<PAGE>
As filed with the Securities and Exchange Commission on January 27, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
INTRABIOTICS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 2834 94-3200380
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
----------------
1255 Terra Bella Avenue
Mountain View, CA 94043
(650) 526-6800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------
Kenneth J. Kelley
President and Chief Executive Officer
IntraBiotics Pharmaceuticals, Inc.
1255 Terra Bella Avenue
Mountain View, CA 94043
(650) 526-6800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
Copies to:
<TABLE>
<S> <C>
Robert L. Jones Patrick T. Seaver
Laura A. Berezin Charles K. Ruck
COOLEY GODWARD LLP LATHAM & WATKINS
Five Palo Alto Square 650 Town Center Drive
3000 El Camino Real 20(th) Floor
Palo Alto, CA 94306-2155 Costa Mesa, CA 92626
(650) 843-5000 (714) 540-1235
</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>
Title of Securities Proposed Maximum Aggregate Amount of
to be Registered Offering Price(1)(2) Registration Fee
<S> <C> <C>
Common Stock, $.001 par value............ $90,000,000 $23,760
</TABLE>
(1) Includes shares of common stock issuable upon exercise of the
underwriter's 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.
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 preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission becomes effective. This preliminary
prospectus is not an offer to sell these securities nor does it seek offers to
buy these securities in any jurisdiction where the offer or sale is not
permitted.
<PAGE>
Subject to Completion, Dated , 2000
[LOGO]
Shares
Common Stock
This is the initial public offering of IntraBiotics Pharmaceuticals, Inc. and we
are offering shares of our common stock. We anticipate that the
initial public offering price will be between $ and $ per share. We
have applied to list our common stock on the Nasdaq National Market under the
symbol "IBPI."
Investing in our common stock involves risks. See "Risk Factors" beginning on
page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions IntraBiotics
<S> <C> <C> <C>
Per Share $ $ $
Total $ $ $
</TABLE>
We have granted the underwriters the right to purchase up to
additional shares to cover over-allotments.
Deutsche Banc Alex. Brown
Warburg Dillon Read LLC
SG Cowen
Adams, Harkness & Hill, Inc.
The date of this prospectus is , 2000
<PAGE>
[This graphic will include the company logo, 3 bullet points that address our
research interests, and a bar chart which shows the current stage of development
for each of our development programs.]
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY MAY NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD CAREFULLY READ THE
ENTIRE PROSPECTUS, INCLUDING "RISK FACTORS" AND THE FINANCIAL STATEMENTS, BEFORE
MAKING AN INVESTMENT DECISION.
OUR BUSINESS
IntraBiotics Pharmaceuticals, Inc. develops and intends to commercialize new
antibacterial and antifungal drugs for the prevention or treatment of serious
infectious diseases. We are about to begin phase III clinical trials for our two
lead product candidates, Ramoplanin Oral and Protegrin IB-367 Rinse. We recently
obtained statistically significant data from phase II clinical trials that
indicate each of these products was well tolerated and support further efficacy
trials. Our new antibiotics may solve medical problems for patients who
currently have few or no satisfactory alternatives. Since these antibiotics kill
bacteria and fungi in new ways, they may be particularly useful in fighting
multi-drug resistant bacteria that cannot be killed with currently available
antibiotics. The increasing incidence of multi-drug resistant bacterial
infections has created a global health care problem, commonly referred to as the
antibiotics crisis.
OUR PRODUCT PORTFOLIO
Ramoplanin is an antibacterial drug that selectively kills certain types of
bacteria, including one of the most problematic, multi-drug resistant types,
called vancomycin resistant enterococci, or VRE. This strain of bacteria is
particularly difficult to treat, as it is resistant to the most commonly
prescribed antibiotics, including one of the most powerful, vancomycin. Because
of this resistance, patients with VRE bloodstream infections are twice as likely
to die as patients with infections caused by the non-resistant strain. In
addition, VRE infections are expensive to treat, generating incremental costs
estimated at $86,000 per case. The incidence of this strain of bacteria is
increasing rapidly in U.S. hospitals, creating a significant and widely
acknowledged public health problem.
