZED OUTSTANDING PREFERENCE AUTHORIZED OUTSTANDING PREFERENCE
- --------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Series A............. 665 665 $66 665 665 $66
Series B............. 7,675 7,500 6,000 7,675 7,500 6,000
Series C............. 8,000 7,387 8,422 8,000 7,387 8,422
Series D............. -- -- -- 5,660 3,482 6,963
Undesignated......... 410 -- -- -- -- --
---------- ------------ ----------- ---------- ------------ -----------
16,750 15,552 $14,488 22,000 19,034 $21,451
========== ============ =========== ========== ============ ===========
<CAPTION>
SEPTEMBER 30, 1999
(UNAUDITED)
SHARES AGGREGATE
SHARES ISSUED AND LIQUIDATION
AUTHORIZED OUTSTANDING PREFERENCE
- --------------------- ---------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Series A............. 665 665 $66
Series B............. 7,675 7,500 6,000
Series C............. 8,000 7,407 8,444
Series D............. 7,000 6,482 12,964
Undesignated......... 660 -- --
---------- ------------ -----------
24,000 22,054 $27,474
========== ============ ===========
</TABLE>
WARRANTS
In conjunction with the equipment lease line executed in April 1997, the Company
issued a warrant to purchase 175,000 shares of Series B preferred stock at an
exercise price of $0.80 per share. The warrant expires in April 2004.
In conjunction with the equipment lease line executed in June 1998, the company
issued a warrant to purchase 131,578 shares of Series C preferred stock at an
exercise price of $1.14 per share. The warrant expires in June 2005.
In conjunction with the Series D preferred stock financing in December 1998, the
Company issued warrants to purchase 191,100 shares of Series D preferred stock
at an exercise price of $2.00 per share. The warrant expires at the earlier of
the closing of the initial public offering or December 2003.
In conjunction with the facilities lease entered into in June 1998, the Company
issued a warrants to purchase 150,000 shares of common stock at an exercise
price of $1.14 per share. The warrants are exercisable at any time up to the
seventh anniversary of the closing of an initial public offering.
1997 INCENTIVE STOCK PLAN
On March 5, 1997, the board adopted the Rigel Pharmaceuticals, Inc. Stock Option
Plan (the "Stock Plan") under which incentive stock options and nonstatutory
stock options may be granted to employees, directors of, or consultants to, the
Company and its affiliates.
Options granted under the Stock Plan expire no later than 10 years from the date
of grant. The option price of each incentive stock option shall be at least 100%
of the fair value on the date of grant, and
- --------------------------------------------------------------------------------
F-14
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the option price for each nonstatutory stock option shall be not less than 85%
of the fair value on the date of grant, as determined by the board of directors.
Options may be granted with different vesting terms from time to time but not to
exceed five years from the date of grant.
As of September 30, 1999, a total of 9,525,000 shares of common stock have been
authorized for issuance under the Stock Plan.
Activity under the Stock Plan through September 30, 1999 is as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at December 31, 1996.................... --
Granted................................................... 1,545,000 $0.10
Exercised................................................. (46,667) 0.10
Cancelled................................................. (23,333) 0.10
---------
Options outstanding at December 31, 1997.................... 1,475,000 0.10
Granted................................................... 2,157,500 0.16
Exercised................................................. (118,666) 0.10
Cancelled................................................. (159,584) 0.12
---------
Options outstanding at December 31, 1998.................... 3,354,250 0.14
Granted (unaudited)....................................... 2,422,000 0.23
Exercised (unaudited)..................................... (226,024) 0.11
Cancelled (unaudited)..................................... (418,423) 0.16
---------
Options outstanding at September 30, 1999 (unaudited)....... 5,131,803 $0.18
=========
</TABLE>
The shares available for future grant are 803,333, 1,805,417, and 4,001,840 as
of December 31, 1997, December 31, 1998, and the nine months ended
September 30, 1999.
The weighted-average fair value of the options granted in 1997, 1998, and the
nine months ended September 30, 1999, was $0.02, $0.03, and $0.06 respectively.
At December 31, 1998 and September 30, 1999, the weighted-average remaining
contractual life of outstanding options was 9.18 years and 9 years,
respectively. Options exercisable at December 31, 1998 were 612,687 at a
weighted-average exercise price of $0.11 per share and at September 30, 1999
were 1,142,578 at a weighted average exercise price of $0.15 per share.
Pro forma information regarding net loss and net loss per share is required by
SFAS 123 and has been determined as if the Company had accounted for its
employee stock options under the fair value method prescribed by the Statement.
The fair value for these options was estimated at the date of grant using the
minimum value method with the following weighted-average assumptions for the
period from inception (June 14, 1996) to December 31, 1997, for the year ended
December 31, 1998, and the nine months ended September 30, 1999: risk-free
interest rates of 4.5%, 5.5% and 6.0% respectively; an expected option life of
five years; and no dividend yield.
- --------------------------------------------------------------------------------
F-15
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the vesting period of the options. The Company's
pro forma information follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(JUNE 14, 1996) TO YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998 SEPTEMBER 30, 1999
- ----------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C>
Net loss:
As reported..................... $(5,649) $(10,604) $(7,929)
Pro forma....................... (5,649) (10,604) (7,960)
Basic and diluted net loss per
share:
As reported..................... $(2.25) $(4.01) $(2.87)
Pro forma....................... (2.25) (4.01) (2.88)
</TABLE>
The effects of applying SFAS 123 for pro forma disclosures are not likely to be
representative of the effects as reported net loss for future years.
The Company granted 627,500 and 279,000 common stock options to consultants in
exchange for services for the year ended December 31, 1998 and the nine months
ended September 30, 1999. The company has recorded compensation expense related
to these options. In accordance with SFAS 123 and EITF 96-18, options granted to
consultants are periodically revalued as they vest.
The Company has recorded deferred stock compensation of approximately $4,727,000
in the nine months ended September 30, 1999, representing the difference between
the exercise price of the options and the deemed fair value of the common stock.
These amounts are being amortized by shares to operations over the vesting
periods using the graded vesting method. Such amortization expense amounted to
approximately $563,000 for the nine months ended September 30, 1999.
RESERVED SHARES
As of December 31, 1998, the Company has reserved shares of common stock for
future issuance as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998
- ---------------------------------------------------------------------------
<S> <C>
Warrants.................................................... 150,000
Incentive stock plan........................................ 5,159,667
Convertible preferred stock................................. 19,033,707
------------
24,343,374
============
</TABLE>
In addition, the Company has reserved the following preferred stock for future
issuance upon exercise of warrants:
<TABLE>
<CAPTION>
DECEMBER 31,
1998
- ---------------------------------------------------------------------------
<S> <C>
Series B.................................................... 175,000
Series C.................................................... 131,578
Series D.................................................... 191,100
</TABLE>
- --------------------------------------------------------------------------------
F-16
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES
As of December 31, 1998, the Company had a federal net operating loss
carryforward of approximately $14,600,000. The Company also had federal research
and development tax credit carryforward of approximately $300,000. The net
operating loss and credit carryforward will expire at various dates beginning in
2011 through 2018, if not utilized.
Utilization of the net operating losses may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code of 1986 and similar state provisions. The annual limitation may
result in the expiration of net operating losses and credits before utilization.
As of December 31, 1998 and 1997, the Company had deferred tax assets of
approximately $6,400,000 and $2,500,000, respectively, which primarily related
to net operating loss carryforward. A full valuation allowance is provided
against the deferred tax assets as, due to the Company's lack of earnings
history, realization of these future benefits are not sufficiently assured. The
valuation allowance increased by $3,900,000 in 1998 and $2,500,000 in 1997.
8. SUBSEQUENT EVENTS (UNAUDITED)
SERIES E FINANCING
On February 3, 2000, the Company closed a private placement in which it sold
2,508,330 shares of Series E Preferred stock at $6.00 per share for net proceeds
of approximately $15 million. Series E Preferred stock is convertible to common
stock at any time into common stock on a one-for-one basis and on conversion is
automatic if the IPO (see below) is consummated. In addition, the Company issued
50,000 shares of Series E preferred stock for a license of technology.
INITIAL PUBLIC OFFERING
In February 2000, the board of directors authorized the filing of a registration
statement with the Securities and Exchange Commission to register shares of its
common stock in connection with a proposed Initial Public Offering. If the
offering contemplated by this prospectus is consummated, the preferred stock
outstanding as of the closing date will be converted into shares of the
Company's common stock. The pro forma stockholders' equity in the accompanying
balance sheet as of September 30, 1999 reflects conversion of the outstanding
preferred stock into 24,612,042 shares of common stock. Pro forma net loss per
share is computed as if the outstanding preferred stock has been converted into
common stock on the date of issuance.
ADDITIONAL DEFERRED COMPENSATION
From October 1, 1999 through January 27, 2000, options to purchase 1,472,599
shares were granted pursuant to the 1997 Stock Option Plan with a weighted
average price of $3.47 per share. The company estimates that additional deferred
compensation of approximately $7.0 million will be recorded as a result of these
options and amortized to compensation expense in accordance with Rigel's policy.
In addition, in January 2000, the Company fully vested an option to purchase
75,000 shares of common stock to a consultant for services. The company
estimates that compensation with respect to these options will be approximately
$664,000 and will be recorded in January 2000.
2000 EMPLOYEE STOCK PURCHASE PLAN
In January 2000, the Company adopted its 2000 Employee Stock Purchase Plan (the
"Purchase Plan"). A total of 400,000 shares of the Company's common stock have
been reserved for issuance under the
- --------------------------------------------------------------------------------
F-17
<PAGE>
RIGEL PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Purchase Plan. In addition, the Purchase Plan provides for annual increases in
the number of shares available for issuance under the Purchase Plan on each
anniversary date of the effective date of the offering. The number of shares
reserved automatically is equal to the lesser of 400,000 shares, 1% of the
outstanding shares on the date of the annual increase or such amount as may be
determined by the board. The Purchase plan permits eligible employees to
purchase common stock at a discount through payroll deductions during defined
offering periods. The price at which the stock is purchased is equal to the
lower of 85% of the fair market value of the common stock on the first day of
the offering or 85% of the fair market value of the Company's common stock on
the purchase date. The initial offering period will commence on the effective
date of the offering.
2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In September 1999, the Company adopted the 2000 Non-Employee Directors Stock
Option Plan and reserved a total of 300,000 shares of common stock for issuance
thereunder. Each non-employee director who becomes a director of the Company
will be automatically granted a nonstatutory stock option to purchase 20,000
shares of common stock on the date on which such person first becomes a
director. At each board meeting immediately following each annual stockholders
meeting, beginning with the first board meeting after the 2001 Annual
Stockholders Meeting, each non-employee director will automatically be granted a
nonstatutory option to purchase 5,000 shares of common stock. The exercise price
of options under the Directors' Plan will be equal to the fair market value of
the common stock on the date of grant. The maximum term of the options granted
under the Directors' Plan is ten years. All grants under the Directors' Plan
will vest monthly over two years from date of grant. The Directors' Plan will
terminate in September 2009, unless terminated earlier in accordance with the
provisions of the Directors' Plan.
- --------------------------------------------------------------------------------
F-18
<PAGE>
[LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than the
underwriting discounts payable by us, in connection with the sale of common
stock being registered. All amounts are estimates except the SEC registration
fee, the NASD filing fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC registration fee........................................
NASD filing fee.............................................
Nasdaq National Market listing fee..........................
Blue Sky Fees and Expenses..................................
Transfer Agent and Registrar fees...........................
Accounting fees and expenses................................
Legal fees and expenses.....................................
Printing and engraving costs................................
Miscellaneous expenses......................................
Total................................................... $
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Delaware law, our amended and restated certificate of
incorporation provides that no director of ours will be personally liable to us
or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
- - for any breach of duty of loyalty to us or to our stockholders;
- - for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- - for unlawful payment of dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law; or
- - for any transaction from which the director derived an improper personal
benefit.
Our amended and restated certificate of incorporation further provides that we
must indemnify our directors and executive officers and may indemnify our other
officers and employees and agents to the fullest extent permitted by Delaware
law. We believe that indemnification under our amended and restated certificate
of incorporation covers negligence and gross negligence on the part of
indemnified parties.
We have entered into indemnification agreements with each of our directors and
certain officers. These agreements, among other things, require us to indemnify
each director and officer for certain expenses including attorneys' fees,
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by or in the right of Rigel, arising
out of the person's services as our director or officer, any subsidiary of ours
or any other company or enterprise to which the person provides services at our
request.
The underwriting agreement (Exhibit 1.1) will provide for indemnification by the
underwriters of Rigel, our directors, our officers who sign the registration
statement, and our controlling persons for some liabilities, including
liabilities arising under the Securities Act.
- --------------------------------------------------------------------------------
II-1
<PAGE>
PART II
- --------------------------------------------------------------------------------
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since July 15, 1996, Rigel has sold and issued unregistered securities to a
limited number of persons, as described below. None of these transactions
involved any underwriters, underwriting discounts or commissions, or any public
offering, and Rigel believes that each transaction was exempt from the
registration requirements of the Securities Act by virtue of Section 4(2)
thereof, Regulation D promulgated thereunder or Rule 701 pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of securities in each such transaction
represented their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof, and
appropriate legends were affixed to the share certificates and instruments
issued in such transactions. We believe that all recipients had adequate access
to information about Rigel, through their relationships with Rigel.
Since July 15, 1996, Rigel has sold and issued the following unregistered
securities:
(1) From July 15, 1996 to January 31, 2000, we granted incentive stock options
and nonstatutory stock options to purchase an aggregate of 7,597,099 shares
of Rigel's common stock at exercise prices ranging from $0.10 to $4.50 per
share to employees, directors and consultants under the Plan. Of these stock
options 655,162 shares have been canceled without being exercised, 588,334
shares have been exercised, 2,500 shares have been repurchased and 6,108,603
shares remain outstanding.
(2) In July 1996 and January 1997, we sold an aggregate of 2,860,000 shares of
our common stock to five purchasers at a purchase price of $0.001 per share,
350,000 shares of which we repurchased.
(3) From July 1996 to January 1997, we sold an aggregate of 665,000 shares of
our Series A preferred stock to four purchasers at a purchase price of $0.10
per share.
(4) In January 1997, we sold an aggregate of 7,500,000 shares of our Series B
preferred stock to nine purchasers at a purchase price of $0.80 per share.
(5) In May 1997, we issued a warrant to purchase 175,000 shares of our Series B
preferred stock at a purchase price of $0.80 per share.
(6) From November 1997 to January 1998, we sold an aggregate of 7,406,843 shares
of our Series C preferred stock to twelve purchasers at a purchase price of
$1.14 per share.
(7) In June 1998, we issued a warrant to purchase 131,578 shares of Series C
preferred stock at an exercise price of $1.14 per share.
(8) From December 1998 to May 1999, we sold an aggregate of 6,481,864 shares of
our Series D preferred stock to ten purchasers at a purchase price of $2.00
per share.
(9) In December 1998, we issued five warrants to purchase an aggregate of
191,100 shares of Series D preferred stock at an exercise price of $2.00 per
share, of which 180 shares have been exercised.
(10) On February 3, 2000, we sold an aggregate of 2,508,330 shares of our
Series E preferred stock to thirteen purchasers at a purchase price of $6.00
per share, and issued 50,000 shares of Series E preferred stock to one
entity for a license for technology.
- --------------------------------------------------------------------------------
II-2
<PAGE>
PART II
- --------------------------------------------------------------------------------
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of Rigel
to be filed upon the closing of the offering made pursuant
to this Registration Statement.
3.2* Amended and Restated Bylaws of Rigel to be filed upon the
closing of the offering made pursuant to this Registration
Statement.
4.1* Specimen Common Stock Certificate.
4.2* Amended and Restated Investor Rights Agreement, dated
February 3, 2000, between Rigel and holders of Rigel's
Series B, Series C, Series D and Series E preferred stock.
4.3* Form of Founder Stock Purchase Agreement.
4.4 Form of warrant to purchase shares of common stock.
4.5 Warrant issued to Lighthouse Capital Partners II, L.P. for
purchase of shares of Series B preferred stock.
4.6 Warrant issued to Lighthouse Capital Partners II, L.P. for
purchase of shares of Series C preferred stock.
4.7 Form of warrant to purchase shares of Series D preferred
stock.
5.1* Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement.
10.2 2000 Equity Incentive Plan.
10.3 Form of Stock Option Agreement pursuant to 2000 Equity
Incentive Plan.
10.4 2000 Employee Stock Purchase Plan.
10.5 2000 Non-Employee Directors' Stock Option Plan.
10.6++ Collaboration Agreement between Rigel and Janssen
Pharmaceutica N.V., dated December 4, 1998.
10.7++ Collaborative Research and License Agreement between Rigel
and Pfizer Inc., dated January 31, 1999.
10.8++ Collaboration Agreement between Rigel and Novartis Pharma
AG, dated May 26, 1999.
10.9++ License and Research Agreement between Rigel and Cell
Genesys, Inc., dated September 2, 1999.
10.10 Collaborative Research and Development Agreement between
Rigel and Neurocrine Biosciences, Inc., dated
December 1997.
10.11 Employment agreement between Rigel and Donald Payan, dated
January 16, 1997.
10.12 Lease between Rigel and Britannia Pointe Grand Limited
Partnership, dated June 2, 1998.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on signature page).
27.1 Financial Data Schedule.
</TABLE>
- ---------
* To be filed by amendment.
++ Confidential treatment requested as to specific portions, which portions are
omitted and filed separately with the Securities and Exchange Commission.
ITEM 17. UNDERTAKINGS
The registrant hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
- --------------------------------------------------------------------------------
II-3
<PAGE>
PART II
- --------------------------------------------------------------------------------
Insofar as indemnification by the registrant for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions referenced in Item 14 of this
Registration Statement 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 hereunder, 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.
The registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of Prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
- --------------------------------------------------------------------------------
II-4
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of South San
Francisco, State of California, on the 3rd day of February, 2000.
<TABLE>
<S> <C>
RIGEL PHARMACEUTICALS INC.
By: /s/ JAMES M. GOWER
--------------------------------------------
James M. Gower
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints James M. Gower and Brian C. Cunningham,
and each of them, his or her true and lawful agent, proxy and attorney-in-fact,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to (i) act on, sign and
file with the Securities and Exchange Commission any and all amendments
(including post-effective amendments) to this registration statement together
with all schedules and exhibits thereto and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, together with all schedules and exhibits thereto, (ii) act on, sign and
file such certificates, instruments, agreements and other documents as may be
necessary or appropriate in connection therewith, (iii) act on and file any
supplement to any prospectus included in this registration statement or any such
amendment or any subsequent registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and
all actions which may be necessary or appropriate to be done, as fully for all
intents and purposes as he or she might or could do in person, hereby approving,
ratifying and confirming all that such agent, proxy and attorney-in-fact or any
of his substitutes may lawfully do or cause to be done by virtue thereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ JAMES M. GOWER President, Chief Executive Officer
- --------------------------------- and Director (Principal Executive February 3, 2000
James M. Gower Officer)
Senior Vice President, Chief
/s/ BRIAN C. CUNNINGHAM Financial Officer Chief Operating
- --------------------------------- Officer and Secretary (Principal February 3, 2000
Brian C. Cunningham Finance and Accounting Officer)
/s/ DONALD G. PAYAN
- --------------------------------- Executive Vice President, Chief February 3, 2000
Donald G. Payan Scientific Officer and Director
/s/ JEAN DELEAGE
- --------------------------------- Director February 3, 2000
Jean Deleage
/s/ ALAN FRAZIER
- --------------------------------- Director February 3, 2000
Alan D. Frazier
/s/ TAK MAK
- --------------------------------- Director February 3, 2000
Tak Mak
/s/ WALTER MOOS
- --------------------------------- Director February 3, 2000
Walter H. Moos
</TABLE>
- --------------------------------------------------------------------------------
II-5
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of Rigel
to be filed upon the closing of the offering made pursuant
to this Registration Statement.
3.2* Amended and Restated Bylaws of Rigel to be filed upon the
closing of the offering made pursuant to this Registration
Statement.
4.1* Specimen Common Stock Certificate.
4.2* Amended and Restated Investor Rights Agreement, dated
February 3, 2000, between Rigel and holders of Rigel's
Series B, Series C, Series D and Series E preferred stock.
4.3* Form of Founder Stock Purchase Agreement.
4.4 Form of warrant to purchase shares of common stock.
4.5 Warrant issued to Lighthouse Capital Partners II, L.P. for
purchase of shares of Series B preferred stock.
4.6 Warrant issued to Lighthouse Capital Partners II, L.P. for
purchase of shares of Series C preferred stock.
4.7 Form of warrant to to purchase shares of Series D preferred
stock.
5.1* Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement.
10.2 2000 Equity Incentive Plan.
10.3 Form of Stock Option Agreement pursuant to 2000 Equity
Incentive Plan.
10.4 2000 Employee Stock Purchase Plan.
10.5 2000 Non-Employee Directors' Stock Option Plan.
10.6++ Collaboration Agreement between Rigel and Janssen
Pharmaceutica N.V., dated December 4, 1998.
10.7++ Collaborative Research and License Agreement between Rigel
and Pfizer Inc., dated January 31, 1999.
10.8++ Collaboration Agreement between Rigel and Novartis Pharma
AG, dated May 26, 1999.
10.9++ License and Research Agreement between Rigel and Cell
Genesys, Inc., dated September 2, 1999.
10.10 Collaborative Research and Development Agreement between
Rigel and Neurocrine Biosciences, Inc., dated
December 1997.
10.11 Employment agreement between Rigel and Donald Payan, dated
January 16, 1997.
10.12 Lease between Rigel and Britannia Pointe Grand Limited
Partnership, dated June 2, 1998.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on signature page).
27.1 Financial Data Schedule.
</TABLE>
- ---------
* To be filed by amendment.
++ Confidential treatment requested as to specific portions, which portions are
omitted and filed separately with the Securities and Exchange Commission.
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR. SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
IS AVAILABLE WITH RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
Warrant No. CS- Number of Shares: Common Stock
RIGEL PHARMACEUTICALS, INC.
1. ISSUANCE. This Warrant is issued to ,
by RIGEL PHARMACEUTICALS, INC., a Delaware corporation (hereinafter with its
successors called the "COMPANY").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "HOLDER"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase from the
Company the following securities (collectively, the "SHARES") at a price per
share of $1.14 (the "PURCHASE PRICE"),
( ) fully paid and nonassessable shares of Common Stock, $.001 par
value, of the Company (the "COMMON STOCK"). Until such time as this Warrant
is exercised in full or expires, the Purchase Price and the securities
issuable upon exercise of this Warrant are subject to adjustment as
hereinafter provided. The person or persons on whose name or names any
certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby
as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company
shall be closed.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i)
in cash or by Check, (ii) by the surrender by the Holder to the Company of
any promissory notes or other obligations issued by the Company, with all
such notes and obligations so surrendered being credited against the Purchase
Price in an amount equal to the principal amount thereof plus accrued
interest to the date of surrender, or (iii) by any combination of the
foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares of Common
Stock equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the
Company. Thereupon, the Company shall issue to the Holder such number of
fully paid and nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
-------
A
1.
<PAGE>
where: X = the number of shares of Common Stock to be issued to the
Holder pursuant to this Section 4.
Y = the number of shares of Common Stock covered by this Warrant
in respect of which the net issue election is made pursuant
to this Section 4.
A = the Fair Market Value (defined below) of one share of Common
Stock, as determined at the time the net issue election is
made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time
the net issue election is made pursuant to this Section 4.
"Fair Market Value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(a) If the net issue election is made in connection with and
contingent upon the closing of the sale of the Company's Common Stock to the
public in a public offering pursuant to a Registration Statement under the
Act (a "Public Offering"), and if the Company's Registration Statement
relating to such Public Offering ("Registration Statement") has been declared
effective by the SEC, then the initial "Price to Public" specified in the
final prospectus with respect to such offering multiplied by the number of
shares of Common Stock into which each share of Preferred Stock is then
convertible.
(b) If the net issue election is not made in connection with
and contingent upon a Public Offering, then as follows:
(i) If traded on a securities exchange or the Nasdaq
National Market, the fair market value of the Common Stock shall be deemed to
be the average of the closing or last reported sale prices of the Common
Stock on such exchange or market over the 30-day period ending five business
days prior to the Determination Date (or, if traded on a securities exchange
or the Nasdaq National Market for less than 35 days as of the Determination
Date, over the period beginning on the date of the Public Offering and ending
five business days prior to the Determination Date);
(ii) If otherwise traded in an over-the-counter market,
the fair market value of the Common Stock shall be deemed to be the average
of the closing ask prices of the Common Stock over the 30-day period ending
five business days prior to the Determination Date; and
(iii) If there is no public market for the Common Stock,
then fair market value shall be determined in good faith by the Company's
Board of Directors.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which
this Warrant shall not have been exercised.
2.
<PAGE>
6. FRACTIONAL SHARES. In no event shall any fractional share of Common
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section
6, be entitled to receive a fractional share of Common Stock, then the
Company shall pay in lieu thereof, the Fair Market Value of such fractional
share in cash.
7. EXPIRATION DATE; AUTOMATIC EXERCISE. Except as otherwise set forth
in Section 10, this Warrant shall expire on the earlier of (i) the close of
business on June 1, 2008 and (ii) seven years after the closing of the
initial public offering of the Company's Common Stock pursuant to a
registration statement under the Securities Act of 1933, as amended, and
shall be void thereafter.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Common Stock, $.001 par value, of the
Company (the "COMMON STOCK"), free from all preemptive or similar rights
therein, as will be sufficient to permit, respectively, the exercise of this
Warrant in full and the conversion into shares of Common Stock upon such
exercise. The Company further covenants that such shares as may be issued
pursuant to such exercise and/or conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company
shall subdivide the Common Stock, by split-up or otherwise, or combine the
Common Stock. or issue additional shares of Common Stock in payment of a
stock dividend on the Common Stock, the number of shares of Common Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall
forthwith be proportionately decreased in the case of a subdivision or stock
dividend, or proportionately increased in the case of a combination.
10. MERGERS AND RECLASSIFICATIONS. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have
the right to purchase, at a total price not to exceed that payable upon the
exercise of this Warrant in full, the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization by a holder
of the number of shares of Common Stock which might have been purchased by
the Holder immediately prior to such Reorganization, and in any such case
appropriate provisions shall be made with respect to the rights and interest
of the Holder to the end that the provisions hereof (including without
limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable hereunder and the provisions relating to the net
issue election) shall thereafter be applicable in relation to any shares of
stock or other securities and property thereafter deliverable upon exercise
hereof. For the purposes of this Section 10, the term "Reorganization" shall
include without limitation any reclassification, capital reorganization or
change of the Common Stock (other than as a result of a subdivision,
3.
<PAGE>
combination or stock dividend provided for in Section 9 hereof), or any
consolidation of the Company with, or merger of the Company into, another
corporation or other business organization (other than a merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding Common Stock), or any sale or
conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.
Notwithstanding the term of this Warrant fixed pursuant to Section 7
above and the provisions of this Section 10, the right to purchase Common
Stock as granted herein shall expire, to the extent not previously exercised,
immediately upon the closing of a merger or consolidation of the Company with
or into another corporation when the Company is not the surviving corporation
(other than a merger or consolidation for the principal purpose of changing
the domicile of the Company), and provided that any securities received in
such merger or consolidation are publicly traded or the sale of all or
substantially all of the Company's capital stock, properties and assets to
any other person, in each case where the stockholders of the Company
immediately prior to such merger, consolidation or sale of assets own
(directly or indirectly) less than 50% of the voting securities of the
surviving entity or purchaser of assets in such transaction (collectively, a
"Merger"), except to the extent assumed by the successor corporation (or
parent thereof) in connection with such Merger. In the event that any
outstanding warrants to purchase equity securities of the Company are
assumed, this Warrant shall also be similarly assumed.
The Company shall notify the Holder at least fifteen (15) calendar days
prior to any proposed Merger, and if the Company fails to deliver such
notice, then notwithstanding anything to the contrary in this Warrant, the
rights to purchase the Company's Common Stock (or the shares of stock and
other securities and property receivable upon such Merger by a holder of
Common Stock (the "OTHER CONSIDERATION")) shall not expire. The Holder may
exercise the Warrant contingent upon the closing of the Merger. If the Merger
does not close within 60 days after notice, any contingent exercise shall be
void.
11. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the
Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
12. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares
of stock of any class or any other securities or property, or to receive any
other right;
(b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets; or
4.
<PAGE>
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then in each such event the Company will provide or cause to be provided to
the Holder a written notice thereof. Such notice shall be provided at least
fifteen (15) calendar days prior to the date specified in such notice on
which any such action is to be taken.
13. CORPORATE INFORMATION. As a courtesy to Holder and in order to
enable Holder to make informed decisions regarding the possible exercise of
this Warrant from time to time, the Company agrees, upon written request by
Holder to the chief financial officer of the Company from time to time (but
not more often than twice in any 12-month period), to provide to Holder
copies of the following documents within a reasonable time after such request
(but in all events only to the extent that, and no sooner than the time that,
such documents have been distributed or made available to all the Company's
stockholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year; (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual
financial statements delivered pursuant to clause (i) above; and (iii) any
other reports, proxy statements or notices distributed to holders of the
Company's Common Stock within the last twelve (12) months preceding such
request (or within the period since the last such request by Holder.
whichever is shorter). Notwithstanding the preceding sentence, when the
Company has outstanding a class of publicly-traded securities or is for any
other reason a reporting company under the Securities Exchange Act of 1934,
the rights under this Section 13 shall terminate.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued
and delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
(a) The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general application
affecting the enforcement of Holders rights or by general equity principals
or public policy concerns.
(b) The shares of Common Stock issuable upon the exercise of this
Warrant have been duly authorized and reserved for issuance by the Company
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable.
(c) The issuance, execution and delivery of this Warrant do not,
and the issuance of the shares of Common Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or
contravene the Company's Certificate of Incorporation or by-laws, or any law,
statute, regulation, rule, judgment or order applicable to the Company, (ii)
violate, contravene or result in a breach or default under any material
contract, agreement or instrument to which the Company is a party or by which
the Company or any of its assets are
5.
<PAGE>
bound or (iii) require the consent or approval of or the filing of any notice
or registration with any person or entity.
15. AMENDMENT AND WAIVER. The terms of this Warrant may be amended,
modified or waived only with the written consent of the party against which
enforcement of the same is sought.
16. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Common Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
(a) INVESTMENT PURPOSE. The right to acquire Common Stock or the
Common Stock issuable upon exercise of the Holder's rights contained herein
will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) ACCREDITED INVESTOR. Holder is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
(c) PRIVATE ISSUE. The Holder understands (i) that the Common
Stock issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be
exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 16.
(d) FINANCIAL RISK. The Holder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its investment and has the ability to bear the economic risks of
its investment.
17. NOTICES, TRANSFERS, ETC.
(a) Any notice or written communication required or permitted to
be given to the Holder may be given by certified mall or delivered to the
Holder at the address most recently provided by the Holder to the Company.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect
to any or all of the shares purchasable hereunder. Upon surrender of this
Warrant to the Company, together with the assignment notice annexed hereto
duly executed, for transfer of this Warrant as an entirety by the Holder, the
Company shall issue a new warrant of the same denomination to the assignee.
Upon surrender of this Warrant to the Company, together with the assignment
hereof properly endorsed, by the Holder for transfer with respect to a
portion of the shares of Preferred Stock purchasable hereunder, the Company
shall issue a new warrant to the assignee, in such denomination as shall
6.
<PAGE>
be requested by the Holder hereof, and shall issue to such Holder a new
warrant covering the number of shares in respect of which this Warrant shall
not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and
denomination and deliver the same (i) in exchange and substitution for and
upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of
any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the
Holder or other evidence reasonably satisfactory to the Company of the loss,
theft or destruction of such Warrant and an indemnification of loss by the
Holder in favor of the Company.
18. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution,
liquidation, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance of performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.
19. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State
of California.
20. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the
Holder's successors, legal representatives and permitted assigns.
21. BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any rights granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
DATED: June 2, 1998 RIGEL PHARMACEUTICALS, INC.
By: /s/ James M Gower
-------------------------------------
Name: James Gower
Title: President
7.
<PAGE>
SUBSCRIPTION
To:_______________________________ Date:_______________________________
The undersigned hereby subscribes for _____________ shares of Preferred
Stock covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:
___________________________________
Signature
___________________________________
Name for Registration
___________________________________
Mailing Address
NET ISSUE ELECTION NOTICE
To:______________________________ Date:_______________________________
The undersigned hereby elects under Section 4 to surrender the right to
purchase _______________ shares of Preferred Stock pursuant to this Warrant.
The certificate(s) for such shares issuable upon such net issue election
shall be issued in the name of the undersigned or as otherwise indicated
below:
___________________________________
Signature
___________________________________
Name for Registration
___________________________________
Mailing Address
<PAGE>
ASSIGNMENT
For value received _____________________ hereby sells, assigns
and transfers unto ______________________________________________________
_________________________________________________________________________
[Please print or typewrite name and address of Assignee]
_________________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
___________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
DATED:____________________________ _______________________________
IN THE PRESENCE OF:
__________________________________
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. AND MAY NOT
BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.
PREFERRED STOCK PURCHASE WARRANT
Warrant No. PSB-1 Number of Shares 175,000
Series B Preferred Stock
RIGEL PHARMACEUTICALS, INC.
Void after April 30, 2004
1. ISSUANCE. This Warrant is issued to LIGHTHOUSE CAPITAL PARTNERS II,
L.P. by RIGEL PHARMACEUTICALS, INC., a Delaware corporation (hereinafter with
its successors called the "COMPANY").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "HOLDER"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase from the Company
the following securities (collectively, the "SHARES") at a price per share of
$0.80 (the "PURCHASE PRICE"), 175,000 fully paid and nonassessable shares of
Series B Preferred Stock, $.001 par value, of the Company (the "PREFERRED
STOCK"). Until such time as this Warrant is exercised in full or expires, the
Purchase Price and the securities issuable upon exercise of this Warrant are
subject to adjustment as hereinafter provided. The person or persons on whose
name or names any certificate representing shares of Preferred Stock is issued
hereunder shall be deemed to have become the holder of record of the shares
represented thereby as at the close of business on the date this Warrant is
exercised with respect to such shares, whether or not the transfer books of the
Company shall be closed.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in cash
or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, or (iii) by any combination of the foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Preferred Stock
equal to the value of this Warrant or any portion hereof by the surrender of
this Warrant or such portion to the Company, with the net issue election notice
annexed hereto duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and
nonassessable shares of Preferred Stock as is computed using the following
formula:
Y (A-B)
------
X=
A
1.
<PAGE>
where: X = the number of shares of Preferred Stock to be issued to the
Holder pursuant to this SECTION 4.
Y = the number of shares of Preferred Stock covered by this Warrant
in respect of which the net issue election is made pursuant to
this SECTION 4.
A = the Fair Market Value (defined below) of one share of Preferred
Stock, as determined at the time the net issue election is made
pursuant to this SECTION 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this SECTION 4.
"Fair Market Value" of a share of Preferred Stock (or Common Stock if the
Preferred Stock has been automatically converted into Common Stock) as of a
particular date (the "Determination Date") shall mean:
(i) If the net issue election is made in connection with and
contingent upon the closing of the sale of the Company's Common Stock to
the public in a public offering pursuant to a Registration Statement under
the Act (a "Public Offering"), and if the Company's Registration Statement
relating to such Public Offering ("Registration Statement") has been
declared effective by the SEC, then the initial "Price to Public" specified
in the final prospectus with respect to such offering multiplied by the
number of shares of Common Stock into which each share of Preferred Stock
is then convertible.
(ii) If the net issue election is not made in connection with and
contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange or the Nasdaq National
Market, the fair market value of the Common Stock shall be deemed to
be the average of the closing or last reported sale prices of the
Common Stock on such exchange or market over the 30-day period ending
five business days prior to the Determination Date, and the fair
market value of the Preferred Stock shall be deemed to be such fair
market value of the Common Stock multiplied by the number of shares of
Common Stock into which each share of Preferred Stock is then
convertible;
(B) If otherwise traded in an over-the-counter market, the fair
market value of the Common Stock shall be deemed to be the average of
the closing ask prices of the Common Stock over the 30-day period
ending five business days prior to the Determination Date, and the
fair market value of the Preferred Stock shall be deemed to be such
fair market value of the Common Stock multiplied by the number of
shares of Common Stock into which each share of Preferred Stock is
then convertible; and
(C) If there is no public market for the Common Stock, then fair
market value shall be determined in good faith by the Company's Board
of Directors.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. FRACTIONAL SHARES. In no event shall any fractional share of Preferred
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this SECTION 6,
be entitled to receive a fractional share of Preferred Stock, then the Company
shall pay in lieu thereof, the Fair Market Value of such fractional share in
cash.
7. EXPIRATION DATE; AUTOMATIC EXERCISE. Except as otherwise set forth in
SECTION 11, this Warrant shall expire at the close of business on April 30, 2004
and shall be void thereafter. Notwithstanding the foregoing, this Warrant shall
automatically be deemed to be exercised in full pursuant to the provisions of
SECTION 4 hereof, without
2.
<PAGE>
any further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence or pursuant to
SECTION 11.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will at
all times from and after the date hereof reserve and keep available such number
of its authorized shares of Preferred Stock and Common Stock, $.001 par value,
of the Company (the "COMMON STOCK"), free from all preemptive or similar rights
therein, as will be sufficient to permit, respectively, the exercise of this
Warrant in full and the conversion into shares of Common Stock of all shares of
Preferred Stock receivable upon such exercise. The Company further covenants
that such shares as may be issued pursuant to such exercise and/or conversion
will, upon issuance, be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issuance thereof.
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company shall
subdivide the Preferred Stock, by split-up or otherwise, or combine the
Preferred Stock, or issue additional shares of Preferred Stock in payment of a
stock dividend on the Preferred Stock, the number of shares of Preferred Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith
be proportionately decreased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.
10. ADJUSTMENTS FOR DILUTING ISSUANCES. The other antidilution rights
applicable to the Preferred Stock and the Common Stock of the Company are set
forth in the Amended and Restated Certificate of Incorporation, as amended from
time to time (the "Articles"), a true and complete copy in its current form
which is attached hereto as EXHIBIT A. Such rights shall not be restated,
amended or modified in any manner which effects the Holder differently than the
holders of Series B Preferred without such Holder's prior written consent. The
Company shall promptly provide the Holder hereof with any restatement, amendment
or modification to the Articles promptly after the same has been made.
11. MERGERS AND RECLASSIFICATIONS. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have
the right to purchase, at a total price not to exceed that payable upon the
exercise of this Warrant in full, the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization by a holder
of the number of shares of Preferred Stock which might have been purchased by
the Holder immediately prior to such Reorganization, and in any such case
appropriate provisions shall be made with respect to the rights and interest
of the Holder to the end that the provisions hereof (including without
limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable hereunder and the provisions relating to the net
issue election) shall thereafter be applicable in relation to any shares of
stock or other securities and property thereafter deliverable upon exercise
hereof. For the purposes of this SECTION 11, the term "REORGANIZATION" shall
include without limitation any reclassification, capital reorganization or
change of the Preferred Stock (other than as a result of a subdivision,
combination or stock dividend provided for in SECTION 9 hereof), or any
consolidation of the Company with, or merger of the Company into, another
corporation or other business organization (other than a merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding Preferred Stock), or any sale
or conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.
Notwithstanding the term of this Warrant fixed pursuant to SECTION 7
above and the provisions of this SECTION 11, the right to purchase Preferred
Stock as granted herein shall expire, to the extent not previously exercised,
immediately upon the closing of a merger or consolidation of the Company with
or into another corporation when the Company is not the surviving corporation
(other than a merger or consolidation for the principal purpose of changing
the domicile of the Company), or the sale of all or substantially all of the
Company's capital stock, properties and assets to any other person, in each
case where the stockholders of the Company immediately prior to such merger,
consolidation or sale of assets own (directly or indirectly) less than 50% of
the voting securities of the surviving entity or purchaser of assets in such
transaction (collectively, a "Merger"), except to the extent assumed by the
successor corporation (or parent thereof) in connection with such Merger. In
the event that any outstanding warrants to purchase equity securities of the
Company are assumed, this Warrant shall also be similarly assumed.
3.
<PAGE>
The Company shall notify the Holder within twenty (20) days of any
proposed Merger, and if the Company fails to deliver such notice, then
notwithstanding anything to the contrary in this Warrant, the rights to
purchase the Company's Preferred Stock (or the shares of stock and other
securities and property receivable upon such Merger by a holder of Preferred
Stock (the "OTHER CONSIDERATION")) shall not expire. The Holder may exercise
the Warrant contingent upon the closing of the Merger. If the Merger does not
close within 60 days after notice, any contingent exercise shall be void.
12. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the
Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
13. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares
of stock of any class or any other securities or property, or to receive any
other right;
(b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then in each such event the Company will provide or cause to be provided to
the Holder a written notice thereof. Such notice shall be provided at least
twenty (20) business days prior to the date specified in such notice on which
any such action is to be taken.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued
and delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
A. The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general application
affecting the enforcement of Holders rights or by general equity principals
or public policy concerns.
B. The shares of Preferred Stock issuable upon the exercise of
this Warrant have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable.
C. The issuance, execution and delivery of this Warrant do not,
and the issuance of the shares of Preferred Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or
contravene the Company's Articles or by-laws, or any law, statute,
regulation, rule, judgment or order applicable to the Company, (ii) violate,
contravene or result in a breach or default under any material contract,
agreement or instrument to which the Company is a party or by which the
Company or any of its assets are bound or (iii) require the consent or
approval of or the filing of any notice or registration with any person or
entity.
D. So long as this Warrant has not terminated, Holder shall be
entitled to receive such financial and other information as the Holder would
be entitled to receive under the Series B Preferred Stock Purchase Agreement
if Holder were a holder of that number of shares issuable upon full exercise
of this Warrant.
E. As of the date hereof, the authorized capital stock of the
Company consists of (i) 20,000,000 shares of Common Stock, of which 2,510,000
shares are issued and outstanding and 175,000 shares are reserved for
4.
<PAGE>
issuance upon the exercise of this Warrant and the conversion of the Preferred
Stock, (ii) 665,000 shares of Series A Preferred Stock, of which 665,000 are
issued and outstanding shares, and (iii) 7,675,000 shares of Series B Preferred
Stock, of which 7,500,000 are issued and outstanding shares and 175,000 shares
are reserved for issuance upon the exercise of this Warrant. Attached hereto as
EXHIBIT B is a capitalization table summarizing the capitalization of the
Company.
15. REGISTRATION RIGHTS. The Company grants to the Holder registration
rights contained in SECTIONS 2.2, 2.3 and 2.4 of the Company's Investor Rights
Agreement dated as of January 17, 1997 (the "INVESTOR RIGHTS AGREEMENT"), so
that (i) the shares of Common Stock issuable upon conversion of the shares of
Preferred Stock issuable upon exercise of this Warrant shall be "Registrable
Securities," and (ii) the Holder shall be a "Holder" and "Investor" for all
purposes of such Investor Rights Agreement.
16. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder.
17. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Preferred Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
A. INVESTMENT PURPOSE. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Holder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention
of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.
B. ACCREDITED INVESTOR. Holder is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
C. PRIVATE ISSUE. The Holder understands (i) that the Preferred
Stock issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be exempt
from the registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this SECTION 17.
D. FINANCIAL RISK. The Holder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks of its
investment.
18. NOTICES, TRANSFERS, ETC.
A. Any notice or written communication required or permitted to be
given to the Holder may be given by certified mail or delivered to the Holder at
the address most recently provided by the Holder to the Company.
B. Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment notice annexed hereto duly
executed, for transfer of this Warrant as an entirety by the Holder, the Company
shall issue a new warrant of the same denomination to the assignee. Upon
surrender of this Warrant to the Company, together with the assignment hereof
properly endorsed, by the Holder for transfer with respect to a portion of the
shares of Preferred Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the
Holder hereof, and shall issue to such Holder a new warrant covering the number
of shares in respect of which this Warrant shall not have been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt
5.
<PAGE>
of an affidavit of the Holder or other evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant and an indemnification
of loss by the Holder in favor of the Company.
19. NO IMPAIRMENT. The Company will not, by amendment of its Articles or
through any reclassification, capital reorganization, consolidation, merger,
sale or conveyance of assets, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
of performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder.
20. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
California.
21. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
22. BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any rights granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
23. QUALIFYING PUBLIC OFFERING. If the Company shall effect a firm
commitment underwritten public offering of shares of Common Stock which results
in the conversion of the Preferred Stock into Common Stock pursuant to the
Company's Articles in effect immediately prior to such offering, then, effective
upon such conversion, this Warrant shall change from the right to purchase
shares of Preferred Stock to the right to purchase shares of Common Stock, and
the Holder shall thereupon have the right to purchase; at a total price equal
to that payable upon the exercise of this Warrant in full, the number of shares
of Common Stock which would have been receivable by the Holder upon the exercise
of this Warrant for shares of Preferred Stock immediately prior to such
conversion of such shares of Preferred Stock into shares of Common Stock, and in
such event appropriate provisions shall be made with respect to the rights and
interest of the Holder to the end that the provisions hereof (including, without
limitation, the provisions for the adjustment of the Purchase Price and of the
number of shares purchasable upon exercise of this Warrant and the provisions
relating to the net issue election) shall thereafter be applicable to any shares
of Common Stock deliverable upon the exercise hereof.
24. VALUE. The Company and the Holder agree that the value of this Warrant
on the date of grant is $100.
Dated: May , 1997 RIGEL PHARMACEUTICALS, INC.
-----
By: /s/ NJ Montgomery
-------------------------------
Name: Nancy Montgomery
-----------------------------
Title: Chief Financial Officer
----------------------------
Attest:
/s/ Brian C. Cunningham
- --------------------------------
Secretary
6.
<PAGE>
SUBSCRIPTION
To: Date:
--------------------------------- --------------------------------
The undersigned hereby subscribes for ___________ shares of Preferred
Stock covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:
-------------------------------------------
Signature
-------------------------------------------
Name for Registration
-------------------------------------------
Mailing Address
NET ISSUE ELECTION NOTICE
To: Date:
--------------------------------- --------------------------------
The undersigned hereby elects under SECTION 4 to surrender the right to
purchase ______ shares of Preferred Stock pursuant to this Warrant. The
certificate(s) for such shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below:
-------------------------------------------
Signature
-------------------------------------------
Name for Registration
-------------------------------------------
Mailing Address
<PAGE>
ASSIGNMENT
For value received _______________________________________________ hereby
sells, assigns and transfers unto _____________________________________________
_______________________________________________________________________________
[Please print or typewrite name and address of Assignee]
_______________________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_____________________ its attorney to transfer the within Warrant on the
books of the within named Company with full power of substitution on the
premises.
Dated:
--------------------
-----------------------------------------
In the Presence of:
- ----------------------
<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
SEE ATTACHED PAGES.
<PAGE>
EXHIBIT B
CAPITALIZATION TABLE
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
IS AVAILABLE WITH RESPECT THERETO.
PREFERRED STOCK PURCHASE WARRANT
Warrant No. _________ Number of Shares: 131,578
Series C Preferred Stock
RIGEL PHARMACEUTICALS, INC.
Void after June 30, 2005
1. ISSUANCE. This Warrant is issued to LIGHTHOUSE CAPITAL PARTNERS II,
L.P. by RIGEL PHARMACEUTICALS, INC., a Delaware corporation (hereinafter with
its successors called the "COMPANY").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "HOLDER"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase from the
Company the following securities (collectively, the "SHARES") at a price per
share of $1.14 (the "PURCHASE PRICE"), 131,578 fully paid and nonassessable
shares of Series C Preferred Stock, $.001 par value, of the Company (the
"PREFERRED STOCK"). Until such time as this Warrant is exercised in full or
expires, the Purchase Price and the securities issuable upon exercise of this
Warrant are subject to adjustment as hereinafter provided. The person or
persons on whose name or names any certificate representing shares of
Preferred Stock is issued hereunder shall be deemed to have become the holder
of record of the shares represented thereby as at the close of business on
the date this Warrant is exercised with respect to such shares, whether or
not the transfer books of the Company shall be closed.
3. PAYMENT OF THE PURCHASE PRICE. The Purchase Price may be paid (i)
in cash or by check, (ii) by the surrender by the Holder to the Company of
any promissory notes or other obligations issued by the Company, with all
such notes and obligations so surrendered being credited against the Purchase
Price in an amount equal to the principal amount thereof plus accrued
interest to the date of surrender, or (iii) by any combination of the
foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Preferred
Stock equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the
Company. Thereupon, the Company shall issue to the Holder such number of
fully paid and nonassessable shares of Preferred Stock as is computer using
the following formula:
Y (A - B)
X = ---------
A
1.
<PAGE>
where: X= the number of shares of Preferred Stock to be issued to the
Holder pursuant to this SECTION 4.
Y= the number of shares of Preferred Stock covered by this Warrant
in respect of which the net issue election is made pursuant to
this SECTION 4.
A= the Fair Market Value (defined below) of one share of Preferred
Stock, as determined at the time the net issue election is made
pursuant to this SECTION 4.
B= the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this SECTION 4.
"Fair Market Value" of a share of Preferred Stock (or Common Stock if the
Preferred Stock has been automatically converted into Common Stock) as a
particular date (the "Determination Date") shall mean:
(i) If the net issue election is made in connection with and
contingent upon the closing of the sale of the Company's Common Stock to
the public in a public offering pursuant to a Registration Statement under
the Act (a "Public Offering"), and if the Company's Registration Statement
relating to such Public Offering ("Registration Statement") has been
declared effective by the SEC, the initial "Price to Public" specified in
the final prospectus with respect to such offering multiplied by the number
of shares of Common Stock into which each share of Preferred Stock is then
convertible.
(ii) If the net issue election is not made in connection with and
contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange or the Nasdaq National
Market, the fair market value of the Common Stock shall be deemed to
be the average of the closing or last reported sale prices of the
Common Stock on such exchange or market over the 30-day period ending
five business days prior to the Determination Date, and the fair
market value of the Preferred Stock shall be deemed to be such fair
market value of the Common Stock multiplied by the number of shares of
Common Stock into which each share of Preferred Stock is then
convertible;
(B) If otherwise traded in an over-the-counter market, the fair
market value of the Common Stock shall be deemed to be the average of
the closing ask prices of the Common Stock over the 30-day period
ending five business days prior to the Determination Date, and the
fair market value of the Preferred Stock shall be deemed to be such
fair market value of the Common Stock multiplied by the number of
shares of Common Stock into which each share of Preferred Stock is
then convertible; and
(C) If there is no public market for the Common Stock, then fair
market value shall be determined in good faith by the Company's Board
of Directors.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which
this Warrant shall not have been exercised.
6. FRACTIONAL SHARES. In no event shall any fractional share of
Preferred Stock be issued upon any exercise of this Warrant. If, upon
exercise of this Warrant as an entirety, the Holder would, except as provided
in this Section 6, be entitled to receive a fractional share of Preferred
Stock, then the Company shall pay in lieu thereof, the Fair Market Value of
such fractional share in cash.
7. EXPIRATION DATE; AUTOMATIC EXERCISE. Except as otherwise set forth
in SECTION 11, this Warrant shall expire at the close of business on June 30,
2005 and shall be void thereafter. Notwithstanding the foregoing, this
Warrant shall automatically be deemed to be exercised in full pursuant to the
provisions of SECTION 4 hereof, without any
2.
<PAGE>
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence or pursuant
to SECTION 11.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Preferred Stock and Common Stock, $.001
par value, of the Company (the "COMMON STOCK"), free from all preemptive or
similar rights therein, as will be sufficient to permit, respectively, the
exercise of this Warrant in full and the conversion into shares of Common
Stock of all shares of Preferred Stock receivable upon such exercise. The
Company further covenants that such shares as may be issued pursuant to such
exercise and/or conversion will, upon issuance, be duly and validly issued,
fully paid and nonassessable and free from all takes, liens and charges with
respect to the issuance thereof.
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company
shall subdivide the Preferred Stock, by split-up or otherwise, or combine the
Preferred Stock, or issue additional shares of Preferred Stock in payment of
a stock dividend on the Preferred Stock, the number of shares of Preferred
Stock issuable in the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination, and the Purchase
Price shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a
combination.
10. ADJUSTMENTS FOR DILUTING ISSUANCES. The other antidilution rights
applicable to the Preferred Stock and the Common Stock of the Company are set
forth in the Amended and Restated Certificate of Incorporation, as amended
from time to time (the "Articles"), a true and complete copy in its current
form which is attached hereto as EXHIBIT A. Such rights shall not be
restated, amended or modified in any manner which effects the Holder
differently than the holders of Series C Preferred without such Holder's
prior written consent. The Company shall promptly provide the Holder hereof
with any restatement, amendment or modification to the Articles promptly
after the same has been made.
11. MERGERS AND RECLASSIFICATION. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have
the right to purchase, at a total price not to exceed that payable upon the
exercise of this Warrant in full, the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization by a holder
of the number of shares of Preferred Stock which might have been purchased by
the Holder immediately prior to such Reorganization, and in any such case
appropriate provisions shall be made with respect to the rights and interest
of the Holder to the end that the provisions hereof (including without
limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable hereunder and the provisions relating to the net
issue election) shall thereafter be applicable in relation to any shares of
stock or other securities and property thereafter deliverable upon exercise
hereof. For the purposes of this SECTION 11, the term "REORGANIZATION" shall
include without limitation any reclassification, capital reorganization or
change of the Preferred Stock (other than as a result of a subdivision,
combination or stock dividend provided for in SECTION 9 hereof), or any
consolidation of the Company with, or merger of the Company into, another
corporation or other business organization (other than a merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding Preferred Stock), or any sale
or conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.
Notwithstanding the term of this Warrant fixed pursuant to SECTION 7
above and the provisions of this SECTION 11, the right to purchase Preferred
Stock as granted herein shall expire, to the extent not previously exercised,
immediately upon the closing of a merger or consolidation of the Company with
or into another corporation when the Company is not the surviving corporation
(other than a merger or consolidation for the principal purpose of changing
the domicile of the Company), or the sale of all or substantially all of the
Company's capital stock, properties and assets to any other person, in each
case where the stockholders of the Company immediately prior to such merger,
consolidation or sale of assets own (directly or indirectly) less than 50% of
the voting securities of the surviving entity or purchaser of assets in such
transaction (collectively, a "Merger"), except to the extent assumed by the
successor corporation (or parent thereof) in connection with such Merger. In
the event that any outstanding warrants to purchase equity securities of the
Company are assumed, this Warrant shall also be similarly assumed.
3.
<PAGE>
The Company shall notify the Holder within twenty (20) days of any
proposed Merger, and if the Company fails to deliver such notice, then
notwithstanding anything to the contrary in this Warrant, the rights to
purchase the Company's Preferred Stock (or the share of stock and other
securities and property receivable upon such Merger by a holder of the
Preferred Stock (the "OTHER CONSIDERATION")) shall not expire. The Holder may
exercise the Warrant contingent upon the closing of the Merger. If the Merger
does not close within 60 days after notice, any contingent exercise shall be
void.
12. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the
Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
13. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares
of stock of any class or any other securities or property, or to receive any
other right;
(b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then in such event the Company will provide or cause to be provided to the
Holder a written notice thereof. Such notice shall be provided at least
twenty (20) business days prior to the date specified in such notice on which
any such action is to be taken.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS. This warrant is issued
and delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
A. The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized, issued, executed and delivered by the Company and
is the valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general application
affecting the enforcement of Holders rights or by general equity principals
or public policy concerns.
B. The shares of Preferred Stock issuable upon the exercise of
this Warrant have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable.
C. The issuance, execution and delivery of this Warrant do not,
and the issuance of the shares of Preferred Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or
contravene the Company's Articles or by-laws, or any law, statute,
regulations, rule, judgment or order applicable to the Company, (ii) violate,
contravene or result in a breach or default under any material contract,
agreement or instrument to which the Company is a party or by which the
Company or any of its assets are bound or (iii) require the consent or
approval of or the filing of any notice or registration with any person or
entity.
D. So long as this Warrant has not terminated, Holder shall be
entitled to receive such financial and other information as the Holder would
be entitled to receive under the Series C Preferred Stock Purchase Agreement
if Holder were a holder of that number of shares issuable upon full exercise
of this Warrant.
E. As of the date hereof, the authorized capital stock of the
Company consists of (i) 20,000,000 shares of Common Stock, of which 2,510,000
are issued and outstanding shares, 175,000 shares are reserved for
4.
<PAGE>
issuance upon the exercise of that certain Warrant dated May 23, 1997, and
131,578 shares are reserved for issuance upon the exercise of this Warrant
and the conversion of the Preferred Stock, (ii) 665,000 shares of Series A
Preferred Stock, of which 665,000 are issued and outstanding shares, and
(iii) 7,675,000 shares of Series B Preferred Stock, of which 7,500,000 are
issued and outstanding shares, and 175,000 shares are reserved for issuance
upon the exercise of that certain Warrant dated May 23, 1997 and (iv)
8,000,000 shares of Series C Preferred Stock, of which 7,386,843 are issued
and outstanding shares, and 131,578 shares are reserved for issuance upon the
exercise of this Warrant. Attached hereto as EXHIBIT B is a capitalization
table summarizing the capitalization of the Company.
15. REGISTRATION RIGHTS. The Company grants to the Holder registration
rights contained in SECTIONS 2.2, 2.3 and 2.4 of the Company's Amended and
Restated Investor Rights Agreement dated as of November 3, 1997 (the
"INVESTOR RIGHTS AGREEMENT"), so that (i) the shares of Common Stock issuable
upon conversion of the shares of Preferred Stock issuable upon exercise of
this Warrant shall be "Registrable Securities," and (ii) the Holder shall be
a "Holder" and "Investor" for all purposes of such Investor Rights Agreement.
16. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder.
17. REPRESENTATIONS AND COVENANTS OF THE HOLDER. The Preferred Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
A. INVESTMENT PURPOSE. The right to acquire Preferred Stock or
the Preferred Stock issuable upon exercise of the Holders' rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Holder has not present intention of
selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
B. ACCREDITED INVESTOR. Holder is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
C. PRIVATE ISSUE. The Holder understands (i) that the Preferred
Stock issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be
exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this SECTION 17.
D. FINANCIAL RISK. The Holder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its investment and has the ability to bear the economic risks of
its investment.
18. NOTICES, TRANSFERS, ETC.
A. Any notice or written communication required or permitted to
be given to the Holder may be given by certified mail or delivered to the
Holder at the address most recently provided by the Holder to the Company.
B. Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect
to any or all of the shares purchasable hereunder. Upon surrender of this
Warrant to the Company, together with the assignment notice annexed hereto
duly executed, for transfer of this Warrant as an entirety by the Holder, the
Company shall issue a new warrant of the same denomination to the assignee.
Upon surrender of this Warrant to the Company, together with the assignment
hereof properly endorsed by the Holder for transfer with respect to a portion
of the shares of the Preferred Stock purchasable hereunder, the Company shall
issue a new warrant to the assignee, in such denomination as shall be
requested by the Holder hereof, and shall issue to such Holder a new warrant
covering the number of shares in respect of which this Warrant shall not have
been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and
denomination and deliver the same (i) in exchange and substitution for and
upon surrender
5.
<PAGE>
and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant
lost, stolen or destroyed, upon receipt of any affidavit of the Holder or
other evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant and an indemnification of loss by the Holder in
favor of the Company.
19. NO IMPAIRMENT. The Company will not, by amendment of its Articles
or through any reclassification, capital reorganization, consolidation,
merger, sale or conveyance of assets, dissolution, liquidation, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance of performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
20. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State
of California.
21. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the
Holder's successors, legal representatives and permitted assigns.
22. BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any rights granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
23. QUALIFYING PUBLIC OFFERING. If the Company shall effect a firm
commitment underwritten public offering of shares of Common Stock which
results in the conversion of the Preferred Stock into Common Stock pursuant
to the Company's Articles in effect immediately prior to such offering, then,
effective upon such conversion, this Warrant shall change from the right to
Purchase shares of Preferred Stock to the right to purchase shares of Common
Stock, and the Holder shall thereupon have the right to purchase, at a total
price equal to that payable upon the exercise of this Warrant in full, the
number of shares of Common Stock which would have been receivable by the
Holder upon the exercise of this Warrant for shares of Preferred Stock
immediately prior to such conversion of such shares of Preferred Stock into
shares of Common Stock, and in such event appropriate provisions shall be
made with respect to the rights and interest of the Holder to the end that
the provisions hereof (including, without limitation, the provisions for the
adjustment of the Purchase Price and of the number of shares purchasable upon
exercise of this Warrant and the provisions relating to the net issue
election) shall thereafter be applicable to any shares of Common Stock
deliverable upon the exercise hereof.
24. VALUE. The Company and the Holder agree that the value of this
Warrant on the date of grant is $100.
Dated: July 16, 1998 RIGEL PHARMACEUTICALS, INC.
By: /s/ Nancy Montgomery
------------------------------------
Name: Nancy Montgomery
----------------------------------
Title: Chief Financial Officer
---------------------------------
Attest:
- --------------------------------
6.
<PAGE>
NO. PDW-____
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE SHARES
OF SERIES D PREFERRED STOCK OF
RIGEL PHARMACEUTICALS, INC.
(VOID AFTER DECEMBER __, 2003)
This certifies that __________________ or its assigns (the
"Holder"), for value received, is entitled to purchase from RIGEL
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), up to the
Maximum Purchase Amount (as defined below) of fully paid and nonassessable
shares of the Company's Series D Preferred Stock ("Preferred Stock") for
cash, unless exercised as provided in Section 1.2 of this Warrant, at a price
equal to the price at which the Company first sells shares of it Series D
Preferred Stock after the date of this Warrant, but not greater than Two
Dollars ($2.00) per share prior to any adjustments made pursuant to Section 3
of this Warrant (the "Stock Purchase Price") at any time or from time to time
up to and including 5:00 p.m. (Pacific time) on the earlier of (i) the
closing of the initial public offering of the Company's Common Stock pursuant
to a registration statement under the Securities Act of 1933, as amended (the
"Initial Public Offering"), (ii) an Organic Change (as provided in Section
3.3 of this Warrant), or (iii) five (5) years from the date of this Warrant,
such earlier day being referred to herein as the "Expiration Date", upon
surrender to the Company at its principal office (or at such other location
as the Company may advise the Holder in writing) of this Warrant properly
endorsed with the Form of Subscription attached hereto duly filled in and
signed and, if applicable, upon payment in cash or by check of the aggregate
Stock Purchase Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Company
shall deliver notice of the Initial Public Offering or Organic Change to the
Holder at least 20 days prior to the closing thereof. The Maximum Purchase
Amount shall be determined by multiplying (i) the principal amount loaned to
the Company pursuant to that certain Convertible Promissory Note entered into
by the Company and the Holder on even date herewith (the "Note") by (ii)
10.0%, and dividing the product of (i) and (ii) by the Stock Purchase Price.
The Stock Purchase Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the
holder of record hereof, at any time or from time to time, up to the Expiration
Date for all or any part of the shares
1.
<PAGE>
of Preferred Stock (but not for a fraction of a share) which may be purchased
hereunder. The Company agrees that the shares of Preferred Stock purchased
under this Warrant shall be and are deemed to be issued to the Holder hereof
as the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered, properly endorsed, the
completed, executed Form of Subscription delivered and payment made for such
shares. Certificates for the shares of Preferred Stock so purchased, together
with any other securities or property to which the Holder hereof is entitled
upon such exercise, shall be delivered to the Holder hereof by the Company at
the Company's expense within a reasonable time after the rights represented
by this Warrant have been so exercised. In case of a purchase of less than
all the shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver a new Warrant or Warrants of like
tenor for the balance of the shares purchasable under the Warrant surrendered
upon such purchase to the Holder hereof within a reasonable time. Each stock
certificate so delivered shall be in such denominations of Preferred Stock as
may be requested by the Holder hereof and shall be registered in the name of
such Holder.
1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein to
the contrary, if the fair market value of one share of the Company's Preferred
Stock is greater than the Stock Purchase Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Form of
Subscription and notice of such election, in which event the Company shall issue
to the Holder a number of shares of Preferred Stock computed using the following
formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Preferred Stock
to be issued to the Holder
Y = the number of shares of Preferred Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the
portion of the Warrant being canceled (at the
date of such calculation)
A = the fair market value of one share of the
Company's Preferred Stock (at the date of such
calculation)
B = Stock Purchase Price (as adjusted to the date
of such calculation)
For purposes of the above calculation, fair market value of one share of
Preferred Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that in the event the Company makes an initial public
offering of its Common Stock the fair market value per share shall be the
product of (i) the per share offering price to the public of the Company's
initial
2.
<PAGE>
public offering, and (ii) the number of shares of Common Stock into
which each share of Preferred Stock is convertible at the time of such exercise.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Preferred Stock which may be issued
upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable
and free from all preemptive rights of any shareholder and free of all taxes,
liens and charges with respect to the issue thereof. The Company further
covenants and agrees that, during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Preferred Stock, or other
securities and property, when and as required to provide for the exercise of
the rights represented by this Warrant. The Company will take all such action
as may be necessary to assure that such shares of Preferred Stock may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Preferred Stock may be listed; provided, however, that the Company
shall not be required to effect a registration under Federal or State
securities laws with respect to such exercise. The Company will not take any
action which would result in any adjustment of the Stock Purchase Price (as
set forth in Section 3 hereof) (i) if the total number of shares of Preferred
Stock issuable after such action upon exercise of all outstanding warrants,
together with all shares of Preferred Stock then outstanding and all shares
of Preferred Stock then issuable upon exercise of all options and upon the
conversion of all convertible securities then outstanding, would exceed the
total number of shares of Preferred Stock then authorized by the Company's
Certificate of Incorporation, or (ii) if the total number of shares of Common
Stock issuable after such action upon the conversion of all such shares of
Preferred Stock, together with all shares of Common Stock then issuable upon
exercise of all options and upon the conversion of all such shares of
Preferred Stock, together with all shares of Common Stock then outstanding
and all shares of Common Stock then issuable upon exercise of all options and
upon the conversion of all convertible securities then outstanding would
exceed the total number of shares of Common Stock then authorized by the
Company's Certificate of Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The
Stock Purchase Price and the number of shares purchasable upon the exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 3. Upon each
adjustment of the Stock Purchase Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Stock Purchase Price resulting
from such adjustment, the number of shares obtained by multiplying the Stock
Purchase Price in effect immediately prior to such adjustment by the number
of shares purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Stock Purchase Price resulting from
such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide its outstanding shares of Preferred Stock into a
greater number of shares, the
3.
<PAGE>
Stock Purchase Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Preferred Stock of the Company shall be combined into a smaller number of
shares, the Stock Purchase Price in effect immediately prior to such
combination shall be proportionately increased.
3.2 DIVIDENDS IN PREFERRED STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the Holders of
Preferred Stock (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received or become
entitled to receive, without payment therefor,
(a) Preferred Stock or any shares of stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Preferred Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or
other distribution,
(b) any cash paid or payable otherwise than as a cash
dividend, or
(c) Preferred Stock or additional stock or other
securities or property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate rearrangement,
(other than shares of Preferred Stock issued as a stock split or adjustments
in respect of which shall be covered by the terms of Section 3.1 above), then
and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of
Preferred Stock receivable thereupon, and without payment of any additional
consideration therefor, the amount of stock and other securities and property
(including cash in the cases referred to in clause (b) above and this clause
(c)) which such Holder would hold on the date of such exercise had he been
the holder of record of such Preferred Stock as of the date on which holders
of Preferred Stock received or became entitled to receive such shares or all
other additional stock and other securities and property.
3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any recapitalization, reclassification or reorganization of the
capital stock of the Company, or any consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its
assets or other transaction shall be effected in such a way that holders of
Preferred Stock shall be entitled to receive stock, securities, or other
assets or property (an "Organic Change"), then, as a condition of such
Organic Change, lawful and adequate provisions shall be made by the Company
whereby the Holder hereof shall thereafter have the right to purchase and
receive (in lieu of the shares of the Preferred Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby) such shares of stock, securities or other assets
or property as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Preferred Stock equal to the number of
shares of such stock immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby; provided, however, that in the
event the value of the stock, securities or other assets or property
(determined in good faith by the Board of Directors of the Company) issuable
or payable with respect to one share of the Preferred Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby is in
4.
<PAGE>
excess of the Stock Purchase Price hereof effective at the time of a merger,
and securities received in such reorganization, if any, are publicly traded,
then this Warrant shall expire unless exercised prior to such Organic Change.
In the event of any Organic Change, appropriate provision shall be made by
the Company with respect to the rights and interests of the Holder of this
Warrant to the end that the provisions hereof (including, without limitation,
provisions for adjustments of the Stock Purchase Price and of the number of
shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise hereof. The Company will not
effect any such consolidation, merger or sale unless, prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or the corporation purchasing such assets
shall assume by written instrument reasonably satisfactory in form and
substance to the Holders of a majority of the warrants to purchase Preferred
Stock then outstanding, executed and mailed or delivered to the registered
Holder hereof at the last address of such Holder appearing on the books of
the Company, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase.
3.4 CERTAIN EVENTS. If any change in the outstanding Preferred
Stock of the Company or any other event occurs as to which the other
provisions of this Section 3 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Holder of the
Warrant in accordance with such provisions, then the Board of Directors of
the Company shall make an adjustment in the number and class of shares
available under the Warrant, the Stock Purchase Price or the application of
such provisions, so as to protect such purchase rights as aforesaid. The
adjustment shall be such as will give the Holder of the Warrant upon exercise
for the same aggregate Stock Purchase Price the total number, class and kind
of shares as he would have owned had the Warrant been exercised prior to the
event and had he continued to hold such shares until after the event
requiring adjustment.
3.5 NOTICES OF CHANGE.
(a) Immediately upon any adjustment in the number or
class of shares subject to this Warrant and of the Stock Purchase Price, the
Company shall give written notice thereof to the Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(b) The Company shall give written notice to the Holder
at least 20 business days prior to the date on which the Company closes its
books or takes a record for determining rights to receive any dividends or
distributions.
(c) The Company shall also give written notice to the
Holder at least 20 business days prior to the date on which an Organic Change
shall take place.
4. ISSUE TAX. The issuance of certificates for shares of Preferred
Stock upon the exercise of the Warrant shall be made without charge to the
Holder of the Warrant for any issue tax (other than any applicable income
taxes) in respect thereof; provided, however, that the
5.
<PAGE>
Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the then Holder of the Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Preferred Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder
of the Company or any other matters or any rights whatsoever as a shareholder
of the Company. No dividends or interest shall be payable or accrued in
respect of this Warrant or the interest represented hereby or the shares
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised. No provisions hereof, in the absence of affirmative
action by the Holder to purchase shares of Preferred Stock, and no mere
enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of such Holder for the Stock Purchase Price or as
a shareholder of the Company, whether such liability is asserted by the
Company or by its creditors.
7. WARRANTS TRANSFERABLE. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof
(except for transfer taxes), upon surrender of this Warrant properly
endorsed. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that this Warrant, when endorsed in blank, shall be
deemed negotiable, and that the holder hereof, when this Warrant shall have
been so endorsed, may be treated by the Company, at the Company's option, and
all other persons dealing with this Warrant as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented by
this Warrant, or to the transfer hereof on the books of the Company any
notice to the contrary notwithstanding; but until such transfer on such
books, the Company may treat the registered owner hereof as the owner for all
purposes.
8. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder
of shares of Preferred Stock issued upon exercise of this Warrant, shall
survive the exercise of this Warrant.
9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
10. NOTICES. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be
delivered or shall be sent by certified mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company
at the address indicated therefor in the first paragraph of this Warrant or
such other address as either may from time to time provide to the other.
6.
<PAGE>
11. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Preferred Stock issuable upon the exercise of
this Warrant shall survive the exercise and termination of this Warrant. All
of the covenants and agreements of the Company shall inure to the benefit of
the successors and assigns of the holder hereof.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California.
13. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction, or mutilation of this Warrant and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash
equal to such fraction multiplied by the then effective Stock Purchase Price.
15. MARKET STANDOFF. The Holder of this Warrant, by acceptance hereof,
agrees that such Holder will not, without the prior written consent of the
lead underwriter of the Company's initial public offering, directly or
indirectly offer to sell, contract to sell (including, without limitation,
any short sale), grant any option for the sale of, acquire any option to
dispose of, or otherwise dispose of any shares subject to this Warrant for a
period of 180 days following the day on which the registration statement
filed on behalf of the Company in connection with the initial public offering
shall become effective by order of the Securities and Exchange Commission.
[THIS SPACE INTENTIONALLY LEFT BLANK]
7.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 4th day of December,
1998.
RIGEL PHARMACEUTICALS, INC.
A Delaware corporation
By: _________________________
Title: ______________________
ATTEST:
______________________________________
Secretary
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
Date: ________________, 19___
Rigel Pharmaceuticals, Inc.
772 Lucerne Drive
Sunnyvale, CA 94086
Attn: President
Ladies and Gentlemen:
/ / The undersigned hereby elects to exercise the warrant issued to it by
Rigel Pharmaceuticals, Inc. (the "Company") and dated ___________
_____, ____ Warrant No. PDW-___ (the "Warrant") and to purchase
thereunder __________________________________ shares of the Series D
Preferred Stock of the Company (the "Shares") at a purchase price of
___________________________________________ Dollars ($__________) per
Share or an aggregate purchase price of
__________________________________ Dollars ($__________) (the "Purchase
Price").
/ / The undersigned hereby elects to convert _______________________
percent (____%) of the value of the Warrant pursuant to the provisions
of Section 1.2 of the Warrant.
Pursuant to the terms of the Warrant, and unless exercised pursuant
to Section 1.2 of the Warrant, the undersigned has delivered the Purchase
Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
_________________________________
By: _____________________________
Title:___________________________
<PAGE>
EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _________,
2000 by and between RIGEL PHARMACEUTICALS, INC. a Delaware corporation (the
"Corporation"), and ____________ ("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in
his/her capacity as _______________ of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as
______________ of the Corporation, the Corporation has determined and agreed to
enter into this Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
_______________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
______________ of the Corporation or as a director, officer or other fiduciary
of an affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; PROVIDED,
HOWEVER, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent may have assumed apart from
this Agreement) and that the Corporation or any affiliate shall have no
obligation under this Agreement to continue Agent in any such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).
1.
<PAGE>
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and any
other amounts that Agent becomes legally obligated to pay because of any claim
or claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Agent by the Corporation under the non-exclusivity provisions of the Code and
Section 43 of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Corporation
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
(b) on account of Agent's conduct that was knowingly
fraudulent or deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
(d) for which payment is actually made to Agent under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment under
such insurance, clause, bylaw or agreement;
(e) if indemnification is not lawful (and, in this respect,
both the Corporation and Agent have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
(f) in connection with any proceeding (or part thereof)
initiated by Agent, or any proceeding by Agent against the Corporation or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers
2.
<PAGE>
vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify Agent for the portion thereof to
which Agent is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at
its own expense;
(b) except as otherwise provided below, the Corporation may,
at its option and jointly with any other indemnifying party similarly notified
and electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Corporation, (ii)
Agent shall have reasonably concluded that there may be a conflict of interest
between the Corporation and Agent in the conduct of the defense of such action
or (iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of Agent's
separate counsel shall be at the expense of the Corporation. The Corporation
shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to which Agent shall have made
the conclusion provided for in clause (ii) above; and
3.
<PAGE>
(c) the Corporation shall not be liable to indemnify Agent
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Agent, in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
4.
<PAGE>
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall
continue after Agent has ceased to be a director, officer, employee or other
agent of the Corporation or to serve at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and shall inure
to the benefit of Agent's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Agent, at the address indicated on the
signature page hereof.
5.
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(b) If to the Corporation, to
Rigel Pharmaceuticals, Inc.
240 East Grand Avenue
South San Francisco, CA 94080
or to such other address as may have been furnished to Agent by the Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
RIGEL PHARMACEUTICALS, INC.
By:
-------------------------------
Title:
----------------------------
AGENT
----------------------------------
Address:
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6.
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EXHIBIT 10.2
RIGEL PHARMACEUTICALS, INC.
2000 EQUITY INCENTIVE PLAN
ADOPTED JANUARY 27, 2000
APPROVED BY STOCKHOLDERS _______________, ______
TERMINATION DATE: JANUARY 26, 2010
1. PURPOSES.
(a) The Plan is an amendment and restatement of, and is intended to
supersede and replace, the Company's 1997 Stock Option Plan.
(b) The persons eligible to receive Stock Awards are the Employees,
Directors and Consultants of the Company and its Affiliates.
(c) The purpose of the Plan is to provide a means by which eligible
recipients of Stock Awards may be given an opportunity to benefit from increases
in value of the Common Stock through the granting of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock
bonuses and (iv) rights to acquire restricted stock.
(d) The Company, by means of the Plan, seeks to retain the services of
the group of persons eligible to receive Stock Awards, to secure and retain the
services of new members of this group and to provide incentives for such persons
to exert maximum efforts for the success of the Company and its Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means Rigel Pharmaceuticals, Inc., a Delaware
corporation.
(g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for
1.
<PAGE>
such services or (ii) who is a member of the Board of Directors of an Affiliate.
However, the term "Consultant" shall not include either Directors who are not
compensated by the Company for their services as Directors or Directors who are
merely paid a director's fee by the Company for their services as Directors.
(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's service. For example, a change in status without interruption
from an Employee of the Company to a Consultant of an Affiliate or a Director
will not constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to Stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable.
2.
<PAGE>
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(u) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(x) "PLAN" means this Rigel Pharmaceuticals, Inc. 2000 Equity Incentive
Plan.
3.
<PAGE>
(y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(aa) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
(bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to
the terms and conditions of the Plan.
(cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of Stock Award shall
be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in
Section 12.
(iv) To terminate or suspend the Plan as provided in
Section 13.
(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.
4.
<PAGE>
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY
TRADED. At such time as the Common Stock is publicly traded, in the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.
(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate nine
million five hundred twenty-five thousand (9,525,000) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.
5.
<PAGE>
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million five
hundred thousand (1,500,000) shares of Common Stock during any calendar year.
(d) CONSULTANTS.
(i) A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (E.G.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.
(ii) Form S-8 generally is available to consultants and
advisors only if (i) they are natural persons; (ii) they provide bona fide
services to the issuer, its parents, its majority-owned subsidiaries or
majority-owned subsidiaries of the issuer's parent; and (iii) the services are
not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
6.
<PAGE>
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board (1) by delivery to the Company of other Common
Stock, (2) according to a deferred payment or other similar arrangement with the
Optionholder or (3) in any other form of legal consideration that may be
acceptable to the Board. Unless otherwise specifically provided in the Option,
the purchase price of Common Stock acquired pursuant to an Option that is paid
by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to the Company's earnings for
financial accounting purposes). At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
7.
<PAGE>
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the Option Agreement or (ii)
the expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(j) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
8.
<PAGE>
(k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.
(m) RE-LOAD OPTIONS.
(i) Without in any way limiting the authority of the Board to
make or not to make grants of Options hereunder, the Board shall have the
authority (but not an obligation) to include as part of any Option Agreement a
provision entitling the Optionholder to a further Option (a "Re-Load Option") in
the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Unless otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of Common Stock acquired, directly or indirectly from the
Company, unless such shares have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes).
(ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
as part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.
9.
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(iii) Any such Re-Load Option may be an Incentive Stock Option
or a Nonstatutory Stock Option, as the Board may designate at the time of the
grant of the original Option; PROVIDED, HOWEVER, that the designation of any
Re-Load Option as an Incentive Stock Option shall be subject to the one hundred
thousand dollar ($100,000) annual limitation on the exercisability of Incentive
Stock Options described in subsection 10(d) and in Section 422(d) of the Code.
There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option
shall be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:
(i) CONSIDERATION. A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.
(ii) VESTING. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the stock bonus
agreement.
(iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock bonus agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the stock bonus agreement, as
the Board shall determine in its discretion, so long as Common Stock awarded
under the stock bonus agreement remains subject to the terms of the stock bonus
agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
10.
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(i) PURCHASE PRICE. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated.
(ii) CONSIDERATION. The purchase price of Common Stock
acquired pursuant to the restricted stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Board in its discretion; PROVIDED, HOWEVER, that at any time
that the Company is incorporated in Delaware, then payment of the Common Stock's
"par value," as defined in the Delaware General Corporation Law, shall not be
made by deferred payment.
(iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may repurchase
or otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
(v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; PROVIDED, HOWEVER, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
11.
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9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock
12.
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upon the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the
Securities Act or (2) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, PROVIDED, HOWEVER, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock of the Company that have been held for more
than six (6) months (or such longer or shorter period of time required to avoid
a charge to the Company's earnings for financial accounting purposes).
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event. Notwithstanding the foregoing, Options granted
under the 1997 Stock Option Plan shall be subject to Section 11(c) below in the
event of a dissolution or liquidation of the Company.
(c) CHANGE IN CONTROL. In the event of (i) a sale, lease or other
disposition of all or substantially all of the securities or assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the
13.
<PAGE>
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, then any
surviving corporation or acquiring corporation may assume any Stock Awards
outstanding under the Plan or may substitute similar stock awards (including an
award to acquire the same consideration paid to the Stockholders in the
transaction described in this subsection 11(c)) for those outstanding under the
Plan. In the event any surviving corporation or acquiring corporation does not
assume such Stock Awards or substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or prior to such event. With respect to any
other Stock Awards outstanding under the Plan, such Stock Awards shall terminate
if not exercised (if applicable) prior to such event.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the Stockholders of the Company to the extent Stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for Stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; PROVIDED, HOWEVER,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
14.
<PAGE>
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is approved by the stockholders of the
Company. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon its adoption by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the Stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
15. CHOICE OF LAW.
The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.
15.
<PAGE>
EXHIBIT 10.3
RIGEL PHARMACEUTICALS, INC.
2000 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, RIGEL PHARMACEUTICALS, INC. (the "Company") has granted
you an option under its 2000 EQUITY INCENTIVE PLAN (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in your Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted) and subject to the provisions of your option, you may
elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover
first vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments
that have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as
provided in the Plan, to the extent that the aggregate Fair Market Value
(determined at the time of grant) of the shares of Common Stock with respect to
which your option plus all other incentive stock options you hold are
exercisable for the first time by you during any calendar year (under all plans
of the
1
<PAGE>
Company and its Affiliates) exceeds one hundred thousand dollars ($100,000),
your option(s) or portions thereof that exceed such limit (according to the
order in which they were granted) shall be treated as nonstatutory stock
options.
4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:
(a) In the Company's sole discretion at the time your option
is exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
5. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.
7. TERM. You may not exercise your option before the commencement of
its term or after its term expires. The term of your option commences on the
Date of Grant and expires upon the EARLIEST of the following:
(a) immediately upon the termination of your Continuous
Service for Cause;
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<PAGE>
(b) three (3) months after the termination of your Continuous
Service for any reason other than Cause, Disability or death, provided that if
during any part of such three- (3-) month period you may not exercise your
option solely because of the condition set forth in the preceding paragraph
relating to "Securities Law Compliance," your option shall not expire until the
earlier of the Expiration Date or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of your Continuous
Service;
(c) twelve (12) months after the termination of your
Continuous Service due to your Disability;
(d) eighteen (18) months after your death if you die either
during your Continuous Service or within three (3) months after your Continuous
Service terminates for reason other than Cause;
(e) the Expiration Date indicated in your Grant Notice; or
(f) the day before the tenth (10th) anniversary of the Date of
Grant.
For purposes of your option, "Cause" means your misconduct, including
but not limited to: (i) your conviction of any felony or any crime involving
moral turpitude or dishonesty, (ii) your participation in a fraud or act of
dishonesty against the Company, (iii) your conduct that, based upon a good faith
and reasonable factual investigation and determination by the Board,
demonstrates your gross unfitness to serve, or (iv) your intentional, material
violation of any contract between the Company and you or any statutory duty of
yours to the Company that you do not correct within thirty (30) days after
written notice to you thereof. Your physical or mental disability shall not
constitute "Cause."
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option (and
the unvested portion of your option if your Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
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<PAGE>
(b) By exercising your option you agree that, as a condition
to any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by exercising
your option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your option that occurs within two (2) years after
the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
9. TRANSFERABILITY. Your option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.
10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
11. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in part,
or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.
(b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of Common
Stock otherwise issuable to you upon the exercise of your option a number of
whole shares of Common Stock having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law. If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common
4
<PAGE>
Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of
such election, shares of Common Stock shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise of your option that
are otherwise issuable to you upon such exercise. Any adverse consequences to
you arising in connection with such share withholding procedure shall be your
sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to issue
a certificate for such shares of Common Stock or release such shares of Common
Stock from any escrow provided for herein.
12. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
13. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.
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EXHIBIT 10.4
RIGEL PHARMACEUTICALS, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
APPROVED BY THE BOARD OF DIRECTORS JANUARY 27, 2000
APPROVED BY STOCKHOLDERS __________, 2000
1. PURPOSE.
(a) The purpose of this 2000 Employee Stock Purchase Plan (the "Plan")
is to provide a means by which employees of Rigel Pharmaceuticals, Inc. (the
"Company") and its Affiliates, as defined in subparagraph 1(b), that are
designated as provided in subparagraph 2(b), may be given an opportunity to
purchase common stock of the Company (the "Common Stock").
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the
1.
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exercise of this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) To terminate or suspend the Plan as provided in paragraph
15.
(vi) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company and its Affiliates and to carry out the intent that the Plan be
treated as an "employee stock purchase plan" within the meaning of Section 423
of the Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock and subject to the increases in the number of reserved
shares described below, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate four hundred thousand (400,000)
shares of Common Stock (the "Reserved Shares"). As of the first nine (9)
anniversaries of the Effective Date of the Plan, the number of Reserved Shares
will be increased automatically by the LEAST of (i) one percent (1%) of the
total number of shares of Common Stock outstanding on such anniversary date,
(ii) four hundred thousand (400,000) shares or (iii) a number of shares
determined by the Board prior to the anniversary date, which number shall be
less than (i) and (ii) above. If any right granted under the Plan shall for any
reason terminate without having been exercised, the Common Stock not purchased
under such right shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges. The terms and conditions of an
Offering shall be
2.
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incorporated by reference into the Plan and treated as part of the Plan. The
provisions of separate Offerings need not be identical, but each Offering shall
include (through incorporation of the provisions of this Plan by reference in
the document comprising the Offering or otherwise) the period during which the
Offering shall be effective, which period shall not exceed twenty-seven (27)
months beginning with the Offering Date, and the substance of the provisions
contained in paragraphs 5 through 8, inclusive.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the terms of the applicable Offering, no employee of the
Company or any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the period of the Offering with respect to such right
shall begin on its Offering Date and end coincident with the end of such
Offering; and
(iii) the Board or the Committee may provide that if such
person first becomes an eligible employee within a specified period of time
before the end of the Offering, he or she will not receive any right under that
Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such
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employee may purchase under all outstanding rights and options shall be treated
as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan; PROVIDED, HOWEVER, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined in subparagraph 7(a)) during the period
which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
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(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering. "Earnings" is defined as an employee's wages (including amounts
thereof elected to be deferred by the employee, that would otherwise have been
paid, under any arrangement established by the Company that is intended to
comply with Section 125, Section 401(k), Section 402(h) or Section 403(b) of the
Code or that provides non-qualified deferred compensation), which shall include
overtime pay, bonuses, incentive pay, and commissions, but shall exclude profit
sharing or other remuneration paid directly to the employee, the cost of
employee benefits paid for by the Company or an Affiliate, education or tuition
reimbursements, imputed income arising under any group insurance or benefit
program, traveling expenses, business and moving expense reimbursements, income
received in connection with stock options, contributions made by the Company or
an Affiliate under any employee benefit plan, and similar items of compensation,
as determined by the Board or the Committee. The payroll deductions made for
each participant shall be credited to an account for such participant under the
Plan and shall be deposited with the general funds of the Company. A participant
may reduce (including to zero) or increase such payroll deductions, and an
eligible employee may begin such payroll deductions, after the beginning of any
Offering only as provided for in the Offering. A participant may make additional
payments into his or her account only if specifically provided for in the
Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such
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deductions have been used to acquire stock for the terminated employee), under
the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such compliance,
no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if
any, such deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
6.
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9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan, due to a change in corporate
capitalization and without the receipt of consideration by the Company (through
reincorporation, stock dividend, stock split, reverse stock split, combination
or reclassification of shares), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 3(a), and the outstanding rights will be appropriately adjusted in
the class(es) and number of securities and price per share of stock subject to
such outstanding rights. Such adjustments shall be made by the Board, the
determination of which shall be final, binding and conclusive.
(b) In the event of: (1) a dissolution, liquidation or sale of all or
substantially all of the securities or assets of the Company, (2) a merger or
consolidation in which the Company is not the surviving corporation or (3) a
reverse merger in which the Company is the surviving corporation but the shares
of Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then any surviving corporation may assume outstanding rights
or substitute similar rights for those under the Plan. In the event that no
surviving corporation assumes outstanding rights or substitutes similar rights
therefor, participants' accumulated payroll deductions shall be used to purchase
Common Stock immediately prior to the transaction described above and the
7.
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participants' rights under the ongoing Offering shall terminate immediately
following such purchase.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under
the Plan;
(ii) Modify the provisions as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as necessary
to comply with any laws or governmental regulations, or except as necessary to
ensure that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the
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Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its sole
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
(c) Notwithstanding the foregoing, the Plan shall terminate and no
rights may be granted under the Plan after the tenth anniversary of the
Effective Date.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective simultaneously with the effectiveness
of the Company's registration statement under the Securities Act with respect to
the initial public offering of shares of the Company's Common Stock (the
"Effective Date"), but no rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the
Board, which date may be prior to the Effective Date.