We are developing Ramoplanin Oral for the elimination of VRE in the
intestines of hospitalized patients to prevent VRE from crossing over into the
bloodstream and causing bloodstream infections. We recently completed a
phase II trial indicating that the drug was well tolerated and was effective in
reducing VRE in the patients' intestines. We are now preparing to start our
phase III trial that, if successful, would demonstrate Ramoplanin Oral's ability
to prevent VRE bloodstream infections. We hold the exclusive rights to this drug
in the U.S. and Canada through licensed patents and trade secrets.
Protegrin IB-367 is a new antibiotic that rapidly kills many types of
bacteria and fungi. We are developing Protegrin IB-367 Rinse for oral mucositis,
a condition characterized by painful mouth ulcers that often form as a side
effect of cancer therapies. Patients often identify oral mucositis as the single
most troublesome side effect of cancer therapy. In severe cases of oral
mucositis, patients may not be able to eat and may have to discontinue or reduce
cancer treatment because of the pain. Oral mucositis often requires additional
patient care, including extended hospitalization, estimated at between $4,500
and $20,000 per case.
We recently completed a phase II trial indicating the drug was well
tolerated, appeared not to be absorbed into the bloodstream from the mouth and
reduced the severity of oral mucositis. To our knowledge, Protegrin IB-367 Rinse
is the first drug to successfully reduce the severity of oral mucositis in a
phase II trial. We are about to begin phase III trials of Protegrin IB-367 Rinse
that, if successful, will demonstrate a reduction in severity of oral mucositis.
We hold exclusive worldwide rights to this drug.
1
<PAGE>
In addition to Ramoplanin Oral and Protegrin IB-367 Rinse, we are about to
begin phase I trials with two other clinical uses and formulations of Protegrin
IB-367. We have three other antibiotic compounds at the preclinical research
stage. Our current product portfolio is presented below.
[Chart showing the clinical development stages for the Company's product
portfolio.]
OUR BUSINESS STRATEGY
We pursue parallel development of product candidates at various stages to
maximize the probability for successful product commercialization. Our
development programs focus on significant unmet medical needs that we believe
provide substantial commercial opportunity and limited competition. We have
in-licensed five antibiotic compounds or technologies, and we intend to continue
to pursue attractive in-licensing opportunities to add breadth and depth to our
research and development portfolio. We are evaluating new formulations and
clinical uses for our product candidates as well.
We plan to market and sell our products, if they receive FDA approval, in
the U.S. through a direct sales force focused on major hospitals. We believe
that a relatively small sales force will initially be effective, as our first
two products target oncology-related indications treated by roughly the same
physician group. This sales force may also be used to market and sell our future
products. We intend to license our foreign product rights to other
pharmaceutical companies to commercialize our products abroad.
2
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered by IntraBiotics.........
Common stock to be outstanding upon
completion of this offering................
Use of proceeds.............................. Clinical trials, development and scale-up of
manufacturing processes by our contract
manufacturers, research and development
activities, acquisition of new technologies
or products, working capital and other
general corporate purposes. See "Use of
Proceeds."
Proposed Nasdaq National Market Symbol....... IBPI
</TABLE>
The number of shares of common stock to be outstanding upon completion of
this offering is based on the number of shares outstanding as of December 31,
1999 and excludes:
- 3,746,896 shares of common stock issuable upon exercise of outstanding
options at a weighted average exercise price of $1.16 per share;
- 677,000 shares of common stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $9.50 per share; and
- 123,501 shares of common stock available for issuance under our stock plan
as of December 31, 1999, and 5,500,000 additional shares of common stock
that were approved for issuance under stock plans after December 31, 1999.
------------------------
UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS ASSUMES:
- THE CONVERSION OF ALL OUTSTANDING SHARES OF PREFERRED STOCK INTO COMMON
STOCK UPON THE CLOSING OF THIS OFFERING;
- A 1-FOR-2 REVERSE STOCK SPLIT OF OUR COMMON STOCK TO BE COMPLETED PRIOR TO
THE OFFERING; AND
- NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.
3
<PAGE>
Summary Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Revenues.................................... $ -- $ -- $ 5,507 $ 6,357 $ 7,863
Operating expenses:
Research and development.................. 2,181 4,049 8,103 21,997 26,102
General and administrative................ 682 949 1,960 2,533 6,082
------- ------- ------- -------- --------
Total operating expenses................ 2,863 4,998 10,063 24,530 32,184
------- ------- ------- -------- --------
Operating loss............................ (2,863) (4,998) (4,556) (18,173) (24,321)
Interest income, net........................ 41 182 481 791 1,206
------- ------- ------- -------- --------
Net loss.................................. $(2,822) $(4,816) $(4,075) $(17,382) $(23,115)
======= ======= ======= ======== ========
Basic and diluted net loss per share........ $(14.25) $(11.92) $ (6.39) $ (20.89) $ (21.62)
======= ======= ======= ======== ========
Shares used in computing basic and diluted
net loss per share........................ 198 404 638 832 1,069
======= ======= ======= ======== ========
Pro forma basic and diluted net loss
per share................................. $ (1.27)
========
Shares used in computing pro forma basic and
diluted net loss per share................ 18,172
========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
---------------------------
Actual As Adjusted (1)
-------- ----------------
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and short-term investments......... $31,429 $
Working capital........................................... 25,743
Total assets.............................................. 35,958
Long-term obligations, less current portion............... 1,725 1,725
Deferred stock compensation............................... (12,650) (12,650)
Accumulated deficit....................................... (52,874) (52,874)
Total stockholders' equity................................ 27,914
</TABLE>
- ------------------------
(1) The as adjusted column reflects the sale of shares of our common stock
in the public offering at an assumed initial public offering price of $
per share, after deducting the underwriting discounts and commissions and
estimated offering expenses.
We were incorporated in Delaware in 1994. Our executive offices and
laboratories are located at 1255 Terra Bella Avenue, Mountain View, California,
94043. Our telephone number is (650) 526-6800 and our web site is
www.IntraBiotics.com. The information on our website is not part of this
prospectus.
4
<PAGE>
RISK FACTORS
ANY INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CONSIDER CAREFULLY THE FOLLOWING INFORMATION ABOUT THESE RISKS, TOGETHER
WITH THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE YOU DECIDE
WHETHER TO BUY OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR,
OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD SUFFER
SIGNIFICANTLY. IN ANY SUCH CASE, THE MARKET PRICE OF OUR COMMON STOCK COULD
DECLINE, AND YOU MAY LOSE ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON
STOCK.
Risks Related to Our Business
Clinical trials for our drug candidates will be expensive and their outcome is
uncertain.
Before obtaining regulatory approvals for the commercial sale of any
products, we must demonstrate through preclinical research and clinical trials
that our drug candidates are safe and effective for use in humans. Conducting
clinical trials is a time-consuming and expensive process, and the outcome of
these trials is uncertain. If any of our clinical trials do not demonstrate
safety and efficacy, we would be unable to obtain regulatory approval from the
FDA for that product.
Any clinical trial may fail to produce results satisfactory to the FDA.
Preclinical and clinical data can be interpreted in different ways. A number of
new drugs have shown promising results in clinical trials, but subsequently
failed to establish sufficient safety and efficacy data to obtain necessary
regulatory approvals. A number of companies have suffered significant setbacks
in advanced clinical trials, even after promising results in earlier trials. We
currently have two drug candidates which have completed phase II clinical
trials, Ramoplanin Oral and Protegrin IB-367 Rinse. If either drug candidate
fails to establish safety and efficacy in phase III clinical trials, we would be
unable to commercialize the drug candidate, and our business will be harmed and
our future profitability, if achieved, will be significantly delayed.
Timing of the completion of our clinical trials and receipt of FDA approvals is
uncertain, and any delays may affect our ability to become profitable.
Completion of clinical trials may take several years or more. Our product
development costs will increase if we have delays in trials or the FDA approval
process or if we need to perform more or larger clinical trials.
Our commencement and completion of clinical trials may be delayed by many
factors, including:
- slower than expected rate of patient recruitment;
- inability to adequately obtain data about patients after their treatment;
- inability to manufacture sufficient quantities of materials used for
clinical trials;
- unforeseen safety issues; or
- inability to show efficacy with statistical significance during the
clinical trials.
If the delays are substantial, our financial results and the commercial
potential for our drug candidates could be harmed, and our ability to become
profitable will be impaired.
5
<PAGE>
We have limited experience with clinical trials and rely on assistance from
collaborative partners.
We have limited experience in conducting and managing clinical trials. We
rely on third parties, including our collaborative partners, to assist us in
managing and monitoring clinical trials. Our reliance on such third parties may
result in delays in completing, or failure to complete, such trials if they fail
to perform under our agreements with them.