9.
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EXHIBIT 10.5
RIGEL PHARMACEUTICALS, INC.
2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED JANUARY 27, 2000
APPROVED BY STOCKHOLDERS _______________, 2000
EFFECTIVE DATE: _______________, 2000
1. PURPOSES.
(a) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options
are the Non-Employee Directors of the Company.
(b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of its Non-Employee Directors, to secure and retain the services of
new Non-Employee Directors and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "ANNUAL GRANT" means an Option granted annually to all Non-Employee
Directors who meet the criteria specified in subsection 6(b) of the Plan.
(c) "ANNUAL MEETING" means the annual meeting of the stockholders of
the Company.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means Rigel Pharmaceuticals, Inc., a Delaware
corporation.
(h) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors of the Company who are not compensated
1.
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by the Company for their services as Directors or Directors of the Company who
are merely paid a director's fee by the Company for their services as Directors.
(i) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's service. For example, a change in status without interruption
from a Non-Employee Director of the Company to a Consultant of an Affiliate or
an Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(o) "INITIAL GRANT" means an Option granted to a Non-Employee Director
who meets the criteria specified in subsection 6(a) of the Plan.
(p) "IPO DATE" means the effective date of the initial public offering
of the Common Stock.
2.
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(q) "NON-EMPLOYEE DIRECTOR" means a Director who is not an Employee.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(s) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(u) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(v) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(w) "PLAN" means this Rigel Pharmaceuticals, Inc. 2000 Non-Employee
Directors' Stock Option Plan.
(x) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(y) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine the provisions of each Option to the extent
not specified in the Plan.
(ii) To construe and interpret the Plan and Options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or an Option as provided in Section
12.
(iv) To terminate or suspend the Plan as provided in Section
13.
3.
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(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company that are not in conflict with the provisions of the Plan.
(c) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate three hundred
thousand (300,000) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such
Option shall revert to and again become available for issuance under the Plan.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
The Options as set forth in section 6 automatically shall be granted
under the Plan to all Non-Employee Directors.
6. NON-DISCRETIONARY GRANTS.
(a) INITIAL GRANTS. Without any further action of the Board, each
person who is elected or appointed for the first time to be a Non-Employee
Director after the IPO Date automatically shall, upon the date of his or her
initial election or appointment to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an Initial Grant to purchase twenty
thousand (20,000) shares of Common Stock on the terms and conditions set forth
herein.
(b) ANNUAL GRANTS. Without any further action of the Board, a
Non-Employee Director shall be granted an Annual Grant as follows: On the day
following each Annual Meeting commencing with the Annual Meeting in 2001, each
person who is then a Non-Employee Director automatically shall be granted an
Annual Grant to purchase five thousand (5,000) shares of Common Stock on the
terms and conditions set forth herein; PROVIDED, HOWEVER, that if the person has
not been serving as a Non-Employee Director for the entire period since the
preceding Annual Meeting, then the number of shares subject to the Annual Grant
shall be reduced pro rata for each full quarter prior to the date of grant
during which such person did not serve as a Non-Employee Director.
4.
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7. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) EXERCISE PRICE. The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable statutes and
regulations, in any combination of the following methods:
(i) By cash or check.
(ii) Provided that at the time of exercise the Common
Stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL, by
delivery of already-owned shares of Common Stock either that the Optionholder
has held for the period required to avoid a charge to the Company's reported
earnings (generally six months) or that the Optionholder did not acquire,
directly or indirectly from the Company, that are owned free and clear of any
liens, claims, encumbrances or security interests, and that are valued at
Fair Market Value on the date of exercise. "Delivery" for these purposes
shall include delivery to the Company of the Optionholder's attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, the Optionholder may not exercise the Option
by tender to the Company of Common Stock to the extent such tender would
violate the provisions of any law, regulation or agreement restricting the
redemption of the Company's stock.
(iii) Provided that at the time of exercise the Common Stock
is publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt
of cash (or check) by the Company or the receipt of irrevocable instructions to
pay the aggregate exercise price to the Company from the sales proceeds.
(d) TRANSFERABILITY. An Option is transferable by will or by the laws
of descent and distribution. An Option also is transferable (i) by instrument to
an inter vivos or testamentary trust, in a form accepted by the Company, in
which the Option is to be passed to beneficiaries
5.
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upon the death of the trustor (settlor) and (ii) by gift, in a form accepted by
the Company, to a member of the "immediate family" of the Optionholder as that
term is defined in 17 C.F.R. 240.16a-1(e). An Option shall be exercisable during
the lifetime of the Optionholder only by the Optionholder and a permitted
transferee as provided herein. However, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.
(e) EXERCISE SCHEDULE. The Option shall be exercisable as the shares of
Common Stock subject to the Option vest.
(f) VESTING SCHEDULE. Options shall vest as follows:
(i) Initial Grants shall provide for vesting of eight hundred
thirty-four (834) of the shares of Common Stock subject to the Option each month
after the date of grant.
(ii) Annual Grants shall provide for vesting of two hundred
nine (209) of the shares of Common Stock subject to the Option each month after
the date of the grant.
(g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service, or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate.
(h) EXTENSION OF TERMINATION DATE. If the exercise of the Option
following the termination of the Optionholder's Continuous Service (other than
upon the Optionholder's death or Disability) would be prohibited at any time
solely because the issuance of shares would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in subsection
7(a) or (ii) the expiration of a period of three (3) months after the
termination of the Optionholder's Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements.
(i) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.
6.
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(j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the three-month period after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise the
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death or (2) the expiration of the term of such Option as
set forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Options, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Options.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
10. MISCELLANEOUS.
(a) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Option unless and until such Optionholder has satisfied all
requirements for exercise of the Option pursuant to its terms.
(b) NO SERVICE RIGHTS. Nothing in the Plan or any instrument executed
or Option granted pursuant thereto shall confer upon any Optionholder any right
to continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company
7.
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or an Affiliate, and any applicable provisions of the corporate law of the state
in which the Company or the Affiliate is incorporated, as the case may be.
(c) INVESTMENT ASSURANCES. The Company may require an Optionholder, as
a condition of exercising or acquiring stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Optionholder's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that the Optionholder is
acquiring the stock subject to the Option for the Optionholder's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (iii) the issuance of the shares upon the
exercise or acquisition of stock under the Option has been registered under a
then currently effective registration statement under the Securities Act or (iv)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(d) WITHHOLDING OBLIGATIONS. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionholder as a result of the
exercise or acquisition of stock under the Option, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject both to the
Plan pursuant to subsection 4(a) and to the nondiscretionary Options specified
in Section 5, and the outstanding Options will be appropriately adjusted in the
class(es) and number of securities and price per share of stock subject to such
outstanding Options. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The conversion of any
convertible
8.
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securities of the Company shall not be treated as a transaction "without receipt
of consideration" by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to such event.
(c) CHANGE IN CONTROL. In the event of (i) a sale, lease or other
disposition of all or substantially all of the securities or assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation may assume any Options outstanding under
the Plan or may substitute similar Options (including an option to acquire the
same consideration paid to the stockholders in the transaction described in this
subsection 11(c)) for those outstanding under the Plan. In the event no
surviving corporation or acquiring corporation assumes such Options or
substitutes similar Options for those outstanding under the Plan, then with
respect to Options held by Optionholders whose Continuous Service has not
terminated, the vesting of such Options (and the time during which such Options
may be exercised) shall be accelerated in full, and the Options shall terminate
if not exercised at or prior to such event. With respect to any other Options
outstanding under the Plan, such Options shall terminate if not exercised prior
to such event.
12. AMENDMENT OF THE PLAN AND OPTIONS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval.
(c) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(d) AMENDMENT OF OPTIONS. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
No Options may be granted under the Plan while the Plan is suspended or after it
is terminated.
9.
<PAGE>
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Option granted while the Plan
is in effect except with the written consent of the Optionholder.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the IPO Date, but no Option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
15. CHOICE OF LAW.
All questions concerning the construction, validity and interpretation
of this Plan shall be governed by the law of the State of Delaware, without
regard to such state's conflict of laws rules.
10.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.6
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is entered into as of
December 4, 1998 (the "Effective Date") by and between RIGEL PHARMACEUTICALS,
INC., a Delaware corporation ("Rigel") with its offices at 772 Lucerne Drive,
Sunnyvale, California 94086, and JANSSEN PHARMACEUTICA N.V., a Belgian
corporation ("Janssen") with offices at Turnhoutseweg 30, 2340 Beerse, Belgium
(Rigel and Janssen individually referred to as "Party", and collectively as
"Parties").
RECITALS
WHEREAS, Rigel is a leader in the discovery and validation of functional
peptide-target interactions regulating the cell cycle in specific tumor cells;
and
WHEREAS, Janssen is engaged in the research, development, marketing,
manufacture and distribution of pharmaceutical compounds useful in treating or
preventing human diseases and conditions; and
WHEREAS, Rigel and Janssen desire to enter into a collaborative
relationship to conduct research to identify novel targets for drug discovery,
as generally described in the Research Plan, with Janssen developing and
commercializing any compounds resulting therefrom; and
WHEREAS, Rigel and Janssen agree that they will conduct the research
under this Agreement on a collaborative basis with a goal of discovering and
identifying products that are suitable for commercialization; and
WHEREAS, Johnson & Johnson Development Corporation has agreed to purchase
and Rigel has agreed to sell one million five hundred thousand (1,500,000)
shares of Rigel Series D Preferred Stock with a total value of US$3 million
pursuant to a stock purchase agreement between the Parties of even date herewith
(the "Stock Purchase Agreement"); and
WHEREAS, if the research collaboration is successful, the resulting
compounds may have a broad range of applications, particularly in the diagnosis,
therapeutic treatment and/or prevention of certain tumors and other diseases;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties agree as follows:
1. DEFINITIONS
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
1.
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As used herein, the following terms shall have the following meanings:
1.1 "ACTIVE PEPTIDE" shall mean a molecule which changes cellular
function in an assay specified by the RMC.
1.2 "AFFILIATE" shall mean any company or entity controlled by,
controlling, or under common control with a Party hereto and shall include
without limitation any company fifty percent (50%) or more of whose voting stock
or participating profit interest is owned or controlled, directly or indirectly,
by a Party, and any company which owns or controls, directly or indirectly,
fifty percent (50%) or more of the voting stock of a Party.
1.3 "CONFIDENTIAL INFORMATION" shall mean all information
(generally not known to the public), inventions, know-how or data disclosed
by a Party to the other pursuant to this Agreement including, without
limitation, Rigel Know-How, Janssen Know-How, manufacturing, marketing,
financial, personnel, scientific and other business information and plans,
and the material terms of this Agreement, whether in oral, written, graphic
or electronic form.
1.4 "CONTROL" shall mean the possession of the ability to grant a
license or sublicense to know-how and patents without violating the terms of any
agreement or other arrangement with, or the rights of, any Third Party.
1.5 "DATE OF FIRST SALE" means the day on which Janssen, its Affiliate
or its sublicensee first sells a Product to a Third Party in an arm's length
transaction.
1.6 "DEVELOPMENT CANDIDATE" shall mean a compound selected for
pre-phase I studies, including, but not limited to, GLP toxicological and
pharmacological studies using GMP material.
1.7 "DIAGNOSTIC PRODUCT" shall mean any composition of matter used for
the diagnosis of a disease or condition, including but not limited to, the
diagnosis of disease susceptibility, or a choice of treatment or monitoring of a
disease or condition, or the determination of genetic traits where such
composition of matter is a component of a Validated Target-Peptide Pair or was
identified by or on behalf of Rigel or Janssen in a Janssen Collaboration Assay
and/or a Janssen Non-Collaboration Assay.
1.8 "EXCLUSIVITY TERM" shall have the meaning assigned to it in
Section 3.6.
1.9 "FDA" means the United States Food and Drug Administration.
1.10 "FIELD OF RESEARCH" shall mean the identification of Molecular
Targets and the related Active Peptides which cause alterations in the cell
cycle of human tumor cells, including changes in the capacity to transit through
various cell cycle stages, and restoration of normal cell cycle progression
which would result in the inhibition of proliferation or the induction of
apoptosis in these human tumor cells.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
2.
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1.11 "FTE" shall mean the equivalent of a full-time scientist based on
at least of 47 (forty-seven) weeks per year of scientific work carried out by
one or more employees or consultants of Rigel, each of whom devotes a portion of
his or her time to scientific work on or directly related to the Research
Program; PROVIDED, HOWEVER, that Janssen understands and agrees that Rigel
retains complete discretion to change the identity, the frequency and time which
any individual employee devotes to the Research Program. Scientific work on or
directly related to the Research Program to be performed by Rigel employees or
consultants can include, but is not limited to, experimental laboratory work,
recording and writing up results, reviewing literature and references, attending
selected and appropriate seminars and symposia, managing and leading scientific
staff, and carrying out Research Program management duties (including service on
the Research Management Committee).
1.12 "HOMOLOGUE" shall mean a modification to one of the components of
a VTPP which is functionally equivalent to such VTPP component.
1.13 "INTERNAL JANSSEN RESEARCH" shall mean the internal research
conducted by Janssen and its permitted sublicensees using Rigel Technology or
with Rigel Technology Assays, to assess the alteration or normalization of
uncontrolled cell growth, cell division, dissemination or differentiation status
of cancer cells.
1.14 "JANSSEN COLLABORATION ASSAY" shall mean a drug discovery assay
incorporating a Janssen Collaboration Target.
1.15 "Janssen Know-How" shall mean any and all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information that is necessary and useful in the Field of Research and that
Janssen owns or Controls on the Effective Date and any replication or any part
of such information or material. Janssen Know-How shall exclude Janssen Patents.
1.16 "JANSSEN PATENTS" shall mean all foreign and domestic patents
(including, without limitation, extensions, reissues, reexaminations, renewals
and inventors certificates) issued as of, and patents issuing from patent
applications (including substitutions, provisionals, divisionals, continuations
and continuations-in-part) that are pending as of, the Effective Date which
claim inventions or discoveries necessary and useful in the Field of Research
and are owned or Controlled by Janssen. The RMC shall compile a list of Janssen
Patents from time to time.
1.17 "JANSSEN COLLABORATION TARGET" means a Validated Target-Peptide
Pair delivered by Rigel as provided in Section 3.5.
1.18 "JANSSEN TECHNOLOGY" shall mean Janssen Patents and Janssen
Know-How.
1.19 "MAJOR MARKET" shall mean the U.S.A., France, Germany, United
Kingdom or any country in the EU pursuant to an NDA approval by the EMEA, or
Japan.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
3.
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1.20 "MOLECULAR TARGET" shall mean a molecule shown in an assay
specified by the RMC to play a role in a research pathway in human tumor cells.
1.21 "NDA" shall mean a New Drug Application or its equivalent for
biological products as more fully defined in 21 C.F.R. Section 314.5 et seq.,
and any equivalent filing in any regulatory jurisdiction.
1.22 "NET SALES" means the gross sales price billed by Janssen or an
Affiliate thereof or a sub-licensee thereof for sales of Products hereunder to a
Third Party less (in each case as may be applicable thereto and consistent with
such Party's then existing standard business practices): (a) standard trade
discounts, including cash discounts or rebates, actually allowed or granted from
the billed amount, (b) credits or allowances actually granted upon claims,
rejections or returns of Products, including recalls, regardless of the party
requesting such recall, (c) charges included as part of the gross sales price
for freight, postage, shipping and insurance charges, to the extent specifically
billed, (d) taxes (other than income taxes), duties or other governmental
charges levied on or measured by the billing amount when included in billing, as
adjusted for rebates and refunds, and (e) accounts that are uncollectible and
written off Janssen's books as uncollectible, provided that any uncollectible
accounts excluded pursuant to this clause (e) which are subsequently collected
by Janssen shall be included in Net Sales for the royalty period in which such
amounts are collected. In the event any Product is sold in the form of a
combination containing one or more active ingredients in addition to a Product,
Net Sales for such combination will be calculated by multiplying actual Net
Sales of such combination by the fraction A/(A+B), where A is the invoice price
of the applicable Product, if sold separately, and B is the total invoice price
of any other active component or components, or non-consumable devices (such as,
for example, implantable pumps or electronic stimulators; however, items such
as, for example, disposable transdermal patches or prefilled syringes shall
constitute consumable devices) in the combination, if sold separately. If, on a
country-by-country basis, the other active component or components in the
combination are not sold separately in said country, Net Sales for the purpose
of determining royalties of the combination shall be calculated by multiplying
actual Net Sales of such combination by the fraction A/C, where A is the invoice
price of the applicable Product, if sold separately, and C is the invoice price
of the combination. If, on a country-by-country basis, neither the Product nor
the other active component or components of the combination is sold separately
in said country, Net Sales for the purposes of determining royalties of the
combination shall be determined by the Parties in good faith.
1.23 "NON-COLLABORATION PHARMACEUTICAL PRODUCT" shall mean a
composition of matter, including, but not limited to a chemical entity, a
pro-drug, an isomer, a non-peptide, and a protein or nucleic acid or any
fragment thereof, that was identified by or on behalf of Janssen or its
permitted sublicensees in the Internal Janssen Research, that is useful for
treating and/or preventing human diseases.
1.24 "PHARMACEUTICAL COLLABORATION PRODUCT" shall mean a composition of
matter, including, but not limited to, a chemical entity, a pro drug, an isomer,
a non-peptide, and a protein or nucleic acid or any fragment thereof, that was
identified by or on behalf of Rigel or Janssen in a Janssen Collaboration Assay,
that is useful for treating and/or preventing human
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
4.
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diseases; PROVIDED, HOWEVER, that the term "Pharmaceutical Collaboration
Product" specifically excludes any composition of matter marketed or being
developed by Janssen as of the Effective Date.
1.25 "PHASE III CLINICAL TRIAL" shall mean that clinical trial of a
Product designed to be on a sufficient number of patients to establish the
safety and efficacy of a Product and generate pharmacoeconomic data to support
regulatory approval in a therapeutic indication as more fully defined in 21
C.F.R. 312.21(c), or any equivalent clinical trial in a non-U.S. regulatory
jurisdiction.
1.26 "PRELIMINARY TARGET-PEPTIDE PAIRS" shall mean a Molecular Target
together with an Active Peptide that binds thereto, which pair has been
identified or discovered in the course of the Research Program, and which has
been Validated Preliminarily.
1.27 "PRODUCTS" shall mean the Pharmaceutical Collaboration
Products, the Target-Peptide Therapeutic Products, the Diagnostic Products
and the Non-Collaboration Pharmaceutical Products.
1.28 "REGULATORY APPROVAL" shall mean any approval (including price and
reimbursement approvals), licenses, registrations, or authorizations of any
federal, state or local regulatory agency, department, bureau or other
government entity, necessary for the manufacture, use, storage, import,
transport or sale of a Product in a regulatory jurisdiction.
1.29 "RESEARCH MANAGEMENT COMMITTEE" OR "RMC" shall mean the committee
formed pursuant to Section 2.1.
1.30 "RESEARCH PERIOD" shall have the meaning assigned to it in Section
3.3.
1.31 "RESEARCH PLAN" shall mean the research plan attached as Exhibit A
to this Agreement, as it may be modified or amended from time to time as
permitted herein.
1.32 "RESEARCH PROGRAM" shall mean the program of the collaborative
research as described in Article 3.
1.33 "RESEARCH PROGRAM KNOW-HOW" shall mean any tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information, including information concerning target-peptide interaction
developed in the Research Program (including, without limitation, the functional
role of the Molecular Target involved) that is within the Field of Research, and
any replication or any part of such information or material; PROVIDED, HOWEVER,
that the term "Research Program Know-How" as defined specifically excludes
Research Program Patents and any compounds identified in Internal Janssen
Research.
1.34 "RESEARCH PROGRAM PATENTS" shall mean all foreign and domestic
patents (including extensions, reissues, reexaminations, renewals and inventors
certificates) issuing from applications (including substitutions, provisionals,
divisionals, continuations and continuations-
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
5.
<PAGE>
in-part) that claim inventions that are made in the Research Program and that
are filed by or on behalf of one or both of the Parties hereto.
1.35 "RESEARCH PROGRAM TECHNOLOGY" shall mean the Research Program
Patents and Research Program Know-How.
1.36 "RIGEL TECHNOLOGY ASSAYS" shall mean the assays transferred to
Janssen or its permitted sublicensees for use in the Internal Janssen Research
which assess the alteration or normalization of uncontrolled cell growth, cell
division, dissemination or differentiation status of cancer cells, which are
more specifically listed in Exhibit B.
1.37 "RIGEL KNOW-HOW" shall mean any and all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information that is necessary and useful in the Field of Research and that
Rigel owns or Controls on the Effective Date and any replication or any part of
such information or material, but subject to any limitations contained in any
license agreements.
1.38 "RIGEL PATENTS" shall mean all foreign and domestic patents
(including, without limitation, extensions, reissues, reexaminations, renewals
and inventors certificates) issued as of, and patents issuing from applications
(including substitutions, provisionals, divisionals, continuations and
continuations-in-part) pending as of, the Effective Date which claim inventions
or discoveries necessary and useful in the Field of Research and are owned or
Controlled by Rigel, but subject to any limitations contained in any license
agreements.
1.39 "RIGEL TECHNOLOGY" shall mean the Rigel Patents and Rigel
Know-How.
1.40 "STANFORD AGREEMENTS" shall mean the agreements by and between
Rigel and The Board of Trustees of Leland Stanford Junior University dated
October 7, 1996 (the "1996 Agreement"), August 18, 1997 (the "1997
Agreement"), and March 27, 1998 (the "1998 Agreement"), which have been
provided to Janssen with commercial terms redacted, and attached hereto as
Exhibit D.
1.41 "STANFORD REQUIRED PROVISIONS" shall mean the provisions relating
to (a) royalty reports, payments and accounting, (b) warranties or negation
thereof, and (c) indemnity, contained respectively in Articles 8, 9 and 10 of
the 1996 Agreement, Articles 7, 9 and 10 of the 1997 Agreement, and Articles 7,
8, and 9 of the 1998 Agreement.
1.42 "TARGET-PEPTIDE THERAPEUTIC PRODUCT" shall mean a product that
contains a component of a VTPP or a Homologue thereof.
1.43 "TERM OF THE AGREEMENT" shall have the meaning assigned to it in
Article 10.
1.44 "TERRITORY" shall mean the entire world.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
6.
<PAGE>
1.45 "THIRD PARTY" shall mean any person or entity other than Janssen,
Rigel and Affiliates of either.
1.46 "VALIDATED PRELIMINARILY" shall mean demonstration of a functional
phenotype change in a primary assay and such other criteria as determined by the
RMC prior to the commencement of target evaluation by Rigel.
1.47 "VALIDATED TARGET-PEPTIDE PAIR" OR "VTPP" shall mean a Molecular
Target together with an Active Peptide that binds thereto, which pair has been
identified or discovered during the course of the Research Program in the Field
of Research, that meets the criteria for full validation established by the RMC
at the time that the respective Preliminary Target Peptide Pair is selected for
further validation.
2. RESEARCH PROGRAM GOVERNANCE
2.1 FORMATION OF RESEARCH MANAGEMENT COMMITTEE. The Research Program
established by this Agreement shall be overseen by a Research Management
Committee composed of an equal number of representatives from each Party (the
"Research Management Committee") drawn from the ranks of senior scientists and
senior research management of each Party. The total number of RMC members shall
be agreed upon by the RMC from time to time. The Parties shall designate their
representatives on the RMC within ten (10) days after the Effective Date. The
Parties shall notify one another in writing of any change in the membership of
the RMC as appropriate to allow for the participation of different research
groups within Janssen and Rigel. The Parties shall agree upon the appropriate
qualifications for members of the RMC and mechanisms for making substitutions
for RMC members. An alternate member designated by a Party may serve
temporarily in the absence of a permanent member of the RMC for such Party.
Each Party shall designate one of its representatives as a co-chair of the RMC.
Each co-chair of the RMC will be responsible for the agenda and the minutes of
alternating RMC meetings.
2.2 RESEARCH PLAN DEVELOPMENT AND MODIFICATION. The RMC shall develop
and periodically modify the Research Plan, commencing with the initial Research
Plan attached hereto as Exhibit A.
2.3 RMC ACTIONS. In taking actions by the RMC, each Party shall have
one vote. If the RMC fails to reach unanimity on a matter before it for
decision, the matter shall be referred for resolution to the CEO of Rigel and
the V.P. of Biological Research of Janssen for their consideration and
agreement. If they are unable to agree after negotiation in good faith, the
matter shall be resolved consistent with Janssen's position; PROVIDED, HOWEVER,
that solely in connection with technical issues involving Rigel Technology such
as, for example, how to carry out a certain experiment or which technique to be
applied to obtain a certain result, such issues shall be resolved consistent
with Rigel's position. Strategic decisions such as, for example, selection of
Preliminary Target Peptide Pairs for further validation and the criteria for
such validation, shall be resolved consistent with Janssen's position.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
7.
<PAGE>
2.4 MEETINGS OF THE RMC. The RMC:
(a) shall hold meetings at such times and places as shall be
determined by the RMC (it being expected that meetings will alternate between
the U.S. and European offices of each party) but in no event shall such meetings
be held in person less frequently than once every three (3) months during the
first two (2) years after the Effective Date;
(b) may conduct meetings in person or by telephone conference,
provided that meetings by telephone conference shall not reduce the number of
meetings in person specified in paragraph (a) above;
(c) by mutual consent of the representatives of each Party, may
invite other senior personnel of their organization to attend meetings of the
RMC, as appropriate however such other senior personnel shall not have any
duties of an RMC member.
(d) may act without a meeting if prior to such action a written
consent thereto is signed by all members of the RMC;
(e) may form and subsequently disband subcommittees with
appropriate representation from each party; and
(f) may amend or expand upon the foregoing procedures for its
internal operation by unanimous written consent.
2.5 MINUTES. At each meeting, the RMC shall elect a secretary who
will prepare, within ten (10) days after each meeting (whether held in person or
be telecommunication), the minutes reporting in reasonable detail the actions
taken by the RMC, the status of the Research Program, issues requiring
resolution and resolutions of previously reported issues, which minutes are to
be signed by the RMC co-chair persons from each of the Parties.
2.6 SUBCOMMITTEES. Any subcommittee established by the RMC shall have
appropriate representation of each Party and may include representatives who are
not members of the RMC. Any such subcommittee shall be given assignments from
the RMC, shall be subject to the authority of the RMC and shall report its
actions to the RMC. At the request of either Party at any time, any such
subcommittee shall be dissolved and its powers and functions returned to the
RMC. The RMC shall not delegate any of its RMC Functions and Powers as
described in Article 2.7, without retaining the final approval before
implementing the subcommittee assignments.
2.7 RMC FUNCTIONS AND POWERS. The activities of the Parties under
this Agreement shall be managed by the RMC only to the extent set forth herein
(unless otherwise mutually agreed by the Parties). During the Research Period
the RMC shall:
(a) determine the goals for the Research Program and establish
and review the Research Plan for accomplishing such goals;
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
8.
<PAGE>
(b) encourage and facilitate ongoing cooperation and
information exchange between the parties;
(c) monitor the progress of the Research Plan and the parties'
diligence in carrying out their responsibilities thereunder;
(d) allocate tasks and coordinate activities required to
perform the Research Plan;
(e) schedule routine visits by Rigel and Janssen personnel to
Janssen and Rigel, respectively, and oversee secondment of Janssen and Rigel
personnel pursuant to Section 3.9;
(f) establish prospective criteria to determine when a
Molecular Target and Active Peptide is a Preliminary Target-Peptide Pair or a
Validated Target-Peptide Pair, and to amend the Research Plan accordingly;
(g) identify and select Preliminary Target-Peptide Pairs and
Validated Target-Peptide Pairs pursuant to Section 3.4 and 3.5;
(h) perform such other functions as expressly provided herein,
as appropriate to further the purposes of this Agreement, as mutually agreed by
the Parties.
2.8 OBLIGATIONS OF PARTIES DURING THE RESEARCH PERIOD. Janssen and
Rigel shall provide the RMC with reasonable access during regular business hours
to all Janssen Know-How, Rigel Know-How and Research Program Know-How specific
to the Research Program that the RMC determines that is reasonably required in
order to perform its obligations hereunder, subject to any bona fide obligations
of confidentiality to a Third Party.
2.9 LIMITATIONS OF POWERS OF THE RMC. The RMC shall have no power to
amend this Agreement and shall have only such powers as are specifically
delegated to it hereunder.
3. CONDUCT OF RESEARCH PROGRAM
3.1 SCOPE OF THE RESEARCH PROGRAM. The Parties hereby agree to
establish and conduct, during the Research Period, a collaborative research
program pursuant to the Research Plan in the Field of Research, as described
in this Article 3. The Parties will collaborate in producing Validated
Target-Peptide Pairs in order to discover, develop and manufacture products
useful in diagnosing, treating or preventing diseases in humans.
3.2 RESEARCH ACTIVITIES; REVISIONS.
(a) The Parties will perform research in the Field of Research
as directed by the RMC and pursuant to the Research Plan. Modifications of the
Research Plan shall be made in writing and only as directed and approved by the
RMC. In the event of any such modification, Exhibit A, the obligations of the
parties including, but not limited to, Rigel's resource obligations
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
9.
<PAGE>
under this Section 3.2 and Janssen's research support obligations under
Section 6.2, shall be revised as necessary and appropriate, subject to
written approval of the Parties.
(b) Rigel agrees to commit the resources set forth in this
subsection (b), to exert the efforts necessary and reasonable and consistent
with its normal business practices to execute and perform the Research Plan
(including extensions for the balance of the Research Period), to maintain and
utilize the scientific staff, laboratories, offices and other facilities
consistent with such undertaking. Rigel and Janssen agree to reasonably
cooperate with each other in the conduct of the Research Plan. The Parties
hereby agree that Rigel's current laboratories; offices and other facilities are
satisfactory for purposes of this Section 3.2. During the first three (3) years
of the Research Period, [ * ] to the Research Program. The purchase of any item
including, but not limited to, cell lines reasonably required by Rigel to
conduct the Research Plan shall be Rigel's obligation and responsibility and all
cost associated therewith shall be to Rigel's account.
3.3 RESEARCH PERIOD; EXTENSIONS. The Research Program will commence on
the Effective Date and terminate three (3) years thereafter, unless extended by
mutual agreement or unless this Agreement is terminated earlier as provided in
Article 10 (the "Research Period"). Janssen shall have an option to extend the
Research Period beyond the initial Research Period of three (3) years for
additional one year periods for a total of two (2) years by giving notice to
Rigel at least one hundred twenty (120) days prior to the anniversary of the end
of the Research Period that it intends to exercise its option. The compensation
per FTE will be at the payment level as set forth herein.
3.4 IDENTIFICATION OF PRELIMINARY TARGET-PEPTIDE PAIRS. During the
Research Period, the RMC shall identify Preliminary Target-Peptide Pairs and
shall issue a list thereof not less often than quarterly.
3.5 IDENTIFICATION OF VALIDATED TARGET-PEPTIDE PAIRS.
(a) During the Research Period, the RMC shall select
Preliminary Target-Peptide Pairs to be further evaluated to determine whether
they are suitable to be selected by the RMC as Validated Target-Peptide Pairs
for the purpose of compound screening as provided in Section 3.6. Prior to
commencing such evaluation, the RMC shall establish the criteria ("Validation
Criteria") pursuant to Section 2.7(f) required for such Preliminary
Target-Peptide Pairs to qualify as Validated Target-Peptide Pairs.
(b) Preliminary Target-Peptide Pairs for which it has not been
established by the end of the Research Period whether or not they meet the
Validation Criteria, shall revert to Rigel; PROVIDED, HOWEVER, that the Parties
may determine that any Preliminary Target-Peptide Pair not fully validated may
be transferred to Janssen for further validation as Internal Janssen Research.
(c) During the Research Period, the RMC shall issue a list of
Validated Target-Peptide Pairs within thirty (30) days after each RMC
meeting, and a final list thereof
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
10.
<PAGE>
within thirty (30) days after the end of the Research Period. Promptly after
a Validated Target Peptide Pair has been listed, Rigel shall transfer all
Research Program Technology necessary for Janssen to initiate screening with
respect to that Validated Target Peptide Pair. Rigel shall not transfer any
component of a Validated Target Peptide Pair to any Third Party without prior
written approval of the Janssen.
3.6 COMPOUND SCREENING; DILIGENCE.
(a) Janssen may initiate compound screening with each
Validated Target-Peptide Pair at any time during the first three (3) years
following its determination by the RMC as a Validated Target-Peptide Pair
(the "Exclusivity Term"). Janssen shall notify Rigel promptly upon the
initiation of screening with each Validated Target-Peptide Pair.
(b) If Janssen does not initiate compound screening with a
Validated Target-Peptide Pair during the Exclusivity Term pertaining to such
Validated Target-Peptide Pair, or, having timely initiated compound screening,
Janssen fails to pursue such screening in a manner consistent with Janssen's
normal research practices, then, in either case, the licenses granted herein
by Rigel to Janssen for such Validated Target-Peptide Pair shall terminate and
Janssen shall grant Rigel an exclusive, worldwide, royalty-free license, with
the right to sublicense, under its interest in the Research Program Technology
with respect to such Validated Target-Peptide Pair.
(c) If, according to Rigel, Janssen has failed to comply
with the diligence requirements as set forth in subsection (b) above, Rigel
shall notify Janssen thereof in writing. Within thirty (30) days of such
notice, the Parties shall meet to discuss the matter. If no agreement is
reached, the dispute shall be resolved as provided in Section 12.3. Effective
upon such resolution, the licenses granted by Rigel hereunder shall terminate
as provided in subsection (b) above, or shall continue, depending on whether
or not Janssen is found to have breached the diligence obligations as
described in subsection (b).
3.7 ADDITIONAL JANSSEN RIGHT TO VALIDATED TARGET-PEPTIDE PAIR.
With respect to each Validated Target-Peptide Pair which reverts to Rigel as
provided in Section 3.6, Rigel will, upon identifying a compound during the
term of this Agreement which modulates the activity of such Validated
Target-Peptide Pair or its constituents provide written notice to Janssen of
such compound and provide the information reasonably necessary for Janssen to
determine whether Janssen wishes to discuss licensing such compound. If
Janssen notifies Rigel within ninety (90) days of Rigel's notice, of its
desire to license such compound, the Parties will conduct good faith
negotiations of terms upon which Rigel will license such compound to Janssen;
PROVIDED, HOWEVER, if the Parties are unable to reach agreement within a
further period of ninety (90) days (or such further period as the Parties may
mutually agree) after Janssen's notice, then Janssen will have no rights with
respect to such compound and Rigel will be free to exploit such compound
alone or with others without obligation or liability to Janssen; PROVIDED,
HOWEVER, that Rigel shall not enter into any agreement with a Third Party on
terms which are substantially the same or less favorable to Rigel, than the
terms last offered by Janssen.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
11.
<PAGE>
3.8 RIGEL SCREENING. Rigel may initiate compound screening with a
Validated Target-Peptide Pair upon the explicit written request of Janssen
and acceptance by Rigel. However, Janssen shall have the exclusive right and
license to develop and exploit any compound so identified or discovered by
Rigel upon the terms provided in Sections 5.2 and 5.3.
3.9 SECONDMENT. In order to further a close working relationship,
the Parties will provide offices and support to each other at each other's
facilities for the visiting personnel of the other Party, as provided herein.
During the Research Period, each Party shall provide employees at the other
Party's facilities, on an as-needed basis to be determined by the RMC. In
addition, the RMC shall arrange for routine visits by other Rigel personnel
to Janssen facilities to facilitate information exchange between the Parties.
4. INTERNAL JANSSEN RESEARCH
4.1 TECHNOLOGY TRANSFER. During the Research Period, Janssen will
periodically notify Rigel of the Rigel Technology Assays and other assays
that are part of the Janssen Internal Research which Janssen or its permitted
sublicensees choose to pursue. Promptly thereafter, Rigel and Janssen shall
meet to determine whether the Rigel Technology Assays and such other assays
described in such notice are within the scope of Internal Janssen Research.
If the Parties determine that such assays are within the scope of the
Internal Janssen Research, Rigel shall transfer the Rigel Technology Assays
to Janssen or its permitted sublicensees, and shall provide such reasonable
assistance as is necessary to establish functioning assays, such assistance
to be [ * ] that Rigel is required to allocate to the Research Program. For
the avoidance of any doubt, any Rigel Technology Assays transferred, and any
information shared with Janssen or its permitted sublicensees in connection
with the Internal Janssen Research shall be used by Janssen or its permitted
sublicensees only to the extent of the licenses granted to Janssen under
Section 5.4.
4.2 USE OF RIGEL ASSAYS. Janssen shall use the Rigel Technology
Assays for the Internal Janssen Research only, and shall not transfer or
otherwise grant access to such assays to any Affiliate or Third Party, other
than to permitted sublicensees pursuant to Section 5.4.
4.3 REPORTING. Janssen shall provide Rigel with written reports on
the Internal Janssen Research and the use of the Rigel Technology Assays not
less than once every calendar year.
5. LICENSE GRANTS; CONFLICTING PROGRAMS; DILIGENCE
5.1 LICENSE GRANTS FOR COLLABORATIVE RESEARCH.
(a) GRANT BY RIGEL. Rigel hereby grants to Janssen and its
Affiliates a nonexclusive, non-transferable, royalty-free license in the
Field of Research during the Research Period under the Rigel Technology, and
Rigel's interest in the Research Program Technology in the Territory, subject
to the terms of this Agreement, solely for the purpose of carrying out
Janssen's responsibilities under the Research Program.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
12.
<PAGE>
(b) GRANT BY JANSSEN. Janssen hereby grants to Rigel and
its Affiliates a nonexclusive, non-transferable, royalty-free license in the
Field of Research during the Research Period under the Janssen Technology and
Janssen's interest in the Research Program Technology in the Territory,
subject to the terms of this Agreement, solely for the purpose of carrying
out Rigel's responsibilities under the Research Program.
5.2 COMMERCIAL LICENSE GRANT. Subject to the terms and
conditions of this Agreement, Rigel hereby grants to Janssen and its
Affiliates an exclusive, royalty-bearing license, with the right to grant
sublicenses, under the Rigel Technology and Rigel's interest in the Research
Program Technology, to discover, develop, identify, make, have made, use,
sell, have sold, offer for sale, export, and import Products in the Territory.
5.3 COMMERCIAL DUE DILIGENCE. The rights granted under Section 5.2
shall be subject to Janssen's obligation to discover, develop and commercially
exploit Products using the level of effort commensurate with other Janssen
products at a similar stage of development and of similar importance (based
on criteria such as patient population, price per treatment and competitive
position). If Janssen fails to use such diligence, Rigel may notify Janssen
of such failure and, if not cured within six (6) months of such notice,
terminate the license under Section 5.2 with respect to such Product.
5.4 LICENSE FOR INTERNAL JANSSEN RESEARCH. Rigel hereby grants
Janssen a non-exclusive, worldwide, royalty bearing license, during the Term
of Agreement under the Rigel Technology and Rigel's interest in the Research
Program Technology to the extent necessary to use the Rigel Technology Assays
for the Internal Janssen Research. Janssen shall have the right to grant
sublicenses under the license granted under this Section 5.4 to The R.W.
Johnson Pharmaceutical Research Institute, a Division of Ortho-McNeil
Pharmaceutical, Inc., and subject to Rigel's prior approval (which approval
shall not be unreasonably withheld) to other named Affiliates; PROVIDED,
HOWEVER, that any such sublicense shall provide for a license to Rigel
corresponding to the license granted by Janssen to Rigel under Section 5.5,
and shall be subject and subordinate to the terms of this Agreement. Janssen
shall provide Rigel with a copy of each sublicense agreement.
5.5 LICENSE TO RIGEL OF IMPROVEMENTS TO RIGEL TECHNOLOGY. Janssen
hereby grants to Rigel a nonexclusive, royalty-free, paid-up, worldwide
license (i) under Janssen's interest in all Research Program Technology, and
(ii) under Janssen's interest in any know-how, inventions or discoveries
generated or made in the course of the Internal Janssen Research, only to the
extent it constitutes an improvement of Rigel Technology.
5.6 EXCLUSIVITY PERIOD. During the first 18 months after the
Effective Date, Rigel will not enter into a research collaboration with a
Third Party ("Third Party Collaboration") in the Field of Research (the
"Exclusive Research Period").
5.7 CONFLICTING PROGRAMS.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
13.
<PAGE>
(a) After the Exclusive Research Period and during the
Research Period, Rigel will notify Janssen if it has decided to pursue a
research project in human oncology described in such notice ("Additional
Program"). Within sixty (60) days after receipt of Rigel's notice, the
Parties shall determine whether or not the Additional Program conflicts with
the Research Program. An Additional Program will be considered to conflict
with the Research Program if, after consultation with the RMC, the VP
Biological Research of Janssen and the CEO of Rigel agree that there is
significant overlap between the molecular targets or pathways of the
Additional Program and the Field of Research.
(b) If such a conflict is determined to exist then (i) Rigel
shall not proceed with the Additional Program, and (ii) Janssen may notify
Rigel within sixty (60) days of such determination of its interest in such
Additional Program. If Janssen so notifies Rigel, then the Parties will enter
into good faith discussions to determine whether there are mutually agreeable
terms upon which they wish to collaborate with respect to the Additional
Program. If Janssen does not so notify Rigel or if the Parties do not enter
into an agreement with respect to the Additional Program within ninety (90)
days (or such further period as the Parties may agree) after Janssen's
notice, then such Additional Program shall not be added to the Research
Program.
(c) If such a conflict is determined not to exist, Janssen
may notify Rigel within sixty (60) days of such determination of its interest
in such Additional Program. If Janssen so notifies Rigel, then the Parties
will enter into good faith discussions to determine whether there are
mutually agreeable terms upon which they wish to collaborate with respect to
the Additional Program. If Janssen does not so notify Rigel or if the Parties
do not enter into an agreement with respect to the Additional Program within
ninety (90) days (or such further period as the Parties may agree) after
Janssen's notice, then Rigel shall be free to pursue the Additional Program
alone or with a Third Party; PROVIDED, HOWEVER, that Rigel shall not enter
into any agreement with a Third Party on terms which are substantially the
same or less favorable to Rigel, than the terms last offered by Janssen to
Rigel in writing.
5.8 SUBLICENSES UNDER STANFORD AGREEMENTS. Subject to Section 6.15
(Third Party Payments by Rigel), the Parties hereby acknowledge that the
Stanford Required Provisions are included in this Agreement for the benefit
of Stanford University. The sublicenses granted hereunder shall remain in
effect after termination of the Stanford Agreements, provided that any
obligations of Janssen under the sublicenses granted herein shall be owed to
Stanford.
6. FINANCIAL SUPPORT
6.1 SIGNING PAYMENT. Within ten (10) days of the Effective Date of
this Agreement, Janssen will pay Rigel [ * ] .
6.2 RESEARCH SUPPORT. Janssen will provide funding to support
Rigel's efforts under the Research Program and [ * ] FTE'S of Rigel at a rate
of US$[ * ] per year. Such amount shall be paid quarterly in advance.
6.3 PAYMENTS FOR PHARMACEUTICAL COLLABORATION PRODUCTS.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
14.
<PAGE>
(a) MILESTONE PAYMENTS. For Pharmaceutical Collaboration
Products, the following payments will be due to Rigel upon the occurrence of
the following events:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
- ---------------------------------------------------------------------------------
<S> <C>
1) First to occur of either (a) Janssen $[ * ]
initiating compound screening with the
second Validated Target-Peptide Pair
delivered by Rigel or (b) six (6) months
after Rigel delivers the second Validated
Target-Peptide Pair.
- ---------------------------------------------------------------------------------
2) Demonstration by Janssen of IN VIVO efficacy $[ * ]
in at least one animal model of the first
Pharmaceutical Collaboration Product
identified in a screening assay using a
Janssen Collaboration Target.
- ---------------------------------------------------------------------------------
3) Selection by Janssen of the first $[ * ]
Development Candidate.
- ---------------------------------------------------------------------------------
4) Enrollment of the fifth patient in a Phase $[ * ]
III Clinical Trial for the first
Pharmaceutical Collaboration Product
- ---------------------------------------------------------------------------------
5) Approval of the first NDA for each $[ * ]
Pharmaceutical Collaboration Product in the
first Major Market.
- ---------------------------------------------------------------------------------
</TABLE>
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net
Sales of Pharmaceutical Collaboration Products at a rate of [ * ] when the
Pharmaceutical Collaboration Product contains a compound originating from
Janssen's compound collection and [ * ] when the Pharmaceutical Collaboration
Product contains a compound originating from Rigel's compound collection.
6.4 PAYMENTS FOR TARGET-PEPTIDE THERAPEUTIC PRODUCTS.
(a) MILESTONE PAYMENTS. For Target-Peptide Therapeutic
Products, the following payments will be due to Rigel upon the occurrence of
the following events:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
- ---------------------------------------------------------------------------------
<S> <C>
1) Demonstration by Janssen of in vivo efficacy $[ * ]
in at least one animal model of the first
Target-Peptide Therapeutic Product.
- ---------------------------------------------------------------------------------
2) Selection by Janssen of the first $[ * ]
Development Candidate.
- ---------------------------------------------------------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
15.
<PAGE>
- ---------------------------------------------------------------------------------
3) Enrollment of the fifth patient in a Phase $[ * ]
III Clinical Trial for the first Target-
Peptide Therapeutic Product
- ---------------------------------------------------------------------------------
4) Approval of the first NDA for each Target- $[ * ]
Peptide Therapeutic Product in the first
Major Market.
- ---------------------------------------------------------------------------------
</TABLE>
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net Sales
of Target-Peptide Therapeutic Products at a rate of [ * ].
6.5 PAYMENTS FOR DIAGNOSTIC PRODUCTS.
(a) MILESTONE PAYMENTS. For Diagnostic Products, the following
payment will be due to Rigel upon the occurrence of the following event:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
- ---------------------------------------------------------------------------------
<S> <C>
1) Regulatory Approval of the first Diagnostic $[ * ]
Product derived from each VTPP
- ---------------------------------------------------------------------------------
</TABLE>
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net Sales
of Diagnostic Products at a rate of [ * ] when the Diagnostic Product is
patented, and [ * ] when the Diagnostic Product is not patented.
6.6 PAYMENTS FOR NON-COLLABORATION PHARMACEUTICAL PRODUCTS.
(a) MILESTONE PAYMENTS. For Non-Collaboration Pharmaceutical
Products, the following payments will be due to Rigel upon the occurrence of the
following events:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
- ---------------------------------------------------------------------------------
<S> <C>
1) Enrollment of the fifth patient in a Phase $[ * ]
III Clinical Trial for the first Non-
Collaboration Pharmaceutical Product
- ---------------------------------------------------------------------------------
2) Approval of the first NDA for the first Non- $[ * ]
Collaboration Pharmaceutical Product in the
first Major Market.
- ---------------------------------------------------------------------------------
</TABLE>
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net Sales
of Non-Collaboration Pharmaceutical Products at a rate of [ * ].
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
16.
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6.7 ROYALTY PERIOD.
(a) In respect of Products for which a royalty is due,
Janssen's obligation to pay royalties to Rigel shall be for a period of ten
(10) years, on a Product-by-Product basis, from the Date of First Sale of
each such Product.
(b) For the purposes of determining whether royalties are
due hereunder, different dosage forms of a Product shall not be considered
different Products provided that different dosage forms contain the same
active ingredient.
(c) Upon termination of the royalty payment obligation,
Janssen shall thereafter have in perpetuity a royalty-free, non-exclusive
license to make, have made, use, sell, have sold, and import such Products
hereunder, without any accounting to Rigel.
6.8 MANNER OF PAYMENT. Remittance of payments under this Article 6
shall be made by means of wire transfer or other telegraphic transfer in U.S.
Dollars to Rigel's account in a bank in the United States to be designated
from time to time by Rigel.
6.9 REPORTS. Janssen shall provide written notice of the
occurrence of all milestone events in this Article. Within forty-five (45)
days following each quarterly period of a calendar year after the Date of
First Sale of the first Product, Janssen shall render to Rigel a written
report setting forth the Net Sales of such Products sold and the royalty due
and payable on a Product-by-Product and country-by-country basis (including
all deductions taken from the gross sales price in determining Net Sales).
6.10 INVOICING. All payments to be made by Janssen under this
Agreement shall be made based upon an invoice to be submitted by Rigel to
Janssen. The invoice shall be in the form attached hereto as Exhibit C.
Except as otherwise provided in Section 6.1, all payments shall be due within
fifteen (15) days of the receipt of such invoice by Janssen.
6.11 RECORDS AND AUDIT.
(a) During the term of this Agreement and for a period of at
least two (2) years thereafter, Janssen shall keep complete and accurate
records pertaining to the sale or other disposition of the Products
commercialized by it, in sufficient detail to permit Rigel to confirm the
accuracy of all payments due hereunder.
(b) Rigel shall have the right to cause an independent,
certified public accountant acceptable to Janssen to audit such records to
confirm Janssen's Net Sales of Products and royalty payments made under this
Agreement; PROVIDED, HOWEVER, that such auditor shall not disclose Janssen's
confidential information to Rigel, except to the extent such disclosure is
necessary to verify the amount of royalties due under this Agreement. Such
audits may be exercised once a year, within two (2) years after the royalty
period to which such records relate, upon prior written notice to Janssen and
during normal business hours. Rigel shall bear the full cost of such audit
unless such audit discloses an understatement of more than five percent (5%)
from the amount of the Net Sales or royalties previously paid. In such case,
Janssen shall bear
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
17.
<PAGE>
the full cost of such audit. In case that such audit discloses an
overpayment of royalties by Janssen, such overpayment shall be refunded to
Janssen. The terms of this Section 6.11 shall survive any termination or
expiration of this Agreement for a period of two (2) years.
6.12 FOREIGN EXCHANGE. The remittance of royalties payable on Net
Sales will be payable in U.S. dollars to Rigel at a bank and to an account
designated by Rigel using a rate of exchange of the currency of the country
from which the royalties are payable in accordance with the currency exchange
rates as published in the Wall Street Journal at the end of the calendar
quarter in which the Net Sales were made. All references to dollars herein
are references to U.S. dollar.
6.13 BLOCKED CURRENCY. Where royalties are due for Net Sales in a
country where by reason of currency regulations of any kind it is impossible
to make royalty payments for that country's Net Sales said royalties shall be
deposited in whatever currency is allowable for the benefit or credit of
Rigel in any accredited bank in that country as shall be acceptable to Rigel.
Moreover, when necessary to facilitate payments from countries other than the
United States, when requested by Janssen, Rigel shall enter into direct
license agreements with Janssen Affiliates designated by Janssen, whereby
such Affiliate will be obligated to remit royalty payments due for Net Sales
in such country directly to Rigel. Each such license agreement shall contain
substantially the same terms as this Agreement insofar as such terms are
lawful under applicable laws and regulations of the particular country; and
Janssen shall be responsible for the performance of all obligations of
Janssen Affiliates under such license agreements.
6.14 TAXES. All payments under this Agreement will be made without
any deduction or withholding for or on account of any tax unless such deduction
or withholding on behalf of Rigel is required by any applicable law. If
Janssen is so required to deduct or withhold, Janssen will:
(a) promptly notify Rigel of such requirement;
(b) pay to the relevant authorities the full amount required
to be deducted or withheld promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such amount has
been assessed against Rigel;
(c) promptly forward to Rigel an official receipt (or
certified copy), or other documentation reasonably acceptable to Rigel,
evidencing such payment to such authorities.
6.15 THIRD PARTY PAYMENTS BY RIGEL. All payments due to Third
Parties pursuant to agreement between Rigel and a Third Party that relate to
Rigel Technology shall be made by and or the account of Rigel. Janssen assumes
no responsibility for any payment due to Stanford University, the State
University of New York at Stony Brook, BASF, any other Third Party pursuant to
an agreement between Rigel and such Third Party.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
18.
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7. INTELLECTUAL PROPERTY
7.1 INFORMATION AND REPORTS. The Parties will provide to the RMC
promptly and at least quarterly the results of the research activities
conducted in the Research Program, such reports to be in such form as
specified by the RMC. The Parties shall keep complete and accurate records
pertaining to the results of work conducted pursuant to the Research Program.
Such records shall be maintained for a period of at least five (5) years
following the year in which any such efforts were made hereunder; PROVIDED,
HOWEVER, that all laboratory notebooks pertaining to the result of the work
conducted pursuant to the Research Program shall be maintained for at least
twenty (20) years.
7.2 DISCLOSURE OF PATENTABLE INVENTIONS. In addition to the
disclosures required, each Party shall provide the other any invention
disclosure related to the Research Program which has been submitted to it in
the normal course of disclosing an invention. Such invention disclosures
shall be provided promptly after submission and in no event later than 10
business days after the end of the calendar quarter in which the disclosure
was submitted.
7.3 OWNERSHIP OF RESEARCH PROGRAM KNOW-HOW; INVENTIONS. Except as
otherwise set forth herein, Research Program Know-How (including, without
limitation, any patentable invention or discovery) acquired, developed or
made solely by employees of one Party during the course of the Research
Program ("Sole Inventions") shall be the property of such Party. Research
Program Know-How (including, without limitation, any patentable invention or
discovery) acquired, developed or made jointly by employees of Janssen and
Rigel as determined in accordance with United States rules of inventorship,
shall be owned jointly by Janssen and Rigel, each to own an undivided
one-half (1/2) interest in such Research Program Know-How ("Joint Invention")
except as provided and subject to the licenses granted herein. Each Party
shall cooperate with the other in completing any patent applications relating
to Joint Inventions, and in executing and delivering any instrument required
to assign, convey or transfer to such other Party its undivided one-half
(1/2) interest.
7.4 PATENT PROSECUTION. Each Party will prepare, file, prosecute
and maintain patent applications for its Sole Inventions and shall be
responsible for related interference proceedings. The Parties will endeavor
to ensure that such patent applications are filed before any public
disclosure by either Party to maintain the validity of patent applications to
be filed outside of the United States and to comply with the provisions of
Article 9. Janssen shall be responsible for filing and prosecuting
applications for, and maintaining, Joint Inventions not related to Rigel
Technology, using counsel of its choice, throughout the world. Janssen shall
pay all expenses for filing applications for, and maintenance of, such Joint
Inventions. In the event that a Party decides not to proceed with filing or
prosecuting an application for, or maintaining, a Research Program Patent for
which it is responsible under this Section 7.3, it shall give the other Party
ninety (90) days written notice before any public disclosure or any relevant
prosecution or maintenance deadline and transmit all information reasonable
and appropriate relating to such Research Program Patent, and such other
Party shall have the right to pursue, at its own expense, prosecution of such
application for, or maintenance of, such patent.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
19.
<PAGE>
7.5 INFRINGEMENT BY THIRD PARTIES.
(a) NOTICE. Each Party shall promptly notify the other in
writing of any alleged or threatened infringement of the Research Program
Patents, which may adversely impact the rights of the Parties hereunder, of
which it becomes aware.
(b) ENFORCEMENT ACTION. In the event that the Parties become
aware of any alleged or threatened infringement of the Research Program
Patents, other than Research Program Patents relating to Rigel Technology,
Janssen shall have the right, but not the obligation, to take appropriate
action against any person or entity directly or contributorily infringing such
Research Program Patent. In the event Janssen fails to institute an
infringement suit or take other reasonable action in response to such
infringement within sixty (60) days, Rigel shall have the right, but not the
obligation upon thirty (30) days written notice to Janssen, to institute such
suit or take other appropriate action in its own name, the joint owner's name,
or both. Rigel shall have the right, but not the obligation, to take
appropriate action against any person or entity directly or contributorily
infringing a Research Program Patent relating to Rigel Technology. In the
event Rigel fails to institute an infringement suit or take other reasonable
action in response to such infringement within sixty (60) days, Janssen shall
have the right, but not the obligation upon thirty (30) days notice to Rigel,
to institute such suit or take other appropriate action in its own name, the
joint owner's name, or both. Regardless of which Party brings an enforcement
action, the other Party hereby agrees to cooperate reasonably in any such
effort, including, if required, furnishing a power of attorney. The Party not
bringing the action shall have the right to participate in such action at its
own expense with its own counsel and in such case any recovery obtained by
settlement or otherwise shall be shared by the Parties in accordance with their
economic interests in such Research Program Patent.
7.6 INFRINGEMENT OF THIRD PARTY PATENT RIGHTS.
(a) JOINT STRATEGY. In the event that the use or sale of a
Product becomes the subject of a claim of infringement of a patent, copyright
or other proprietary right anywhere in the world, and without regard to which
Party is charged with said infringement, and the venue of such claim, the
Parties shall promptly confer to discuss the claim.
(b) DEFENSE. Unless the Parties otherwise agree, Janssen
shall assume the primary responsibility for the conduct of the defense of any
such claim. Rigel shall have the right, but not the obligation, to
participate in any such suit at its sole option and at its own expense. Each
Party shall reasonably cooperate with the Party conducting the defense of the
claim. Neither Party shall enter into any settlement that affects the other
party's rights or interests without such other party's written consent, not
to be unreasonably withheld.
8. REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other that:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
20.
<PAGE>
(a) CORPORATE POWER. It is duly organized and validly existing
under the laws of its state or country of incorporation, and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
(b) DUE AUTHORIZATION. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
or persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate action.
(c) BINDING AGREEMENT. This Agreement is legally binding upon
it and enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
(d) GRANT OF RIGHTS; MAINTENANCE OF AGREEMENTS. It has not,
and will not during the term of this Agreement, grant any right to any Third
Party which would conflict with the rights granted to the other Party hereunder.
It has (or will have at the time performance is due) maintained and will
maintain and keep in full force and effect all agreements necessary to perform
its obligations hereunder.
(e) VALIDITY. It is aware of no action, suit or inquiry or
investigation instituted by any governmental agency, which questions or
threatens the validity of this Agreement.
(f) EMPLOYEE OBLIGATIONS. All of its employees, officers and
consultants have executed agreements requiring in the case of employees and
officers, assignment to the Party of all inventions made during the course of
and as a result of their association with such Party and obligating the
individual to maintain as confidential the confidential information of the
Party, as well as the confidential information of a Third Party which such Party
may receive.
(g) PERFORMANCE BY AFFILIATES. The Parties recognize that each
may perform some or all of its obligations under this Agreement through
Affiliates, provided, however, that each Party shall remain responsible and be
guarantor of the performance by its Affiliates and shall cause its Affiliates to
comply with the provisions of this Agreement in connection with such
performance.
8.2 WARRANTY AND DISCLAIMER CONCERNING TECHNOLOGY. As of the
Effective Date of this Agreement, it is not aware of any Third Party patents
that would prevent the other Party from exercising the licenses granted herein,
or would prevent a Party from carrying out the Research Program.
NOTWITHSTANDING THE FOREGOING, THE TECHNOLOGY PROVIDED BY EACH PARTY HEREUNDER
IS PROVIDED "AS IS" AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF
DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
21.
<PAGE>
OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE
OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO.
Without limiting the generality of the foregoing, each Party expressly does
not warrant (i) the success of any research commenced under the Research
Program or (ii) the safety or usefulness for any purpose of the technology it
provides hereunder.
9. CONFIDENTIALITY; PUBLICATION
9.1 CONFIDENTIALITY. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing by the Parties, the Parties agree
that, for the term of this Agreement and for five (5) years thereafter, the
receiving Party (the "Receiving Party") shall keep confidential and shall not
publish or otherwise disclose and shall not use for any purpose other than as
provided for in this Agreement any Confidential Information furnished to it by
the other Party (the "Disclosing Party") pursuant to this Agreement unless the
Receiving Party can demonstrate by contemporaneous, competent written proof that
such Confidential Information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the Receiving Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the Receiving Party in breach of the Agreement;
(d) was disclosed to the Receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the Disclosing Party or any Third Party not to disclose such
information to others; or
(e) was independently discovered or developed by the Receiving
Party without the use of Confidential Information belonging to the Disclosing
Party.
9.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:
(a) filing or prosecuting patents relating to Research Program
Technology;
(b) regulatory filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental regulations;
(e) conducting pre-clinical or clinical trials of Products; and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
22.
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(f) disclosure to Affiliates, sublicensees, employees,
consultants or agents who agree to be bound by similar terms of confidentiality
and non-use at least equivalent in scope to those set forth in this Article 9.
Notwithstanding the foregoing, in the event a Party is authorized to make
a disclosure of the other party's Confidential Information pursuant to this
Section 9.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and use reasonable efforts to secure
confidential treatment of such information. In any event, the Parties agree to
take all reasonable action to avoid disclosure of Confidential Information
hereunder. The Parties will consult with each other concerning the provisions of
this Agreement to be redacted in any filings made by the Parties with the
Securities and Exchange Commission or as otherwise required by law.
9.3 PUBLICATIONS.
(a) REVIEW AND APPROVAL. Each Party to this Agreement
recognizes that the publication of papers, including oral presentations and
abstracts, regarding the Research Program Know-How and the Research Program
Patents, subject to reasonable controls to protect Confidential Information,
will be beneficial to both Parties. However, each Party shall have the right to
review and approve any paper proposed for publication by the other Party or its
permitted sublicensees, including oral presentations and abstracts, which
utilizes data generated from the Research Program and/or includes Research
Program Know-How or Confidential Information of the reviewing Party.
(b) REVIEW AND APPROVAL PROCESS. At least thirty (30) days
before any such paper is presented or submitted for publication, the Party or
its permitted sublicensee proposing publication shall deliver a complete copy to
the other Party. The receiving Party shall review any such paper and give its
comments to the publishing Party or its permitted sublicensee within thirty (30)
days of the delivery of such paper to the receiving Party. With respect to oral
presentation materials and abstracts, the Parties shall make reasonable efforts
to expedite review of such materials and abstracts, and shall return such items
as soon as practicable to the publishing Party with appropriate comments, if
any, but in no event later than thirty (30) days from the delivery date thereof
to the receiving Party. The publishing Party or its permitted sublicensee shall
comply with the other Party's request to delete references to such other Party's
Confidential Information in any such paper and agrees to withhold publication of
same an additional ninety (90) days in order to permit the Parties to file
patent application, if either of the Parties deem it necessary, in accordance
with the terms of this Agreement.
9.4 PUBLICITY. Neither Party shall, without the prior written consent
of the other Party (which consent shall not be unreasonably withheld or
delayed), originate any publicity, news release or public announcement, written
or oral, whether to the public or press, relating to this Agreement, including
its existence, the subject matter to which it relates, performance under it or
any of its terms or to any amendment hereto, excepting only such announcements
as in the opinion of counsel for the Party making such announcement is required
by law to be made. Any such announcements shall be factual and as brief as
possible. If a Party decides to make an
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
23.
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announcement required by law, it will give the other Party 10 business days'
advance written notice, where possible, of the text of the announcement so
that the other Party will have an opportunity to comment upon the
announcement. To the extent that the receiving Party requests that any
information in the materials proposed to be disclosed be deleted, the
disclosing Party shall request confidential treatment of such information
pursuant to any applicable rules or regulations (including those of the
Securities and Exchange Commission) relating to the confidential treatment of
such information so that there be omitted from the materials that are
proposed to be disclosed any information that the receiving Party reasonably
requests to be deleted. The Parties shall mutually agree upon a press
release to be made on or promptly after the Effective Date. Any information
which has been disclosed to Third Parties pursuant to this Section 9.4 may be
repeated in whole or in part in any subsequent disclosures or statements to
Third Parties without the restrictions contained herein.
10. TERM AND TERMINATION
10.1 TERM OF THE AGREEMENT. This Agreement shall become effective upon
the Effective Date and continue, unless earlier terminated pursuant to Section
10.2 or 10.3, until the expiration of the last to expire patent claiming a
Product (the "Term of Agreement").
10.2 EARLY TERMINATION. This Agreement shall terminate upon thirty
(30) days prior notice by Rigel (a) if Janssen has not selected a Preliminary
Target-Peptide Pair for further evaluation pursuant to Section 3.4 prior to the
expiration of the Research Period or, (b) if Janssen does not initiate compound
screening as provided in Section 3.6 prior to the expiration of the latest to
expire Exclusivity Term.
10.3 TERMINATION FOR BREACH. In the event that (a) either Party shall
commit a material breach at any time and (b) such defaulting Party shall fail to
remedy such material breach within sixty (60) days after the date of notice
thereof by the non-defaulting Party to the defaulting Party (or, if such
material breach cannot be remedied within sixty (60) days, such longer period of
time as may be reasonably necessary provided the defaulting Party commences to
remedy such material breach within such sixty (60) day period and thereafter
proceeds promptly and diligently to complete such remedy) (with respect to the
defaulting Party, an "Event of Default"), then the non-defaulting Party may at
any time thereafter terminate this Agreement.
10.4 JANSSEN REMEDIES UPON TERMINATION. If this Agreement is
terminated as a result of an Event of Default by Rigel, the licenses granted in
Article 5 herein shall survive such termination. In such event, Janssen's
obligations in Article 6 shall survive, except that all royalty rates shall be
reduced by fifty percent.
10.5 RIGEL CHANGE OF CONTROL.
(a) If a Rigel Change of Control (as defined below) occurs
during the Research Period, then Janssen shall have the right, in its sole
discretion, to terminate the Research Program and the Research Period by giving
thirty (30) days' prior written notice thereof
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
24.
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to Rigel at any time during the sixty (60) day period following the
occurrence of the Rigel Change of Control. Upon such termination by Janssen
pursuant to this subsection (a), then:
(i) all unspent research funds paid to Rigel pursuant to
Section 6.2 shall be returned promptly to Janssen; and
(ii) Rigel shall have no further obligation to transfer
VTPPs or Rigel Technology Assays, or provide other assistance to Janssen for
Internal Janssen Research;
(iii) Section 2, 3 (except for Sections 3.6 (Compound
Screening; Diligence) and 3.7 (Additional Janssen Right to Validated
Target-Peptide Pair), 5.1, 5.6, 5.7, and 7.2 shall terminate;
(iv) all other terms and conditions of this Agreement
shall continue in full force and effect.
(b) For the purpose of this Section 10.5, a "Rigel Change of
Control" shall have occurred only at such time as a Third Party with (i) annual
sales of pharmaceutical and diagnostic products of more than one billion
dollars, and (ii) a market capitalization of more than fifteen billion dollars
acquires, in one transaction or a series of transactions, either (y) all or
substantially all of the assets of Rigel, or (z) more than 50% of the
outstanding voting securities of Rigel (whether by stock acquisition, merger or
otherwise).
10.6 TERMINATION NOT SOLE REMEDY. Termination is not the sole remedy
under this Agreement, and, whether or not termination is effected, all other
remedies will remain available except as agreed to otherwise herein (including,
without limitation, any remedies in favor of Janssen referred to in Paragraph
10.5).
11. INDEMNITY
11.1 RESEARCH AND DEVELOPMENT INDEMNIFICATION. Each Party (the
"Indemnifying Party") shall indemnify, defend and hold the other Party (the
"Indemnified Party") harmless from and against any and all liabilities, claims,
damages, costs, expenses or money judgments incurred by or rendered against the
Indemnified Party and its Affiliates and sub-licensees incurred in the defense
or settlement of a Third Party lawsuit or in a satisfaction of a Third Party
judgment arising out of any injuries to person and/or damage to property
resulting from (a) negligence of the Indemnifying Party performed in carrying
out the development program hereunder, and (b) personal injury to the
Indemnified Party's employees or agents or damage to the Indemnified Party's
property resulting from acts in carrying out activities contemplated by this
Agreement.
11.2 PRODUCT LIABILITY. Janssen hereby agrees to indemnify, hold
harmless and defend Rigel and its directors, officers, employees, and agents
against any claim or claims, including, but not limited to liability, suits,
actions, demands, expenses and/or loss including reasonable legal expenses and
attorneys fees, arising from bodily injury and death, resulting from or arising
out of the manufacture, use or sale of Products by Janssen, its Affiliates and
sub-licensees.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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11.3 CONTROL OF DEFENSE. Any entity entitled to indemnification under
this Article shall give notice to the indemnifying Party of any Claims that may
be subject to indemnification, promptly after learning of such Claim, and the
indemnifying Party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnified Party. If such defense is assumed by
the indemnifying Party with counsel so selected, the indemnifying Party will not
be subject to any liability for any settlement of such Claims made by the
indemnified Party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified Party with respect to such
Claims.
12. GOVERNING LAW; DISPUTE RESOLUTION
12.1 GOVERNING LAW. This Agreement shall be governed by Delaware law,
as such law applies to contracts entered into in Delaware by residents of
Delaware.
12.2 COMPLIANCE WITH LAWS. The Parties shall comply with all applicable
laws, rules, regulations and orders of the United States and all jurisdictions
and any agency or court thereof in connection with this Agreement and the
transactions contemplated thereby.
12.3 DISPUTE RESOLUTION. Except as provided in Section 2.3 above, in
the event of a dispute, the Parties shall refer such dispute to a designated
executive of Rigel and a designated executive of Janssen for attempted
resolution by good faith negotiations within thirty (30) days after such
referral is made. In the event such executives are unable to resolve such
dispute within such thirty (30) day period, either Party may invoke the
provisions of Section 12.4 below.
12.4 JURISDICTION AND VENUE. Except as provided in Section 2.3 and
12.3 above, any claim or controversy arising out of or related to this Agreement
or any breach hereof shall be adjudicated in the state and federal courts having
jurisdiction over disputes arising in the State of Delaware, and the Parties
hereby consent to the jurisdiction and venue of such court.
13. PRODUCT DEVELOPMENT AND COMMERCIALIZATION
13.1 JANSSEN'S DEVELOPMENT RESPONSIBILITIES. Janssen shall be solely
responsible for and have the sole right to select a compound for development
into a Product. Once such a compound is selected for development, Janssen shall
be solely responsible for and shall have the sole right to develop such compound
throughout Pre-phase I and Phases I, II and III including making all Drug
Approval Applications and obtaining all Regulatory Approvals on a worldwide
basis. In this regard, Janssen agrees to carry out development of such compound
consistent with its normal business practices. This development effort shall
include the right to slow or terminate development and all other actions deemed
by Janssen to be reasonable in the development of the compound. Moreover,
Janssen shall be responsible for all cost and expenses in connection with such
development efforts.
13.2 MARKETING OBLIGATIONS. All business decisions, including, but not
limited to, the design, sale, price and promotion of Products under this
Agreement and the decision whether to market any particular Product shall be
within the sole discretion of Janssen. Any marketing of a
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
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AMENDED.
26.
<PAGE>
Product in one market or country shall not obligate Janssen to market said
Product in any other market or country. Furthermore Janssen makes no
representation or warranty that the market of a Product shall be the
exclusive means by which Janssen will participate in any therapeutic field.
14. GENERAL PROVISIONS
14.1 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail addressed to the signatory to whom such notice is required or permitted to
be given and transmitted by facsimile to the number indicated below. All
notices shall be deemed to have been given when mailed, as evidenced by the
postmark at the point of mailing, or faxed; provided that such fax is confirmed
by electronic confirmation of transmission.
All notices to Janssen shall be addressed as follows:
Janssen Pharmaceutica N.V.
Turnhoutseweg 30
2340 Beerse, BELGIUM
Attention: Executive Vice President
Fax: (32+14) 60-28-41
with a copy to:
Office of General Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933 U.S.A.,
Telephone (732) 524-2485,
Telecopy (732) 524-2788
All notices to Rigel shall be addressed as follows:
Rigel Pharmaceuticals, Inc.
772 Lucerne Drive
Sunnyvale, California 94086
Attn: President
Fax: (408) 736-1588
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attn: Robert L. Jones, Esq.
Fax: (650) 857-0663
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AMENDED.
27.
<PAGE>
Any Party may, by written notice to the other, designate a new address
or fax number to which notices to the Party giving the notice shall
thereafter be mailed or faxed.
14.2 FORCE MAJEURE. No Party shall be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the Party claiming excuse uses its best efforts
to overcome the same.
14.3 ENTIRETY OF AGREEMENT. This Agreement embodies the entire, final
and complete agreement and understanding between the Parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter. No modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each Party.
14.4 NON-WAIVER. The failure of a Party in any one or more instances
to insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.
14.5 DISCLAIMER OF AGENCY. Neither Party is, or will be deemed to be,
the legal representative or agent of the other, nor shall either Party have the
right or authority to assume, create, or incur any Third Party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.
14.6 SEVERABILITY. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either Rigel or Janssen deems any
provision to be contrary to any laws, then that provision shall be severed and
the remainder of the Agreement shall continue in full force and effect. To the
extent possible, the Parties shall revise such invalidated provision in a manner
that will closely approximate the parties' original intent.
14.7 AFFILIATES; ASSIGNMENT. Except as otherwise provided herein,
neither Party may assign its rights or delegate its duties under this Agreement
without the prior written consent of the other Party, not to be unreasonably
withheld; PROVIDED, HOWEVER, that either Party may assign this Agreement to any
of its Affiliates or to any successor by merger or sale of substantially all of
its business unit to which this Agreement relates in a manner such that the
assignor will remain liable and responsible for the performance and observance
of all its duties and obligations hereunder. This Agreement shall be binding
upon the successors and permitted assigns of the Parties. Any attempted
delegation or assignment not in accordance with this Section 14.7 shall be of no
force or effect
14.8 HEADINGS. The headings contained in this Agreement have been
added for convenience only and shall not be construed as limiting.
14.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
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28.
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14.10 ENGLISH LANGUAGE. This Agreement has been prepared in the English
language and shall be construed in the English language.
14.11 LICENSOR BANKRUPTCY. All rights and licenses granted under or
pursuant to this Agreement by Rigel to Janssen are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of Title 11, U.S. Code (the
"Bankruptcy Code"), licenses of rights to "intellectual property" as defined
under section 101(60) of the Bankruptcy Code. The Parties agree that Janssen,
as a licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code. Rigel
agrees during the term of this Agreement to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, of all such intellectual property. The Parties further agree that,
in the event of the commencement of a bankruptcy proceeding by or against Rigel
under the Bankruptcy Code, Janssen shall be entitled to a complete duplicate of
(or complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and the same, if not already in its
possession, shall be promptly delivered to Janssen, upon written request
therefor by Janssen, (a) upon any such commencement of a bankruptcy proceeding,
unless Rigel elects to continue to perform all of its obligations under this
Agreement, or (b) if not delivered under clause (a) above, upon the rejection of
this Agreement by or on behalf of Rigel.
14.12 NO OTHER REPRESENTATIONS. Each of the Parties hereto acknowledges
and agrees (a) that no representation or promise not expressly contained in this
Agreement has been made by the other Party hereto or by any of its agents,
employees, representatives or attorneys; (b) that this Agreement is not being
entered into on the basis of, of in reliance on, any promise or representation,
expressed or implied, covering the subject matter hereof, other than those which
are set forth expressly in this Agreement; and (c) that each Party has had the
opportunity to be represented by counsel of its own choice in this matter,
including the negotiations which preceded the execution of this Agreement.
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AMENDED.
29.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement.
RIGEL PHARMACEUTICALS, INC. JANSSEN PHARMACEUTICA, N.V.
By: /s/ James Gower By: /s/ Gustav van Reet
----------------------------- --------------------------------------
Name: Jim Gower Name: Dr. Gustav van Reet
Title: President and CEO Title: Managing Director
By: /s/ Didier de Chaffoy de Courcelles
--------------------------------------
Name: Didier de Chaffoy de Courcelles
Title: Vice President Biological Research
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30.
<PAGE>
EXHIBIT A
RESEARCH PLAN
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31.
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SYNOPSIS
RIGEL-JANSSEN COLLABORATION PROPOSAL
APPROACH: To identify targets that regulate cell cycle checkpoint control
mechanisms. This will be accomplished by introducing into selected tumor
cells using proprietary retroviral delivery-vectors cDNA libraries and
constrained [ * ] random peptide libraries in order to alter the cellular
phenotype of specific tumor cells. Using this approach in tumor cells, which
exhibit uncontrolled proliferation, target-peptide pairs will be identified
which restore normal cell-cycle progression [ * ]
cDNA LIBRARIES: [ * ]
PEPTIDE LIBRARIES: The first library to be tested will be a constrained [ * ]
random peptide library. Other libraries will be screened as necessary.
CELL LINES FOR PRIMARY SCREENS: [ * ]
PRIMARY SCREENS: For each of the above tumor cell lines, retrovirally delivered
libraries (cDNA and random constrained peptide) will be introduced into cells.
[ * ]
SECONDARY SCREENS: Individual cDNA and peptide hits from the primary screens
will be evaluated in the same FACS assay as above, [ * ]
PATHWAY MAPPING. Using the Yeast Two-Hybrid (YTH) technology cDNA hits
(those found by Rigel in their functional screens, or by Janssen, [ * ]) will
be used in YTH to find their interacting protein partners, and these will be
evaluated in the above assays for function. [ * ] The goal is to identify
peptide-protein pairs that restore proteins in normal cell cycle responses in
a significant number of tumor cell lines.
RESOURCES: [ * ] for 36 months.
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<PAGE>
IDENTIFICATION OF FUNCTIONAL PEPTIDE-TARGET INTERACTIONS REGULATING CELL
CYCLE IN SPECIFIC TUMOR CELLS
JANSSEN PROJECT OUTLINE
INTRODUCTION
The hallmark of a malignant cell is uncontrolled proliferation. This phenotype
is acquired through the accumulation of gene mutations, the majority of which
promote passage through the cell cycle. [ * ] THE GOAL OF THIS PROPOSAL IS TO
IDENTIFY PEPTIDE/PROTEIN INTERACTIONS THAT INHIBIT THE ABILITY OF SPECIFIC TUMOR
CELLS TO PROLIFERATE, BY ALTERING THEIR CAPACITY TO TRANSIT THROUGH VARIOUS
STAGES OF THE CELL CYCLE. [ * ] The identification of these targets will allow
for low molecular weight compound screening to isolate activators or inhibitors
of cell cycle checkpoint pathways.
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<PAGE>
Table 1 Summary of screens to identify functional peptide-target interactions
regulating cell cycle in specific tumor cells.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
LIBRARY STRUCTURE +
SCREENING APPROACH READOUT TARGETING MOTIF
- ----------------------------------------------------------------------------------
<S> <C> <C>
1. Functional screening with [ * ] - [ * ]
peptide libraries for
inhibitors of tumor cell
progression through
various phases of the cell
cycle
- ----------------------------------------------------------------------------------
2. Functional analysis of [ * ]
proteins [ * ] isolated by
Janssen implicated in
cell-cycle control.
[ * ] - [ * ]
[ * ] - [ * ]
[ * ] - [ * ]
- ----------------------------------------------------------------------------------
3. Elucidation of the -
signaling pathways that
mediate the control of
cell cycle checkpoints In
specific tumor cells
[ * ] [ * ] - [ * ]
- ----------------------------------------------------------------------------------
[ * ] [ * ] - [ * ]
[ * ] [ * ] - [ * ]
- ----------------------------------------------------------------------------------
</TABLE>
* NLS = nuclear localization sequence
A. SPECIFIC AIMS
The outline of the Specific Aims below, is followed by a more detailed
discussion of the Experimental Methods and the Design of the Project.
SPECIFIC AIM 1:
FUNCTIONAL SCREENING WITH PEPTIDE LIBRARIES FOR INHIBITORS OF TUMOR CELL
PROGRESSION THROUGH VARIOUS PHASES OF THE CELL CYCLE.
Screens in specific aim 1 will be conducted on a panel of tumor cell
lines to be chosen by Janssen. These cell lines will be selected based on their
representation of important oncology markets, biological significance, and
clinical relevance. The characteristics of the tumor cell lines are detailed in
an addendum to be provided by Janssen. [ * ]
[ * ] Peptides that demonstrate desirable characteristics will be used
as bait in a yeast two-hybrid screen to locate their intracellular binding
partners (see specific aim 3.1 for details). The right-hand side of Figure 1
illustrates this identification cycle for functional peptide-target protein
interactions (the left-hand side will be discussed in section 2.3 and 3.3
below).
DIAGRAM
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SPECIFIC AIM 2:
FUNCTIONAL ANALYSIS OF PROTEINS IMPLICATED IN CELL CYCLE CHECKPOINT
CONTROL.
Cell cycle checkpoint control proteins, selected by Janssen scientists,
will be subjected to a detailed functional analysis to establish their potential
as targets for further pharmaceutical development. Initial examples will
include, but are not limited to, [ * ]
2.1 Retroviral-Mediated Functional Analysis Of Cell Cycle
Control Proteins.
Cell cycle control genes selected by Janssen will be cloned into
Rigel's proprietary retroviral expression system for stable transduction into
selected tumor lines. Optimized infection protocols will be developed for
each cell line. Transduced cells will be analyzed for cell cycle effects and
changes in apoptotic responses [ * ]
2.2 LARGE-SCALE RANDOM-MUTAGENESIS ANALYSIS OF CELL CYCLE
CONTROL PROTEINS: GENERATION OF LIBRARIES OF MUTANT PROTEINS.
[ * ]
2.3 CELL CYCLE CONTROL PROTEIN-BINDING PEPTIDE LIBRARY SCREEN.
[ * ]
SPECIFIC AIM 3:
ELUCIDATION OF THE SIGNALING PATHWAYS THAT MEDIATE THE CONTROL OF CELL
CYCLE CHECKPOINTS IN SPECIFIC TUMOR CELLS
Specific aim 3 represents the final phase in the derivation of
functional-based peptide-protein pairs that are members of a pathway(s) that
regulate cell cycle in specific tumor cells.
3.1 TWO-HYBRID SCREENING OF PEPTIDE HITS TO IDENTIFY FUNCTIONAL
PEPTIDE-TARGET PROTEIN PAIRS.
The peptide hits identified in Specific will be used as bait in a
two-hybrid screen to identify their intracellular binding partners (Appendix
D). This will identify peptide-target pairs that can be further assessed in
secondary and orthogonal assays to be determined by the Rigel-Janssen joint
research committee for their potential to specifically inhibit tumor cells
progression through various phases of the cell cycle. These protein targets
will also be subjected to additional two-hybrid screening to identify
neighboring interacting proteins that may also regulate the cell cycle and
proliferation of tumor cells (see 3.3 below).
3.2 ISOLATION OF PEPTIDES THAT BIND TO SPECIFIC PROTEINS
IMPLICATED IN CELL CYCLE REGULATION AND DETERMINATION OF THEIR ABILITY TO
SPECIFICALLY INHIBIT TUMOR REPLICATION AND PROGRESSION THROUGH VARIOUS PHASES OF
THE CELL CYCLE.
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<PAGE>
The cell cycle control proteins selected by Janssen (see Specific Aim
2.1) will be subjected to a two-hybrid screen using a combinatorial peptide
library to identify specific binding peptides (Appendix E). [ * ] The isolated
target-binding peptides will be assessed for their ability to inhibit cell cycle
progression in tumor cells. Validated peptide hits will be subjected to
secondary assays to confirm their function and specificity.
3.3 CELL CYCLE CHECKPOINT PATHWAY MAPPING.
The protein targets identified above (Specific Aim 2 and 3.1) will be
screened for additional interactions with other proteins by yeast two-hybrid
technology (Appendix D). These binding proteins will be assayed for their
ability to halt tumor cell progression through various cell cycle phases. Those
that have function in this basic assay will be subjected to a two-hybrid screen
using a combinatorial peptide library to identify specific binding peptides
(Appendix F). [ * ] The isolated target-binding peptides will be assessed for
their ability to inhibit cell cycle progression in tumor cells. Validated
peptide hits will be subjected to secondary assays to confirm their function and
specificity. This process represents a reverse of what was described earlier in
Specific Aim 1 and is illustrated in the left-hand side of Figure 1.
B. EXPERIMENTAL DESIGN AND METHODS
SPECIFIC AIM 1:
FUNCTIONAL SCREENING WITH PEPTIDE LIBRARIES FOR INHIBITORS OF TUMOR CELL
PROGRESSION THROUGH VARIOUS PHASES OF THE CELL CYCLE.
RATIONALE:
Altered regulation of proteins that control cell cycle checkpoints may
result in chromosomal instability which underlies the transformed state of many
tumor cells. Using Rigel's high throughput genetic screens, it is expected that
novel tumor-specific targets will be identified, which when bound to a peptide,
will result in the cell being blocked from exiting a specific phase of the cell
cycle.
[ * ]
1.1 PEPTIDE LIBRARY SCREENING AND TARGET IDENTIFICATION USING A
CELL CYCLE CHECKPOINT ASSAY.
[ * ]
[ * ]
[ * ]
SPECIFIC AIM 2:
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<PAGE>
FUNCTIONAL ANALYSIS OF PROTEINS IMPLICATED IN CELL CYCLE CHECKPOINT CONTROL
RATIONALE:
[ * ]
2.1 RETROVIRAL-MEDIATED FUNCTIONAL ANALYSIS OF CELL CYCLE
CONTROL PROTEINS.
[ * ]
2.2 LARGE SCALE RANDOM-MUTAGENESIS ANALYSIS OF CELL CYCLE
CONTROL PROTEINS: GENERATION OF LIBRARIES OF MUTANT PROTEINS.
[ * ]
2.3 CELL CYCLE CONTROL PROTEIN-BINDING PEPTIDE LIBRARY SCREEN.
[ * ]
SPECIFIC AIM 3:
ELUCIDATION OF THE SIGNALING PATHWAYS THAT MEDIATE THE CONTROL OF CELL
CYCLE CHECKPOINTS IN SPECIFIC TUMOR CELLS
RATIONALE:
Peptides that inhibit the ability of tumor cells to transit through
specific phases of the cell cycle do so by binding to intracellular proteins
that am members of pathways which control cell replication. Identification of
functional Peptide-target Protein Pairs which significantly alter these
responses will enable screening [ * ] compounds.
3.1 TWO-HYBRID SCREENING OF PEPTIDE HITS TO IDENTIFY FUNCTIONAL
PEPTIDE-TARGET PROTEIN PAIRS.
[ * ]
3.2 ISOLATION OF PEPTIDES THAT BIND TO SPECIFIC PROTEINS
IMPLICATED IN CELL CYCLE REGULATION AND DETERMINATION OF THEIR ABILITY TO
SPECIFICALLY INHIBIT TUMOR REPLICATION AND PROGRESSION THROUGH VARIOUS PHASES OF
THE CELL CYCLE.
[ * ]
3.3 CELL CYCLE CHECKPOINT PATHWAY MAPPING.
The second-level two-hybrid screening of protein targets that bind to peptide
hits (from Specific Aim 3.1), or cell cycle control proteins selected by Janssen
(Specific Aim 2.1), is referred to as functional-based pathway mapping. This
will elucidate interacting members within the cell cycle
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<PAGE>
checkpoint control pathway. These interacting proteins will be assayed for
their ability to modulate growth and progression through the cell cycle in
"normal" and tumor cell lines. [ * ] These binding peptides will then be
assessed for their ability to inhibit growth and cell cycle progression in
tumor cells. Individual peptide hits will be subjected to secondary assays
to confirm their function and specificity. This will produce additional
peptide/protein pairs capable of regulating tumor growth.
C. INITIAL STEPS FOR TARGET IDENTIFICATION/VALIDATION (SEE FLOWCHART IN
APPENDIX K)
It is important to recognize that once a protein target has been
identified that binds to a confirmed peptide hit, by virtue of the functional
screen that produced the peptide hit the functional relationship of the target
protein to the pathway of interest is defined for that particular cell type.
False positives only arise if the peptide hit binds to additional proteins not
related to the functional pathway altered by the peptide hit. Below is a
protocol to discriminate false positives from pathway specific peptide/protein
target pairs.
[ * ]
Some or all of the above methods can be employed to confirm that a
peptide/protein pair, identified in the initial screen functions. It will be
the task of the joint scientific board from Rigel and Janssen to determine
which assays are necessary to sufficiently define a functional
peptide/protein pair for the next phase of development, specifically small
molecular weight compound screening.
D. HEADCOUNT
To run optimally, the project will take [ * ] :
[ * ]
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<PAGE>
APPENDIX A
[ * ]
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<PAGE>
APPENDIX B
FUNCTIONAL SCREEN FOR PEPTIDE INHIBITORS OF TUMOR CELL PROGRESSION
[ * ]
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<PAGE>
APPENDIX C
MUTAGENIC PCR GENERATES A LIBRARY OF RANDOM TARGET CDNA VARIANTS
[ * ]
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<PAGE>
APPENDIX D
YEAST TWO-HYBRID SCREENING
[ * ]
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<PAGE>
[ * ]
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1
<PAGE>
Yeast Two-Hybrid Screening
[ * ]
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2
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From Identified Gene to Peptide Hits
[ * ]
Appendix E
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3
<PAGE>
Appendix F
Retrovirally expressed cell cycle control proteins and peptides induce cell
cycle arrest
DIAGRAM
DIAGRAM
DIAGRAM
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4
<PAGE>
Appendix G
Protocol for Transfection of Phoenix Cells and Infection of Nonadherent Target
Cells
DIAGRAM
Day 1:
Seed Phoenix cells (Es or As) in 10cm plates at 5 x 10x6 cells in 6 ml (DMEM +
10% FBS + Pen/Strep) per plate the day before transfection.
Day 2:
Allow all reagents to reach room temperature 30 min. before starting. Add 50
microM chloroquine at 8 microliter/plate (50 microM final) before preparing the
transfection solution.
Mix CaPO4 reagents in 15 ml polypropylene tube:
Per plate: 10 micrograms DNA
122 microliters 2M CaCl2
876 microliters H2O
1.0 ml 2X HBS
Add 2X HBS and depress the expulsion button completely to bubble air through
the mix for 10 secs. Immediately add mixture gently dropwise to plate.
Incubate 3-8 hours. Remove medium and replace with 6.0 ml DMEM-medium.
Day 3:
Change medium again to 6.0 mls of medium optimal for the cells to be infected.
Move to 32 degree C either in the morning or afternoon depending on the Phoenix
cell confluency and whether you will infect at 48 or 72 hrs after transfection.
Day 4 or 5:
Collect virus supernatant from transfected plates (6.0 ml) into 50 ml tubes and
add protamine sulfate to a final concentration of 5 micrograms/ml. Pass through
a 0.45 microm filter. Count target cells and distribute 10x7 cells per 10 cm
plate transfected to 50 ml tubes and pellet 5 min. Resuspend each pellet of
target cells in virus supernatant and transfer to a 6 well plate at 1.0-1.2 ml
per well. Seal plate with parafilm and centrifuge at RT for 30-90 min. at 2500
RPM. Remove parafilm and incubate plate over night at 37 degrees C.
Day 5:
Collect and pellet each well of target cells. Resuspend in 3 ml medium and
transfer back to the same 6 well plate. Infection can be repeated by refeeding
the Phoenix cells with 6ml fresh medium and reinfecting the same cells again up
to 3 times to increase % of cells infected (for instance at 48, 56, and 72
hours)
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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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Day 7 or 8:
At 48 to 72 hrs. post infection, target cells are ready to analyze for
expression.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
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APPENDIX H
[ * ]
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APPENDIX I
RETROVIRAL LIBRARY DESIGN FEATURES
[ * ]
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APPENDIX J
[ * ]
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APPENDIX K
FLOW CHART FOR FUNCTIONAL SCREENS
(IDENTIFICATION OF FUNCTIONAL PEPTIDE/PROTEIN PAIRS)
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
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RIGEL - JANSSEN COLLABORATION
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
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TIMELINES FOR RIGEL SCREENS
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
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RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[ * ]
[ * ]
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
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RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
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RIGEL - JANSSEN COLLABORATION
[ * ]
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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RIGEL - JANSSEN COLLABORATION
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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RIGEL - JANSSEN COLLABORATION
[ * ]
[ * ]
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
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EXHIBIT B
RIGEL TECHNOLOGY ASSAYS
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EXHIBIT C
FORM OF INVOICE
[Rigel Letterhead]
INVOICE NO. [__]
[Invoice Date]
Janssen Pharmaceutica NV
[ * ]
COLLABORATION AGREEMENT BETWEEN RIGEL, INC. AND JANSSEN PHARMACEUTICA, N.V.
DATED DECEMBER 4, 1998
Dear [ * ]
Pursuant to Section [ ] of the above agreement, please pay to Rigel the
following amount for [description of services for research funding or a
milestone event for milestone payments, or make reference to net sales report
from Janssen for royalty payments]:
US$ [ ]
Please remit the above amount within fifteen (15) days from the date this
invoice by wire transfer to the following account:
[account information]
Sincerely,
Rigel, Inc.
- ----------------------------
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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EXHIBIT D
STANFORD AGREEMENTS
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
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AGREEMENT
Effective as of October 7, 1996 ("Effective Date"), THE BOARD OF TRUSTEES OF
THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under the
laws of the State of California ("STANFORD") and RIGEL PHARMACEUTICALS, INC., a
Delaware corporation having a principle place of business at 24 Windsor Drive,
Hillsborough, CA 94010 ("RIGEL"), agree as follows:
1. BACKGROUND.
1.1 STANFORD has an assignment of U.S. Patent Application No.
08/589,109, entitled "Methods for Screening for Transdominant Effector Peptides
and RNA Molecules" (the "NOLAN/ROTHENBERG PATENT APPLICATION") claiming an
invention developed in the laboratory of Dr. Garry Nolan (the "Invention"), and
any Licensed Patent(s), as hereinafter defined, which may claim such Invention.
1.2 STANFORD has certain biological materials and other know-how
("Know-How"), as herein defined, pertaining to the Invention.
1.3 STANFORD desires to have the Know-How and Invention perfected and
marketed at the earliest possible time in order that products resulting
therefrom may be available for public use and benefit.
1.4 RIGEL desires a license under said Know-How, Invention, and
Licensed Patent(s) in the field of use of gene transfer technologies, including
retrovirally mediated nucleic acid libraries, for drug development, drug
delivery, drug screening, and target analysis and discovery associated with the
development, manufacture, use and sale of Licensed product(s), as defined below.
1.5 RIGEL acknowledges that certain of the Cell Lines (as defined
below) were made in the course of research supported by Progenesys.
1.6 The patent application entitled "Methods for Screening for
Transdominant Intracellular Effector Peptides and RNA Molecules," which claims
technology useful in the field and which was developed in the laboratory of Dr.
Garry Nolan (the "Nolan Patent Application"), has previously been assigned to
RIGEL.
2. DEFINITIONS.
2.1 "LICENSED BIOLOGICAL MATERIALS" means the materials listed on
Exhibit A, including certain vector libraries ("Vector Libraries") and cell
lines ("Cell Lines") set forth therein, as amended from time to time upon the
parties' mutual written consent.
2.2 "LICENSED KNOW-HOW" means all know-how necessary or useful for the
commercial exploitation of the Licensed Patents in the Licensed Field of Use,
including without limitation all know-how, trade secrets, protocols,
information, processes or other subject matter
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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which is either disclosed in the Nolan/Rothenberg Patent Application, or
necessary or useful to practice the licenses granted to RIGEL in this
Agreement with respect to the Invention. Licensed Know-How excludes the
Licensed Patents and includes the Licensed Biological Materials.
2.3 "LICENSED PATENT(S)" means any Letters Patent, both foreign
(subject to Section 7) and domestic, issued upon (i) the Nolan/Rothenberg
Patent Application (STANFORD's U.S. Patent Application, Serial Number
08/589,109 filed January 23, 1996), (ii) any substitutions, divisionals,
continuations, and continuations-in-part (to the extent such
continuations-in-part claim subject matter disclosed or claimed in the
Nolan/Rothenberg Patent Application as filed on January 23, 1996 and to the
extent that the practice of an invention claimed in a Licensed Patent issuing
from a patent application other than such continuation-in-part would infringe
a claim of Licensed Patent issuing from such continuation-in-part), and (iii)
any foreign counterparts of (i) or (ii).
2.4 "LICENSED TECHNOLOGY" means the Licensed Patent(s) and the
Licensed Know-How.
2.5 "LICENSED PRODUCT(S)" means:
(a) any product, the manufacture, use, sale, offer for sale or
import of which:
(1) is covered by a valid claim of an issued,
unexpired Licensed Patent(s) directed to the Invention (claim of an issued,
unexpired Licensed Patent(s) shall be presumed to be valid unless and until it
has been held to be invalid by a final judgment of a court of competent
jurisdiction from which no appeal can be or is taken), or
(2) is covered by any claim being prosecuted in a
pending application directed to the Invention, which claim has not been pending
for more than three (3) years from first filing of such claim;
(b) any product which directly incorporates any of the Licensed
Biological Materials; or
(c) any product which would not, but for the use of the
Licensed Biological Materials, have been identified, discovered, or developed.
2.6 "NET SALES" means the gross revenue derived by RIGEL and/or
RIGEL's sublicensee(s) from the sales of Licensed Product(s), less the following
items but only insofar as they actually pertain to the disposition of such
Licensed Product(s) by RIGEL or RIGEL's sublicensee(s), are included in such
gross revenue, and are separately billed:
(a) Import, export, excise and sales taxes, and custom duties;
(b) Credit for returns, allowances, trades, or retroactive
price adjustments;
(c) Transportation charges, issuances and allowances;
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(d) Discounts actually allowed; or
(E) Royalties payable to third parties on the manufacture, use,
sale, offer for sale or import of Licensed Products.
2.7 "LICENSED FIELD OF USE" means the use of gene transfer
technologies, including retrovirally mediated nucleic acid libraries, for drug
development, drug delivery, and target analysis and discovery. Solely with
respect to the [ * ] Cell Lines set forth on Exhibit A, the Licensed Field of
Use excludes the use of such Cell Lines, derivatives or vectors thereof or other
tangible products that are a direct lineal descendent from such Cell Lines
(although obtained in any manner therefrom), wherein cells treated with any one
or more of the aforementioned materials are contained within a human subject or
are subsequently transplanted into a human subject.
2.8 "EXCLUSIVE" means that, subject to Article 4, STANFORD shall not
grant further licenses in the Licensed Field of Use.
3. GRANT.
3.1 STANFORD hereby grants and RIGEL hereby accepts a worldwide
license in the Licensed Field of Use under STANFORD's right, title and interest
in the Licensed Patents and the Vector Libraries to make, use, sell, offer for
sale and import Licensed Product(s).
3.2 The license granted in Section 3.1 is Exclusive, including the
right to sublicense pursuant to Article 13, in the Licensed Field of Use for a
term (the "Exclusivity Term") commencing as of the Effective Date and ending on
the first to occur of the following:
(a) twenty (20) years from the Effective Date; or
(b) ten (10) years from the date of first commercial sale of a
Licensed Product(s) by RIGEL or RIGEL's sublicensee(s). RIGEL agrees to
promptly inform STANFORD in writing of the date of first commercial sale of
Licensed Products. After expiration of the Exclusivity Term, said license shall
become nonexclusive and continue indefinitely.
3.3 STANFORD additionally grants, and RIGEL hereby accepts, a
worldwide, nonexclusive license in the Licensed Field of Use under STANFORD's
right, title and interest in the Licensed Know-How other than the Vector
Libraries to make, use, sell, offer for sale and import Licensed Product(s).
The term of such nonexclusive license shall commence upon the Effective Date
and, continiue indefinitely.
3.4 Notwithstanding the Exclusive license granted to RIGEL, pursuant
to Sections 3.1 and 3.2, STANFORD shall have the right to practice the Licensed
Patents and to use the Vector Libraries for non-commercial, academic research
purposes.
4. GOVERNMENT RIGHTS.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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This Agreement is subject to all of the terms and conditions of Title 35
United States Code Sections 200 through 204, including an obligation that
Licensed Product(s) sold or produced in the United States be "manufactured
substantially in the United States," and RIGEL agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder, relating to the Invention. STANFORD agrees to provide
reasonable assistance to RIGEL in the event RIGEL decides to seek a waiver under
such domestic manufacture equipment.
5. DILIGENCE.
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture, and sale of Licensed Product(s) and to diligently
develop markets for the Licensed Product(s). RIGEL shall demonstrate such
diligence to STANFORD by achieving proof of principle through written
documentation of the following within eighteen (18) months after the Effective
Date:
(a) Construction of a retroviral vector library;
(b) Infection of cells with such vector library;
(c) Detection of a physiological response to such infection in
an infected cell; and
(d) Isolation and analysis of the peptide eliciting such
physiological response from the cell.
5.2 If RIGEL is unable to demonstrate the foregoing proof of principle
within eighteen (18) months after the Effective Date, STANFORD may elect to
narrow the definition of the Licensed Field of Use to include only the use of
retrovirally mediated nucleic acid libraries for drug development, drug
delivery, drug screening, and target analysis and discovery, by providing
written notice to RIGEL thereof. Additionally, RIGEL shall provide to
STANFORD within eighteen (18) months after the Effective Date a plan for the
development and commercialization of Licensed Products (a "Development
Plan"). STANFORD shall comment upon and approve such plan, which approval
shall not be unreasonably withheld. After the Development Plan is approved
by STANFORD, RIGEL shall use reasonable efforts to diligently perform its
obligations under such Development Plan. If Stanford reasonably believes
that RIGEL is not using reasonable efforts to perform the Development Plan,
STANFORD may so notify RIGEL. The parties shall promptly thereafter meet to
discuss RIGEL's progress under the Development Plan, and shall develop a
mutually agreeable plan for remedying any such lack of diligence ( the
"Proposed Remedy"). If RIGEL fails to perform the Proposed Remedy within one
hundred and eighty (180) days after the Proposed Remedy is agreed upon,
STANFORD may elect to narrow the definition of the Licensed Field of Use to
include only the use of retrovirally mediated nucleic acid libraries for drug
development, drug delivery, and target analysis and discovery by providing
written notice to RIGEL. If RIGEL then fails to perform the Proposed Remedy
within ninety (90) days after receiving STANFORD's notice that it has elected
to so narrow the
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
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Licensed Field of Use definition, then STANFORD may elect to convert the
Exclusive License granted to RIGEL pursuant to Sections 3.1 and 3.2 to a
nonexclusive license for the remaining term of this Agreement.
5.3 PROGRESS REPORT. On or before each anniversary of the Effective
Date until RIGEL markets a Licensed Product(s), RIGEL shall make a written
annual report to STANFORD covering RIGEL's progress during the preceding year
toward commercial use of Licensed Product(s). Such report shall include, as
a minimum, information sufficient to enable STANFORD to satisfy relevant
reporting requirements of the U.S. Government and to ascertain RIGEL's
progress toward meeting the diligence requirements of this Article 5.
6. ROYALTIES.
6.1 RIGEL agrees to pay to STANFORD a noncreditable, nonrefundable
license issue royalty of ________________ half of which shall be paid within
forty-five (45) days after the Effective Date and the balance of which shall be
on the first anniversary of the Effective Date.
6.2 Upon each anniversary of the Effective Date, RIGEL shall also pay
to STANFORD a Minimum Annual Royalty as follows:
Anniversary of Effective Date Minimum Annual Royalty Due
First and Second ____________
Third through Seventh ____________
Eighth and Thereafter ____________
Said Minimum Annual Royalty payments are nonrefundable but they are creditable
against earned royalties to the extent provided in Paragraph 6.5. The foregoing
Minimum Annual Royalty payment shall be decreased by [ * ] if either:
(i) Stanford abandons all patent applications from which
Licensed Patent(s) could issue prior to the time that any Licensed Patent(s)
issue; or
(ii) Stanford elects to narrow the definition of the Licensed
Field of Use pursuant to Section 5.2.
6.3 If Rigel grants to a third party a sublicense under the Licensed
Technology solely for research, and not commercialization purposes (a "Research
Sublicense"), Rigel shall also pay to STANFORD a milestone payment equal to
__________ of any research milestone payment that RIGEL receives as
consideration for the grant of such Research Sublicense. RIGEL shall pay such
amount to STANFORD within sixty (60) days after RIGEL receives such research
milestone payment.
If RIGEL grants to a third party a sublicense under the Licensed
Technology which includes the right to sell and offer for sale Licensed Products
(a "Commercialization Sublicense"), RIGEL shall pay to STANFORD a sublicense fee
as follows:
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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First Sublicense Granted ______________
Second Sublicensed Granted ______________
Each Additional Sublicense Granted ______________
RIGEL shall pay such sublicense fees to STANFORD within sixty (60) days after
the effective date of each Commercialization Sublicense.
6.4 In addition, RIGEL shall pay STANFORD earned royalties equal to
___________ of Net Sales of Licensed Products set forth in Sections 2.5(a) and
2.5(b), or ________of Net Sales of Licensed Products which can only be
categorized under Section 2.5(c). If a Licensed product can be included in more
than one of Sections 2.5(a), 2.5(b) or 2.5(c), the royalty rate due to STANFORD
on Net Sales of such Licensed Product shall be _______.
6.5 As further consideration for the license granted to RIGEL under
this Agreement, RIGEL shall issue to STANFORD ______________shares of Preferred
Stock of RIGEL, pursuant to a Stock Purchase Agreement. If such number of
shares shall equal less than ______________of the total outstanding shares of
RIGEL's stock at any time during the period from the date of issuance of such
stock until one (1) year thereafter, STANFORD and RIGEL shall discuss whether
RIGEL shall adjust the number of shares issued to Stanford under this Section
6.5.
6.6 Creditable payments under this Agreement shall be an offset to
RIGEL against up to fifty percent (50%) of each earned royalty payment which
RIGEL would be required to pay pursuant to Paragraph 6.4 until the entire credit
is exhausted.
6.7 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties hereunder shall continue
until ten (10) years after first commercial sale of Licensed Products.
6.8 The royalty on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the payments
due STANFORD.
6.9 Within thirty (30) days after receipt of a statement from
STANFORD, RIGEL shall reimburse STANFORD for all costs incurred by STANFORD,
including those costs incurred prior to the Effective Date, in connection with
the preparation, filing and prosecution of all patent applications and
maintenance of patents claiming the Invention.
7. PATENT RIGHTS.
STANFORD shall have the obligation to file, prosecute and maintain all
patent applications and patents included in the Licensed Patents. STANFORD will
provide RIGEL
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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with an opportunity to review and comment upon the prosecution strategy and
to consult with STANFORD on the content of patent filings, and will provide
copies of any correspondence relating to patent applications and patents
included in the Licensed Patents to RIGEL or a designee of RIGEL. RIGEL
shall have the right to designate, in its sole discretion, those foreign
countries in which STANFORD will file, prosecute and maintain patents and
patent applications included in the Licensed Patents. STANFORD may propose
to file, prosecute and maintain a Licensed Patent in a country which RIGEL
has not designated pursuant to this Section 7. If RIGEL agrees to such
designation, it shall reimburse STANFORD costs of such filing, prosecution of
maintenance of such patent or patent applications pursuant to Section 6.9 and
such patent or patent applications shall be included in the Licensed Patents.
If RIGEL does not agree to such proposal, STANFORD may elect to proceed
with such filing, prosecution or maintenance at its own expense, and such
patent or patent application shall not be included in the Licensed Patents.
8. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING.
8.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the
first sale of a Licensed Product, RIGEL shall make written reports (even if
there are no sales) and earned royalty payments to STANFORD within thirty
(30) days after the end of each calendar quarter. This report shall be in the
form of the report of Exhibit B and shall state the number, description, and
aggregate Net Sales of Licensed Product(s) during such completed calendar
quarter, and resulting calculation pursuant to Paragraph 6.4 of earned
royalty payment due STANFORD for such completed calendar quarter. Concurrent
with the making of each such report, RIGEL shall include payment due STANFORD
of royalties for the calendar quarter covered by such report.
8.2 ACCOUNTING. RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license herein
granted. Such records will include general ledger records showing cash receipts
and expenses, and records which include production records, customers serial
numbers and related information in sufficient detail to enable the royalties
payable hereunder by RIGEL to be determined. RIGEL further agrees to permit its
books and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided for in Paragraph 8.1. Such examination is
to be made by STANFORD or its designee, at the expense of STANFORD, except in
the event that the results of the audit reveal an underreporting of royalties
due STANFORD of five percent (5%) or more, then the audit costs shall be paid by
RIGEL.
9. NEGATION OF WARRANTIES.
9.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by STANFORD as to the validity
or scope of any Licensed Patent(s);
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(b) A warranty or representation that anything made, used,
sold, or otherwise disposed of under any license granted in this Agreement is or
will be free from infringement of patents, copyrights, and other rights of third
parties;
(c) An obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described in Article 13;
(d) Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of STANFORD or other persons
other than Licensed Patent(s), regardless of whether such patents or other
rights are dominant or subordinate to any Licensed Patent(s); or
(e) An obligation to furnish any technology or technological
information other than the Licensed Technology.
9.2 Except as expressly set forth in the Agreement STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCT(S)
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY
OTHER EXPRESS OR IMPLIED WARRANTIES.
9.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing
Biologically Functional Molecular Chimeras"; U.S. Patent No. 4,468,464 and U.S.
Patent No. 4,740470, both entitled, "Biologically Functional Molecular Chimeras"
(collectively known as the Cohen/Boyer patents), or reissues thereof; or
(b) U.S. Patent 4,656,134 "Amplification of Eucaryotic Genes"
or any patent application corresponding thereto.
9.4 STANFORD represents and warrants that it has all right, power and
authority necessary to grant the licenses set forth in Article 3 to RIGEL,
and that it has not, and will not during the term of this Agreement, grant
any right to any third party which would conflict with the rights granted to
RIGEL hereunder.
10. INDEMNITY.
10.1 RIGEL agrees to indemnify, hold harmless, and defend STANFORD and
Stanford Health Services and their respective trustees, officers, employees,
students, and agents against any and all claims by third parties for death,
illness, personal injury, property damage, and improper business practices
arising out of the manufacture, use, sale, or other disposition of
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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the Invention, Licensed Technology, or Licensed Product(s) by RIGEL or
RIGEL's sublicensee(s) or customers.
10.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not have
any responsibilities or liabilities whosoever with respect to Licensed
Product(s).
10.3 RIGEL shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
10.4 In addition to the foregoing, RIGEL shall maintain Comprehensive
General Liability Insurance including Products Liability Insurance, with
reputable and financially secure insurance carrier(s) to cover the activities
of RIGEL and its sublicensee(s) in the amounts and during the periods
specified herein. Such insurance shall provide minimum limits of liability of
One Million Dollars ($1,000,000) as of the first anniversary of the date upon
which RIGEL first leases a facility in which it will conduct research and
development activities, and of Five Million Dollars ($5,000,000) as of the
commencement of human clinical trials of Licensed Products. Such insurance
shall include STANFORD, Stanford Health Services, their trustees, directors,
officers, employees, students, and agents as additional insureds. Such
insurance shall be written to cover claims incurred, discovered, manifested,
or made during or after the expiration of this Agreement. At STANFORD's
request, RIGEL shall furnish a Certificate of Insurance evidencing primary
coverage and requiring thirty (30) days prior written notice of cancellation
or material change to STANFORD. RIGEL shall advise STANFORD, in writing, that
it maintains excess liability coverage (following form) over primary
insurance for at least the minimum limits set forth above. All such insurance
of RIGEL shall be primary coverage; insurance of STANFORD or Stanford Health
Services shall be excess and noncontributory.
11. MARKING.
Prior to the issuance of patents on the Invention, RIGEL agrees to mark
Licensed Product(s) (or their containers or labels) made, sold, or otherwise
disposed of by it under the licenses granted in this Agreement with the words
"Patent Pending," and following the issuance of one or more patents, with the
numbers of the Licensed Patent(s).
12. STANFORD NAMES AND MARKS.
RIGEL agrees not to identify STANFORD in any promotional advertising or
other promotional materials to be disseminated to the pubic or any portion
thereof or to use the name of any STANFORD faculty member, employee, or student
or any trademark, service mark, trade name, or symbol of STANFORD or the
Stanford University Hospital, or that is associated with either of them, without
STANFORD's prior written consent, except as required by law. STANFORD shall not
unreasonably hold consent under this Section 12.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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13. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS.
13.1 RIGEL shall promptly inform STANFORD of any suspected infringement
of any Licensed Patent(s) by a third party. During the Exclusive period of this
Agreement, STANFORD and RIGEL each shall have the right to institute an action
for infringement of the Licensed Patent(s) against such third party in
accordance with the following:
(a) If STANFORD and RIGEL agree to institute suit jointly, the
suit shall be brought in both their names, the out-of-pocket costs thereof shall
be borne equally, and any recovery or settlement shall be shared equally. RIGEL
and STANFORD shall agree to the manner in which they shall exercise control over
such action. STANFORD may, if it so desires, also be represented by separate
counsel of its own selection, the fees for which counsel shall be paid by
STANFORD;
(b) In the absence of agreement to institute a suit jointly,
STANFORD may institute suit, and, at its option, join RIGEL as a plaintiff. If
STANFORD decides to institute suit, then it shall notify RIGEL in writing.
STANFORD shall bear the entire cost of such litigation and shall be entitled to
retain the entire amount of any recovery or settlement; and
(c) In the absence of agreement to institute a suit jointly and
if STANFORD notifies RIGEL that it has decided not to join in or institute a
suit, as provided in (a) or (b) above, RIGEL may institute suit and, at its
option, join STANFORD as a plaintiff. RIGEL shall bear the entire cost of such
litigation and shall be entitled to retain the entire amount of any recovery or
settlement, provided, however, that any recovery in excess of litigation costs
shall be deemed to be Net Sales, and RIGEL shall pay STANFORD royalties thereon
at the rates specified herein.
13.2 Should either STANFORD or RIGEL commence a suit under the
provisions of Paragraph 13.1 and thereafter elect to abandon the same, it shall
give timely notice to the other party who may, if it so desires, continue
prosecution of such suit, provided, however, that the sharing of expenses and
any recovery in such suit shall be as agreed upon between STANFORD and RIGEL.
14. SUBLICENSE(S).
14.1 RIGEL may grant sublicense(s) under its Exclusive license rights
during the Exclusivity Term. RIGEL may grant sublicense(s) under nonexclusive
license rights, if such sublicense is in conjunction with a sublicense of other
RIGEL proprietary technology.
14.2 If RIGEL is unable or unwilling to serve or develop a potential
market or market territory for which there is a willing sublicense(s), RIGEL
will, at STANFORD's request negotiate in good faith a sublicense(s) hereunder on
commercially reasonable terms.
14.3 Any sublicense(s) granted by RIGEL under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant a sublicense to a third party; and
(b) The earned royalty rate specified in the sublicense(s) may
be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 8, 9, and 10 for the benefit of STANFORD and provide for the transfer
of all obligations including the payment of royalties specified in such
sublicense(s), to STANFORD or its designee, in the event that this Agreement is
terminated.
14.4 RIGEL agrees to provide STANFORD a copy of any sublicense(s)
granted pursuant to this Article 14.
15. TERMINATION.
15.1 RIGEL may terminate this Agreement by giving STANFORD notice in
writing at least thirty (30) days in advance of the Effective Date of
termination selected by RIGEL.
15.2 STANFORD may terminate this Agreement if RIGEL:
(a) Is in default in payment of royalty or providing of
reports;
(b) Is in material breach of any provision hereof; or
(c) Intentionally provides any false report;
and RIGEL fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof by STANFORD.
15.3 SURVIVING ANY TERMINATION ARE:
(a) RIGEL's obligation to pay royalties accrued or accruable;
(b) Any cause of action or claim of RIGEL or STANFORD, accrued
or to accrue, because of any breach or default by the other party; and
(c) The provisions of Articles 8, 9, and 10.
16. ASSIGNMENT.
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
17. DOUBLE PATENTING CONTINGENCY.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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If the PTO rejects either the Nolan/Rothenberg Patent Application for
double patenting in view of the claims of the Nolan Patent Application, or the
claims of the Nolan Patent Application for double patenting in view of the
claims of the Nolan/Rothenberg Patent Application, then RIGEL may elect to
assign its right, title and interest in the Nolan Patent Application to
STANFORD, in which case STANFORD shall grant to RIGEL an irrevocable, exclusive,
worldwide, royalty-free license under STANFORD's right, title and interest in
the Nolan Patent Application for all purposes.
18. ARBITRATION.
18.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
18.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgement upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
18.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
18.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
19. NOTICES.
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: 24 Windsor Drive
Hillsborough, CA 94010
Attention: Dr. Donald G. Payan
Either party may change its address upon written notice to the other party.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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20. WAIVER
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
21. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California.
22. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
23. ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto, embodies the
entire understanding of the parties and shall supercede all previous
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
24. COUNTERPARTS.
This Agreement may be executed in counterparts, with the same force and
effect as if the parties had executed the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Katherine Ku
-----------------------------
Name Katherine Ku
----------------------------------
Title Director, Technology Licensing
---------------------------------
Date October 7, 1996
----------------------------------
RIGEL
Signature /s/ Donald G. Payan
-----------------------------
Name Donald G. Payan
----------------------------------
Title President & CEO
---------------------------------
Date 10/9/96
----------------------------------
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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EXHIBIT A
MATERIALS FROM NOLAN LAB TO BE
LICENSED TO RIGEL
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
EXHIBIT B
SAMPLE REPORTING FORM
Stanford Docket No. S______-________
This report is provided pursuant to the license agreement between Stanford
University and ______________________________________________________.
License Agreement Effective Date: __________________________
Report Covering Period _________
Fixed Fees (Annual Minimum Payment) $_________
Number of Sublicense Executed _________
Net Sales $_________
Royalty Calculation _________
Royalty Subtotal $_________
Credit $_________
Royalty Due $_________
Comments:
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. BACKGROUND...........................................................................1
2. DEFINITIONS..........................................................................1
3. GRANT................................................................................3
4. GOVERNMENT RIGHTS....................................................................3
5. DILIGENCE............................................................................4
6. ROYALTIES............................................................................4
7. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING............................................5
8. NEGATION OF WARRANTIES...............................................................6
9. INDEMNITY............................................................................7
10. MARKING..............................................................................7
11. STANFORD NAMES AND MARKS.............................................................8
12. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS........................................8
13. SUBLICENSE(S)........................................................................9
14. TERMINATION..........................................................................9
15. ASSIGNMENT..........................................................................10
16. DOUBLE PATENTING CONTINGENCY........................................................10
17. ARBITRATION.........................................................................10
18. NOTICES.............................................................................10
19. WAIVER..............................................................................11
20. APPLICABLE LAW......................................................................11
</TABLE>
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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AMENDMENT
The Board of Trustees of the Leland Stanford Junior University ("Stanford") and
Rigel Pharmaceuticals, Inc. ("Rigel") agree to extend the time period within
which Rigel must pay the license issue royalty due to Stanford pursuant to the
License Agreement between Stanford and Rigel dated October 7, 1996 (the
"Agreement"). Section 6.1 of the Agreement is hereby amended to provide that
Rigel will pay the license issue royalty to Stanford within ninety (90) days
after the Effective Date of the Agreement.
Accepted and agreed by:
/s/ Katherine Ku /s/ Donald G. Payan
- ---------------------------------- ---------------------------
Ms. Katherine Ku; Director, Technology Licensing Dr. Donald G. Payan
Stanford University Rigel Pharmaceuticals, Inc.
December 6, 1996 November 25, 1996
- ----------------------- ----------------------
Date Date
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
COLLABORATION AGREEMENT
BY AND BETWEEN
RIGEL PHARMACEUTICALS, INC.
AND
JANSSEN PHARMACEUTICA N.V
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
LICENSE AGREEMENT
Effective as of August 18, 1997 (the "Effective Date"), THE BOARD OF
TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate
powers under the laws of the State of California ("STANFORD") and RIGEL
PHARMACEUTICALS, INC., a Delaware corporation having a principle place of
business at 772 Lucerne Drive, Sunnyvale, CA 94086 ("RIGEL"), agree as follows:
1. BACKGROUND.
1.1 STANFORD owns certain [ * ] and [ * ] cell lines and derivatives
thereof developed in the laboratories of Dr. Garry Nolan and Dr. Michele Calos
at STANFORD.
1.2 STANFORD has previously granted to RIGEL a nonexclusive license to
such materials pursuant to the License Agreement between RIGEL and STANFORD
dated October 7, 1996 (the "1996 License Agreement").
1.3 RIGEL now desires to obtain an exclusive worldwide license to such
materials for all uses in the RIGEL Field (as defined below), which exclusive
license shall be in addition to the nonexclusive license provided in the 1996
License Agreement.
2. DEFINITIONS.
2.1 "EXCLUSIVE" means that, subject to Article 3, STANFORD shall not
grant further licenses in the RIGEL Field.
2.2 "GENE THERAPY" means the treatment of cells which are contained
within a human subject or which are subsequently transplanted into a human
subject with the Materials.
2.3 "LICENSED PRODUCT(S)" means any product in the RIGEL Field which:
(i) directly incorporates any of the Materials; or (ii) would not, but for the
use of the Materials, have been identified, discovered or developed. Licensed
Products shall include without limitation both diagnostic and therapeutic
pharmaceutical products.
2.4 "MATERIALS" means the [ * ] helper-free retrovirus producer lines,
[ * ] (collectively, the "[ * ] cell lines") and the [ * ] cell lines developed
in the laboratories of Dr. Garry Nolan and Dr. Michele Calos at STANFORD.
2.5 "RIGEL FIELD" means the creation and use of retrovirally produced
peptide and protein libraries of random sequence for the screening of
transdominant effector peptides and RNA molecules as claimed in U.S. Patent
Application Serial No. 589911/PCT No. 9701019 (entitled "Methods for Screening
for Transdominant Intracellular Effector Peptides and RNA Molecules") as such
claims were filed on January 23, 1997, and U.S. Patent Application Serial No.
589109/PCT No. 9701048 (entitled "Methods for Screening for Transdominant
Effector Peptides and RNA Molecules"), as such claims were filed on January 23,
1997, as well as any
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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processes, techniques and applications disclosed in the foregoing patent
applications, for drug discovery and therapeutic target identification.
2.6 "NET SALES" means the gross revenue derived by RIGEL and/or
RIGEL's sublicensees from the sales of Licensed Product(s), less the following
items insofar as they actually pertain to the disposition of such Licensed
Product(s) by RIGEL or RIGEL's sublicensees, are included in such gross revenue,
and are separately billed.
(a) Import, export, excise and sales taxes, and custom duties;
(b) Credit for returns, allowances, trades or retroactive price
adjustments;
(c) Transportation charges, issuance and allowances;
(d) Discounts actually allowed; or
(e) Royalties payable to third parties on the manufacture, use,
sale offer for sale or import of Licensed Products.
3. GRANT; TRANSFER OF MATERIALS.
3.1 STANFORD hereby grants, and RIGEL hereby accepts, a worldwide,
royalty-bearing, sublicensable license in the RIGEL Field under STANFORD's
right, title and interest in the Materials to make, use, sell, offer for sale
and import Licensed Products.
3.2 The license granted in Section 3.1 is Exclusive, including the
right to sublicense pursuant to Article 12, in the RIGEL Field for a term (the
"Exclusivity Term") commencing as of the Effective Date and ending three (3)
years thereafter with respect to both the [ * ]and [ * ] cell lines; provided,
however, that RIGEL may extend such Exclusivity Term with respect to either or
both of such cell lines as follows: If RIGEL elects to extend the Exclusivity
Term with respect to the [ * ] cell line for an additional year, RIGEL shall pay
to STANFORD an exclusivity extension fee of ________ (the "[ * ] Exclusivity
Extension Fee"). If RIGEL elects to extend the Exclusivity Term with respect to
the [ * ] cell line for an additional year, RIGEL shall pay to STANFORD an
exclusivity extension fee of _________ (the "[ * ] Exclusivity Extension Fee").
Such exclusivity extension fees shall be due any time prior to the third
anniversary of the Effective Date, and shall operate to extend the Exclusivity
Term until the fourth anniversary of the Effective Date with respect to the [ *
] cell line, if RIGEL pays the [ * ] Exclusivity Extension Fee, and/or the [ * ]
cell line, if RIGEL pays the [ * ] Exclusivity Extension Fee. RIGEL may elect
to extend the Exclusivity Term for additional one year periods of time with
respect to the [ * ] cell line and/or the [ * ] cell line, as applicable, by so
notifying STANFORD of its intent to extend the Exclusivity Term with respect to
the [ * ] cell line and/or the [ * ] cell line at least thirty (30) days prior
to the following anniversary of the Effective Date and paying to STANFORD either
or both of the [ * ] Exclusivity Extension Fee and the [ * ] Extension Fee, as
applicable, prior to the following anniversary of the Effective Date. Any
exclusivity extension fees paid by RIGEL pursuant to this Section 3.2 shall be
nonrefundable but creditable against
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
2.
<PAGE>
earned royalties as provided in Section 6.4. If RIGEL extends the
Exclusivity Term, RIGEL and STANFORD shall discuss in good faith additional
appropriate diligence milestones.
3.3 After expiration of the Exclusivity Term with respect to the [ * ]
cell line and/or the [ * ] cell line, the license granted to RIGEL pursuant to
Section 3.1 with respect to such cell line(s), shall terminate. Such
termination shall not affect the term of the nonexclusive license granted to
RIGEL under the 1996 License Agreement.
3.4 Notwithstanding the Exclusive license granted to RIGEL pursuant to
Section 3.1, STANFORD shall have the right to use and to distribute the
Materials to other nonprofit and academic institutions for non-commercial,
academic research purposes in the RIGEL Field. Any transfer of the Materials by
STANFORD pursuant to this Section 3.4 shall be governed by a material transfer
agreement which (i) restricts the recipient's use of the Materials to the
performance of specified academic research projects, (ii) does not allow the
recipient to transfer the Materials to any other entity, and (iii) contains
other terms and conditions typically included in agreements governing the
transfer and use of biological materials for noncommercial academic research
purposes.
3.5 Promptly after the Effective Date, STANFORD shall transfer to
RIGEL such quantities of the Materials as RIGEL shall reasonably request.
Thereafter, STANFORD shall transfer to RIGEL such additional quantities of
Materials as RIGEL shall reasonably request in the event that RIGEL's stock of
the Materials is destroyed or contaminated.
4. GOVERNMENT RIGHTS.
This Agreement is subject to all of the terms and conditions of Title 35
United States Code Sections 200 through 204, including an obligation that
Licensed Product(s) sold or produced in the United States be "manufactured
substantially in the United States," and RIGEL agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder. STANFORD agrees to provide reasonable assistance to
RIGEL in the event RIGEL decides to seek a waiver under such domestic
manufacture requirement.
5. DILIGENCE.
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture and sale of Licensed Product(s) and to develop
diligently markets for the Licensed Product(s). RIGEL shall demonstrate such
diligence to STANFORD by achieving proof of principle though written
documentation of the following achievements:
(a) Construction of a retroviral vector library;
(b) Infection of cells with such vector library;
(c) Detection of a physiological response to such infection in
an infected cell;
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(d) Isolation and analysis of the peptide eliciting such
physiological response from the cell; and
(e) Identification of two novel targets for drug design, or
demonstration that two previously known targets have a novel activity suitable
for drug design.
5.2 If RIGEL is unable to demonstrate items 5.1(a) through (d) within
eighteen (18) months after the Effective Date, and item 5.1(e) within thirty six
(36) months after the Effective Date, STANFORD may request that RIGEL meet with
STANFORD to discuss RIGEL's lack of diligence. The parties shall meet within
thirty (30) days after RIGEL receives any such notice to develop a mutually
agreeable plan for remedying any such lack of diligence (the "Proposed Remedy").
If RIGEL fails to perform the Proposed Remedy within one hundred eighty (180)
days after the Proposed Remedy is agreed upon, STANFORD may elect to terminate
this Agreement, which termination shall not have any effect upon the rights
granted to RIGEL pursuant to the 1996 License Agreement.
5.3 On or before each anniversary of the Effective Date during the
Exclusivity Term, RIGEL shall make a written annual report to STANFORD covering
RIGEL's progress during the preceding year toward commercial use of the Licensed
Product(s). Such report shall include as a minimum information sufficient to
enable STANFORD to satisfy relevant reporting requirements of the U.S.
Government and to ascertain RIGEL's progress toward meeting the diligence
requirements of this Article 5.
6. LICENSE FEE AND ROYALTIES.
6.1 In partial consideration for the Exclusive License granted by
STANFORD to RIGEL with respect to the [ * ] cell lines included in the
Materials, RIGEL agrees to pay to STANFORD the following:
(a) A noncreditable, nonrefundable license issue royalty of
______________________, which amount shall be paid within thirty (30) days after
the Effective Date.
(b) An exclusivity fee equal to _______________________ for
each of the three (3) years following the first anniversary of the Effective
Date, which amounts shall be paid to STANFORD within thirty (30) days after each
of the first, second and third anniversaries of the Effective Date. Such
payments shall be nonrefundable but creditable against earned royalties to the
extent provided in Section 6.4.
(c) RIGEL shall issue to STANFORD _____________________ Stock
of RIGEL, pursuant to a stock purchase agreement to be entered into between
RIGEL and STANFORD within ninety (90) days after the Effective Date.
(d) If RIGEL grants to a third party a sublicense to the
Materials solely for research, and not commercialization purposes (a "Research
Sublicense"), RIGEL shall also pay to STANFORD a milestone payment equal to
__________________________ payment that
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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RIGEL receives as consideration for the grant of such Research Sublicense.
RIGEL shall pay such amount to STANFORD within sixty (60) days after RIGEL
receives such research milestone payment. If RIGEL grants to a third party a
sublicense under the Materials which includes the right to sell and offer for
sale Licensed Products (a "Commercialization Sublicense"), RIGEL shall pay to
STANFORD a sublicense fee as follows:
First Commercialization Sublicense Granted __________
Second Commercialization Sublicense Granted ____________
Each Additional Commercialization Sublicense __________
Granted
If RIGEL owes amounts to STANFORD pursuant to this Section 6.1(d) and also
pursuant to Section 6.3 of the 1996 License Agreement with respect to a
particular Research Sublicense or Commercialization Sublicense, the amounts due
to STANFORD pursuant to this Section 6.1(d) shall be reduced by any amounts due
to STANFORD pursuant to Section 6.3 of the 1996 License Agreement with respect
to such Research Sublicense or Commercialization Sublicense. RIGEL shall pay
such sublicense fees to STANFORD within sixty (60) days after the effective date
of each Commercialization Sublicense.
6.2 In partial consideration for the Exclusive License granted by
STANFORD to RIGEL for the [ * ] cell lines included in the Materials, RIGEL
agrees to pay to STANFORD an exclusivity fee equal to __________________ for
each of the three (3) years following the first anniversary of the Effective
Date, which amounts shall be paid to STANFORD within thirty (30) days after each
of the first, second and third anniversaries of the Effective Date. Such
payments shall be nonrefundable but creditable against earned royalties to the
extent provided in Section 6.4.
6.3 As further consideration for the license granted to RIGEL pursuant
to Section 3.1, RIGEL shall pay to STANFORD earned royalties equal to _______ of
Net Sales of Licensed Products by RIGEL and its sublicensees; provided, however,
that if royalties on Net Sales of a particular Licensed Product by RIGEL and its
sublicensees would be due to STANFORD pursuant to both this Section 6.3 and
Section 6.4 of the 1996 License Agreement, RIGEL shall be obligated to pay only
the royalties due to STANFORD pursuant to Section 6.4 of the 1996 License
Agreement on Net Sales of such Licensed Products.
6.4 Creditable payments under this Agreement shall be an offset to
RIGEL against up to fifty percent (50%) of each earned royalty payment which
RIGEL would be required to pay pursuant to Section 6.4 until the entire
creditable amount is exhausted.
6.5 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties pursuant to Section 6.3
shall continue until ten (10) years after first commercial sale of Licensed
Products.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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6.6 The royalties on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the payments
due STANFORD.
7. Royalty Reports, Payments, and Accounting.
7.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the
first sale of a Licensed Product, RIGEL shall make written reports (even if
there are no sales in a particular quarter) and earned royalty payments to
STANFORD within thirty (30) days after the end of each calendar quarter. This
report shall be in the form of the report of Exhibit A and shall state the
number, description, and aggregate Net Sales of Licensed Product(s) during such
completed calendar quarter, and resulting calculation pursuant to Section 6.3 of
earned royalty payments due STANFORD for such completed calendar quarter.
Concurrent with the making of each such report, RIGEL shall include payment due
STANFORD of earned royalties for the calendar quarter covered by such report.
7.2 ACCOUNTING. RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license herein
granted. Such records will include general ledger records showing cash receipts
and expenses, and records which include production records, customers serial
numbers and related information in sufficient detail to enable the royalties
payable hereunder by RIGEL to be determined. RIGEL further agrees to permit its
books and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided for in Section 7.1. Such examination is to
be made by STANFORD or its designee, at the expense of STANFORD, except in the
event that the results of the audit reveal an underreporting of royalties due
STANFORD of five percent (5%) or more, then the audit costs shall be paid by
RIGEL.
8. PATENTS; NEW INVENTIONS.
8.1 STANFORD's Office of Technology Licensing represents and warrants
that to the best of its knowledge as of the Effective Date, STANFORD has not
sought or obtained patent protection of the Materials or any use thereof in the
Rigel Field. STANFORD agrees that future inventions and discoveries using or
relating to the Materials may be useful to RIGEL in the development and/or
commercialization of Licensed Products. Subject to STANFORD's obligations with
respect to sponsored research, STANFORD will, as soon as practicable, bring any
such new invention or discovery to RIGEL's attention and provide RIGEL a
reasonable opportunity to negotiate a license therefor.
9. WARRANTIES.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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9.1 STANFORD's Office of Technology Licensing represents and warrants
that as of the Effective Date, it has received no claims by third parties that
the use of the Materials infringes any patents, copyrights, and other rights of
third parties.
9.2 STANFORD represents and warrants that it has all right, power and
authority necessary to grant the License set forth in Article 3 to RIGEL, and
that it has not, and will not during the term of this Agreement, grant any right
or interest in the Materials to any third party which would conflict with the
rights granted to RIGEL hereunder.
9.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing
Biologically Functional Molecular Chimeras"; U.S. Patent No. 4,468,464 and U.S.
Patent No. 4,740,470, both entitled, "Biologically Functional Molecular
Chimeras" (collectively known as the Cohen/Boyer patents), or reissues thereof;
or
(b) U.S. Patent 4,656,134, entitled "Amplification of
Eucaryotic Genes" or any patent application corresponding thereto.
9.4 Except as provided in Section 9.1 and as otherwise expressly set
forth in this Agreement, nothing in this Agreement will be construed as a
warranty or representation that anything made, used, sold, or otherwise disposed
of under any license granted in this Agreement is or will be free from
infringement of patents, copyrights, and trademarks of third parties; conferring
rights to use in advertising, publicity, or otherwise any trademark or the name
of "STANFORD"; or granting by implication, estoppel, or otherwise any licenses
or rights under patents of STANFORD.
9.5 EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCT(S)
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY
OTHER EXPRESS OR IMPLIED WARRANTIES.
10. INDEMNITY.
10.1 RIGEL agrees to indemnify, hold harmless, and defend STANFORD and
STANFORD Health Services (or any successor thereto) and their respective
trustees, officers, employees, students, and agents against any and all claims
by third parties for death, illness, personal injury, property damage, and
improper business practices arising out of the manufacture, use, sale, or other
disposition of the Materials or Licensed Product(s) by RIGEL or RIGEL's
sublicensee(s) or customers.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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10.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not have
any responsibilities or liabilities whatsoever with respect to Licensed
Product(s).
10.3 RIGEL shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
10.4 In addition to the foregoing, RIGEL shall maintain Comprehensive
General Liability Insurance, including Products Liability Insurance, with
reputable and financially secure insurance carrier(s) to cover the activities of
RIGEL and its sublicensee(s) in the amounts and during the periods specified
herein. Such insurance shall provide minimum limits of liability of One Million
Dollars ($1,000,000) as of the first anniversary of the date upon which RIGEL
first leases a facility in which it will conduct research and development
activities, and of Five Million Dollars ($5,000,000) as of the commencement of
human clinical trials of Licensed Products. Such insurance shall include
STANFORD, Stanford Health Services (or any successor thereto), their trustees,
directors, officers, employees, students, and agents as additional insureds.
Such insurance shall be written to cover claims incurred, discovered,
manifested, or made during or after the expiration of this Agreement. At
STANFORD's request, RIGEL shall furnish a Certificate of Insurance evidencing
primary coverage and requiring thirty (30) days prior written notice of
cancellation or material change to STANFORD. RIGEL shall advise STANFORD, in
writing, that it maintains excess liability coverage (following form) over
primary insurance for at least the minimum limits set forth above. All such
insurance of RIGEL shall be primary coverage; insurance of STANFORD or Stanford
Health Services (or any successor thereto) shall be excess and noncontributory.
11. STANFORD NAMES AND MARKS
11.1 RIGEL agrees not to identify STANFORD in any promotional
advertising or other promotional materials to be disseminated to the pubic or
any portion thereof or to use the name of any STANFORD faculty member, employee,
or student or any trademark, service mark, trade name, or symbol of STANFORD or
the STANFORD Health Services (or any successor thereto), or that is associated
with either of them, without STANFORD's prior written consent, except as
required by law. STANFORD shall not unreasonably hold consent under this
Section 11.
12. SUBLICENSE(S).
12.1 RIGEL may, solely in conjunction with a sublicense under the
rights licensed to RIGEL pursuant to Section 3.1 of the 1996 License Agreement,
grant sublicense(s) under its Exclusive license rights during the Exclusivity
Term.
12.2 Any sublicense(s) granted by RIGEL under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant a sublicense to a third party; and
(b) The earned royalty rate specified in the sublicense(s) may
be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 7, 9, and 10 for the benefit of STANFORD and provide for the transfer
of all obligations including the payment of royalties specified in such
sublicense(s), to STANFORD or its designee, in the event that this Agreement is
terminated, if such sublicenses remain in effect after termination of this
Agreement.
12.3 RIGEL agrees to provide STANFORD a copy of any sublicense(s)
granted pursuant to this Article 12.
13. TERM AND TERMINATION.
13.1 The term of this Agreement shall commence upon the Effective Date
and shall continue until expiration of both the [ * ] cell Exclusivity Term and
the [ * ] cell line Exclusivity Term. Additionally, RIGEL may terminate this
Agreement prior to such expiration date by giving STANFORD notice in writing at
least thirty (30) days in advance of the effective date of termination selected
by RIGEL. If RIGEL terminates this Agreement prior to the third anniversary of
the Effective Date, RIGEL's obligations to make the payments due to STANFORD
pursuant to Sections 6.1(b), and 6.2 and shall survive such termination until
expiration of RIGEL's obligations thereunder. Any termination or expiration of
this Agreement shall have no effect upon the Rights granted to RIGEL pursuant to
the 1996 License Agreement.
13.2 STANFORD may terminate this Agreement if RIGEL:
(a) Is in default in payment of royalty or providing of
reports;
(b) Is in material breach of any provision hereof; or
(c) Intentionally provides any false report;
and RIGEL fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof to RIGEL by STANFORD.
13.3 SURVIVING ANY TERMINATION ARE:
(a) RIGEL's obligation to pay exclusivity fees pursuant to
Sections 6.1(b) and 6.2, royalties accrued or accruable pursuant to Section 6.3,
and Sections 6.4, 6.5 and 6.6;
(b) Any cause of action or claim of RIGEL or STANFORD, accrued
or to accrue, because of any breach or default by the other party; and
(c) The provisions of Articles 7, 9 and 10.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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14. ASSIGNMENT.
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
15. ARBITRATION.
15.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
15.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgment upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
15.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
15.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
16. NOTICES.
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: 772 Lucerne Drive
Sunnyvale, CA 94086
Attention: Dr. Donald G. Payan
Either party may change its address upon written notice to the other party.
17. WAIVER.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
18. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California. Any claim or controversy arising out of or related to this
Agreement or any breach hereof shall be submitted to a court of applicable
jurisdiction in the State of California, and each party hereby consents to the
jurisdiction and venue of such court.
19. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
20. ENTIRE AGREEMENT.
This Agreement, together with the Exhibit attached hereto, embodies the
entire understanding of the parties and shall supersede all previous
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
21. COUNTERPARTS.
This Agreement may be executed in counterparts, with the same force and
effect as if the parties had executed the same instrument.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Jon Sandelin
---------------------------
Name Jon Sandelin
--------------------------------
Title Acting Director
-------------------------------
Date August 18, 1997
--------------------------------
RIGEL PHARMACEUTICALS , INC.
Signature /s/ Donald G. Payan
---------------------------
Name Donald G. Payan
--------------------------------
Title VP R&D and COO
-------------------------------
Date 8/18/97
--------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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EXHIBIT A
SAMPLE REPORTING FORM
Stanford Docket No. S____-_______
This report is provided pursuant to the license agreement between Stanford
University and ____________________________________________.
License Agreement Effective Date: _______________________
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------
Report Covering Period
- ---------------------------------------------------------------------------------
Fixed Fees (Annual Minimum Payment) $
- ---------------------------------------------------------------------------------
Number of Sublicenses Executed
- ---------------------------------------------------------------------------------
Net Sales $
- ---------------------------------------------------------------------------------
Royalty Calculation
- ---------------------------------------------------------------------------------
Royalty Subtotal $
- ---------------------------------------------------------------------------------
Credit $
- ---------------------------------------------------------------------------------
Royalty Due $
- ---------------------------------------------------------------------------------
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
<TABLE>
<S> <C>
1. Background...........................................................................1
2. Definitions..........................................................................1
3. Grant; Transfer of Materials.........................................................2
4. Government Rights....................................................................3
5. Diligence............................................................................3
6. License Fee and Royalties............................................................4
7. Royalty Reports, Payments, and Accounting............................................6
8. Patents; New inventions..............................................................6
9. Warranties...........................................................................6
10. Indemnity............................................................................7
11. STANFORD Names and Marks.............................................................8
12. Sublicense(s)........................................................................8
13. Term and Termination.................................................................9
14. Assignment...........................................................................9
15. Arbitration.........................................................................10
16. Notices.............................................................................10
17. Waiver..............................................................................10
18. Applicable Law......................................................................10
19. Severability........................................................................11
20. Entire Agreement....................................................................11
21. Counterparts........................................................................11
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
LICENSE AGREEMENT
Effective as of March 27, 1998 ("Effective Date"), THE BOARD OF TRUSTEES
OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under
the laws of the State of California ("STANFORD"), and RIGEL PHARMACEUTICALS,
INC., a Delaware corporation doing business as RIGEL, INC. in California, having
a principal place of business at 772 Lucerne Drive, Sunnyvale, California 94086
("RIGEL"), agree as follows:
1. BACKGROUND
1.1 STANFORD has an assignment of U.S Provisional Applications (the
"Provisionals"), [ * ] (the "Invention"), and as described in Stanford Docket
[ * ], and any Licensed Patents, as hereinafter defined, which may claim such
Invention.
1.2 STANFORD has certain biological materials ("Licensed BIOLOGICAL
Materials") and other know-how ("Know-How"), as defined below, pertaining to the
Inventions.
1.3 STANFORD desires to have the Know-How and Inventions perfected and
marketed at the earliest possible time in order that products resulting
therefrom may be available for public use and benefit.
1.4 RIGEL desires a license under said Know-How, Invention and
Licensed Patents to develop, manufacture, use and sell Licensed Products in the
Licensed Field of Use, as defined below.
1.5 The Know-How and Invention were made in the course of research
supported by the National Institutes of Health.
2. DEFINITIONS
2.1 "EXCLUSIVE" means that STANFORD shall not grant further licenses
in the Licensed Territory in the Licensed Field of Use.
2.2 "LICENSED BIOLOGICAL MATERIALS" means the materials listed on
Exhibit A, as amended from time to time upon the parties' mutual written
consent.
2.3 "LICENSED FIELD OF USE" means, subject to Section 14:
(a) the development of reporter systems useful for the analysis
of protein-protein interactions;
(b) the development of methods for analyzing molecular
interactions by reporter subunit complementation; and
(c) applications of the systems and methods set forth in (a)
and (b) to functional genomics, target analysis and drug discovery.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
1.
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2.4 "LICENSED KNOW-HOW" means know-how useful for the commercial
exploitation of the Licensed Patents in the Licensed Field of Use and is
provided to RIGEL by STANFORD, including know-how, trade secrets, protocols,
information, processes or other subject matter which is either disclosed in the
Licensed Patents, or useful to practice the Invention in the Licensed Field of
Use. Licensed Know-How excludes the Licensed Patents and includes the Licensed
Biological Materials. STANFORD has no obligation to provide such know-how.
2.5 "LICENSED PATENTS" means any Letters Patent issued upon (i)
patent applications claiming priority from or based upon the Provisionals;
(ii) any patents issuing from any divisional, continuations, substitute, or
continuation-in-part (to the extent provided in this Section 2.5) application
relating to the patent applications described in (i); and (iii) any foreign
counterparts of the patent applications described in (i) or (ii).
Continuation-in-part applications are included in the Licensed Patents to the
extent that such continuation-in-part claims subject matter disclosed in the
applications set forth in (i) and to the extent that the practice of an
invention claimed in a Licensed Patent issuing from a patent application
other than such continuation-in-part would infringe a claim of a Licensed
Patent issuing from such continuation-in-part.
2.6 "LICENSED PRODUCTS" means
(a) any product, the manufacture, use, sale, offer for sale and
import of which:
(i) is covered by one or more valid claims of an issued,
unexpired Licensed Patent directed to the Invention. Claims of issued,
unexpired Licensed Patent shall be presumed to be valid unless and until they
have been held to be invalid by a final judgment of a court of competent
jurisdiction from which no appeal can be or is taken; or
(ii) is covered by any claim being prosecuted in a
pending application directed to the Invention, which claim has not been pending
for more than three (3) years from the first filing of such claim; and
(b) any product which directly incorporates any of the Licensed
Biological Materials; and
(c) any product which would not, but for the use of the
Licensed Technology, have been identified, discovered or developed.
2.7 "LICENSED TECHNOLOGY" means the Licensed Patents and the Licensed
Know-How.
2.8 "LICENSED TERRITORY" means all the countries in the world.
2.9 "NET SALES" means the gross revenue derived by RIGEL and/or its
sublicensee(s) from the sales of Licensed Products to end users thereof, less
the following items but only insofar as they actually pertain to the disposition
of such Licensed Products by RIGEL or RIGEL's sublicensee(s), are included in
such gross revenue, and are separately billed:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
2.
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(a) import, export, excise and sales taxes, and custom duties;
(b) transportation charges, issuances and allowances;
(c) credit for returns, allowances, trades or retroactive price
adjustments;
(d) discounts actually allowed; or
(e) royalties payable to third parties on the manufacture, use,
sale, offer for sale or import of Licensed Products.
2.10 "SERVICE PROVIDER" means a third party contract research or
similar organization that performs assay services (i) for other entities on a
fee-for-service basis and (ii) not in connection with such organization's own
drug development programs (whether such programs are conducted solely by such
entity or jointly by such entity and one or more third parties).
3. GRANT
3.1 STANFORD hereby grants, and RIGEL hereby accepts, a license in the
Licensed Field of Use to make, use, sell, offer for sale and import Licensed
Products in the Licensed Territory.
3.2 RIGEL hereby grants, and STANFORD hereby accepts, a non-exclusive,
royalty free license under its interest in any inventions conceived by RIGEL
during the term of this Agreement that solely relate to the technology claimed
in the Licensed Patents and any intellectual property rights related thereto
(collectively, "Improvements"), to practice and grant licenses under such
Improvements solely for noncommercial, academic research purposes.
3.3 The license granted to RIGEL pursuant to Section 3.1 under the
Licensed Know-How shall be nonexclusive for the term of this Agreement. The
license granted in Section 3.1 under the Licensed Patents is Exclusive for a
term (the "Exclusivity Term") commencing as of the Effective Date and ending
(except as otherwise provided in this Agreement) on the first to occur of the
following:
(a) the fifth anniversary of the Effective Date if STANFORD
does not grant a license under the Licensed Patents outside the Licensed Field
of Use to a third party prior to or on such date; or
(b) the eighth anniversary of the Effective Date, if STANFORD
grants a license under the Licensed Patents outside the Licensed Field of Use to
a third party prior to or on the fifth anniversary of the Effective Date.
After expiration of the Exclusivity Term, the license granted to RIGEL
pursuant to Section 3.1 under the Licensed Patents shall be nonexclusive
for the remainder of the term of the Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
3.
<PAGE>
3.4 Notwithstanding the Exclusive license under the Licensed Patents
granted to RIGEL pursuant to Section 3.1, STANFORD shall have the right to
practice the Licensed Technology in the Licensed Field of Use for noncommercial,
academic research purposes. STANFORD shall have the right to publish any
information included in the Licensed Technology.
3.5 STANFORD may grant sublicenses under Improvements to third parties
solely for noncommercial, academic research purposes, provided that each such
sublicense is granted in conjunction with a license under the Licensed
Technology. After the expiration of the Exclusivity Term, STANFORD may grant
sublicenses under Improvements to third parties for purposes other than
conducting noncommercial academic research, provided that each such sublicense
is granted solely in conjunction with the grant of a license under the Licensed
Technology. STANFORD's license under Section 3.2 and its ability to grant
sublicenses thereunder as provided in this Section 3.5 shall survive termination
of this Agreement.
4. GOVERNMENT RIGHTS
This Agreement is subject to all of the terms and conditions of Title 35
United States Code Sections 200 through 204, including an obligation that
Licensed Products sold or produced in the United States be "manufactured
substantially in the United States," and RIGEL agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder relating to Inventions.
5. DILIGENCE; PROGRESS REPORTS
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all commercially reasonable efforts and diligence to proceed with
the development, manufacture and sale of Licensed Products and to diligently
develop markets for the Licensed Products. RIGEL shall demonstrate such
diligence to STANFORD by achieving the following goals:
(a) before the first anniversary of the Effective Date, RIGEL
shall identify and characterize [ * ].
(b) before the second anniversary of the Effective Date, RIGEL
shall establish two (2) new high throughput screening assays that utilize the
Licensed Technology, one (1) of which is primarily useful for target
identification and one (1) of which is primarily useful for screening to
identify small molecules that bind to drug targets; and
(c) before the fourth anniversary of the Effective Date, use
the assays described in (b) to identify one new drug target and one small
molecule that competes with the binding of molecules to a drug target.
5.2 If RIGEL is unable to demonstrate its diligence by achieving the
goals provided in Section 5.1 within the time frames set forth therein, the
parties shall meet no later than thirty (30) days after the relevant date set
forth in Section 5.1 to discuss in good faith the reasons for such
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
4.
<PAGE>
failure, and mutually acceptable mechanisms for remedying such failure. If
the parties do not agree upon modifications to the diligence requirements set
forth in Section 5.1 during such discussion, then STANFORD may thereafter
convert RIGEL's exclusive license under the Licensed Patents to non-exclusive
upon thirty (30) days written notice to RIGEL.
5.3 If RIGEL succeeds in meeting the goals provided in Section 5.1,
RIGEL and STANFORD agree to meet within ninety (90) days prior to the fourth
anniversary of the Effective Date to establish further mutually acceptable
diligence requirements applicable to the next two (2) year period during the
term of the Agreement. If the parties, after good faith effort, cannot agree on
such additional requirements, STANFORD may in its sole discretion elect to
convert RIGEL's exclusive license under the Licensed Patents to non-exclusive as
of the fourth anniversary of the Effective Date by written notice to RIGEL.
5.4 On or before August 1, 1998 and each anniversary thereof until
RIGEL markets Licensed Products, RIGEL shall make a written annual report to
STANFORD covering RIGEL's progress during the preceding year toward commercial
use of Licensed Products. Such report shall include, as a minimum, information
sufficient to enable STANFORD to satisfy reporting requirements of the U.S.
Government and for STANFORD to ascertain progress by RIGEL toward meeting the
diligence requirements of this Article 5.
6. PAYMENTS AND ROYALTIES
6.1 RIGEL shall upon the Effective Date:
(a) pay to STANFORD a noncreditable, nonrefundable license
issue royalty of __________; and
(b) issue to STANFORD ___________________ Stock pursuant to a
stock purchase agreement to be separately executed by the parties.
6.2 Subject to Section 6.6, RIGEL also agrees to pay the following
minimum annual royalties to STANFORD within thirty (30) days after the
occurrence of each date below:
<TABLE>
<CAPTION>
Anniversary of Effective Date Minimum Annual Royalty Due
----------------------------- --------------------------
<S> <C>
First and Second _________
Third through Fifth _________
Sixth and Thereafter _________
</TABLE>
These minimum annual royalty payments are nonrefundable, but they are
creditable against earned royalties due to Stanford pursuant to Section
6.4. In addition, the minimum annual royalties set forth in this
Section 6.2 shall be reduced by fifty percent (50%) if STANFORD abandons
all patent applications from which Licensed Patents could issue prior to
the time that any Licensed Patents issue.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
5.
<PAGE>
6.3 RIGEL also agrees to pay to STANFORD upon the occurrence of the
following events, the following amounts:
<TABLE>
<CAPTION>
Event Milestones
----- ----------
<S> <C>
Earlier of the execution of the first sublicense ____________
by Rigel under the Licensed Technology or 18
months after the Effective Date
Earlier of the execution of the second sublicense ____________
by Rigel under the Licensed Technology or 48
months after the Effective Date
Earlier of the execution of the third sublicense ____________
by Rigel under the Licensed Technology or 78
months after the Effective Date
Execution of any additional sublicenses by Rigel ____________
after payment of all of the foregoing milestones
</TABLE>
6.4 RIGEL shall pay to STANFORD earned royalties of ___________ of Net
Sales during the Exclusivity Term. Should total earned royalties due on
Licensed Products to STANFORD under this Agreement and any other agreement
between STANFORD and RIGEL (the "Other Agreements") equal or exceed __________
of Net Sales, STANFORD shall, upon request by RIGEL, meet with RIGEL to discuss
an appropriate mechanism, if RIGEL's royalty obligations under this Agreement
and the Other Agreements render further development and commercialization of
License Products uneconomic. The parties will discuss in good faith appropriate
adjustments to RIGEL's obligations under this Agreement..
6.5 RIGEL shall also pay to STANFORD ______________ upon the issuance
of the first patent included in the Licensed Patents.
6.6 Within thirty (30) days after the license granted under the
Licensed Patents pursuant to Section 3.1 becomes non-exclusive pursuant to
Sections 3.3, 5.2 or 5.3, STANFORD shall provide to RIGEL a written summary of
all non-confidential material terms of any other license agreements with third
parties relating to the Licensed Technology. STANFORD shall use reasonable
efforts to obtain consent of any such third parties to disclose such material
terms or at least a general description of the economic terms of such other
license agreements to RIGEL. Within thirty (30) days after receiving such
summary, RIGEL shall elect one of the following options by written notice to
STANFORD:
(a) to allow this Agreement to continue in full force and
effect, except that the minimum annual royalties due to STANFORD pursuant to
Section 6.2 shall be reduced by fifty percent (50%); or
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
6.
<PAGE>
(b) to modify the terms of this Agreement to include terms no
less favorable to RIGEL than those STANFORD then provides to third party
licensees of the Licensed Technology.
If no such license agreement between STANFORD and any such third party
exists at the time RIGEL must elect either (a) or (b), then (a) shall
automatically apply. If RIGEL elects the option set forth in Section
6.6(a), such a reduction shall be in addition to any reduction resulting
from the application of Section 6.2. If RIGEL elects the option set forth
in Section 6.6(b), RIGEL and STANFORD shall modify the Agreement to
contain all rights and obligations contained in licenses available to
such other licensees.
6.7 Creditable payments under this Agreement shall be offset against
up to fifty percent (50%) of each earned royalty payment which RIGEL would be
required to pay pursuant to Section 6.4, until the entire creditable amount is
exhausted.
6.8 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties hereunder shall continue
until ten (10) years after first commercial sale of Licensed Products.
6.9 The royalty on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the payments
due STANFORD.
7. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT - Beginning with the
first sale of Licensed Products, RIGEL shall make written reports (even if there
are no sales) and earned royalty payments to STANFORD within thirty (30) days
after the end of each calendar quarter. This report shall be in the form of the
report of Appendix B and shall state the number, description and aggregate Net
Sales of Licensed Products during such completed calendar quarter, and shall
state the resulting calculation pursuant to Section 6.4 of earned royalty
payments due STANFORD for such completed calendar quarter. Concurrent with the
making of each such report, RIGEL shall include payment due STANFORD of
royalties for the calendar quarter covered by such report.
7.2 ACCOUNTING - RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use and other
disposition of products sold or otherwise disposed of under the licenses herein
granted. Such records will include general ledger records showing cash receipts
and expenses and records which include production records, customers, serial
numbers and related information in sufficient detail to enable the royalties
payable hereunder by RIGEL to be determined. RIGEL further agrees to permit its
books and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
7.
<PAGE>
for in Section 7.1. Such examination is to be made by STANFORD or its
designee, at the expense of STANFORD, except in the event that the results of
the audit reveal an underreporting of royalties due STANFORD of five percent
(5%) or more, then the audit costs shall be paid by RIGEL.
8. NEGATION OF WARRANTIES
8.1 Nothing in this Agreement is or shall be construed as:
(a) a warranty or representation by STANFORD as to the validity
or scope of any Licensed Patents;
(b) a warranty or representation that anything made, used, sold
or otherwise disposed of under any license granted in this Agreement is or will
be free from infringement of patents, copyrights and other rights of third
parties;
(c) an obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described in Article 13;
(d) granting by implication, estoppel or otherwise any licenses
or rights under patents or other rights of STANFORD or other persons other than
Licensed Technology, regardless of whether such patents or other rights are
dominant or subordinate to any Licensed Technology; or
(e) an obligation to furnish any technology or technological
information other than the Licensed Technology.
8.2 Except as expressly set forth in this Agreement, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCT(S)
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR ANY OTHER
EXPRESS OR IMPLIED WARRANTIES.
8.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to U.S. Patent 4,656,134
"Amplification of Eucaryotic Genes" or any patent application corresponding
thereto.
9. INDEMNITY
9.1 LICENSEE agrees to indemnify, hold harmless, and defend STANFORD,
UCSF-Stanford Health Care and Stanford Health Services and their respective
trustees, officers, employees, students and agents against any and all claims
for death, illness, personal injury, property damage, and improper business
practices arising out of the manufacture, use, sale or
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
8.
<PAGE>
other disposition of Inventions, Licensed Products or Licensed Technology by
RIGEL or RIGEL's sublicensee(s), or their customers.
9.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not have
any responsibilities or liabilities whatsoever with respect to Licensed
Product(s).
9.3 LICENSEE shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
9.4 In addition to the foregoing, LICENSEE shall maintain, during
the term of this Agreement, Comprehensive General Liability Insurance,
including Products Liability Insurance, with reputable and financially secure
insurance carrier(s) to cover the activities of LICENSEE and its
sublicensee(s). Such insurance shall provide minimum limits of liability of
$5 Million and shall include STANFORD, UCSF-Stanford Health Care, Stanford
Health Services, their trustees, directors, officers, employees, students and
agents as additional insureds. Such insurance shall be written to cover
claims incurred, discovered, manifested, or made during or after the
expiration of this Agreement. At STANFORD's request, LICENSEE shall furnish
a Certificate of Insurance evidencing primary coverage and requiring thirty
(30) days prior written notice of cancellation or material change to
STANFORD. LICENSEE shall advise STANFORD, in writing, that it maintains
excess liability coverage (following form) over primary insurance for at
least the minimum limits set forth above. All such insurance of LICENSEE
shall be primary coverage; insurance of STANFORD, USCF-Stanford Health Care,
and Stanford Health Services shall be excess and noncontributory.
10. MARKING
Prior to the issuance of patents on the Inventions, RIGEL agrees to mark
Licensed Products (or their containers or labels) made, sold, or otherwise
disposed of by it under the license granted in this Agreement with the words
"Patent Pending," and following the issuance of one or more patents, with the
numbers of the Licensed Patents.
11. STANFORD NAMES AND MARKS
RIGEL agrees not to identify STANFORD in any promotional advertising or
other promotional materials to be disseminated to the public or any portion
thereof or to use the name of any STANFORD faculty member, employee, or student
or any trademark, service mark, trade name, or symbol of STANFORD, STANFORD
Health Services or UC-Stanford Health Care, or that is associated with any of
them, without STANFORD's prior written consent.
12. PATENT RIGHTS
12.1 STANFORD shall have the obligation to file, prosecute and maintain
all patent applications and patents included in the Licensed Patents.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
9.
<PAGE>
12.2 STANFORD will provide RIGEL with an opportunity to review and
comment upon the prosecution strategy and to consult with STANFORD on the
content of patent filings. In addition, STANFORD will provide RIGEL or a
designee of RIGEL with copies of any correspondence relating to patent
applications and patents included in the Licensed Patents.
12.3 RIGEL shall have the right to designate, in its sole discretion,
those foreign countries in which STANFORD will file, prosecute and maintain
patents and patent applications included in the Licensed Patents. STANFORD may
propose to file, prosecute and maintain Licensed Patents in a country which
RIGEL has not designated pursuant to this Section 12.3. If RIGEL agrees to such
designation, it shall reimburse STANFORD for the costs of such filing,
prosecution and maintenance of such patents or patent applications pursuant to
Section 12.4 and such patents or patent applications shall be included in the
Licensed Patents. If RIGEL does not agree to such proposal, STANFORD may elect
to proceed with such filing, prosecution or maintenance at its own expense, and
such patents or patent applications in such country shall not be included in the
Licensed Patents.
12.4 Within thirty (30) days after the Effective Date, RIGEL shall
reimburse STANFORD for all costs incurred by STANFORD prior to the Effective
Date in connection with the filing and prosecution of the patent applications
described in Section 2.5 ("Prior Patent Costs"). RIGEL shall also reimburse
STANFORD for all costs incurred by STANFORD after the Effective Date with
respect to the filing, prosecution, issuance and maintenance of patent
applications described in Section 2.5 and the Licensed Patents ("Future Patent
Costs"); PROVIDED, HOWEVER, that:
(a) if STANFORD grants a license under the Licensed Patents to
any third party (an "Other Licensee"), RIGEL's obligation to reimburse STANFORD
under this Section 12.4(a) shall be reduced such that RIGEL and such Other
Licensee(s) shall pay a pro-rata share of all Future Patent Costs incurred after
the date STANFORD executes such license agreement with such Other Licensee (such
pro-rata share shall be equal to the total Future Patent Costs incurred divided
by the number of licensees under the Licensed Patents at the time such costs are
incurred); and
(b) in addition to any reimbursement due RIGEL pursuant to
Section 12.4(a), if STANFORD grants a license under the Licensed Patents to an
Other Licensee prior to the second anniversary of the Effective Date, STANFORD
shall reimburse RIGEL for fifty percent (50%) of the Prior Patent Costs.
13. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS
13.1 RIGEL shall promptly inform STANFORD of any suspected infringement
of any Licensed Patents by a third party. During the Exclusivity Term, STANFORD
and RIGEL each shall have the right to institute an action for infringement of
the Licensed Patents against such third party in accordance with the following:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
10.
<PAGE>
(a) if STANFORD and RIGEL agree to institute suit jointly, the
suit shall be brought in both their names, the out-of-pocket costs thereof shall
be borne equally, and any recovery or settlement shall be shared equally. RIGEL
and STANFORD shall agree to the manner in which they shall exercise control over
such action. STANFORD may, if it so desires, also be represented by separate
counsel of its own selection, the fees for which counsel shall be paid by
STANFORD;
(b) in the absence of agreement to institute a suit jointly,
STANFORD may institute suit, and, at its option, join RIGEL as a plaintiff. If
STANFORD decides to institute suit, then it shall notify RIGEL in writing.
STANFORD shall bear the entire cost of such litigation and shall be entitled to
retain the entire amount of any recovery or settlement; and
(c) in the absence of agreement to institute a suit jointly and
if STANFORD notifies RIGEL that it has decided not to join in or institute a
suit, as provided in (a) or (b) above, RIGEL may institute suit and, at its
option, join STANFORD as a plaintiff. RIGEL shall bear the entire cost of such
litigation. Any recovery in excess of litigation costs will be shared with
STANFORD as follows:
(i) Any payment for past sales will be deemed to be Net
Sales and RIGEL will pay STANFORD royalties thereon at the rates specified in
Paragraph 6.4; and
(ii) any payment which covers future sales will be deemed
a sublicense and royalties will be shared as specified in Paragraph 6.3 and
Article 15.
LICENSEE and STANFORD agree to negotiate in good faith an
appropriate compensation to STANFORD for any non-cash
amounts or awards received in any settlement or cross-
license resulting from a suit brought by RIGEL pursuant to
this Section 13.1(c). STANFORD will not share in the
portion of the recovery, if any, that is payment for
"willful infringement."
13.2 Should either STANFORD or RIGEL commence a suit under the
provisions of Section 13.1 and thereafter elect to abandon the same, it shall
give timely notice to the other party who may, if it so desires, continue
prosecution of such suit; PROVIDED, HOWEVER, that the sharing of expenses and
any recovery in such suit shall be as agreed upon between STANFORD and RIGEL.
14. OTHER LICENSEE(S) OF STANFORD
14.1 If during the Exclusivity Term STANFORD discusses with, or has
received an offer from, a third party (a "Potential Licensee") with respect to
an opportunity for such Potential Licensee to obtain a license under the
Licensed Technology within the Licensed Field of Use, STANFORD may so notify
RIGEL. Such notice shall specify the field within which such Potential Licensee
desires to obtain a license under the Licensed Technology (the "Field of
Interest"). Within thirty (30) days after RIGEL receives a notice from STANFORD
pursuant to this Section 14.1, the parties will meet to discuss RIGEL's current
activities directed toward, or
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
11.
<PAGE>
plans for, developing Licensed Products useful within the Field of Interest.
If RIGEL does not demonstrate that it is then diligently conducting such
activities or provide plans for diligently developing Licensed Products
within the Field of Interest that are reasonably acceptable to STANFORD, then
RIGEL and STANFORD shall discuss in good faith reasonable modifications to
the Agreement that exclude the Field of Interest from the definition of the
Licensed Field of Use. STANFORD may thereafter license to such Potential
Licensee the Licensed Technology in the Field of Interest.
14.2 If STANFORD has not entered into an agreement with a Service
Provider outside the Licensed Field of Use during the Exclusivity Term, then
after the expiration of the Exclusivity Term STANFORD and RIGEL agree to discuss
in good faith how to modify appropriately the definition of the Licensed Field
of Use to enable STANFORD to increase the interest of Service Providers in
obtaining a license under the Licensed Technology outside any modified Licensed
Field of Use.
15. SUBLICENSE(S)
15.1 RIGEL may grant sublicense(s) to its corporate partners in
conjunction with a sublicense of RIGEL's proprietary technology other than the
Licensed Technology and Improvements; provided that the Licensed Technology is
applicable to the field within which RIGEL and such corporate partner are
collaborating.
15.2 Any sublicense(s) granted by RIGEL under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant sublicenses to a third parties (subject to
Section 15.4); and
(b) The earned royalty rate specified in the sublicense(s) may
be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 7, 8, and 9 for the benefit of STANFORD and provide for the transfer of
all obligations, including the payment of royalties specified in such
sublicense(s), to STANFORD or its designee, in the event that this Agreement is
terminated if such sublicenses remain in effect after termination of this
Agreement.
15.3 RIGEL agrees to provide STANFORD with a copy of any sublicense
granted pursuant to this Article 15.
15.4 STANFORD agrees that RIGEL and/or its permitted sublicensee(s) may
(i) distribute Licensed Products through their normal channels, and (ii)
contract for the manufacture of Licensed Products with one or more third
parties.
16. TERMINATION
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
12.
<PAGE>
16.1 RIGEL may terminate this Agreement by giving STANFORD notice in
writing at least thirty (30) days in advance of the effective date of
termination selected by RIGEL.
16.2 STANFORD may terminate this Agreement if RIGEL:
(a) is in default in payment of royalties or providing of
reports;
(b) is in breach of any provision hereof (subject to Section
5.2); or
(c) intentionally provides any false report;
and fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof by STANFORD.
16.3 Surviving any termination are:
(a) RIGEL's obligation to pay royalties accrued or accruable;
(b) any cause of action or claim of RIGEL or STANFORD, accrued
or to accrue, because of any breach or default by the other party; and
(c) the provisions of Sections 3.2, 3.5 and Articles 7, 8 and
9.
17. ASSIGNMENT
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
18. ARBITRATION
18.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
18.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgement upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
18.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
18.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
13.
<PAGE>
19. NOTICES
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail, registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
STANFORD University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: Rigel, Inc.
772 Lucerne Drive
Sunnyvale, CA 94086
Attention: President
Either party may change its address upon written notice to the other
party.
20. WAIVER
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
21. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California.
22. SEVERABILITY; ENTIRE AGREEMENT
If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be in any way affected or impaired thereby. This Agreement
embodies the entire understanding of the parties and shall supersede all
previous communications, representations or understandings, either oral or
written, between the parties relating to the subject matter hereof. No
amendment or modification hereof shall be valid or binding upon the parties
unless made in writing and signed by duly authorized representatives of both
parties.
23. COUNTERPARTS
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
14.
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This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one legal
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Katherine Ku
-------------------------
Name Katherine Ku
------------------------------
Title Director
-----------------------------
Date April 15, 1998
------------------------------
RIGEL
Signature /s/ James M. Gower
-------------------------
Name James M. Gower
------------------------------
Title President & CEO
-----------------------------
Date 3/27/98
------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
15.
<PAGE>
EXHIBIT A
LICENSED BIOLOGICAL MATERIALS
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
16.
<PAGE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
17.
<PAGE>
CERTAIN CONFIDENTIAL INFORAMTION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
EXHIBIT 10.7
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT ("the Agreement") is
entered into as of January 31, 1999 ("Effective Date") by and between PFIZER
INC, a Delaware corporation, having an office at 235 East 42nd Street, New
York, New York 10017-5755 ("Pfizer") and RIGEL PHARMACEUTICALS, INC., a
Delaware corporation, having an address at 772 Lucerne Drive, Sunnyvale,
California 94086 ("Rigel"). Pfizer and Rigel and their Affiliates may be
referred to herein individually as a "Party" or collectively as the "Parties."
WHEREAS, Rigel has the capability and expertise to undertake research
for the discovery of novel and selective elements of the IL-4 signaling
pathway involved in the modulation of IgE synthesis that are suitable targets
for an IgE synthesis-inhibitor, lead identification program;
WHEREAS, Rigel owns the patents, patent applications and licenses with
third parties set forth in Exhibit A attached to and made a part of this
Agreement with respect to retroviral expression technology and cell lines
engineered for identifying components of the IL-4 pathway; and
WHEREAS, Pfizer has the capability to undertake research for the
discovery and evaluation of biosynthetic, biochemical and organic matter for
treatment of disease and also the capability for clinical analysis,
manufacturing and marketing with respect to a wide variety of drugs for
medicinal use in human and animal health; and
WHEREAS, the Parties plan to seek patent protection for biological
elements that regulate IgE synthesis which will serve as molecular targets
for compounds from Pfizer's chemical library and patent protection for
Licensed Products which make up the subject matter of this Agreement;
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
Whenever used in this Agreement, the terms defined in this Section 1
shall have the meanings specified.
1.1 "AFFILIATE" means (a) any corporation or other legal entity
owning, directly or indirectly, fifty percent (50%) or more of the voting
capital shares or similar voting securities of a Party; (b) any corporation
or other legal entity fifty percent (50%) or more of the voting capital
shares or similar voting rights of which is owned, directly or indirectly, by
a Party; or (c) any corporation or other legal entity fifty percent (50%) or
more of the voting capital shares or similar voting rights of which is owned,
directly or indirectly, by a corporation or other legal
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
entity which owns, directly or indirectly, fifty percent (50%) or more of the
voting capital shares or similar voting securities of such Party.
1.2 "ANIMAL HEALTH PRODUCT" shall mean any Licensed Product intended
for animal patients.
1.3 "AREA" means research directed to the discovery of cDNA, peptides
or proteins within the IL-4 signaling pathway that selectively regulate IgE
synthesis further described in the Research Plan.
1.4 "DISCOVERY MILESTONE" shall have the meaning given to that term
in Section 3.3.
1.5 "EFFECTIVE DATE" is January 31, 1999.
1.6 "HIGH THROUGHPUT SCREEN" or "HTS" means a primary assay performed
by or under the direction of Pfizer that incorporates a Molecular Target for
the purpose of identifying potential Licensed Products.
1.7 "HUMAN HEALTH PRODUCT" shall mean any Licensed Product intended
for human patients.
1.8 "LICENSED PRODUCT" means any chemical or biological entity that
(a) directly, selectively and specifically modulates the activity of a
Molecular Target; (b) was identified by Pfizer in HTS; (c) is to be used for
the management of any disease or any therapeutic indication in human or
animal patients; and (d) the manufacture, use or sale of which would infringe
Valid Claims.
1.9 "MOLECULAR TARGET" shall mean any cDNA, peptide or protein
identified in the Research Program.
1.10 "NET SALES" means the gross amount invoiced by Pfizer, its
Affiliates, or any sublicensee of Pfizer for sales to a third party or third
parties of Licensed Products, less normal and customary trade discounts
actually allowed, rebates, returns, credits, taxes the legal incidence of
which is on the purchaser and separately shown on Pfizer's or any sublicensee
of Pfizer's invoices and transportation, insurance and postage charges, if
prepaid by Pfizer or any sublicensee of Pfizer and billed on Pfizer's or any
sublicensee of Pfizer's invoices as a separate item.
1.11 "PRODUCT PATENT RIGHTS" shall mean all the Valid Claims covering
Licensed Products, whether domestic or foreign, including all continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all reissues, re-examinations and extensions thereof.
1.12 "PFIZER COMPOUND LIBRARY" means those Pfizer compounds which it
may use for HTS.
[ * ] = CERTAIN CONFIDENTIAL INFORAMTION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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1.13 "PFIZER CONFIDENTIAL INFORMATION" means all information about any
element of Pfizer Technology or Program Technology, except for Program
Technology assigned to Rigel pursuant to Section 5.1, which is disclosed by
Pfizer to Rigel and designated "Confidential" in writing by Pfizer at the
time of disclosure or within thirty (30) days following disclosure to Rigel
to the extent that such information as of the date of disclosure to Rigel is
not (i) demonstrably known to Rigel other than by virtue of a prior
confidential disclosure to Rigel by Pfizer; (ii) disclosed in published
literature, or otherwise generally known to the public through no fault or
omission of Rigel; or (iii) obtained from a third party free from any
obligation of confidentiality to Pfizer prior to disclosure to Rigel by
Pfizer.
1.14 "PFIZER TECHNOLOGY" means Technology that is or was developed by
employees of or consultants to Pfizer alone or jointly with third parties
prior to the Effective Date, but, in the case of consultants or third
parties, only to the extent Pfizer has the right to grant rights to such
Technology.
1.15 "PROGRAM INVENTIONS" shall have the meaning given to it in
Section 5.1.
1.16 "PROGRAM TECHNOLOGY" means Technology within the Area that is or
was developed by employees of or consultants to Pfizer or Rigel solely or
jointly with each other in the course of performing the Research Program;
PROVIDED, HOWEVER, that Rigel's peptide library, [ * ] cell line and [ * ]
cell line shall not be Program Technology and are owned by or exclusively
licensed to Rigel and deemed to be Rigel Technology and that the Pfizer
Compound Library shall not be Program Technology and is owned by or
exclusively licensed and deemed to be Pfizer Technology.
1.17 "RECOMMENDED FOR DEVELOPMENT NOTICE" or "RFD" shall have the
meaning provided in the Research Plan.
1.18 "RESEARCH COMMITTEE" shall have the meaning given to that term in
Section 2.5.1.
1.19 "RESEARCH PERIOD" means the period beginning on the Effective
Date and ending on the date the Research Program terminates as provided in
Section 8.1.
1.20 "RESEARCH PLAN" means the written plan describing the research
and development to be carried out by Rigel and Pfizer pursuant to this
Agreement, as amended from time to time. The initial Research Plan is
appended to this Agreement as Exhibit B.
1.21 "RESEARCH PROGRAM" is the collaborative research program in the
Area conducted by Pfizer and Rigel pursuant to the Research Plan.
1.22 "RIGEL CONFIDENTIAL INFORMATION" means all information about any
element of the Rigel Technology or Program Technology, except for Program
Technology assigned to Pfizer pursuant to Section 5.1, which is disclosed by
Rigel to Pfizer and designated "Confidential" in writing by Rigel at the time
of disclosure or within thirty (30) days following disclosure to Pfizer to
the extent that such information as of the date of disclosure to Pfizer is
not (i) demonstrably known to Pfizer other than by virtue of a prior
confidential disclosure to Pfizer
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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<PAGE>
by Rigel; (ii) disclosed in published literature, or otherwise generally
known to the public through no fault or omission of Pfizer; or (iii) obtained
from a third party free from any obligation of confidentiality to Rigel prior
to disclosure to Pfizer by Rigel.
1.23 "RIGEL PATENT RIGHTS" shall mean the Valid Claims in Rigel's
patents and patent applications, listed in Exhibit A, any patents granted
thereon, including any divisions, continuations, continuations-in-part,
renewals, extensions, reexaminations, reissues or foreign counterparts
thereof.
1.24 "RIGEL TECHNOLOGY" means Technology that is or was developed by
employees of or consultants to Rigel alone or jointly with, or licensed to
Rigel from, third parties prior to the Effective Date, but, in the case of
consultants or third parties, only to the extent Rigel has the right to grant
rights to such Technology.
1.25 "TARGET PATENT RIGHTS" shall have the meaning given to it in
Section 6.1.1.
1.26 "TECHNOLOGY" means and includes all unpatented materials,
technology, technical information, know-how, expertise and trade secrets.
1.27 "VALID CLAIM" means a claim within a patent or patent application
so long as such claim shall not have been disclaimed by the Parties or shall
not have been held invalid in a final decision rendered by a tribunal of
competent jurisdiction from which no appeal has been or can be taken.
2. COLLABORATIVE RESEARCH PROGRAM
2.1 PURPOSE. Rigel and Pfizer shall conduct the Research Program
throughout the Research Period. The objective of the Research Program is to
discover Molecular Targets and to discover and develop Licensed Products.
2.2 AMENDMENT TO RESEARCH PLAN. The Research Plan may be amended
from time to time by unanimous agreement of the Research Committee. Exhibit
B shall be revised as necessary to reflect each such amendment.
2.3 CONTINGENT LICENSE. If during the Research Period Rigel ceases
to do business or is unable to perform its duties and obligations as set
forth in the Research Plan, whether due to insolvency, bankruptcy or any
other reason, Pfizer shall have a non-exclusive license in the Area under the
Rigel Technology and under Rigel Patent Rights to carry out and complete the
Research Plan.
2.4 EXCLUSIVITY. Rigel agrees, during the Research Period, not to
conduct research itself or sponsor any other research, or engage in any
research sponsored with any third party in the Area except pursuant to the
Research Program.
2.5 RESEARCH COMMITTEE.
2.5.1 PURPOSE. Pfizer and Rigel shall establish a Research
Committee (the "Research Committee"):
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECRUITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(a) to review and evaluate progress of the Research
Program throughout the Research Period under the Research Plan;
(b) to prepare any amendments to the Research Plans;
(c) to coordinate and monitor publication of research
results obtained from and the exchange of information and materials that
relate to the Research Program (This function will survive the termination of
Research Period for a period of three (3) years).