If we fail to obtain the capital necessary to fund our operations, we will be
unable to develop our drug candidates and may have to cease operations.
We will continue to expend substantial resources for the expansion of
research and development, including costs associated with researching drug
candidates, securing in-licensing opportunities, conducting preclinical research
and clinical trials and obtaining regulatory approval for our drug candidates.
We expect that significant additional financing will be required in the future
to fund our operations. We do not know whether additional financing will be
available when needed or on acceptable terms, if at all. If we are unable to
raise additional financing when necessary, we may have to delay some or all of
our product development efforts or be forced to cease operations.
We may be forced to raise additional capital sooner than currently anticipated.
We believe that the proceeds from this offering, together with our current
cash balances, cash equivalents, short-term investments and cash generated from
our collaborative arrangements will be sufficient to meet our operating and
capital requirements for at least the next 12 months. However, we have based
this estimate on assumptions that may prove to be wrong. Our future liquidity
and capital requirements will depend on many factors, including:
- the timing, cost, extent and results of clinical trials;
- payments to third parties associated with manufacturing scale-up;
- the costs and timing of regulatory approvals;
- the costs of establishing sales, marketing and distribution capabilities;
- the progress of our research and development activities;
- availability and terms of in-licensing opportunities; and
- future opportunities for raising capital.
Any additional equity financing may be dilutive to stockholders, and debt
financing, if available, may involve restrictive covenants. Collaborative
arrangements may require us to relinquish our rights to certain of our
technologies, drug candidates or marketing territories. If funding is not
available, our development and commercialization activities may be impaired.
We rely on single-source third party manufacturers who are subject to regulation
and do not have commercial scale manufacturing experience with our products.
We rely on third parties to manufacture our products on a commercial scale.
While we maintain a limited inventory of our drug candidates, we depend on
single-source contract manufacturers to produce each of our products for use in
our clinical trials. If our contract manufacturers are unable or fail to produce
the required quantities of our drug candidates for clinical use or commercial
sale on a timely basis, at commercially reasonable prices and with sufficient
purity, our current and future clinical trials, our product development and
sales and marketing efforts will be impaired. In addition, we currently intend
to contract with third parties for the manufacturers of the final formulation.
6
<PAGE>
Our contract manufacturers have a limited number of facilities in which our
drug candidates can be produced. In addition, together with our third-party
manufacturers, we are required to register manufacturing facilities with the FDA
and foreign regulatory authorities. The facilities will then be subject to
inspections assessing compliance with current good manufacturing practice
requirements established by the FDA or corresponding foreign regulatory
agencies. If these facilities become unavailable for any reason or if our
contract manufacturers fail to comply with the FDA's current good manufacturing
practices or if our contract manufacturers terminate their agreements with us,
we would have to find an alternative source for manufacturing our drug
candidates. There are, on a worldwide basis, a limited number of contract
facilities in which our drug candidates can be produced under current good
manufacturing practice regulations. It can also take a substantial period of
time for a contract facility to begin producing antibiotics in sufficient
commercial quantities and according to current good manufacturing practices. In
addition, the manufacturing processes for Protegrin IB-367 and Ramoplanin are
extremely complex and proprietary. If we are unable to continue having Protegrin
IB-367 or Ramoplanin manufactured by our current contract manufacturers, we do
not know if we could engage another contract manufacturer when needed or on
acceptable terms, if at all.
We currently intend to continue using our contract manufacturers to produce
commercial quantities of our drug candidates if they receive regulatory
approval. Our contract manufacturers have no experience in manufacturing
Protegrin IB-367 and Ramoplanin in quantities sufficient for commercialization.
Contract manufacturers often encounter difficulties in scaling up production,
including problems involving production yields, quality control, quality
assurance and shortage of qualified personnel. If our contract manufacturers are
unable to scale up production to meet our commercial needs, our revenue would be
adversely affected.
We expect to continue to incur future operating losses and may never achieve
profitability.