2.5.2 Membership. Within ten (10) days of the Effective Date
each Party shall appoint, in its sole discretion, four (4) members to the
Research Committee. Substitutes may be appointed at any time. The members
initially shall be:
Pfizer Appointees: Rigel Appointees:
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
2.5.3 Co-Chairs. The Research Committee shall be chaired by two
(2) chairpersons, one appointed by Rigel and the other by Pfizer. The
Co-Chairs will have the responsibility to ensure that a Research Committee
meeting agenda is distributed to the Research Committee prior to the meeting.
2.5.4 Meetings. The Research Committee shall meet in person at
least quarterly, at places and on dates suggested by Pfizer and by Rigel in
turn. The location of the first meeting of the Research Committee shall be at
Pfizer's election. Representatives of Pfizer or Rigel or both, in addition
to members of the Research Committee, may attend such meetings at the
invitation of either Party.
2.5.5 Minutes. The Research Committee shall keep accurate
minutes of its deliberations which record all proposed decisions and all
actions recommended or taken. Drafts of the minutes shall be delivered to all
Research Committee members within fifteen (15) business days after each
meeting. The Party choosing the location of the meeting shall be responsible
for the preparation and circulation of the draft minutes. Draft minutes
shall be edited by the co-chairpersons and shall be issued in final form only
with their approval and agreement.
2.5.6 Decisions. All decisions of the Research Committee shall
be by the unanimous vote of its members.
2.5.7 Expenses. Pfizer and Rigel shall each bear all expenses,
including reasonable travel, related to the participation of their designated
members of the Research Committee, respectively.
2.6 REPORTS AND MATERIALS.
[*] = CERTAIN CONFIEDNTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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2.6.1 Reports. Pfizer and Rigel each shall furnish to the
Research Committee:
(a) summary written reports within fifteen (15) days
after the end of each three (3) month period during the Research Period,
describing its progress under the Research Plan; and
(b) a comprehensive written report within thirty (30)
days after the end of the Research Period, describing in detail the work
accomplished by it under the Research Plan during and discussing and
evaluating the results of such work.
2.6.2 Materials. Rigel shall provide the following Program
Technology to Pfizer:
(a) all Molecular Targets identified in the course of
the Research Program;
(b) all other Program Technology, including biological
materials, which is: specific to a Molecular Target which has been delivered
to Pfizer by Rigel pursuant to Section 2.6.2(a); necessary for Pfizer to
perform its obligations under the Research Program; or necessary for Pfizer
to perform HTS with delivered Molecular Targets;
PROVIDED, HOWEVER, that such Program Technology will not include the
transfer of any portion of Rigel's peptide libraries or Rigel Technology to
Pfizer or the transfer of the Pfizer compound library or any portion of it to
Rigel. Rigel agrees to supply reasonable quantities of Molecular Targets and
biological materials specific to such Molecular Targets to Pfizer for the
performance of the Research Program; and Pfizer agrees to supply reasonable
quantities of Molecular Targets to perform HTS; PROVIDED, HOWEVER, that if
either Party needs quantities of such materials which quantities are larger
than would otherwise be anticipated by the supplying Party, the Parties will
meet and discuss in good faith appropriate compensation to the supplying
Party for such supply.
2.6.3 Pfizer's Selection of Molecular Targets. Pfizer may, in
its sole, unfettered discretion, select for HTS during the Research Program
and the three (3) year period immediately following the Research Period, any
Molecular Target identified in the Research Program. [ * ]
2.6.4 Exclusivity of Molecular Targets. Molecular Targets for
which Pfizer has initiated HTS shall be exclusive to Pfizer and shall not be
conveyed to a third party in any manner by Rigel.
2.6.5 Reversion to Rigel. The following shall become Rigel
Technology, and Rigel shall have no obligations to Pfizer with respect to:
Molecular Targets which are not selected pursuant to Section 2.6.3; and any
Molecular Target for which Pfizer has failed to satisfy the due diligence
obligations set forth in Section 2.6.3; PROVIDED, HOWEVER, that no Molecular
Target for which Pfizer has initiated HTS shall revert to Rigel.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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2.7 LABORATORY FACILITIES AND PERSONNEL. Pfizer and Rigel shall
provide suitable laboratory facilities, equipment and personnel for the work
to be done under the Research Program.
2.8 DILIGENT EFFORTS. Rigel and Pfizer each shall use reasonably
diligent efforts to achieve the objectives of the Research Program.
2.9 KEY INVESTIGATOR. If during the Research Period Dr. Donald
Payan's association with Rigel, in the capacity as chief scientific officer
or a similar role ends for any reason and the Parties are unable to agree on
a successor acceptable to Pfizer, in its sole and unfettered discretion,
within one hundred eighty (180) days of his dissociation, Pfizer may
terminate this Agreement pursuant to Section 8.3.1.
3. PAYMENTS.
3.1 RESEARCH PROGRAM FUNDING.
3.1.1 Pfizer will fund the research to be performed by Rigel,
pursuant to the Agreement, according to the following schedule:
COMMITMENT YEAR ANNUAL COMMITMENT
1 [ * ]
2 [ * ]
The funding payments of [ * ] shall support the work of the equivalent of ten
(10) full time employees ("FTEs") of Rigel.
3.1.2 All funding payments shall be made quarterly in advance
for work scheduled to be performed by Rigel during any three (3) month
period, against Rigel's invoice for the FTEs allocated to the Research
Program for such three (3) month period. Adjustments as necessary to reflect
the work actually performed by Rigel shall be made at the end of each three
(3) month period and shall be reflected in Rigel's invoice for the next three
(3) month period. It is understood that all payments pursuant to this Section
are non-creditable and non-refundable. Rigel shall also furnish to Pfizer
the name and percent effort of each Rigel employee assigned to perform the
Research Plan during each three (3) month period.
3.1.3 The amount of the funding payment for each quarter shall
be based on the work in progress pursuant to the applicable Research Plan and
the associated annual budget for Research Program personnel (FTEs); provided,
however, that the aggregate amount of funding payments made in any commitment
year shall not exceed the annual commitment for such commitment year.
3.1.4 Rigel shall keep for three (3) years from the conclusion
of the Research Period complete and accurate records of its expenditures of
payments received by it pursuant to
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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this Research Agreement. The records shall conform to generally accepted
accounting practices (GAAP) as applied to similar companies similarly
situated. Pfizer shall have the right at its own expense during the Research
Period and during the subsequent three-year period to appoint an independent
certified public accountant reasonably acceptable to Rigel to inspect said
records to verify the accuracy of the FTE allocation, pursuant to the
Research Plan. Upon reasonable notice by Pfizer, Rigel shall make its
records available for inspection by the independent certified public
accountant during regular business hours at the place or places where such
records are customarily kept, to verify the accuracy of the FTE allocation.
This right of inspection shall not be exercised more than once in any
calendar year and not more than once with respect to records covering any
specific period of time. All information concerning such expenditures, and
all information learned in the course of any audit or inspection, shall be
deemed to be Rigel's Confidential Information. The failure of Pfizer to
request verification of any expenditures before or during the three-year
period shall be considered acceptance by Pfizer of the accuracy of such FTE
allocation, and Rigel shall have no obligation to maintain any records
pertaining to such report or statement beyond such three year period. The
results of such inspection, if any, shall be binding on the parties.
3.1.5 If Pfizer, in its sole, unfettered discretion, extends the
Research Program for a third year as set forth in Section 8.4, Pfizer shall
pay Rigel [ * ] with respect to the extension period on the same terms and
conditions set forth in this Section 3. The funding payments shall support
the work of ten (10) Rigel FTEs.
3.2 INITIAL PAYMENT. Within fifteen (15) days of the execution of
this Agreement, Pfizer will pay to Rigel a one time, non refundable,
noncreditable payment of [ * ]
3.3 DISCOVERY MILESTONE PAYMENTS. Within sixty (60) days after
Rigel's delivery to Pfizer of Molecular Targets meeting the D3/D4 criteria
set forth in Exhibit B and within thirty (30) days after Pfizer's selection,
in its sole, unfettered discretion, of a Molecular Target for HTS ("Discovery
Milestones"), as the case may be, Pfizer shall pay Rigel according to the
following schedule:
DISCOVERY STAGE DELIVERABLE MILESTONE PAYMENT
D3 Molecular Targets No. 1-3 $[ * ] each
D3 Molecular Targets No. 4-6 $[ * ] each
D3 Molecular Targets No. 7+ $[ * ] each
D4a/D4b Molecular Targets No.1-3 $[ * ] each
D4a/D4b Molecular Targets No.4-6 $[ * ] each
D4a/D4b Molecular Targets No.7+ $[ * ] each
HTS Molecular Target No.1 $[ * ]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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HTS Molecular Target No.2 $[ * ]
HTS Molecular Target No.3 $[ * ]
HTS Molecular Target No.4 $[ * ]
HTS Molecular Target No.5 $[ * ]
HTS Molecular Target No.6 $[ * ]
HTS Molecular Target No.7+ [ * ]
3.4 DISCOVERY MILESTONE PAYMENT CHARACTERISTICS. Discovery Milestone
payments are in addition to the other payments in this Section 3 and are
noncreditable and non-refundable. If Pfizer in its sole, unfettered
discretion, selects a Molecular Target for HTS which does not meet the
criteria for D3 or D4, such Molecular Target shall be deemed to have met both
D3 and D4 criteria for the purposes of the payment for Discovery Milestones
to Rigel under Section 3.3.
3.5 LIMITATION OF DISCOVERY MILESTONE PAYMENTS. Irrespective of the
number of Molecular Targets meeting the criteria or the number of Molecular
Targets selected by Pfizer for HTS, the aggregate amount which Pfizer shall
pay to Rigel for Discovery Milestones shall not exceed (a) [ * ] in the case
of Molecular Targets meeting the D3 criteria; (b) [ * ] in the case of
Molecular Targets which meet the D4a/D4b criteria; and (c) [ * ] in the case
of Molecular Targets selected for HTS in Pfizer's sole, unfettered discretion.
3.6 RECOMMENDED FOR DEVELOPMENT. Pfizer will pay to Rigel the sum of
[ * ] each time Pfizer issues a Recommended for Development Notice for a
Human Health Product and a sum of [ * ] each time Pfizer issues a RFD notice
for a Animal Health Product; PROVIDED, HOWEVER, that such payment will be
made only once for each compound identified in a specific Pfizer HTS for a
specific indication and will not include back-up compounds identified in the
same HTS for the same indication. These payments are noncreditable and
non-refundable, and shall be paid to Rigel within thirty (30) days of
Pfizer's issuance of the applicable RFD notice.
3.7 ROYALTIES ON NET SALES OF LICENSED PRODUCTS.
3.7.1 Pfizer shall pay Rigel a royalty based on the Net Sales of
each Licensed Product. Such royalty shall be paid with respect to each
country of the world from the date of the first commercial sale (the date of
the invoice of Pfizer or any sublicensee of Pfizer with respect to such sale)
of such Licensed Product in each such country until the expiration of the
last Product Patent Right to expire with respect to each such country and
each such Licensed Product. If the manufacture and sale of a Licensed
Product takes place in countries where there are no Product Patent Rights,
Pfizer will pay to Rigel a royalty based on the Net Sales of each Licensed
Product in each such country for ten (10) years after the first commercial
sale of such Licensed Product in such country.
3.7.2 Unpatented Products. Pfizer will commercialize only those
products derived or resulting from HTS which are covered by Product Patent
Rights. If, in the unlikely
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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<PAGE>
event, Pfizer determines in its absolute,
unfettered discretion to commercialize an unpatented product, it will meet with
Rigel to discuss additional compensation, if any, to Rigel, for use of the
Molecular Target on the basis of which Pfizer conducted HTS to identify such
product given Pfizer's advancement and commercialization of an unpatented
product will have involved extraordinary development costs to Pfizer.
3.8 ROYALTY RATES. The royalty paid each year shall be based on
increments of world-wide Net Sales with respect to each of the Licensed Products
according to the following schedule:
<TABLE>
<CAPTION>
HUMAN HEALTH PRODUCT ANIMAL HEALTH PRODUCT
Annual Net Sales (Dollars) Royalty Rate Royalty Rate
- --------------------------- ------------ ------------
<S> <C> <C>
$0-$500MM
[ * ] [ * ]
> $500MM < $750MM
[ * ] [ * ]
> $500MM < 1B
[ * ] [ * ]
> = $750MM
[ * ] [ * ]
> = $1B
[ * ] [ * ]
</TABLE>
3.9 PAYMENT DATES FOR ROYALTIES. Royalties shall be paid by Pfizer on
Net Sales within sixty (60) days after the end of each calendar quarter in which
such Net Sales are made. Such payments shall be accompanied by a statement
showing the Net Sales of each Licensed Product by Pfizer or any sublicensee of
Pfizer in each country, the applicable royalty rate for such Licensed Product,
and a calculation of the amount of royalty due, including any offsets.
3.10 ACCOUNTING FOR ROYALTIES. The Net Sales used for computing the
royalties payable to Rigel by Pfizer shall be computed in U.S. dollars, and
royalties shall be paid in U.S. dollars by wire transfer in immediately
available funds to a U.S. account designated by Rigel, or by other mutually
acceptable means. For purposes of determining the amount of royalties due, the
amount of Net Sales in any foreign currency shall be computed by (a) converting
such amount into U.S. dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as published in the Wall Street
Journal for the close of the last business day of the calendar quarter for which
the relevant royalty payment is to be made by Pfizer; and (b) deducting the
amount of any governmental tax, duty, charge, or other fee actually paid in
respect of such conversion into, and remittance of U.S. dollars.
3.11 RECORDS FOR ROYALTIES. Pfizer shall keep for three (3) years from
the date of each payment of royalties complete and accurate records of sales by
Pfizer, its Affiliates or sublicensees of each Licensed Product in sufficient
detail to allow the accruing royalties to be determined accurately. Rigel shall
have the right for a period of three (3) years after receiving any report or
statement with respect to royalties due and payable to appoint at its expense
(except as otherwise provided in this Section 3.11), an independent certified
public accountant reasonably acceptable to Pfizer to inspect the relevant
records of Pfizer, its Affiliates or
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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sublicensees to verify such report or statement. Pfizer, its Affiliates or
sublicensees shall make its records available for inspection by such
independent certified public accountant during regular business hours at such
place or places where such records are customarily kept, upon reasonable
notice from Rigel, to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any calendar year
nor more than once with respect to sales in any given period. Rigel agrees
to hold in strict confidence all information concerning royalty payments and
reports, and all information learned in the course of any audit or
inspection, except to the extent necessary for Rigel to reveal such
information in order to enforce its rights under this Agreement or if
disclosure is required by law. The failure of Rigel to request verification
of any report or statement during said three (3) year period shall be
considered acceptance of the accuracy of such report, and Pfizer shall have
no obligation to maintain records pertaining to such report or statement
beyond said three (3) year period. The findings of each inspection, if any,
shall be binding on both Parties.
3.12 MILESTONE PAYMENTS FOR LICENSED PRODUCTS. Pfizer shall pay
Rigel, within sixty (60) days of the completion of each event set forth below
("Event"), the payment listed opposite that Event. Payments shall be made in
U.S. dollars by wire transfer in immediately available funds to a U.S. bank
account designated by Rigel, or other mutually acceptable means. Pfizer
shall be obligated to make each payment only once with respect to each
Licensed Product affected by an Event and such payment for such Event shall
not be due with respect to any subsequent Licensed Product directed to a
Molecular Target and indication which has previously been the subject of the
same Event. With the exception of any such milestone paid to Rigel for the
occurrence of the earlier of Submission of IND or initiation of human
(Section 3.12.1(i)) or animal (Section 3.12.2(i)) clinical trials, payments
made by Pfizer pursuant to this Section 3.12 with respect to a Licensed
Product shall be credited against sums due to Rigel pursuant to Section 3.8
of this Agreement with respect to Net Sales of such Licensed Product. [ * ]
of the milestone payment paid to Rigel for commencement of Phase III human
clinical trials (Section 3.12.1(ii)) and submission of NADA for animal use
(Section 3.12.2 (ii)) shall be credited against royalty payments and [ * ] of
milestone payments paid to Rigel for NDA/PLA filing for human use (Section
3.12.1 (iii)) and for NADA/PLA approval in any country for animal use
(Section 3.12.2 (iii)); PROVIDED, HOWEVER, that the sums due pursuant to
Section 3.8 in any calendar year with respect to such Licensed Product shall
not be reduced by virtue of this credit by more than [ * ]:
3.12.1 HUMAN HEALTH PRODUCT
<TABLE>
<CAPTION>
EVENT AMOUNT (DOLLARS)
----- ----------------
<S> <C>
$ [ * ]
(i) Submission of INDA or initiation of human
clinical testing in any country (whichever
occurs first)
(ii) Commencement of Phase III human clinical $ [ * ]
trials in any country
(iii) NDA/PLA Filing in any country for human $ [ * ]
use
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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<PAGE>
3.12.2 ANIMAL HEALTH PRODUCT
<TABLE>
<CAPTION>
EVENT AMOUNT (DOLLARS)
----- ----------------
<S> <C>
(i) Submission of INAD or initiation of $ [ * ]
animal clinical testing in any country
(whichever occurs first)
(ii) Submission of NADA in any country for $ [ * ]
animal use
(iii) NADA/PLA Approval in any country for $ [ * ]
animal use
</TABLE>
For the purposes of the foregoing, "IND" "INAD" or "INDA" shall mean an
Investigational New Drug Application filed with the U.S. Food and Drug
Administration (FDA), or a similar filing made with a counterpart health
regulatory authority in another country; "NDA/PLA" or "NADA/PLA" shall mean a
New Drug Application, Product License Application, or other application for
authority to market a Licensed Product filed with the U.S. FDA or a counterpart
health regulatory agency in another country.
3.13 U.S. FUNDS. Each payment pursuant to this Agreement shall be paid
by Pfizer in U.S. currency by wire transfer in immediately available funds to an
account designated by Rigel, or by other mutually acceptable means. If a
payment due date is not otherwise specified in this Agreement, payment shall be
made within thirty (30) days after receipt and acceptance by Pfizer of the
invoice from Rigel.
4. TREATMENT OF CONFIDENTIAL INFORMATION
4.1 CONFIDENTIALITY
4.1.1 Pfizer and Rigel each recognize that the other's Confidential
Information constitutes highly valuable, confidential information. Subject to
the terms and conditions of the Agreement, Pfizer and Rigel each agree that
during the Research Period and for five (5) years thereafter, it will keep
confidential, and will cause its Affiliates to keep confidential, all Rigel
Confidential Information or Pfizer Confidential Information, as the case may be,
that is disclosed to it, or to any of its Affiliates pursuant to this Agreement.
Neither Pfizer nor Rigel nor any of their respective Affiliates shall use such
Confidential Information except as expressly permitted in this Agreement.
4.1.2 Pfizer and Rigel each agree that any disclosure of the
other's Confidential Information to any officer, employee or agent of the other
Party or of any of its Affiliates shall be made only if and to the extent
necessary to carry out its responsibilities under this Agreement and shall be
limited to the maximum extent possible consistent with such responsibilities.
Pfizer and Rigel each agree not to disclose the other's Confidential Information
to any third parties under any circumstance without written permission from the
other Party. Each Party shall take such action, and shall cause its Affiliates
to take such action, to preserve the confidentiality of each other's
Confidential Information as it would customarily take to preserve the
confidentiality of its own similar Confidential Information. Each Party, upon
the other's request, will return all
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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the Confidential Information disclosed to the other Party pursuant to this
Agreement, including all copies and extracts of documents, within sixty (60)
days of the request upon the termination of this Agreement except for one (1)
copy which may be kept for the purpose of complying with continuing
obligations under this Agreement.
4.1.3 Rigel and Pfizer each represent that all of its employees,
Affiliates and any consultants to such Party, participating in the Research
Program who shall have access to Pfizer Technology, Rigel Technology or Program
Technology and Pfizer Confidential Information and Rigel Confidential
Information are bound by agreement to maintain such information in confidence
with the same degree of care each Party holds it own confidential information.
4.2 PUBLICATION. Notwithstanding any matter set forth with
particularity in this Agreement to the contrary, results obtained in the course
of the Research Program may be submitted for publication following scientific
review by the Research Committee and subsequent approval by Rigel's and Pfizer's
managements, which approval shall not be unreasonably withheld. After receipt
of the proposed publication by both Pfizer's and Rigel's managements, written
approval or disapproval shall be provided within thirty (30) days for a
manuscript, within fourteen (14) days for an abstract for presentation at, or
inclusion in the proceedings of a scientific meeting, and within fourteen (14)
days for a transcript of an oral presentation to be given at a scientific
meeting.
4.3 PUBLICITY. Except as required by law, and except for approved press
releases which may be issued by each Party upon the signing of this Agreement,
neither Party may disclose the terms of this Agreement without the prior written
consent of the other Party; PROVIDED, HOWEVER, that Rigel may disclose the
terms, or provide copies, of this Agreement as necessary in the normal course of
business to bankers, investors and others bound by obligations of
confidentiality not to disclose such information to other third parties in order
to obtain financing.
4.4 PERMITTED DISCLOSURE.
4.4.1 If either Party is requested to disclose the Confidential
Information in connection with a legal or administrative proceeding or is
otherwise required by law to disclose the Confidential Information, such Party
will give the other Party prompt notice of such request. The disclosing Party
may seek an appropriate protective order or other remedy or waive compliance
with the provisions of this Agreement. If such Party seeks a protective order
or other remedy, the other Party will cooperate. If such Party fails to obtain
a protective order or waive compliance with the relevant provisions of this
Agreement, the other Party will disclose only that portion of Confidential
Information which its legal counsel determines it is required to disclose.
4.4.2 Disclosure of Inventions. Each Party shall promptly inform
the other about all inventions in the Area that are conceived, made or developed
in the course of carrying out the Research Program by employees of, or
consultants to, either of them solely, or jointly with employees of, or
consultants to the other.
5. INTELLECTUAL PROPERTY RIGHTS.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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5.1 OWNERSHIP. All Rigel Confidential Information, Rigel Technology and
Rigel Patent Rights shall be owned by Rigel. All Pfizer Confidential
Information, Pfizer Technology and Pfizer Patent Rights shall be owned by
Pfizer. Program Technology (including, without limitation, any patentable
invention or discovery) acquired, developed or made solely or jointly by
employees or agents of either Party during the course of the Research Program
("Program Inventions") shall be the property of Pfizer and deemed to be Pfizer
Confidential Information if it pertains to or is an improvement upon its HTS
compound library or a Licensed Product and shall be the property of Rigel and
deemed to be Rigel Confidential Information if it pertains to or is an
improvement upon Rigel Patents, Rigel Technology or pertains to or is an
improvement upon Molecular Targets which are not selected for HTS by Pfizer.
Each Party shall cooperate with the other in completing any patent applications
relating to Program Inventions, and in executing and delivering any instrument
required to assign, convey or transfer to such other Party its interest, as
provided in the preceding sentence.
5.2 GRANTS OF RESEARCH LICENSES.
5.2.1 Program License. Rigel and Pfizer each grants to the other a
nonexclusive, worldwide, royalty-free license during the Research Period,
including the right to grant sublicenses to Affiliates, to make and use
Confidential Information, Program Technology and Product Patent Rights for the
purpose of performing the Research Program; provided, however, that the other
Party shall not acquire, by virtue of this Section or any other Section, any
rights in the following:
(a) Rigel's peptide libraries;
(b) the Pfizer Compound Library; or
(c) any compounds active in the HTS which Pfizer chooses,
in its sole, unfettered discretion, not to develop or otherwise include in
Program Technology.
5.2.2 Research License.
(a) Rigel grants Pfizer an irrevocable, nonexclusive,
worldwide license under its interest in Program Technology, except Rigel Core
Technology, and under all intangible technology, technical information,
know-how, expertise and trade secrets within Rigel Technology disclosed to
Pfizer during the course of the Research Program, solely for the purpose of
conducting research.
(b) Pfizer grants Rigel an irrevocable, nonexclusive,
worldwide license under Pfizer's interest in all intangible technology,
technical information, know-how, expertise and trade secrets within Program
Technology, and under all intangible technology, technical information,
know-how, expertise and trade secrets within Pfizer Technology disclosed to
Rigel during the course of the Research Program, solely for the purpose of
conducting research.
(c) For purposes of this Section 5.2.2, Rigel Core
Technology shall mean:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(i) Rigel's peptide libraries
(ii) Rigel's [*] cell lines
(iii) [*] cell lines
5.3 GRANT OF COMMERCIALIZATION LICENSE, TERM, RIGHTS AND OBLIGATIONS.
5.3.1 Grant to Pfizer. Rigel hereby grants to Pfizer an exclusive,
world-wide license, including the right to grant sublicenses, to research,
manufacture, use, sell, offer for sale and import Licensed Products under
Rigel's interest in the Product Patent Rights and the Molecular Targets.
5.3.2 Term of License. The term of the grant to Pfizer set forth
in Section 5.3.1 shall begin on the Effective Date. The duration of the term of
the grant shall be determined on a country-by-country basis. For any country in
which there are Product Patent Rights, the term shall end on the date of the
last to expire of the Product Patent Rights in such country. For all other
countries, the term shall expire on the tenth (10th) anniversary of the first
commercial sale of such Licensed Product in such country.
5.3.3 Paid-Up License. Upon the expiration of Pfizer's obligation
to pay royalties on Net Sales of Licensed Products as provided in Section 3.7.1,
the license granted in Section 5.3.1 shall become an irrevocable, nonexclusive
paid-up license.
5.3.4 Pfizer Obligations.
(a) Pfizer shall use reasonably diligent efforts to
exploit Licensed Products commercially employing similar effort to that applied
to other products similarly situated; provided, however, Pfizer may, in its
sole, unfettered judgement, discontinue the development or sale of any Licensed
Product in any country in the world or all of them.
(b) If Pfizer grants a sublicense pursuant to this Section
5, Pfizer shall guarantee that any sublicensee fulfills all of Pfizer's
obligations under this Agreement; PROVIDED, HOWEVER, that Pfizer shall not be
relieved of its obligations pursuant to this Agreement.
5.3.5 Technical Assistance. Rigel shall provide to Pfizer or any
sublicensee of Pfizer, at Pfizer's request and expense, any agreed technical
assistance reasonably necessary to enable Pfizer or such sublicensee to
manufacture, use, sell, offer for sale or import each Licensed Product and to
enjoy fully all the rights granted to Pfizer pursuant to this License Agreement;
provided, however, that Rigel is reasonably capable of providing that
assistance. Pfizer shall reimburse Rigel's costs of providing such assistance.
6. PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF PATENT
RIGHTS.
The following provisions relate to the filing, prosecution and maintenance
of patents and patent applications during the term of this Agreement:
6.1 FILING, PROSECUTION AND MAINTENANCE BY RIGEL.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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6.1.1 With respect to any Rigel interest in patents and patent
applications which claim a Molecular Target ("Target Patent Rights"), Rigel
shall have the obligation:
(a) to file applications for letters patent on any
invention included in Target Patent Rights; PROVIDED, HOWEVER, that Rigel shall
consult with Pfizer regarding countries in which such patent applications should
be filed and shall file patent applications in those countries where Pfizer
requests that Rigel file such applications; and, further provided, that Rigel,
at its option and expense, may file in countries where Pfizer does not request
that Rigel file such applications;
(b) to take all reasonable steps to prosecute all pending
and new patent applications included within Target Patent Rights;
(c) to respond to oppositions, nullity actions,
re-examinations, revocation actions and similar proceedings filed by third
parties against the grant of letters patent for such applications;
(d) to maintain in force any letters patent included in
Target Patent Rights by duly filing all necessary papers and paying any fees
required by the patent laws of the particular country in which such letters
patent were granted; and
(e) to cooperate fully with, and take all reasonable and
necessary actions requested by, Pfizer in connection with the preparation,
prosecution and maintenance of any letters patent included in Target Patent
Rights.
Rigel shall notify Pfizer in a timely manner of any decision to abandon
a pending patent application or an issued patent included in Target Patent
Rights. Thereafter, Pfizer shall have the option, at its expense, of
continuing to prosecute any such pending patent application or of keeping the
issued patent in force.
6.1.2 Copies of Documents. Rigel shall provide to Pfizer copies
of all patent applications that are part of Target Patent Rights prior to
filing, for the purpose of obtaining substantive comment of Pfizer patent
counsel. Rigel shall also provide to Pfizer copies of all documents relating
to prosecution of all such patent applications in a timely manner and shall
provide to Pfizer every six (6) months a report detailing their status.
6.1.3 Reimbursement of Costs for Filing Prosecuting and
Maintaining Target Patent Rights. Within ninety (90) days of rendered patent
services and thirty (30) days of receipt of invoices from Rigel, Pfizer shall
reimburse Rigel for all the costs of writing, filing, prosecuting, responding
to opposition and maintaining patent applications and patents in countries
where Pfizer requests that patent applications be filed, prosecuted and
maintained. Such reimbursement shall be in addition to payments described in
Section 3. However, Pfizer may, upon sixty (60) days notice, request that
Rigel discontinue filing or prosecution of patent applications in any country
and discontinue reimbursing Rigel for the costs of filing, prosecuting,
responding to opposition or maintaining such patent application or patent in
any country. Rigel shall pay all costs in those countries in which Pfizer
does not request that Rigel file, prosecute or maintain patent applications
and patents, but in which Rigel, at its option, elects to do so.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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6.1.4 Pfizer shall have the right to file on behalf of and as an
agent for Rigel all applications and take all actions necessary to obtain patent
extensions pursuant to 35 USC Section 156 and foreign counterparts for Target
Patent Rights described in Section 6.1 licensed to Pfizer. Rigel agrees, to
sign, at Pfizer's expense, such further documents and take such further actions
as may be requested by Pfizer in this regard.
6.2 FILING, PROSECUTION AND MAINTENANCE BY PFIZER. With respect to
Product Patent Rights claiming compounds in the Pfizer Compound Library or
Licensed Products, Pfizer shall have those rights and duties ascribed to Rigel
in Section 6.1, except that Pfizer will bear all related expenses.
6.3 DISCLAIMING A VALID CLAIM. Neither Party may disclaim a Valid Claim
within Target Patent Rights or Product Patent Rights without the consent of the
other.
6.4 ACTUAL OR THREATENED DISCLOSURE OR INFRINGEMENT. When information
comes to the attention of Pfizer to the effect that any Target Patent Rights or
Product Patent Rights relating to a Licensed Product have been or are threatened
to be unlawfully infringed, Pfizer shall have the right at its expense to take
such action as it may deem necessary to prosecute or prevent such unlawful
infringement, including the right to bring or defend any suit, action or
proceeding involving any such infringement. Pfizer shall notify Rigel promptly
of the receipt of any such information and of the commencement of any such suit,
action or proceeding. If Pfizer determines that it is necessary or desirable
for Rigel to join any such suit, action or proceeding, Rigel shall, at Pfizer's
expense, execute all papers and perform such other acts as may be reasonably
required to permit Pfizer to commence such action, suit or proceeding in which
case Pfizer shall hold Rigel free, clear and harmless from any and all costs and
expenses of litigation, including attorneys fees. If Pfizer brings a suit, it
shall have the right first to reimburse itself out of any sums recovered in such
suit or in its settlement for all costs and expenses, including attorney's fees,
related to such suit or settlement, and twenty percent (20%) of any funds that
shall remain from said recovery shall be paid to Rigel and the balance of such
funds shall be retained by Pfizer. Each Party shall always have the right to be
represented by counsel of its own selection and at its own expense in any suit
instituted by the other for infringement under the terms of this Section. If
Pfizer lacks standing and Rigel has standing to bring any such suit, action or
proceeding, then Rigel shall do so at the request of Pfizer and at Pfizer's
expense.
6.5 DEFENSE OF INFRINGEMENT CLAIMS. Rigel will cooperate with Pfizer at
Pfizer's expense in the defense of any suit, action or proceeding against Pfizer
or any sublicensee of Pfizer alleging the infringement of the intellectual
property rights of a third party by reason of the use of Target Patent Rights or
Product Patent Rights in the manufacture, use or sale of the Licensed Product.
Pfizer shall give Rigel prompt written notice of the commencement of any such
suit, action or proceeding or claim of infringement and will furnish Rigel a
copy of each communication relating to the alleged infringement. Rigel shall
give to Pfizer all authority (including the right to exclusive control of the
defense of any such suit, action or proceeding and the exclusive right after
consultation with Rigel, to compromise, litigate, settle or otherwise dispose of
any such suit, action or proceeding), at Pfizer's expense, including by
providing information and assistance necessary to defend or settle any such
suit, action or proceeding; PROVIDED, HOWEVER, Pfizer shall obtain Rigel's prior
consent to such part of any settlement which contemplates payment or other
action by Rigel or has a material adverse effect on Rigel's
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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business. If the Parties agree that Rigel should institute or join any suit,
action or proceeding pursuant to this Section, Pfizer may, at Pfizer's
expense, join Rigel as a defendant if necessary or desirable, and Rigel shall
execute all documents and take all other actions, including giving testimony,
which may reasonably be required in connection with the prosecution of such
suit, action or proceeding.
7. ACQUISITION OF RIGHTS FROM THIRD PARTIES. During the Research Period, each
Party which acquires technology, patents or information in the Area from third
parties during the course of the Research Program and wants to use such
technology, patents or information in its performance of the Research Program
shall obtain the prior written consent of the other Party, such consent not to
be unreasonably withheld, prior to using such technology, patents or information
in its performance of the Research Program. If the other Party gives the
acquiring Party consent to use such third party technology, patents or
information in the performance of the Research Program, such technology, patents
or information shall be deemed either the Confidential Information or the
Technology of the acquiring Party, as appropriate.
8. TERM, TERMINATION AND RENEWAL.
8.1 TERM. Unless sooner terminated or extended, the Research Period
shall expire two (2) calendar years from the Effective Date. Unless sooner
terminated or extended, the Agreement shall expire upon the expiration of
Pfizer's financial obligations under this Agreement.
8.2 EVENTS OF TERMINATION. The following events shall constitute an
event of termination ("Events of Termination"):
8.2.1 Rigel or Pfizer shall fail in any material respect to perform
or observe any term, covenant or understanding contained in this Agreement, and
any such failure shall remain unremedied for sixty (60) days after written
notice to the failing Party; or
8.2.2 If any written representation or warranty by Rigel or Pfizer,
or any of its officers, made under or in connection with this Agreement or any
other contemporaneous written agreement between the Parties shall prove to have
been incorrect in any material respect when made.
8.3 TERMINATION.
8.3.1 Upon the occurrence of any Event of Termination, the Party
not responsible may, by written notice to the other Party, terminate this
Agreement.
8.3.2 If Pfizer terminates this Agreement pursuant to Section
8.3.1, the terms and conditions of the Agreement, shall not terminate, but
instead shall terminate or expire according to its terms. If Rigel terminates
this Agreement pursuant to Section 8.3.1, the terms and conditions of the
Agreement shall terminate immediately.
8.3.3 Termination of this Agreement for any reason, with or without
cause, will not terminate the license granted pursuant to Section 5.2.2.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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8.3.4 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the Parties in any
Section which provide by its terms for performance by either Party subsequent to
termination;
(b) Rigel's right to receive all royalty, milestone or
other payments accrued hereunder; or
(c) any other remedies which either Party may otherwise
have.
8.4 RENEWAL. Pfizer shall have the option, in its sole, unfettered
discretion, of renewing the Research Program for a one (1) year extension period
on the same terms and conditions set forth in this Agreement by written notice
to Rigel. This option shall expire if not exercised by Pfizer at least three (3)
months prior to the termination date described in Section 8.1. If Pfizer
exercises this option, the Parties shall adopt an annual Research Plan during
the ensuing ninety (90) day period, including a budget. All other terms and
conditions of this Agreement shall otherwise remain in full force and effect
except as set forth in Section 3.1.5.
9. REPRESENTATIONS AND WARRANTIES.
9.1 REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES. Rigel and Pfizer
each represents and warrants as follows:
9.1.1 It is a corporation duly organized, validly existing and is
in good standing under the laws of the State of Delaware, is qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the conduct of its business or the ownership of its properties requires
such qualification and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.
9.1.2 The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action and do not
and will not (i) require any additional consent or approval of its stockholders
beyond the approvals already obtained; (ii) violate any provision of any law,
rule, regulations, order, writ, judgment, injunctions, decree, determination
award presently in effect having applicability to it or any provision of its
certificate of incorporation or by-laws; or (iii) result in a breach of or
constitute a default under any material agreement, mortgage, lease, license,
permit or other instrument or obligation to which it is a Party or by which it
or its properties may be bound or affected.
9.1.3 This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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9.1.4 It is not under any obligation to any person, or entity,
contractual or otherwise, that is conflicting or inconsistent in any respect
with the terms of this Agreement or that would impede the diligent and complete
fulfillment of its obligations.
9.1.5 It has good and marketable title to or valid leases or
licenses for, all of its properties, rights and assets necessary for the
fulfillment of its responsibilities under the Research Program, subject to no
claim of any third party other than the relevant lessors or licensors.
9.2 REPRESENTATIONS AND WARRANTIES OF RIGEL.
9.2.1 LICENSES GRANTED. Rigel represents and warrants to Pfizer
that it has the right to grant the licenses granted pursuant to this Agreement,
and that the licenses so granted do not conflict with or violate the terms of
any agreement between Rigel and any third party.
9.2.2 FINANCIAL STABILITY. Rigel represents and warrants as of the
Effective Date that it has received subsequent to October 31, 1998 cash
aggregating at least $7 million from equity investment and at least $3 million
from license fees and research support which, together with other cash on hand
and projected cash receipts, is sufficient to meet its projected cash expenses
during the next following 18 months exclusive, in each case, respectively, of
cash received or to be received from Pfizer and of cash Rigel is required to
expend to perform fully its obligations under the Research Program. Rigel
further represents and warrants that during the Research Period it will continue
to maintain sufficient financial resources to perform fully its obligations
under the Research Program and will furnish to Pfizer, not earlier than January
31, 1999 or more often than annually thereafter, within sixty (60) days after
receipt of Pfizer's written request therefor, reasonable evidence of sufficient
financial resources to perform fully its remaining obligations under the
Research Program; provided, however, the information contained in, and any
information furnished pursuant to Pfizer's request under, this Section 9.2.2 is
Confidential Information of Rigel and is subject to the requirements of Article
4 of this Agreement.
9.2.3 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state, or federal
governmental authority is required on the part of Rigel in connection with
Rigel's valid execution, delivery, or performance of this Agreement.
9.2.4 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of
Rigel consists, or will consist immediately prior to the Effective Date, of:
(a) Preferred Stock. 22,000,000 shares of Preferred Stock,
par value $.001, of which 665,000 shares have been designated Series A Preferred
Stock, all of which are issued and outstanding; 7,675,000 shares have been
designated Series B Preferred Stock, of which 7,500,000 are issued and
outstanding; 8,000,000 shares have been designated Series C Preferred Stock, of
which 7,386,843 are issued and outstanding; and 5,660,000 shares of Series D
Preferred Stock, of which 3,481,864 are issued and outstanding (before giving
effect to any transactions with Pfizer). The rights, privileges and preferences
of the Series A, Series B, Series C and Series D Preferred Stock are as stated
in the restated certificate of incorporation.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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(b) Common Stock. 35,000,000 shares of common stock, par
value $.001 ("Common Stock"), of which 2,675,333 shares are issued and
outstanding.
(c) The outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, and Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and were
issued in accordance with the registration or qualification provisions of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(d) Except for (i) the conversion privileges of the Series
A, Series B, Series C, and Series D Preferred Stock, (ii) the rights provided in
paragraph 2.3 of a certain Investor Rights Agreement separately furnished to
Pfizer, (iii) a warrant to purchase 175,000 shares of Series B Preferred Stock,
(iv) a warrant to purchase 131,578 shares of Series C Preferred Stock, and (v)
shares to be issued to Pfizer under a certain stock purchase agreement executed
on even date herewith, there are not outstanding any options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy
or stockholder agreements or agreements of any kind for the purchase or
acquisition from Rigel of any of its securities. In addition, Rigel has
reserved 5,325,000 shares of its Common Stock for purchase upon exercise of
options to be granted in the future under Rigel's 1997 Stock Option Plan (the
"Option Plan"). Rigel is not a party or subject to any agreement or
understanding, and, to the best of Rigel's knowledge, there is no agreement or
understanding between any persons that affects or relates to the voting or
giving of written consents with respect to any security or the voting by a
director of Rigel.
9.2.5 SUBSIDIARIES. As of the Effective Date, Rigel does not own
or control, directly or indirectly, any interest in any other corporation,
partnership, limited liability company, association, or other business entity.
Rigel is not a participant in any joint venture, partnership, or similar
arrangement.
9.2.6 PERMITS. Rigel has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of Rigel, and believes
it can obtain, without undue burden or expense, any similar authority for the
conduct of its business as presently planned to be conducted. Rigel is not in
default in any material respect under any of such franchises, permits, licenses
or other similar authority.
9.2.7 COMPLIANCE WITH OTHER INSTRUMENTS. Rigel is not in violation
or default in any material respect of any provision of its restated certificate
of incorporation or bylaws or in any material respect of any provision of any
mortgage, indenture, agreement, instrument, or contract to which it is a party
or by which it is bound or, to the best of its knowledge, of any federal or
state judgment, order, writ, decree, statute, rule, regulation or restriction
applicable to Rigel. The execution, delivery, and performance by Rigel of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, will not result in any such violation or be in material conflict with
or constitute, with or without the passage of time or giving of notice, either a
material default under any such provision or an event that results in the
creation of any material lien, charge, or encumbrance upon any assets of Rigel
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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or the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to Rigel, its
business or operations, or any of its assets or properties.
9.2.8 LITIGATION. There is no action, suit, proceeding, or
investigation pending or currently threatened against Rigel that questions the
validity of this Agreement or the right of Rigel to enter into this Agreement,
or to consummate the transactions contemplated hereby, or that might result,
either individually or in the aggregate, in any material adverse change in the
assets, business, properties, prospects, or financial condition of Rigel, or in
any material change in the current equity ownership of Rigel. The foregoing
includes, without limitation, any action, suit, proceeding, or investigation
pending or currently threatened involving the prior employment of any of Rigel's
employees, their use in connection with Rigel's business of any information or
techniques allegedly proprietary to any of their former employers, their
obligations under any agreements with prior employers, or negotiations by Rigel
with potential backers of, or investors in, Rigel or its proposed business.
Rigel is not a party to or, to the best of its knowledge, named in or subject to
any order, writ, injunction, judgment, or decree of any court, government
agency, or instrumentality. There is no action, suit, proceeding or
investigation by Rigel currently pending or that Rigel currently intends to
initiate.
9.2.9 DISCLOSURE. Rigel has provided Pfizer with all the
information reasonably available to it without undue expense that Pfizer has
requested for deciding whether to enter into this Agreement. This Agreement
does not contain any untrue statement of a material fact or, to the best of
Rigel's knowledge, omits to state a material fact necessary to make the
statements made by Rigel herein not misleading.
9.2.10 FINANCIAL STATEMENTS. Rigel has delivered to Pfizer its
unaudited balance sheet as at August 31, 1998 and unaudited statement of income
and cash flows for the eight months ending August 31, 1998 (collectively, the
"Financial Statements"). The Financial Statements, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of Rigel as of August 31, 1998;
provided, however, that the unaudited financial statements are subject to normal
recurring year-end audit adjustments (which are not expected to be material),
and do not contain all footnotes required under generally accepted accounting
principles.
9.2.11 CHANGES. Since August 31, 1998 there has not been:
(a) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties, prospects, assets, liabilities or financial condition of Rigel (as
such business is presently conducted and as it is presently proposed to be
conducted);
(b) any waiver or compromise by Rigel of a valuable right
or of a material debt owed to it;
(c) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by Rigel, except in the ordinary course
of business and that is not
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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material to the business, properties, prospects, or financial condition of
Rigel (as such business is presently conducted and as it is presently
proposed to be conducted);
(d) any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets, or other intangible assets;
(e) any resignation or termination of employment of any
key officer of Rigel and Rigel, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such officer;
(f) any mortgage, pledge, transfer of a security interest
in, or lien, created by Rigel, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(g) any loans or guarantees made by Rigel to or for the
benefit of its employees, stockholders, officers, or directors, or any members
of their immediate families, other than travel advances and other advances made
in the ordinary course of its business;
(h) any declaration, setting aside, or payment of any
dividend or other distribution of Rigel's assets in respect of any of Rigel's
capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by Rigel;
(i) any material adverse change in the business, property,
assets, liabilities, financial condition or results of operations of Rigel;
(j) any change (individually or in the aggregate), except
in the ordinary course of business, in the contingent obligations of Rigel by
way of guarantee, endorsement, indemnity, warranty or otherwise;
(k) except in the ordinary course of business, any
material change in the compensation arrangement of any of Rigel's employees,
officers or directors; or
(l) to the best of Rigel's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, prospects, or financial condition of Rigel (as such
business is presently conducted and as it is presently proposed to be
conducted).
9.2.12 PATENTS AND TRADEMARKS. To the best of its knowledge (but
without having conducted any special investigation), Rigel owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, and proprietary rights and
processes (including technology currently licensed from Stanford University)
necessary for its business as now conducted and as proposed to be conducted
without any conflict with, or infringement of the rights of, others. Rigel
currently licenses certain technology from Stanford University (the "Licensed
Technology") on an "as is" basis, with no representation or warranty from
Stanford University that such technology does not infringe the proprietary
rights of others. To Rigel's knowledge, Rigel has not, as of the date hereof,
received any claims from any third party alleging that the use of the Licensed
Technology infringes the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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proprietary rights of such party. Except for agreements with its own
employees or consultants and standard end-user license agreements, there are
no outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is Rigel bound by or a party to any options, licenses, or
agreements of any kind with respect to the patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information, and
proprietary rights and processes of any other person or entity, other than
the license agreements with Janssen Pharmaceutica N.V., Stanford University,
SUNY, and BASF. Rigel has not received any communications alleging that
Rigel has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights, trade
secrets, or other proprietary rights or processes of any other person or
entity. Rigel is not aware that any of its employees is obligated under any
contract (including licenses, covenants, or commitments of any nature) or
other agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such employee's
best efforts to promote the interests of Rigel or that would conflict with
Rigel's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of Rigel's business by the
employees of Rigel, nor the conduct of Rigel's business as proposed, will, to
the best of Rigel's knowledge, conflict with or result in a breach of the
terms, conditions, or provisions of, or constitute a default under, any
contract, covenant, or instrument under which any of such employees is now
obligated. Rigel is not aware of any violation by a third party of any of
Rigel's patents, licenses, trademarks, service marks, tradenames, copyrights,
trade secrets or other proprietary rights.
9.2.13 EMPLOYEES; EMPLOYEE COMPENSATION. There is no strike, labor
dispute or union organization activities pending or, to the best of Rigel's
knowledge, threatened between it and its employees. None of Rigel's employees
belongs to any union or collective bargaining unit. To the best of its
knowledge, Rigel has complied in all material respects with all applicable state
and federal equal opportunity and other laws related to employment. To the best
of Rigel's knowledge, no employee of Rigel is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee with Rigel, or any other party because of the
nature of the business conducted or presently proposed to be conducted by Rigel
or to the use by the employee of his or her best efforts with respect to such
business. Rigel is not a party to or bound by any currently effective employment
contract, deferred compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement, or other employee compensation agreement,
except as entered into in the ordinary course of business. Rigel is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with Rigel, nor does Rigel have a present intention
to terminate the employment of any of the foregoing. Subject to general
principles related to wrongful termination of employees, the employment of each
officer and employee of Rigel is terminable at the will of Rigel.
9.2.14 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and officer of Rigel has executed a Proprietary Information and
Inventions Agreement. Each consultant to Rigel has executed a Consulting
Agreement containing confidentiality and assignment of inventions provisions
similar to those included in the Proprietary Information and Inventions
Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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9.2.15 TAX RETURNS, PAYMENTS, AND ELECTIONS. Rigel has timely filed
all tax returns and reports (federal, state and local) as required by law.
These returns and reports are true and correct in all material respects. Rigel
has paid all taxes and other assessments due, except those contested by it in
good faith. Rigel has not elected pursuant to the Internal Revenue Code of
1986, as amended ("Code"), to be treated as an S corporation or a collapsible
corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has
it made any other elections pursuant to the Code (other than elections that
relate solely to methods of accounting, depreciation, or amortization) that
would have a material effect on the business, properties, prospects, or
financial condition of Rigel. Rigel has never had any tax deficiency proposed
or assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax or governmental charge.
None of Rigel's federal income tax returns and none of its state income or
franchise tax or sales or use tax returns has ever been audited by governmental
authorities.
9.2.16 INSURANCE. Rigel has in full force and effect fire and
casualty insurance policies, with extended coverage, in amounts customary for
companies similarly situated to Rigel.
9.2.17 ENVIRONMENTAL AND SAFETY LAWS. Rigel is not in violation of
any applicable statute, law, or regulation relating to the environment or
occupational health and safety, and to the best of its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law, or regulation.
9.2.18 REAL PROPERTY HOLDING CORPORATION. Rigel is not a real
property holding corporation within the meaning of Code section 897(c)(2) and
any regulations promulgated thereunder.
9.2.19 FDA APPROVAL. The U.S. Food and Drug Administration has not
delivered a letter of nonapproval, nor threatened to deliver such a letter, with
respect to any product manufactured, marketed, licensed or developed by Rigel,
or any product which Rigel intends to manufacture, market, license or develop.
9.2.20 INVESTMENT COMPANY ACT. Rigel is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
10. COVENANTS OF RIGEL AND PFIZER OTHER THAN REPORTING REQUIREMENTS.
Throughout the term of the Agreement, Rigel and Pfizer each shall:
10.1 maintain and preserve its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in good standing in each jurisdiction in
which such qualification is from time to time necessary or desirable in view of
their business and operations or the ownership of their properties.
10.2 comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government authority to
the extent necessary to conduct the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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Research Program, except for those laws, rules, regulations, and orders it
may be contesting in good faith.
11. INDEMNIFICATION.
Pfizer will indemnify Rigel for damages, settlements, costs, legal fees and
other expenses incurred in connection with a claim against Rigel based on a
Licensed Product or any action or omission of Pfizer, its agents or employees
whether such claims allege negligence, willful misconduct or strict liability,
related to the obligations of Pfizer under this Agreement. Pfizer, in its sole
discretion, shall choose legal counsel, shall control the defense of such claim
or action and shall have the right to settle same on such terms and conditions
it deems advisable.
12. NOTICES.
All notices and invoices shall be in writing mailed via certified mail,
return receipt requested, courier, or facsimile transmission with transmission
confirmed addressed as follow, or to such other address as may be designated
from time to time:
IF TO PFIZER: To Pfizer at its address as set forth at the beginning of
this Agreement.
Attention: President, Central Research
with copy to: Office of the General Counsel
Fax:
IF TO RIGEL: Rigel at its address as set forth at the beginning of this
Agreement.
Attention: President
Fax: (408) 736-1588
Notices shall be deemed given as of the date received or five (5) days after
dispatch.
13. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
14. MISCELLANEOUS.
14.1 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective legal representatives,
successors and permitted assigns.
14.2 HEADINGS. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
14.3 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original. Signatures may
be transmitted via facsimile, thereby constituting the valid signature and
delivery of this Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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14.4 AMENDMENT, WAIVER. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each Party or, in the case of waiver, by the Party or
Parties waiving compliance. The delay or failure of any Party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any Party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
14.5 NO THIRD PARTY BENEFICIARIES. No third party including any employee
of any Party to this Agreement, shall have or acquire any rights by reason of
this Agreement. Nothing contained in this Agreement shall be deemed to
constitute the Parties partners with each other or any third party.
14.6 ASSIGNMENT AND SUCCESSORS. This Agreement may not be assigned by
either Party, except that each Party may assign this Agreement and the rights
and interests of such Party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such Party with or
into such corporations.
14.7 FORCE MAJEURE. Neither Pfizer nor Rigel shall be liable for failure
of or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of Pfizer or
Rigel.
14.8 SEVERABILITY. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the Parties that the remainder of the
Agreement shall not be affected so long as the essential benefits of this
Agreement remain enforceable and obtainable.
14.9 INTEGRATION. This Agreement supersedes all other agreements and
understandings between the parties with respect to the subject matter discussed
herein.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives.
Agreed: Pfizer Inc and Affiliates Agreed: Rigel Pharmaceuticals, Inc. and
Affiliates
By: /s/ George M. Milne Jr. By: /s/ James M. Gower
------------------------------ --------------------------
George M. Milne, Jr. James M. Gower
President Chief Executive Officer
Pfizer Central Research Rigel Pharmaceuticals, Inc.
Date: 1/29/99 Date 1/26/99
--------------------------- -------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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EXHIBIT A
RIGEL PATENT RIGHTS
<TABLE>
<CAPTION>
LICENSED TITLE/MATERIAL INVENTOR PATENT
TECHNOLOGIES FILING
DATE
<S> <C> <C> <C>
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
<TABLE>
<CAPTION>
PATENTS TITLE AUTHOR PATENT
FILING
DATE
<S> <C> <C> <C> <C>
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORAMTION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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EXHIBIT B
RESEARCH PLAN
1. GOALS
The goal of this collaboration between Rigel and Pfizer is to identify
novel and selective elements of the IL-4 signaling pathway that are suitable
targets for an IgE synthesis inhibitor, lead identification program.
2. RESEARCH PLAN
The research strategy for the first two years of the Pfizer-Rigel
collaboration is shown in FIGURE 1. During this time, research activities will
take place primarily at Rigel towards the goal of discovering novel Molecular
Targets in the IL-4 signaling pathway that can be further developed by Pfizer
into high throughput screens (HTS) at Pfizer to find agents to inhibit IL-4
signaling and IgE synthesis for the treatment of allergic disease and asthma.
In brief, Rigel uses intracellular retrovirus expression of peptide libraries in
an IL-4 responsive reporter cell line to discover peptide inhibitors of the IL-4
signaling pathway. [ * ]
2.1 DELIVERABLES AND TIMELINE
2.1.1 RESEARCH ACTIVITIES, [ * ]
DELIVERABLE 1 (D1)--ISOLATION AND CONFIRMATION OF INHIBITORY
PEPTIDES:
(a) [ * ]
(b) [ * ]
2.1.2 RESEARCH ACTIVITIES, [ * ]
DELIVERABLE 2 (D2)--IgE SYNTHESIS INHIBITION AND SPECIFICITY
OF INDIVIDUAL PEPTIDE HITS:
[ * ]
(a) [ * ]
(b) [ * ]
D2 CRITERIA: Section 2.1.2(a) shall be known as D2a criteria, and Section
2.1.2(b) above shall be known as D2b criteria.
DELIVERABLE 3 (D3)--CLONING OF FULL LENGTH CDNAS OF PROTEINS BINDING OF
INHIBITORY PEPTIDES:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
<PAGE>
Rigel will deliver full length sequences of protein binding partners of
inhibitory peptides. [ * ]
D3 MILESTONE CRITERIA: [ * ]
At Pfizer's sole, unfettered discretion, a D3 milestone may be paid to
Rigel by Pfizer in the absence of one or more of the first three criteria being
met.
2.1.3 RESEARCH ACTIVITIES, [ * ]
DELIVERABLE 4 (D4)--VALIDATION OF CDNAS IDENTIFIED IN
DELIVERABLE 3 (D3):
(a) [ * ]
(b) [ * ]
D4 MILESTONE CRITERIA: [ * ]
At Pfizer's sole, unfettered discretion, a D4 milestone may be paid to
Rigel by Pfizer in the absence of one or more of the criteria being met.
2.2 PROGRAM TECHNOLOGIES
Certain reagents will be enabling to Pfizer's efforts to validate Molecular
Targets, to progress Molecular Targets to the HTS phase, and to engage in
research in the IgE synthesis inhibition area. Since they are not explicitly
stated elsewhere, the following reagents will be considered Program
Technologies: [ * ]
2.3 PROGRESSION OF MOLECULAR TARGETS AT PFIZER
Once potential Molecular Targets are available, Pfizer will have the sole
unfettered discretion of which to select for progression to HTS and beyond.
[ * ]
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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Rigel-Pfizer Collaboration
FIGURE 1 [ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
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FIGURE 2
RIGEL: SELECTION OF PEPTIDE INHIBITORS OF IL-4 SIGNALING (0-12 months)
[CHART]
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
EXHIBIT 10.8
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT ("Agreement") is entered into as of May
26th, 1999 ("Effective Date") by and between RIGEL PHARMACEUTICALS, INC., a
Delaware corporation ("Rigel") with its offices at 240 East Grand Avenue,
South San Francisco, CA 94080, and NOVARTIS PHARMA AG, a Swiss corporation
("Novartis") with offices at Lichtstrasse 35, CH-4058, Basel, Switzerland
(collectively, "Parties"; individually, a "Party").
RECITALS
WHEREAS, Rigel is a leader in the discovery and validation of
intracellular target molecules involved in the modulation of human disease; and
WHEREAS, Novartis is engaged in the research, development, marketing,
manufacture and distribution of pharmaceutical compounds useful in treating or
preventing human diseases and conditions; and
WHEREAS, Rigel and Novartis desire to enter into a collaborative
relationship to conduct research on intracellular target molecules and to
discover, develop and manufacture pharmaceutical products useful for treating or
preventing diseases associated with human disease; and
WHEREAS, Novartis is purchasing two million (2,000,000) shares of Rigel
Series D Preferred Stock with a total value of US$4 million pursuant to a stock
purchase agreement between the Parties of even date herewith (the "Stock
Purchase Agreement"), and the Parties are further entering into an Equity Option
Agreement pursuant to which Novartis may purchase up to an additional US$10
million in value of Rigel equity;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties agree as follows:
1. DEFINITIONS
As used herein, the following terms (whether used in their singular or
plural form) shall have the following meanings:
"AFFILIATE" shall mean, with respect to a Party to this Agreement, any
other entity, whether de jure or de facto, which directly or indirectly
controls, is controlled by, or is under common control with, such Party. A
business entity or Party shall be regarded as in control of another business
entity if it owns, or directly or indirectly controls, at least fifty percent
(50%) (or such lesser percentage which is the maximum allowed to be owned by a
foreign entity in a particular jurisdiction) of the voting stock or other
ownership interest of the other entity, or if it directly or indirectly
possesses the power to direct or cause the direction of the management and
policies of the other entity by any lawful means whatsoever.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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"AT-NOVARTIS PROJECT" shall mean a Program of Research performed by
Novartis as provided in Section 4.2 hereof.
"B-CELL PROJECT" shall mean the Program of Research directed to the
identification of Novel Validated Targets involved in the process of B-Cell
activation, as the Program of Research is more fully described in Exhibit A-2
hereto.
"COLLABORATION PROJECT" shall mean a Joint Project or an At-Novartis
Project.
"COMMENCEMENT DATE" shall mean the date upon which a Collaboration
Project shall commence as set forth in Exhibit B or as determined pursuant to
the provisions of Section 2.2 hereof.
"COMPOUND SCREENING" shall mean the use of a primary assay for testing
biological or chemical materials, including chemical materials coming out of
high-throughput screening, to determine whether they show pharmaceutically
relevant activity.
"CONFIDENTIAL INFORMATION" shall mean any invention, discovery, patent
application or claim, trade secret, idea, improvement or other work of
authorship, any process, formula, data, program, drawing, information, price,
technique, sample, compound, extract, media, vector and/or cell line and
procedures and formulations for producing any such sample, compound, extract,
media, vector and/or cell line, any process, formula or data relating to any
research project, work in process, future development, engineering,
manufacturing, marketing, servicing, financing or personnel matter relating to a
Party, its present or future products, sales, suppliers, clients, customers,
employees, investors, or business, whether in oral, written, graphic or
electronic form.
"CONTROL" shall mean the possession of the ability to grant a license
or sublicense to know-how or patents without violating the terms of any
agreement or other arrangement with, or the rights of, any Third Party.
"COOPERATION MANAGEMENT COMMITTEE" or "CMC" shall mean the committee
formed pursuant to Section 3.1.
"EXCLUSIVITY TERM" shall have the meaning assigned to it in Section
5.2.
"EXTENSION FEE" shall have the meaning assigned to it in Section 7.5.
"FSC-STATUS" or "Final Selected Compound Status" shall mean the point
at which a Product is declared, following Novartis' standard compound
development procedures, an 'FSC Compound' or equivalent status by Novartis'
Research Management Board or some other similar body, which declaration
authorizes the initiation of preclinical development programs aimed, INTER ALIA,
at the detailed investigation of those toxicological, bioavailability,
pharmacokinetic and formulation parameters whose successful completion will
allow progression of the Product to Phase I Clinical Trials.
"FTE" shall mean the equivalent of a full-time twelve (12) months
(including normal vacations, sick days and holidays) work of a person,
carried out by one or more employees or consultants of a Party, each of whom
devotes all or a portion of his or her time to a Collaboration Project;
provided, however, that each Party understands and agrees that the other
Party retains complete discretion to change the identity, the frequency and
time which
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any individual employee devotes to a Collaboration Project. Scientific work
on or directly related to a Collaboration Project to be performed by a
Party's employees or consultants can include, but is not limited to,
experimental laboratory work, recording and writing up results, reviewing
literature and references, holding scientific discussions, managing and
leading scientific staff, and carrying out Research Cooperation management
duties (including service on the Cooperation Management Committee).
"JOINT INVENTION" shall have the meaning assigned to it in Section 8.1.
"JOINT PROJECT" shall mean a Program of Research which Novartis and
Rigel agree will be conducted collaboratively as provided in Section 4.1 hereof.
"JOINT TECHNOLOGY" shall mean Know-How and Patents conceived or reduced
to practice by at least one employee of Novartis and at least one employee of
Rigel during the course of a Program of Research.
"KNOW-HOW" shall mean any and all tangible or intangible know-how,
trade secret, invention (whether or not patentable), data, pre-clinical and
clinical result, physical, chemical or biological material, and other
information.
"LEAD COMPOUND" shall mean an active compound identified by Rigel in
the course of Compound Screening on the basis of a Novel Validated Target
pursuant to Section 5.6.
"MILESTONE EVENT" shall have the meaning assigned to it in Section 7.2.
"MILESTONE PAYMENT" shall have the meaning assigned to it in Section
7.2.
"NOTICE DATE" shall have the meaning assigned to it in Section 4.1.4
and 4.2.4.
"NOVARTIS KNOW-HOW" shall mean any Know-How that is necessary and
useful in a Program of Research and that Novartis owns or Controls on the
Effective Date, and any replication or any part of such information or material.
"NOVARTIS PATENTS" shall mean all Patents which claim inventions or
discoveries necessary and useful in a Program of Research and that that Novartis
owns or Controls on the Effective Date.
"NOVARTIS TECHNOLOGY" shall mean Novartis Know-How and Novartis
Patents, subject to any limitation contained in the agreements under which
Novartis' rights to the use of such Novartis Technology are derived.
"NOVEL VALIDATED TARGET" shall mean a specific molecule in an
intracellular signaling pathway which, when bound by a specific peptide, changes
in a predetermined way the phenotype of a target cell with a degree of
specificity and in a manner meeting the predetermined validation criteria set by
the CMC for Joint Projects and by Novartis for At-Novartis Projects.
"PATENTS" shall mean all foreign and domestic patents (including,
without limitation, extensions, reexaminations, reissues, renewals and inventors
certificates) and patents issuing from patent applications (including
substitutions, provisionals, divisionals, continuations and
continuations-in-part).
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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"PHASE I CLINICAL TRIALS" shall mean first clinical trial where the
Product is applied in healthy human volunteers to test safety of such Product.
"PRODUCT" shall mean a molecule in the various stages of development
from identification in Compound Screening to and including commercialization,
which is useful to diagnose, treat or prevent human diseases or conditions and
whose principal mechanism of action by which it exerts its pharmacological
activity is based upon, derived from or discovered with the use of, a Novel
Validated Target.
"PROGRAM OF RESEARCH" shall mean research utilizing Rigel Technology to
identify specific target molecules and peptides which bind thereto that alter a
selected phenotype of a target cell population, including the use of retroviral
vector and expression systems which express libraries of molecules in target
cells, high-speed fluorescent cell sorting systems to identify the cells in
which the selected phenotype change has occurred and two-hybrid screening assays
to elaborate the intracellular interactions of the specific target molecules and
other means and methods, whether or not utilizing Rigel Technology, appropriate
in a particular program.
"PROGRAM PROPOSAL" shall mean a written description of a Program of
Research specifying in reasonable detail the specific goals of the project
including clinical objectives, target cells to be utilized, desired biologic
endpoints of assays of the target cells, project time frames and resource
requirements.
"PROJECT CONTACT PERSON" shall have the meaning assigned to it in
Section 3.8.
"PROJECT KNOW-HOW" shall mean Know-How developed, conceived or reduced
to practice by a Party in the course of a Collaboration Project.
"PROJECT PATENT" shall mean a Patent claiming Project Know-How.
"PROJECT TECHNOLOGY" shall mean Project Know-How and Project Patents.
"RESEARCH COOPERATION" shall mean the Joint Projects and the
At-Novartis Projects.
"RESEARCH PERIOD" shall mean, for each Joint Project and each
At-Novartis Project, five (5) years commencing as of the corresponding
Commencement Date, subject to earlier termination as permitted hereby.
"RIGEL CORE TECHNOLOGY" shall mean Rigel's proprietary packaging cell
lines (e.g., without limitation, that designated as [ * ]), high-speed
functional genomic screening technology, two-hybrid screening assays, retroviral
vector systems and expression systems that utilize these vectors to express
libraries of molecules in target cells and high speed fluorescent cell sorting
systems and any improvements thereon, and any Patents and Know-How relating
thereto owned or Controlled by Rigel, subject to any limitation contained in the
agreements under which Rigel's rights to the use of such Rigel Core Technology
are derived.
"RIGEL KNOW-HOW" shall mean any Know-How other than Rigel Core
Technology that is useful in a Collaboration Project and that Rigel owns or
Controls on the Effective Date and any replication or any part of such
information or material.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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"RIGEL PATENTS" shall mean all Patents other than Rigel Core
Technology which claim inventions or discoveries useful in a Collaboration
Project and that are owned or Controlled by Rigel on the Effective Date.
"RIGEL TECHNOLOGY" shall mean the Rigel Patents and Rigel Know-How,
subject to any limitation contained in the agreements under which Rigel's rights
to the use of such Rigel Technology are derived.
"SOLE INVENTIONS" shall have the meaning assigned to it in Section 8.1.
"T-CELL PROJECT" shall mean the Program of Research directed to the
identification of Novel Validated Targets involved in the process of T-Cell
activation, as the Program of Research is more fully described in Exhibit A-1
hereto.
"TERM OF AGREEMENT" shall have the meaning assigned to it in Section
11.1.
"TERRITORY" shall mean the entire world.
"THIRD PARTY" shall mean any person or entity other than Novartis,
Rigel and Affiliates of either.
2. SELECTION OF PROJECTS
2.1 NOVARTIS ACCESS TO FIVE PROJECTS. Novartis may have access to up to
five (5) Programs of Research of which at least two (2) will be Joint Projects
and no more than three (3) will be At-Novartis Projects.
2.2 PROPOSAL FOR A PROGRAM OF RESEARCH.
2.2.1 JOINT PROJECTS. A Program of Research for a Joint
Project may be proposed by Novartis or Rigel submitting to the other a Program
Proposal. Within thirty (30) days of receipt of a Program Proposal the receiving
party shall determine whether it has any agreement with a Third Party which
would prevent it from agreeing to conduct pursuant to this Agreement the Program
of Research identified in the Program Proposal and notify the proposing party
accordingly. If the receiving party is free to conduct the Program of Research
pursuant to this Agreement, the Parties shall meet to determine whether they
will agree to conduct such Program of Research pursuant to this Agreement. If
so, the CMC shall meet promptly to prepare a mutually agreeable description of
the Program of Research to be attached as an exhibit to this Agreement, to
specify the number of FTEs which will be utilized, the Commencement Date and the
number of FTEs as well as the resources to be allocated at Novartis. If the
receiving party is not free to conduct the Program of Research pursuant to this
Agreement, neither Party shall have any obligation or liability to the other
with respect to such Program of Research.
2.2.2 AT-NOVARTIS PROJECTS.
(a) Novartis may propose a Program of Research
for an At- Novartis Project by submitting to Rigel a corresponding Program
Proposal.
(b) Novartis shall have the right to proceed
with such Program of Research, unless Rigel notifies Novartis in writing within
thirty (30) days of receipt of a
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Program Proposal (i) that in Rigel's opinion, the Program of Research as
proposed by Novartis is scientifically not feasible, or (ii) that Rigel is
engaged in advanced negotiations with a Third Party regarding a collaboration
on a Program of Research which would conflict with the Program of Research
proposed by Novartis under this Agreement, or (iii) that Rigel has initiated
an internal Program of Research, as evidenced by written records, which would
conflict with the Program of Research proposed by Novartis.
(c) If Rigel provides to Novartis a notice
pursuant to subsection (b)(i) above, the Parties shall meet to discuss and
revise the proposed Program Proposal as appropriate to address Rigel's comments
and suggestions, whereafter Novartis shall have the right to proceed with such
Program of Research based on the revised Program Proposal. If Rigel provides to
Novartis a notice pursuant to subsection (b)(ii) or (b)(iii) above, such Program
of Research may not be pursued by Novartis, and neither Party shall have any
obligation or liability to the other with respect to such Program of Research.
(d) If Novartis has the right to proceed with a
Program of Research as provided in this Section 2.2.2, Novartis will provide to
Rigel a mutually agreeable description of the Program of Research, including the
validation criteria to be applied for determining whether a molecule is a Novel
Validated Target, to be attached as an exhibit to this Agreement which
description shall specify the Commencement Date of the At-Novartis Project.
Thereafter, the Parties will meet promptly to specify the Rigel Technology and
Rigel Core Technology to be transferred and the time of the transfer thereof to
Novartis pursuant to Section 4.2.5 hereof.
2.3 NUMBER AND KIND OF ADDITIONAL PROGRAMS OF RESEARCH. The parties
hereby agree that the Commencement Date of the T-Cell Project shall be the
Effective Date of this Agreement. Subject to Section 2.2, Novartis and Rigel
will add to this Agreement two (2) additional Programs of Research prior to the
first (1st) anniversary of the Effective Date and two(2) Programs of Research
prior to the second (2nd) anniversary of the Effective Date.
2.4 T-CELL PROJECT. Novartis and Rigel hereby agree that the T-Cell
Project is to be conducted as a Joint Project as provided in Section 4.1 and is
one of the Programs of Research referred to in Section 2.1. A mutually agreeable
description of the Program of Research is set forth in Exhibit A-1. The number
of FTEs and the Commencement Date for the T-Cell Project are set forth in
Exhibit B-1.
2.5 B-CELL PROJECT. Novartis hereby acknowledges that Rigel has
proposed the B-Cell Project as the second Joint Project in compliance with
Section 2.2, and that Novartis has no agreement with a Third Party which would
prevent it from agreeing to engage in the B-Cell Project pursuant to this
Agreement. A mutually agreeable description of the Program of Research for the
B-Cell Project is set forth in Exhibit A-2. The number of FTEs and the
Commencement Date for the B-Cell Project are set forth in Exhibit B-2. Novartis
will notify Rigel within ninety (90) days after the Effective Date whether it
agrees that the B-Cell Project shall be conducted as the second Joint Project.
If Novartis does not so agree, Rigel's proposal of the B-Cell Project shall be
considered withdrawn as of the ninety-first (91st) day after the Effective Date
and neither Novartis nor Rigel shall thereafter have any obligation or liability
to the other with respect to the B-Cell Project.
3. RESEARCH COOPERATION GOVERNANCE
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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3.1 JOINT COOPERATION COMMITTEE FORMATION. The Research Cooperation
established by this Agreement shall be overseen or monitored, pursuant to the
provisions of Section 3.7 hereof, by a Cooperation Management Committee composed
of an equal number of representatives from each Party (the "Cooperation
Management Committee"). Each Party shall initially designate three (3)
representatives on the CMC within ten (10) business days after the Effective
Date. The addition of further representatives to the CMC, if any, shall occur
pursuant to the provisions of Section 3.3.6 hereof. Each Party may, upon notice
to the other Party, change its representatives to the CMC to allow for the
participation of different research groups within Novartis or Rigel, as the case
may be. The Parties shall agree upon the appropriate qualifications for members
of the CMC. An alternate member designated by a Party may serve temporarily in
the absence of a permanent member of the CMC for such Party. Each Party shall
designate one of its representatives as a Co-Chair of the CMC. Each Co-Chair of
the CMC will be responsible for the agenda and the minutes of alternating CMC
meetings.
3.2 CMC ACTIONS. Actions by the CMC pursuant to this Agreement shall be
taken only with unanimous approval of all of the representatives of the CMC. If
the CMC fails to reach unanimity on a matter before it for decision, the matter
shall be referred for resolution to the designated executives of the Parties
identified in Section 13.2.
3.3 MEETINGS OF THE CMC. The CMC:
3.3.1 shall hold meetings at such times and places as shall be
determined by the CMC (it being expected that meetings will alternate between
one of Novartis' research sites on the one hand and Rigel's head offices on the
other hand) but in no event shall such meetings be held in person less
frequently than once every three (3) months during the entire period during
which the Research Period of at least one Collaboration Project is not yet
expired or terminated;
3.3.2 may conduct meetings in person or by telephone or
video conference;
3.3.3 by mutual consent of the representatives of each Party,
may invite other personnel of either Party to attend meetings of the CMC;
3.3.4 may act without a meeting if prior to such action a
written consent thereto is signed by all members of the CMC;
3.3.5 may form and subsequently disband subcommittees with
appropriate representation from each Party;
3.3.6 may increase or decrease the equal number of CMC
representatives each Party can designate; and
3.3.7 may amend or expand upon the foregoing procedures for
its internal operation by unanimous written consent.
3.4 MINUTES. Subject to the provisions of Section 3.1 hereof, one of
the Co-chairs of the CMC will prepare, within ten (10) business days after each
meeting (whether held in person or by telephone or video conference), the
minutes reporting in reasonable detail the actions taken by the CMC, the status
of each Collaboration Project, the then current list of Novel Validated Targets,
issues requiring resolution and resolutions of previously reported
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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issues, which minutes are to be approved by the signature of the CMC Co-Chair
of the other Party.
3.5 SUBCOMMITTEES. Any subcommittee established by the CMC shall have
appropriate representation of each Party and may include representatives of a
Party who are not members of the CMC. Any such subcommittee shall be subject to
the CMC and shall report its activities and actions to the CMC. At the request
of either Party at any time, any such committee shall be dissolved and its
powers and functions returned to the CMC.
3.6 REPORTS. Novartis and Rigel shall each provide written reports at
or before each CMC meeting describing its activities and results under the
Research Cooperation. Such reports shall be in such form and contain such detail
as the CMC shall determine.
3.7 CMC FUNCTIONS AND POWERS. The activities of the Parties under this
Agreement shall be managed by the CMC only to the extent set forth herein
(unless otherwise mutually agreed by the Parties). The CMC shall:
3.7.1 foster the collaborative relationship between the
Parties;
3.7.2 facilitate and monitor the technology transfer under
the Collaboration Projects;
3.7.3 approve the validation criteria for a Novel Validated
Target within sixty (60) days of each Commencement Date;
3.7.4 pursuant to Section 5.4 and provided Novartis has
requested Rigel screening thereunder, approve in advance the criteria for a Lead
Compound identified by Rigel and to be reported to Novartis;
3.7.5 monitor the progress of the research in the Joint
Projects;
3.7.6 monitor the status of At-Novartis Projects to allow
assessment of whether or when a Milestone Payment is due;
3.7.7 review and allocate annual FTEs in the Joint Projects,
within the framework of the contractually agreed funding level;
3.7.8 clear scientific publications relating to the Joint
Projects, and, insofar as containing work from both Parties, relating to
At-Novartis Projects, subject to the review and approval of both Parties
pursuant to Section 10.3;
3.7.9 perform such other functions as elsewhere explicitly
provided in this Agreement and as appropriate to further the purposes of this
Agreement as mutually determined by the Parties.
3.8 PROJECT CONTACT PERSONS. Subject to the CMC, the day-to-day
communication between the Parties and project coordination of each Joint Project
will be performed by two (2) "Project Contact Persons", one to be appointed by
each Party.
3.9 OBLIGATIONS OF PARTIES. Each one of the Parties shall have the
right to inspect the other Party's records through a qualified independent Third
Party, reasonably acceptable to the other Party, to determine whether the other
Party's performance complies with the
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terms of this Agreement, but not more frequently than once in any year during
the Research Period and subject to (1) the confidentiality obligations of
Article 10 and (2) any BONA FIDE obligations of confidentiality to a Third
Party.
3.10 LIMITATIONS OF POWERS OF THE CMC. The CMC shall have no power to
amend this Agreement and shall have only such powers as are specifically
delegated to it hereunder.
4. CONDUCT OF JOINT AND AT-NOVARTIS
4.1 CONDUCT OF JOINT PROJECTS.
4.1.1 SCOPE OF JOINT PROJECTS. Each Joint Project will be
conducted as a collaborative research program during its Research Period to
identify and validate Novel Validated Targets. The Parties intend that these
Novel Validated Targets will be suitable to enable Compound Screening to
identify molecules useful for the development and manufacture of Products.
4.1.2 REVISIONS OF JOINT PROJECTS. By mutual agreement in
writing the Parties may revise the scope of a Joint Project.
4.1.3 PERFORMANCE OF RESEARCH ACTIVITIES. Each Party will
perform the activities assigned to it in the Program of Research for each Joint
Project, or as directed by the CMC, in good scientific manner, and in compliance
with all applicable good laboratory practices and applicable legal requirements
to attempt to achieve efficiently and expeditiously its objectives described in
the Program of Research attached to this Agreement pursuant to Section 2.2.1.
4.1.4 IDENTIFICATION OF NOVEL VALIDATED TARGETS. Rigel shall
notify the CMC in writing of each Novel Validated Target identified by Rigel
during the Research Period of each Joint Project promptly after its
identification. Such notice shall be accompanied with a report and sufficient
data which establish that the validation criteria predetermined by the CMC
pursuant to Section 3.7.3 have been met. The CMC shall issue a list of the Novel
Validated Targets identified in the course of such Joint Project as a part of
the minutes of each CMC meeting and a final list within thirty (30) days after
the end of such Research Period. The date on which Rigel has delivered the
notice described in this Section 4.1.4, provided Novartis has not within ten
(10) business days of receipt of said notice informed Rigel that in Novartis'
opinion, the CMC-predetermined validation cirteria have not been met, shall be
considered the "Notice Date" of such Novel Validated Target. If Novartis informs
Rigel that in Novartis' opinion, the CMC-predetermined validation criteria have
not yet been met, the matter will be discussed and brought to a decision at the
next meeting of the CMC.
4.1.5 TECHNOLOGY TRANSFER. Rigel, as from time to time it may
be directed by the CMC, shall transfer to Novartis at no additional cost to
Novartis such Rigel Technology and Rigel Core Technology as shall be necessary
for the purpose of enabling Novartis to perform its responsibilities under the
applicable Program of Research of Joint Projects to identify Novel Validated
Targets. Novartis may use such Rigel Technology and Rigel Core Technology
pursuant to the licenses granted under this Agreement.
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4.1.6 SECONDMENT. In order to further a close working
relationship, the Parties may agree to provide offices and support at its
facilities for the personnel of the other Party.
4.2 CONDUCT OF AT-NOVARTIS PROJECTS.
4.2.1 SCOPE OF AT-NOVARTIS PROJECTS. Each At-Novartis Project
shall be performed by Novartis fully in-house to identify and validate Novel
Validated Targets. It is intended that these Novel Validated Targets will be
suitable to enable Compound Screening to identify molecules useful for the
development and manufacture of Products.
4.2.2 REVISIONS OF AT-NOVARTIS PROJECTS. By mutual agreement
in writing the Parties may revise the scope of an At-Novartis Project.
4.2.3 PERFORMANCE OF RESEARCH ACTIVITIES. Novartis will
perform research in accordance with the Program of Research for each
At-Novartis Project in good scientific manner, and in compliance with all
applicable good laboratory practices and applicable legal requirements to
attempt to achieve efficiently and expeditiously its objectives described in
the Program of Research attached to this Agreement pursuant to Section 2.2.2.
4.2.4 IDENTIFICATION OF NOVEL VALIDATED TARGETS. Novartis
shall notify the CMC in writing of any Novel Validated Targets identified by
Novartis during the Research Period of each At-Novartis Project promptly after
its identification. Such notice shall be accompanied with a report and
sufficient data which establish that the validation criteria predetermined
pursuant to Section 2.2.2(d) have been met. CMC shall issue a list of the Novel
Validated Targets identified in the course of such At-Novartis Project as a part
of the minutes of each CMC meeting and a final list within thirty (30) days
after the end of such Research Period. The date on which Novartis has provided
the notice described in this Section 4.2.4 shall be considered the "Notice Date"
of such Novel Validated Target.
4.2.5 TECHNOLOGY TRANSFER. Rigel will transfer to Novartis
such Rigel Technology and Rigel Core Technology, including without limitation
the Phoenix packaging cell line, as reasonably necessary to enable the target
identification activities Novartis is to perform in each At-Novartis Project as
proposed by Novartis and reasonably acceptable to Rigel; provided, however, that
Novartis shall reimburse Rigel its reasonable costs and expenses therefor.
Novartis may use such Rigel Technology and Rigel Core Technology pursuant to the
licenses granted under this Agreement.
4.3 ADDITIONAL PROJECTS. If Novartis expresses an interest in
cooperating with Rigel with respect to any Programs of Research in addition to
the two Joint Projects and three At-Novartis Projects, Rigel and Novartis will
meet promptly to discuss in good faith whether and under what terms they could
agree to cooperate with respect to such further research projects.
4.4 DISCLOSURE. Rigel and Novartis will disclose to the CMC promptly
and at least quarterly the results of the research activities conducted in each
Collaboration Project, such reports to be in such form as specified by the CMC.
The Parties shall keep complete and accurate records pertaining to the results
of work conducted pursuant to each Collaboration Project. Such records shall be
maintained by each Party for a period of at least three (3) years following the
year in which any such efforts were made hereunder.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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4.5 DISCRETIONARY TERMINATION OF RESEARCH PERIOD.
4.5.1 DISCRETIONARY TERMINATION DATE FOR JOINT PROJECTS.
Novartis may at its discretion terminate each Joint Project, individually, upon
at least six (6) months prior written notice as hereinafter provided. If
Novartis gives notice of termination for a given Joint Project no later than
eighteen (18) months from the applicable Commencement Date, termination of such
Joint Project will take effect at twenty-four (24) months from its Commencement
Date. If Novartis gives notice of termination for a given Joint Project after
eighteen (18) months but no later than thirty-six (36) months from the
applicable Commencement Date, termination of such Joint Project will take effect
at forty-two (42) months from its Commencement Date.
4.5.2 DISCRETIONARY TERMINATION OF AT-NOVARTIS PROJECTS.
Novartis may, at its discretion, terminate each At-Novartis Project,
individually, at any time with immediate effect.
4.5.3 EFFECT OF DISCRETIONARY TERMINATION.
(a) If Novartis terminates the T-Cell Project
effective twenty-four (24) months after the applicable Commencement Date or
forty-two (42) months after the applicable Commencement Date, Novartis will keep
all rights and licenses granted under Section 6.2 with respect to those Novel
Validated Targets identified prior to the termination of the Research Period,
subject to the applicable milestone and/or royalty payment obligations of
Article 7 and Exhibit C.
(b) If Novartis terminates any Joint Project other
than the T-Cell Project
(i) effective twenty-four (24) months
after the applicable Commencement Date, all licenses granted to Novartis
relating to such Joint Project shall terminate upon the termination such Joint
Project, and the rights to all Novel Validated Targets identified as of the date
of termination shall revert to Rigel;
(ii) effective forty-two (42) months from
the applicable Commencement Date, Novartis will keep all rights and licenses
granted under Section 6.2 with respect to those Novel Validated Targets
identified prior to the termination of the Research Period, subject to the
applicable milestone and/or royalty payment obligations of Article 7 and Exhibit
C.
(c) If Novartis terminates any At-Novartis
Project at or effective prior to forty-two (42) months after the applicable
Commencement Date, all licenses granted to Novartis relating to such At-Novartis
Project shall terminate upon termination of such At-Novartis Project, and the
rights to all Novel Validated Targets identified as of the date of termination
shall revert to Rigel. If Novartis terminates an At-Novartis Project after
forty-two (42) months, Novartis shall keep the rights to the Novel Validated
Targets identified in the course of such At-Novartis Project as licensed under
Section 6.2.
4.6 TERMINATION OF COLLABORATION PROJECT FOR BREACH.
4.6.1 Either Party may terminate a Collaboration Project after
sixty (60) days prior notice to the other that the other Party has committed a
material breach of its obligations
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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in the performance of such Collaboration Project unless the other Party cures
(to the extent practicable) the breach within such period of time.
4.6.2 If Novartis terminates a Collaboration Project under
Section 4.6.1 above, Novartis will keep all rights and licenses granted under
Section 6.2 with respect to those Novel Validated Targets identified prior to
the termination of the Research Period, subject to the applicable milestone
and/or royalty payment obligations of Article 7 and Exhibit C.
4.6.3 If Rigel terminates a Collaboration Project under
Section 4.6.1 above, all licenses granted to Novartis for such Collaboration
Project shall terminate and the rights to all Novel Validated Targets identified
in the course of such Collaboration Project shall revert to Rigel.
4.7 TERMINATION OF JOINT PROJECT FOR SCIENTIFIC REASONS. If it is
determined by both Parties before the end of the 12th month of a Joint Project
already underway that it is no longer scientifically feasible, the Parties shall
meet for good faith discussions to determine if an alternate project may be
substituted on substantially similar terms. If after the 12th month of a Joint
Project the CMC determines that for scientific reasons, a Joint Project cannot
yield any Novel Validated Targets, or that such Novel Validated Targets will not
be suitable for Compound Screening in high-throughput format, Novartis shall
have to right to terminate such Joint Project with written notice effective upon
receipt by Rigel. Upon such termination, Novartis shall make to Rigel, upon
receipt of a corresponding invoice, a termination payment for non-cancelable
commitments and other costs incurred by Rigel due to such termination
corresponding to three (3) months of the research support payable pursuant to
Section 7.1. Upon termination pursuant to this Section 4.7, all licenses granted
to Novartis for such Joint Project shall terminate, and the rights to all Novel
Validated Targets identified in the course of such Joint Project (if any) shall
revert to Rigel.
4.8 EXISTING OBLIGATIONS. The termination of any Research Period shall
not relieve the Parties of any obligation that accrued prior to such expiration
or termination.
5. COMPOUND SCREENING AND DEVELOPMENT
5.1 NOVARTIS COMPOUND SCREENING. Novartis shall have the right to
initiate Compound Screening with each Novel Validated Target upon notice to
Rigel any time during the Exclusivity Term with respect to such Novel Validated
Target.
5.2 EXCLUSIVITY TERM. Novartis' screening right under Section 5.1 shall
be exclusive ('exclusive', as used in this Section 5.2 and subject to the
provisions of Section 5.5, shall mean 'to the exclusion also of Rigel') during
the first two (2) years ("Exclusivity Term") after the Notice Date. Subject to
Section 5.3, Novartis may, after the first two years, extend the Exclusivity
Term with respect to a Novel Validated Target for up to five (5) additional one
(1) year periods upon payment to Rigel of the appropriate Extension Fee provided
in Section 7.5 on or before (i) the day which is thirty (30) days prior to the
end of such Exclusivity Term or (ii) if Novartis has informed Rigel in writing
on or before a date with is sixty (60) days prior to the end of such Exclusivity
Term, thirty (30) days after receipt of a corresponding invoice from Rigel,
whichever is the later. Upon expiration of the Exclusivity Term, Novartis' right
to conduct Compound Screening with a Novel Validated Target, subject to the
payments required by Section 7.2 and 7.4, shall become nonexclusive
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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and Rigel shall also have the nonexclusive right, including the right to
sublicense, to conduct Compound Screening with such Novel Validated Target.
5.3 NOVARTIS DILIGENCE.
5.3.1 In addition to the payment of the Extension Fee and as a
further condition for Novartis to extend the Exclusivity Term, Novartis shall be
obligated to maintain itself or through its Affiliates or sublicensees a
diligent, continuous program of utilizing the Novel Validated Target to identify
molecules useful for the development and manufacture of Products.
5.3.2 Novartis shall be deemed to be maintaining a diligent
continuous program with respect to a Novel Validated Target if Novartis (i) is
actively using the Novel Validated Target in Novartis' screening systems for
Compound Screening or, (ii) is actively undertaking diligent, commercially
reasonable efforts, similar to those used for products of comparable commercial
potential originating in Novartis for the continuing development of a Product
and the commercialization of a Product including, without limitation, the
performance of an active derivatisation and lead optimization program, the
designation of FSC Status, initiation of clinical trials, submission of
regulatory filings and commercial launch of a Product.
5.4 REPORTING. During each applicable Exclusivity Term, Novartis shall
provide information on its activities under Section 5.3.1 or 5.3.2 above to the
CMC on a quarterly basis. At any time during the Exclusivity Term with respect
to a Novel Validated Target, Novartis shall on a not less than quarterly basis
provide documentation to the reasonable satisfaction of Rigel that Novartis is
maintaining a diligent, continuous program with respect to the Novel Validated
Target.
5.5 CONVERSION OF EXCLUSIVE RIGHT. If Novartis does not pay the
Extension Fee or does not maintain a diligent continuous program with respect to
a Novel Validated Target as provided in Section 5.3 above, then the Exclusivity
Term shall be deemed expired and Novartis' screening right under Section 5.1,
subject to the payments required by Section 7.2 and 7.4, shall become
non-exclusive, perpetual, and fully paid-up, and Rigel shall have the
nonexclusive right, including the right to sublicense, to conduct Compound
Screening with such Novel Validated Target.
5.6 RIGEL SCREENING. At any time during the Exclusivity Term with
respect to a Novel Validated Target, Novartis, at its sole discretion, may
request in writing that Rigel conduct Compound Screening of Rigel's
small-molecule compound library against such Novel Validated Target. If Rigel
agrees to conduct such screening, the CMC shall establish criteria for an
active compound to qualify as a Lead Compound. Thereafter, Rigel will conduct
such screening pursuant to a workplan to be agreed to by the Parties. If
Rigel identifies a Lead Compound, it shall so notify Novartis, and Section
6.4 hereof shall then apply.
6. LICENSE GRANTS; NONCOMPETITION
6.1 RESEARCH LICENSE GRANTS.
6.1.1 GRANT BY RIGEL. Rigel hereby grants to Novartis and its
Affiliates a nonexclusive, non-transferable, royalty-free license during the
Research Period for each
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Collaboration Project under the Rigel Technology, Rigel Core Technology and
Rigel's interest in Project Technology in the Territory, subject to the terms of
this Agreement, solely for the purpose of carrying out Novartis'
responsibilities under the applicable Collaboration Project.
6.1.2 GRANT BY NOVARTIS. Novartis hereby grants to Rigel and
its Affiliates a nonexclusive, non-transferable, royalty-free license during the
Research Period for each Collaboration Project under the Novartis Technology and
Novartis' interest in the Project Technology, subject to the terms of this
Agreement, solely for the purpose of carrying out Rigel's responsibilities under
the applicable Collaboration Project.
6.2 COMMERCIAL LICENSE GRANTS.
6.2.1 Subject to Section 5.3 and the other terms and
conditions of this Agreement, Rigel hereby grants to Novartis and its Affiliates
an exclusive license, with the right to grant sublicenses, under the Rigel
Technology and Rigel's interest in the Project Technology to make, have made,
use, import, offer for sale and sell Products.
6.2.2 Subject to the terms and conditions of this Agreement,
Rigel hereby grants to Novartis and its Affiliates a nonexclusive,
non-transferable, royalty-free license under Rigel Core Technology only for
confirmational screening and similar uses relating to Novel Validated Targets
identified in the course of a Collaboration Project, it being understood that
Novartis has the right to use such Technology for the purposes of further
development, registration and commercialisation of Products.
6.3 LICENSE TO RIGEL OF IMPROVEMENTS TO RIGEL CORE TECHNOLOGY. Novartis
hereby grants to Rigel a nonexclusive, royalty-free, worldwide license, with the
right to sublicense, under Novartis' interest in the Project Technology only to
the extent it constitutes an improvement of the Rigel Core Technology licensed
to Novartis hereunder. For the avoidance of any doubt, the license granted by
Novartis under this Section 6.3 shall not include, without limitation, any
Patents or Know-How claiming the composition of matter, method of making or use
of Products.
6.4 OPTION FOR LICENSE FOR RIGEL LEAD COMPOUND. Novartis shall have an
option during the ninety (90) days following receipt of Rigel's notice of
identification of a Lead Compound as provided in Section 5.6 to negotiate with
Rigel a worldwide, exclusive license to such Lead Compound and compounds derived
therefrom under terms to be agreed but including those shown on Exhibit C
hereto. If Novartis does not execute such a license within such period, Rigel
shall have no further obligation or liability to Novartis for such Lead
Compound.
7. FINANCIAL SUPPORT
7.1 RESEARCH SUPPORT. Novartis will provide funding to support Rigel's
efforts during the Research Period of each Joint Project, on an FTE basis at a
rate of $[ * ] per year multiplied by the number of FTEs as shown in Exhibit B
for such Joint Project. The amounts payable shall be paid in advance by
certified or bank check or wire transfer in United States dollars in four equal
payments to be paid quarterly upon presentation of a corresponding invoice by
Rigel. Payments shall be made no later than (a) by the first (1st) business day
of each applicable Research Period quarter or (b) thirty (30) days after receipt
of the
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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corresponding invoice, whichever is the later. Research support under this
Section 7.1 shall not be credited against any equity, milestone or royalty
payments due Rigel hereunder.
7.2 MILESTONE PAYMENTS TO RIGEL. Novartis will pay to Rigel the
following amounts ("Milestone Payments") in respect of the achievements with
respect to each Joint Project and each At-Novartis Project:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
- ----------------------------------------------------------------------------------------------------
<S> <C>
1) NOTICE DATE OF THE FIRST NOVEL VALIDATED TARGET $[ * ]
- ----------------------------------------------------------------------------------------------------
2) NOTICE DATE OF EACH SUBSEQUENT NOVEL VALIDATED TARGET $[ * ]
- PER NOVEL VALIDATED TARGET
- ----------------------------------------------------------------------------------------------------
3) INITIATION OF COMPOUND SCREENING WITH EACH NOVEL
VALIDATED TARGET:
PER NOVEL VALIDATED TARGET:
FIRST FOUR (4) NOVEL VALIDATED TARGETS, CUMULATED OVER $[ * ]
ALL COLLABORATION PROJECTS
EACH SUBSEQUENT NOVEL VALIDATED TARGET $[ * ]
- ----------------------------------------------------------------------------------------------------
4) FSC STATUS DECLARATION OF THE FIRST PRODUCT IDENTIFIED IN $[ * ]
COMPOUND SCREENING CONDUCTED AGAINST EACH NOVEL VALIDATED
TARGET PURSUANT TO SECTION 5.3 - PER NOVEL VALIDATED TARGET
- ----------------------------------------------------------------------------------------------------
5) FIRST PRODUCT IDENTIFIED ON THE BASIS OF A NOVEL VALIDATED $[ * ]
TARGET ENTERS PHASE I CLINICAL TRIALS - PER NOVEL VALIDATED
TARGET
- ----------------------------------------------------------------------------------------------------
</TABLE>
All Milestone Payments to be made by Novartis to Rigel pursuant
to this Section 7.2 shall be made within thirty (30) days of receipt of an
invoice from Rigel. Novartis shall promptly report to Rigel the occurrence of
the Milestone Events 3), 4), and 5).
7.3 PROJECT ACCESS PAYMENTS. No later than (a) by the Commencement Date
of each Joint Project and each At-Novartis Project or (b) thirty (30) days after
receipt of the corresponding invoice from Rigel, whichever is the later,
Novartis will pay Rigel a project access fee of $[ * ].
7.4 ROYALTIES. Novartis shall pay to Rigel all royalties due to Third
Party licenses listed on Exhibit D hereto in the event Novartis shall practice
the inventions of the Patents licensed thereunder. Further, if applicable
pursuant to Articles 5.6 and 6.4, Novartis shall pay to Rigel the royalties as
provided in Exhibit C. For the avoidance of any doubt, Novartis shall pay to
Rigel no other royalties under this Agreement.
7.5 EXTENSION FEE. As provided in Section 5.2, the amount payable by
Novartis to extend the Exclusivity Term for each year after the initial two (2)
year Exclusivity Term
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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for a Novel Validated Target ("Extension Fee") shall be $[ * ] for the third
(3rd) year, $[ * ] for the fourth (4th) year and, $[ * ] for each of the fifth
(5th), sixth (6th) and seventh (7th) year.
8. INTELLECTUAL PROPERTY
8.1 OWNERSHIP OF PROJECT KNOW-HOW; INVENTIONS. Project Know-How
invented (as determined in accordance with United States rules of inventorship)
solely by employees of one Party during the course of a Collaboration Project
("Sole Inventions") shall be the property of such Party. In the event that
employees of Novartis and Rigel jointly invent any Project Know-How (again as
determined in accordance with United States rules of inventorship), such Project
Know-How shall be owned jointly by Novartis and Rigel, each to own an undivided
one-half (1/2) interest in such Project Know-How ("Joint Invention") except as
provided herein. Each Party shall cooperate with the other in completing any
patent applications relating to Joint Inventions, and in executing and
delivering any instrument required to assign, convey or transfer to such other
Party its undivided one-half (1/2) interest.
8.2 PATENT PROSECUTION.
8.2.1 Novartis Patents and Rigel Patents licensed hereunder
shall be prosecuted and maintained by Novartis and Rigel, respectively, at such
Party's option and its own expense; provided, however, that the Parties shall
consult with and consider the comments of the CMC with respect to the
prosecution of applications for such patents.
8.2.2 Each Party will prepare, file, prosecute and maintain
patent applications for its Sole Inventions and shall be responsible for related
interference proceedings.
8.2.3 In case of Joint Inventions, the Parties will
mutually agree on the responsibility for filing and prosecuting applications
or patent applications relating thereto, and the defense against Third
Parties who infringe on Patents issuing thereon.
8.3 INFRINGEMENT OF THIRD-PARTY RIGHTS.
8.3.1 If a Third Party claims that the practice of the Rigel
Technology or Rigel Core Technology under this Agreement infringes on its
Patents, each Party shall notify the other Party promptly upon learning of such
claim.
8.3.2 Promptly upon such notification, the Parties shall meet
to discuss the strategy and appropriate steps to be taken to deal with such
claim, including, without limitation, by working around the Patents of the Third
Party, by practicing the Rigel Technology or Rigel Core Technology in countries
where the Third Party has no applicable Patents, by seeking to invalidate the
Third Party Patents or by entering into negotiations with such Third Party
regarding a license under its Patents. The Parties shall further agree on an
equitable and fair distribution of the costs resulting from any such course of
action.
9. REPRESENTATIONS AND WARRANTIES
9.1 REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other that:
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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9.1.1 CORPORATE POWER. It is duly organized and validly
existing under the laws of its state or country of incorporation, and has full
corporate power and authority to enter into this Agreement and to carry out the
provisions hereof.
9.1.2 DUE AUTHORIZATION. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
or persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate action.
9.1.3 BINDING AGREEMENT. This Agreement is legally binding
upon it and enforceable in accordance with its terms. The execution, delivery
and performance of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by which
it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
9.1.4 GRANT OF RIGHTS; MAINTENANCE OF AGREEMENTS. It has not,
and will not during the Term of the Agreement, grant any right to any Third
Party which would conflict with the rights granted to the other Party hereunder.
It has (or will have at the time performance is due) maintained and will
maintain and keep in full force and effect all agreements necessary to perform
its obligations hereunder.
9.1.5 VALIDITY. It is aware of no action, suit or inquiry or
investigation instituted by any governmental agency which questions or threatens
the validity of this Agreement.
9.1.6 EMPLOYEE OBLIGATIONS. All of its employees, officers and
consultants have executed agreements requiring in the case of employees and
officers, assignment to the Party of all inventions made during the course of
and as a result of their association with such Party and obligating the
individual to maintain as confidential the confidential information of the
Party, as well as the confidential information of a Third Party which such Party
may receive.
9.2 DISCLAIMER CONCERNING TECHNOLOGY. THE TECHNOLOGY PROVIDED BY EACH
PARTY HEREUNDER IS PROVIDED "AS IS" AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND
ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING
FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH
RESPECT THERETO. Without limiting the generality of the foregoing, each Party
expressly does not warrant (i) the success of any Program of Research or (ii)
the safety or usefulness for any purpose of the technology it provides
hereunder.
10. CONFIDENTIALITY; PUBLICATION
10.1 CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, the Parties agree that,
for the Term of the Agreement and for five (5) years thereafter, the receiving
Party (the "Receiving Party") shall keep confidential and shall not publish or
otherwise disclose and shall not use for any purpose other than as provided in
this Agreement any Confidential Information furnished to it
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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by the other Party (the "Disclosing Party") pursuant to this Agreement unless
the Receiving Party can demonstrate by contemporaneous, competent written proof
that such Confidential Information:
(a) was already known to the Receiving Party, other
than under an obligation of confidentiality, at the time of disclosure by the
Disclosing Party;
(b) was generally available to the public or
otherwise part of the public domain at the time of its disclosure to the
Receiving Party;
(c) became generally available to the public or
otherwise part of the public domain after its disclosure and other than
through any act or omission of the Receiving Party in breach of the Agreement;
(d) was disclosed to the Receiving Party, other than
under an obligation of confidentiality to a Third Party, by a Third Party who
had no obligation to the Disclosing Party or any Third Party not to disclose
such information to others; or
(e) was independently discovered or developed by the
Receiving Party without the use of Confidential Information belonging to the
Disclosing Party.
10.2 AUTHORIZED DISCLOSURE.
10.2.1 Each Party may disclose Confidential Information
belonging to the other Party to the extent such disclosure is reasonably
necessary in the following instances:
(a) filing or prosecuting Patents relating to
Project Know-How;
(b) regulatory filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental
regulations;
(e) conducting pre-clinical or clinical trials of
Products; and
(f) disclosure to Affiliates, sublicensees,
employees, consultants or agents who agree to be bound by similar terms of
confidentiality and non-use at least equivalent in scope to those set forth
in this Article 10.
10.2.2 Notwithstanding the foregoing, in the event a Party is
required to make a disclosure of the other Party's Confidential Information
pursuant to this Section 10.2 it will, except where impracticable, give
reasonable advance notice to the other Party of such disclosure and use
commercially reasonable efforts to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. The Parties will consult
with each other and agree on the provisions of this Agreement to be redacted in
any filings made by the Parties with the Securities and Exchange Commission or
as otherwise required by law.
10.3 PUBLICATIONS.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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10.3.1 REVIEW AND APPROVAL. Each Party to this Agreement
recognizes that the publication of papers, including oral presentations and
abstracts, regarding the Research Cooperation, subject to reasonable controls to
protect Confidential Information, can be beneficial to both Parties. However,
each Party shall have the right to review and approve any paper proposed for
publication by the other Party, including oral presentations and abstracts,
which utilizes data generated from the Research Cooperation or includes
Confidential Information of the reviewing Party.
10.3.2 REVIEW AND APPROVAL PROCESS. At least forty-five (45)
days before any such paper is presented or submitted for publication, the Party
proposing publication shall deliver a complete copy to the other Party. The
receiving Party shall review any such paper and give its comments to the
publishing Party within thirty (30) days of the delivery of such paper to the
receiving Party. With respect to oral presentation materials and abstracts, the
Parties shall make reasonable efforts to expedite review of such materials and
abstracts, and shall return such items as soon as practicable to the publishing
Party with appropriate comments, if any, but in no event later than thirty (30)
days from the delivery date thereof to the receiving Party. The publishing Party
shall comply with the other Party's request to delete references to such other
Party's Confidential Information in any such paper and agrees to withhold
publication of same an additional ninety (90) days in order to permit the
Parties to obtain patent protection, if either of the Parties deem it necessary,
in accordance with the terms of this Agreement.
10.4 SAMPLES. Samples of compounds provided by one Party (the
"Supplying Party") to the other Party (the "Receiving Party") during the
Research Program shall not be supplied or sent by the Receiving Party to any
Third Party without the written consent of the Supplying Party. The Receiving
Party shall return to the Supplying Party any samples not used upon expiration
or termination of the applicable Research Period, except that Novartis may
retain such samples to the extent necessary to exercise the licenses granted in
Section 6.2.
11. TERM AND TERMINATION
11.1 TERM OF THE AGREEMENT. This Agreement shall become effective upon
the Effective Date and continue until the later of (i) the expiration of the
obligation of Novartis to pay royalties as provided in Section 7.4, and (ii) the
expiration of the last Patent licensed to Novartis under this Agreement,
whereupon the licenses granted under Sections 6.2 and 6.3 shall be deemed
non-exclusive, perpetual and fully paid-up.
11.2 TERMINATION FOR MATERIAL BREACH. Each Party shall have the right
to terminate this Agreement after ninety (90) days prior notice to the other
that the other Party has committed a material breach of the Agreement other than
performance of obligations under a Collaboration Project, unless the other Party
cures (to the extent practicable) the breach within such period of time.
Licenses granted to the non-breaching Party under Section 6 of this Agreement
shall not be affected by termination for material breach. All licenses granted
to the breaching Party under Section 6 of this Agreement shall automatically
terminate upon such termination.
11.3 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Expiration or termination
of this Agreement shall not affect any accrued rights or obligations of either
Party. Sections 9, 10, 11 (and Section 6 to the extent referenced therein), 12,
13, 14.1, and 14.3 through 14.10, and any
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19.
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definitions of terms used therein shall survive any expiration or termination of
this Agreement.
12. INDEMNITY
12.1 INDEMNIFICATION. Each Party hereby agrees to save, defend and hold
the other Party and its directors, officers, employees, and agents harmless from
and against any and all claims, suits, actions, demands, liabilities, expenses
and/or loss, including reasonable legal expense and attorneys' fees
(collectively, "Claims") for damage to persons or property resulting directly or
indirectly from actions in connection with a Collaboration Project by the
indemnifying Party, its Affiliates, agents or sublicensees, but only to the
extent such Claims result from the gross negligence or willful misconduct of the
indemnifying Party or its Affiliates, agents or sublicensees and do not result
from the negligence of the Party seeking indemnification.
12.2 PRODUCT LIABILITY. Novartis hereby agrees to indemnify, hold
harmless and defend Rigel and its directors, officers, employees, and agents
against any Claim or Claims, including, but not limited to claims for bodily
injury and death, resulting from or arising out of the manufacture, use or sale
of Products by Novartis, its Affiliates and sublicensees.
12.3 CONTROL OF DEFENSE. Any entity entitled to indemnification under
this Article 12 shall give notice to the indemnifying Party of any Claims that
may be subject to indemnification and, promptly after learning of such Claim,
the indemnifying Party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnified Party. If such defense is assumed by
the indemnifying Party with counsel so selected, the indemnifying Party will not
be subject to any liability for any settlement of such Claims made by the
indemnified Party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified Party with respect to such
Claims.
13. GOVERNING LAW; DISPUTE RESOLUTION
13.1 GOVERNING LAW. This Agreement shall be governed by laws of the
state of Delaware, as such law applies to contracts entered into in Delaware by
residents of Delaware, without reference to its choice of law provisions.
13.2 DISPUTE RESOLUTION. In the event of any dispute, the Parties shall
refer such dispute to a designated executive of Rigel and a designated executive
of Novartis for attempted resolution by good faith negotiations within thirty
(30) days after such referral is made. In the event such executives are unable
to resolve such dispute within such thirty (30) day period, either Party may
invoke the provisions of Section 13.3 below.
13.3 JURISDICTION AND VENUE. Except as provided in Section 13.2 above,
any claim or controversy arising out of or related to this Agreement or any
breach hereof shall be adjudicated in the federal district court of Dover,
Delaware, and the Parties hereby consent to the jurisdiction and venue of such
court.
14. GENERAL PROVISIONS
14.1 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail addressed to
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20.
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the signatory to whom such notice is required or permitted to
be given and transmitted by facsimile to the number indicated below. All notices
shall be deemed to have been given when mailed, as evidenced by the postmark at
the point of mailing, or faxed; provided that such fax is confirmed by
electronic confirmation of transmission.
All notices to Novartis shall be addressed as follows:
Novartis Pharma AG
Lichtstrasse 35
P.O. Box
CH-4002 Basel
Switzerland
Attn: Legal Department
Fax: +41-61-324-6859
All notices to Rigel shall be addressed as follows:
Rigel Pharmaceuticals, Inc.
240 East Grand Avenue
South San Francisco, CA 94080
Attn: President
Fax: +1-650-624-1101
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attn: Patrick A. Pohlen, Esq.
Fax: (650) 857-0663
Any Party may, by written notice to the other, designate a new address
or fax number to which notices to the Party giving the notice shall thereafter
be mailed or faxed.
14.2 FORCE MAJEURE. No Party shall be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the Party claiming excuse uses commercially
reasonable efforts to overcome the same.
14.3 ENTIRETY OF AGREEMENT. This Agreement embodies the entire, final
and complete agreement and understanding between the Parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter. No modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each Party.
14.4 NON-WAIVER. The failure of a Party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.
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21.
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14.5 DISCLAIMER OF AGENCY. Neither Party is, or will be deemed to be,
the legal representative or agent of the other, nor shall either Party have the
right or authority to assume, create, or incur any third Party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.
14.6 SEVERABILITY. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either Rigel or Novartis deems any
provision to be contrary to any laws, then that provision shall be severed and
the remainder of the Agreement shall continue in full force and effect. To the
extent possible, the Parties shall revise such invalidated provision in a manner
that will closely approximate the Parties' original intent.
14.7 AMBIGUITIES. The Parties hereby acknowledge that they have drafted
this Agreement jointly. Thus, any presumption that ambiguous provisions shall be
construed against the party drafting an agreement is inapplicable, and each
Party expressly agrees not to invoke said presumption in the event of a dispute
between the Parties relating to this Agreement.
14.8 AFFILIATES; ASSIGNMENT. Except as otherwise provided herein,
neither Party may assign its rights or delegate its duties under this Agreement
without the prior written consent of the other Party, not to be unreasonably
withheld; provided, however, that either Party may assign this Agreement to any
of its Affiliates or to any successor by merger or sale of substantially all of
the assets or business unit to which this Agreement relates; provided further,
however, that any such assignment shall be made in a manner such that the
assignee expressly undertakes in writing to be liable and responsible for the
performance and observance of all its duties and obligations hereunder. This
Agreement shall be binding upon the successors and permitted assigns of the
Parties. Any attempted delegation or assignment not in accordance with this
Section 14.7 shall be of no force or effect.
14.9 HEADINGS. The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.
14.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
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22.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement.
RIGEL PHARMACEUTICALS, INC. NOVARTIS PHARMA AG
By: /s/ James M. Gower By: /s/ Paul Herring
------------------------------- --------------------------------
Name: James M. Gower Name: Dr. Paul Herring
----------------------------- ------------------------------
Title: President & CEO Title: Head of Research
---------------------------- -----------------------------
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23.
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EXHIBIT A-1
T-CELL PROGRAM OF RESEARCH
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NOVEL REGULATORY PATHWAYS IN T AND B LYMPHOCYTES
NOVARTIS PROJECT OUTLINE
PROJECT I: IDENTIFICATION OF REGULATORY PROTEINS THAT
AFFECT T CELL ACTIVATION
INTRODUCTION
Activation of specific signaling pathways in lymphocytes determines the
quality, magnitude and duration of immune responses. In transplantation, acute
and chronic inflammatory diseases, and autoimmunity, it is these pathways that
are responsible for the induction, maintenance and exacerbation of' disuse
lymphocyte responses. Of the many activation pathways that have been elucidated,
most are ubiquitous and not unique to a particular cell lineage. The goal of
this proposal is to identify and validate novel signaling molecules specific for
T cell activation and effector function. From these molecules, T cell-specific
targets will be identified that axe effective in modulating immune-mediated
processes. A combination of high throughput functional and yeast two-hybrid
genetic screens will be employed to isolate and map novel signaling molecules in
lymphocyte activation. Engagement of the [ * ] in conjunction with T cell
assistance stimulates humoral immunity characterized by immunoglobulin
production and antigen presentation by B cells. Likewise, T cell signaling
through the T cell receptor (TCR) and other molecules [ * ] leads to specific
cellular immunity. Summarized below, in Table 1, is our strategy for identifying
and validating novel T cell intracellular signaling molecules. Each approach,
its readout, and the libraries to be used are detailed in the remaining sections
of the proposal.
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TABLE 1. SUMMARY OF SCREENS TO IDENTIFY INTRACELLULAR REGULATORS OF LYMPHOCYTE
ACTIVATION AND/OR EFFECTOR FUNCTION.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
INTRACELLULAR TARGETING
APPROACH READOUT STRUCTURES AND MOTIFS
- ---------------------------------------------------------------------------------------
<S> <C> <C>
PROJECT I
IDENTIFICATION OF REGULATORY
PROTEINS THAT AFFECT T CELL
ACTIVATION
- ---------------------------------------------------------------------------------------
1. PRIMARY SCREENS
- ---------------------------------------------------------------------------------------
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
- ---------------------------------------------------------------------------------------
2. SECONDARY ASSAYS
- ---------------------------------------------------------------------------------------
[ * ] [ * ]
[ * ] [ * ]
- --------------------------------------------------------------------------------------
3. PATHWAY MAPPING
- --------------------------------------------------------------------------------------
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
- --------------------------------------------------------------------------------------
</TABLE>
PROJECT I.
IDENTIFICATION OF REGULATORY PROTEINS THAT AFFECT T CELL ACTIVATION.
1 Primary Screens
Screens in Project I will [ * ]. Modulating T cell activation and
function has clinical relevance for transplantation, autoimmunity and
inflammatory diseases.
1.1 Primary peptide screen for inhibition of [ * ] in T cells stimulated
through [ * ]
[ * ]
1.2 Functional screening for inhibitors of [ * ].
[ * ].
2. SECONDARY ASSAYS
2.1 Secondary assays measuring expression of cell surface [ * ]
[ * ].
FIGURE 1
DIAGRAM
2.2 Secondary assays measuring T cell differentiation into [ * ]
[ * ]
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EXPERIMENTAL DESIGN AND METHODS
PROJECT I.
IDENTIFICATION OF REGULATORY PROTEINS THAT AFFECT T CELL ACTIVATION.
RATIONALE:
T cells are pivotal in determining the type of immune response and
its duration. Alterations in T cell activation and regulation are implicated
in numerous diseases such as acute and chronic inflammation, autoimmunity and
graft rejection. The screens in this approach will identify T cell
activation-specific signaling molecules and assess their bias towards [ * ].
This will permit specific intervention into T cell-mediated processes that
contribute to or are the basis of disease.
1 PRIMARY SCREENS.
1.1 Primary peptide screen for inhibition of [ * ] in T cells stimulated
through [ * ]
[ * ].
PEPTIDE LIBRARY SCREENING AND PROTEIN TARGET IDENTIFICATION.
[ * ].
We have developed several retroviral constructs to control all aspects
of peptide expression and localization. This gives us great flexibility when
designing retroviral libraries within any cell line and with whatever
characteristics are deemed necessary for intracellular peptide expression (see
Appendix G). Constrained peptides have many valuable features compared to
linear peptides, including enhanced resistance to proteolysis and a restricted
conformation space that can result in a higher binding affinity for cognate
binding proteins.
[ * ].
1.2 Functional screening for inhibitors of [ * ]-induced transcription of the
[ * ] promoter in cell lines carrying the [ * ] promoter upstream of n
reporter fused to death genes
[ * ].
2 SECONDARY ASSAYS TO ASSESS PHYSIOLOGIC CHARACTERISTICS AND SPECIFICITY
OF PRIMARY FUNCTIONAL PEPTIDE HITS.
2.1 Secondary assays measuring expression of cell surface T cell [ * ]
[ * ]. The overall aim of these assays is to test the specificity and
physiologic characteristics of the functional peptide hits. This will be a
critical step in determining priority of hits for more intensive investigation.
[ * ]. In this manner, activation pathways that mediate multiple functions in T
cells can be deconvoluted in a step-wise manner.
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2.2 Secondary assays measuring T cell differentiation into [ * ] and [ * ]
cells in T cell lines and primary human [ * ] T cells
[ * ].
Functionally validated peptide hits will then be used as bait to
isolate their interacting protein targets by genetic (yeast two-hybrid)
screening technologies (see section 3 for yeast two-hybrid details). These
new interacting partners can be cycled into the functional assays to assess
their specific role in T cell signaling. In this manner, activation pathways
that mediate multiple functions in T cells can be deconvoluted in a step-wise
manner.
PROJECT I - PATHWAY MAPPING.
FUNCTIONAL MAPPING OF NOVEL T CELL SIGNALING PROTEINS.
3.1 Yeast two-hybrid screening, to identify and map proteins that interact
with functional peptide hits.
Peptides that modulate lymphocyte activation do so by binding to
intracellular proteins that are members of signal transduction pathways which
ultimately lead to diverse phenotypic endpoints in T cells. Identification of
functional peptide-target protein pairs in these pathways will enable
subsequent screening for low molecular weight compounds that alter T cell
function.
Priority peptide hits from the library screens that alter lymphocyte
activation will be subjected m yeast two-hybrid screening to identify their
intracellular binding partners. The libraries to be screened are described in
section 1 above. The screening protocol for identification of interacting
proteins is summarized in Appendix D. [ * ].
INITIAL STEPS FOR TARGET IDENTIFICATION/VALIDATION (SEE FLOWCHART IN
APPENDIX L).
It is important to recognize that once a target protein/peptide pair
has been identified, the relationship between that target protein and the
pathway of interest for that particular cell type is defined by virtue of the
functional screen that produced it. False positives arise only if the hit binds
to additional proteins not related to the functional pathway of interest. The
binding peptide minimizes this possibility as it binds to only a portion of the
cDNA in a manner that regulates the pathway of interest. Below is a protocol to
discriminate false positives from pathway-specific protein/peptide target pairs.
Once the desired change in the phenotype of the library-infected cells
is achieved, the cDNAs/peptides responsible will be sequenced. Individual
sequences derived from the libraries, and subsequently two-hybrid approaches
will be tested for their ability to alter T or B cell activation as described
earlier. Targets are defined as functional cDNAs whose binding peptide can
alter its influence on lymphocyte activation in a desired way.
The protein/peptide pairs can be subjected to numerous secondary
assays to confirm their role and specificity in lymphocyte
activation/regulation. The type of protein/peptide pairs identified will
dictate the exact assays performed. These assays include [ * ]. These assays
will assist the Joint Novartis-Rigel Research Committee in their determination
of targets to be introduced into Novartis small molecule compound screens.
Below is a brief description of the rationale and approach for each of the
assays described above.
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[ * ].
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30.
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HEADCOUNT
To run optimally, the T cell project (Project I) and the B cell
project (Project II) will each take 12 full-time Rigel FTEs. Listed here are
the scientists who would begin working on the T cell project:
[ * ]
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31.
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APPENDIX A
[ * ]
APPENDIX B
[ * ]
APPENDIX C
[ * ]
APPENDIX D(1)
[ * ]
APPENDIX D (2)
[ * ]
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APPENDIX E
PROTOCOL FOR TRANSFECTION OF PHOENIX CELLS AND INFECTION OF NONADHERENT
TARGET CELLS
DIAGRAM
DAY 1:
Seed Phoenix cells (Es or As) in 10cm plates at 5 x 10E6 cells in 6
ml (DMEM + 10% FBS + Pen/Strep) per plate the day before transfection.
DAY 2:
Allow all reagents to reach room temperature 30 min. before
starting. Add 50 mM chloroquine at 8 microliter/plate (50 microM final)
before preparing the transfection solution.
Mix CaPO4 reagents in 15ml polypropylene tube:
per plate: 10 micrograms DNA 122 microliter 2M CaCl2 876
microliter H20 1.0ml 2X HBS
Add 2X I-lBS and depress the expulsion button completely to bubble
air through the mix for 10 secs. Immediately add mixture gently dropwise to
plate.
Incubate 3-8 hours.
Remove medium and replace with 6.0 ml DMEM-medium.
DAY 3:
Change medium again to 6.0 mls of medium optimal for the cells to be
infected.
Move to 32 DEG. C either in the rooming or afternoon depending on
the Phoenix cell confluency and whether you will infect at 48 or 72 hrs after
transfection.
DAY 4 OR 5:
Collect virus supernatant from transfected plates (6.0 ml) into 50
ml tubes and add protamine sulfate to a final concentration of 5 microgram/ml.
Pass through a 0.45 micrometer filter.
Count target cells and distribute 10E7 cells per 10 cm plate
transfected to 50 ml tubes and pellet 5 min.
Resuspend each pellet of target cells in virus supernatant and
transfer to a 6 well plate at 1.0-1.2 ml per well.
Seal plate with parafilm and centrifuge at RT for 30-90 min. at 2500
RPM.
Remove parafilm and incubate plate over night at 37 DEG. C.
DAY 5:
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Collect and pellet each well of target cells. Resuspend in 3 ml
medium and transfer back to the same 6well plate.
Infection can be repeated by refeeding the Phoenix cells with 6ml
fresh medium and reinfecting the same cells again up to 3 times to increase %
of cells infected (for instance at 48, 56, and 72 hours)
DAY 7 OR DAY 8:
At 48 to 72 hrs. post infection, target cells are ready to analyze
for expression.
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APPENDIX F
[ * ]
APPENDIX G
[ * ]
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APPENDIX H
[ * ]
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36.
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Appendix J
[ * ]
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37.
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Appendix K
[ * ]
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38.
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Appendix L (1)
[ * ]
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39.
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Appendix L(2)
[ * ]
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40.
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igel-Novartis Collaboration
[ * ]
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EXHIBIT A-2
B-CELL PROGRAM OF RESEARCH
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PROVISIONAL DRAFT
NOVEL REGULATORY PATHWAYS IN T AND B LYMPHOCYTES
NOVARTIS PROJECT OUTLINE
PROJECT II: IDENTIFICATION OF REGULATORY PROTEINS THAT AFFECT
BCR-INDUCED IG PRODUCTION
INTRODUCTION
Activation of specific signaling pathways in lymphocytes determines
the quality, magnitude and duration of immune responses. In transplantation,
acute and chronic inflammatory diseases, and autoimmunity, it is these pathways
that are responsible for the induction, maintenance and exacerbation of disease
lymphocyte responses. Of the many activation pathways that have been elucidated,
most are ubiquitous and not unique to a particular cell lineage. The goal of
this proposal is to identify and validate novel (signaling) molecules specific
for B cell activation and effector function as potential pharmacological
targets for B cell inhibition. From these molecules, B ce!l-specific targets
will be identified that are effective in modulating immune-mediated processes.
A combination of high throughput functional and yeast two-hybrid genetic
screens will be employed to isolate and map novel (signaling) molecules
essential for lymphocyte activation. Engagement of the [ * ] together with
additional activation principals stimulates humoral immunity characterized by
immunoglobulin production and antigen presentation by B cells. Summarized
below, in Table 1, are [ * ] strategies for identifying and validating novel B
cell intracellular signaling molecules. Each approach, its readout, and the
libraries to be used are detailed in the remaining sections of the proposal.
Two of these approaches (to be chosen by the Joint Novartis-Rigel Research
Management Committee) will be pursued initially.
PREFINAL DRAFT -- ELEMENTS YET TO BE FINALIZED
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43.
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TABLE 1. SUMMARY OF SCREENS TO IDENTIFY INTRACELLULAR REGULATORS OF LYMPHOCYTE
ACTIVATION AND/OR EFFECTOR FUNCTION.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
PROJECT II
IDENTIFICATION OF
REGULATORY PROTEINS THAT
AFFECT BCR-INDUCED IG
PRODUCTION
- ------------------------------------------------------------------------------
<S> <C> <C>
APPROACH READOUT LIBRARY
- ------------------------------------------------------------------------------
1. PRIMARY SCREENS
- ------------------------------------------------------------------------------
[ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------
2. SECONDARY ASSAYS
- ------------------------------------------------------------------------------
[ * ] [ * ]
- ------------------------------------------------------------------------------
</TABLE>
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44.
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EXPERIMENTAL DESIGN AND METHODS
IDENTIFICATION OF REGULATORY PROTEINS THAT AFFECT B CELL ACTIVATION
1 Primary Screens
During xeno-transplantation, the initial hyperacute rejection is
predominantly mediated by complement and secretory Ig. Inhibition of secretory
Ig production may result in suppression of the rejection. Therefore, the
primary goal of our screen is to identify protein targets that are involved in
the pathways that lead to the production and secretion of Ig. [ * ]. The
knowledge obtained from these screens provides a comprehensive perspective on
this complex and intractable area in a manner not possible with any single
approach.
1.1 Screen 1: Primary peptide screen looking for signaling molecules involved
in [ * ] activation as measured by inhibition of B cell activation marker
up-regulation.
[ * ]
PEPTIDE LIBRARY SCREENING AND PROTEIN TARGET IDENTIFICATION:
[ * ]
1.2 Screen 2: Primary peptide screen for inhibitors of [ * ] promoter activity
in a mature B cell line stimulated through [ * ].
[ * ]
1.3 Screen 3: Primary peptide screen for inhibitors of [ * ] as measured by
[ * ] in a mature B cell line.
[ * ]
1.4 Back-up Screen: Primary peptide screen for inhibition of [ * ] measured
by [ * ] in a mature or immature B cell line.
[ * ]
2. SECONDARY ASSAYS TO ASSESS PHYSIOLOGIC CHARACTERISTICS AND
SPECIFICITY OF PRIMARY FUNCTIONAL PEPTIDE HITS.
2.1 Secondary assays measuring [ * ] in B cell lines and primary human PBL B
cells stimulated through [ * ].
After library enrichment, individual sequences shown to modulate BCR
signaling and/or Ig secretion will be introduced into a standard set of
secondary assays. The overall aim of these assays is to test the specificity
and physiologic characteristics of the functional peptide hits. This will be
a critical step in prioritizing hits for more intensive investigation. [ * ].
Functionally validated peptide hits will then be used as bait to
isolate their interacting protein targets by genetic (yeast two-hybrid)
screening technologies (see section 3 for yeast two-hybrid details). These
new interacting partners can be cycled into the functional assays
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45.
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to assess their specific role in Ig secretion. In this manner, activation
pathways that mediate multiple functions in Ig secretion can be deconvoluted
in a step-wise manner.
2.2 Additional assays to further characterize the specificity of hits that
block [ * ].
In addition to secondary assays directly targeting [ * ], a
combination of generic assays [ * ].
Peptide hits validated in these [ * ] assays will be cycled into
yeast two-hybrid screens as described in section 2.1 and section 3.1.
PATHWAY MAPPING.
FUNCTIONAL MAPPING OF NOVEL B CELL SIGNALING PROTEINS.
3.1 Yeast two-hybrid screening to identify and map proteins that interact
with functional peptide hits.
Peptides that modulate lymphocyte activation do so by binding to
intracellular proteins that are members of signal transduction pathways which
ultimately lead to diverse phenotypic endpoints in B cells. Identification of
functional peptide-target protein pairs in these pathways will enable
subsequent screening for low molecular weight compounds that alter T and B
cell function.
Priority peptide hits from the library screens that alter [ * ]
signaling will be subjected to yeast two-hybrid screening to identify their
intracellular binding partners .(Appendix N). The libraries to be screened
will be derived from various populations of B cells. The screening protocol
for identification of interacting proteins is summarized in Appendix O. [ * ].
Isolated proteins that are determined to interact with the
functional sequence baits will be tested for their ability to affect [ * ]
signaling in the previously discussed secondary assays. The various ways to
determine function in the secondary assays is [ * ].
INITIAL STEPS FOR TARGET IDENTIFICATION/VALIDATION (SEE FLOWCHART IN
APPENDIX QI AND Q2).
It is important to recognize that once a target protein/peptide pair
has been identified, the relationship between that target protein and the
pathway of interest for that particular cell type is defined by virtue of the
functional screen that produced it. False positives arise only if the hit
binds to additional proteins not related to the functional pathway of interest.
The binding peptide minimizes this possibility as it binds to only a portion of
the cDNA in a manner that regulates the pathway of interest. Below is a
protocol to discriminate false positives from pathway-specific protein/peptide
target pairs.
Once the desired change in the phenotype of the library-infected cells
is achieved, the cDNAs/peptides responsible will be sequenced. Individual
sequences derived from the libraries, and subsequently two-hybrid approaches
will be tested for their ability to alter B cell activation as described
earlier in Sections 1 and 2. Initial targets are defined as functional cDNAs
whose binding peptide can alter its influence on lymphocyte activation in a
desired way.
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The protein/peptide pairs can be subjected to numerous secondary
assays to confirm their role and specificity in lymphocyte
activation/regulation. The type of protein/peptide pairs identified will
dictate the exact assays performed. These assays include [ * ]. Below is a
brief description of the rationale and approach for each of the assays
described above.
[ * ]
Some or all of the above methods can be employed to confirm that a
protein/peptide pair, identified in the initial screen is functionally
relevant. Because of our retroviral technology virtually any strategy of
intracellular expression can be utilized to verify protein/peptide target
pairs in living cells. It will be the task of the RMC to determine which
assays are necessary to sufficiently define a functional protein/peptide pair
for the next phase of development, specifically small molecular weight
compound screening.
3.2 Additional levels of Yeast two-hybrid screening to identify and map
proteins that interact with the functional cDNA target
The functional cDNA targets identified in 3.1 that bind to the
inhibitory peptide will be used as bait to identify its binding partners.
This second level of yeast two-hybrid analysis will identify [ * ].
HEADCOUNT
To run optimally, the T cell project (Project I) and the B cell
project (Project II) will each take 12 full-time Rigel FTEs. Listed here are
the scientists who would begin working on the B cell project (see Appendix R
for an amended list of the scientists who will begin working on the T cell
project):
[ * ].
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APPENDIX A
[ * ]
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APPENDIX B
[ * ]
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APPENDIX D
PROTOCOL FOR TRANSFECTION OF PHOENIX CELLS AND INFECTION OF NONADHERENT TARGET
CELLS
DIAGRAM
Day 1:
Seed phoenix cells (Es or As) in 10cm plates at 5 x 10E6 cells in 6 ml (DMEM
+ 10% FBS + Pen/Strep) per plate the day before transfection.
Day 2:
Allow all reagents to reach room temperature 30 min. before staring. Add 50
mM chloroquine at 8 microliter/plate (50 microM final) before preparing the
transfection solution.
Mix CaPO4 reagents in 15 ml polypropylene tube:
Per plate: 10 micrograms DNA
122 microliters 2M CaCl2
876 microliters H2O
1.0ml 2X HBS
Add 2X HBS and depress the expulsion button completely to bubble air through
the mix for 10 secs. Immediately add mixture gently dropwise to plate.
Incubate 3-8 hours.
Remove medium and replace with 6.0 ml DMEM-medium.
Day 3:
Change medium again to 6.0 mls of medium optimal for the cells to be
infected. Move to 32 degrees C either in the morning of afternoon depending
on the Phoenix cell confluency and whether you will infect at 48 or 72 hrs
after transfection.
Day 4 or 5:
Collect virus supernatant form transfected plates (6.0 ml) into 50 ml tubes
and add protamine sulfate to a final concentration of 5 micrograms/ml. Pass
through a 0.45 microm filter. Count target cells and distriubte 10x7 cells
per 10cm plate transfected to 50 ml tubes and pellet 5 min. Resuspend each
pellet of target cells in virus supernatant and transfer to a 6 well plate at
1.0-1.2 ml per well. Seal plate with parafilm and centrifuge at RT for 30-90
min. at 2500 RPM. Remove parafilm and incubate plate over night at 37 degrees
C.
Day 5:
Collect and pellet each well of target cells. Resuspend in 3 ml medium and
transfer back to same 6 well plate. Infection can be repeated by refeeding
the Phoenix cells with 6ml fresh medium and reinfecting the same cells agains
up to 3 times to increase % of cells infected (for instance at 48, 56, and 72
hours)
Day 7 or Day 8:
At 48 to 72 hrs. post infection, target cells are ready to analyze for
expression.
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APPENDIX E
[ * ]
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APPENDIX F
[ * ]
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52.
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APPENDIX G
[ * ]
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53.
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APPENDIX H
[ * ]
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54.
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APPENDIX I
[ * ]
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55.
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APPENDIX J
[ * ]
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56.
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APPENDIX K
[ * ]
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57.
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APPENDIX L
[ * ]
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58.
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APPENDIX M
[ * ]
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59.
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APPENDIX N
[ * ]
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60.
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APPENDIX O
[ * ]
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61.
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APPENDIX P(1)
[ * ]
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62.
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APPENDIX P(2)
[ * ]
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63.
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APPENDIX Q1 FLOW CHART FOR FUNCTIONAL SCREENS
(IDENTIFICATION OF TARGET PROTEIN/PEPTIDE PAIRS)
[ * ]
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APPENDIX Q2
TARGET VALIDATION STEPS
[ * ]
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RIGEL/NOVARTIS COLLABORATION TIMELINE
[ * ]
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66.
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EXHIBIT B
<TABLE>
<CAPTION>
NUMBER
OF COMMENCEMENT
PROJECT FTES DATE
<S> <C> <C>
B-1 T-Cell Project 12 Effective Date
B-2 B-Cell Project 12 To be determined
</TABLE>
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67.
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EXHIBIT C
LICENCE TERMS UNDER ARTICLES 5.6 AND 6.4
1. DEFINITIONS:
For purposes of this Exhibit C the term
- - "Direct Product" shall mean a product developed by Novartis based upon
a Rigel-supplied compound or a derivative thereof, the manufacture, use
or sale of which in the absence of a licence, would infringe a valid
claim (to be defined in a full agreement) of Rigel.
- - "Indirect Product" shall mean a product developed by Novartis based
upon a Rigel-supplied compound or a derivative thereof and which is not
a Direct Product.
2. CONSIDERATION DUE FOR EACH DIRECT PRODUCT:
<TABLE>
<S> <C> <C>
(A) LICENSE EXECUTION AND MILESTONE PAYMENTS
Upon execution of license $[ * ]
Upon start of Phase I Clinical Trials $[ * ]
Upon NDA submission $[ * ]
Upon NDA approval $[ * ]
(B) ROYALTIES ON ANNUAL NET SALES OF DIRECT PRODUCTS DURING PATENT
TERM*:
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
*subject to a deduction from royalty payments of an amount corresponding to 50% of
the milestone payments made to Rigel under 2(a), provided, that each royalty payment
shall not be reduced by more than 50% of the amount due prior to applying the milestone
payment credit
</TABLE>
3. CONSIDERATION DUE FOR EACH INDIRECT PRODUCTS:
- - License execution and milestone payments equal to [ * ] of the amounts
set forth in 2.(a) above for Direct Products;
- - No royalties.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
68.
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EXHIBIT D
THIRD PARTY LICENSES
Agreement between the Board of Trustees of the Leland Stanford Junior University
and Rigel Pharmaceuticals, Inc. dated October 7, 1996
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69.
<PAGE>
COLLABORATION AGREEMENT
BY AND BETWEEN
RIGEL PHARMACEUTICALS, INC.
AND
NOVARTIS PHARMA AG
------------------
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1.
<PAGE>
<TABLE>
<S> <C>
1. DEFINITIONS...........................................................1
2. SELECTION OF PROJECTS.................................................5
2.1 Novartis Access to Five Projects.................................5
2.2 Proposal for a Program of Research...............................5
2.3 Number and Kind of Additional Programs of Research...............6
2.4 T-Cell Project...................................................6
2.5 B-Cell Project...................................................6
3. RESEARCH COOPERATION GOVERNANCE.......................................6
3.1 Joint Cooperation Committee Formation............................6
3.2 CMC Actions......................................................7
3.3 Meetings of the CMC..............................................7
3.4 Minutes..........................................................7
3.5 Subcommittees....................................................7
3.6 Reports..........................................................8
3.7 CMC Functions and Powers.........................................8
3.8 Project Contact Persons..........................................8
3.9 Obligations of Parties...........................................8
3.10 Limitations of Powers of the CMC.................................9
4. CONDUCT OF JOINT AND AT-NOVARTIS......................................9
4.1 Conduct of Joint Projects........................................9
4.2 Conduct of At-Novartis Projects.................................10
4.3 Additional Projects.............................................10
4.4 Disclosure......................................................10
4.5 Discretionary Termination of Research Period....................10
4.6 Termination of Collaboration Project for Breach.................11
4.7 Termination of Joint Project for Scientific Reasons.............12
4.8 Existing Obligations............................................12
5. COMPOUND SCREENING AND DEVELOPMENT...................................12
5.1 Novartis Compound Screening.....................................12
5.2 Exclusivity Term................................................12
5.3 Novartis Diligence..............................................13
5.4 Reporting.......................................................13
</TABLE>
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i.
<PAGE>
<TABLE>
<S> <C>
5.5 Conversion of Exclusive Right...................................13
5.6 Rigel Screening.................................................13
6. LICENSE GRANTS; NONCOMPETITION.......................................13
6.1 Research License Grants.........................................13
6.2 Commercial License Grants.......................................14
6.3 License to Rigel of Improvements to Rigel Core Technology.......14
6.4 Option for License for Rigel Lead Compound......................14
7. FINANCIAL SUPPORT....................................................14
7.1 Research Support................................................14
7.2 Milestone Payments to Rigel.....................................15
7.3 Project Access Payments.........................................15
7.4 Royalties.......................................................15
7.5 Extension Fee...................................................15
8. INTELLECTUAL PROPERTY................................................16
8.1 Ownership of Project Know-How; Inventions.......................16
8.2 Patent Prosecution..............................................16
8.3 Infringement of Third-Party Rights..............................16
9. REPRESENTATIONS AND WARRANTIES.......................................16
9.1 Representations and Warranties..................................16
9.2 Disclaimer Concerning Technology................................17
10. CONFIDENTIALITY; PUBLICATION.........................................17
10.1 Confidentiality.................................................17
10.2 Authorized Disclosure...........................................18
10.3 Publications....................................................18
10.4 Samples.........................................................19
11. TERM AND TERMINATION.................................................19
11.1 Term of the Agreement...........................................19
11.2 Termination for Material Breach.................................19
11.3 Accrued Rights, Surviving Obligations...........................19
12. INDEMNITY............................................................20
12.1 Indemnification.................................................20
12.2 Product Liability...............................................20
12.3 Control of Defense..............................................20
</TABLE>
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ii.
<PAGE>
<TABLE>
<S> <C>
13. GOVERNING LAW; DISPUTE RESOLUTION....................................20
13.1 Governing Law...................................................20
13.2 Dispute Resolution..............................................20
13.3 Jurisdiction and Venue..........................................20
14. GENERAL PROVISIONS...................................................20
14.1 Notices.........................................................20
14.2 Force Majeure...................................................21
14.3 Entirety of Agreement...........................................21
14.4 Non-Waiver......................................................21
14.5 Disclaimer of Agency............................................21
14.6 Severability....................................................22
14.7 Ambiguities.....................................................22
14.8 Affiliates; Assignment..........................................22
14.9 Headings........................................................22
14.10 Counterparts....................................................22
</TABLE>
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iii.
<PAGE>
AGREEMENT
Effective as of October 7, 1996 ("Effective Date"), THE BOARD OF
TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate
powers under the laws of the State of California ("STANFORD") and RIGEL
PHARMACEUTICALS, INC., a Delaware corporation having a principle place of
business at 24 Windsor Drive, Hillsborough, CA 94010 ("RIGEL"), agree as
follows:
1. BACKGROUND.
1.1 STANFORD has an assignment of U.S. Patent Application No.
08/589,109, entitled "Methods for Screening for Transdominant Effector
Peptides and RNA Molecules" (the "Nolan/Rothenberg Patent Application")
claiming an invention developed in the laboratory of Dr. Garry Nolan (the
"Invention"), and any Licensed Patent(s), as hereinafter defined, which may
claim such Invention.
1.2 STANFORD has certain biological materials and other know-how
("Know-How"), as herein defined, pertaining to the Invention.
1.3 STANFORD desires to have the Know-How and Invention perfected
and marketed at the earliest possible time in order that products resulting
therefrom may be available for public use and benefit.
1.4 RIGEL desires a license under said Know-How, Invention, and
Licensed Patent(s) in the field of use of gene transfer technologies,
including retrovirally mediated nucleic acid libraries, for drug development,
drug delivery, drug screening, and target analysis and discovery associated
with the development, manufacture, use and sale of Licensed product(s), as
defined below.
1.5 RIGEL acknowledges that certain of the Cell Lines (as defined
below) were made in the course of research supported by Progenesys.
1.6 The patent application entitled "Methods for Screening for
Transdominant Intracellular Effector Peptides and RNA Molecules," which
claims technology useful in the field and which was developed in the
laboratory of Dr. Garry Nolan (the "Nolan Patent Application"), has
previously been assigned to RIGEL.
2. DEFINITIONS.
2.1 "LICENSED BIOLOGICAL MATERIALS" means the materials listed on
Exhibit A, including certain vector libraries ("Vector Libraries") and cell
lines ("Cell Lines") set forth therein, as amended from time to time upon the
parties' mutual written consent.
2.2 "LICENSED KNOW-HOW" means all know-how necessary or useful for
the commercial exploitation of the Licensed Patents in the Licensed Field of
Use, including without limitation all know-how, trade secrets, protocols,
information, processes or other subject matter which is either disclosed in
the Nolan/Rothenberg Patent Application, or necessary or useful to
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AMENDED.
4.
<PAGE>
practice the licenses granted to RIGEL in this Agreement with respect to the
Invention. Licensed Know-How excludes the Licensed Patents and includes the
Licensed Biological Materials.
2.3 "LICENSED PATENT(S)" means (i) any Letters Patent, both foreign
(subject to Section 7) and domestic, issued upon the Nolan/Rothenberg Patent
Application STANFORD's U.S. Patent Application, Serial Number 08/589,109
filed January 23, 1996, (ii) any substitutions, divisionals, continuations,
and continuations-in-part (to the extent such continuations-in-part claim
subject matter disclosed or claimed in the Nolan/Rothenberg Patent
Application as filed on January 23, 1996and to the extent that the practice
of an invention claimed in a Licensed Patent issuing from a patent
application other than such continuation-in-part would infringe a claim of
Licensed Patent issuing from such continuation-in-part), and (iii) any
foreign counterparts of (i) or (ii).
2.4 "LICENSED TECHNOLOGY" means the Licensed Patent(s) and the
Licensed Know-How.
2.5 "LICENSED PRODUCT(S)" means:
(a) any product, the manufacture, use, sale, offer for sale
or import of which:
(1) is covered by a valid claim of an issued,
unexpired Licensed Patent(s) directed to the Invention (claim of an issued,
unexpired Licensed Patent(s) shall be presumed to be valid unless and until
it has been held to be invalid by a final judgment of a court of competent
jurisdiction from which no appeal can be or is taken), or
(2) is covered by any claim being prosecuted in a
pending application directed to the Invention, which claim has not been
pending for more than three (3) years from first filing of such claim;
(b) any product which directly incorporates any of the
Licensed Biological Materials; or
c) any product which would not, but for the use of the
Licensed Biological Materials, have been identified, discovered, or developed.
2.6 "NET SALES" means the gross revenue derived by RIGEL and/or
RIGEL's sublicensee(s) from the sales of Licensed Product(s), less the
following items but only insofar as they actually pertain to the disposition
of such Licensed Product(s) by RIGEL or RIGEL's sublicensee(s), are included
in such gross revenue, and are separately billed:
a) Import, export, excise and sales taxes, and custom duties;
b) Credit for returns, allowances, trades, or retroactive
price adjustments;
c) Transportation charges, issuances and allowances;
d) Discounts actually allowed; or
e) Royalties payable to third parties on the manufacture, use,
sale, offer for sale or import of Licensed Products.
2.7 "LICENSED FIELD OF USE" means the use of gene transfer
technologies, including retrovirally mediated nucleic acid libraries, for
drug development, drug delivery, and target
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
5.
<PAGE>
analysis and discovery. Solely with respect to the [ * ] Cell Lines set forth
on Exhibit A, the Licensed Field of Use excludes the use of such Cell Lines,
derivatives or vectors thereof or other tangible products that are a direct
lineal descendent from such Cell Lines (although obtained in any manner
therefrom), wherein cells treated with any one or more of the aforementioned
materials are contained within a human subject or are subsequently
transplanted into a human subject.
2.8 "EXCLUSIVE" means that, subject to Article 4, STANFORD shall not
grant further licenses in the Licensed Field of Use.
3. GRANT.
3.1 STANFORD hereby grants and RIGEL hereby accepts a worldwide
license in the Licensed Field of Use under STANFORD's right, title and
interest in the Licensed Patents and the Vector Libraries to make, use, sell,
offer for sale and import Licensed Product(s).
3.2 The license granted in Section 3.1 is Exclusive, including the
right to sublicense pursuant to Article 13, in the Licensed Field of Use for
a term (the "Exclusivity Term") commencing as of the Effective Date and
ending on the first to occur of the following:
(a) twenty (20) years from the Effective Date; or
(b) ten (10) years from the date of first commercial sale
of a Licensed Product(s) by RIGEL or RIGEL's sublicensee(s). RIGEL agrees to
promptly inform STANFORD in writing of the date of first commercial sale of
Licensed Products. After expiration of the Exclusivity Term, said license
shall become nonexclusive and continue indefinitely.
3.3 STANFORD additionally grants, and RIGEL hereby accepts, a
worldwide, nonexclusive license in the Licensed Field of Use under STANFORD's
right, title and interest in the Licensed Know-How other than the Vector
Libraries to make, use, sell, offer for sale and import Licensed Product(s).
The term of such nonexclusive license shall commence upon the Effective Date
and, continiue indefinitely.
3.4 Notwithstanding the Exclusive license granted to RIGEL, pursuant
to Sections 3.1 and 3.2, STANFORD shall have the right to practice the
Licensed Patents and to use the Vector Libraries for non-commercial, academic
research purposes.
4. GOVERNMENT RIGHTS.
This Agreement is subject to all of the terms and conditions of
Title 35 United States Code Sections 200 through 204, including an obligation
that Licensed Product(s) sold or produced in the United States be
"manufactured substantially in the United States," and RIGEL agrees to take
all reasonable action necessary on its part as licensee to enable STANFORD to
satisfy its obligation thereunder, relating to the Invention. STANFORD agrees
to provide reasonable assistance to RIGEL in the event RIGEL decides to seek
a waiver under such domestic manufacture requirement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
6.
<PAGE>
5. DILIGENCE.
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture, and sale of Licensed Product(s) and to diligently
develop markets for the Licensed Product(s). RIGEL shall demonstrate such
diligence to STANFORD by achieving proof of principle through written
documentation of the following within eighteen (18) months after the
Effective Date:
a) Construction of a retroviral vector library;
b) Infection of cells with such vector library;
c) Detection of a physiological response to such infection
in an infected cell; and
d) Isolation and analysis of the peptide eliciting such
physiological response from the cell.
5.2 If RIGEL is unable to demonstrate proof of principle within
eighteen (18) months Licensed after the Effective Date, STANFORD may elect to
narrow the definition of the Licensed Field of Use to include only the use of
retrovirally mediated nucleic acid libraries for drug development, drug
delivery, drug screening, and target analysis and discovery, by providing
written notice to RIGEL thereof. Additionally, RIGEL shall provide to
STANFORD within eighteen (18) months after the Effective Date a plan for the
development and commercialization of Licensed Products (a "Development
Plan"). STANFORD shall comment upon and approve such plan, which approval
shall not be unreasonably withheld. After the Development Plan is approved by
STANFORD, RIGEL shall use reasonable efforts to diligently perform its
obligations under such Development Plan. If Stanford reasonably believes that
RIGEL is not using reasonable efforts to perform the Development Plan,
STANFORD may so notify RIGEL. The parties shall promptly thereafter meet to
discuss RIGEL's progress under the Development Plan, and shall develop a
mutually agreeable plan for remedying any such lack of diligence ( the
"Proposed Remedy"). If RIGEL fails to perform the Proposed Remedy within one
hundred and eighty (180) days after the Proposed Remedy is agreed upon,
STANFORD may elect to narrow the definition of the Licensed Field of Use to
include only the use of retrovirally mediated nucleic acid libraries for drug
development, drug delivery, and target analysis and discovery by providing
written notice to RIGEL. If RIGEL then fails to perform the Proposed Remedy
within ninety (90) days after receiving STANFORD's notice that it has elected
to so narrow the Licensed Field of Use definition, then STANFORD may elect to
convert the Exclusive License granted to RIGEL pursuant to Sections 3.1 and
3.2 to a nonexclusive license for the remaining term of this Agreement.
5.3 PROGRESS REPORT. On or before each anniversary of the Effective
Date until RIGEL markets a Licensed Product(s), RIGEL shall make a written
annual report to STANFORD covering RIGEL's progress during the preceding year
toward commercial use of Licensed Product(s). Such report shall include, as a
minimum, information sufficient to enable STANFORD to satisfy relevant
reporting requirements of the U.S. Government and to ascertain progress by
RIGEL toward meeting the diligence requirements of this Article 5.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
7.
<PAGE>
6. ROYALTIES.
6.1 RIGEL agrees to pay to STANFORD a noncreditable, nonrefundable
license issue royalty of [ * ] half of which shall be paid within forty-five
(45) days after the Effective Date and the balance of which shall be on the
first anniversary of the Effective Date.
6.2 Upon each anniversary of the Effective Date, RIGEL shall also
pay to STANFORD a Minimum Annual Royalty as follows:
<TABLE>
<CAPTION>
Anniversary of Effective Date Minimum Annual Royalty Due
<S> <C>
First and Second [ * ]
Third through Seventh [ * ]
Eighth and Thereafter [ * ]
</TABLE>
Said Minimum Annual Royalty payments are nonrefundable but they are
creditable against earned royalties to the extent provided in Paragraph 6.5.
The foregoing Minimum Annual Royalty payment shall be decreased by [ * ] if
either:
(i) Stanford abandons all patent applications from which
Licensed Patent(s) could issue prior to the time that any Licensed Patent(s)
issue; or
(ii) Stanford elects to narrow the definition of the Licensed
Field of Use pursuant to Section 5.2.
6.3 If Rigel grants to a third party a sublicense under the Licensed
Technology solely for research, and not commercialization purposes (a
"Research Sublicense"), Rigel shall also pay to STANFORD a milestone payment
equal to [ * ] of any research milestone payment that RIGEL receives as
consideration for the grant of such Research Sublicense. RIGEL shall pay such
amount to STANFORD within sixty (60) days after RIGEL receives such research
milestone payment.
If RIGEL grants to a third party a sublicense under the Licensed
Technology which includes the right to sell and offer for sale Licensed
products (a "Commercialization Sublicense"), RIGEL shall pay to STANFORD a
sublicense fee as follows:
<TABLE>
<S> <C>
First Sublicense Granted [ * ]
Second Sublicensed Granted [ * ]
Each Additional Sublicense Granted [ * ]
</TABLE>
RIGEL shall pay such sublicense fees to STANFORD within sixty (60) days after
the effective date of each Commercialization Sublicense.
6.4 In addition, RIGEL shall pay STANFORD earned royalties equal to
(i) [ * ] of Net Sales of Licensed Products set forth in Sections 2.5(a) and
2.5(b), or [ * ] of Net Sales of Licensed Products which can only be
categorized under Section 2.5(c). If a Licensed product can be included in
more than one of Sections 2.5(a), 2.5(b) or 2.5(c), the royalty rate due to
STANFORD on Net Sales of such Licensed Product shall be [ * ].
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
8.
<PAGE>
6.5 As further consideration for the license granted to RIGEL under
this Agreement, RIGEL shall issue to STANFORD forty thousand (40,000) shares
of Preferred Stock of RIGEL, pursuant to a Stock Purchase Agreement. If such
number of shares shall equal less than three tenths of one percent (0.3%) of
the total outstanding shares of RIGEL's stock at any time during the period
from the date of issuance of such stock until one (1) year thereafter,
STANFORD and RIGEL shall discuss whether RIGEL shall adjust the number of
shares issued to Stanford under this Section 6.5.
6.6 Creditable payments under this Agreement shall be an offset to
RIGEL against up to fifty percent (50%) of each earned royalty payment which
RIGEL would be required to pay pursuant to Paragraph 6.4 until the entire
credit is exhausted.
6.7 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties hereunder shall
continue until ten (10) years after first commercial sale of Licensed
Products.
6.8 The royalty on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the
payments due STANFORD.
6.9 Within thirty (30) days after receipt of a statement from
STANFORD, RIGEL shall reimburse STANFORD for all costs incurred by STANFORD,
including those costs incurred prior to the Effective Date, in connection
with the preparation, filing and prosecution of all patent applications and
maintenance of patents corresponding to the Invention.
7. PATENT RIGHTS.
STANFORD shall have the obligation to file, prosecute and maintain
all patent applications and patents included in the Licensed Patents.
STANFORD will provide RIGEL with an opportunity to review and comment upon
the prosecution strategy and to consult with STANFORD on the content of
patent filings, and will provide copies of any correspondence relating to
patent applications and patents included in the Licensed Patents to RIGEL or
a designee of RIGEL. RIGEL shall have the right to designate, in its sole
discretion, those foreign countries in which STANFORD will file, prosecute
and maintain patents and patent applications included in the Licensed
Patents. STANFORD may propose to file, prosecute and maintain a Licensed
Patent in a country which RIGEL has not designated pursuant to this Section
7. If RIGEL agrees to such designation, it shall reimburse STANFORD costs of
such filing, prosecution of maintenance of such patent or patent applications
pursuant to Section 6.9 and such patent or patent applications shall be
included in the Licensed Patents. If RIGEL does not agree to such proposal,
STANFORD may elect to proceed with such filing, prosecution or maintenance at
its own expense, and such patent or patent applications shall not be included
in the Licensed Patents.
8. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
9.
<PAGE>
8.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the
first sale of a Licensed Product, RIGEL shall make written reports (even if
there are no sales) and earned royalty payments to STANFORD within thirty
(30) days after the end of each calendar quarter. This report shall be in the
form of the report of Appendix B and shall state the number, description, and
aggregate Net Sales of Licensed Product(s) during such completed calendar
quarter, and resulting calculation pursuant to Paragraph 6.4 of earned
royalty payment due STANFORD for such completed calendar quarter. Concurrent
with the making of each such report, RIGEL shall include payment due STANFORD
of royalties for the calendar quarter covered by such report.
8.2 ACCOUNTING. RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license
herein granted. Such records will include general ledger records showing cash
receipts and expenses, and records which include production records,
customers serial numbers and related information in sufficient detail to
enable the royalties payable hereunder by RIGEL to be determined. RIGEL
further agrees to permit its books and records to be examined by STANFORD
from time to time to the extent necessary to verify reports provided for in
Paragraph 8.1. Such examination is to be made by STANFORD or its designee, at
the expense of STANFORD, except in the event that the results of the audit
reveal an underreporting of royalties due STANFORD of five percent (5%) or
more, then the audit costs shall be paid by RIGEL.
9. NEGATION OF WARRANTIES.
9.1 Nothing in this Agreement is or shall be construed as:
a) A warranty or representation by STANFORD as to the
validity or scope of any Licensed Patent(s);
b) A warranty or representation that anything made, used,
sold, or otherwise disposed of under any license granted in this Agreement is
or will be free from infringement of patents, copyrights, and other rights of
third parties;
c) An obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described in Article 13;
d) Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of STANFORD or other persons
other than Licensed Patent(s), regardless of whether such patents or other
rights are dominant or subordinate to any Licensed Patent(s); or
e) An obligation to furnish any technology or technological
information other than the Licensed Technology.
9.2 Except as expressly set forth in the Agreement STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
10.
<PAGE>
OF THE LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
TRADEMARK, OR OTHER RIGHTS, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
9.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to:
a) U.S. Patent No. 4,237,224, "Process for Producing
Biologically Functional Molecular Chimeras"; U.S. Patent No. 4,468,464 and
U.S. Patent No. 4,740470, both entitled, "Biologically Functional Molecular
Chimeras" (collectively known as the Cohen/Boyer patents), or reissues
thereof; or
b) U.S. Patent 4,656,134 "Amplification of Eucaryotic
Genes" or any patent application corresponding thereto.
9.4 STANFORD warrants that it has all right, power and authority
necessary to grant the licenses set forth in Article 3 to RIGEL, and that it
has not, and will not during the term of this Agreement, grant any right to
any third party which would conflict with the rights granted to RIGEL
hereunder.
10. INDEMNITY.
10.1 RIGEL agrees to indemnify, hold harmless, and defend STANFORD
and Stanford Health Services and their respective trustees, officers,
employees, students, and agents against any and all claims by third parties
for death, illness, personal injury, property damage, and improper business
practices arising out of the manufacture, use, sale, or other disposition of
the Invention, Licensed Technology, or Licensed Product(s) by RIGEL or
RIGEL's sublicensee(s) or customers.
10.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort
(including negligence), strict liability, contract or otherwise. STANFORD
shall not have any responsibilities or liabilities whosoever with respect to
Licensed Product(s).
10.3 RIGEL shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
10.4 In addition to the foregoing, RIGEL shall maintain Comprehensive
General Liability Insurance, with reputable and financially secure insurance
carrier(s) to cover the activities of RIGEL and its sublicensee(s) in the
amounts and during the periods specified herein. Such insurance shall provide
minimum limits of liability of One Million Dollars ($1,000,000) as of the first
anniversary of the date upon which RIGEL first leases a facility in which it
will conduct research and development activities, and of Five Million Dollars
($5,000,000) as of the commencement of human clinical trials of Licensed
Products. Such insurance shall include STANFORD, Stanford Health Services, their
trustees, directors, officers, employees, students, and agents as additional
insureds. Such insurance shall be written to cover claims incurred,
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
11.
<PAGE>
discovered, manifested, or made during or after the expiration of this
Agreement. At STANFORD's request, RIGEL shall furnish a Certificate of
Insurance evidencing primary coverage and requiring thirty (30) days prior
written notice of cancellation or material change to STANFORD. RIGEL shall
advise STANFORD, in writing, that it maintains excess liability coverage
(following form) over primary insurance for at least the minimum limits set
forth above. All such insurance of RIGEL shall be primary coverage; insurance
of STANFORD or Stanford Health Services shall be excess and noncontributory.
11. MARKING.
Prior to the issuance of patents on the Invention, RIGEL agrees to mark
Licensed Product(s) (or their containers or labels) made, sold, or otherwise
disposed of by it under the licenses granted in this Agreement with the words
"Patent Pending," and following the issuance of one or more patents, with the
numbers of the Licensed Patent(s).
12. STANFORD NAMES AND MARKS.
RIGEL agrees not to identify STANFORD in any promotional advertising or other
promotional materials to be disseminated to the pubic or any portion thereof
or to use the name of any STANFORD faculty member, employee, or student or
any trademark, service mark, trade name, or symbol of STANFORD or the
Stanford University Hospital, or that is associated with either of them,
without STANFORD's prior written consent, except as required by law. STANFORD
shall not unreasonably hold consent under this Section 12.
13. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS.
13.1 RIGEL shall promptly inform STANFORD of any suspected
infringement of any Licensed Patent(s) by a third party. During the Exclusive
period of this Agreement, STANFORD and RIGEL each shall have the right to
institute an action for infringement of the Licensed Patent(s) against such
third party in accordance with the following:
a) If STANFORD and RIGEL agree to institute suit jointly,
the suit shall be brought in both their names, the out-of-pocket costs
thereof shall be borne equally, and any recovery or settlement shall be
shared equally. RIGEL and STANFORD shall agree to the manner in which they
shall exercise control over such action. STANFORD may, if it so desires, also
be represented by separate counsel of its own selection, the fees for which
counsel shall be paid by STANFORD;
b) In the absence of agreement to institute a suit jointly,
STANFORD may institute suit, and, at its option, join RIGEL as a plaintiff.
If STANFORD decides to institute suit, then it shall notify RIGEL in writing.
STANFORD shall bear the entire cost of such litigation and shall be entitled
to retain the entire amount of any recovery or settlement; and
c) In the absence of agreement to institute a suit jointly and
if STANFORD notifies RIGEL that it has decided not to join in or institute a
suit, as provided in (a) or (b) above, RIGEL may institute suit and, at its
option, join STANFORD as a plaintiff. RIGEL shall bear the entire cost of such
litigation and shall be entitled to retain the entire amount of any recovery or
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
12.
<PAGE>
settlement, provided, however, that any recovery in excess of litigation
costs shall be deemed to be Net Sales, and RIGEL shall pay STANFORD royalties
thereon at the rates specified herein.
13.2 Should either STANFORD or RIGEL commence a suit under the
provisions of Paragraph 12.1 and thereafter elect to abandon the same, it
shall give timely notice to the other party who may, if it so desires,
continue prosecution of such suit, provided, however, that the sharing of
expenses and any recovery in such suit shall be as agreed upon between
STANFORD and RIGEL.
14. SUBLICENSE(S).
14.1 RIGEL may grant sublicense(s) under its Exclusive license
rights during the Exclusivity Term. RIGEL may grant sublicense(s) under
nonexclusive license rights, if such sublicense is in conjunction with a
sublicense of other RIGEL proprietary technology.
14.2 If RIGEL is unable or unwilling to serve or develop a potential
market or market territory for which there is a willing sublicense(s), RIGEL
will, at STANFORD's request negotiate in good faith a sublicense(s) hereunder
on commercially reasonable terms.
14.3 Any sublicense(s) granted by RIGEL under this Agreement shall
be subject and subordinate to terms and conditions of this Agreement, except:
a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant a sublicense to a third party; and
b) The earned royalty rate specified in the sublicense(s)
may be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions
of Articles 8, 9, and 10 for the benefit of STANFORD and provide for the
transfer of all obligations including the payment of royalties specified in
such sublicense(s), to STANFORD or its designee, in the event that this
Agreement is terminated.
14.4 RIGEL agrees to provide STANFORD a copy of any sublicense(s)
granted pursuant to this Article 14.
15. TERMINATION.
15.1 RIGEL may terminate this Agreement by giving STANFORD notice in
writing at least thirty (30) days in advance of the Effective Date of
termination selected by RIGEL.
15.2 STANFORD may terminate this Agreement if RIGEL:
a) Is in default in payment of royalty or providing of
reports;
b) Is in material breach of any provision hereof; or
c) Intentionally provides any false report;
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
13.
<PAGE>
and RIGEL fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof by STANFORD.
15.3 Surviving any termination are:
a) RIGEL's obligation to pay royalties accrued or accruable;
b) Any cause of action or claim of RIGEL or STANFORD,
accrued or to accrue, because of any breach or default by the other party; and
c) The provisions of Articles 8, 9, and 10.
16. ASSIGNMENT.
This Agreement may not be assigned by either party without the
express written consent of the other party, except that RIGEL may assign the
Agreement in connection with a merger, consolidation or sale of all or
substantially all of RIGEL's assets.
17. DOUBLE PATENTING CONTINGENCY.
If the PTO rejects either the Nolan/Rothenberg Patent Application
for double patenting in view of the claims of the Nolan Patent Application,
or the claims of the Nolan Patent Application for double patenting in view of
the claims of the Nolan/Rothenberg Patent Application, then RIGEL may elect
to assign its right, title and interest in the Nolan Patent Application to
STANFORD, in which case STANFORD shall grant to RIGEL an irrevocable,
exclusive, worldwide, royalty-free license under STANFORD's right, title and
interest in the Nolan Patent Application for all purposes.
18. ARBITRATION.
18.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising
under this Agreement, shall be settled by arbitration in accordance with the
Licensing Agreement Arbitration Rules of the American Arbitration Association.
18.2 Upon request by either party, arbitration will be by a third
party arbitrator mutually agreed upon in writing by RIGEL and STANFORD within
thirty (30) days of such arbitration request. Judgement upon the award
rendered by the arbitrator shall be final and nonappealable and may be
entered in any court having jurisdiction thereof.
18.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
18.4 Any arbitration shall be held at Stanford, California, unless
the parties hereto mutually agree in writing to another place.
19. NOTICES.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
14.
<PAGE>
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: 24 Windsor Drive
Hillsborough, CA 94010
Attention: Dr. Donald G. Payan
Either party may change its address upon written notice to the other party.
20. WAIVER
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
21. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California.
22. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not be in any way affected or impaired
thereby.
23. ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto, embodies
the entire understanding of the parties and shall supercede all previous
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
24. COUNTERPARTS.
This Agreement may be executed in counterparts, with the same force
and effect as if the parties had executed the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
in duplicate originals by their duly authorized officers or representatives.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
15.
<PAGE>
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Katherine Ku
-----------------------------
Name Katherine Ku
-------------------------------
Title Director, Technology Licensing
-------------------------------
Date October 7, 1996
-------------------------------
RIGEL
Signature /s/ Donald G. Payan
-----------------------------
Name Donald G. Payan
-------------------------------
Title President & CEO
-------------------------------
Date 10/9/96
-------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
16.
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EXHIBIT A
MATERIALS FROM NOLAN LAB TO BE
LICENSED TO RIGEL
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
1.
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EXHIBIT B
SAMPLE REPORTING FORM
Stanford Docket No. S______-________
This report is provided pursuant to the license agreement between
Stanford University and
------------------------------------------------------.
License Agreement Effective Date: __________________________
Report Covering Period _________
Fixed Fees (Annual Minimum Payment) $________
Number of Sublicense Executed _________
Net Sales $________
Royalty Calculation _________
Royalty Subtotal $________
Credit $________
Royalty Due $________
Comments:
ii.
<PAGE>
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
EXHIBIT 10.9
LICENSE AND RESEARCH AGREEMENT
THIS LICENSE AND RESEARCH AGREEMENT (the "Agreement") is made and
entered into as of 2 September, 1999, (the "Effective Date") by and between
Rigel Pharmaceuticals, Inc., a corporation organized under the laws of
Delaware and having a principal place of business at 240 East Grand Avenue,
South San Francisco, CA 94080 ("Rigel") and Cell Genesys, Inc. a corporation
organized under the laws of Delaware and having a principal place of business
at 342 Lakeside Drive, Foster City, CA 94404 ("CG"). Rigel and CG may be
referred to collectively as the "Parties," or individually as a "Party."
RECITALS
WHEREAS, CG owns patents relating to [ * ] cell lines [ * ] and [ * ]
cell lines [ * ], and related technology; and
WHEREAS, Rigel has a license to the [ * ] cell lines, associated
vectors and vector libraries under intellectual property rights owned by
Stanford University; and
WHEREAS, CG and Rigel desire to enter into an agreement granting each
other licenses under such patents and other intellectual property rights as
provided herein; and
WHEREAS, Rigel is in the business of, among other things, providing
services for identifying molecules which bind together in intracellular
signaling pathways, and CG desires that Rigel perform such services for CG to
identify peptides, proteins and/or Genetic Material (as defined below) that
modulate angiogenesis in endothelial tissues.
NOW THEREFORE, in consideration of the foregoing premises
and the covenants and promises contained in this Agreement, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "AFFILIATE" shall mean, with respect to a Party to this Agreement,
any other entity, whether de jure or de facto, which directly or indirectly
controls, is controlled by, or is under common control with, such Party. A
business entity or Party shall be regarded as in control of another business
entity if it owns, or directly or indirectly controls, at least fifty percent
(50%) (or such lesser percentage which is the maximum allowed to be owned by
a foreign entity in a particular jurisdiction) of the voting stock or other
ownership interest of the other entity, or if it
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
1.
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directly or indirectly possesses the power to direct or cause the direction
of the management and policies of the other entity by any lawful means
whatsoever.
1.2 "CG COLLABORATION PARTNERS" means those third parties which enter
into a research or development agreement with CG under which CG conducts
substantial research or development activities in collaboration with such
third party and grants a license to such third party under patents and/or
know-how owned or controlled by CG in addition to a sublicense under the
Rigel Biological Materials or Rigel Know-How, which licenses and sublicense
are for the further development and commercialization of the results of such
collaborative research or development.
1.3 "CG [ * ] FIELD" means human Gene Therapy and animal Gene Therapy.
1.4 "CG KNOW-HOW" means all Information Controlled by CG as of the
Effective Date that is necessary or useful for practicing the CG Patents.
1.5 "CG LICENSE" means the license agreement between CG and [ * ] as in
effect as of the Effective Date and attached hereto as Appendix A.
1.6 "CG PATENTS" means the Patents and applications listed on Appendix
B, to the extent the same as Controlled by CG.
1.7 "CG PROGRAM FIELD" means the research, development or
commercialization of human or animal therapeutic products and services, which
products and/or services are comprised of peptides, proteins or Gene Therapy.
1.8 "CONTROL" OR "CONTROLLED" means ownership of, or a license to, a
particular item, material or intellectual property right with the ability to
grant to the other Party access to and/or a license or sublicense as provided
for herein without violating the terms of any agreement with a Third Party
under which such rights were acquired from such Third Party.
1.9 "FIELD OF RESEARCH" means identification of peptides, proteins and/or
Genetic Material that modulate angiogenesis in endothelial tissues.
1.10 "FTE" means a full-time employee or consultant of Rigel or the
equivalent thereof.
1.11 "FTE YEAR" means the amount of time one FTE would spend working during
one (1) calendar year.
1.12 "GENE THERAPY" means a product or service for the treatment or
prevention of a disease that utilizes ex vivo or in vivo delivery (via viral
or nonviral gene transfer methods or systems) of Genetic Material, including
any cell incorporating Genetic Material.
1.13 "GENETIC MATERIAL" means a nucleotide sequence, including DNA, RNA
and complementary and reverse complementary nucleotide sequences thereto,
whether coding or noncoding and whether intact or a fragment.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
2.
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1.14 "INFORMATION" means any and all information, including without
limitation techniques, inventions, practices, methods, knowledge, know-how,
skill, experience, test data, analytical and quality control data, compositions
and assays, and any business, marketing, personnel or financial information or
matters.
1.15 "PATENT" means an issued, valid, unexpired patent, including any
extension, registration, confirmation, reissue, re-examination or renewal
thereof, or a pending application for a patent, in any country, region or
jurisdiction.
1.16 "PROGRAM KNOW-HOW" shall mean any Information developed in the
Research relating to the development of Therapeutic Candidates, excluding
Information relating to Targets.
1.17 "PROGRAM PATENT" shall mean a Patent claiming inventions or
discoveries in the Program Know-How.
1.18 "PROGRAM TECHNOLOGY" shall mean Program Know-How and Program
Patents.
1.19 "RESEARCH" shall have the meaning provided in Section 3.1(a).
1.20 "RESEARCH PLAN" shall have the meaning provided in Section 3.1(a).
1.21 "RIGEL BIOLOGICAL MATERIALS" means the [ * ] cell lines, associated
vectors and vector libraries set forth in Appendix C.
1.22 "RIGEL COLLABORATION PARTNERS" means those third parties which
enter into a research or development agreement with Rigel under which Rigel
conducts substantial research or development activities in collaboration with
such third party and grants a license to such third party under patents
and/or know-how owned or controlled by Rigel in addition to a sublicense
under CG Patents and/or CG Know-How, which licenses and sublicense are for
the further development and commercialization of the results of such
collaborative research or development.
1.23 "RIGEL FIELD" means the creation and use of virally produced
peptide and protein libraries for the screening of transdominant effector
peptides and RNA molecules as claimed in the patent applications set forth on
Appendix D as well as any processes, techniques and applications disclosed in
the foregoing patents applications; it is understood that the foregoing
technology is to be used for (a) the discovery, validation and development of
targets for human or animal therapeutics, and (b) the discovery, testing,
development and commercialization of therapeutic, diagnostic and drug
delivery products. For purposes of this Section 1.23, "disclosed in" shall
mean disclosed in the specifications of such patent applications as necessary
to practice the invention claimed and not solely as part of the description
of the prior art.
1.24 "RIGEL KNOW-HOW" means all Information Controlled by Rigel as of
the Effective Date necessary or useful for the use or modification of the
Rigel Biological Materials.
1.25 "RIGEL LICENSE" means the license agreements between Rigel and
Stanford University as in effect as of the Effective Date and attached hereto
as Appendix E.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
3.
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1.26 "RMC" shall have the meaning provided in Section 3.2.
1.27 "SUCCESS CRITERIA" shall have the meaning provided in Section
3.1(b).
1.28 "TAIL END PERIOD" shall mean the period of six (6) months after the
end of the Research Period, the purpose of which is to permit the RMC to
identify Therapeutic Candidates; provided, however, that if this Agreement is
terminated prior to or during the Tail End Period, the Tail End Period shall be
deemed to end upon such termination date.
1.29 "TARGET" shall mean a molecule occurring naturally in the body that
is shown during the Research to directly or indirectly cause or impede
angiogenesis in endothelial tissue, to the extent such molecule (or its
binding to another molecule) is agonized or antagonized by a Therapeutic
Candidate. It is understood that a particular protein, peptide of Genetic
Material could be both a Therapeutic Candidate and a Target, and in such case
such molecule shall be treated as a "Target" hereunder to the extent that
such molecule is used as a drug discovery target, and shall at the same time
be treated as a "Therapeutic Candidate" hereunder to the extent such molecule
is used as a drug or therapy.
1.30 "THERAPEUTIC CANDIDATE" shall mean a peptide, protein or Genetic
Material discovered, identified, produced or tested during the Research
Period pursuant to the Research, or identified during the Tail End Period,
which meets the Success Criteria, and any homologues or derivatives thereof.
For such purposes, it is understood that if a protein or peptide meets the
Success Criteria, Genetic Material that codes for such protein or peptide (or
its homologues or derivatives) shall be within the definition of Therapeutic
Candidate (and vice-versa).
1.31 "[ * ] PATENTS" means the patents listed in Appendix F.
ARTICLE 2
LICENSES
2.1 CG LICENSE GRANTS.
(a) Subject to the terms of license of the CG License, CG hereby
grants to Rigel a royalty-free, non-exclusive, worldwide license, with the
right to sublicense to Rigel Collaboration Partners, under and to CG's right,
title and interest in any Program Technology owned solely by CG, all for
purposes solely within the Rigel Field; and hereby waives any claims against
Rigel for the practice and use of the CG Patents and CG Know-How within the
Rigel Field prior to the Effective Date. Any sublicense granted hereunder to
Rigel Collaboration Partners shall be limited to the purposes of such
collaboration (as such purposes are described in Section 1.22 above).
(b) CG hereby grants to Rigel a royalty-free, exclusive, worldwide
license, with the right to grant and authorize sublicenses, under CG's right,
title and interest in the Program Technology that is owned jointly by the
Parties under Section 4.1(d) below, and Targets
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
4.
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that are similarly owned jointly with Rigel, all to make and use the Targets for
purposes outside the CG Program Field.
(c) CG has entered into a license agreement with the [ * ] concerning
the [ * ] Patents which includes the right to sublicense (the "[ * ]
Agreement"); as of the Effective Date, however, the terms under which CG may
grant sublicenses under the [ * ] Agreement make impractical a sublicense to
Rigel under the [ * ] patents for purposes of the Rigel Field. In the event that
CG successfully renegotiates the terms of the [ * ] Agreement such that such
sublicense would be practical, CG agrees to discuss in good faith the grant of a
sublicense to Rigel under the [ * ] patents. The Parties understand and agree,
however, that CG is not and shall not be obligated to enter into any agreement
with Rigel concerning the [ * ] Patents, that failure to reach such an agreement
for any reason shall not be deemed a breach of this Agreement and that this
Section 2.1(C) shall not be deemed to preclude CG form entering into an
agreement with a third party of any type or at any time concerning the [ * ]
Patents.
2.2 RIGEL LICENSE GRANTS.
(a) Subject to the terms and prior to the termination or expiration of
the Rigel License, the Parties agree that Rigel shall grant to CG, at CG's sole
option and upon CG's request, a royalty-free, non-exclusive, worldwide license,
without the right to sublicense, under Rigel's right, title and interest in the
Rigel Know-How and Rigel Biological Materials, to make, have made, use sell,
offer for sale and import products in the CG [ * ] Field. It is understood that
in no event will CG have any obligation to obtain such license from Rigel. Rigel
will give CG thirty (30) days prior written notice of the termination of the
Rigel License by Rigel.
(b) Rigel hereby grants to CG:
(i) a royalty-free, exclusive, world-wide license, with the
right to grant and authorize sublicenses, under Rigel's right, title and
interest in the Program Technology (including without limitation the
Therapeutic Candidates) owned solely by Rigel or jointly with CG, to make,
have made, use, sell, offer for sale and import products, and otherwise
exploit the Program Technology, in each case for purposes solely within the
CG Program Field; and
(ii) subject to rights previously granted to third parties,
a royalty-free, non-exclusive, worldwide license, with the right to grant
sublicenses, under Rigel's right, title and interest in and to all Patents
with priority dates prior to the Effective Date that claim Therapeutic
Candidates, or the manufacture or use thereof, to make, have made, use and
sell products in Gene Therapy incorporating such Therapeutic Candidates.
(c) In addition, Rigel hereby grants to CG a royalty-free,
non-exclusive license, without the right to sublicense to CG Collaboration
Partners, under Rigel's right, title and interest in the Targets to make and
use the Targets solely to for the research and development of Therapeutic
Candidates in the Field of Research. For clarity, it is understood and agreed
that the licenses garanted to CG under this Section 2.2 specifically exclude
the performance by CG of research on or with a Target which is outside the
Field of Research. Any sublicense granted hereunder to CG Collaboration
Partners shall be limited to the purposes of such collaboration.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
5.
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2.3 RIGEL COVENANT. Rigel hereby covenants that neither Rigel nor its
Affiliates will make any claims against CG, its permitted sublicensees,
distributors and customers in the chain of title with CG or its permitted
sublicensees for Patent infringement as a result of activities which are
explicitly permitted under the terms of this Agreement, nor shall Rigel or
its Affiliates authorize a third party to make such a claim, and Rigel agrees
to cooperate with CG in the defense against any such claim by licensees of
Rigel.
2.4 NO OTHER LICENSE. No right or license is granted by either Party to
the other under any other intellectual property other than those items
expressly included in the licenses granted in this Article 2. Accordingly, no
license shall be deemed granted by implication, estoppel or otherwise, if
such license is not expressly and specifically granted in this Article 2.
ARTICLE 3
RESEARCH
3.1 RESEARCH.
(a) Rigel agrees to (i) use diligent efforts to conduct research
within the Field of Research (the "Research"), in accordance with the
research plan (the "Research Plan") incorporated hereby in, and appended to,
this Agreement as Appendix G, as amended from time to time by written
agreement of the Parties; and (ii) use diligent efforts to meet the goals of
the Research Plan according to the timetables set forth therein. Without
limiting the foregoing, the Research shall commence of the Effective Date and
terminate upon the earlier of three (3) years after the Effective Date or the
termination of the Agreement (the "Research Period"). Rigel will commit [ * ]
during each year of the Research Period, or such other allocation as the RMC
may decide, provided that in the event the RMC decides to reallocate FTEs
between years, Rigel shall have no obligation to commit more than [ * ] in
total over the entire Research Period. The individual FTEs who will conduct
the Research are listed in Appendix H and may be replaced by Rigel, as
reasonably agreed by the Parties, with other FTEs of comparable skill and
expertise. Rigel agrees to test against the Success Criteria during the
Research Period any proteins, peptides and Genetic Material produced or
evaluated in connection with the Research as contemplated in the Research
Plan.
(b) The Parties shall reasonably establish criteria for determining
whether a particular peptide, protein or Genetic Material modulates
angiogenesis in endothelial tissue in assays performed at Rigel, as such
criteria are contemplated in the Research Plan (the "Success Criteria").
3.2 RESEARCH MANAGEMENT COMMITTEE. The Parties shall form a research
management committee (the "RMC") comprised of four (4) individuals, two (2)
being Rigel employees appointed and replaced by Rigel at its discretion, and
two (2) being CG employees appointed and replaced by CG at its discretion.
The size and composition of the RMC may be modified by mutual agreement of
the Parties. The RMC shall evaluate the results of the Research set forth in
the research reports pursuant to Section 3.4(a) to assess whether a peptide,
protein or
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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Genetic Material is a Therapeutic Candidate, and perform such other duties as
specifically delegated to the RMC by mutual written agreement of the Parties.
3.3 RMC MEETINGS AND ACTIONS. RMC Meetings shall take place at such
times and places as shall be determined by the RMC in order for the RMC to
fulfill its obligations under Section 3.2. It is expected that the meetings
will alternate between appropriate offices of each Party, or at such other
convenient locations as agreed. If agreed by its members, the RMC may conduct
meetings by telephone or video conference or other acceptable electronic
means, provided that any decisions made during such meeting are recorded in
writing and confirmed by signature of at least one (1) of the RMC members
from each of the Parties. All decisions of or actions taken by the RMC shall
be by unanimous approval of all the members of the RMC, and voting on any
matters shall be reflected in the minutes of the meeting at which the vote
was taken. If the RMC is unable to reach unanimous decision on any particular
matter or issue, such matter or issue shall be referred to the chief
executive officer of each Party or their designees for resolution. It is
understood that for purposes of determining the Parties' rights and
obligations under this Agreement, the authority of the RMC shall be limited
to deciding those specific issues specifically delegated to the RMC in other
Article of this Agreement (i.e., other than the general matters described in
this Article 3).
3.4 REPORTS; DISCLOSURE.
(a) Rigel shall keep CG fully informed of the progress and results
of the Research and shall provide written reports at or before each RMC
meeting describing its activities, the level of effort applied to, and the
results of, the Research, specifically including Rigel's determination as to
which peptides, proteins or Genetic Material as of the date of such report
meet the Success Criteria. Such RMC reports shall be in such form and contain
such detail as the RMC shall determine. Rigel agrees to fully disclose to CG
the Program Technology and the Targets, and to provide CG with reasonable
quantities of Targets and Therapeutic Candidates generated or utilized in
connection with the Research.
(b) Rigel agrees to maintain records of its activities in
performing the Research, in good scientific manner, and to permit CG to have
access to such records upon ten (10) days written notice to Rigel and during
regular business hours, to the extent reasonably necessary to verify that
Rigel has met its obligations under this Section 3.4.
3.5 EXCLUSIVITY OF EFFORTS. Rigel agrees that neither Rigel nor any of
its Affiliates shall directly or indirectly conduct or sponsor any research,
develop or otherwise commercialize any products or technologies within the
Field of Research, other than pursuant to the Research Plan, during the
Research Period and for a period of [ * ] following the Research Period.
Without limiting the foregoing, Rigel shall not appoint or license any third
party to develop market, sell or otherwise distribute such products until
after the expiration of [ * ]following the Research Period.
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
7.
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ARTICLE 4
INTELLECTUAL PROPERTY MATTERS
4.1 OWNERSHIP AND PROSECUTION. Subject to the terms of this Agreement,
as between the Parties hereto:
(a) It is understood that CG retains its entire right, title and
interest in the CG Patents and CG Know-How, subject only to the rights
expressly granted to Rigel hereunder, and shall have the right, but not the
obligation, to file, prosecute and maintain any Patents related thereto at
its expense.
(b) It is understood that Rigel retains its entire right, title and
interest in the Rigel Biological Materials and Rigel Know-How, subject only
to the rights expressly granted to CG hereunder, and shall have the right,
but not the obligation, to file, prosecute and maintain any Patents related
thereto at its expense.
(c) It is understood that, subject only to the rights expressly
granted to the other Party hereunder, each Party retains its entire right,
title and interest in and to any inventions, discoveries, know-how, trade
secrets, and other information made or developed solely by such Party and/or
its consultants in the course of the performance of this Agreement ("Sole
Inventions"), and, subject to subsection (e) below, shall have the right, but
not the obligation, to file, prosecute and maintain any Patents claiming its
Sole Inventions ("Sole Patents") in all countries of the world.
(d) Both Parties shall jointly own any inventions, discoveries,
know-how, trade secrets, and other information, that are made jointly by the
Parties in the course of the performance of this Agreement ("Joint
Inventions"). Subject to subsection (e) below, the RMC shall designate the
Party which shall be responsible for filing, prosecuting and maintaining
Patents claiming Joint Inventions ("Joint Patents"). All costs and expenses
of filing, prosecuting and maintaining such Joint Patents will be borne
equally by the Parties. The Party designated by the RMC to perform patenting
activities shall seek the comments of the other Party and shall keep the
other informed of the progress of such prosecution by providing quarterly
status reports and copies of all correspondence between their patent counsel
and the patent offices of the countries where such applications were filed.
Such other Party shall reasonably assist the Party designated by the RMC in
the prosecution of Joint Patents, including, without limitation, by executing
any necessary powers of attorney. Subject to the rights and licenses granted
to the other Party in Section 2.1(b) and 2.2(b), it is understood that
neither Party shall have any obligation to account to the other, or obtain
the consent of the owner, with respect to the commercialization, licensing or
enforcement of any Joint Patents, and hereby waives any right it may have
under the laws of any country to require such accounting or consent.
(e) CG shall have the right but not the obligation (either itself or
through its designee) to file, prosecute and maintain Patents claiming
Therapeutic Candidates ("Candidate Patents"); provided, however, that for any
molecule that is a Therapeutic Candidate and a Target: (i) CG shall have the
right but not the obligation (either itself or through its designee) to file,
prosecute and maintain Patents claiming uses of such molecule in the CG Program
Field and
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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such Patents also shall be Candidate Patents; and (ii) Rigel shall have the
right, but not the obligation, to file, prosecute and maintain any patents
claiming the composition of matter of such molecule or claiming any use of
the molecule outside the CG Program Field or in the Rigel Field. All costs
and expenses of filing, prosecuting and maintaining Candidate Patents will be
borne by the Party that undertakes such prosecution. The Party undertaking
such prosecution shall seek the comments of the other Party and shall keep
the other Party informed of the progress of such prosecution by providing
quarterly status reports and copies of all correspondence between their
patent counsel and the patent offices of the countries where such
applications were filed. Each Party shall reasonably assist the other Party
in the prosecution of Candidate Patents, including, without limitation, by
executing any necessary powers of attorney and other document, necessary for
such prosecution.
(f) Each Party agrees to keep the other Party fully informed as to
prosecution and maintenance (including without limitation any interference,
opposition or other prosecution or other proceedings) with respect to patents
claiming and disclosing subject matter within the Program Technology. In the
event that a Party elects not to prosecute or maintain any patent rights in a
Sole Invention comprising Program Technology, it shall promptly notify the
other Party and authorize the other Party to seek or continue such
prosecution and maintenance at such other Party's expense. In such case the
owner of Sole Invention shall cooperate fully with the other Party to
facilitate such prosecution and maintenance.
4.2 INFRINGEMENT AND SIMILAR ACTIONS. As between the Parties hereto:
(a) CG shall have the sole and exclusive right, at its expense, to
prosecute any and all infringement or wrongful use of the CG Patents and CG
Know-How, and (subject to paragraph (c) below) Sole Patents owned by CG
and/or to enter settlements, judgments or other arrangements respecting such
infringement or wrongful use. CG may retain all damages and other amounts
recovered as a result of any such action, settlement, judgment or other
arrangement.
(b) Rigel shall have the sole and exclusive right, at its expense,
to prosecute any and all infringement or wrongful use of the Rigel Know-How,
the Rigel Biological Materials, and (subject to paragraph (c) below) Sole
Patents owned by Rigel and/or to enter settlements, judgments or other
arrangements respecting such infringement or wrongful use. Rigel may retain
all damages and other amounts recovered as a result of any such action,
settlement, judgment or other arrangement.
(c) With respect to infringement of any Program Patents in the CG
Program Field, CG shall have the right, but not the obligation (directly or
through designees), to institute, prosecute and control at its own expense
and for its own benefit, any action or proceeding with respect to such
infringement. With respect to infringement of any Program Patents (i.e.,
outside the CG Program Field), Rigel shall have the right, but not the
obligation, (directly or through designees) to institute, prosecute and
control, at its own expense and for its own benefit, any action or proceeding
with respect to such infringement. If a Party with the right to do so fails
to bring an action or proceeding against a suspected infringer within a
reasonable period after receiving a written request by the other Party to do
so, such other Party shall have the right to
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BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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bring and control an action against such infringer by counsel of its own choice
and retain for its own account any amounts recovered from third parties. If one
Party brings any such action or proceeding, the other Party agrees to be joined
as a Party plaintiff if necessary to prosecute the action and to give the first
Party reasonable assistance and authority to file and prosecute the suit.
(d) Each Party shall promptly notify the other in writing of any
alleged or threatened infringement of Joint Patents of which it becomes aware
and which may adversely impact the rights of the Parties hereunder. Promptly
upon such notification, the Parties shall meet to discuss the strategy and
appropriate steps to be taken to deal with such infringement. Any recovery
obtained by settlement or otherwise shall be disbursed as follows: first, any
reasonable expenses incurred in connection with such action (including counsel
fees) by both Parties are reimbursed; thereafter, the net recovery shall be
shared between the Parties according to the ratio of their respective
contributions to the litigation costs. This paragraph shall not be deemed to
limit the Parties' respective rights to enforce Joint Patents, or to limit the
rights granted under paragraph (c) above.
4.3 THIRD PARTY CLAIMS.
(a) Except to the extent expressly warranted in Article 7, and
subject to the indemnification obligation in Article 5, CG shall have no
liability to Rigel with respect to any claim, suit or action alleging that
the practice of the license rights granted by CG under Section 2.1 infringes
any intellectual property or other right of a third party. Except to the
extent expressly warranted in Article 7, and subject to the indemnification
obligation in Article 5, Rigel shall have no liability to CG or its
Affiliates with respect to any claim, suit or action alleging that the
practice of the license rights granted under Section 2.2 infringes any
intellectual property or other rights of a third party.
(b) Rigel hereby agrees to provide reasonable assistance to CG, at
its request, in defending any action or claim initiated by a third party
against CG arising from any claim that the use or practice of the Rigel
Know-How, Rigel Biological Materials or the Target by CG or its Affiliates
infringes that third party's proprietary rights. CG hereby agrees to provide
Rigel reasonable assistance, at its request and expense, in defending any
action or claim initiated by a third party against Rigel or its Affiliates
arising from any claim that the use or practice of the CG Patents or CG
Know-How by Rigel or its Affiliates infringes that third party's proprietary
rights.
(c) If a third party asserts against CG that a patent, trademark or
other intangible right owned by it is infringed by any product in the CG
Program Field derived or resulting from or incorporating Program Technology,
CG will be solely responsible for defending against any such assertions at
its cost and expense. Each Party will give prompt written notice to the other
of any such claim. Rigel will assist in the defense of any such claim as
reasonably requested by CG, at CG's expense, and may retain separate counsel
at its own expense at any time.
(d) Neither Party shall enter into any settlement of any such claim
which would admit the invalidity of Patents within the Program Technology
without the other Party's prior written consent, which consent shall not be
unreasonably withheld or delayed.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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4.4 PASS-THROUGH ROYALTIES. In consideration for the
licenses granted herein:
(a) Rigel agrees to pay any amounts which CG is required to pay to
[ * ] under the CG License as a result of CG's grant to Rigel of license
rights to CG Patents or CG Know-How to Rigel or the exercise of the license
rights granted by CG under the CG License.
(b) Rigel agrees to pay CG (i) [ * ] for the license granted to
Rigel hereunder to CG Patents related to the [ * ] cell lines, and (ii) [ * ]
for each sublicense granted by Rigel under this Agreement.
(c) CG agrees that in the event CG exercises its option to obtain a
license pursuant to Section 2.2(a) above, CG will pay any amounts which Rigel
is required to pay to Stanford University under the Rigel Licesne as a result
of Rigel's grant to CG of license rights to Rigel Biolgoical Material or
Rigel Know-How to CG or the exercise of the license rights granted by Rigel
under the Rigel License. It is understood that unless and until CG obtains
such license rights from Rigel, CG shall not be obligated to pay to Rigel or
to Stanford University any amounts that Rigel is required to pay to Stanford
University under the Rigel License.
ARTICLE 5
INDEMNIFICATION
5.1 CG INDEMNITY. CG agrees to indemnify, hold harmless and defend
Rigel, its Affiliates, agents and employees from and against any and all
liabilities, losses, damages, costs, fees and expenses, including reasonable
legal expenses and attorneys' fees (collectively, "Losses") arising out of
suits, claims, actions, or demands, brought or made by a third party ("Third
Party Claim") against Rigel, its Affiliates, agents and employees, based on
(i) CG's use and practice of the Rigel Know-How, Rigel Biological Materials,
the Program Technology or the Targets, or (ii) breach of CG's warranties
under Article 7 below, or (iii) the manufacture, use, handling, storage, sale
or other disposition of Rigel Biological Materials, Program Technology, the
Targets or any products resulting or derived from the Rigel Biological
Materials or the Program Technology by CG, it Affiliates, agents, employees
or sublicensees, all except to the extent such Losses or Third Party Claims
result from the negligence or willful misconduct of Rigel or a breach of
Rigel's warranties under Article 7 below.
5.2 RIGEL INDEMNITY. Rigel agrees to indemnify, hold harmless and
defend CG, its Affiliates, agents and employees from and against any and all
Losses arising out of any Third Party Claims against CG, its Affiliates,
agents and employees based on (i) Rigel's use or practice of the CG Patents
the CG Know-How or the Program Technology, (ii) breach of Rigel's warranties
under Article 7 below, or (iii) the manufacture, use, handling, storage, sale
or other disposition of Program Technology, the Targets or any products
resulting or derived from the Program Technology by Rigel, its Affiliates,
agents, employees or sublicensees, all except to the extent such Losses or
Third Party Claims result from the negligence or willful misconduct of CG, or
a breach of CG's warranties under Article 7 below.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
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5.3 In the event that a Party is seeking indemnification under this
Article 5, it shall inform the other Party of a claim or suit as soon as
reasonably practicable after it receives notice of the claim or suit, shall
permit the indemnifying Party to assume direction and control of the defense
of the claim or suit (including the right to settle the claim or suit solely
for monetary consideration), and shall cooperate as reasonably requested (at
the expense of the indemnifying Party) in the defense of the claim or suit.
Neither Party will enter into any settlement or claim pursuant to this
Section 5.3 which is materially adverse to the rights of the other Party
herein, without the other Party's prior written consent, which will not be
unreasonably withheld or delayed.
ARTICLE 6
CONFIDENTIALITY
6.1 CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing, the Parties agree that, for the
term of this Agreement and for five (5) years thereafter, the Party receiving
any Information or materials furnished to it by the other Party pursuant to
this Agreement (collectively, "Confidential Information") shall keep
confidential and shall not publish or otherwise disclose or use such
Confidential Information for any purpose other than as provided for in this
Agreement.
6.2 EXCEPTIONS. The obligations in Section 6.1 shall not apply to any
Information or materials to the extent that the receiving Party can establish
by competent proof that such Information or materials:
(a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement; or
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others.
6.3 AUTHORIZED DISCLOSURE. Each Party may disclose the other's
Confidential Information to the extent such disclosure is reasonably
necessary (i) to exercise the rights granted to such Party hereunder
(including the right to grant sublicenses as permitted by this Agreement
provided that prior to any disclosure to a sublicensee, such sublicensee has
executed a confidentiality agreement with terms corresponding to this Article
6); and (ii) to file or prosecute patent applications, to prosecute or defend
litigation, to comply with applicable governmental
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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regulations or to conduct preclinical or clinical trials; provided that if a
Party is required by law or regulation to make any such disclosure of the
other Party's Confidential Information it will, except where impracticable
for necessary disclosures, for example in the event of medical emergency,
give reasonable advance notice to the other Party of such disclosure
requirement and, except to the extent inappropriate in the case of patent
applications, will use its best efforts to secure confidential treatment of
such Confidential Information required to be disclosed.
6.4 SURVIVAL. This Article 6 shall survive the termination or
expiration of this Agreement for a period of five (5) years.
ARTICLE 7
WARRANTY MATTERS
7.1 LIMITED WARRANTIES. CG hereby represents and warrants to Rigel that
CG has the full right and power to grant the licenses granted to Rigel under
Section 2.1(a). Rigel hereby represents and warrants to CG that Rigel has the
full right and power to grant the licenses granted to CG under Section 2.2.
7.2 GENERAL WARRANTIES. Each of the Parties hereby represents and
warrants to the other that (i) it is a corporation duly organized and validly
existing in good standing under the laws of its state of incorporation, (ii)
it is duly qualified and authorized to enter into and perform its obligations
under this Agreement, (iii) it has full power, authority and legal right to
enter into and perform this Agreement, and (iv) the execution, delivery, and
performance of this Agreement has been duly authorized by all necessary
corporate action on the part of each Party and does not contravene any law
binding on it, its Articles of Incorporation or Bylaws, any indenture,
mortgage, contract or other agreement to which it is a Party or by which it
is bound or any laws, governmental rule, regulation or order.
7.3 INTELLECTUAL PROPERTY WARRANTIES.
(a) Each of the Parties hereby represents and warrants to the
other that (i) it does not Control any Patens that would dominate the Patents
licensed to the other Party hereunder, (ii) it is not aware of any claims of
a third party which would call into question the rights of such Party in the
licensed subject matter or its right to grant the licenses granted to the
other Party hereunder, (iii) it has provided the other Party with all
information concerning royalty obligations pertinent to the licenses granted
to the other Party hereunder; and (iv) it will use commercially reasonable
efforts to keep in force any license agreement from which the license or
sublicense granted to the other Party under this Agreement is derived to the
extent that such license agreement does not provide for a survival of any
sublicenses granted by such Party.
(b) Rigel further warrants to CG that as of the Effective Date
(i) to the best of its knowledge, Rigel's conduct of the Research, and the
manufacture, sale and use of Therapeutic Candidates will not infringe any
third party intellectual property rights, and without limiting the foregoing,
Rigel warrants that Rigel's conduct of the Research will not infringe any of
the
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
13.
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patents listed in Appendix I hereto; (ii) Rigel does not know of any third
party other than Stanford University having a claim in the Rigel Biological
Materials; and (iii) Rigel has the right to grant to CG a license under the
Rigel Biological Materials and the Rigel Know-How to make, use and sell
products in the CG [ * ] Field.
(c) CG further warrants to Rigel that CG has the right to grant
to Rigel a license under the CG Patents and CG Know-How to make, use and sell
products within the Rigel Field.
(d) Rigel warrants that it has not as of the Effective Date
entered into an agreement with any third party licensing or granting right to
Rigel technology in the Field of Research.
7.4 LIMITATION ON WARRANTIES. EXCEPT AS PROVIDED IN SECTIONS 7.1, 7.2,
AND 7.3 ABOVE, NEITHER PARTY MAKES ANY WARRANTIES TO THE OTHER PARTY, WHETHER
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO ANY PRODUCT OR
PROCESS, OR AS TO THE VALIDITY OR SCOPE OF ANY PATENTS, OR THAT ANY LICENSED
BIOLOGICAL MATERIALS, PATENTS OR KNOW-HOW WILL BE FREE FROM INFRINGEMENT OF
PATENTS OF ANY THIRD PARTY, OR THAT NO THIRD PARTIES ARE INFRINGING SAME.
ARTICLE 8
TERM AND TERMINATION
8.1 TERM OF AGREEMENT. Unless earlier terminated as otherwise provided
in this Article 8, this Agreement shall remain in effect until the expiration
of the last to expire of the CG Patents or Program Patents.
8.2 TERMINATION FOR BREACH. A Party may terminate this Agreement prior
to the expiration of the Agreement in the event that the other Party is in
breach of or default under a material term of the Agreement, and the
breaching Party does not cure such breach or default within thirty (30) days
of written notice thereof from the non-breaching Party. Subject to Section
8.3 below, upon any such termination, all the licensees granted by and
between the Parties herein shall terminate; provided that any sublicense
granted by a Party hereunder to a third party prior to such termination shall
survive such termination, so long as the sublicensee agrees to be bound by
the applicable terms of this Agreement.
8.3 SURVIVAL. Upon expiration or termination of this Agreement the
rights and obligations under Articles 5 and 6 and Sections 7.4, 8.3, 9.2,
9.3, 9.7 and 9.10 shall continue. In addition, upon expiration or termination
of this Agreement after the end of the Research Period, the license granted
under Article 2 above and the rights and obligations under Article 4 shall
survive. Further, subject to Section 2.1(b) and 2.2(b) if they survive the
termination or expiration of this Agreement as provided above, neither Party
shall have any obligation to account to the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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other, or obtain the consent of the owner, with respect to the
commercialization, licensing or enforcement of any Joint Patents, and hereby
waives any right it may have under the laws of any country to require such
accounting or consent.
ARTICLE 9
MISCELLANEOUS
9.1 RELATIONSHIP OF THE PARTIES. This Agreement creates only
licensor-licensee and sublicensor-sublicensee relationships between Rigel and
CG. No partnership or other legal relationship is created hereunder. Neither
Party is, or will be deemed to be, an agent or legal representative of the
other Party for any purpose. Neither Party will be entitled to enter into any
contracts in the name of or on behalf of the other Party, and neither Party
will be entitled to pledge the credit of the other Party in any way or hold
itself out as having authority to do so.
9.2 ASSIGNMENT. This Agreement may not be assigned by either Party
without the prior written consent of the other Party, which consent shall not
be unreasonably withheld; provided, however, that a Party may assign this
Agreement without such consent to any Affiliate or to a successor in interest
by way of merger, acquisition, sale or transfer of substantially all of its
business or assets pertaining to the subject matter of this Agreement. The
Agreement will be binding upon and inure to the benefit of all permitted
successors and assignees of the Parties hereunder, and the name of each Party
appearing herein will be deemed to include the names of such Party's
successors and assignees.
9.3 USE OF NAMES. No Party hereto may use the name of the other Party
in public announcements without the prior consent of the other Party as
required by law or regulation.
9.4 AMENDMENT. No amendment, modification or supplement of any
provision of the Agreement will be valid or effective unless made in writing
and signed by a duly authorized officer of each Party.
9.5 WAIVER. No provision of the Agreement will be waived by any act,
omission or knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party.
9.6 HEADINGS. The headings for each article and section in this
Agreement have been inserted for the convenience of reference only and are
not intended to limit or expand on the meaning of the language contained in
the particular article or section.
9.7 NOTICES. Any notice or other communication required or permitted to
be given to either Party hereto shall be in writing unless otherwise specified
and shall be deemed to have been properly given and to be effective on the date
of delivery if delivered in person or by facsimile or three (3) days after
mailing by registered or certified mail, postage paid, to the other Party at
the following address:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
15.
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If to Rigel: Rigel, Inc.
240 East Grant Avenue
South San Francisco, CA 94080
Attn: Secretary
Fax: 650.624.1101
Copy to: Cooley Godward, LLP
Five Palo Alto Square, 4th Floor
3000 El Camino Real
Palo Alto, CA 94306
Attn: Patrick A. Pohlen, Esq.
Fax: 650.857.0663
If to CG: Cell Genesys, Inc.
342 Lakeside Drive
Foster City, CA 94404
Attn: Chief Executive Officer
Fax: 650.358.0803
9.8 SEVERABILITY. Whenever possible, each provision of the Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of the Agreement.
9.9 ENTIRE AGREEMENT OF THE PARTIES. The Agreement will constitute and
contain the complete, final and exclusive understanding and agreement of the
Parties with respect to the subject matter hereof and cancels and supersedes
any and all prior negotiations, correspondence, understandings and
agreements, whether oral or written, between the Parties respecting the
subject matter. Each Party hereto was represented by counsel in drafting and
negotiating this Agreement, and all Parties are deemed to have contributed to
the drafting hereof.
9.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California excluding only laws
and rules relating to "choice of law". All Parties to this Agreement hereby
consent to the jurisdiction of the courts of the State of California and the
Federal District Court for the Northern District of California for resolution
of any disputes that arise hereunder.
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
16.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as of the date first written above.
CELL GENESYS, INC. RIGEL PHARMACEUTICALS, INC.
By: /s/ Stephen A. Sherwin By: /s/ Donald W. Perryman
-------------------------------------- -------------------------------
Name: Stephen A. Sherwin, M.D. Name: Donald W. Perryman
------------------------------------ -----------------------------
Title: Chairman & Chief Executive Officer Title: VP, Business Development
----------------------------------- ----------------------------
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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APPENDIX A
EXCLUSIVE LICENSE AGREEMENT
EXCLUSIVE LICENSE AGREEMENT made as of January 31, 1996 (the
"Effective Date"), by and between Cell Genesys, Inc. ("Company"), a
corporation organized and existing under the laws of the State of Delaware,
having an office at 322 Lakeside Drive, Foster City, California 94404, and
[ * ] ("[ * ]"), a nonprofit education corporation organized and existing
under the laws of the State of New York, having an office at [ * ]
WITNESSETH:
WHEREAS, [ * ] is the owner by assignment from [ * ] ("Inventors")
of the entire right, title and interest in United States Patent Application
[ * ]and in the inventions described and claimed therein ("Licensed Patent
Rights"), and in the Biological Materials and related Know-How, as defined
below;
WHEREAS, [ * ] and the Company entered into a license agreement
effective as of October 25, 1994 (the "Prior Agreement"), pursuant to which
[ * ] granted to the Company a non-exclusive license to use the Licensed
Patent Rights, Know-How and Biological Materials for research and commercial
purposes;
WHEREAS, the parties have agreed to expand the scope of the license
and rights granted to the Company and therefore have agreed to terminate the
Prior Agreement as of the Effective Date, and enter into this Agreement;
WHEREAS, [ * ] wishes to offer and grant the Company an exclusive
license with regard to the Licensed Patent Rights, Know-How and the
Biological Materials for research and commercial purposes, and seeks to be
compensated for the transfer and use of such rights; and
WHEREAS, the Company wishes to license from [ * ] the Licensed
Patent Rights, Biological Materials and Know-How for commercial development
and application as herein defined.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived hereunder, the parties hereto agrees as follows:
1. DEFINITIONS.
The following terms will have the meanings assigned to them below
when used in this Agreement.
1.1 "AFFILIATE" shall mean:
(a) any entity owning or controlling, directly or indirectly, at
least forty-nine percent (49%) of the stock normally entitled to vote for
election of directors of a party; or
(b) any entity at least forty-nine percent (49%) of whose stock
normally entitled to vote for election of directors is owned or controlled,
directly or indirectly, by a party.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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1.2 "BIOLOGICAL MATERIALS" shall mean (i) the ecotropic producer cell
line named [ * ] which producer cell line was deposited with the American
Type Culture Collection as of [ * ] and has been assigned
Accession No. [ * ] and any viruses produced thereby; (ii)
__________________________________________________ Biological Materials shall
also include any direct progeny, mutant, or derivatives of the [ * ]
_____________________________________________ cell lines and the viruses
produced thereby.
1.3 "IMPROVEMENT TECHNOLOGY" means all patent and other intellectual
property rights, and materials relating to inventions, discoveries or
improvements to the Licensed Technology licensed to [ * ] by any academic
institution, governmental and other not-for-profit entity to which [ * ]
grants a non-exclusive research license with regard to the Licensed
Technology pursuant to Section 6.3 herein.
1.4 "KNOW-HOW" shall mean information and data not generally known which
are owned and in the possession of or available to [ * ] and which it is free
to divulge as of the Effective Date regarding the preparation and use of
Biological Materials, and pharmacological, biological and clinical properties
of Biological Materials. It is understood that Know-How shall not include any
information or data known by the Company prior to receipt of such information
or data from Rockefeller, as shown by reasonable evidence.
1.5 "LICENSED PATENT RIGHTS" shall mean:
(a) the patent application(s) concerning the subject matter of
this Agreement which are listed on Exhibit A attached hereto;
(b) all patent applications which are divisions, substitutions,
continuations, continuations-in-part, renewals, or additions of the patent
applications described in (a) hereof,
(c) all foreign counterparts of the applications listed in (a)
and (b) hereof; and
(d) all patents, including reissues, re-examinations and
extensions, which may issue on any of the preceding.
1.6 "LICENSED PRODUCTS" shall mean any and all products the manufacture,
use or sale of which but for the license granted herein would infringe a Valid
Claim or are within the scope of a Pending Claim in the country in which such
products are made or sold.
1.7 "LICENSED TECHNOLOGY" shall mean the Licensed Patent Rights,
Biological Materials and Know-How.
1.8 "NET SALES" shall mean [ * ], where [ * ] shall mean the amount
invoiced by the Company or its sublicensees to customers for Licensed Products
less: (i) all trade, cash and quantity credits, discounts, refunds or
government rebates, (ii) amounts for claims, allowances or credits for returns;
retroactive price reductions; chargebacks or the like; (iii) packaging,
handling fees and prepaid freight, sales taxes, duties and other governmental
charges (including value added tax), but excluding what is commonly known as
income taxes; and (iv) provisions for
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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uncollectible accounts determined in accordance with reasonable accounting
practices, consistently applied to all products of the selling party. [ * ]
shall not include sales by the Company to its Affiliates for resale, provided
that if the Company sells a Licensed Product to an Affiliate for resale, [ * ]
shall include the amounts invoiced by such Affiliate to third parties on the
resale of such Licensed Product. Notwithstanding the foregoing. [ * ] shall
include charges for the separation, transduction and/or expansion of cells
comprising Licensed Products, but notwithstanding any of the foregoing, shall
not include charges for apheresis, reinfusion, surgical procedures, hospital
stays or other charges not directly attributed to the Licensed Product or to
the ex vivo preparation of the Licensed Product.
1.9 "PARTY" shall mean the Company or [ * ], and "Parties" shall mean
both the Company and Rockefeller.
1.10 "PENDING CLAIM" shall mean a claim of a pending patent application
within the Licensed Patent Rights.
1.11 "TERRITORY" shall mean the entire world.
1.12 "VALID CLAIM" shall mean a claim of an issued and unexpired patent
included within the Licensed Patent Rights, which has not been held
unenforceable or invalid by a court or other governmental agency of competent
jurisdiction, and which has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise.
2. LICENSED RIGHTS
2.1 Subject to Section 2.2 below, [ * ] grants to the Company and its
Affiliates the following licenses:
(a) an exclusive, worldwide, royalty-bearing license under the
Licensed Technology, with the right to grant and authorize sublicenses, to
make, have made, import, have imported, use, sell, offer for sale and
otherwise exploit the Licensed Products in any country of the Territory; and
(b) a non-exclusive, worldwide, royalty-free, irrevocable license
under the Improvement Technology, with the right to grant and authorize
sublicenses, to make, have made, import, have imported, use, sell, offer for
sale and otherwise commercialize products and services in any country of the
Territory.
2.2 The licenses granted by [ * ] in Section 2.1 (a) above are subject
to any limitations on [ * ] rights arising under the provisions of the
following:
(a) 35 United States, Section 201 et seq., and regulations and
rules promulgated thereunder and any agreements implementing the provisions
thereof, or
(b) other applicable laws or regulations to which [ * ] may be
subject; or
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(c) [ * ] Institutional Patent Agreement with the United States
Department of Health and Human Services, dated June 15, 1973, as amended,
which is its formal agreement with the United States Government to implement
the cited provisions of the U.S. Code.
2.3 [ * ] shall promptly notify the Company of any Improvement
Technology of which it acquires knowledge and provide the Company all
available information relating thereto.
2.4 The licenses herein granted shall continue for the lives of any
issued patents hereunder as the same or the effectiveness thereof may be
extended by any governmental authority, rule or regulation applicable thereto.
3. TRANSFER OF BIOLOGICAL MATERIALS AND KNOW-HOW
3.1 The parties acknowledge that pursuant to the Prior Agreement, [ * ]
transferred to the Company a quantity of Biological Materials and such Know-How
to allow the Company to establish a viable cell culture of said Biological
Materials for the Company's purposes. The Company is permitted to cultivate and
use said Biological Materials, subject to the terms and conditions of this
Agreement On the Effective Date, [ * ] shall notify the American Type Culture
Collection ("ATCC") that the Company is authorized to receive samples of the
Biological Materials deposited with the ATCC and to deliver such materials to
the Company at the Company's request, and that the Company has the right to
authorize third parties to receive one or more samples of the Biological
Materials, on such terms as the Company may indicate to the ATCC.
3.2 Should the Company exhaust the quantity of Biological Materials
within six (6) months of the date of execution hereof, so that a viable cell
culture of said Biological Materials no longer exists, [ * ] shall authorize
the ATCC to provide the Company with a quantity of Biological Materials
sufficient to reestablish the Company's viable colony thereof.
3.3 Within sixty (60) days of the Effective Date, [ * ]shall deliver
to the Company tangible copies of all existing Know-How which it did not
previously provide to the Company pursuant to the Prior Agreement.
4. PAYMENTS
4.1 In consideration of the rights and licenses granted hereunder, the
Company shall pay or cause to be paid to [ * ] amounts as follows:
(a) _________________________________________________________
(b) _________________________________________________________
(c) _________________________________________________________
(d) a royalty of [ * ] of Net Sales of Licensed Products sold by
the Company within the scope of a Valid Claim within the Licensed Patent Rights
in the country they are made or sold.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
4.
<PAGE>
Notwithstanding the above, the royalty due [ * ] on Net Sales of Licensed
Products, the manufacture, use or sale of which would not infringe a Valid
Claim in the country for which they are sold but which are within the scope
of a Pending Claim in such country, shall be fifty percent (50%) of the
royalty due under Section 4.l(d).
4.2 In the event that a Licensed Product is sold in combination as a
single product with another product whose sale and use are not covered by the
Licensed Patent Rights in the country for which the combination product is
sold, Net Sales from such sales, for purposes of calculating the amounts due
under Section 4.1 above, shall be calculated by multiplying the Net Sales of
that combination by the fraction A/(A + B), where A is the gross selling
price of the Licensed Product, as the case may be, sold separately, and B is
the gross selling price of the other product sold separately. In the event
that no such separate sales are made by the Company, Net Sales for royalty
determination shall be as reasonably allocated by the Company between such
Licensed Product and such other product, based upon their relative importance
and proprietary protection.
4.3 Licensed Products sold, leased or otherwise distributed by the
Company's sublicensees shall be considered to be sales, leases or disposals
of Licensed Products by the Company for purposes of royalty payments and
reports under this Agreement. The obligation to pay royalties pursuant to
this Agreement is imposed only once with respect to the sale of a particular
Licensed Product regardless of the number of claims or patents that cover
such Licensed Product. The Company shall have no obligation to pay royalties
on Licensed Products used in research and development, in clinical trials or
other noncommercial purposes, or distributed as samples.
4.4 The Company's obligation to pay royalties hereunder shall continue
on a country-by-country basis until (i) the expiration of the last-to-expire
issued patent within the Licensed Patent Rights in such country, or (ii) [ * ]
following the first commercial sale of a Licensed Product in a country, if no
patent covering such Licensed Product has been issued in such country.
Thereafter, the Company shall have a fully paid up license under Licensed
Patent Rights, Biological Materials and Know-How to make, have made, use,
sell, lease, import, have imported, offer for sale or otherwise exploit the
Licensed Product(s) for any use in that country.
4.5 _______________________________________________________________
4.6 _______________________________________________________________
4.7 Unless this Agreement is terminated earlier, within sixty (60)
days following the first achievement by the Company or a sublicensee of the
following milestones with respect to the first Licensed Product within the
scope of a Valid Claim within the Licensed Patent Rights, the Company shall
pay to [ * ] [ * ] milestone payments as follows:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
5.
<PAGE>
<TABLE>
<CAPTION>
EVENT Payment
-------------------------------------------------- -------
<S> <C>
Enrollment of first patient in a Company-sponsored $ [ * ]
[ * ] clinical trial of a Licensed Product
Enrollment of first patient in a Company-sponsored $ [ * ]
[ * ] clinical trial of a Licensed Product
Approval of NDA in U.S. of a Licensed Product $ [ * ]
</TABLE>
4.8 Upon commencement of commercial sales of any Licensed Products
which generate a royalty to [ * ] pursuant to this Agreement, the Company
shall within ninety (90) days of the close of the fiscal semi-annual period,
provide semi-annual reports to [ * ] showing the total Net Sales of Licensed
Products sold, leased or otherwise disposed of during such period and the
calculation of royalties thereon. Any royalty then due and payable shall be
included with such report. All reports provided hereunder by the Company
shall be the Confidential Information of the Company, subject to Section 7
herein. The Company's records shall be open to inspection by an independent
certified public accountant designated by [ * ] for three (3) years from the
submission of such reports and payments, subject to execution of a
confidentiality agreement reasonably acceptable to the Company, once per
calendar year at reasonable times, at [ * ]expense, for the sole purpose of
verifying the accuracy of the reports and royalty payments made by the
Company. The accountant shall report to [ * ] only whether there has been an
underpayment and, if so, the amount thereof.
5. TIMES AND CURRENCIES OF PAYMENT
5.1 Royalty payments shall be made in United States dollars or if
sales are made in the currency of other countries, royalties shall be
calculated in the currency of such other country and be converted into United
States dollars using the applicable exchange rate for sale of U.S. dollars
listed by the foreign exchange desk of the Bank of America on the last day of
the applicable reporting period.
5.2 If at any time legal restrictions prevent the prompt remittance of
part or all royalties by the Company with respect to any country where a
Licensed Product is sold, the Company shall have the right and option to make
such payment by depositing the amount thereof in local currency to an account
in the name of [ * ] in a bank or other depository in such country.
6. SUBLICENSEES
6.1 The Company and its Affiliates shall have the right to grant and
authorize sublicenses under the Licensed Technology and Improvement Technology
to commercial entities for research purposes and for commercial purposes,
including without limitation, to make, have made, import, have imported, use,
lease, offer for sale and sell Licensed Products in the Territory.
6.2 The Company shall have the sole discretion to determine the financial
and other terms on which any sublicenses shall be granted under the Licensed
Technology, subject to the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
6.
<PAGE>
provisions herein. Any sublicense(s) granted by the Company under this
Agreement shall be subject and subordinate to the terms and conditions of
this Agreement, except the financial terms of the sublicense(s) may require
greater payments than the financial terms in this Agreement.
6.3 Notwithstanding Section 2.1 above, [ * ], on behalf of the
Company, may continue to grant limited, non-transferable, research
sublicenses to academic institutions, governmental and other not-for-profit
entities using the form sublicense agreement attached hereto as Exhibit B.
[ * ] shall not enter into or agree to enter into any agreement with such an
entity which deviates in any way from the form agreement set forth in Exhibit
B, without the prior written consent of the Company. [ * ] shall provide the
Company with a copy of each such research license entered by [ * ] promptly
following the execution of such agreement.
6.4 In the event of any termination of this Agreement, any sublicenses
granted under or this Agreement shall also terminate unless such sublicensees
provide [ * ] written notice that they will abide by the applicable terms of
this Agreement.
6.5 In no event shall a default or breach of a sublicensee of a
sublicense granted by the Company pursuant to this Agreement constitute by a
default or breach by the Company of this Agreement or be deemed a valid basis
for the termination of this Agreement.
7. CONFIDENTIAL INFORMATION
7.1 Each Party and its Affiliates and sublicensees shall treat as
confidential all Confidential Information received from the other Party
hereto, shall not use such Confidential Information except as expressly set
forth herein or otherwise authorized in writing, shall implement reasonable
procedures to prohibit the disclosure, unauthorized duplication, misuse or
removal of such Confidential Information and shall not disclose such
Confidential Information to any third party except as may be necessary and
required in connection with the rights and obligations of such party under
this Agreement, and subject to confidentiality obligations at least as
protective as those set forth herein. Without limiting the foregoing, each of
the parties shall use at least the same procedures and degree of care which
it uses to prevent the disclosure of its own confidential information to
prevent the disclosure of Confidential Information of the other Party. As
used herein, the term "Confidential Information" shall mean any information
expressly designated as Confidential Information in this Agreement and
information disclosed by one Party to another pursuant to this Agreement
which is in written, graphic, machine readable or other tangible form and is
marked "Confidential" to indicate its confidential nature. Confidential
Information may also include oral information disclosed by one Party to
another pursuant to this Agreement, provided that such information is
designated as confidential at the time of disclosure and within thirty (30)
days after its oral disclosure is reduced to a written summary by the
disclosing Party, which summary is marked in a manner to indicate its
confidential nature and delivered to the receiving Party.
7.2 Notwithstanding the above, neither Party has any obligation of
confidence under this Agreement with respect to any information which:
(i) may be demonstrated to have been known to the receiving
Party prior to the time of disclosure thereof by the disclosing Party; or
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
7.
<PAGE>
(ii) without breach of this Agreement, has been published or
is otherwise available to the public at any time whether before or after the
time of disclosure to such Party; or
(iii) is at any time lawfully received by such Party from a
third party who has no obligation of confidence to a Party in respect hereof.
7.3 Each Party hereto may disclose another's Confidential Information
to the extent such disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation, complying with
applicable governmental regulations or otherwise submitting information to tax
or other government authorities, making a permitted sublicense or other
exercise of its rights hereunder or conducting clinical trials, provided that
if a Party is required to make any such disclosure of another Party's secret or
Confidential Information, other than pursuant to a confidentiality agreement,
it will give reasonable advance notice to the latter Party of such disclosure
requirement and, will use its best efforts to secure confidential treatment of
such information prior to its disclosure (whether through protective orders or
otherwise).
8. REPRESENTATIONS AND WARRANTIES
8.1 [ * ] represents and warrants that: (i) it is a nonprofit
corporation duly organized, validly existing and in good standing under the
laws of New York (ii) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on the part of
[ * ]; (iii) it is the sole and exclusive owner of all right, title and
interest in the Licensed Patent Rights; (iv) the Licensed Patent Rights are
free and clear of any lien, security interest or restriction on transfer or
license; (v) [ * ] has not previously granted, and will not grant during the
term of this Agreement, any right, license or interest in and to the Licensed
Patent Rights, Biological Materials and Know-How, or any portion thereof, in
conflict with the rights, exclusive license and interest granted to the
Company herein; (vi) it has complied fully with all requirements of 35 U.S.C.
Section 201 et seq. and all implementing regulations with respect to perfecting
its interest in the Licensed Patent Rights; (vii) Exhibit A contains a complete
and accurate listing of all Licensed Patent Rights existing as of the Effective
Date; and (viii) there are no actions, suits, investigations, claims or
proceedings pending in any way relating to the Licensed Patent Rights,
Biological Materials or Know-How.
8.2 The Company represents and warrants that: (i) it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; and (ii) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company.
8.3 [ * ] EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES
AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE OF BIOLOGICAL MATERIALS, LICENSED PROCESSES OR LICENSED
PRODUCTS CONTEMPLATED BY THIS AGREEMENT. FURTHER, [ * ] HAS MADE NO FORMAL
INVESTIGATION AND THEREORE CAN MAKE NO REPRESENTATION THAT BIOLOGICAL MATERIALS
SUPPLIED BY IT OR THE METHODS USED IN MAKING OR
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
8.
<PAGE>
USING SUCH MATERIALS ARE NOW OR WILL REMAIN FREE FROM LIABILITY FOR PATENT
INFRINGEMENT.
9. _____________________________________
9.1 _____________________________________________________________
9.2 _____________________________________________________________
10. PUBLICITY
The Company will not use either directly or by implication the name of [ * ],
or the name of any member of the faculty or staff thereof for any commercial
or promotional purposes without prior notification and written agreement of
[ * ]. Except as expressly provided herein, the Parties agree not to disclose
the terms of this Agreement to any third party without the prior written
consent of the other Party to the fact and form of such disclosure, except as
required by securities or other applicable laws, to prospective investors and
to such party's accountants, attorneys and other professional advisors.
Notwithstanding the above, the Company may disclose the existence of this
Agreement and issue a press release, reasonably acceptable to [ * ], describing
this Agreement and the rights granted the Company by [ * ] under this
Agreement, and disclose to actual and potential sublicensees the rights granted
the Company by [ * ] under this Agreement.
11. PATENTS
11.1 Except as set forth in Section 11.4, the Company shall have the
sole right to control the preparation, filing, prosecution and maintenance of
the Licensed Patent Rights, and any interference or opposition proceeding
relating thereto, using patent counsel of its choice. The Company shall consult
with [ * ] regarding the prosecution of any such patent applications, by
providing [ * ]a reasonable opportunity to review and comment on all proposed
submissions to any patent office before submittal, and provided further that
the Company shall keep [ * ] reasonably informed as to the status of such
patent applications by promptly providing [ * ] copies of all communications
relating to such patent applications that are received from any patent office.
If the Company informs [ * ] in writing that the Company no longer wishes to
conduct such activities with regard to any such patent applications or patents
in any country, then [ * ]will be free, at its discretion and expense to either
abandon the subject patent applications or to continue such activities, and the
Company shall have no further rights with respect to the applicable patent
applications or patents in such countries.
11.2 During the term of the Agreement, the Company shall be responsible
for one hundred percent (100%) of the expenses incurred in connection with the
activities set forth in Section 11.1. above. _________________________________
With respect to patent-related costs incurred after the Effective Date, the
Company shall reimburse [ * ] within thirty (30) days following invoice for
such costs, in a form reasonably acceptable to the Company.
11.3 If either Party hereto becomes aware that any Licensed Patent Rights
are being or have been infringed by any third party, such Party shall promptly
notify the other Party hereto in
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
9.
<PAGE>
writing describing the facts relating thereto in reasonable detail. The
Company shall have the initial right, but not the obligation, to institute,
prosecute and control any action, suit or proceeding (an "Action") with
respect to such infringement, including any declaratory judgment action, at
its expense, using counsel of its choice; provided, however, during the
pendency of any such Action, the Company shall be entitled to place any
royalties otherwise due [ * ]hereunder in a separate account controlled by
the Company. If the pertinent Licensed Patent Rights are found invalid or
unenforceable in such an Action, or any appeal thereof, the Company may retain
the amounts placed in such account without further obligation to [ * ] with
regard thereto. If the Licensed Patent Rights are not held invalid or
unenforceable in such an Action, or any appeal thereof, the Company shall
promptly pay the amounts deposited in such account to [ * ]. Any amounts
recovered from third parties in any such Action shall be retained by the
Company. In the event the Company fails to initiate or defend any Action
involving the Licensed Patent Rights within one (1) year of receiving notice
of any commercially significant infringement, [ * ] shall have the right, but
not the obligation, to initiate and control such an Action, and the Company
shall cooperate reasonably with [ * ], at [ * ]'s request, in connection with
any such Action. Any amounts recovered in such Action shall be used first to
reimburse the Company and [ * ] for the expenses incurred in connection with
such Action, and any remainder retained by [ * ].
11.4 In the event the parties believe an interference may be declared
or an interference is declared between any patent application or patent
within the Licensed Patent Rights and any patent application or patent owned
or controlled by the Company relating to the production of high titer
retroviruses, the parties agree to amicably settle any such prospective or
actual interference in accordance with the procedure set forth on Exhibit C.
The Company shall have the exclusive right to initiate such settlement
procedure after consultation with [ * ]. In the event of any such prospective
or actual interference and the settlement thereof, each Party shall pay its
own costs associated therewith and the parties shall equally share the costs
of any arbitration, including without limitation, administration and
arbitrator fees. It is understood and agreed that in the event an
interference is declared, neither Patty shall have an obligation to
participate in such a proceeding, but each hereby acknowledges that it
understands that a failure to participate may result in an adverse outcome
which could have a material adverse impact on such Party. It is further
understood and agreed that any patent applications and patents within the
Licensed Patent Rights which are involved in any interference shall remain
subject to the license granted the Company herein.
12. LICENSED PRODUCT LIABILITY
The Company agrees to indemnify, defend and hold harmless [ * ] and its
trustees, officers, agents, faculty, employees, and students (the
"Indemnitees"), from any and all liability arising from injury or damage to
persons or property resulting directly or indirectly from the Company's
acquisition, use, manufacture, sublicense or sale of any Licensed Product
covered by Licensed Patent Rights or Know-How licensed hereunder.
Notwithstanding the foregoing, the Company expressly retains any and all
claims it may have against Indemnitees arising from indemnitees' negligence
or willful misconduct. The Company's obligation to indemnify the Indemnitees
under this Section 11 shall not apply unless the indemnified Party promptly
notifies the Company of any claim or liability subject to this Section 12 and
cooperates fully with the Company in the defense of any such claim or
proceeding. The Company further agrees to obtain, prior to the first
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
10.
<PAGE>
commercial sale of a Licensed Product, and maintain in force for at least
fifteen (15) years following the last sale of a Licensed Product, product
liability insurance coverage of at least [ * ] dollars or a lesser amount as
appropriate to the risk as determined by reference to reliable standards in
the industry, such insurance to specifically name [ * ] as an additional
insured.
13. NOTICES
Any notice required to be given pursuant to this Agreement shall be in writing
and may be made by personal delivery or by registered or certified mail, return
receipt requested, by one Party to the other Party at the addresses noted below:
In the case of the Company, notice should be sent to:
Cell Genesys, Inc.
322 Lakeside Drive
Foster City, California 94404
Attn: Senior Vice President, Corporate Development
In the case of [ * ], notice should be sent to:
[ * ]
Attn: Office of the General Counsel
14. LAW TO GOVERN
This Agreement shall be interpreted and governed in accordance with the laws of
the State of New York.
15. ASSIGNMENT
This Agreement may not be assigned by either Party without the prior written
consent of the other; PROVIDED, HOWEVER, the Company may assign this Agreement
in connection with the transfer of all or substantially all of its business
relating to the subject matter of this Agreement whether by sale, merger,
operation of law or otherwise.
16. TERMINATION
16.1 The Company shall have the right to terminate this Agreement at
any time with respect to any Licensed Patent Right or any country upon ninety
(90) days prior written notice to [ * ]. Such termination shall automatically
terminate the license rights provided in Section 2 with respect to such
Licensed Patent Rights hereof in such country but shall not relieve the
Company of the obligation to pay royalties for any period prior to the
effective date of termination.
16.2 Either Party may terminate this Agreement in the event of a
material breach by the other Party which is not cured within a reasonable
time, provided only that the offending Party is given notice of the breach
and not less than ninety (90) days in which to cure such breach.
16.3 Sections 2.4, 6.4 and 24.3 and Articles 7, 8, 10, 12, 14, 17 and
25 shall survive expiration or termination of this Agreement for any reason.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
11.
<PAGE>
17. RESOLUTION OF DISPUTES
The Parties agree that in the event of it dispute between them arising from,
concerning, or in any way relating to this Agreement, the Parties shall
undertake good faith efforts to resolve the same amicably between themselves.
18. FORCE MAJEURE
The Parties shall not be liable in any manner for failure or delay in
fulfillment of all or part of this Agreement, directly or indirectly caused
by acts of God, governmental orders or restrictions, war, war-like
conditions, revolution, riot, looting, strike, lockout, fire, earthquake,
flood or other similar or dissimilar cause or circumstances beyond the
nonperforming Party's control. The nonperforming Party shall promptly notify
the other Party of the cause or circumstance and shall recommence its
performance of its obligations as soon as practicable after the cause or
circumstance ceases.
19. BINDING UPON SUCCESSORS AND ASSIGNS
Subject to the limitations on assignment herein, this Agreement shall be
binding upon and inure to the benefit of successors in interest or assigns of
[ * ] and the Company. Any such successor or assignee of a Party's interest
shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by said Party.
20. INDEPENDENT CONTRACTORS
The relationship between [ * ] and the Company is that of independent
contractors. [ * ] and the Company are not joint venturers, partners,
principal and agent, master and servant, employer or employee, and have no
other relationship other than independent contracting parties. [ * ] shall
have no power to bind or obligate the Company in any manner, other than as is
expressly set forth in this Agreement. Likewise, the Company shall have no
power to bind or obligate [ * ] in any manner, other than as is expressly set
forth in this Agreement.
21. SEVERABILITY
If any provision of this Agreement is ultimately held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
22. NO WAIVER
Any delay in enforcing a Party's rights under this Agreement or any waiver as
to a particular default or other matter shall not constitute a waiver of such
Party's rights to the future enforcement of its rights under this Agreement,
excepting only as to an express written and signed waiver as to a particular
matter for a particular period of time.
23. NO IMPLIED OBLIGATIONS
It is understood and agreed that nothing in this Agreement shall be deemed to
prevent the Company from commercializing technology or products similar to or
competitive with the Licensed Technology or the Licensed Products. Nor shall
anything in this Agreement impair the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
12.
<PAGE>
right of the Company to independently acquire, license, develop or have
others develop for it technology performing similar or equivalent functions
as the Licensed Technology, or to develop, market or distribute products
based on such technology in addition to or in lieu of the Licensed Products.
24. COMPLIANCE WITH LAWS. REGULATIONS AND STANDARDS
24.1 The Company recognizes that the use of Biological Materials
carries with it certain safety risks to both the environment and the
population that are inherent in such materials, and shall exercise prudent
scientific laboratory procedures in the use of said Biological Materials.
24.2 The inventors and [ * ] recognize and have advised that the
Biological Materials may be used to create infectious retroviruses with a
broad host range, that the supplied materials may be used to create
retroviruses that can infect human cells in both vitro and in vivo, that the
Biological Materials and all materials derived thereof should be handled and
used with all due care in accordance with generally acceptable scientific
guidelines establishing appropriate precautions and approved by the
Institutional Biosafety Committee or similar authority at the Company.
24.3 The Company shall bear all risk to the Company and/or to any
others resulting from use, directly or indirectly, to which the Company puts
the Biological Materials or any progeny or cells or cell lines derived from
it.
25. NO CONSEQUENTIAL DAMAGES
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF ANY BREACH OF THIS AGREEMENT.
26. ENTIRE UNDERSTANDING
This Agreement with its Exhibits represents the entire understanding between
the Parties with respect to the subject matter hereof and supersedes any other
agreement, expressed or implied, by the Parties with respect to the Licensed
Patent Rights, Biological Materials, Know-How and Improvement Technology, and
supersedes and merges all prior negotiations, discussions and agreements,
including without limitation, the Prior Agreement between the parties. This
Agreement may not be amended or modified except in a written document signed
by authorized representatives of the Parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
CELL GENESYS, INC.
By: /s/ R. Scott Greer
------------------------------------
Title: Senior Vice President
Corporate Development
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
13.
<PAGE>
Date: February 2. 1996
[ * ]
By: [ * ]
--------------------------------------
Title: Vice President and General Counsel
January 31, 1996
Date: January 31, 1996
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
14.
<PAGE>
EXHIBIT "A"
LICENSED PATENT RIGHTS
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
1.
<PAGE>
AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT
This Amendment to Exclusive License Agreement ("Amendment"), effective as of
November 3, 1998, by and between Cell Genesys, Inc.,("Company"), a
corporation organized and existing under the laws of the State of Delaware,
having an office at 342 Lakeside Drive, Foster City, California 94404, and
[ * ] ("[ * ]"), a nonprofit education corporation organized and existing
under the laws of the State of New York, having an office at [ * ] (Company
and [ * ] collectively, the "Parties").
BACKGROUND
The Parties desire to amend that certain Exclusive License Agreement by and
between Company and [ * ] effective as of January 31, 1996 (the "Agreement")
as set forth herein below.
NOW, THEREFORE, the Parties agree as follows:
1. AMENDMENT. This Amendment hereby amends the Agreement to incorporate
the terms and conditions set forth in this Amendment. The relationship
of the Parties shall continue to be governed by the terms and
conditions of the Agreement, as amended herein; and in the event that
there is any conflict between the terms and conditions of the Agreement
and this Amendment, the terms and conditions of this Amendment shall
control. As used in this Amendment, all capitalized terms shall have
the meanings defined for such terms in this Amendment or, if not
defined in the Amendment, the meanings defined in the Agreement.
2. MODIFICATION TO THE AGREEMENT.
2.1 Section 4.6 of the Agreement is hereby amended to read in its
entirety as follows:
"4.6 COMMERCIAL SUBLICENSES. It is understood and agreed that
Company shall have the right, at its sole discretion, to grant
Commercial Sublicenses to third parties ____________________________.
As used herein, "Commercial Sublicense" shall mean Commercial Target
Sublicenses and any other sublicense right granted under the Licensed
Technology, provided, however, Commercial Sublicenses shall exclude
rights granted by Company to a third party pursuant to an agreement
substantially in the form of Exhibit D to this Agreement (i.e.,
research sublicenses)."
2.2 The Agreement is hereby amended to add the following new
Section 4.9:
"4.9 COMMERCIAL TARGET SUBLICENSES. Subject to the terms and
conditions set forth in this Section 4.9 below and without limiting
the provisions of Section 4.6 above or Article 6 below, Company shall
have the right to grant and authorize Commercial Target Sublicenses
to third parties (each such third party, a "Commercial Target
Sublicensee") on terms and conditions as Company deems appropriate in
its sole discretion.
(a) MILESTONE AND MAINTENANCE FEES. In addition to amounts payable
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
1.
<PAGE>
pursuant to Section 4.3 above and in consideration of Company's right
to grant and authorize Commercial Target Sublicenses pursuant to this
Section 4.9 ________________________________________. Payments due
under this Section 4.9(a) shall be due and payable within sixty (60)
days after the calendar quarter in which the Milestone Fee
or Maintenance Fee, as applicable, is received by Company
___________________________________________.
(b) TERMS. For purposes of this Section 4.9 the following
capitalized terms shall have the following meanings. "Commercial Target
Sublicense" shall mean a sublicense under the Licensed Technology that
includes the right to conduct Target Validation using the Licensed
Technology. "Target Validation" shall mean the process by which the
function of nucleotide sequences are identified, determined and/or
confirmed; and/or the function of nucleotide sequences are identified,
determined and/or confirmed as being significant in a disease or other
biological pathway in which pharmacological or other intervention is
sought to affect the function of that pathway.
___________________________________________________________________.
(c) SURVIVAL. Subject to Section 6.4 below, Commercial
Sublicenses, including Commercial Target Sublicenses, shall survive the
termination of this Agreement, provided that the Commercial Sublicensee
or Commercial Target Sublicensee, as the case may be, agrees to be
bound by the applicable terms and conditions of this Agreement."
3. ENTIRE AGREEMENT. Together the Agreement (including the Exhibits
thereto) and this Amendment constitute the entire agreement between the
Parties in connection with the subject matter thereof and supersede all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment.
CELL GENESYS, INC. [ * ]
By: /s/ Bruce A. Hironaka By: [ * ]
--------------------------------- ------------------------------
Title: Vice President, Corp. Devel. Title: Vice President and
General Counsel
------------------------------ ---------------------------
Date: November 16, 1998 Date: 11/3/98
------------------------------- ----------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
2.
<PAGE>
APPENDIX B
[ * ] CELL LINE
[ * ]
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
3.
<PAGE>
APPENDIX C
RIGEL BIOLOGICAL MATERIALS
[ * ] Vectors:
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
4.
<PAGE>
APPENDIX D
NOLAN AND NOLAN/ROTHENBERG PATENTS
U.S. Patent Application No. 08/589,109, entitled "Methods for Screening for
Transdominant Effector Peptides and RNA Molecules" (the Nolan/Rothenberg
Patent Application).
U.S. Patent Applications Nos. 08/789,333, 08/589,911 and 08/963,368, entitled,
"Methods for Screening for Transdominant Intracellular Effector Peptides and
RNA Molecules" (the Nolan Patent Application).
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
5.
<PAGE>
APPENDIX E
LICENSE AGREEMENT
BY AND BETWEEN
THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY
AND
RIGEL PHARMACEUTICALS, INC.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
1.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. DEFINITIONS. ...............................................................................1
2. LICENSED RIGHTS.............................................................................3
3. TRANSFER OF BIOLOGICAL MATERIALS AND KNOW-HOW...............................................4
4. PAYMENTS....................................................................................4
5. TIMES AND CURRENCIES OF PAYMENT.............................................................6
6. SUBLICENSEES ...............................................................................6
7. CONFIDENTIAL INFORMATION....................................................................7
8. REPRESENTATIONS AND WARRANTIES..............................................................8
9. ______________________________..............................................................9
10. PUBLICITY...................................................................................9
11. PATENTS.....................................................................................9
12. LICENSED PRODUCT LIABILITY.................................................................10
13. NOTICES....................................................................................11
14. LAW TO GOVERN..............................................................................11
15. ASSIGNMENT.................................................................................11
16. TERMINATION................................................................................11
17. RESOLUTION OF DISPUTES.....................................................................12
18. FORCE MAJEURE..............................................................................12
19. BINDING UPON SUCCESSORS AND ASSIGNS........................................................12
20. INDEPENDENT CONTRACTORS....................................................................12
21. SEVERABILITY...............................................................................12
22. NO WAIVER..................................................................................12
23. NO IMPLIED OBLIGATIONS.....................................................................13
24. COMPLIANCE WITH LAWS. REGULATIONS AND STANDARDS............................................13
25. NO CONSEQUENTIAL DAMAGES...................................................................13
26. ENTIRE UNDERSTANDING.......................................................................13
APPENDIX E LICENSE AGREEMENT.....................................................................1
1. DEFINITIONS.................................................................................1
2. GRANT; TRANSFER OF LICENSED BIOLOGICAL MATERIALS............................................2
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
3. LICENSE ROYALTIES...........................................................................2
4. PATENTS; NEW INVENTIONS.....................................................................3
5. WARRANTIES..................................................................................3
6. INDEMNITY...................................................................................4
7. STANFORD NAMES AND MARKS....................................................................5
8. SUBLICENSE(S)...............................................................................5
9. TERM AND TERMINATION........................................................................5
10. ASSIGNMENT..................................................................................6
11. ARBITRATION.................................................................................6
12. NOTICES.....................................................................................7
13. WAIVER......................................................................................7
14. APPLICABLE LAW..............................................................................7
15. DISCLAIMER OF AGENCY........................................................................7
16. SEVERABILITY................................................................................8
17. ENTIRE AGREEMENT............................................................................8
18. COUNTERPARTS................................................................................8
</TABLE>
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ii.
<PAGE>
APPENDIX E
LICENSE AGREEMENT
Effective as of June 1, 1999 (the "Effective Date"), THE BOARD OF
TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate
powers under the laws of the State of California ("STANFORD") and RIGEL
PHARMACEUTICALS, INC., a Delaware corporation having a principle place of
business at 240 East Grand Avenue, South San Francisco, CA 94080 ("RIGEL"),
agree as follows:
RECITALS
A. STANFORD owns certain [ * ] cell lines and derivatives thereof and
biological components related thereto.
B. RIGEL desires to obtain a non-exclusive license to such materials for
use in the Field, with the right to grant one non-exclusive sublicense to Cell
Genesys, Inc.
1. DEFINITIONS.
1.1 "CELL GENESYS" means Cell Genesys, Inc., a Delaware corporation,
having a principal place of business at 342 Lakeside Drive, Foster City,
CA 94404.
1.2 "FIELD" means any and all fields of use, including, without
limitation, any research or commercial field of use.
1.3 "LICENSED BIOLOGICAL MATERIALS" means the materials listed on
Exhibit A.
1.4 "LICENSED KNOW-HOW" means:
(a) any and all tangible or intangible know-how, trade secrets,
inventions (whether or not patentable), processes, data, and other information
owned by STANFORD as of the Effective Date that are necessary or useful for
the use of the Licensed Biological Materials; and
(b) any modifications or progeny of the information and materials
in subsection (a) above that STANFORD may elect to provide to RIGEL at
STANFORD's sole and exclusive discretion.
1.5 "PATENT" shall mean all foreign and domestic patents (including,
without limitation, extensions, reexaminations, reissues, renewals and
inventors certificates) and patents issuing from patent applications (including
substitutions, provisionals, divisionals, continuations and continuations-in-
part).
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
1.
<PAGE>
2. GRANT; TRANSFER OF LICENSED BIOLOGICAL MATERIALS.
2.1 STANFORD hereby grants, and RIGEL hereby accepts, a worldwide,
non-exclusive license (without the right to sublicense except to Cell Genesys
in the field of human and/or animal gene therapy as provided in Article 8)
under STANFORD's right, title and interest in the Licensed Biological
Materials to conduct research and development and to use the Licensed
Biological Materials to make, have made, use, import, offer for sale and sell
products in the Field.
2.2 STANFORD hereby grants, and RIGEL hereby accepts, a worldwide,
non-exclusive license (without the right to sublicense except to Cell Genesys
in the field of human and/or animal gene therapy as provided in Article 8)
under STANFORD's right, title and interest in the Licensed Know-How to use
the Licensed Know-How in the Field.
2.3 STANFORD shall have the right to use the Licensed Know-How and the
Licensed Biological Materials for its own bona fide research, including
sponsored research and collaborations. In addition, STANFORD shall have the
right to distribute the Licensed Biological Materials.
2.4 Promptly after the Effective Date, STANFORD shall transfer to
RIGEL such quantities of the Licensed Biological Materials as RIGEL shall
reasonably request. Thereafter, STANFORD shall transfer to RIGEL such
additional quantities of Licensed Biological Materials as RIGEL shall
reasonably request in the event that RIGEL's stock of the Licensed Biological
Materials is destroyed or contaminated.
3. LICENSE ROYALTIES.
3.1 In partial consideration for the license granted by STANFORD to
RIGEL under Section 2.1, RIGEL agrees to pay to STANFORD the following:
(a) An initial, nonrefundable license issue royalty of [ * ],
which amount shall be paid within thirty (30) days after the Effective Date.
(b) A royalty payment equal to [ * ] on each of the first three
(3) anniversaries of the Effective Date.
After the third (3rd) anniversary of the Effective Date, the sublicense
shall be considered perpetual and fully paid-up.
3.2 If RIGEL grants to Cell Genesys a sublicense under the Licensed
Biological Materials to use and sell products in the field of human and/or
animal gene therapy, RIGEL shall pay to STANFORD during the term of such
sublicense a sublicense fee as follows:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
2.
<PAGE>
Upon signing of the sublicense $[ * ]
On each of the first three (3) anniversaries of $[ * ]
the effective date of such sublicense
On the 4th, 5th and 6th anniversaries of the $[ * ]
effective date of such sublicense
After the sixth (6th) anniversary of the effective date of such sublicense,
the sublicense shall be considered perpetual and fully paid-up.
4. PATENTS; NEW INVENTIONS.
Subject to the terms and conditions of this Agreement, any patentable
inventions or discoveries conceived or reduced to practice by the employees,
agents or consultants of one party during the course of the Agreement ("Sole
Inventions") shall be the property of such party. Any patentable inventions
or discoveries conceived or reduced to practice jointly by employees, agents
or consultants of STANFORD and RIGEL as determined in accordance with United
States rules of inventorship ("Joint Inventions") during the course of and
pursuant to this Agreement shall be owned jointly by STANFORD and RIGEL, each
to own an undivided one-half (1/2) interest in such Joint Invention. Each
party shall cooperate with the other in completing any patent applications
relating to Joint Inventions, and in executing and delivering any instrument
required to assign, convey or transfer to such other party its undivided
one-half (1/2) interest.
5. WARRANTIES.
5.1 STANFORD's Office of Technology Licensing represents and warrants
that to the best of its knowledge as of the Effective Date, STANFORD has not
sought or obtained patent protection of the Licensed Biological Materials or
any use thereof in the Field.
5.2 STANFORD's Office of Technology Licensing represents and warrants
that as of the Effective Date, it has no knowledge of claims by third parties
that the use of the Licensed Biological Materials infringes any patents,
copyrights or other rights of third parties.
5.3 STANFORD represents and warrants that it has all right, power and
authority necessary to grant the licenses set forth in Article 2 to RIGEL.
5.4 RIGEL agrees that nothing in this Agreement grants RIGEL any express
or implied license or right under or to:
(a) U.S. Patent 4,656,134, entitled "Amplification of Eucaryotic
Genes" or any patent application corresponding thereto; or
(b) U.S. Patent 5,070,012, entitled "Monitoring of Cells and
Trans-Activating Transcription Elements" or any patent application corresponding
thereto; or
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
3.
<PAGE>
(c) U.S. Patent 5,804,387, entitled "FACS-Optimized Mutants of
the Green Fluorescent Protein (GFP) or any patent application corresponding
thereto.
5.5 STANFORD agrees that nothing in this Agreement grants STANFORD any
express or implied license or right under or to U.S. Patent Application Nos.
08/789,333, 08/589,911, or 08/963,368, entitled "Method for Screening for
Transdominant Intracellular Effector Peptides and RNA Molecules," or any
continuations, divisionals or continuation-in-parts thereof or any patents
which may issue therefrom.
5.6 Except as provided in Sections 5.1, 5.2 and 5.3 and as otherwise
expressly set forth in this Agreement, nothing in this Agreement will be
construed as a warranty or representation that anything made, used, sold, or
otherwise disposed of under any license granted in this Agreement is or will
be free from infringement of patents, copyrights, and trademarks of third
parties; conferring rights to use in advertising, publicity, or otherwise any
trademark or the name of "STANFORD"; or granting by implication, estoppel, or
otherwise any licenses or rights under patents of STANFORD.
5.7 EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED BIOLOGICAL
MATERIALS OR LICENSED KNOW-HOW WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
TRADEMARK, OR OTHER RIGHTS, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
6. INDEMNITY.
6.1 RIGEL agrees to indemnify, hold harmless, and defend STANFORD,
UCSF-Stanford Health Care and Stanford Health Services and their respective
trustees, officers, employees, students, and agents against any and all claims
by third parties for death, illness, personal injury, property damage, and
improper business practices arising out of the manufacture, use, sale, or other
disposition of the Licensed Biological Materials or any products arising or
derived from Licensed Biological Materials, by RIGEL or RIGEL's sublicensee(s)
or customers.
6.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort
(including negligence), strict liability, contract or otherwise. STANFORD
shall not have any responsibilities or liabilities whatsoever with respect to
products arising or derived from Licensed Biological Materials by RIGEL.
6.3 RIGEL shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
6.4 In addition to the foregoing, RIGEL shall maintain Comprehensive
General Liability Insurance, including Products Liability Insurance, with
reputable and financially secure
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
4.
<PAGE>
insurance carrier(s) to cover the activities of RIGEL and its sublicensee(s)
in the amounts and during the periods specified herein. Such insurance shall
provide minimum limits of liability of One Million Dollars ($1,000,000) as of
the first anniversary of the date upon which RIGEL first leases a facility in
which it will conduct research and development activities, and of Five
Million Dollars ($5,000,000) as of the commencement of human clinical trials.
Such insurance shall include STANFORD, UCSF-Stanford Health Care and Stanford
Health Services, their trustees, directors, officers, employees, students,
and agents as additional insureds. Such insurance shall be written to cover
claims incurred, discovered, manifested or made during or after the expiration
of this Agreement. At STANFORD's request, RIGEL shall furnish a Certificate of
Insurance evidencing primary coverage and requiring thirty (30) days prior
written notice of cancellation or material change to STANFORD. RIGEL shall
advise STANFORD, in writing, that it maintains excess liability coverage
(following form) over primary insurance for at least the minimum limits set
forth above. All such insurance of RIGEL shall be primary coverage; insurance
of STANFORD, UCSF-Stanford Health Care or Stanford Health Services shall be
excess and noncontributory.
7. STANFORD NAMES AND MARKS.
RIGEL agrees not to identify STANFORD in any promotional advertising or
other promotional materials to be disseminated to the pubic or any portion
thereof or to use the name of any STANFORD faculty member, employee, or student
or any trademark, service mark, trade name, or symbol of STANFORD, UCSF-Stanford
Health Care or Stanford Health Services, or that is associated with any of them,
without STANFORD's prior written consent, except as required by law. STANFORD
shall not unreasonably withhold consent under this Section 7.
8. SUBLICENSE(S).
8.1 Subject to the provisions of this Article 8, RIGEL may grant a
sublicense to the license rights granted to RIGEL by STANFORD in Sections 2.1
and 2.2 to Cell Genesys solely in the field of human and/or animal gene therapy.
8.2 Any sublicense granted by RIGEL to Cell Genesys under this Agreement
shall be subject and subordinate to terms and conditions of this Agreement,
except:
(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant a sublicense to a third party; and
(b) The financial obligations of any sublicensee to RIGEL specified
in the sublicense(s) may be different from those obligations set forth in this
Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 5 and 6 for the benefit of STANFORD and shall survive any termination
of this Agreement.
8.3 RIGEL agrees to provide STANFORD with a copy (with financial terms
redacted) of any sublicense granted to Cell Genesys pursuant to this Article
8 and written notice
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
5.
<PAGE>
of the effective date of any termination of such sublicense prior to the
expiration of the Term (as defined in Section 9.1).
9. TERM AND TERMINATION.
9.1 The term of this Agreement shall commence upon the Effective Date
and shall expire upon the later of: (a) the expiration of the last to expire
of any Patents owned by STANFORD at any time which claim inventions in the
Licensed Biological Materials or the Licensed Know-How; or (b) twenty (20)
years from the Effective Date (the "Term"). In addition, RIGEL may terminate
this Agreement prior to the expiration of the Term by giving STANFORD notice
in writing at least thirty (30) days in advance of the effective termination
date selected by RIGEL.
9.2 Either party may terminate this Agreement prior to the expiration
of the Term if the other party is in material breach of any provision hereof
and fails to remedy any such default or breach within thirty (30) days after
written notice thereof to the breaching party.
9.3 Surviving the expiration of the Term are:
(a) Any cause of action or claim of RIGEL or STANFORD, accrued or
to accrue, because of any breach or default by the other party prior to the
expiration of the Term; and
(b) Articles 4, 5, 6, 7 and 11; and
(c) Article 8 and Sections 2.1 and 2.2; and the licenses granted
thereunder shall be deemed perpetual and fully paid-up.
9.4 Surviving any termination of this Agreement are:
(a) Any cause of action or claim of RIGEL or STANFORD, accrued or
to accrue, because of any breach or default by the other party prior to the
termination of this Agreement; and
(b) Articles 4, 5, 6, 7, 8 and 11 and Section 3.2; and
(c) Sections 2.1 and 2.2 if RIGEL has fulfilled all of its payment
obligations to STANFORD under Section 3.1 prior to such termination; and the
licenses granted thereunder shall be deemed perpetual and fully paid-up.
10. ASSIGNMENT.
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
6.
<PAGE>
11. ARBITRATION.
11.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising
under this Agreement, shall be settled by arbitration in accordance with the
Licensing Agreement Arbitration Rules of the American Arbitration Association.
11.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgment upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
11.3 The parties shall be entitled to discovery in like manner as if the
arbitration were a civil suit in the California Superior Court.
11.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
12. NOTICES.
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: Rigel Pharmaceuticals, Inc.
240 East Grand Ave.
South San Francisco, CA 94080
Attention: President
Either party may change its address upon written notice to the other party.
13. WAIVER.
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
14. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California. Any claim or controversy arising out of or related to this
Agreement or any breach hereof shall be submitted to a court of applicable
jurisdiction in the State of California, and each party hereby consents to
the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
7.
<PAGE>
jurisdiction and venue of such court.
15. DISCLAIMER OF AGENCY.
Neither party is, or will be deemed to be, the legal representative or
agent of the other, nor shall either party have the right or authority to
assume, create, or incur any third party liability or obligation of any kind,
express or implied, against or in the name of or on behalf of another except
as expressly set forth in this Agreement.
16. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not be in any way affected or impaired
thereby.
17. ENTIRE AGREEMENT.
This Agreement, together with the Exhibit attached hereto, embodies the
entire understanding of the parties and shall supersede all previous
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
18. COUNTERPARTS.
This Agreement may be executed in counterparts, with the same force
and effect as if the parties had executed the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE RIGEL PHARMACEUTICALS, INC.
LELAND STANFORD JUNIOR UNIVERSITY
By: /s/ Katherine Ku By: /s/ Donald W. Perryman
------------------------------------ ---------------------------------
Name: Katherine Ku Name: Donald W. Perryman
---------------------------------- -------------------------------
VP, Business Development
Title: Director, Technology Licensing Title: June 1999
--------------------------------- ------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
8.
<PAGE>
EXHIBIT A
LICENSED BIOLOGICAL MATERIALS
[ * ] Vectors:
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>
COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT
This Agreement is entered into as of December , 1997 (the "Effective
Date"), by and between NEUROCRINE BIOSCIENCES INC., a Delaware corporation
having an office at 3050 Science Park Road, San Diego, California 92121
("Neurocrine"), and RIGEL, INC., a Delaware corporation having an office at
772 Lucerne Drive, Sunnyvale, California 94086 ("Rigel").
RECITALS
WHEREAS, Neurocrine has an active research program in the area of
neurodegeneration and has developed a substantial compound library and drug
screening and medicinal chemistry capabilities;
WHEREAS, Rigel has certain intellectual property and expertise
pertaining to the discovery, and identification of molecular targets
associated with signal transduction pathways; and
WHEREAS, Neurocrine and Rigel desire to establish a collaboration for
the discovery, development and commercialization of (a) novel protein targets
involved in glial cell and macrophage activation, and (b) small molecule
inhibitors of protein:protein interactions involving proteins other than
those involved in glial cell activation (the "Collaboration"), and to reflect
their mutual understanding within this definitive Collaborative Research and
Development Agreement (the "Collaboration Agreement" or the "Agreement");
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Collaborative Agreement, the parties agree as
follows:
AGREEMENT
I. DEFINITIONS
1.1 "AFFILIATE" means, as to a party to this Agreement, any
corporation, company, partnership, joint venture or other entity which
controls, is controlled by, or is under common control with, such party. For
purposes of this Section 1.1, control shall mean (without limitation) in the
case of corporate entities, the direct or indirect ownership of at least
fifty percent (50%) of the stock or participating shares entitled to vote for
the election of directors.
1.2 "ANNUAL RESEARCH PLAN" means a plan approved by the Steering
Committee detailing the scope, level and extent of the Research and
Development, the specific technical and scientific responsibilities of each
party for each party for each one-year period during the Research and
Development Period, as described in Section 3.2.
1.3 "COLLABORATION PRODUCTS" means collectively, Rigel Collaboration
Products and Neurocrine Collaboration Products.
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1.4 "CONFIDENTIAL INFORMATION" means any proprietary information,
including the Neurocrine Technology and Rigel Technology, and any other
information relating to any research project, work in process, future
development, scientific, manufacturing, marketing, business plan, financial
or personnel matter relating to either party, its present or future products,
sales, suppliers, customers, employees, investors or business that one party
discloses to the other party during the term of this Agreement, whether in
oral, written, graphic or electronic form.
1.5 "DEVELOPMENT MOLECULES" means any small molecule included in the
Neurocrine library or produced in the course of Neurocrine's performance of
medicinal chemistry on a small molecule included in the Neurocrine Chemical
Library pursuant to Section 2.3, which small molecule is screened against a
Rigel Target and is determined by the Research Committee to have an EC(50) of
less than 1 uM against such target. Development Molecules exclude Peptide
Antagonists.
1.6 "EUROPE" shall mean the United Kingdom, Germany, France, Italy,
Spain and Switzerland.
1.7 "JOINT TECHNOLOGY" means any and all discoveries, modifications,
improvements, know-how, trade secrets, inventions (whether or not
patentable), patent applications and patents (including, without limitation,
all substitutions, divisionals, reissues, reexaminations, continuations,
continuations-in-part and inventors' certificates and all foreign
counterparts of the foregoing), data, information or physical, chemical or
biological material useful or necessary to the development or
commercialization of Collaboration Products that is developed by Neurocrine
and Rigel jointly during the term of this Agreement as a result of Research
and Development under the Annual Research Plan. Ownership of Joint Technology
shall be determined in accordance with Article 6.
1.8 "MAJOR COUNTRIES" means the United States, Europe, Japan and Canada.
1.9 "NEUROCRINE CHEMICAL LIBRARY" means the library of chemical
compounds that Neurocrine owns or controls during the Research and
Development Period. For the purposes of this Agreement, the Neurocrine
Chemical Library shall be assumed to be approximately one hundred thousand
(100,000) compounds during the first year of the Collaboration, and
approximately one hundred twenty-five thousand (125,000) compounds during the
second year of the Collaboration, and shall be deemed to exclude any
compounds that Neurocrine has licensed to a third party prior to the
Effective Date and any compounds that Neurocrine is precluded from providing
to Rigel under this Agreement by reason of contractual or other proprietary
flights of a third party.
1.10 "NEUROCRINE COLLABORATION PRODUCTS" means any product
incorporating or discovered utilizing a Protein Target or a Peptide
Antagonist.
1.11 "NEUROCRINE TECHNOLOGY" means any and all discoveries,
modifications, improvements, know-how, trade secrets, inventions (whether
or not patentable), patent
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applications and patents (including, without limitation, all substitutions,
divisionals, reissues, reexaminations, continuations, continuations-in-part
and inventors' certificates and all foreign counterparts of the foregoing),
data, information or physical, chemical or biological material useful or
necessary to the development or commercialization of Collaboration Products
that is owned or licensed (with a right to sublicense) by Neurocrine as of
the Effective Date or solely made or developed by Neurocrine during the
Research and Development of Collaboration Products pursuant to this Agreement.
1.12 "PROTEIN TARGET" means an enzyme, receptor, transducer or
transcription factor or other molecule identified during the performance of
the Research and Development that the Research Committee determines, based
upon data generated during the Research and Development, is a molecule
primarily involved in glial cell activation. Protein Targets shall exclude
Rigel Targets.
1.13 "PARTY" means Neurocrine or Rigel or their respective Affiliates.
1.14 "PEPTIDE ANTAGONISTS" means peptides identified or produced by
Rigel pursuant to Section 2 that the Research Committee determines, based upon
data generated during the Research and Development, to have activity against
one or more Protein Targets. Peptide Antagonists exclude Development Molecules.
1.15 "RESEARCH AND DEVELOPMENT" means the collaborative activities
conducted by the parties during the Research and Development Period pursuant
to this Agreement targeted toward the generation, identification, production
and characterization of Rigel Targets, Protein Targets, Peptide Antagonists
and Development Molecules.
1.16 "RESEARCH AND DEVELOPMENT PERIOD" means the period commencing upon
the Effective Date and terminating upon the second anniversary of the Effective
Date, during which period the parties shall conduct Research and Development.
The parties may extend the Research and Development Period for additional one
(1) year periods upon mutually acceptable terms.
1.17 "RIGEL COLLABORATION PRODUCTS" means any product incorporating or
discovered utilizing Rigel Target or a Development Molecule.
1.18 "RIGEL TARGET" means an enzyme, receptor, transducer, transcription
factor or other molecule that the Research Committee determines, based upon
data generated during the Research and Development, is specifically associated
primarily with processes other than glial cell activation. Rigel Targets
exclude Protein Targets.
1.19 "RIGEL TECHNOLOGY" means any and all discoveries, modifications,
improvements, know-how, trade secrets, inventions (whether or not patentable),
patent applications and patents (including, without limitation, all
substitutions, divisionals, reissues, reexaminations, continuations,
continuations-in-part and inventors' certificates and all foreign
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counterparts of the foregoing), data, information or physical, chemical or
biological material useful or necessary to the development or commercialization
of Collaboration Products that is owned or licensed (with a right to sublicense)
by Rigel as of the Effective Date or solely made or developed by Rigel during
the Research and Development of Collaboration Products performed pursuant to
this Agreement.
1.20 "STEERING COMMITTEE" means the committee established under Section 3
of this Agreement.
2. RESEARCH AND DEVELOPMENT COLLABORATION
2.1 OVERVIEW. The primary purpose of the Collaboration is to conduct
Research and Development toward the discovery and development of Collaboration
Products in accordance with the Annual Research Plan. To that end, it is
contemplated by the parties that:
(a) Neurocrine will have primary responsibility for supplying
certain cell lines necessary for the study of glial cell activation, providing
small molecule compounds from the Neurocrine Chemical Library, performing
limited medicinal chemistry as required by the Annual Research Plan, and
conducting certain screening and secondary assays and screening compounds from
the Neurocrine Chemical Library against Rigel Targets;
(b) Neurocrine and Rigel will share responsibility for applying the
Rigel Technology to develop an appropriate glial cell assay system to identify
Protein Targets and Peptide Antagonists; and
(c) Rigel will have primary responsibility for identifying and
providing Protein Targets, identifying and sequencing gene(s) coding for the
Protein Targets, and generating, identifying and providing Peptide Antagonists
of such Protein Targets. Rigel will also have responsibility for providing
Rigel Targets to Neurocrine for screening purposes. It is understood that the
individual and joint responsibilities will be set forth in detail in the Annual
Research Plan to be developed pursuant to Section 3.2.
2.2 IDENTIFICATION AND TRANSFER OF PROTEIN TARGETS. The parties shall
use diligent efforts to identify and transfer to Neurocrine one or more
"primary" Protein Targets that the Research Committee determines, based upon
the activity of such target in glial cell function assays performed during the
Research and Development, to be the best targets against which to screen small
molecules for activity. To this end, within the first year of the
Collaboration, Rigel shall use diligent efforts to identify and provide to
Neurocrine at least six (6) Protein Targets, the genes encoding those Protein
Targets, and Peptide Antagonists active against such Protein Targets, unless
the Steering Committee otherwise provides in the Annual Research Plan. In the
event that Rigel is unable, using such diligent efforts, to provide the Protein
Targets, genes encoding the Protein Targets and/or Peptide Antagonists within
the first year of the Collaboration, Rigel shall continue to use diligent
efforts to provide such biological materials as soon as possible thereafter.
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2.3 TRANSFER OF DEVELOPMENT MOLECULE TECHNOLOGY.
(a) Within the first year of the Collaboration, Rigel may provide
to Neurocrine a maximum of three (3) Rigel Targets that Neurocrine shall screen
against the Neurocrine Chemical Library. Similarly, during the second year of
the Collaboration, Rigel may provide to Neurocrine a maximum of another
three (3) Rigel Targets for the purposes of screening against the Neurocrine
Chemical Library. In no instance shall Neurocrine be obligated to screen a Rigel
Target that it believes in good faith to be in direct competition with a
Neurocrine research and development program existing at the time of the request.
All Rigel Targets shall be formatted in 96-well plates in an assay suitable for
high throughput screening. Within six (6) months of receipt of a Rigel Target,
Neurocrine shall screen such Rigel Targets as directed by the Research
Committee and provide Rigel with the results of such screen. In the event Rigel
provides more than two Rigel Targets to Neurocrine in any sixty (60) day period,
Neurocrine shall have the right to extend the time period within which it must
provide the results of the screen by an additional sixty (60) days.
(b) Based upon the results of the foregoing screening activities,
Rigel may select one (1) Rigel Target in each of the two years of the
Research and Development Period. During the second year of the Collaboration,
Neurocrine shall devote one full-time equivalent (FTE) for the purpose of
performing medicinal chemistry on molecules in the Neurocrine Chemical
Library that the Research Committee determines are active against the Rigel
Target and most suitable for structure-activity relationship development, and
perform additional appropriate screening to provide Rigel with a Development
Molecule prior to expiration of the Research and Development Period. Once a
Development Molecule has been identified, Neurocrine shall no longer be
obligated to expend any additional effort or resources on such Rigel Target
or Development Molecule. In the event that Neurocrine, in its discretion,
determines that it is unable to devote the services of one full-time
equivalent (FTE) to such medicinal chemistry activities during the second
year of the Collaboration, Neurocrine may elect to provide Rigel with a
portion of the Neurocrine Chemical Library (hereinafter the "Sample Library")
in lieu of the performance of such services. The Sample Library shall consist
of approximately one hundred microliters (100 uL) of a ten millimolar (10mM)
stock solution of any compound then existing in the Neurocrine Chemical
Library, for which Neurocrine has in its possession a quantity of at least 2
milligrams, on a compound-by-compound basis. The Sample Library shall also
include any structural information Neurocrine has in its possession with
regard to the transferred compounds. At the end of the second year of the
Collaboration (or earlier as provided above), Neurocrine shall provide to
Rigel the Sample Library to allow Rigel to conduct internal screening
activities, excluding the screening of any targets which Neurocrine is, or
reasonably anticipates, itself screening, as determined at the time of
transfer. For purposes of clarity, at the time of transfer Neurocrine shall
provide Rigel with a list of the targets as to which screening of the Sample
Library is prohibited.
2.4 CONDUCT OF RESEARCH AND DEVELOPMENT. The parties will conduct their
respective Research and Development activities under the Annual Research Plan
in good
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scientific manner and in compliance with all applicable governmental,
regulatory and legal requirements. Neurocrine and Rigel will each use their
good faith scientific and business judgment to allocate sufficient time,
effort, equipment and facilities to. the Collaboration to achieve the
objectives of the Collaboration consistent with the terms of this Agreement
and the recommendations of the Steering Committee, as provided in Section 3
below.
2.5 VISIT OF FACILITIES. Representatives of either party may, upon
reasonable notice and at a frequency reasonably acceptable to the Other party
during normal business hours (a) visit the facilities where the Research and
Development is being conducted; and (b) consult informally, during such visits
and by telephone, with personnel of the other party performing the Research
and Development. Each party shall bear its own expenses with regard to any such
visits. If requested by the other party, Neurocrine and Rigel shall cause
appropriate individuals working on the Research and Development to be available
for meetings at the location of the facilities where such individuals are
employed at times reasonably convenient to each party.
2.6 DISCLOSURE OF DATA. The parties will promptly provide to each
other all data generated during the Research and Development, including,
without limitation, all Neurocrine Technology, Joint Technology and Rigel
Technology arising during the Research and Development Period.
3. STEERING COMMITTEE
3.1 FORMATION. The parties will promptly after the Effective Date form a
Steering Committee having six members, with an equal number of representatives
from each of Neurocrine and Rigel. Each party may replace its respective
representatives on the Steering Committee from time to time upon written notice
to the other party.
3.2 MEETING AND RESPONSIBILITIES.
(a) Within ninety (90) days from execution of this Agreement, the
Steering Committee shall formulate and approve an Annual Research Plan which
shall guide each party's activities through December 31, 1998. The Steering
Committee will meet regularly during the Research and Development Period to:
(i) set objectives for the Research and Development; (ii) assess the level
and extent of the Research and Development activities to be conducted by each
party; (iii) review the progress of the Research and Development; (iv) oversee
patent matters relating to Joint Technology and any Rigel Technology or
Neurocrine Technology to be assigned pursuant to Section 6.3; (v) ensure that
the designation of all Rigel Targets, Protein Targets, Peptide Antagonists and
Development Molecules is documented and is consistent with the definitions
provided herein, and resolve any disputes regarding such designations;
(vi) oversee the extent and timing of any technology transfer necessary or
appropriate for the Research and
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Development; and (vii) encourage and facilitate ongoing cooperation between
the parties. Meetings of the Steering Committee will take place at mutually
agreed upon times and locations. From time to time, the Steering Committee
may establish subcommittees (including a Research Committee responsible for
directing the parties' day to day Research and Development activities) to
oversee particular projects or activities, and such additional subcommittees
shall be staffed as designated by the Steering Committee.
(b) By September 1, 1998, Neurocrine and Rigel shall submit to one
another their respective proposals concerning the Research and Development to
be conducted during the next calendar year. Thereafter, Neurocrine and. Rigel
shall jointly prepare proposed revisions to the draft Annual Research Plan for
submission to the Steering Committee for approval. The Steering Committee shall
review the proposal as soon as possible after receipt, and shall establish and
approve a final Annual Research Plan for the following calendar year prior to
or on November 15, 1998. The Steering Committee may amend the Annual Research
Plan from time to time as it deems necessary or appropriate. The parties shall
alternate the responsibility of preparing and distributing the minutes of such
Steering Committee meetings, with Neurocrine preparing the minutes of the first
meeting. All such meeting minutes should, whenever possible, be distributed to
the parties within twenty-one (21) days from the date of the meeting, and
should include any changes to the Annual Research Plan, and a summary of any
inventions, discoveries or results achieved under this Agreement which should
be deemed to be Joint Technology. If necessary or desired, each party may
consult with its respective patent counsel prior to rendering any such
designation of results as Joint Technology. The Steering Committee shall
attempt to resolve any disagreements regarding whether a given technology
should be designated as Joint Technology, Rigel Technology or Neurocrine
Technology pursuant to Section 6.6.
3.3 DISAGREEMENTS. Decisions of the Steering Committee shall be by a
majority vote. If no majority vote is obtained with respect to any issue, the
matter will be referred to the Chief Executive Officer of each party or such
other senior executive designated by a party who is reasonably acceptable to
the other party and who has decision-making authority. Such persons shall
meet and attempt to resolve the matter in good faith. Any disputes that remain
unresolved by such executives shall be submitted for resolution as provided in
Section 9.3.
4. COLLABORATION FUNDING
4.1 RESEARCH AND DEVELOPMENT FUNDING. Neurocrine and Rigel shall each
be responsible for their own costs associated with activities within the
Annual Research Plan.
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5. LICENSES
5.1 RESEARCH LICENSE TO RIGEL. Neurocrine hereby grams to Rigel a
non-exclusive, worldwide, royalty-free license, without the right to
sublicense, under Neurocrine's interest in the Neurocrine Technology, Joint
Technology and any Rigel Technology that may be assigned to Neurocrine
pursuant to Section 6.5, solely to the extent necessary or appropriate for
Rigel to conduct Research and Development of Collaboration Products pursuant
to this Agreement.
5.2 RESEARCH LICENSE TO NEUROCRINE. Rigel hereby grants to Neurocrine
a non-exclusive, worldwide, royalty-free license, without the right to
sublicense, under Rigel's interest in the Rigel Technology, Joint Technology
and any Neurocrine Technology that may be assigned to Rigel pursuant to
Section 6.5, solely to the extent necessary or appropriate for Neurocrine to
conduct Research and Development of Collaboration Products pursuant to this
Agreement.
5.3 COMMERCIALIZATION LICENSE TO NEUROCRINE. Rigel hereby grants to
Neurocrine an exclusive, worldwide, royalty free license, with the right to
sublicense, under Rigel's interest in any applicable intellectual property
rights within the Rigel Technology or the Joint Technology solely to develop,
make, use, sell, offer for sale and import Neurocrine Collaboration Products.
5.4 COMMERCIALIZATION LICENSE TO RIGEL. Neurocrine hereby grants to
Rigel an exclusive, worldwide, royalty-free, license, with the right to
sublicense, under Neurocrine's interest in any applicable intellectual
property rights within the Neurocrine Technology or the Joint Technology
solely to develop, make, use, sell, offer for sale or import Rigel
Collaboration Products.
6. PATENT MATTERS
6.1 OWNERSHIP. Subject to Section 6.5, as determined in accordance with
the rules of inventorship under U.S. law, each party shall have sole ownership
of all inventions made solely by its employees or other agents during the term
of this Agreement, which inventions shall be Rigel Technology if made solely by
Rigel's employees or agents or Neurocrine Technology if made solely by
Neurocrine's employees or agents. The parties shall each own a fifty percent
(50%) undivided interest (without accounting) in all inventions made jointly by
the parties' employees or other agents, subject to any licenses granted
pursuant to this Agreement, which inventions shall be Joint Technology.
Specifically, Neurocrine shall have sole ownership and control of the Neurocrine
Technology, and Rigel shall have sole ownership and control of Rigel Technology,
subject to any licenses granted pursuant to this Agreement. The parties agree
that they each shall enter into agreements with their respective employees and
other agents providing
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that, to the maximum extent permitted by applicable law, such employees and
other agents shall assign (or be obligated to assign) to the party hereto
which acts as their employer or principal, the ownership and control of all
inventions conceived or reduced to practice by such employees and agents in
the course of their employment for, or within the scope of the agency
relationship with, each party hereto. Any disputes regarding the designation
of inventions as Neurocrine Technology, Rigel Technology or Joint Technology
shall be submitted for resolution by the Steering Committee.
6.2 PROSECUTION OF PATENTS CONSTITUTING RIGEL TECHNOLOGY. Rigel shall
prepare, file, prosecute and maintain patent applications and/or patents
worldwide, in accordance with Section 6.6, for those inventions within the
Rigel Technology and any inventions assigned to Rigel pursuant to Section
6.5. Rigel shall use its best efforts, consistent with its own internal
filing procedures, to obtain letters patent on patentable Rigel Technology in
all Major Countries and, where possible and appropriate, worldwide.
6.3 PROSECUTION OF PATENTS CONSTITUTING NEUROCRINE TECHNOLOGY AND
JOINT TECHNOLOGY. Neurocrine shall prepare, file, prosecute and maintain
patents and/or patent application worldwide, in accordance with Section 6.6,
for those inventions within the Neurocrine Technology and within the Joint
Technology and any inventions included in the Rigel Technology that are
assigned to Neurocrine pursuant to Section 6.5. Neurocrine shall use its best
efforts, consistent with its own internal filing procedures, to obtain
letters patent in all Major Countries and, where possible and appropriate,
worldwide.
6.4 COOPERATION IN PATENT MATTERS. Consistent with Section 6.6 below,
the parties agree to cooperate with each other as necessary or appropriate in
the preparation, filing and prosecution of patent applications pursuant to
Sections 6.2, 6.3 and 6.5, including providing one another a reasonable
opportunity to review and comment on any patent application to be filed in
the U.S. or in any other country. All costs associated with the preparation,
filing, prosecution and maintenance of patent applications and patents
coveting jointly owned Joint Technology shall be shared equally by the
parties.
6.5 TRANSFER OF CERTAIN PATENTS CONSTITUTING NEUROCRINE TECHNOLOGY,
RIGEL TECHNOLOGY OR JOINT TECHNOLOGY. Notwithstanding Sections 6.1 and 6.2,
Rigel shall assign its interest in any inventions included in the Rigel
Technology and any Joint Technology that is solely related to a Protein
Target or to a Peptide Antagonist to Neurocrine, and Neurocrine shall
thereafter prepare, file, prosecute and maintain patents and/or patent
applications worldwide for all such inventions, consistent with the
provisions of Section 6.3. Similarly, notwithstanding Sections 6.1 and 6.3,
Neurocrine shall assign its interest in any invention included in the
Neurocrine Technology and any Joint Technology that is solely related to a
Development Molecule or to a Rigel Target to Rigel, and Rigel shall
thereafter prepare, file, prosecute and maintain patents and/or patent
applications worldwide for all such inventions, consistent with the
provisions of Section 6.2.
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6.6 DISCLOSURE OF INVENTIONS AND REVIEW OF PATENT APPLICATIONS. Each
party shall provide the other with a copy of a summary of any disclosure of an
invention (including those inventions included in the Joint Technology) arising
in the course of the Collaboration as soon as is reasonably practical after
such party recognizes such invention to allow the other party an opportunity to
comment upon the subject matter and upon the ownership and inventorship of the
invention. Subsequent to the provision of such a summary, designation of an
invention as Rigel Technology, Neurocrine Technology or Joint Technology, and
the determination of the ownership of such invention, the party responsible for
filing a patent application on such invention pursuant to Section 6 shall
provide the other party with a copy of any draft patent application directed
toward the invention in order. In addition, Neurocrine shall provide to Rigel a
copy of all amendments or substantive communications relating to jointly owned
Joint Technology sufficiently in advance of any relevant deadline or
anticipated submission date to allow Rigel a reasonable opportunity to evaluate
and comment upon any such application, amendment or substantive communication.
6.7 ENFORCEMENT OF PATENTS BY A SINGLE PARTY. (a) Rigel shall have the
first right (but not the obligation) to enforce the patents included in the
Rigel Technology and any patents included in the Neurocrine Technology or Joint
Technology that are assigned to Rigel pursuant to section 6.4 against third
party infringement, and (b) Neurocrine shall have the first right (but not the
obligation) to enforce the patents included within the Neurocrine Technology or
Joint Technology (other than those patents included in the Joint Technology or
Neurocrine Technology that are assigned to Rigel pursuant to Section 6.5)
against third party infringement. In the event that the party with the first
right to enforce a patent pursuant to this Section 6.6 fails to commence
enforcement or otherwise terminates the alleged infringement within six months
after that party has learned of the alleged infringement, the other party shall
have the right, but not the obligation, to bring and control any such action
using counsel of its own choice and at its own expense.
6.8 JOINT ENFORCEMENT OF PATENTS. If one party commences enforcement
proceedings pursuant to Section 6.6, the other party may elect upon written
notice to the enforcing party to join in the action in order to provide
reasonable assistance and to share in the costs and expenses associated with
the action. Any monetary awards recovered through the action shall first be
applied to fees and expenses, and the remainder shared pro rata based upon
the relative financial contribution of the parties to such fees and expenses.
6.9 THIRD PARTY INFRINGEMENT ACTIONS. If a party receives notice of
any suit or claim alleging that the conduct of the activities within this
Agreement infringes the proprietary rights of a third party, the parties
shall promptly meet to discuss and decide on an appropriate response.
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7. CONFIDENTIALITY
7.1 CONFIDENTIALITY OBLIGATION. During the term of this Agreement and
for a period of five years thereafter, each party hereto shall maintain in
confidence all Confidential Information disclosed to it by the other party.
Neither party will use, disclose or grant the use of such Confidential
Information except as expressly authorized by this Agreement. To the extent
that disclosure is authorized by this Agreement, the disclosing party will
obtain prior agreement from its employees, agents, consultants or investigators
to whom disclosure is to be made to hold in confidence and not make use of such
information for any purpose other than those permitted by this Agreement. Each
party will use at least the same standard of care as it uses to protect its own
proprietary and trade secret information to ensure that such employees, agents,
consultants and investigators do not disclose or make any unauthorized use of
such Confidential Information. Each party will promptly notify the other upon
discovery of any unauthorized use or disclosure of the Confidential Information.
7.2 EXCEPTIONS. The obligations of confidentiality contained in
Section 7.1 will not apply to the extent that it can be established by the
party receiving Confidential Information (the "Receiving Party") by competent
proof that such Confidential Information:
(a) was already known to the Receiving Party, other than under an
obligation of confidentiality with respect thereto, at the time of receipt from
the other party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its receipt from the other party;
(c) becomes generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the Receiving Party in breach of this Agreement; or
(d) was received by the Receiving Party, other than under an
obligation of confidentiality, by a third party without breach of any
obligations of confidentiality with respect thereto.
7.3 AUTHORIZED DISCLOSURE. Each party may disclose the Confidential
Information to the extent such disclosure is reasonably necessary in filing
or prosecuting patent applications, prosecuting or defending litigation, or
complying with applicable laws, governmental regulations, or court orders
provided that if such party is required to make any such disclosure of the
Confidential information it will to the extent practicable give reasonable
advance notice to the other party of such disclosure requirement and, except
to the extent inappropriate in the case of patent applications, will use all
reasonable efforts to secure confidential treatment of such information
required to be disclosed, subject to the limitations on disclosure set forth
in Section 7.4 (b).
7.4 PUBLICATION.
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(a) During the term of this Agreement and for a period of five
(5) years thereafter, Neurocrine and Rigel each acknowledge the other party's
interest in publishing certain of its results to obtain recognition within the
scientific community and to advance the state of scientific knowledge. Each
party also recognizes the mutual interest in obtaining valid patent protection
and maintaining as confidential any Confidential Information or non-patentable
information which would have commercial value when undisclosed and maintained
as a trade secret. Consequently, if a party, its employees or consultants
desire to make a disclosure (including both written publications and oral
presentations made in the absence of a contractual obligation of
confidentiality) relating to work performed by such party (the "Publishing
Party") as part of the Research and Development, it shall transmit to the other
party (the "Reviewing Party") a copy of the proposed written publication at
least sixty (60) days prior to submission for publication, or an outline of
such oral presentation at least thirty (30) days prior to the anticipated date
of presentation. The Reviewing Party shall have the right (i) to propose
modifications to the publication or presentation to protect the patentability
of inventions, to maintain a trade secret or to protect other Confidential
Information of a party and (ii) to request a delay in publication or
presentation for a reasonable period of time as provided in Section 7.4(b) in
order to protect patentable information.
(b) If the Reviewing Party requests such a delay, the Publishing
Party shall delay the submission of the publication or the oral presentation
for a period of up to ninety (90) days to allow one or both parties to file
patent applications coveting information included in the publication or
presentation in accordance with Section 6. If the Reviewing Party reasonably
claims that such information, whether patentable or not, either is Confidential
Information of the Reviewing Party or may have significant commercial value and
can be maintained as a trade secret, the Publishing Party shall publish or
disclose only such information which would not adversely affect the
confidentiality of such Confidential Information or the commercial value of
such trade secret. Upon the expiration of sixty (60) or thirty (30) day review
period (as the case may be) set forth in Section 7.4(a), the Publishing Party
shall be free to proceed with the written publication or the presentation, as
applicable, unless the Reviewing Party has requested a further delay or a
modification described in this Section 7.4(b).
8. TERM AND TERMINATION OF THE AGREEMENT
8.1 TERM. Unless earlier terminated as provided below, the term of
this Agreement shall commence upon the Effective Date and terminate
concurrently With the termination of the Research and Development Period.
8.2 TERMINATION.
(a) Each party will have the right to terminate this Agreement
(i) in the event of insolvency or bankruptcy of the other party, or (ii) after
written notice to the other that the
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other is in breach of any material term of this Agreement, unless the other
party cures such breach before the expiration of sixty (60) days from the
date of receipt of such notice.
(b) Either party may elect to terminate this Agreement during the
Research and Development Period prior to its expiration pursuant to Section
8.1 by providing to the other ninety (90) days written notice. In the event
that the Agreement is terminated prior to the second anniversary of the Research
and Development Period, the parties will meet and determine in good faith the
identity and disposition of all intellectual property rights and biological and
chemical materials generated up until the time of termination in accordance with
Section 6; provided, however, that the parties will negotiate in good faith the
disposition of any intellectual property rights and biological and chemical
materials that are not covered by the provisions of Section 6. Expiration or
termination of this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination.
8.3 EFFECTS OF EXPIRATION OR TERMINATION OF THE RESEARCH AND
DEVELOPMENT PERIOD. Upon expiration of the Research and Development Period or
any termination of this Agreement prior to the expiration of the Research and
Development Period, all remaining chemical and biological materials included
in the Rigel Technology that are in Neurocrine's possession at the time of
expiration or termination of the Research and Development Period shall be
returned to Rigel, and all remaining chemical and biological materials included
in the Neurocrine Technology that are in Rigel's possession at the time of
expiration or termination of the Research and Development Period shall be
returned to Neurocrine, except to the extent that the parties may otherwise
agree during discussions conducted pursuant to Section 8.2 (b).
8.4 EFFECTS OF EXPIRATION OR TERMINATION OF THE AGREEMENT. Sections 6,
7, 8, 9.1, 9.2, 9.3, 9.9 and 9.10 shall survive any expiration or termination
of this Agreement. Upon any termination of this Agreement prior to its
expiration pursuant to Section 8.1. the commercialization licenses granted
pursuant to Sections 5.3 and 5.4 shall survive such termination of this
Agreement; provided, however, that if this Agreement is terminated for material
breach by Neurocrine, then the license granted pursuant to Section 5.3 shall
not survive such termination, and further provided that if this Agreement is
terminated for material breach by Rigel, then the license granted pursuant to
Section 5.4 shall not survive such termination.
9. MISCELLANEOUS PROVISIONS
9.1 INDEMNIFICATION.
(a) Rigel agrees to indemnify, hold harmless and defend the
other, its officers, agents, and Affiliates (the "Neurocrine Indemnitees")
against any and all claims, suits, losses, damage, costs, fees and expenses
of or by third parties (collectively, "Claims") for damage to persons or
property resulting directly or indirectly from Rigel's, its Affiliates or its
sublicensee's actions in connection with its performance under this Agreement
or the manufacture, use, sale offer for sale or import of Rigel Collaboration
Products, except to the extent such Claims arise out of or result from the
negligence, recklessness or willful acts or omissions of the Neurocrine
13.
<PAGE>
Indemnitees or arise out of or result from any breach of this Agreement by
the Neurocrine Indemnitee. Any Neurocrine Indemnitee shall give prompt notice
to Rigel of any Claims brought or filed against such Neurocrine Indemnitee,
and Rigel shall assume the defense of such Claims with counsel reasonably
satisfactory to the Neurocrine Indemnitee. Rigel will not be subject to any
liability for any settlement of such Claims made by a Neurocrine Indemnitee
without Rigel's consent (not to be unreasonably withheld). The Neurocrine
Indemnitee may retain separate counsel with respect to any such Claims at its
own expense.
(b) Neurocrine agrees to indemnify, hold harmless and defend the
other, its officers, agents, and Affiliates (the "Rigel Indemnitees") against
any and all claims, suits, losses, damage, costs, fees and expenses of or by
third parties (collectively, "Claims") for damage to persons or property
resulting directly or indirectly from Neurocrine's, its Affiliates or its
sublicensee's actions in connection with its performance under this Agreement
or the manufacture, use, sale offer for sale or import of Neurocrine
Collaboration Products, except to the extent such Claims arise out of or
result from the negligence, recklessness or willful acts or omissions of the
Rigel Indemnitees or arise out of or result from any breach of this Agreement
by the Rigel Indemnitee. Any Rigel Indemnitee shall give prompt notice to
Neurocrine of any Claims brought or filed against such Rigel Indemnitee, and
Neurocrine shall assume the defense of such Claims with counsel reasonably
satisfactory to the Rigel Indemnitee. Neurocrine will not be subject to any
liability for any settlement of such Claims made by a Rigel Indemnitee
without Neurocrine's consent (not to be unreasonably withheld). The Rigel
Indemnitee may retain separate counsel with respect to any such Claims at its
own expense.
9.2 DISCLAIMER OF WARRANTIES. THE RIGEL TECHNOLOGY AND THE NEUROCRINE
TECHNOLOGY ARE PROVIDED BY RIGEL AND NEUROCRINE, RESPECTIVELY, "AS IS" AND
EACH PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION WARRANTIES OF DESIGN, MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, NONIFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES
WITH RESPECT THERETO. Without limitation, each party expressly does not warrant
the success of any Research and Development activities or the safety or
usefulness of any technology it provides hereunder.
9.3 DISPUTE RESOLUTION. If a dispute arises between the parties
relating to the interpretation or performance of this Agreement or the
grounds for the termination thereof, the parties agree to hold a meeting,
attended by individuals with decision-making authority regarding the dispute,
to attempt in good faith to negotiate a resolution of the dispute prior to
pursuing other available remedies. If, within 30 days after such meeting, the
parties have not succeeded in negotiating a resolution of the dispute, such
dispute shall be submitted to final and binding arbitration under the then
current Licensing Agreement Arbitration Rules of the American Arbitration
Association ("AAA"), with a panel of three arbitrators with significant
experience in the biopharmaceutical industry conducting proceedings in San
Diego, California. Such arbitrators
14.
<PAGE>
shall be selected by mutual agreement of the parties or, failing such
agreement, shall be selected according to the aforesaid AAA rules. The parties
shall bear the costs of arbitration equally unless the arbitrators, pursuant to
their right, but not their obligation, require the non-prevailing party to bear
all or any unequal portion of the prevailing party's costs. The decision by the
arbitrators shall be made within ninety (90) days after the selection of the
arbitrators. The decision of the arbitrators shall be final and may be sued on
or enforced by the party in whose favor it decides in any court of competent
jurisdiction at the option of such party. The arbitrators will be instructed to
prepare and deliver a written, reasoned opinion conferring their decision. The
rights and obligations of the parties to arbitrate any dispute relating to the
interpretation or performance of this Agreement or the grounds for the
termination thereof shall survive the expiration or termination of this
Agreement for any reason.
9.4 FORCE MAJEURE. Neither party shall be held liable or responsible to
the other party nor shall either party be deemed to have defaulted under or
breached this Agreement for failure or delay in fulfilling or performing any
term of this Agreement (other than payment of monies due) when such failure or
delay is caused by or results from causes beyond reasonable control of the
affected party including but not limited to fire, floods, embargoes, war, acts
of war (whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority, or earthquakes, provided that
the affected party uses reasonable efforts to overcome such failure or delay.
9.5 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any rights or
obligations hereunder be assigned or transferred, by either party without the
written consent of the other party; provided, however, that either party may,
without such consent, assign this Agreement and its rights and obligations
hereunder (a) in connection with the transfer or sale of all or substantially
all of its business, if such assets include substantially all of the assets
relating to its performance of its obligations hereunder, (b) to a wholly owned
subsidiary or, (c) in the event of its merger or consolidation with another
company at any time during the term of this Agreement. Any purported assignment
in violation of this Section 9.5 shall be void. Any permitted assignee shall
assume all obligations of its assignor under this Agreement.
9.6 PUBLICITY. The parties agree that neither party will originate any
news release or other public announcement, written or oral, or otherwise make
any disclosure relating to the existence or terms of or performance under
this Agreement without the prior written approval of the other party, except
as may otherwise be required by law, or as provided in Section 7.4.
9.7 EXPORT LAWS. Each party hereby agrees that no technology or
information licensed from the other, and no product thereof, will be made
available or re-exported, directly or indirectly, except in compliance with
all applicable export laws and regulations.
9.8 SEVERABILITY. Both parties hereby expressly agree and contract
that it is the intention of neither party to violate any laws, rules,
regulations, treaty or decision of any
15.
<PAGE>
government agency or executive body thereof of any country or community or
association of countries. Should a court or governmental authority of competent
jurisdiction determine that one or more provisions of this Agreement are invalid
or unenforceable by reason of such a violation, then the parties hereto shall
attempt to substitute, by mutual consent, valid provisions for such invalid
provisions, which valid provisions closely approximate the economic effect of
the invalid provisions. If the parties are unable to formulate a mutually
acceptable provision to replace any invalid provision, then such invalid
provisions shall be severed from this Agreement and the invalidity of such
provision shall not affect the validity of the Agreement as a whole.
9.9 NOTICES. Any notice or report required or permitted to be given or
made under this Agreement by one of the parties hereto to the other shall be in
writing, delivered personally or by facsimile (and promptly confirmed by
telephone, personal delivery or courier) or courier, postage prepaid, addressed
to such other party at its address indicated on the first page of this Agreement
(to the attention of Gary Lyons, if to Neurocrine, and to the attention of James
Gower, if to Rigel), or to such other address as the addressee shall have last
furnished in writing to the address or and shall be effective upon receipt by
the addressee.
9.10 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to its
choice of law provisions, and any applicable laws of the United States.
9.11 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written,
heretofore made are expressly merged into and made a part of this Agreement.
This Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by both parties hereto.
9.12 INDEPENDENT CONTRACTORS. It is expressly agreed that Neurocrine and
Rigel shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency of any kind.
Neither party shall have the authority to make any statements, representations
or commitments of any kind, or to take any action, which shall be binding on the
other, without the prior written authorization of the other party to do so.
9.13 WAIVER. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
9.14 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Collaborative Agreement.
NEUROCRINE, INC. RIGEL, INC.
By: /s/ Kevin C. Gorman By: /s/ James Gower
------------------------------- --------------------------------
Kevin C. Gorman James Gower
Title: Senior Director, Title: Chief Executive Officer
Business Development
17.
<PAGE>
RIGEL PHARMACEUTICALS
24 WINDSOR DRIVE, HILLSBOROUGH. CA 94010
PHONE/FAX: 415-579-4638
January 16, 1997
Dr. Donald G. Payan
24 Windsor Drive
Hillsborough, CA 94010
RE: EMPLOYMENT AGREEMENT
Dear Don:
Rigel Pharmaceuticals, Inc. (the "Company") is pleased to offer you
the position of Vice President Research and Chief Operating Officer of the
Company beginning January 16, 1997 ("Effective Date") on the terms set forth
below (the "Agreement").
As Vice President Research and COO, you will perform the duties
customarily associated with this position, and such duties as may be assigned
to you by the Company's President and CEO. Of course, the Company may change
your position, duties and work location from time to time, as it deems
necessary.
Your annual salary will be $185,000 ("Base Salary"), less standard deductions
and withholdings, paid semi-monthly. You will be expected to work as required
to complete your job duties.
In addition, upon formal approval by the Board, the Company will issue
to you 750,000 shares of Company founders common stock as described in the
Company's Stock Purchase Agreement (the "Founders Stock"). This Founders
Stock will be subject to the repuchase provisions contained in the Stock
Purchase Agreement (the "Purchase Option"). If your employment with the
Company is terminated without cause within three years, then the Founders
Stock which remains subject to the Purchase Option will immediately lapse
according to the following: (i) in the event at least one-third (1/3) of the
Founders Stock remains subject to the Purchase Option, then the Purchase
Option shall lapse with respect to one-third (1/3) of the Founders Stock; or
(ii) in the event less than one-third (1/3) of the Founders Stock remains
subject to the Purchase Option, then the Purchase Option shall lapse with
respect to all such Founders Stock.
In addition to your salary and equity compensation, on the Effective
Date the Company will provide you with sick and vacation leave, medical and
dental insurance coverage, and any other benefits consistent with Company
policy for exempt, full-time employees. Details about these benefits are
available for your review. The Company reserves the right to modify your
compensation and benefits from time to time, as it deems necessary.
<PAGE>
Dr. Donald G. Payan
January 16, 1997
Page 2
The Company agrees to reimburse you for reasonable documented business
expenses pursuant to Company policy.
You will be expected to abide by all of the Company's policies and
procedures. As a condition of your employment, you also agree to sign and
comply with the Company's Proprietary Information and Inventions Agreement
(attached hereto as Exhibit A).
By accepting this offer, you represent and warrant that you are not a
parry to any agreement with any third party or prior employer which would
conflict with or inhibit your performance of your duties with the Company.
Either you or the Company may terminate your employment relationship at
any time for any reason whatsoever, with or without cause or advance notice.
This at-will employment relationship cannot be changed except in a writing
signed by a duly authorized officer of the Company. If the Company terminates
your employment without cause, the Company will make severance payments to
you in the form of continuation of your base salary in effect on the
Effective Date for one (1) year following your separation from the Company.
These payments will be made on the Company's ordinary payroll dates, and will
be subject to standard payroll deductions and withholdings. In the event of
such termination, you will not be entitled to any additional compensation or
benefits beyond what is provided in this paragraph and in the paragraph above
relating to acceleration of Founders Stock vesting. If you resign or your
employment is terminated for cause, all compensation and benefits will cease
immediately, and you will receive no severance benefits. For purposes of this
Agreement, "cause" shall mean misconduct, including: (i) conviction of any
felony or any crime involving moral turpitude or dishonesty; (ii)
participation in a fraud or act of dishonesty against the Company; (iii)
material breach of the Company's policies; (iv) damage to the Company's
property; (v) material breach of this Agreement or your Proprietary
Information and Inventions Agreement; or (vi) conduct by you which in the
good faith and reasonable determination of the Board demonstrate s gross
unfitness to serve.
You agree that, for one (1) year following the termination of your
employment with the Company, you will not personally initiate or participate
in the solicitation of any employee of the Company or any of its affiliates
to terminate his or her relationship with the Company or any of its
affiliates in order to become an employee for any other person or business
entity.
To ensure rapid and economical resolution of any disputes which may
arise under this Agreement, you and the Company agree that any and all
disputes or controversies, whether of law or fact of any nature whatsoever
(including, but not limited to, all state and federal statutory and
discrimination claims), with the sole exception of those dispute, which may
arise from your Proprietary Information and inventions Agreement, arising
from or regarding your employment
<PAGE>
Dr. Donald G. Payan
January 16, 1997
Page 3
or the termination thereof, or the interpretation, performance, enforcement
or breach of this Agreement shall be resolved by confidential, final and
binding arbitration under the then-existing Rules of Practice and Procedure
of Judicial Arbitration and Mediation Services, Inc., which shall be
conducted in San Francisco, California.
This Agreement, including Exhibit A constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
respect to the terms and conditions of your employment. This Agreement is
entered into without reliance upon any promise, warranty or representation,
written or oral, other than those expressly contained herein, and it
supersedes any other such promises, warranties, representations or
agreements. It may not be amended or modified except by a written instrument
signed by you and a duly authorized officer of the Company. If any provision
of this Agreement is determined to be invalid or unenforceable, in whole or
in part, this determination will not affect any other provision of this
Agreement. This Agreement shall be construed and interpreted in accordance
with the laws of the State of California and shall be deemed drafted by both
parties.
As required by law, this offer of employment is subject to satisfactory
proof of your right to work in the United States.
If you choose to accept our offer under the terms described above,
please sign below and return this letter to me.
We look forward to a productive and enjoyable work relationship.
Very truly yours,
RIGEL PHARMACEUTICALS, INC.
By: /s/James M. Gower
---------------------------------------------
James M. Gower
ACCEPTED BY: /s/Donald G. Payan
----------------------
Donald G. Payan
DATE: 1/16/97
----------------------
<PAGE>
EXHIBIT 10.12
BUILD-TO-SUIT LEASE
Landlord: Britannia Pointe Grand Limited Partnership
Tenant: Rigel, Inc.
Date: June 2, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Lease of Property . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Landlord's Reserved Rights . . . . . . . . . . . . . . . . . . . 1
2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Early Possession . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Delay In Possession . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Acknowledgement Of Rent Commencement . . . . . . . . . . . . . . 3
2.5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Option To Extend Term . . . . . . . . . . . . . . . . . . . . . 4
3. RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Minimum Rental . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Rental Amounts . . . . . . . . . . . . . . . . . . . . . . 4
(b) Rental Amounts During First Extended Term . . . . . . . . . 5
(c) Rental Amounts During Second Extended Term . . . . . . . . 5
(d) Rental Adjustment Due to Change in Square Footage . . . . . 6
3.2 Late Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. STOCK WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Stock Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Construction of Improvements . . . . . . . . . . . . . . . . . . 6
5.2 Condition of Property . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 7
6. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 Payment of Operating Expenses . . . . . . . . . . . . . . . . . . 8
7.2 Definition Of Operating Expenses . . . . . . . . . . . . . . . . 8
7.3 Determination Of Operating Expenses . . . . . . . . . . . . . . .10
7.4 Final Accounting For Lease Year . . . . . . . . . . . . . . . . .11
7.5 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8.2 Interruption . . . . . . . . . . . . . . . . . . . . . . . . . .12
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9. ALTERATIONS; SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . .12
9.1 Right To Make Alterations . . . . . . . . . . . . . . . . . . . .12
9.2 Title To Alterations . . . . . . . . . . . . . . . . . . . . . .12
9.3 Tenant Fixtures . . . . . . . . . . . . . . . . . . . . . . . . .13
9.4 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
9.5 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
10. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . .14
10.1 Landlord's Work . . . . . . . . . . . . . . . . . . . . . . . . .14
10.2 Tenant's Obligation For Maintenance . . . . . . . . . . . . . . .14
(a) Good Order, Condition And Repair . . . . . . . . . . . . .14
(b) Landlord's Remedy . . . . . . . . . . . . . . . . . . . . .14
(c) Condition Upon Surrender . . . . . . . . . . . . . . . . .14
11. USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.2 [Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.3 No Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . .15
11.4 Compliance With Laws. - . . . . . . . . . . . . . . . . . . . . .15
11.5 Liquidation Sales . . . . . . . . . . . . . . . . . . . . . . . .16
11.6 Environmental Matters . . . . . . . . . . . . . . . . . . . . . .16
12. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . .19
12.1 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
12.2 Quality Of Policies And Certificates . . . . . . . . . . . . . .20
I2.3 Workers' Compensation . . . . . . . . . . . . . . . . . . . . . .21
12.4 Waiver Of Subrogation . . . . . . . . . . . . . . . . . . . . . .21
12.5 Increase In Premiums . . . . . . . . . . . . . . . . . . . . . .21
12.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . .21
12.7 Blanket Policy . . . . . . . . . . . . . . . . . . . . . . . . .22
13. SUBLEASE AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . .22
13.1 Assignment And Sublease Of Building . . . . . . . . . . . . . . .22
13.2 Rights Of Landlord . . . . . . . . . . . . . . . . . . . . . . .22
14. RIGHT OF ENTRY AND QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . .23
14.1 Right Of Entry . . . . . . . . . . . . . . . . . . . . . . . . .23
14.2 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . .23
15. CASUALTY AND TAKING . . . . . . . . . . . . . . . . . . . . . . . . . .23
15.1 Damage or Destruction . . . . . . . . . . . . . . . . . . . . . .23
15.2 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . .24
15.3 Reservation Of Compensation . . . . . . . . . . . . . . . . . . .25
15.4 Restoration Of Improvements . . . . . . . . . . . . . . . . . . .26
16. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
16.1 Events Of Default . . . . . . . . . . . . . . . . . . . . . . . .26
(a) [Omitted.] . . . . . . . . . . . . . . . . . . . . . . . .26
(b) Nonpayment . . . . . . . . . . . . . . . . . . . . . . . .26
(c) Other Obligations . . . . . . . . . . . . . . . . . . . . .26
(d) General Assignment . . . . . . . . . . . . . . . . . . . .26
(e) Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . .26
(f) Receivership . . . . . . . . . . . . . . . . . . . . . . .27
(g) Attachment . . . . . . . . . . . . . . . . . . . . . . . .27
(h) Insolvency . . . . . . . . . . . . . . . . . . . . . . . .27
16.2 Remedies Upon Tenant's Default . . . . . . . . . . . . . . . . .27
16.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . .28
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17. SUBORDINATION, ATTORNMENT AND SALE . . . . . . . . . . . . . . . . . . .28
17.1 Subordination To Mortgage . . . . . . . . . . . . . . . . . . . .28
17.2 Sale Of Landlord's Interest . . . . . . . . . . . . . . . . . . .29
17.3 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . .29
17.4 Subordination to CC&R's . . . . . . . . . . . . . . . . . . . . .29
17.5 Mortgagee Protection . . . . . . . . . . . . . . . . . . . . . .29
18. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
18.1 Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
19. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.2 Successors And Assigns . . . . . . . . . . . . . . . . . . . . .31
19.3 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
19.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.5 Litigation Between Parties . . . . . . . . . . . . . . . . . . .32
19.6 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .32
19.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . .32
19.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .32
19.10 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . .32
19.11 Financial Information . . . . . . . . . . . . . . . . . . . . .32
19.12 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.13 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.14 Rules And Regulations . . . . . . . . . . . . . . . . . . . . .33
19.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
19.16 Memorandum Of Lease . . . . . . . . . . . . . . . . . . . . . .33
19.17 Corporate Authority . . . . . . . . . . . . . . . . . . . . . .33
19.18 Execution and Delivery . . . . . . . . . . . . . . . . . . . . .34
19.19 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
<CAPTION>
EXHIBITS
<S> <C>
EXHIBIT A Real Property Description
EXHIBIT B Site Plan
EXHIBIT C Workletter
EXHIBIT D Estimated Construction Schedule
EXHIBIT E Acknowledgement of Rent Commencement Date
</TABLE>
-iii-
<PAGE>
BUILD-TO-SUIT LEASE
THIS BUILD-TO-SUIT LEASE ("LEASE") is made and entered into as of June
2, 1998, by and between BRITANNIA POINTE GRAND LIMITED PARTNERSHIP, a
Delaware limited partnership ("LANDLORD"), and RIGEL, INC., a Delaware
corporation ("TENANT").
THE PARTIES AGREE AS FOLLOWS:
1. PROPERTY
1.1 LEASE OF PROPERTY.
(a) Landlord leases to Tenant and Tenant hires and leases from
Landlord, on the terms, covenants and conditions hereinafter set forth, the
building (the "BUILDING") to be constructed pursuant to Article 5 hereof and
EXHIBIT C attached hereto on a portion of the real property described in
EXHIBIT A attached hereto (the "PROPERTY"), to consist of a two-story office
and laboratory building containing approximately 60,964 square feet. The
location of the Building on the Property is intended to be substantially as
shown on the site plan attached hereto as EXHIBIT B (the "SITE PLAN"). The
Property is part of the Britannia Pointe Grand Business Park (the "CENTER")
on East Grand Avenue in the City of South San Francisco, County of San Mateo,
State of California, which presently consists of the Property and certain
adjacent undeveloped land and presently includes the existing buildings
designated as Buildings D, E, F and G on the Site Plan (containing, in the
aggregate, approximately 177,253 square feet of office and research and
development space), as well as one additional building of approximately
47,000 square feet presently under construction in the area designated
"MetaXen Building" on the Site Plan. The Building and the other improvements
to be constructed on the Property pursuant to Article 5 hereof and EXHIBIT C
attached hereto are sometimes referred to collectively herein as the
"IMPROVEMENTS." The parking areas, driveways, sidewalks, landscaped areas and
other portions of the Center that lie outside the exterior walls of the
buildings now existing or to be constructed in the Center, as depicted in the
Site Plan and as hereafter modified by Landlord from time to time in
accordance with the provisions of this Lease, are sometimes referred to
herein as the "COMMON AREAS."
(b) As an appurtenance to Tenant's leasing of the Building
pursuant to Section 1. l(a), Landlord hereby grants to Tenant, for the
benefit of Tenant and its employees, suppliers, shippers, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, (i) those portions of the Common
Areas improved from time to time for use as parking areas, driveways,
sidewalks, landscaped areas, or for other common purposes, and (ii) all
access easements and similar rights and privileges relating to or appurtenant
to the Center and created or existing from time to time under any access
easement agreements, declarations of covenants, conditions and restrictions,
or other written agreements now or hereafter of record with respect to the
Center, subject however to any limitations applicable to such rights and
privileges under applicable law, under this Lease and/or under the written
agreements creating such rights and privileges.
1.2 LANDLORD'S RESERVED RIGHTS. To the extent reasonably necessary to
permit Landlord to exercise any rights of Landlord and discharge any
obligations of Landlord under this Lease, Landlord shall have, in addition to
the right of entry set forth in Section 16.1 hereof, the following rights:
(i) to make changes to the Common Areas, including, without limitation,
changes in the location, size or shape of any portion of the Common Areas,
and to relocate parking spaces in the Center (but not materially decrease the
number of such parking spaces in areas of the Center generally adjacent to
the Building); (ii) to close temporarily any of the Common Areas for
maintenance or other reasonable purposes, provided that reasonable parking
and reasonable access to the Building remain available;
<PAGE>
(iii) to construct, alter or add to other buildings and Common Area
improvements in the center (including, but not limited to, construction of
site improvements, buildings and Common Area improvements in adjacent
portions of the Center as it may exist from time to time); (iv) to build in
areas adjacent to the Center and to add such areas to the Center; (v) to use
the Common Areas while engaged in making additional improvements, repairs or
alterations to the Center Or any portion thereof; and (vi) to do and perform
such other acts with respect to the Common Areas and the Center as may be
necessary or appropriate; PROVIDED, however, that notwithstanding anything to
the contrary in this Section 1.2, Landlord's exercise of its rights hereunder
shall not cause any material diminution of Tenant's rights, nor any material
increase of Tenant's obligations, under this Lease or with respect to the
Improvements.
2. TERM
2.1 TERM. The term of this Lease shall commence upon mutual execution
of this Lease by Landlord and Tenant. Tenant's minimum rental and Operating
Expense obligations shall commence on the earlier of (i) the date which is
six (6) months after the date Landlord delivers to Tenant a Structural
Completion Certificate pursuant to the Workletter attached hereto as EXHIBIT
C (subject to any adjustments authorized or required under the provisions of
such EXHIBIT C), correctly notifying Tenant that Landlord's construction of
the shell of the Building pursuant to Article V and EXHIBIT C is
substantially complete, or (ii) the date Tenant takes occupancy of and
commences operation of its business in the Building, the earlier of such
dates being herein called the "RENT COMMENCEMENT DATE," and shall end on the
day (the "TERMINATION DATE") immediately preceding the date seventeen (17)
years thereafter, unless sooner terminated or extended (if applicable) as
hereinafter provided.
2.2 EARLY POSSESSION. Tenant shall have the nonexclusive right to
occupy and take possession of the Building from and after the date of
Landlord's delivery of the Structural Completion Certificate described in
clause (i) of Section 2.1, even though Landlord will be continuing to
construct the balance of Landlord's Work as contemplated in EXHIBIT C, for
the purpose of constructing Tenant's Work as contemplated in EXHIBIT C and
for the purpose of installing fixtures and furniture, laboratory equipment,
computer equipment, telephone equipment, low voltage data wiring and personal
property and other similar work related to the construction of Tenant's Work
and/or preparatory to the commencement of Tenant's business on the Property.
Such occupancy and possession, and any early access under the next sentence
of this Section 2.2, shall be subject to and upon all of the terms and
conditions of this Lease and of the Workletter attached hereto as EXHIBIT C
including, but not limited to, conditions relating to the maintenance of
required insurance), except that Tenant shall have no obligation to pay
minimum rental or Operating Expenses for any period prior to the Rent
Commencement Date as determined under Section 2.1; such early possession
shall not advance or otherwise affect the Rent Commencement Date or
Termination Date determined under Section 2.1. Tenant shall also be entitled
to have early access to the Property at all appropriate times prior to
Landlord's delivery of the Structural Completion Certificate, subject to the
approval of Landlord and its general contractor (which approval shall not be
unreasonably withheld or delayed) and to all other provisions of this Section
2.2, solely for the purpose of performing work preparatory to the
construction of Tenant's Work or necessary for the orderly sequencing of such
work, and Tenant shall not be required to pay minimum rental or Operating
Expenses by reason of such early access until the Rent Commencement Date
otherwise occurs; without limiting the generality of the preceding portion of
this sentence, Tenant shall be entitled to have early access to the Property
and the Building as soon as the roof metal decking is in place to begin
hanging electrical, mechanical and plumbing services from the overhead
structure, subject to all of the provisions of this Section 2.2. Tenant shall
not interfere with or delay Landlord's contractors by any early access,
occupancy or possession under this Section 2.2, shall coordinate and
cooperate with Landlord and its contractors (who shall similarly coordinate
and cooperate with Tenant and its contractors) to minimize any interference
or delay by either party with respect to the other party's work following
Landlord's delivery of the Structural Completion Certificate, and shall
indemnify, defend and hold harmless Landlord and its agents and employees
from and against any and all claims, demands, liabilities, actions, losses,
costs and expenses, including
-2-
<PAGE>
(but not limited to) reasonable attorneys' fees, arising out of or in
connection with Tenant's early entry upon the Property hereunder.
2.3 DELAY IN POSSESSION. Landlord agrees to use its best reasonable
efforts to complete its portion of the work described in Section 5.1 and
EXHIBIT C promptly, diligently and within the respective time periods set
forth in the Estimated Construction Schedule attached hereto as EXHIBIT D and
incorporated herein by this reference, as such schedule may be modified from
time to time by mutual written agreement of Landlord and Tenant, and subject
to the effects of any delays caused by or attributable to Tenant or any other
circumstances beyond Landlord's reasonable control (excluding financial
inability); PROVIDED, however, that except to the extent caused by a material
default by Landlord of its obligations set forth in this Lease (including,
but not- limited to, its obligations set forth in this Section 2.3 and in
Section 5.1 and EXHIBIT C), Landlord shall not be liable for any damages
caused by any delay in the completion of such work, nor shall any such delay
affect the validity of this Lease or the obligations of Tenant hereunder.
Notwithstanding any other provision of this Section 2.3, however, if Landlord
fails to deliver the Structural Completion Certificate and tender possession
of the completed structural portions of the Building Shell (I.E., those
portions required to be completed as a condition of delivery of the
Structural Completion Certificate) to Tenant by the date which is twenty-one
(21) months after the date of this Lease, then Tenant shall have the right to
terminate this Lease without further liability hereunder by written notice
delivered to Landlord at any time prior to Landlord's delivery of the
Structural Completion Certificate and tender of possession of the completed
structural portions of the Building Shell to Tenant; PROVIDED, however, that
the 21-month period set forth in this sentence shall be extended, day for
day, for a period equal to the length of any delays in Landlord's design and
construction of the Building Shell that are caused by any material default by
Tenant in the performance of its obligations under this Lease, including (but
not limited to) any failure of Tenant to make prompt and timely delivery to
Landlord of all information reasonably necessary for Landlord to complete the
preparation of all drawings, designs and specifications for the Building
Shell and/or any failure of Tenant to respond in a prompt and timely manner
to any requests by Landlord or its architect for approval of drawings,
designs, specifications, changes or other matters requiring Tenant's review
or approval under the provisions of EXHIBIT C.
2.4 ACKNOWLEDGEMENT OF RENT COMMENCEMENT. Promptly following the Rent
Commencement Date, Landlord and Tenant shall execute a written
acknowledgement of the Rent Commencement Date, Termination Date and related
matters, substantially in the form attached hereto as EXHIBIT E (with
appropriate insertions), which acknowledgement shall be deemed to be
incorporated herein by this reference. Notwithstanding the foregoing
requirement, the failure of either party to execute such a written
acknowledgement shall not affect the determination of the Rent Commencement
Date, Termination Date and related matters in accordance with the provisions
of this Lease.
2.5 HOLDING OVER. If Tenant holds possession of the Property or any
portion thereof after the term of this Lease WITH Landlord's written consent,
then except as otherwise specified in such consent, Tenant shall become a
tenant from month to month at one hundred ten percent (110%) of the rental
and otherwise upon the terms herein specified for the period immediately
prior to such holding over and shall continue in such status until the
tenancy is terminated by either party upon not less than thirty (30) days
prior written notice. If Tenant holds possession of the Property or any
portion thereof after the term of this Lease WITHOUT Landlord's written
consent, then Landlord in its sole discretion may elect (by written notice to
Tenant) to have Tenant become a tenant either from month to month or at will
at one hundred fifty percent (150%) of the rental (prorated on a daily basis
for an at-will tenancy, if applicable) and otherwise upon the terms herein
specified for the period immediately prior to such holding over, or may elect
to pursue any and all legal remedies available to Landlord under applicable
law with respect to such unconsented holding over by Tenant. Tenant shall
indemnify and hold Landlord harmless from any loss, damage, claim, liability,
cost or expense (including reasonable attorneys' fees) resulting from any
delay by Tenant in surrendering the Property or any portion thereof (except
to the extent such delay is with Landlord's prior written consent), including
but not limited to any claims made by a
-3-
<PAGE>
succeeding tenant by reason of such delay. Acceptance of rent by Landlord
following expiration or termination of this Lease shall not constitute a
renewal of this Lease.
2.6 OPTION TO EXTEND TERM. Tenant shall have the option to extend the
term of this Lease, at the minimum rental set forth in Section 3. l(b) and
(c) and otherwise upon all the terms and provisions set forth herein with
respect to the initial term of this Lease, for up to two (2) additional
periods of five (5) years each, the first commencing upon the expiration of
the initial term hereof and the second commencing upon the expiration of the
first extended term, if any. Exercise of such option with respect to the
first such extended term shall be by written notice to Landlord at least nine
(9) months prior to the expiration of the initial term hereof; exercise of
such option with respect to the second extended term, if the first extension
option has been duly exercised, shall be by like written notice to Landlord
at least nine (9) months prior to the expiration of the first extended term
hereof. If Tenant is in default hereunder, beyond any applicable notice and
cure periods, on the date of such notice or on the date any extended term is
to commence, then the exercise of the option shall be of no force or effect,
the extended term shall not commence and this Lease shall expire at the end
of the then current term hereof (or at such earlier time as Landlord may
elect pursuant to the default provisions of this Lease). If Tenant properly
exercises one or more extension options under this Section, then all
references in this Lease (other than in this Section 2.6) to the "term" of
this Lease shall be construed to include the extension term(s) thus elected
by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall
have no right to extend the term of this Lease beyond its prescribed-term.
3. RENTAL
3.1 MINIMUM RENTAL.
(a) RENTAL AMOUNTS. Tenant shall pay to Landlord as minimum rental
for the Building, in advance, without deduction, offset, notice or demand, on
or before the Rent Commencement Date and on or before the first day of each
subsequent calendar month of the term of this Lease, the following amounts
per month, subject to adjustment in accordance with the terms of this Section
3.1:
<TABLE>
<CAPTION>
MONTHS MONTHLY MINIMUM RENTAL
------ -------------------------
<S> <C>
001 - 012 $ 121,928 ($2.00/sq ft)
013 - 024 121,928 ($2.00/sq ft)
025 - 036 177,405 ($2.91/sq ft)
037 - 048 190,817 ($3.13/sq ft)
049 - 060 195,085 ($3.20/sq ft)
061 - 072 196,304 ($3.22/sq ft)
073 - 084 200,572 ($3.29/sq It)
085 - 096 165,822 ($2.72/sq ft)
097 - 108 170,699 ($2.80/sq ft)
109 - 120 175,576 ($2.88/sq ft)
121 - 132 158,506 ($2.60/sq ft)
133 - 144 163,993 ($2.69/sq ft)
145 - 156 170,090 ($2.79/sq ft)
157 - 168 176,186 ($2.89/sq ft)
169 - 180 162,164 ($2.66/sq ft)
181 - 192 168,261 ($2.76/sq ft)
193 - 204 174,967 ($2.87/sq ft)
</TABLE>
If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on
other than the last day of a calendar month, the minimum rental for such
first or last month of the term of this Lease, as the case may be, shall be
prorated based on the number of days the term of this Lease is in effect
during such month. If an increase in minimum rental becomes effective on a
day other
-4-
<PAGE>
than the first day of a calendar month, the minimum rental for that month
shall be the sum of the two applicable rates, each prorated for the portion
of the month during which such rate is in effect.
(b) RENTAL AMOUNTS DURING FIRST EXTENDED TERM. If Tenant properly
exercises its right to extend the term of this Lease pursuant to Section 2.6
hereof, the minimum rental during the first extended term shall be equal to
ninety-five percent (95 %) of the fair market rental value of the Building
(as defined below), including any rental increase provisions then customary
in the City of South San Francisco for comparable commercial leases for
office, laboratory and research and development projects, determined as of
the commencement of such extended term in accordance with this paragraph.
Upon Landlord's receipt of a proper notice of Tenant's exercise of its option
to extend the term of this Lease, the parties shall have sixty (60) days in
which to agree on the fair market rental (including any applicable rental
increase provisions) for the Building at the commencement of the first
extended term for the uses permitted hereunder. If the parties agree on such
fair market rental and rental increase provisions (if any), they shall
execute an amendment to this Lease stating the amount of the applicable
minimum monthly rental and any applicable rental increase provisions. If the
parties are unable to agree on such rental (including an), applicable rental
increase provisions) within such sixty (60) day period, then within fifteen
(15) days after the expiration of such period each party, at its cost and by
giving notice to the other party, shall appoint a real estate appraiser with
at least five (5) years experience appraising similar commercial properties
in northeastern San Mateo County to appraise and set the fair market rental
and any applicable rental increase provisions for the Building at the
commencement of the first extended term in accordance with the provisions of
this Section 3.1(b). If either party fails to appoint an appraiser within the
allotted time, the single appraiser appointed by the other party shall be the
sole appraiser. If an appraiser is appointed by each party and the two
appraisers so appointed are unable to agree upon a fair market rental (and
any appropriate rental increase provisions) within thirty (30) days after the
appointment of the second, the two appraisers shall appoint a third similarly
qualified appraiser within ten (10) days after expiration of such 30-day
period; if they are unable to agree upon a third appraiser, then either party
may, upon not less than five (5) days notice to the other party, apply to the
Presiding Judge of the San Mateo County Superior Court for the appointment of
a third qualified appraiser. Each party shall bear its own legal fees in
connection with appointment of the third appraiser and shall bear one-half of
any other costs of appointment of the third appraiser and of such third
appraiser's fee. The third appraiser, however selected, shall be a person who
has not previously acted for either party in any capacity. Within thirty (30)
days after the appointment of the third appraiser, a majority of the three
appraisers shall set the fair market rental and any applicable rental
increase provisions for the first extended term and shall so notify the
parties. If a majority are unable to agree within the allotted time, (i) the
three appraised fair market rentals shall be added together and divided by
three and the resulting quotient shall be the fair market rental for the
first extended term, and (ii) the applicable rental increase provision shall
be equal to the mathematical average (or the nearest reasonable approximation
thereto) of the two rental increase provisions that are most closely
comparable, which determinations shall be binding on the parties and shall be
enforceable in any further proceedings relating to this Lease. For purposes
of this Section 3.1(b), the "FAIR MARKET RENTAL" of the Building shall be
determined with reference to the then prevailing market rental rates for
properties in the City of South San Francisco with shell and standard office,
research and development improvements and site (common area) improvements
comparable to those then existing in the Building and on the Property; no
equipment or laboratory improvements constructed by or for Tenant, whether at
Landlord's or Tenant's expense and whether paid for in cash or through
additional rent or financed in any other manner (including, but not limited
to, equipment and laboratory improvements installed as part of the initial
tenant improvements pursuant to Section 5.1 and EXHIBIT C), shall be taken
into account in determining such fair market rental.
(c) RENTAL AMOUNTS DURING SECOND EXTENDED TERM. If Tenant properly
exercises its right to a second extended term of this Lease pursuant to
Section 2.6 hereof, the minimum rental during such second extended term shall
be determined in the same manner provided in the preceding paragraph for the
first extended term, except that the determination shall be made as of the
commencement of the second extended term.
-5-
<PAGE>
(d) RENTAL ADJUSTMENT DUE TO CHANGE IN SQUARE FOOTAGE. The minimum
rental amounts specified in this Section 3.1 are based upon an estimated area
of 60,964 square feet for the Building. If the actual area of the Building
(measured from the exterior faces of exterior wails and from the dripline of
any overhangs, except that in the case of any two-story recesses or
overhangs, the area to the dripline of the overhang shall be counted as part
of the area of the first story but not as part of the area of the second
story), when completed, is greater or less than such estimated area, then the
minimum rentals specified in Section 3. l(a) shall be adjusted for each
rental period in strict proportion to the ratio between the actual area of
the Building during the applicable period (determined on the basis of
measurement described above in this sentence) and the assumed area of 60,964
square feet. Measurement of building area under this paragraph shall be made
initially by Landlord's architect, subject to review and approval by Tenant's
architect.
3.2 LATE CHARGE. If Tenant fails to pay when due rental or other
amounts due Landlord hereunder, such unpaid amounts shall bear interest for
the benefit of Landlord at a rate equal to the lesser of fifteen percent (15%)
per annum or the maximum rate permitted by law, from the date due to the
date of payment. In addition to such interest, Tenant shall pay to Landlord a
late charge in an amount equal to six percent (6%) Of any installment of
minimum rental and any other amounts due Landlord if not paid in full on or
before the fifth (5th) day after such rental or other amount is due. Tenant
acknowledges that late payment by Tenant to Landlord of rental or other
amounts due hereunder will cause Landlord to incur costs not contemplated by
this Lease, including, without limitation, processing and accounting charges
and late charges which may be imposed on Landlord by the terms of any loan
relating to the Property. Tenant further acknowledges that it is extremely
difficult and impractical to fix the exact amount of such costs and that the
late charge set forth in this Section 3.2 represents a fair and reasonable
estimate thereof. Acceptance of any late charge by Landlord shall not
constitute a waiver of Tenant's default with respect to overdue rental or
other amounts, nor shall such acceptance prevent Landlord from exercising any
other rights and remedies available to it. Acceptance of rent or other
payments by Landlord shall not constitute a waiver of late charges or
interest accrued with respect to such rent or other payments or any prior
installments thereof, nor of any other defaults by Tenant, whether monetary
or non-monetary in nature, remaining uncured at the time of such acceptance
of rent or other payments.
4. STOCK WARRANTS
4.1 STOCK WARRANTS. Within thirty (30) days after the execution of this
Lease, as a condition to Landlord's obligations hereunder, Tenant shall
deliver to Landlord or Landlord's designees (which may be any partners,
shareholders or affiliates of Landlord or any affiliates of any such
partners, shareholders or affiliates of Landlord) warrants registered in the
name of Landlord or Landlord's designees for the acquisition of an aggregate
of one hundred fifty thousand (150,000) shares of Tenant's common stock,
which warrants shall be in form and substance mutually satisfactory to
Landlord and Tenant. The warrants shall have an exercise price consistent
with the most recent arm's-length financing consummated by Tenant at the time
of execution of this Lease and shall be exercisable for a period beginning on
the date of this Lease and ending on the seventh (7th) anniversary of the
closing of the initial public offering (if any) of Tenant's common stock.
5. CONSTRUCTION
5.1 CONSTRUCTION OF IMPROVEMENTS.
(a) Landlord shall, at Landlord's cost and expense (except as
otherwise provided herein and in EXHIBIT C), construct Landlord's Work as
defined in and in accordance with the terms and conditions of the Workletter
attached hereto as EXHIBIT C (the "WORKLETTER"). Landlord shall use its best
reasonable efforts to complete such construction promptly, diligently and
within the applicable time periods set forth in the Estimated Construction
Schedule attached hereto as EXHIBIT D and incorporated herein by this
-6-
<PAGE>
reference, as such schedule may be modified from time to time in accordance
with the Workletter, subject to the effects of any delays caused by Tenant or
any other circumstances beyond Landlord's reasonable control (excluding any
financial inability), and subject to the provisions of Section 2.3 above.
(b) Tenant shall, at Tenant's cost and expense (except as
otherwise provided herein and in EXHIBIT C), promptly and diligently
construct Tenant's Work as defined in and in accordance with the terms and
conditions of the Workletter.
5.2 CONDITION OF PROPERTY. Landlord shall deliver the Building Shell
and other Improvements constructed by Landlord to Tenant clean and free of
debris, promptly upon completion of construction thereof, and Landlord
warrants to Tenant that the Building Shell and other Improvements constructed
by Landlord (i) shall be free from material structural defects and shall be
in good operating condition on the Rent Commencement Date, and (ii) shall be
constructed in compliance in all material respects with the plans and
specifications developed pursuant to the Workletter and mutually approved (to
the extent required thereunder) by Landlord and Tenant, subject to any
changes implemented in such specifications in accordance with the procedures
set forth in the Workletter. If this warranty is violated in any respect,
then it shall be the obligation of Landlord, after receipt of written notice
from Tenant setting forth with specificity the nature of the violation, to
promptly, :it Landlord's sole cost, correct the condition(s) constituting
such violation. Tenant's failure to give such written notice to Landlord
within one hundred eighty (180) days after the Commencement Date shall give
rise to a conclusive presumption that Landlord has complied with all
Landlord's obligations hereunder, except with respect to latent defects (as
to which such 180-day limitation shall not apply). Without limiting the scope
of Landlord's obligations under the foregoing provisions of this Section 5.2,
Landlord also agrees to either (x) use its best reasonable efforts to enforce
when and as necessary, for the benefit of Tenant and the Improvements, any
and all contractor's and/or manufacturer's warranties extending more than one
hundred eighty (180) days after the Rent Commencement Date with respect to
any of Landlord's Work or, at Tenant's request, (y) assign any or all of such
warranties to Tenant for enforcement purposes (PROVIDED, however, that
Landlord may reserve joint enforcement rights under such warranties to the
extent of Landlord's continuing obligations or warranties hereunder). TENANT
ACKNOWLEDGES THAT THE WARRANTY CONTAINED IN THIS SECTION IS IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION
OF THE IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO
OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE.
5.3 COMPLIANCE WITH LAW. Landlord warrants to Tenant that the Building
Shell and other Improvements constructed by Landlord (when constructed), as
they exist on the Rent Commencement Date, but without regard to the use for
which Tenant will occupy the Building, shall not violate any covenants or
restrictions of record or any applicable law, building code, regulation or
ordinance in effect on the Rent Commencement Date. Tenant warrants to
Landlord that the Tenant Improvements and any other improvements constructed
by Tenant from time to time shall not violate any applicable law, building
code, regulation or ordinance in effect on the Rent Commencement Date or at
the time such improvements are placed in service. If it is determined that
any of these warranties has been violated, then it shall be the obligation of
the warranting party, after written notice from the other party, to correct
the condition(s) constituting such violation promptly, at the warranting
party's sole cost and expense. Tenant acknowledges that except as expressly
set forth in this Lease, neither Landlord nor any agent of Landlord has made
any representation or warranty as to the present or future suitability of the
Property or Improvements for the conduct of Tenant's business or proposed
business thereon.
6. TAXES
6.1 PERSONAL PROPERTY. Tenant shall be responsible for and shall pay
prior to delinquency all taxes and assessments levied against or by reason of
(a) any and all
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alterations, additions and items installed or placed on or in the Building
and taxed as personal property rather than as real property, and/or (b) all
personal property, trade fixtures and other property placed by Tenant on or
about the Property. Upon request by Landlord, Tenant shall furnish Landlord
with satisfactory evidence of Tenant's payment thereof. If at any time during
the term of this Lease any of said alterations, additions or personal
property, whether or not belonging to Tenant, shall be taxed or assessed as
part of the Center, then such tax or assessment shall be paid by Tenant to
Landlord within fifteen (15) days after presentation by Landlord of copies of
the tax bills in which such taxes and assessments are included and shall, for
the purposes of this Lease, be deemed to be personal property taxes or
assessments under this Section 6.1.
6.2 REAL PROPERTY. To the extent any real property taxes and
assessments on the Property (including, but not limited to, the Improvements)
are assessed directly to Tenant, Tenant shall be responsible for and shall
pay prior to delinquency all such taxes and assessments levied against the
Property. Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant's payment thereof. To the extent the Property
and/or Improvements are taxed or assessed to Landlord following the Rent
Commencement Date, such real property taxes and assessments shall constitute
Operating Expenses (as that term is defined in Section 7.2 of this Lease) and
shall be paid in accordance with the provisions of Article 7 of this Lease.
7. OPERATING EXPENSES
7.1 PAYMENT OF OPERATING EXPENSES.
(a) Tenant shall pay to Landlord, at the time and in the manner
hereinafter set forth, as additional rental, an amount equal to fifteen and
fifty-seven hundredths percent (15.57 %) ("TENANT'S OPERATING COST SHARE") of
the Operating Expenses defined in Section 7.2.
(b) Tenant's Operating Cost Share as specified in paragraph (a) of
this Section is based upon an estimated area of 60,964 square feet for the
Building and upon an aggregate area of 391,585 square feet for the existing
buildings owned by Landlord in the Center (Buildings D, E, F and G as shown
on the Site Plan), the Building and the two additional buildings that
Landlord is committed to build in the Center (the MetaXen Building and the
SUGEN Building, as designated on the Site Plan). If the actual area of the
Building (when completed) or of the other buildings owned from time to time
by Landlord in the Center, as determined in good faith by Landlord's
architect on the basis of measurement set forth in Section 3.1 (d) hereof,
differs from the assumed numbers set forth above (including, but not limited
to, any such difference arising from the MetaXen Building and/or the SUGEN
Building being completed and occupied later than the Rent Commencement Date
hereunder), then Tenant's Operating Cost Share shall be adjusted to reflect
the actual areas so determined as they exist from time to time.
(c) If Landlord constructs additional buildings in the Center or
on any adjacent property owned by Landlord and operated, for common area
purposes, on an integrated basis with the Center, Tenant's Operating Cost
Share shall be adjusted to be equal to the percentage determined by dividing
the gross square footage of the Building as it then exists by the gross
square footage of all buildings located in the Center or on any applicable
adjacent property owned by Landlord as described above. In determining such
percentage, a building shall be taken into account from and after the date on
which a tenant first enters into possession of the building or a portion
thereof, and the good faith determination of the gross square footage of any
such building by Landlord's architects shall be final and binding upon the
parties.
7.2 DEFINITION OF OPERATING EXPENSES.
(a) Subject to the exclusions and provisions hereinafter
contained, the term "OPERATING EXPENSES" shall mean the total costs and
expenses incurred by or allocable to
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Landlord for management, operation and maintenance of the Improvements, the
Property and the Center, including, without limitation, costs and expenses of
(i) insurance (which may include, at Landlord's option, earthquake insurance
as part of or in addition to any casualty or property insurance policy),
property management, landscaping, and the operation, repair. and maintenance
of buildings and Common Areas: (ii) all utilities and services; (iii) real
and personal property taxes and assessments or substitutes therefor levied or
assessed against the Center or any part thereof, including (but not limited
to) any possessory interest, use, business, license or other taxes or fees,
any taxes imposed directly on rents or services, any assessments or charges
for police or fire protection, housing, transit, open space, street or
sidewalk construction or maintenance or other similar services from time to
time by any governmental or quasi-governmental entity, and any other new
taxes on landlords in addition to taxes now in effect; (iv) supplies,
equipment, utilities and tools used in management, operation and maintenance
of the Center; (v) capital improvements to the Property, the Improvements or
the Center, amortized over a reasonable period, (aa) which reduce or will
cause future reduction of other items of Operating Expenses for which Tenant
is otherwise required to contribute or (bb) which are required by law,
ordinance, regulation or order of any governmental authority or (cc) of which
Tenant has use or which benefit Tenant; and (vi) any other costs (including,
but not limited to, any parking or utilities fees or surcharges) allocable to
or paid by Landlord, as owner of the Center or Improvements, pursuant to any
applicable laws, ordinances, regulations or orders of any governmental or
quasi-governmental authority or pursuant to the terms of any declarations of
covenants, conditions and restrictions now or hereafter affecting the Center
or over which Tenant has non-exclusive usage rights as contemplated in
Section 1. l(b) hereof. Operating Expenses shall not include any costs
attributable to the work for which Landlord is required to pay under Article
5 or EXHIBIT C, nor any costs attributable to the initial construction of
buildings or Common Area improvements in the Center. The distinction between
items of ordinary operating maintenance and repair and items of a capital
nature shall be made in accordance with generally accepted accounting
principles applied on a consistent basis or in accordance with tax accounting
principles, as determined in good faith by Landlord's accountants.
(b) Notwithstanding anything to the contrary contained in this
Lease, the following shall not be included within Operating Expenses:
(i) Costs of maintenance or repair of the roof membrane
for any building within the Center, except during periods (if any) in which
costs of maintenance or repair of the roof membrane for the Building are
likewise included as an Operating Expense (rather than being incurred
directly by Tenant or passed through directly to Tenant on a
building-by-building basis);
(ii) Leasing commissions, attorneys' fees, costs,
disbursements, and other expenses incurred in connection with negotiations or
disputes with tenants, or in connection with leasing, renovating or improving
space for tenants or other occupants or prospective tenants or other
occupants of the Center;
(iii) The cost of any service sold to any tenant (including
Tenant) or other occupant for which Landlord is entitled to be reimbursed as
an additional charge or rental over and above the basic rent and operating
expenses payable under the lease with that tenant;
(iv) Any depreciation on the Building or on any other
improvements in the Center;
(v) Expenses in connection with services or other benefits
of a type that are not offered or made available to Tenant but that are
provided to another tenant of the Center;
(vi) Costs incurred due to Landlord's violation of any
terms or conditions of this Lease or of any other lease relating to the
Building or to any other portion of the Center or the Property;
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(vii) Overhead profit increments paid to any subsidiary or
affiliate of Landlord for management or other services on or to the Center or
any portion thereof or for supplies or other materials to the extent that the
cost of the services, supplies or materials exceeds the cost that would have
been paid had the services, supplies or materials been provided by
unaffiliated parties on a competitive basis;
(viii) All interest, loan fees and other carrying costs
related to any mortgage or deed of trust or related to any capital item, and
all rental and other amounts payable under any ground or underlying lease, or
under any lease for any equipment ordinarily considered to be of a capital
nature (except (A) janitorial equipment which is not affixed to the Building
and/or (B) equipment the cost of which, if purchased, would be considered an
amortizable Operating Expense under the provisions of this Section 7.2,
notwithstanding the capital nature of such equipment);
(ix) Any compensation paid to clerks, attendants or Other
persons in commercial concessions operated by Landlord;
(x) Advertising and promotional expenditures;
(xi) Costs of repairs and other work occasioned by fire,
windstorm or other casualty of an insurable nature, except to the extent of
any applicable deductible amounts under insurance actually carried by
Landlord;
(xii) Any costs, fines or penalties incurred due to
violations by Landlord of any governmental rule or authority or of this Lease
or any other lease of any portion of the Center or the Property, or due to
Landlord's negligence or willful misconduct;
(xiii) Management costs to the extent they exceed a
reasonable and competitive rate for such services in the market for
management of comparable commercial properties in the San Francisco Bay Area;
(xiv) Costs for sculpture, paintings or other objects of
art, and for any insurance thereon or extraordinary security in connection
therewith;
(xv) Wages, salaries or other compensation paid to any
executive employees above the grade of building manager;
(xvi) The cost of correcting any building code or other
violations which were violations prior to the Rent Commencement Date;
(xvii) The cost of containing, removing or otherwise
remediating any contamination of the Property (including the underlying land
and groundwater) by any toxic or hazardous materials (including, without
limitation, asbestos and PCBs); and
(xviii) Premiums for earthquake insurance coverage, but only
to the extent (if any) that such premiums exceed, in any applicable period, a
commercially reasonable rate, taking into account all relevant factors
(including, but not limited to, the nature, size and location of the Center,
the nature and value of the improvements therein that are owned by or
insurable by Landlord, and the general availability and cost of commercial
earthquake insurance in the insurance markets existing from time to time
during the term of this Lease).
7.3 DETERMINATION OF OPERATING EXPENSES. On or before the Rent
Commencement Date and during the last month of each calendar year of the term
of this Lease ("LEASE YEAR"), or as soon thereafter as practical, Landlord
shall provide Tenant notice of Landlord's estimate of the Operating Expenses
for the ensuing Lease Year or applicable portion thereof. On or before the
first day of each month during the ensuing Lease Year or applicable portion
thereof, beginning on the Rent Commencement Date, Tenant shall pay to
Landlord Tenant's Operating Cost Share of the portion of such estimated
Operating Expenses allocable (on a prorata basis) to such month; PROVIDED,
however, that if such notice is not given in the last
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month of a Lease Year, Tenant shall continue to pay on the basis of the prior
year's estimate, if any, until the month after such notice is given. If at
any time or times it appears to Landlord that the actual Operating Expenses
will vary from Landlord's estimate by more than five percent (5 %), Landlord
may, by notice to Tenant, revise its estimate for such year and subsequent
payments by Tenant for such year shall be based upon such revised estimate.
7.4 FINAL ACCOUNTING FOR LEASE YEAR.
(a) Within ninety (90) days after the close of each Lease Year, or
as soon after such 90-day period as practicable, Landlord shall deliver to
Tenant a statement of Tenant's Operating Cost Share of the Operating Expenses
for such Lease Year prepared by Landlord from Landlord's books and records,
which statement shall be final and binding on Landlord and Tenant (except as
provided in Section 7.4(b)). If on the basis of such statement Tenant owes an
amount that is more or less than the estimated payments for such Lease Year
previously made by Tenant, Tenant or Landlord, as the case may be, shall pay
the deficiency to the other party within thirty (30) days after delivery of
the statement. Failure or inability of Landlord to deliver the annual
statement within such ninety (90) day period shall not impair or constitute a
waiver of Tenant's obligation to pay Operating Expenses, or cause Landlord to
incur any liability for damages.
(b) At any time within three (3) months after receipt of
Landlord's annual statement of Operating Expenses as contemplated in Section
7.4(a), Tenant shall be entitled, upon reasonable written notice to Landlord
and during normal business hours at Landlord's office or such other places as
Landlord shall designate, to inspect and examine those books and records of
Landlord relating to the determination of Operating Expenses for the
immediately preceding Lease Year covered by such annual statement or, if
Tenant so elects by written notice to Landlord, to request an independent
audit of such books and records. The independent audit of the books and
records shall be conducted by a certified public accountant acceptable to
both Landlord and Tenant or, if the parties are unable to agree, by a
certified public accountant appointed by the Presiding Judge of the San Mateo
County Superior Court upon the application of either Landlord or Tenant (with
notice to the other party). In either event, such certified public accountant
shall be one who is not then employed in any capacity by Landlord or Tenant
or by any of their respective affiliates. The audit shall be limited to the
determination of the amount of Operating Expenses for the subject Lease Year,
and shall be based on generally accepted accounting principles and tax
accounting principles, consistently applied. If it is determined, by mutual
agreement of Landlord and Tenant or by independent audit, that the amount of
Operating Expenses billed to or paid by Tenant for the applicable Lease Year
was incorrect, then the appropriate party shall pay to the other party the
deficiency or overpayment, as applicable, within thirty (30) days after the
final determination of such deficiency or overpayment. All costs and expenses
of the audit shall be paid by Tenant unless the audit shows that Landlord
overstated Operating Expenses for the subject Lease Year by more than five
percent (5 %), in which case Landlord shall pay all costs and expenses of the
audit. Each party agrees to maintain the confidentiality of the findings of
any audit in accordance with the provisions of this Section 7.4.
7.5 PRORATION. If the Rent Commencement Date falls on a day other than
the first day of a Lease Year or if this Lease terminates on a day other than
the last day of a Lease Year, then the amount of Operating Expenses payable
by Tenant with respect to such first or last partial Lease Year shall be
prorated on the basis which the number of days during such Lease Year in
which this Lease is in effect bears to 365. The termination of this Lease
shall not affect the obligations of Landlord and Tenant pursuant to Section
7.4 to be performed after such termination.
8. UTILITIES
8.1 PAYMENT. Commencing with the Rent Commencement Date and thereafter
throughout the term of this Lease, Tenant shall pay, before delinquency, all
charges for water, gas, heat, light, electricity, power, sewer, telephone,
alarm system, janitorial and
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other services or utilities supplied to or consumed in or with respect to the
Building (other than any separately metered costs for water, electricity or
other services or utilities furnished with respect to the Common Areas, which
costs shall be paid by Landlord and shall constitute Operating Expenses under
Section 7.2 hereof), including any taxes on such services and utilities. It
is the intention of the parties that all such services shall be separately
metered to the Building. In the event that any of such services supplied to
the Building are not separately metered, then the amount thereof shall be an
item of Operating Expenses and shall be paid as provided in Article 7.
8.2 INTERRUPTION. There shall be no abatement of rent or other charges
required to be paid hereunder and Landlord shall not be liable in damages or
otherwise for interruption or failure of any service or utility furnished to
or used with respect to the Building or Property because of accident, making
of repairs, alterations or improvements, severe weather, difficulty or
inability in obtaining services or supplies, labor difficulties or any other
cause. Notwithstanding the foregoing provisions of this Section 8.2, however,
in the event of any interruption or failure of any service or utility to the
Building that (i) is caused in whole or in material part by the active
negligence or willful misconduct of Landlord or its agents or employees AND
(ii) continues for more than three (3) business days AND (iii) materially
impairs Tenant's ability to use the Building for its intended purposes
hereunder, then following such three (3) business day period, Tenant's
obligations for payment of rent and other charges under this Lease shall be
abated in proportion to the degree of impairment of Tenant's use of the
Building, and such abatement shall continue until Tenant's use of the
Building is no longer materially impaired thereby.
9. ALTERATIONS; SIGNS
9.1 RIGHT TO MAKE ALTERATIONS. Tenant shall make no alterations,
additions or improvements to the Building or the Property, other than
interior non-structural alterations costing less than Fifty Thousand Dollars
($50,000.00) in the aggregate during any twelve (12) month period, without
the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. All such alterations, additions and
improvements shall be completed with due diligence in a first-class
workmanlike manner, in compliance with plans and specifications approved in
writing by Landlord and in compliance with all applicable laws, ordinances,
rules and regulations, and to the extent Landlord's consent is not otherwise
required hereunder for such alterations, additions or improvements, Tenant
shall give prompt written notice thereof to Landlord. Tenant shall cause any
contractors engaged by Tenant for work in the Building or on the Property to
maintain public liability and property damage insurance, and other customary
insurance, with such terms and in such amounts as Landlord may reasonably
require, naming as additional insureds Landlord and any of its partners,
shareholders, property managers and lenders designated by Landlord for this
purpose, and shall furnish Landlord with certificates of insurance or other
evidence that such coverage is in effect. Notwithstanding any other
provisions of this Section 9. I, under no circumstances shall Tenant make any
structural alterations or improvements, or any substantial changes to the
roof or substantial equipment installations on the roof, or any substantial
changes or alterations to the building systems, without Landlord's prior
written consent (which consent shall not be unreasonably withheld or
delayed). If Tenant so requests in seeking Landlord's consent to any
alterations, additions or improvements, Landlord shall specify in granting
such consent whether Landlord intends to require that Tenant remove such
alterations, additions or improvements (or any specified portions thereof)
upon expiration or termination of this Lease. Landlord shall receive no fee
for supervision, profit, overhead or general conditions in connection with
any alterations, additions or improvements constructed or installed by Tenant
under this Lease, whether as part of the initial Tenant's Work under EXHIBIT
C or otherwise.
9.2 TITLE TO ALTERATIONS. All alterations, additions and improvements
installed in, on or about the Building or the Property shall become part of
the Property and shall become the property of Landlord, unless Landlord
elects to require Tenant to remove the same upon the termination of this
Lease; PROVIDED, however, that the foregoing shall not apply to Tenant's
movable furniture and equipment and trade fixtures. Tenant shall promptly
repair
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any damage caused by its removal of any such furniture, equipment or trade
fixtures. Notwithstanding any other provisions of this Article 9, however,
(a) under no circumstances shall Tenant have any right to remove from the
Building or the Property, at the expiration or termination of this Lease, any
lab benches, fume hoods, cold rooms or other similar improvements and
equipment installed in the Building and paid for in whole or in part by
Landlord, even if such equipment and improvements were installed by Tenant as
part of Tenant's Work under EXHIBIT C and paid for by Tenant in the form of
rent (but Tenant SHALL have the right to remove any such equipment and
improvements installed entirely by Tenant at its own expense and paid for in
cash by Tenant, without any contribution or reimbursement from Landlord and
without any related rental obligation on the part of Tenant); and (b) if
Tenant requests Landlord's written consent to any alterations, additions or
improvements under Section 9.1 hereof and, in requesting such consent, asks
that Landlord specify whether Landlord will require removal of such
alterations, additions or improvements upon termination or expiration of this
Lease, then Landlord shall not be entitled to require such removal unless
Landlord specified its intention to do so at the time of granting of
Landlord's consent to the requested alterations, additions or improvements.
9.3 TENANT FIXTURES. Subject to the final sentence of Section 9.2 and
to Section 9.5, Tenant may install, remove and reinstall trade fixtures
without Landlord's prior written consent, except that installation and
removal of any fixtures which are affixed to the Building or the Property or
which affect the exterior or structural portions of the Building or the
building systems shall require Landlord's written approval, which approval
shall not be unreasonably withheld or delayed. Subject to the provisions of
Section 9.5, the foregoing shall apply to Tenant's signs, logos and insignia,
all of which Tenant shall have the right to place and remove and replace (a)
only with Landlord's prior written consent as to location, size and
composition, which consent shall not be unreasonably withheld or delayed, and
(b) only in compliance with all restrictions and requirements of applicable
law and of any covenants, conditions and restrictions or other written
agreements now or hereafter applicable to the Property. Tenant shall
immediately repair any damage caused by installation and removal of fixtures
under this Section 9.3.
9.4 NO LIENS. Tenant shall at all times keep the Building and the
Property free from all liens and claims of any contractors, subcontractors,
materialmen, suppliers or any other parties employed either directly or
indirectly by Tenant in construction work on the Building or the Property.
Tenant may contest any claim of lien, but only if, prior to such contest,
Tenant either (i) posts security in the amount of the claim, plus estimated
costs and interest, or (ii) records a bond of a responsible corporate surety
in such amount as may be required to release the lien from the Building and
the Property. Tenant shall indemnify, defend and hold Landlord harmless
against any and all liability, loss, damage, cost and other expenses,
including, without limitation, reasonable attorneys' fees, arising out of
claims of any lien for work performed or materials or supplies furnished at
the request of Tenant or persons claiming under Tenant.
9.5 SIGNS. Without limiting the generality of the provisions of Section
9.3 hereof, Tenant shall have the right to display its corporate name and
logo on the Building and in front of the entrance to the Building, subject to
Landlord's prior approval as to location, size, design and composition (which
approval shall not be unreasonably withheld or delayed), subject to the
established sign criteria for the Center and subject to all restrictions and
requirements of applicable law and of any covenants, conditions and
restrictions or other written agreements now or hereafter applicable to the
Property. Landlord is hereby deemed to have approved, as to location, any
signage the location of which is expressly designated on the Site Plan
attached hereto as EXHIBIT B or on any Approved Plan developed pursuant to
the Workletter.
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10. MAINTENANCE AND REPAIRS
10.1 LANDLORD'S WORK.
(a) Landlord shall repair and maintain or cause to be repaired and
maintained the Common Areas of the Center and the roof (structural portions
only), exterior walls and other structural portions of the Building. The cost
of all work performed by Landlord under this Section I0.1 shall be an
Operating Expense hereunder, except to the extent such work (i) is required
due to the negligence of Landlord, (ii) involves the repair or correction of
a condition or defect that Landlord is required to correct pursuant to
Section 5.2 hereof, (iii) is a capital expense not includible as an Operating
Expense under Section 7.2 hereof, (iv) is required due to the negligence or
willful misconduct of Tenant or its agents, employees or invitees (in which
event Tenant shall bear the full cost of such work pursuant to the
indemnification provided in Section 12.6 hereof, subject to the release set
forth in Section 12.4 hereof). Tenant knowingly and voluntarily waives the
right to make repairs at Landlord's expense, except to the extent permitted
by Section 10.1 (b) below, or to offset the cost thereof against rent, under
any law, statute, regulation or ordinance now or hereafter in effect.
(b) If Landlord fails to perform any repairs or maintenance
required to be performed by Landlord on the Building under Section 10. l(a)
and such failure continues for thirty (30) days or more after Tenant gives
Landlord written notice of such failure (or, if such repairs or maintenance
cannot reasonably be performed within such 30-day period, then if Landlord
fails to commence performance within such 30-day period and thereafter to
pursue such performance diligently to completion), then Tenant shall have the
right to perform such repairs or maintenance and Landlord shall reimburse
Tenant for the reasonable cost thereof within fifteen (15) days after written
notice from Tenant of the completion and cost of such work, accompanied by
copies of invoices or other reasonable supporting documentation. Under no
circumstances, however, shall Tenant have any right to offset the cost of any
such work against rent or other charges falling due from time to time under
this Lease.
10.2 TENANT'S OBLIGATION FOR MAINTENANCE.
(a) GOOD ORDER, CONDITION AND REPAIR. Except as provided in
Section 10.1 hereof, Tenant at its sole cost and expense shall keep and
maintain in good and sanitary order, condition and repair the Building and
every part thereof, wherever located, including but not limited to the roof
(non-structural portions only), signs, interior, ceiling, electrical system,
plumbing system, telephone and communications systems of the Building, the
HVAC equipment and related mechanical systems serving the Building (for which
equipment and systems Tenant shall enter into a service contract with a
person or entity designated or approved by Landlord), all doors, door checks,
windows, plate glass, door fronts, exposed plumbing and sewage and other
utility facilities, fixtures, lighting, wall surfaces, floor surfaces and
ceiling surfaces of the Building and all other interior repairs, foreseen and
unforeseen, with respect to the Building, as required.
(b) LANDLORD'S REMEDY. If Tenant, after notice from Landlord,
fails to make or perform promptly any repairs or maintenance which are the
obligation of Tenant hereunder, Landlord shall have the right, but shall not
be required, to enter the Building and make the repairs or perform the
maintenance necessary to restore the Building to good and sanitary order,
condition and repair. Immediately on demand from Landlord, the cost of such
repairs shall be due and payable by Tenant to Landlord.
(c) CONDITION UPON SURRENDER. At the expiration or sooner
termination of this Lease, Tenant shall surrender the Building and the
Improvements, including any additions, alterations and improvements thereto,
broom clean, in good and sanitary order, condition and repair, ordinary wear
and tear excepted, first, however, removing all goods and effects of Tenant
and all and fixtures and items required to be removed or specified to be
removed at Landlord's election pursuant to this Lease (including, but not
limited to, any such,, removal required as a result of an election duly made
by Landlord to require such removal as
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contemplated in Section 9.2), and repairing any damage caused by such
removal. Tenant shall not have the right to remove fixtures or equipment if
Tenant is in default hereunder unless Landlord specifically waives this
provision in writing. Tenant expressly waives any and all interest in any
personal property and trade fixtures not removed from the Property by Tenant
at the expiration or termination of this Lease, agrees that any such personal
property and trade fixtures may, at Landlord's election, be deemed to have
been abandoned by Tenant, and authorizes Landlord (at its election and
without prejudice to any other remedies under this Lease or under applicable
law) to remove and either retain, store or dispose of such property at
Tenant's cost and expense, and Tenant waives all claims against Landlord for
any damages resulting from any such removal, storage, retention or disposal.
11. USE OF PROPERTY
11.1 PERMITTED USE. Subject to Sections 11.3, 11.4 and 11.6 hereof,
Tenant shall use the Building solely for a laboratory research and
development facility, including (but not limited to) wet chemistry and
biology labs, clean rooms, pilot scale, clinical scale and GMP scale
manufacturing, storage and use of toxic and radioactive materials (subject to
the provisions of Section 11.6 hereof), storage and use of laboratory
animals, administrative offices, and other lawful purposes reasonably related
to or incidental to such specified uses (subject in each case to receipt of
all necessary approvals from the City of South San Francisco and other
governmental agencies having jurisdiction over the Building), and for no
other purpose.
11.2 [Omitted.]
11.3 NO NUISANCE. Tenant shall not use the Property for or carry on or
permit upon the Property or any part thereof any offensive, noisy or
dangerous trade, business, manufacture, occupation, odor or fumes, or any
nuisance or anything against public policy, nor interfere with the rights or
business of Landlord in the Building or the Property, nor commit or allow to
be committed any waste in, on or about the Property. Tenant shall not do or
permit anything to be done in or about the Property, nor bring nor keep
anything therein, which will in any way cause the Property to be uninsurable
with respect to the insurance required by this Lease or with respect to
standard fire and extended coverage insurance with vandalism, malicious
mischief and riot endorsements.
11.4 COMPLIANCE WITH LAWS. Tenant shall not use the Property or permit
the Property or the Center to be used in whole or in part for any purpose or
use that is in violation of any applicable laws, ordinances, regulations or
rules of any governmental agency or public authority. Tenant shall keep the
Building and Improvements equipped with all safety appliances required by
law, ordinance or insurance on the Property, or any order or regulation of
any public authority, because of Tenant's particular use of the Property.
Tenant shall procure all licenses and permits required for use of the
Property. Tenant shall use the Property in strict accordance with all
applicable ordinances, rules, laws and regulations and shall comply with all
requirements of all governmental authorities now in force or which may
hereafter be in force pertaining to the use of the Property by Tenant,
including, without limitation, regulations applicable to noise, water, soil
and air pollution, and making such nonstructural alterations and additions
thereto as may be required from time to time by such laws, ordinances, rules,
regulations and requirements of governmental authorities or insurers of the
Property (collectively, "REQUIREMENTS") because of Tenant's construction of
improvements in or other particular use of the Property. Any structural
alterations or additions required from time to time by applicable
Requirements because of Tenant's construction of improvements in the Building
or other particular use of the Property shall, at Landlord's election, either
(i) be made by Tenant, at Tenant's sole cost and expense, in accordance with
the procedures and standards set forth in Section 9.1 for alterations by
Tenant, or (ii) be made by Landlord at Tenant's sole cost and expense, in
which event Tenant shall pay to Landlord as additional rent, within ten (10)
days after demand by Landlord, an amount equal to all reasonable costs
incurred by Landlord in connection with such alterations or additions, The
judgment of any court, or the admission by Tenant in any proceeding against
Tenant, that Tenant has violated any law, statute, ordinance or
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governmental rule, regulation or requirement shall be conclusive of such
violation as between Landlord and Tenant.
11.5 LIQUIDATION SALES. Tenant shall not conduct or permit to be
conducted any auction, bankruptcy sale, liquidation sale, or going out of
business sale, in, upon or about the Property, whether said auction or sale
be voluntary, involuntary or pursuant to any assignment for the benefit of
creditors, or pursuant to any bankruptcy or other insolvency proceeding.
11.6 ENVIRONMENTAL MATTERS.
(a) For purposes of this Section, "HAZARDOUS SUBSTANCE" shall mean
the substances included within the definitions of the term "hazardous
substance" under (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 ET SEQ., and
the regulations promulgated thereunder, as amended, (ii) the California
Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health &
Safety Code Sections 25300 ET SEQ., and regulations promulgated thereunder,
as amended, (iii) the Hazardous Materials Release Response Plans and
Inventory Act, California Heath & Safety Code Sections 25500 ET SEQ., and
regulations promulgated thereunder, as amended, and (iv) petroleum;
"HAZARDOUS WASTE" shall mean (i) any waste listed as or meeting the
identified characteristics of a "hazardous waste" under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 ET SEQ., and
regulations promulgated pursuant thereto, as amended (collectively, "RCRA"),
(ii) any waste meeting the identified characteristics of "hazardous waste,"
"extremely hazardous waste" or "restricted hazardous waste" under the
California Hazardous Waste Control Law, California Health & Safety Code
Sections 25100 ET SEQ., and regulations promulgated pursuant thereto, as
amended (collectively, the "CHWCL"), and/or (iii) any waste meeting the
identified characteristics of "medical waste" under California Health &
Safety Code Sections 25015-25027.8, and regulations promulgated thereunder,
as amended; and "HAZARDOUS WASTE FACILITY" shall mean a hazardous waste
facility as defined under the CHWCL.
(b) Without limiting the generality of the obligations set forth
in Section 11.4 of this Lease:
(i) Tenant shall not cause or permit any hazardous
substance or hazardous waste to be brought upon, kept, stored or used in or
about the Property without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, except that Tenant, in connection
with its permitted use of the Property as provided in Section 11.1, may keep,
store and use materials that constitute hazardous substances which are
customary for such permitted use, provided such hazardous substances are
kept, stored and used in quantities which are customary for such permitted
use and are kept, stored and used in full compliance with clauses (ii) and
(iii) immediately below.
(ii) Tenant shall comply with all applicable laws, rules,
regulations, orders, permits, licenses and operating plans of any
governmental authority with respect to the receipt, use, handling,
generation, transportation, storage, treatment and/or disposal of hazardous
substances or wastes by Tenant or its agents or employees, and Tenant will
provide Landlord with copies of all permits, licenses, registrations and
other similar documents that authorize Tenant to conduct any such activities
in connection with its authorized use of the Property from time to time.
(iii) Tenant shall not (A) operate on or about the Property
any facility required to be permitted or licensed as a hazardous waste
facility or for which interim status as such is required, nor (B) store any
hazardous wastes on or about the Property for ninety (90) days or more, nor
(C) conduct any other activities on or about the Property that could result
in the Property being deemed to be a "hazardous waste facility"(including,
but not limited to, any storage or treatment of hazardous substances or
hazardous wastes which could have such a result).
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(iv) Tenant shall comply with all applicable laws, rules,
regulations, orders and permits relating to underground storage tanks
installed by Tenant or its agents or employees or at the request of Tenant
(including any installation, monitoring, maintenance, closure and/or removal
of such tanks) as such tanks are defined in California Health & Safety Code
Section 25281(x), including, without limitation, complying with California
Health & Safety Code Sections 25280-25299.7 and the regulations promulgated
thereunder, as amended. Tenant shall furnish to Landlord copies of all
registrations and permits issued to or held by Tenant from time to time for
any and all underground storage tanks located on or under the Property.
(v) If applicable, Tenant shall provide Landlord in
writing the following information and/or documentation within fifteen (15)
days after the Rent Commencement Date, and shall update such information at
least annually, on or before each anniversary of the Rent Commencement Date,
to reflect any change in or addition to the required information and/or
documentation (PROVIDED, however, that in the case of the materials described
in subparagraphs (B), (C) and (E) below, Tenant shall not be required to
deliver copies of such materials to Landlord but shall maintain copies of
such materials to such extent and for such periods as may be required by
applicable law and shall permit Landlord or its representatives to inspect
and copy such materials during normal business hours at any time and from
time to time upon reasonable notice to Tenant):
(A) A list of all hazardous substances and/or wastes
that Tenant receives, uses, handles, generates, transports, stores, treats or
disposes of from time to time in connection with its operations on the
Property.
(B) All Material Safety Data Sheets ("MSDS'S"), if
any, required to be completed with respect to operations of Tenant at the
Property from time to time in accordance with Title 26, California Code of
Regulations Section 8-5194 or 42 U.S.C. Section 11021, or any amendments
thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS's.
(C) All hazardous waste manifests (as defined in
Title 26, California Code of Regulations Section 22-66481), if any, that
Tenant is required to complete from time to time in connection with its
operations at the Property.
(D) A copy of any Hazardous Materials Management Plan
required from time to time with respect to Tenant's operations at the
Property, pursuant to California Health & Safety Code Sections 25500 ET SEQ.,
and any regulations promulgated thereunder, as amended.
(E) Any Contingency Plans and Emergency Procedures
required of Tenant from time to time due to its operations in accordance with
Title 26, California Code of Regulations Sections 22-67140 ET SEQ., and any
amendments thereto, and any Training Programs and Records required under
Title 26, California Code of Regulations, Section 22-67105, and any
amendments thereto.
(F) Copies of any biennial reports to be furnished to
the California Department of Health Services from time to time relating to
hazardous substances or wastes, pursuant to Title 26, California Code of
Regulations, Section 22-66493, and any amendments thereto.
(G) Copies of all industrial wastewater discharge
permits issued to or held by Tenant from time to time in connection with its
operations on the Property.
(H) Copies of any other lists or inventories of
hazardous substances and/or wastes on or about the Property that Tenant is
otherwise required to prepare and file from time to time with any
governmental or regulatory authority.
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(vi) Tenant shall secure Landlord's prior written approval
for any proposed receipt, storage, possession, use, transfer or disposal of
"radioactive materials" or "radiation," as such materials are defined in
Title 26, California Code of Regulations Section 17-30100, and/or any other
materials possessing the characteristics of the materials so defined, which
approval Landlord may withhold in its sole and absolute discretion; PROVIDED,
that such approval shall not be required for any radioactive materials for
which Tenant has secured prior written approval of the Nuclear Regulatory
Commission and delivered to Landlord a copy of such approval. Tenant, in
connection with any such authorized receipt, storage, possession, use,
transfer or disposal of radioactive materials or radiation, shall:
(A) Comply with all federal, state and local laws,
rules, regulations, orders, licenses and permits issued to or applicable to
Tenant with respect to its business operations on the Property;
(B) Maintain, to such extent and for such periods as
may be required by applicable law, and permit Landlord and its
representatives to inspect during normal business hours at any time and from
time to time upon reasonable notice to Tenant, a list of all radioactive
materials or radiation received, stored, possessed, used, transferred or
disposed of by Tenant or in connection with the operation of Tenant's
business on the Property from time to time, to the extent not already
disclosed through delivery of a copy of a Nuclear Regulatory Commission
approval with respect thereto as contemplated above; and
(C) Maintain, to such extent and for such periods as
may be required by applicable law, and permit Landlord or its representatives
to inspect during normal business hours at any time and from time to time
upon reasonable notice to Tenant, all licenses, registration materials,
inspection reports, governmental orders and permits in connection with the
receipt, storage, possession, use, transfer or disposal of radioactive
materials or radiation by Tenant or in connection with the operation of
Tenant's business on the Property from time to time.
(vii) Tenant shall comply with any and all applicable laws,
rules, regulations and orders of any governmental authority with respect to
the release into the environment of any hazardous wastes or substances or
radiation or radioactive materials by Tenant or its agents or employees.
Tenant shall give Landlord immediate verbal notice of any unauthorized
release of any such hazardous wastes or substances or radiation or
radioactive materials into the environment, and shall follow such verbal
notice with written notice to Landlord of such release within twenty-four
(24) hours of the time at which Tenant became aware of such release.
(viii) Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims, losses (including, but not
limited to, loss of rental income), damages, liabilities, costs, legal fees
and expenses of any sort arising out of or relating to (A) any failure by
Tenant to comply with any provisions of this paragraph l l.6(b), or (B) any
receipt, use handling, generation, transportation, storage, treatment,
release and/or disposal of any hazardous substance or waste or any
radioactive material or radiation on or about the Property as a proximate
result of Tenant's use of the Property or as a result of any intentional or
negligent acts or omissions of Tenant or of any agent, employee or invitee of
Tenant.
(ix) Tenant shall cooperate with Landlord in furnishing
Landlord with complete information regarding Tenant's receipt, handling, use,
storage, transportation, generation, treatment and/or disposal of any
hazardous substances or wastes or radiation or radioactive materials. Upon
request, Tenant shall grant Landlord reasonable access at reasonable times to
the Property to inspect Tenant's receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of hazardous substances
or wastes or radiation or radioactive materials, without being deemed guilty
of any disturbance of Tenant's use or possession and without being liable to
Tenant in any manner.
(x) Notwithstanding Landlord's rights of inspection and
review under this paragraph 11.6(b), Landlord shall have no obligation or
duty to so inspect or
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review, and no third party shall be entitled to rely on Landlord to conduct
any sort of inspection or review by reason of the provisions of this
paragraph 11.6(b).
(xi) If Tenant receives, handles, uses, stores, transports,
generates, treats and/or disposes of any hazardous substances or wastes or
radiation or radioactive materials on or about the Property at any time
during the term of this Lease, then within thirty (30) days after the
termination or expiration of this Lease, Tenant at its sole cost and expense
shall obtain and deliver to Landlord an environmental study, performed by an
expert reasonably satisfactory to Landlord, evaluating the presence or
absence of hazardous substances and wastes, radiation and radioactive
materials on and about the Property. Such study shall be based on a
reasonable and prudent level of tests and investigations of the Property and
surrounding portions of the Center (if appropriate), which tests shall be
conducted no earlier than the date of termination or expiration of this
Lease. Liability for any remedial actions required or recommended on the
basis of such study shall be allocated in accordance with Sections 11.4,
11.6, 12.6 and other applicable provisions of this Lease.
(c) Landlord shall indemnify, defend and hold Tenant harmless from
and against any and all claims, losses, damages, liabilities, costs, legal
fees and expenses of any sort arising out of or relating to (i) the presence
on the Property of any hazardous substances or wastes or radiation or
radioactive materials as of the Rent Commencement Date (other than as a
result of any intentional or negligent acts or omissions of Tenant or of any
agent, employee or invitee of Tenant), (ii) any unauthorized release into the
environment (including, but not limited to, the Property) of any hazardous
substances or wastes or radiation or radioactive materials to the extent such
release results from the negligence of or willful misconduct or omission by
Landlord or its agents or employees, and/or (iii) the presence on the
Property of any hazardous substances or wastes or radiation or radioactive
materials arising after the Rent Commencement Date from any cause or source
other than as a result of any intentional or negligent acts or omissions of
Tenant or of any agent, employee or invitee of Tenant.
(d) The provisions of this Section 11.6 shall survive the
termination of this Lease.
12. INSURANCE AND INDEMNITY
12.1 INSURANCE.
(a) Tenant shall procure and maintain in full force and effect at
all times during the term of this Lease, at Tenant's cost and expense,
commercial general liability insurance to protect against liability to the
public, or to any invitee of Tenant or Landlord, arising out of or related to
the use of or resulting from any accident occurring in, upon or about the
Property, with limits of liability of not less than (i) Two Million Dollars
($2,000,000.00) for injury to or death of one person, (ii) Five Million
Dollars ($5,000,000.00) for personal injury or death, per occurrence, and
(iii) One Million Dollars ($1,000,000.00) for property damage, or combined
single limit of liability of not less than Five Million Dollars
($5,000,000.00). Such insurance shall name Landlord, its general partners,
its Managing Agent and any lender holding a deed of trust on the Property
from time to time (as designated in writing by Landlord to Tenant from time
to time) as additional insureds thereunder. The amount of such insurance
shall not be construed to limit any liability or obligation of Tenant under
this Lease. Tenant shall also procure and maintain in full force and effect
at all times during the term of this Lease, at Tenant's cost and expense,
products/completed operations coverage on terms and in amounts (A) customary
in Tenant's industry for companies engaged in the marketing of products on a
scale comparable to that in which Tenant is engaged from time to time and (B)
mutually satisfactory to Landlord and Tenant in their respective reasonable
discretion.
(b) Landlord shall procure and maintain in full force and effect
at all times during the term of this Lease, at Landlord's cost and expense
(but reimbursable as an Operating Expense under Section 7.2 hereof),
commercial general liability insurance to
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protect against liability arising out of or related to the use of or
resulting from any accident occurring in, upon or about the Property, with
combined single limit of liability of not less than Five Million Dollars
($5,000,000.00) per occurrence for bodily injury and property damage.
(c) Landlord shall procure and maintain in full force and effect
at all times during the term of this Lease, at Landlord's cost and expense
(but reimbursable as an Operating Expense under Section 7.2 hereof), policies
of property insurance providing protection against "all risk of direct
physical loss" (as defined by and detailed in the Insurance Service Office's
Commercial Property Program "Cause of Loss--Special Form [CP1030]" or its
equivalent) for the Building Shell (as defined in EXHIBIT C) and for the
improvements in the Common Areas of the Property, on a full replacement cost
basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an "agreed amount" basis). Such insurance may
include earthquake coverage to the extent Landlord in its discretion elects
to carry such coverage, and shall have such commercially reasonable
deductibles and other terms as Landlord in its discretion determines to be
appropriate. Landlord shall have no obligation to carry property damage
insurance for any alterations, additions or improvements installed by Tenant
in the Building or on or about the Property.
(d) Tenant shall procure and maintain in full force and effect at
all times during the term of this Lease, at Tenant's cost and expense,
policies of property insurance providing protection against "all risk of
direct physical loss" (as defined by and detailed in the Insurance Service
Office's Commercial Property Program "Cause of Loss-Special Form [CP1030]" or
its equivalent) for the Tenant Improvements constructed by Tenant pursuant to
EXHIBIT C and on all other alterations, additions and improvements installed
by Tenant from time to time in or about the Building, on a full replacement
cost basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an "agreed amount" basis). Such insurance may
have such commercially reasonable deductibles and other terms as Tenant in
its discretion determines to be appropriate, and shall name both Tenant and
Landlord as insureds as their interests may appear.
(e) During the course of construction of the improvements being
constructed by Landlord and Tenant under Section 5.1 and EXHIBIT C, Landlord
and Tenant respectively shall each procure and maintain in full force and
effect, at its respective sole cost and expense, policies of builder's risk
insurance on the improvements respectively being constructed by it, in such
amounts and with such commercially reasonable deductibles and other terms as
Landlord in its reasonable discretion determines to be appropriate with
respect to the insurance to be maintained by Landlord, and in such amounts
and with such commercially reasonable deductibles and other terms as Landlord
and Tenant may mutually and reasonably determine to be appropriate with
respect to the insurance to be maintained by Tenant.
12.2 QUALITY OF POLICIES AND CERTIFICATES. All policies of insurance
required hereunder shall be issued by responsible insurers and, in the case
of policies carried or required to be carried by Tenant, shall be written as
primary policies not contributing with and not in excess of any coverage that
Landlord may carry. Tenant shall deliver to Landlord copies of policies or
certificates of insurance showing that said policies are in effect. The
coverage provided by such policies shall include the clause or endorsement
referred to in Section 12.4. If Tenant fails to acquire, maintain or renew
any insurance required to be maintained by it under this Article 12 or to pay
the premium therefor, then Landlord, at its option and in addition to its
other remedies, but without obligation so to do, may procure such insurance,
and any sums expended by it to procure any such insurance on behalf of or in
place of Tenant shall be repaid upon demand, with interest as provided in
Section 3.2 hereof. Tenant shall obtain written undertakings from each
insurer under policies required to be maintained by it to notify all insureds
thereunder at least thirty (30) days prior to cancellation of coverage.
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12.3 WORKERS' COMPENSATION. Tenant shall maintain in full force and effect
during the term of this Lease workers' compensation insurance in at least the
minimum amounts required by law, coveting all of Tenant's employees working on
the Property.
12.4 WAIVER OF SUBROGATION. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any tight to recover against the other
with respect to (i) damage to property, (ii) damage to the Property or any part
thereof, or (iii) claims arising by reason of any of the foregoing, but only to
the extent that any of the foregoing damages and claims under clauses (i)-(iii)
hereof are covered, and only to the extent of such coverage, by casualty
insurance actually carried or required to be carried hereunder by either
Landlord or Tenant. This provision is intended to waive fully, and for the
benefit of each party, any rights and claims which might give rise to a right of
subrogation in any insurance carrier. Each party shall procure a clause or
endorsement on any casualty insurance policy denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to the occurrence of injury or loss. Coverage provided by
insurance maintained by Tenant shall not be limited, reduced or diminished by
virtue of the subrogation waiver herein contained.
12.5 INCREASE IN PREMIUMS. Tenant shall do all acts and pay all expenses
necessary to insure that the Property is not used for purposes prohibited by any
applicable fire insurance, and that Tenant's use of the Property complies with
all requirements necessary to obtain any such insurance. If Tenant uses or
permits the Property to be used in a manner which increases the existing rate of
any insurance carried by Landlord on the Center and such use continues for
longer than a reasonable period specified in any written notice from Landlord to
Tenant identifying the rate increase and the factors causing the same, then
Tenant shall pay the amount of the increase in premium caused thereby, and
Landlord's costs of obtaining other replacement insurance policies, including
any increase in premium, within ten (10) days after demand therefor by Landlord.
12.6 INDEMNIFICATION.
(a) Tenant shall indemnify, defend and hold Landlord and its
partners, shareholders, officers, directors, agents and employees harmless from
any and all liability for injury to or death of any person, or loss of or damage
to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys' fees), damages or expenses
of any kind arising therefrom which may be brought or made against Landlord or
which Landlord may pay or incur by reason of the use, occupancy and enjoyment of
the Property by Tenant or any invitees, sublessees, licensees, assignees,
employees, agents or contractors of Tenant or holding under Tenant (including,
but not limited to, any such matters arising out of or in connection with any
early entry upon the Property by Tenant pursuant to Section 2.2 hereof) from any
cause whatsoever other than negligence or willful misconduct or omission by
Landlord, its agents or employees. Landlord and its partners, shareholders,
officers, directors, agents and employees shall not be liable for, and Tenant
hereby waives all claims against such persons for, damages to goods, wares and
merchandise in or upon the Property, or for injuries to Tenant, its agents or
third persons in or upon the Property, from any cause whatsoever other than
negligence or willful misconduct or omission by Landlord, its agents or
employees. Tenant shall give prompt notice to Landlord of any casualty or
accident in, on or about the Property.
(b) Landlord shall indemnify, defend and hold Tenant and its
partners, shareholders, officers, directors, agents and employees harmless from
any and all liability for injury to or death of any person, or loss of or damage
to the property of any person, and all actions, claims, demands, costs
(including, without limitation, reasonable attorneys' fees), damages or expenses
of any kind arising therefrom which may be brought or made against Tenant or
which Tenant may pay or incur, to the extent such liabilities or other matters
arise in, on or about the Property by reason of any negligence or willful
misconduct or omission by Landlord, its agents or employees.
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12.7 BLANKET POLICY. Any policy required to be maintained hereunder may be
maintained under a so-called "blanket policy" insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder
is not thereby diminished.
13. SUBLEASE AND ASSIGNMENT
13.1 ASSIGNMENT AND SUBLEASE OF BUILDING. Except in the case of a Permitted
Transfer, Tenant shall not have the right or power to assign its interest in
this Lease, or make any sublease of the Building or any portion thereof, nor
shall any interest of Tenant under this Lease be assignable involuntarily or by
operation of law, without on each occasion obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed. Any
purported sublease or assignment of Tenant's interest in this Lease requiring
but not having received Landlord's consent thereto (to the extent such consent
is required hereunder) shall be void. Without limiting the generality of the
foregoing, Landlord may withhold consent to any proposed subletting or
assignment solely on the ground, if applicable, that the use by the proposed
subtenant or assignee is reasonably likely to. be incompatible with Landlord's
use of any adjacent property owned or operated by Landlord, unless the proposed
use is within the permitted uses specified in Section 11.1, in which event it
shall not be reasonable for Landlord to object to the proposed use. Except in
the case of a Permitted Transfer, any dissolution, consolidation, merger or
other reorganization of Tenant, or any sale or transfer of substantially all of
the stock or assets of Tenant in a single transaction or series of related
transactions, shall be deemed to be an assignment hereunder and shall be void
without the prior written consent of Landlord as required above. Notwithstanding
the foregoing, (i) an initial public offering of the common stock of Tenant
shall not be deemed to be an assignment hereunder; and (ii) Tenant shall have
the right to assign this Lease or sublet the Building, or any portion thereof,
without Landlord's consent (but with prior or concurrent written notice by
Tenant to Landlord), to any Affiliate of Tenant, or to any entity which results
from a merger or consolidation with Tenant, or to any entity which acquires
substantially all of the stock or assets of Tenant as a going concern
(hereinafter each a "PERMITTED TRANSFER"). For purposes of the preceding
sentence, an "AFFILIATE" of Tenant shall mean any entity in which Tenant owns at
least a twenty percent (20%) equity interest, any entity which owns at least a
twenty percent (20%) equity interest in Tenant, and/or any entity which is
related to Tenant by a chain of ownership interests involving at least a twenty
percent (20%) equity interest at each level in the chain. Landlord shall have no
right to terminate this Lease in connection with, and shall have no right to any
sums or other economic consideration resulting from, any Permitted Transfer.
Except as expressly set forth in this Section 13.1, however, the provisions of
Section 13.2 shall remain applicable to any Permitted Transfer and the
transferee under such Permitted Transfer shall be and remain subject to all of
the terms and provisions of this Lease.
13.2 RIGHTS OF LANDLORD. Consent by Landlord to one or more assignments
of this Lease, or to one or more sublettings of the Building or any portion
thereof, or collection of rent by Landlord from any assignee or sublessee,
shall not operate to exhaust Landlord's rights under this Article 13, nor
constitute consent to any subsequent assignment or subletting. No assignment
of Tenant's interest in this Lease and no sublease shall relieve Tenant of
its obligations hereunder, notwithstanding any waiver or extension of time
granted by Landlord to any assignee or sublessee, or the failure of Landlord
to assert its rights against any assignee or sublessee, and regardless of
whether Landlord's consent thereto is given or required to be given
hereunder. In the event of a default by any assignee, sublessee or other
successor of Tenant in the performance of any of the terms or obligations of
Tenant under this Lease, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against any such assignee, sublessee or
other successor. In addition, Tenant immediately and irrevocably assigns to
Landlord, as security for Tenant's obligations under this Lease, all rent
from any subletting of all or a part of the Building as permitted under this
Lease, and Landlord, as Tenant's assignee and as attorney-in-fact for Tenant,
or any receiver for Tenant appointed on Landlord's application, may collect
such rent and apply it toward Tenant's obligations under this Lease; except
that, until the occurrence of an act of default by Tenant, Tenant shall have
the right to collect such rent and to retain all sublease profits.
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14. RIGHT OF ENTRY AND QUIET ENJOYMENT
14.1 RIGHT OF ENTRY. Landlord and its authorized representatives shall
have the right to enter the Building at any time during the term of this
Lease during normal business hours and upon not less than twenty-four (24)
hours prior notice, except in the case of emergency (in which event no notice
shall be required and entry may be made at any time), for the purpose of
inspecting and determining the condition of the Building or for any other
proper purpose including, without limitation, to make repairs, replacements
or improvements which Landlord may deem necessary, to show the Building to
prospective purchasers, to show the Building to prospective tenants (but only
during the final year of the term of this Lease), and to post notices of
nonresponsibility. Landlord shall not be liable for inconvenience, annoyance,
disturbance, loss of business, quiet enjoyment or other damage or loss to
Tenant by reason of making any repairs or performing any work upon the
Building or the Property or by reason of erecting or maintaining any
protective barricades in connection with any such work, and the obligations
of Tenant under this Lease shall not thereby be affected in any manner
whatsoever, PROVIDED, however, Landlord shall use reasonable efforts to
minimize the inconvenience to Tenant's normal business operations caused
thereby.
14.2 QUIET ENJOYMENT. Landlord covenants that Tenant, upon paying the rent
and performing its obligations hereunder and subject to all the terms and
conditions of this Lease, shall peacefully and quietly have, hold and enjoy the
Building and the Property throughout the term of this Lease, or until this Lease
is terminated as provided by this Lease.
15. CASUALTY AND TAKING
15.1 DAMAGE OR DESTRUCTION.
(a) If the Building, or the Common Areas of the Property necessary
for Tenant's use and occupancy of the Building, are damaged or destroyed in
whole or in part under circumstances in which (i) repair and restoration is
permitted under applicable governmental laws, regulations and building codes
then in effect and (ii) repair and restoration reasonably can be completed
within a period of one (1) year (or, in the case of an occurrence during the
last year of the term of this Lease, within a period of sixty (60) days)
following the date of the occurrence, then Landlord, as to the Common Areas of
the Property and the Building Shell, and Tenant, as to the Tenant Improvements
constructed by Tenant, shall commence and complete, with all due diligence and
as promptly as is reasonably practicable under the conditions then existing, all
such repair and restoration as may be required to return the affected portions
of the Property to a condition comparable to that existing immediately prior to
the occurrence. In the event of damage or destruction the repair of which is not
permitted under applicable governmental laws, regulations and building codes
then in effect, if such damage or destruction (despite being corrected to the
extent then permitted under applicable governmental laws, regulations and
building codes) would still materially impair Tenant's ability to conduct its
business in the Building, then either party may terminate this Lease as of the
date of the occurrence by giving written notice to the other within thirty (30)
days after the date of the occurrence; if neither party timely elects such
termination, or if such damage or destruction does not materially impair
Tenant's ability to conduct its business in the Building, then this Lease shall
continue in full force and effect, except that there shall be an equitable
adjustment in monthly minimum rental and of Tenant's Operating Cost Share of
Operating Expenses, based upon the extent to which Tenant's ability to conduct
its business in the Building is impaired, and Landlord and Tenant respectively
shall restore the Common Areas and Building Shell and the Tenant Improvements to
a complete architectural whole and to a functional condition. In the event of
damage or destruction which cannot reasonably be repaired within one (1) year
(or, in the case of an occurrence during the last year of the term of this
Lease, within a period of sixty (60) days) following the date of the occurrence,
then either Landlord or Tenant, at its election, may terminate this Lease as of
the date of the occurrence by giving written notice to the other within thirty
(30) days after the date of the occurrence; if neither party timely elects such
termination, then this Lease shall continue in full force and effect and
Landlord and Tenant
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shall each repair and restore applicable portions of the Property in accordance
with the first sentence of this Section 15.1.
(b) The respective obligations of Landlord and Tenant pursuant to
Section 15.1(a) are subject to the following limitations:
(i) If the occurrence results from a peril which is required
to be insured pursuant to Section 12.1(c) and (d) above, the obligations of
either party shall not exceed the amount of insurance proceeds received from
insurers (or, in the case of any failure to maintain required insurance,
proceeds that reasonably would have been available if the required insurance had
been maintained) by reason of such occurrence, plus the amount of the party's
permitted deductible (PROVIDED that each party shall be obligated to use its
best efforts to recover any available proceeds from the insurance which it is
required to maintain pursuant to the provisions of Section 12.1(c) or (d), as
applicable), and, if such proceeds (including, in the case of a failure to
maintain required insurance, any proceeds that reasonably would have been
available) are insufficient, either party may terminate file Lease unless the
other party promptly elects and agrees, in writing, to contribute the amount of
the shortfall; and
(ii) If the occurrence results from a peril which is not
required to be insured pursuant to Section 12.1(c) and (d) above and is not
actally insured, Landlord shall be required to repair and restore the Building
Shell and Common Areas to the extent necessary for Tenant's continued use and
occupancy of the Building, and Tenant shall be required to repair and restore
the Tenant Improvements to the extent necessary for Tenant's continued use and
occupancy of the Building, provided that each party's obligation to repair and
restore shall not exceed an amount equal to five percent (5 %) of the
replacement cost of the Building Shell and Common Area improvements, as to
Landlord, or five percent (5 %) of the replacement cost of the Tenant
Improvements, as to Tenant; if the replacement cost as to either party exceeds
such amount, then the party whose limit has been exceeded may terminate this
Lease unless the other party promptly elects and agrees, in writing, to
contribute the amount of the shortfall.
(c) If this Lease is terminated pursuant to the foregoing provisions
of this Section 15.1 following an occurrence which is a peril actually insured
or required to be insured against pursuant to Section 12.1(c) and (d), Landlord
and Tenant agree (and any Lender shall be asked to agree) that such insurance
proceeds shall be allocated between Landlord and Tenant in a manner which fairly
and reasonably reflects their respective ownership rights under this Lease, as
of the termination or expiration of the term of this Lease, with respect to the
improvements, fixtures, equipment and other items to which such insurance
proceeds are attributable.
(d) From and after the date of an occurrence resulting in damage to
or destruction of the Building or of the Common Areas necessary for Tenant's use
and occupancy of the Building, and continuing until repair and restoration
thereof are completed, there shall be an equitable abatement of minimum rental
and of Tenant's Operating Cost Share of Operating Expenses based upon the degree
to which Tenant's ability to conduct its business in the Building is impaired.
15.2 CONDEMNATION.
(a) If during the term of this Lease the Property or Improvements, or
any substantial part of either, is taken by eminent domain or by reason of any
public improvement or condemnation proceeding, or in any manner by exercise of
the right of eminent domain (including any transfer in avoidance of an exercise
of the power of eminent domain), or receives irreparable damage by reason of
anything lawfully done under color of public or other authority, then (i) this
Lease shall terminate as to the entire Building at Landlord's election by
written notice given to Tenant within sixty (60) days after the taking has
occurred, and (ii) this Lease shall terminate as to the entire Building at
Tenant's election, by written notice given to Landlord within thirty (30) days
after the nature and extent of the taking have been finally determined, if the
portion of the Building taken is of such extent and
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nature as substantially to handicap, impede or permanently impair Tenant's use
of the balance of the Building. If Tenant elects to terminate this Lease, Tenant
shall also notify Landlord of the date of termination, which date shall not be
earlier than thirty (30) days nor later than ninety (90) days after Tenant has
notified Landlord of Tenant's election to terminate, except that this Lease
shall terminate on the date of taking if such date falls on any date before the
date of termination designated by Tenant. If neither party elects to terminate
this Lease as hereinabove provided, this Lease shall continue in full force and
effect (except that there shall be an equitable abatement of minimum rental and
of Tenant's Operating Cost Share of Operating Expenses based upon the degree to
which Tenant's ability to conduct its business in the Building is impaired),
Landlord shall restore the Building Shell and Common Area improvements to a
complete architectural whole and a functional condition and as nearly as
reasonably possible to the condition existing before the taking, and Tenant
shall restore the Tenant Improvements and Tenant's other alterations, additions
and improvements to a complete architectural whole and a functional condition
and as nearly as reasonably possible to the condition existing before the
taking. In connection with any such restoration, each party shall use its
respective best efforts (including, without limitation, any necessary
negotiation or intercession with its respective lender, if any) to ensure that
any severance damages or other condemnation awards intended to provide
compensation for rebuilding or restoration costs are promptly collected and made
available to Landlord and Tenant in portions reasonably corresponding to the
cost and scope of their respective restoration obligations, subject only to such
payment controls as either party or its lender may reasonably require in order
to ensure the proper application of such proceeds toward the restoration of the
Improvements. Each party waives the provisions of Code of Civil Procedure
Section 1265.130, allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial condemnation of the Building or
Property.
(b) The respective obligations of Landlord and Tenant pursuant to
Section 15.2(a) are subject to the following limitations:
(i) Each party's obligation to repair and restore shall not
exceed, net of any condemnation awards or other proceeds available for and
allocable to such restoration as contemplated in Section 15.2(a), an amount
equal to five percent (5 %) of the replacement cost of the Building Shell and
Common Area improvements, as to Landlord, or five percent (5 %) of the
replacement cost of the Tenant Improvements, as to Tenant; if the replacement
cost as to either party exceeds such amount, then the party whose limit has been
exceeded may terminate this Lease unless the other party promptly elects and
agrees, in writing, to contribute the amount of the shortfall; and
(ii) If this Lease is terminated pursuant to the foregoing
provisions of this Section 15.2, or if this Lease remains in effect but any
condemnation awards or other proceeds become available as compensation for the
loss or destruction of any of the Improvements, then Landlord and Tenant agree
(and any Lender shall be asked to agree) that such proceeds shall be allocated
between Landlord and Tenant, respectively, in the respective proportions in
which Landlord and Tenant would have shared, under Section 15.1 (c), the
proceeds of any insurance proceeds following loss or destruction of the
applicable improvements by an insured casualty.
15.3 RESERVATION OF COMPENSATION. Landlord reserves, and Tenant waives and
assigns to Landlord, all rights to any award or compensation for damage to the
Improvements, the Property and the leasehold estate created hereby, accruing by
reason of any taking in any public improvement, condemnation or eminent domain
proceeding or in any other manner by exercise of the right of eminent domain or
of anything lawfully done by public authority, except that (a) Tenant shall be
entitled to any and all compensation or damages paid for or on account of
Tenant's moving expenses, trade fixtures and equipment and any leasehold
improvements installed by Tenant in the Building at its own sole expense, but
only to the extent Tenant would have been entitled to remove such items at the
expiration of the term of this Lease and then only to the extent of the then
remaining unamortized value of such improvements computed on a straight-line
basis over the term of this Lease, and (b) any condemnation awards or proceeds
described in Section 15.2(b)(ii) shall be allocated
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and disbursed in accordance with the provisions of Section 15.2(b)(ii),
notwithstanding any contrary provisions of this Section 15.3.
15.4 RESTORATION OF IMPROVEMENTS. In connection with any repair or
restoration of Improvements by either party following a casualty or taking as
hereinabove set forth, the party responsible for such repair or restoration
shall, to the extent possible, return such Improvements to a condition
substantially equal to that which existed immediately prior to the casualty or
taking. To the extent such party wishes to make material modifications to such
Improvements, such modifications shall be subject to the prior written approval
of the other party (not to be unreasonably withheld or delayed), except that no
such approval shall be required for modifications that are required by
applicable governmental authorities as a condition of the repair or restoration,
unless such required modifications would impair or impede Tenant's conduct of
its business in the Building (in which case any such modifications in Landlord's
work shall require Tenant's consent, not unreasonably withheld or delayed) or
would materially and adversely affect the exterior appearance, the structural
integrity or the mechanical or other operating systems of the Building (in which
case any such modifications in Tenant's work shall require Landlord's consent,
not unreasonably withheld or delayed).
16. DEFAULT
16.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(a) [Omitted.]
(b) NONPAYMENT. Failure to pay, when due, any amount payable to
Landlord hereunder, such failure continuing for a period of five (5) business
days after written notice of such failure; PROVIDED, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 ET SEQ., as amended from time to
time;
(c) OTHER OBLIGATIONS. Failure to perform any obligation, agreement
or covenant under this Lease other than those matters specified in subsection
(b) hereof, such failure continuing for thirty (30) days after written notice of
such failure; PROVIDED, however, that if such failure is curable in nature but
cannot reasonably be cured within such 30-day period, then Tenant shall not be
in default if, and so long as, Tenant promptly (and in all events within such
30-day period) commences such cure and thereafter diligently pursues such cure
to completion; and PROVIDED FURTHER, however, that any such notice shall be in
lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161 ET SEQ., as amended from time to time;
(d) GENERAL ASSIGNMENT. A general assignment by Tenant for the
benefit of creditors;
(e) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition by Tenant's creditors, which
involuntary petition remains undischarged for a period of thirty (30) days. In
the event that under applicable law the trustee in bankruptcy or Tenant has the
right to affirm this Lease and continue to perform the obligations of Tenant
hereunder, such trustee or Tenant shall, in such time period as may be permitted
by the bankruptcy court having jurisdiction, cure all defaults of Tenant
hereunder outstanding as of the date of the affirmance of this Lease and provide
to Landlord such adequate assurances as may be necessary to ensure Landlord of
the continued performance of Tenant's obligations under this Lease.
Specifically, but without limiting the generality of the foregoing, such
adequate assurances must include assurances that the Building continues to be
operated only for the use permitted hereunder. The provisions hereof are to
assure that the basic understandings between Landlord and Tenant with respect to
Tenant's use of the Property and the benefits to Landlord therefrom are
preserved, consistent with the purpose and intent of applicable bankruptcy laws;
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(f) RECEIVERSHIP. The employment of a receiver appointed by court
order to take possession of substantially all of Tenant's assets or the
Building, if such receivership remains undissolved for a period of thirty (30)
days;
(g) ATTACHMENT. The attachment, execution or other judicial seizure
of all or substantially all of Tenant's assets or the Building, if such
attachment or other seizure remains undismissed or undischarged for a period of
thirty (30) days after the levy thereof; or
(h) INSOLVENCY. The admission by Tenant in writing of its inability
to pay its debts as they become due, the filing by Tenant of a petition seeking
any reorganization or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant of an answer admitting or failing timely to
contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within thirty (30) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.
16.2 REMEDIES UPON TENANT'S DEFAULT.
(a) Upon the occurrence of any event of default described in Section
16.1 hereof, Landlord, in addition to and without prejudice to any other rights
or remedies it may have, shall have the immediate right to re-enter the Building
or any part thereof and repossess the same, expelling and removing therefrom all
persons and property (which property may be stored in a public warehouse or
elsewhere at the cost and risk of and for the account of Tenant), using such
force as may be necessary to do so (as to which Tenant hereby waives any claim
for loss or damage that may thereby occur). In addition to or in lieu of such
re-entry, and without prejudice to any other rights or remedies it may have,
Landlord shall have the right either (i) to terminate this Lease and recover
from Tenant all damages incurred by Landlord as a result of Tenant's default, as
hereinafter provided, or (ii) to continue this Lease in effect and recover rent
and other charges and amounts as they become due.
(b) Even if Tenant has breached this Lease and abandoned the
Building, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession under subsection (a) hereof and Landlord
may enforce all of its rights and remedies under this Lease, including the right
to recover rent as it becomes due, and Landlord, without terminating this Lease,
may exercise all of the rights and remedies of a lessor under California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has right to
sublet or assign, subject only to reasonable limitations), or any successor Code
section. Acts of maintenance, preservation or efforts to relet the Building or
the appointment of a receiver upon application of Landlord to protect Landlord's
interests under this Lease shall not constitute a termination of Tenant's right
to possession.
(c) If Landlord terminates this Lease pursuant to this Section 16.2,
Landlord shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any successor
Code section, which remedies include Landlord's right to recover from Tenant (i)
the worth at the time of award of the unpaid rent and additional rent which had
been earned at the time of termination, (ii) the worth at the time of award of
the amount by which the unpaid rent and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided, (iii) the
worth at the time of award of the amount by which the unpaid rent and additional
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided, and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant's failure to perform its obligations under this Lease or which
in the ordinary course of-things would be likely to result therefrom, including,
but not limited to, the cost of recovering possession of the Building, expenses
of
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reletting, including necessary repair, renovation and alteration of the
Building, reasonable attorneys' fees, and other reasonable costs. The "WORTH AT
THE TIME OF AWARD" of the amounts referred to in clauses (i) and (ii) above
shall be computed by allowing interest at ten percent (10%) per annum from the
date such amounts accrued to Landlord. The "WORTH AT THE TIME OF AWARD" of the
amounts referred to in clause (iii) above shall be computed by discounting such
amount at one percentage point above the discount rate of the Federal Reserve
Bank of San Francisco at the time of award.
16.3 REMEDIES CUMULATIVE. All rights, privileges and elections or remedies
of Landlord contained in this Article 16 are cumulative and not alternative to
the extent permitted by law and except as otherwise provided herein.
17. SUBORDINATION, ATTORNMENT AND SALE
17.1 SUBORDINATION TO MORTGAGE. This Lease, and any sublease entered into
by Tenant under the provisions of this Lease, shall be subject and subordinate
to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Building, the
Property, the Center, or any of them, and the rights of any assignee of Landlord
or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
under any of the foregoing, and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof; PROVIDED, however, that such subordination in the case of
any future ground lease, mortgage, deed of trust, sale/leaseback transaction or
any other hypothecation for security placed upon the Building, the Property, the
Center, or any of them shall be conditioned on Tenant's receipt from the ground
lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance
Agreement in a form reasonably acceptable to Tenant (i) confirming that so long
as Tenant is not in material default hereunder beyond any applicable cure period
(for which purpose the occurrence of any event of default under Section 16.1
hereof shall be deemed to be "material"), Tenant's rights hereunder shall not be
disturbed by such person or entity and (ii) agreeing that the benefit of such
Non-Disturbance Agreement shall be transferable to any transferee under a
Permitted Transfer and to any other assignee or subtenant that is acceptable to
the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor at the
time of transfer. Moreover, Tenant's obligations under this Lease shall be
conditioned on Tenant's receipt within thirty (30) days after mutual execution
of this Lease, from (x) Slough Estates USA Inc. (as successor to Slough Parks
Incorporated), the beneficiary under an existing deed of trust on the Property,
and (y) any other ground lessor, mortgagee, trustee, beneficiary or leaseback
lessor currently owning or holding a security interest in the Property, of a
Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming
(i) that so long as Tenant is not in material default hereunder beyond any
applicable cure period (for which purpose the occurrence of any event of default
under Section 16.1 hereof shall be deemed to be "material"), Tenant's rights
hereunder shall not be disturbed by such person or entity and (ii) agreeing that
the benefit of such Non-Disturbance Agreement shall be transferable to any
transferee under a Permitted Transfer and to any other assignee or subtenant
that is acceptable to the ground lessor, mortgagee, trustee, beneficiary or
leaseback lessor at the time of transfer. If any mortgagee, trustee,
beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have
this Lease be an encumbrance upon the Property prior to the lien of its
mortgage, deed of trust, ground lease or leaseback lease or other security
arrangement and gives notice thereof to Tenant, this Lease shall be deemed prior
thereto, whether this Lease is dated prior or subsequent to the date thereof or
the date of recording thereof. Tenant, and any sublessee, shall execute such
documents as may reasonably be requested by any mortgagee, trustee, beneficiary,
ground lessor, sale/leaseback lessor or assignee to evidence the subordination
herein set forth, subject to the conditions set forth above, or to make this
Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback
lease or other security arrangement, as the case may be. Upon any default by
Landlord in the performance of its obligations under any mortgage, deed of
trust, ground lease, leaseback lease or assignment, Tenant (and any sublessee)
shall, notwithstanding any subordination hereunder, attorn to the mortgagee,
trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder
upon demand and become the tenant of the successor in interest to Landlord, at
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the option of such successor in interest, and shall execute and deliver any
instrument or instruments confirming the attornment herein provided for.
17.2 SALE OF LANDLORD'S INTEREST. Upon sale, transfer or assignment of
Landlord's entire interest in the Building and the Property, Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment.
17.3 ESTOPPEL CERTIFICATES. Tenant or Landlord (the "RESPONDING PARTY"), as
applicable, shall at any time and from time to time, within ten (10) days after
written request by the other party (the "REQUESTING PARTY"), execute,
acknowledge and deliver to the requesting party a certificate in writing
stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the date and the nature of each modification; (ii) the
date to which rental and all other sums payable hereunder have been paid; (iii)
that the requesting party is not in default in the performance of any of its
obligations under this Lease, that the certifying party has given no notice of
default to the requesting party and that no event has occurred which, but for
the expiration of the applicable time period, would constitute an event of
default hereunder, or if the responding party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and (iv)
such other matters as may reasonably be requested by the requesting party or by
any institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Property, or prospective
sublessee or assignee of this Lease. Any such certificate provided under this
Section 17.3 may be relied upon by any lender, mortgagee, trustee, beneficiary,
assignee or successor in interest to the requesting party, by any prospective
purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed
in lieu of foreclosure of any mortgage or deed of trust on the Property, by any
subtenant or assignee, or by any other third party. Failure to execute and
return within the required time any estoppel certificate requested hereunder, if
such failure continues for five (5) days after a second written request by the
requesting party for such estoppel certificate, shall be deemed to be an
admission of the truth of the matters set forth in the form of certificate
submitted to the responding party for execution.
17.4 SUBORDINATION TO CC&R'S. This Lease, and any permitted sublease
entered into by Tenant under the provisions of this Lease, and the interests in
real property conveyed hereby and thereby shall be subject and subordinate (a)
to any declarations of covenants, conditions and restrictions affecting the
Property or the Center from time to time, PROVIDED that the terms of such
declarations are reasonable, do not materially impair Tenant's ability to
conduct the uses permitted hereunder on the Property, and do not discriminate
against Tenant relative to other similarly situated tenants occupying portions
of the Center, (b) to the Declaration of Covenants, Conditions and Restrictions
for Pointe Grand Business Park dated November 4, 1991 and recorded on February
25, 1992 as Instrument No. 92025214, Official Records of San Mateo County, as
amended from time to time (the "MASTER DECLARATION"), the provisions of which
Master Declaration are an integral part of this Lease, (c) to the Declaration of
Covenants, Conditions and Restrictions dated November 23, 1987 and recorded on
November 24, 1987 as Instrument No. 87177987, Official Records of San Mateo
County, which declaration imposes certain covenants, conditions and restrictions
on the Property, and (d) to the Environmental Restriction and Covenant (Pointe
Grand) dated as of April 16, 1997 and recorded on April 16, 1997 as Instrument
No. 97-043682, Official Records of San Mateo County, which declaration imposes
certain covenants, conditions and restrictions on the Center. Tenant agrees to
execute, upon request by Landlord, any documents reasonably required from time
to time to evidence such subordination.
17.5 MORTGAGEE PROTECTION. If, following a default by Landlord under any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Building, the Property, the Center, or any of them, the
Building, the Property and/or the Center, as applicable, is acquired by the
mortgagee, beneficiary, master lessor or other secured party, or by any other
successor owner, pursuant to a foreclosure, trustee's sale, sheriffs sale, lease
termination or other-similar procedure (or deed in lieu thereof), then any such
person or entity so acquiring the Building, the Property and/or the Center shall
not be:
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(a) liable for any act or omission of a prior landlord or owner of
the Property (including, but not limited to, Landlord);
(b) subject to any offsets or defenses that Tenant may have against
any prior landlord or owner of the Property and/or the Center (including, but
not limited to, Landlord);
(c) bound by any rent or additional rent that Tenant may have paid in
advance to any prior landlord or owner of the Property and/or the Center
(including, but not limited to, Landlord) for a period in excess of one month,
or by any security deposit, cleaning deposit or other prepaid charge that Tenant
may have paid in advance to any prior landlord or owner (including, but not
limited to, Landlord), except to the extent such deposit or prepaid amount has
been expressly turned over to or credited to the successor owner thus acquiring
the Property and/or the Center, as applicable:
(d) liable for any warranties or representations of any nature
whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord
or owner of the Property and/or the Center (including, but not limited to,
Landlord) with respect to the use, construction, zoning, compliance with laws,
title, habitability, fitness for purpose or possession, or physical condition
(including, without limitation, environmental matters) of the Property, the
Building or the Center; or
(e) liable to Tenant in any amount beyond the interest of such
mortgagee, beneficiary, master lessor or other secured party or successor owner
in the Property and the Center as they exist from time to time, it being the
intent of this provision that Tenant shall look solely to the interest of any
such mortgagee, beneficiary, master lessor or other secured party or successor
owner in the Property and Center for the payment and discharge of the landlord's
obligations under this Lease and that such mortgagee, beneficiary, master lessor
or other secured party or successor owner shall have no separate personal
liability for any such obligations.
18. SECURITY
18.1 DEPOSIT. Within ten (10) days after mutual execution of this Lease,
Tenant shall deposit with Landlord the sum of One Hundred Twenty-One Thousand
Nine Hundred Twenty-Eight and No/100 Dollars ($121,928.00), which sum (the
"SECURITY DEPOSIT" shall be held by Landlord as security for the faithful
performance of all of the terms, covenants, and conditions of this Lease to be
kept and performed by Tenant during the term hereof. If Tenant defaults with
respect to any provision of this Lease, including, without limitation, the
provisions relating to the payment of rental and other sums due hereunder,
Landlord shall have the right, but shall not be required, to use, apply or
retain all or any part of the Security Deposit for the payment of rental or any
other amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or applied, Tenant shall, within ten (10) days after
written demand therefor, deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount and Tenant's failure to do
so shall be a material breach of this Lease. Landlord shall not be required to
keep any deposit under this Section separate from Landlord's general funds, and
Tenant shall not be entitled to interest thereon. If Tenant fully and faithfully
performs every provision of this Lease to be performed by it, the Security
Deposit, or any balance thereof, shall be returned to Tenant or, at Landlord's
option, to the last assignee of Tenant's interest hereunder, at the expiration
of the term of this Lease and after Tenant has vacated the Property. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer all deposits then held by Landlord under this Section to Landlord's
successor in interest, whereupon Tenant agrees to release Landlord from all
liability for the return of such deposit or the accounting thereof.
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19. MISCELLANEOUS
19.1 NOTICES. All notices, consents, waivers and other communications
which this Lease requires or permits either party to give to the other shall
be in writing and shall be deemed given when delivered personally (including
delivery by private courier or express delivery service) or four (4) days
after deposit in the United States mail, registered or certified mail,
postage prepaid, addressed to the parties at their respective addresses as
follows:
To Tenant: (until Rent Commencement Date)
Rigel, Inc.
772 Lucerne Drive
Sunnyvale, CA 94086
Attn: James M. Gower
(after Rent Commencement Date)
Rigel, Inc.
[street address to be determined]
South San Francisco, CA 94080
Attn: James M. Gower
with copy to: Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, CA 94306-2155
Attn: Anna B. Pope, Esq.
To Landlord: Britannia Pointe Grand Limited Partnership
1939 Harrison Street, Suite 715
Park Plaza Building
Oakland, CA 94612
Attn: T. J. Bristow
with copy to: Folger Levin & Kahn LLP
Embarcadero Center West
275 Battery Street, 23rd Floor
San Francisco, CA 94111
Attn: Donald E. Kelley, Jr.
and copy to: Slough Estates USA Inc.
33 West Monroe Street, Suite 2000
Chicago, IL 60603
Attn: William Rogalla
or to such other address as may be contained in a notice at least fifteen
(15) days prior to the address change from either party to the other given
pursuant to this Section. Rental payments and other sums required by this
Lease to be paid by Tenant shall be delivered to Landlord at Landlord's
address provided in this Section, or to such other address as Landlord may
from time to time specify in writing to Tenant, and shall be deemed to be
paid only upon actual receipt.
19.2 SUCCESSORS AND ASSIGNS. The obligations of this Lease shall run
with the land, and this Lease shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except
that the original Landlord named herein and each successive Landlord under
this Lease shall be liable only for obligations accruing during the period of
its ownership of the Property, and any liability for obligations accruing
after termination Of such ownership shall terminate as of the date of such
termination of ownership and shall pass to the successor lessor.
19.3 NO WAIVER. The failure of Landlord to seek redress for violation, or
to insist upon the strict performance, of any covenant or condition of this
Lease shall not be deemed at
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waiver of such violation, or prevent a subsequent act which would originally
have constituted a violation from having all the force and effect of an
original violation.
19.4 SEVERABILITY. If any provision of this Lease or the application
thereof is held to be invalid or unenforceable, the remainder of this Lease
or the application of such provision to persons or circumstances other than
those as to which it is invalid or unenforceable shall not be affected
thereby, and each of the provisions of this Lease shall be valid and
enforceable, unless enforcement of this Lease as so invalidated would be
unreasonable or grossly inequitable under all the circumstances or would
materially frustrate the purposes of this Lease.
19.5 LITIGATION BETWEEN PARTIES. In the event of any litigation or other
dispute resolution proceedings between the parties hereto arising out of or
in connection with this Lease, the prevailing party shall be reimbursed for
all reasonable costs, including, but not limited to, reasonable accountants'
fees and attorneys' fees, incurred in connection with such proceedings
(including, but not limited to, any appellate proceedings relating thereto)
or in connection with the enforcement of any judgment or award rendered in
such proceedings. "PREVAILING PARTY" within the meaning of this Section shall
include, without limitation, a party who dismisses an action for recovery
hereunder in exchange for payment of the sums allegedly due, performance of
covenants allegedly breached or consideration substantially equal to the
relief sought in the action.
19.6 SURRENDER. A voluntary or other surrender of this Lease by Tenant,
or a mutual termination thereof between Landlord and Tenant, shall not result
in a merger but shall, at the option of Landlord, operate either as an
assignment to Landlord of any and all existing subleases and subtenancies, or
a termination of all or any existing subleases and subtenancies. This
provision shall be contained in any and all assignments or subleases made
pursuant to this Lease.
19.7 INTERPRETATION. The provisions of this Lease shall be construed as
a whole, according to their common meaning, and not strictly for or against
Landlord or Tenant. The captions preceding the text of each Section and
subsection hereof are included only for convenience of reference and shall be
disregarded in the construction or interpretation of this Lease.
19.8 ENTIRE AGREEMENT. This written Lease, together with the exhibits
hereto, contains all the representations and the entire understanding between
the parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total by this Lease
and the exhibits hereto. This Lease may be modified only by an agreement in
writing signed by each of the parties.
19.9 GOVERNING LAW. This Lease and all exhibits hereto shall be
construed and interpreted in accordance with and be governed by all the
provisions of the laws of the State of California.
19.10 NO PARTNERSHIP. The relationship between Landlord and Tenant
is solely that of a lessor and lessee. Nothing contained in this Lease shall
be construed as creating any type or manner of partnership, joint venture or
joint enterprise with or between Landlord and Tenant.
19.11 FINANCIAL INFORMATION. From time to time Tenant shall promptly
provide directly to prospective lenders and purchasers of the Property and/or
Center designated by Landlord such financial information pertaining to the
financial status of Tenant as Landlord may reasonably request; PROVIDED, Tenant
shall be permitted to provide such financial information in a manner which
Tenant deems reasonably necessary to protect the confidentiality of such
information. In addition, from time to time, Tenant shall provide Landlord with
such financial information pertaining to the financial status of Tenant as
Landlord may reasonably request. Landlord agrees that all financial information
supplied to Landlord by Tenant shall be treated as confidential material, and
shall not be disseminated to any party or entity (including any entity
affiliated with Landlord) without Tenant's prior
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written consent, except that Landlord shall be entitled to provide such
information, subject to reasonable precautions to protect the confidential
nature thereof, (i) to Landlord's partners and professional advisors, solely
to use in connection with Landlord's execution and enforcement of this Lease,
and (ii) to prospective lenders and/or purchasers of the Property and/or
Center, solely for use in connection with their bona fide consideration of a
proposed financing or purchase of the Property and/or Center, PROVIDED that
such prospective lenders and/or purchasers are not then engaged in businesses
directly competitive with the business then being conducted by Tenant. For
purposes of this Section, without limiting the generality of the obligations
provided herein, it shall be deemed reasonable for Landlord to request copies
of Tenant's most recent audited annual financial statements, or, if audited
statements have not been prepared, unaudited financial statements for
Tenant's most recent fiscal year, accompanied by a certificate of Tenant's
chief financial officer that such financial statements fairly present
Tenant's financial condition as of the date(s) indicated. Notwithstanding any
other provisions of this Section 19.11, during any period in which Tenant has
outstanding a class of publicly traded securities and is filing with the
Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and
any other periodic filings required under the Securities Exchange Act of
1934, as amended, it shall constitute sufficient compliance under this
Section 19.11 for Tenant to furnish Landlord with copies of such periodic
filings substantially concurrently with the filing thereof with the
Securities and Exchange Commission.
Landlord and Tenant recognize the need of Tenant to maintain the
confidentiality of information regarding its financial status and the need of
Landlord to be informed of, and to provide to prospective lenders and
purchasers of the Property and/or Center financial information pertaining to,
Tenant's financial status. Landlord and Tenant agree to cooperate with each
other in achieving these needs within the context of the obligations set
forth in this Section.
19.12 COSTS. If Tenant requests the consent of Landlord under any
provision of this Lease for any act that Tenant proposes to do hereunder,
including, without limitation, assignment or subletting of the Building,
Tenant shall, as a condition to doing any such act and the receipt of such
consent, reimburse Landlord promptly for any and all reasonable costs and
expenses incurred by Landlord in connection therewith, including, without
limitation, reasonable attorneys' fees, up to a maximum of $2,500.00 per
request.
19.13 TIME. Time is of the essence of this Lease, and of every term
and condition hereof.
19.14 RULES AND REGULATIONS. Tenant shall observe, comply with and
obey, and shall cause its employees, agents and, to the best of Tenant's
ability, invitees to observe, comply with and obey such rules and regulations
as Landlord may promulgate from time to time for the safety, care,
cleanliness, order and use of the Improvements, the Property and the Center.
19.15 BROKERS. Landlord agrees to pay a brokerage commission to
Catalyst Real Estate Group and to Cornish & Carey Commercial in connection
with the consummation of this Lease in accordance with a separate agreement.
Each party represents and warrants that no other broker participated in the
consummation of this Lease and agrees to indemnify, defend and hold the other
party harmless against any liability, cost or expense, including, without
limitation, reasonable attorneys' fees, arising out of any claims for
brokerage commissions or other similar compensation in connection with any
conversations, prior negotiations or other dealings by the indemnifying party
with any other broker.
19.16 MEMORANDUM OF LEASE. At any time during the term of this
Lease, either party, at its sole expense, shall be entitled to record a
memorandum of this Lease and, if either party so elects, both parties agree
to cooperate in the preparation, execution, acknowledgement and recordation
of such document in reasonable form.
19.17 CORPORATE AUTHORITY. The- person signing this Lease on behalf
of Tenant warrants that he or she is fully authorized to do so and, by so
doing, to bind Tenant.
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19.18 EXECUTION AND DELIVERY. This Lease may be executed in one or
more counterparts and by separate parties on separate counterparts, but each
such counterpart shall constitute an original and all such counterparts
together shall constitute one and the same instrument.
19.19 SURVIVAL. Without limiting survival provisions which would
otherwise be implied or construed under applicable law, the provisions of
Sections 2.6, 7.4, 9.2, 9.3, 9.4, 11.6, 12.6 and 19.5 hereof shall survive
the termination of this Lease with respect to matters occurring prior to the
expiration of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first set forth above.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED RIGEL, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, By: /s/ James M. Gower
LLC, a California limited liability ---------------------------
company, General Partner Its: CEO
---------------------------
By: /s/T. J. Bristow By: /s/ Brian C. Cunningham
------------------------------- ---------------------------
Its Manager, President and Its: Secretary
Chief Financial Officer ---------------------------
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EXHIBITS
EXHIBIT A Real Property Description
EXHIBIT B Site Plan
EXHIBIT C Workletter
EXHIBIT D Estimated Construction Schedule
EXHIBIT E Acknowledgement of Rent Commencement Date
<PAGE>
EXHIBIT A
REAL PROPERTY DESCRIPTION
All that certain real property in the City of South San Francisco, County of
San Mateo, State of California, more particularly described as follows:
Lots 1, 2, 3 and 4, inclusive, as shown on Parcel Map No. 91-284, "Being a
resubdivision of the parcels described in the deeds to Metal and Thermit
Corporation, recorded in Book 293, at Page 394 of Deeds; in Book 49, at Page
490, Official Records; in Book 77, at Page 41:5, Official Records; and,
except that parcel described in Book 1352, at Page 373, Official Records,"
filed on February 25, 1992, in Book 65 of Parcel Maps, in the Office of the
Recorder of the County of San Mateo, California.
<PAGE>
EXHIBIT B
SITE PLAN
[PLAN]
<PAGE>
EXHIBIT C
WORKLETTER
This Workletter ("WORKLETTER") constitutes part of the Build-to-Suit
Lease dated as of June 2, 1998 (the "LEASE") between BRITANNIA POINTE GRAND
LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and RIGEL,
INC., a Delaware corporation ("TENANT"). The terms of this Workletter are
incorporated in the Lease for all purposes.
1. DEFINED TERMS. As used in this Workletter, the following capitalized
terms have the following meanings:
(a) APPROVED PLANS: Plans and specifications prepared by the applicable
Architect for the respective Improvements and approved by both Landlord and
Tenant in accordance with Paragraph 2 of this Workletter (subject to further
modification in accordance with such Paragraph 2).
(b) ARCHITECT: Chamorro Design Group, or any other architect selected
by Landlord in its sole discretion, with respect to the Building Shell, the
Site Improvements and any other Improvements which Landlord is to design
pursuant to this Workletter; any architect selected by Tenant with the
written approval of Landlord (which approval shall not be unreasonably
withheld or delayed), with respect to the Tenant Improvements and any other
Improvements which Tenant is to design pursuant to this Workletter.
(c) BUILDING SHELL: The shell of the Building, as more fully defined in
SCHEDULE C-1 attached to this Workletter.
(d) CHANGE ORDER: See definition in Paragraph 2(e)(ii) hereof.
(e) COST OF IMPROVEMENT: See definition in Paragraph 2(c) hereof.
(f) FINAL COMPLETION CERTIFICATE: See definition in Paragraph 3(0)
hereof.
(g) FINAL WORKING DRAWINGS: See definition in Paragraph 2(a) hereof.
(h) GENERAL CONTRACTOR: Concrete Shell Structures, Inc., or any other
general contractor selected by Landlord in its sole discretion, with respect
to Landlord's Work. The General Contractor with respect to Tenant's Work
shall be selected by Tenant, subject to Landlord's approval (not to be
unreasonably withheld or delayed), as contemplated in Paragraph 5(a) hereof.
(i) IMPROVEMENTS: The Building Shell, Site Improvements, Tenant
Improvements and other improvements shown on the Approved Plans from time to
time and to be constructed on the Property pursuant to the Lease and this
Workletter.
(j) LANDLORD DELAY: Any of the following types of delay in the
completion of construction of the Tenant Improvements:
(i) Any delay resulting from Landlord's failure to furnish, in a
timely manner, information requested by Tenant or by the Architect or General
Contractor for Tenant's Work in connection with the design or construction of
Tenant's Work, or from Landlord's failure to approve in a timely manner any
matters requiring approval by Landlord; or
(ii) Any delay of any other kind or nature caused by Landlord (or
Landlord's contractors, agents or employees) or resulting from the
performance of Landlord's Work.
<PAGE>
(k) LANDLORD'S WORK: The Building Shell and Site Improvements, and any
other Improvements which Landlord is to construct or install pursuant to this
Workletter or by mutual agreement of Landlord and Tenant from time to time.
(l) PUNCH LIST WORK: Minor corrections of construction or decoration
details, and minor mechanical adjustments, that are required in order to
cause any applicable portion of the Improvements as constructed to conform to
the Approved Plans in all material respects and that do not materially
interfere with Tenant's use or occupancy of the Building and the Property.
(m) SITE IMPROVEMENTS: The parking areas, driveways, landscaping and
other improvements to the Common Areas of the Property that are depicted on
EXHIBIT B to the Lease (as the same may be modified pursuant to the process
of development and approval of the Approved Plans) and more specifically
described in SCHEDULE C-1 attached to this Workletter.
(n) STRUCTURAL COMPLETION CERTIFICATE: See definition in Paragraph 3(a)
hereof.
(o) TENANT DELAY: Any of the following types of delay in the completion
of construction of the Building Shell:
(i) Any delay resulting from Tenant's failure to furnish, in a
timely manner, information requested by Landlord or by the Architect or
General Contractor for Landlord's Work in connection with the design or
construction of the Building Shell, or from Tenant's failure to approve in a
timely manner any matters requiring approval by Tenant;
(ii) Any delay attributable to any request by Tenant to construct
the Building Shell in an "above standard" manner, or to any use of "above
standard" Building Shell components that is necessitated by Tenant's
particular use requirements or by the contemplated Tenant's Work;
(iii) Any delay resulting from Change Orders, including any delay
resulting from the need to revise any drawings or obtain further governmental
approvals as a result of any Change Order; or
(iv) Any delay of any other kind or nature caused by Tenant (or
Tenant's contractors, agents or employees) or resulting from the performance
of Tenant's Work.
(p) TENANT IMPROVEMENTS: The improvements to or within the Building,
other than improvements constituting pan of the Building Shell, shown on the
Approved Plans from time to time and to be constructed by Tenant (except as
otherwise provided herein) pursuant to the Lease and this Workletter,
including (but not limited to) the improvements described on SCHEDULE C-2
attached to this Workletter (except to the extent any such SCHEDULE C-2
improvements constitute part of the Building Shell).
(q) TENANT'S WORK: All of the Improvements other than those
constituting Landlord's Work, and such other materials and improvements as
Tenant deems necessary or appropriate for Tenant's use and occupancy of the
Building.
(r) UNAVOIDABLE DELAYS: Delays due to acts of God, acts of public
agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy
weather, inability to obtain supplies, materials, fuels or permits, delays of
contractors or subcontractors, or other causes or contingencies beyond the
reasonable control of Landlord or Tenant, as applicable.
(s) WORK DEADLINES: The target dates for performance by the applicable
party of the steps listed in the Estimated Construction Schedule attached as
EXHIBIT D to the Lease.
(t) Capitalized terms not otherwise defined in this Workletter shall have
the definitions set forth in the Lease.
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2. PLANS, COST OF IMPROVEMENTS AND CONSTRUCTION. Landlord and Tenant shall
comply with the procedures set forth in this Paragraph 2 in preparing,
delivering and approving matters relating to the Improvements.
(a) APPROVED PLANS AND WORKING DRAWINGS FOR LANDLORD'S WORK. Landlord
shall promptly and diligently (and in all events prior to any applicable Work
Deadlines, subject to Tenant Delays and Unavoidable Delays) cause to be
prepared and delivered to Tenant, for approval, plans and specifications for
the Improvements constituting Landlord's Work. Following mutual approval of
such plans and specifications, Landlord shall then cause to be prepared and
delivered to Tenant, on or before the applicable Work Deadline (assuming
timely delivery by Tenant of all information, decisions and drawings required
to be furnished or made by Tenant in order to permit complete preparation of
plans and drawings), final working drawings and specifications for the
Improvements constituting Landlord's Work, including structural, fire
protection, life safety, mechanical and electrical working drawings and final
architectural drawings (collectively, "LANDLORD'S FINAL WORKING DRAWINGS").
Landlord's Final Working Drawings shall substantially conform to the Approved
Plans. Landlord's obligation to deliver Landlord's Final Working Drawings to
Tenant within the time period set forth above shall be extended for any delay
encountered by Landlord as a result of a request by Tenant for changes in
accordance with the procedure set forth below, any other Tenant Delays, or
any Unavoidable Delays. No later than the applicable Work Deadline (assuming
timely delivery of plans and drawings by Landlord), Tenant shall either
approve Landlord's Final Working Drawings or set forth in writing with
particularity any changes necessary to bring Landlord's Final Working
Drawings into substantial conformity with the Approved Plans or into a form
which will be acceptable to Tenant. In no event, however, shall Tenant have
the right to object to any aspect of the proposed plans and specifications or
proposed Landlord's Final Working Drawings for Landlord's Work (including,
but not limited to, any change from the Approved Plans) that is necessitated
by applicable law, or to any aspect of such proposed plans and specifications
or proposed Landlord's Final Working Drawings that relates to the Building
Shell or Site Improvements, although Landlord agrees to consult with Tenant
and to give reasonable consideration to Tenant's views regarding functional
characteristics of the Building Shell and Site Improvements. Failure of
Tenant to deliver to Landlord written notice of disapproval and specification
of required changes on or before the applicable Work Deadline shall
constitute and be deemed to be approval of Landlord's Final Working Drawings.
Upon approval, actual or deemed, of Landlord's Final Working Drawings by
Landlord and Tenant, Landlord's Final Working Drawings shall be deemed to be
incorporated in and considered part of the Approved Plans, superseding (to
the extent of any inconsistencies) any inconsistent features of the
previously existing Approved Plans.
(b) APPROVED PLANS AND WORKING DRAWINGS FOR TENANT'S WORK. Tenant shall
promptly and diligently (and in all events prior to any applicable Work
Deadlines, subject to Landlord Delays and Unavoidable Delays) cause to be
prepared and delivered to Landlord, for approval, plans and specifications
for the Improvements constituting Tenant's Work. Following mutual approval of
such plans and specifications, Tenant shall then cause to be prepared and
delivered to Landlord final working drawings and specifications for the
Improvements constituting Tenant's Work, including any applicable life
safety, mechanical and electrical working drawings and final architectural
drawings (collectively, "TENANT'S FINAL WORKING DRAWINGS"). Tenant's Final
Working Drawings shall substantially conform to the Approved Plans. Landlord
shall either approve Tenant's Final Working Drawings or set forth in writing
with particularity any changes necessary to bring Tenant's Final Working
Drawings into substantial conformity with the Approved Plans or into a form
which will be acceptable to Landlord. Upon approval of Tenant's Final Working
Drawings by Landlord and Tenant, Tenant's Final Working Drawings shall be
deemed to be incorporated in and considered part of the Approved Plans,
superseding (to the extent of any inconsistencies) any inconsistent features
of the previously existing Approved Plans.
(c) COST OF IMPROVEMENTS. "COST OF IMPROVEMENT" shall mean, with
respect to any item or component for which a cost must be determined in order
to allocate such cost, or an increase in such cost, to Landlord and/or Tenant
pursuant to this Workletter, the sum of the following (unless otherwise
agreed in writing by Landlord and Tenant with respect to any
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specific item or component or any category of items or components): (i) all
sums paid to contractors or subcontractors for labor and materials furnished
in connection with construction of such item or component; (ii) all costs,
expenses, payments, fees and charges (other than penalties) paid or incurred
to or at the direction of any city, county or other governmental or
quasi-governmental authority or agency which are required to be paid in order
to obtain all necessary governmental permits, licenses, inspections and
approvals relating to construction of such item or component;
(iii) engineering and architectural fees for services rendered in connection
with the design and construction of such item or component (including, but
not limited to, the applicable Architect for such item or component and an
electrical engineer, mechanical engineer and civil engineer); (iv) sales and
use taxes; (v) testing and inspection costs; (vi) the cost of power, water
and other utility facilities and the cost of collection and removal of debris
required in connection with construction of such item or component; and (vii)
all other "hard" costs incurred in the construction of such item or component
in accordance with the Approved Plans and this Workletter. Cost of
Improvement shall not include any project management fee relating to the
construction of such item or component.
(d) CONSTRUCTION OF LANDLORD'S WORK. Promptly. following approval of
Landlord's Final Working Drawings, Landlord shall apply for and use
reasonable efforts to obtain the necessary permits and approvals to allow
construction of all Improvements constituting Landlord's Work. Upon receipt
of such permits and approvals, Landlord shall, at Landlord's sole expense
(except as otherwise provided in the Lease or in this Workletter), diligently
construct and complete the Improvements constituting Landlord's Work
substantially in accordance with the Approved Plans, subject to Unavoidable
Delays and Tenant Delays (if any). Such construction shall be performed in a
neat and workmanlike manner and shall conform to all applicable governmental
codes, laws and regulations in force at the time such work is completed.
Landlord shall have the right, in its sole discretion, to decide whether and
to what extent to use union labor on or in connection with Landlord's Work
and shall use the General Contractor specified in Paragraph l(h) to construct
all Improvements constituting Landlord's Work.
(e) CHANGES.
(i) If Landlord determines at any time that changes in Landlord's
Final Working Drawings or in any other aspect of the Approved Plans relating
to any item of Landlord's Work are required as a result of applicable law or
governmental requirements, or at the insistence of any other third party
whose approval, may be required with respect to the Improvements, or as a
result of unanticipated conditions encountered in the course of construction,
then Landlord shall promptly (A) advise Tenant of such circumstances and (B)
cause revised Approved Plans and/or Landlord's Final Working Drawings, as
applicable, reflecting such changes to be prepared by Architect and, to the
extent such changes relate to items other than the Building Shell or Site
Improvements, submitted to Tenant for approval in accordance with the
procedure contemplated in Paragraph 2(a) hereof. Upon final approval of
revised drawings by Landlord and Tenant (if applicable), Landlord's Final
Working Drawings and/or Approved Plans shall be deemed to be modified
accordingly.
(ii) If Tenant at any time desires any changes, alterations or
additions to the Approved Plans or Landlord's Final Working Drawings with
respect to any of Landlord's Work, Tenant shall submit a detailed written
request to Landlord specifying such changes, alterations or additions (a
"CHANGE ORDER"). Upon receipt of any such request, Landlord shall promptly
notify Tenant of (A) whether the matters proposed in the Change Order are
approved by Landlord (which approval shall not be unreasonably withheld), (B)
Landlord's estimate of the number of days of delay, if any, which shall be
caused by such Change Order if implemented (including, without limitation,
delays due to the need to obtain any revised plans or drawings and any
governmental approvals), and (C) Landlord's estimate of the increase, if any,
which shall occur in the Cost of Improvement for the items or components
affected by such Change Order if such Change Order is implemented (including,
but not limited to, any costs of compliance with laws or governmental
regulations that become applicable because of the requested Change Order). If
Tenant notifies Landlord in writing, within five (5) business days after
receipt of such notice from Landlord, of Tenant's approval of the Change
Order (including
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the estimated delays and cost increases, if any, described in Landlord's
notice), then Landlord shall cause Such Change Order to be implemented and
Tenant shall be responsible for all costs or cost increases resulting from or
attributable to the Change Order, subject to the provisions of Paragraph 4
hereof. If Tenant fails to notify Landlord in writing of Tenant's approval of
such Change Order within said five (5) business day period, then such Change
Order shall be deemed to be withdrawn and shall be of no further effect.
3. COMPLETION.
(a) When Landlord receives written certification from Architect that
construction of the foundation, structural slab on grade, underslab plumbing
work, structural steel framework, decking and concrete on second floor, roof
structure and installation of main fire sprinkler lines in the Building have
been completed in accordance with the Approved Plans, Landlord shall prepare
and deliver to Tenant a certificate signed by both Landlord and Architect
(the "STRUCTURAL COMPLETION CERTIFICATE") certifying that the construction of
such portions of the Building has been substantially completed in accordance
with the Approved Plans in all material respects and specifying the date of
that completion. The delivery of such Structural Completion Certificate shall
commence the running of the 6-month time period until the Rent Commencement
Date under Section 2.1 of the Lease.
(b) When Landlord receives written certification from Architect that
construction of the remaining Improvements constituting Landlord's Work has
been completed in accordance with the Approved Plans (except for Punch List
Work), Landlord shall prepare and deliver to Tenant a certificate signed by
both Landlord and Architect (the "FINAL COMPLETION CERTIFICATE") certifying
that the construction of the remaining Improvements constituting Landlord's
Work has been substantially completed in accordance with the Approved Plans
in all material respects, subject only to completion of Punch List Work, and
specifying the date of that completion. Upon receipt by Tenant of the Final
Completion Certificate, the Improvements constituting Landlord's Work will be
deemed delivered to Tenant for all purposes of the Lease (subject to
Landlord's continuing obligations with respect to the Punch List Work).
(c) Notwithstanding any other provisions of this Workletter or of the
Lease, if Landlord is delayed in substantially completing any of Landlord's
Work necessary for issuance of the Structural Completion Certificate as a
result of any Tenant Delay, then the 6-month period between the delivery of
the Structural Completion Certificate and the Rent Commencement Date pursuant
to Section 2.1 of the Lease shall be reduced, day for day, by the number of
days by which such Tenant Delay delayed completion of the portions of
Landlord's Work necessary for issuance of the Structural Completion
Certificate, and Tenant shall reimburse Landlord in cash, within fifteen (15)
days after written demand by Landlord (accompanied by reasonable
documentation of the items claimed), for any increased construction-related
costs and expenses incurred by Landlord as a result of the Tenant Delay.
(d) At any time within thirty (30) days after delivery of the
Structural Completion Certificate or the Final Completion Certificate, as
applicable, Tenant shall be entitled to submit one or more lists to Landlord
specifying Punch List Work to be performed on the applicable Improvements
constituting Landlord's Work, and upon receipt of such list(s), Landlord
shall diligently complete such Punch List Work at Landlord's sole expense. In
the event of any dispute as to completion of any item or component of
Landlord's Work, the certificate of the applicable Architect shall be
conclusive. Promptly after Landlord provides Tenant with the Final Completion
Certificate, Landlord shall cause the recordation of a Notice of Completion
(as defined in Section 3093 of the California Civil Code) with respect to
Landlord's Work.
4. PAYMENT OF COSTS.
(a) LANDLORD'S WORK. Except as otherwise expressly provided in this
Workletter (including, but not limited to, the cost allocations set forth in
SCHEDULE C-2 attached hereto) or by mutual written agreement of Landlord and
Tenant, the cost of construction of Landlord's Work shall be borne by
Landlord at its sole cost and expense, including any costs or cost increases
incurred as a result of Unavoidable Delays, governmental requirements or
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<PAGE>
unanticipated conditions; PROVIDED, however, that notwithstanding any other
provisions of this Paragraph 4(a), to the extent the Cost of Improvement
relating to the construction of any item or component of Landlord's Work is
increased as a result of any permitted Change Order or any Tenant Delay, or
as a result of any "above standard" Building Shell components requested by
Tenant or otherwise necessitated by Tenant's particular use requirements or
by the contemplated Tenant's Work, or as a result of any other plan changes
or compliance costs attributable to Tenant's particular use requirements or
to the contemplated Tenant's Work, the amount of the increase in the Cost of
Improvement with respect to such item or component shall be reimbursed by
Tenant to Landlord in cash or, by mutual agreement of Landlord and Tenant,
may be deducted from Landlord's maximum obligation under Paragraph 4(b) with
respect to the cost of Tenant's Work.
(b) TENANT'S WORK. Except as otherwise expressly provided in this
Workletter (including, but not limited to, the cost allocations set forth in
SCHEDULE C-2 attached hereto) or by mutual written agreement of Landlord and
Tenant, the cost of construction of the Tenant Improvements shall be borne
eighty percent (80%) by Landlord and twenty percent (20%) by Tenant, up to a
maximum Landlord's obligation of $115.00 per square foot of space in the
Building (measured in accordance with Section 3.l(d) of the Lease), equating
to a total Cost of Improvements for the Tenant Improvements of $143.75 per
square foot. Tenant shall be responsible, at its sole cost and expense, for
payment of twenty percent (20%) of the first $143.75 per square foot of the
Cost of Improvements of the Tenant Improvements, for the entire Cost of
Improvements of the Tenant Improvements in excess of $143.75 per square foot
(if any such excess occurs) and for the entire cost of any Tenant's Work that
is not part of the Tenant Improvements, including (but not limited to), in
each case, any costs or cost increases incurred as a result of Unavoidable
Delays, governmental requirements or unanticipated conditions. The rental
schedule set forth in Section 3.1(a) of the Lease is NOT subject to
adjustment based on the Cost of Improvements of the Tenant Improvements,
regardless of whether the final Cost of Improvements for the Tenant
Improvements uses the entire tenant improvement allowance of $115.00 per
square foot that Landlord has agreed to make available as set forth above or
is less than that amount. The timing, conditions and other procedures for
payment or disbursement of Landlord's share of the cost of the Tenant
Improvements (up to the maximum amount specified above) shall be subject to
mutual agreement of Landlord, Tenant and Landlord's lender (if any). To the
extent the Cost of Improvement with respect to the Tenant Improvements
exceeds $143.75 per square foot (reduced by 125% of any amounts deducted
from Landlord's maximum payment obligation as a result of the final sentence
of Paragraph 4(a) hereof), whether as a result of Change Orders, Tenant
Delays and/or Unavoidable Delays or otherwise, the amount of such excess
shall in all events be Tenant's sole responsibility and expense.
5. TENANT'S WORK. On or before the applicable Work Deadline (subject to
Landlord Delays and Unavoidable Delays, if any), Tenant shall construct and
install in the Building the Tenant's Work, substantially in accordance with
the Approved Plans or, with respect to Tenant's Work not shown on the
Approved Plans, substantially in accordance with plans and specifications
prepared by Tenant and approved in writing by Landlord (which approval shall
not be unreasonably withheld or delayed). Tenant's Work shall be performed in
accordance with, and shall in all respects be subject to, the terms and
conditions of the Lease (to the extent not inconsistent with this
Workletter), and shall also be subject to the following conditions:
(a) CONTRACTOR REQUIREMENTS. The contractor engaged by Tenant for
Tenant's Work, and any subcontractors, shall be duly licensed in California
and shall be subject to Landlord's prior written approval, which approval
shall not be unreasonably withheld or delayed. Tenant shall engage only union
contractors for the construction of Tenant's Work and for the installation of
Tenant's fixtures and equipment in the Building, and shall require all such
contractors engaged by Tenant, and all of their subcontractors, to use only
union labor on or in connection with such work, except to the extent Landlord
determines, in its reasonable discretion, that the use of non-union labor
would not create a material risk of labor disputes, picketing or work
interruptions at the Site, in which event Landlord shall, to that extent,
waive such union labor requirement.
-6-
<PAGE>
(b) COSTS AND EXPENSES OF TENANT'S WORK. Subject to Landlord's payment
or reimbursement obligations under Paragraph 4(b) hereof with respect to
Landlord's share of the Cost of Improvements for the Tenant Improvements,
Tenant shall promptly pay all costs and expenses arising out of the
performance of Tenant's Work (including the costs of permits) and shall
furnish Landlord with evidence of payment on request. Tenant shall provide
Landlord with ten (10) days' prior written notice before commencing any
Tenant's Work. On completion of Tenant's Work, Tenant shall deliver to
Landlord a release and waiver of lien executed by each contractor,
subcontractor and materialman involved in the performance of Tenant's Work.
(c) INDEMNIFICATION. Tenant shall indemnify, defend (with counsel
satisfactory to Landlord) and hold Landlord harmless from all suits, claims,
actions, losses, costs and expenses (including, but not limited to, claims
for workers' compensation, attorneys' fees and costs) based on personal
injury or property damage or contract claims (including, but not limited to,
claims for breach of warranty) arising from the performance of Tenant's Work.
Tenant shall repair or replace or, at Landlord's election, reimburse Landlord
for the cost of repairing or replacing) any portion of the Improvements
and/or any of Landlord's real or personal property or equipment that is
damaged, lost or destroyed in the course of or in connection with the
performance of Tenant's Work.
(d) INSURANCE. Tenant's contractors shall obtain and provide to
Landlord certificates evidencing workers' compensation, public liability and
property damage insurance in amounts and forms and with companies
satisfactory to Landlord.
(e) RULES AND REGULATIONS. Tenant and Tenant's contractors shall comply
with any other rules, regulations and requirements that Landlord or General
Contractor may reasonably impose with respect to the performance of Tenant's
Work. Tenant's agreement with Tenant's contractors shall require each
contractor to provide daily cleanup of the construction area to the extent
that such cleanup is necessitated by the performance of Tenant's Work.
(f) EARLY ENTRY. Landlord shall permit entry of contractors into the
Building for the purposes of performing Tenant's Work, subject to
satisfaction of the conditions set forth in the Lease. This license to enter
is expressly conditioned on the contractor(s) retained by Tenant working in
harmony with, and not interfering with, the workers, mechanics and
contractors of Landlord. If at any time the entry or work by Tenant's
contractor(s) causes any material interference with the workers, mechanics or
contractors of Landlord, permission to enter may be withdrawn by Landlord
immediately on written notice to Tenant.
(g) RISK OF LOSS. All materials, work, installations and decorations of
any nature brought onto or installed in the Building, by or at the direction
of Tenant or in connection with the performance of Tenant's Work, before the
commencement of the Term shall be at Tenant's risk, and neither Landlord nor
any party acting on Landlord's behalf shall be responsible for any damage,
loss or destruction thereof.
(h) CONDITION OF TENANT'S WORK. All work performed by Tenant shall be
performed in a good and workmanlike manner, shall be free from defects in
design, materials and workmanship, and shall be completed in compliance with
the plans approved by Landlord for such Tenant's Work in all material
respects and in compliance with all applicable governmental laws, ordinances,
codes and regulations in force at the time such work is completed.
6. NO AGENCY. Nothing contained in this Workletter shall make or constitute
Tenant as the agent of Landlord.
7. SURVIVAL. Without limiting survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Paragraph 5(c)
of this Workletter shall survive the termination of the Lease with respect to
matters occurring prior to expiration of the Lease.
8. MISCELLANEOUS. All references in this Workletter to a number of days shall
be construed to refer to calendar days, unless otherwise specified herein. In
all instances where Tenant's approval is required, if no written notice of
disapproval is given within the applicable time
-7-
<PAGE>
period, at the end of that period Tenant shall be deemed to have given
approval and the next succeeding time period shall commence. If any item
requiring approval is disapproved by Tenant in a timely manner, the procedure
for preparation of that item and approval shall be repeated.
IN WITNESS WHEREOF, the parties have executed this Workletter
concurrently with and as of the date of the Lease.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED RIGEL, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, By: /s/ James M. Gower
LLC, a California limited liability -------------------------
company, General Partner James M. Gower
Its: CEO
-------------------------
By: /s/ T. J. Bristow
------------------------- By: /s/ Brian C. Cunningham
T. J. Bristow -------------------------
Its Manager, President and Its: Secretary
Chief Financial Officer -------------------------
-8-
<PAGE>
EXHIBIT E
ACKNOWLEDGEMENT OF RENT COMMENCEMENT DATE
This Acknowledgement is executed as of _______,1999, by BRITANNIA POINTE
GRAND LIMITED PARTNERSHIP a Delaware limited partnership ("LANDLORD"), and
RIGEL, INC., a Delaware corporation ("TENANT"), pursuant to Section 2.4 of
the Build-to-Suit Lease dated June 2, 1998 between Landlord and Tenant (the
"LEASE") covering premises located at ___________, South San Francisco, CA
94080 (the "PROPERTY")
Landlord and Tenant hereby acknowledge and agree as follows:
1. The Rent Commencement Date under the Lease is ___________, 1999.
2. The termination date under the Lease shall be ______ 2016, subject
to any applicable provisions of the Lease for extension or early termination
thereof.
3. The square footage of the Building, as finally designed and built,
measured in accordance with Section 3.1(d) of the Lease, is ________ square
feet.
4. Tenant accepts the Building and acknowledges the satisfactory
completion of all Improvements therein required to be made by Landlord,
subject only to (a) any applicable "punch list" or similar procedures
specifically provided under the Lease or under the Workletter governing such
work, and (b) Landlord's warranties and representations set forth in Section
5.2 of the Lease.
EXECUTED as of the date set forth above.
"Landlord" "Tenant"
BRITANNIA POINTE GRAND LIMITED RIGEL, INC., a Delaware corporation
PARTNERSHIP, a Delaware limited
partnership
By: BRITANNIA POINTE GRAND, By:
LLC, a California limited liability ------------------------
company, General Partner James M. Gower
Its: CEO
By: ------------------------
----------------------------- By:
T. J. Bristow -------------------------
Its Manager, President and Its:
Chief Financial Officer -----------------------
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated February 19,
1999, in the Registration Statement (Form S-1) and related Prospectus of Rigel
Pharmaceuticals, Inc. for the registration of its common stock.
Palo Alto, California /s/ ERNST & YOUNG LLP
February 3, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR THE PERIOD FROM INCEPTION (JUNE 14, 1996) TO DECEMBER
31, 1997, FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE UNAUDITED FINANCIAL
STATEMENTS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS YEAR 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 SEP-30-1998 SEP-30-1999
<PERIOD-START> JUN-14-1996 JAN-01-1998 JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 SEP-30-1998 SEP-30-1999
<CASH> 9,144 9,493 0 7,192
<SECURITIES> 0 0 0 0
<RECEIVABLES> 0 0 0 1,160
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 9,248 9,605 0 8,695
<PP&E> 1,932 3,218 0 8,387
<DEPRECIATION> 0 0 0 0
<TOTAL-ASSETS> 11,330 12,956 0 17,161
<CURRENT-LIABILITIES> 1,139 5,697 0 7,426
<BONDS> 0 0 0 0
0 0 0 0
16 19 0 22
<COMMON> 3 3 0 3
<OTHER-SE> 14,449 21,676 0 32,376
<TOTAL-LIABILITY-AND-EQUITY> 8,819 5,445 0 4,055
<SALES> 0 0 0 0
<TOTAL-REVENUES> 0 28 0 5,898
<CGS> 0 0 0 0
<TOTAL-COSTS> 5,734 10,522 6,926 13,707
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 85 (110) 117 (120)
<INCOME-PRETAX> 0 0 0 0
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> 0 0 0 0
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (5,649) (10,604) (6,809) (7,929)
<EPS-BASIC> 0 0 0 0
<EPS-DILUTED> 0 (.58) 0 (.34)
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