We have never generated revenue from product sales and have incurred
significant net losses in each year since inception. We have incurred net losses
of $4.1 million in 1997, $17.4 million in 1998 and $23.1 million in 1999. As of
December 31, 1999, our accumulated deficit was approximately $52.9 million. We
expect to continue to incur substantial additional losses for the foreseeable
future as a result of increases in our research and development costs, including
costs associated with conducting preclinical research and clinical trials, and
we may never become profitable. We will receive product revenues only if we
complete clinical trials with respect to one or more products, receive
regulatory approvals and successfully commercialize such products.
Competitors may develop and commercialize products that are more effective, less
expensive, have fewer side effects or are easier to administer than ours.
We may be unable to compete successfully if others develop and commercialize
competitive products that are less expensive, more effective, have fewer side
effects or are easier to administer than our drug candidates. If we are unable
to compete successfully with our drug candidates, our revenue and results of
operations would be adversely affected.
Our competitors include pharmaceutical and biotechnology companies. We are
aware of several of these companies that are actively engaged in research and
development in areas related to cancer therapy and antibiotics. These companies
have commenced clinical trials in cancer therapy and antibiotic products or have
successfully commercialized such products. Many of these companies are studying
the same diseases and disease indications as we are.
7
<PAGE>
Industry efforts have recently intensified with respect to the development
of new antibiotics because of the recognized need and relatively few therapeutic
options. Our drug candidates may become obsolete as a result of:
- other drug development technologies and methods of preventing or reducing
the incidence of disease;
- development of microorganisms resistant to our products; or
- other classes of therapeutic agents.
Many of our competitors and related private and public research and academic
institutions have substantially greater experience, 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 developing drugs, obtaining
regulatory approvals and manufacturing and marketing products. We also compete
with these organizations and other companies for in-licensing opportunities for
future drug candidates and in attracting scientific and management personnel.
We are subject to extensive government regulation, and we may not obtain
regulatory approvals.
None of our drug candidates has been approved for sale in the U.S. or any
foreign market. We must obtain approval from the FDA in order to sell our drug
candidates in the U.S. and from foreign regulatory authorities in order to sell
our drug candidates in other countries. The FDA could require us to repeat
clinical trials as part of the regulatory review process. Delays in obtaining or
failure to obtain regulatory approvals may:
- delay or prevent the successful commercialization of any of our drug
candidates;
- diminish our competitive advantage; and
- adversely affect our receipt of revenues or royalties.
The regulatory review and approval process is lengthy, expensive and
uncertain. Securing FDA approval requires the submission of extensive
preclinical and clinical data and supporting information to the FDA for each
indication to establish safety and effectiveness. We have limited experience in
obtaining such approvals, and cannot be certain when we will receive these
regulatory approvals, if ever.
In addition to initial regulatory approval, our drug candidates are subject
to extensive and rigorous ongoing domestic government regulation. The FDA
regulates, among other things, the development, testing, manufacture,
record-keeping, labeling, storage, promotion and distribution of our products.
After approval, changes to a product such as manufacturing changes or additional
indications or labeling claims are subject to further FDA review and approval.
Any approvals, once obtained, may be withdrawn if compliance with regulatory
requirements is not maintained or safety problems are identified. If our
products are marketed abroad, they also are subject to extensive regulation by
foreign governments. Failure to comply with these requirements may subject us to
stringent penalties.
8
<PAGE>
We may not be able to adequately protect our intellectual property.
We rely on a combination of patents, trade secrets and contractual
provisions to protect our intellectual property. If we are unable to adequately
protect our intellectual property, our competitive position would be harmed. Our
success depends in part on our ability to:
- obtain patents;
- protect trade secrets;
- operate without infringing upon the proprietary rights of others; and
- prevent others from infringing on our proprietary rights.
We will be able to protect our proprietary rights from unauthorized use by
third parties only to the extent that our proprietary rights are covered by
valid and enforceable patents or are effectively maintained as trade secrets.
We try to protect our proprietary position by filing U.S. and foreign patent
applications related to our proprietary technology, inventions and improvements
that are important to the development of our business. However, the patent
position of biopharmaceutical companies involves complex legal and factual
questions. We cannot predict the enforceability or scope of any issued patents
or those that may issue in the future. Patents, if issued, may be challenged,
invalidated or circumvented. Consequently, any patents that we own or license
from third parties may not provide any protection against competitors.
Furthermore, others may independently develop similar technologies or duplicate
any technology that we have developed. In addition, our pending patent
applications, those we may file in the future, or those we may license from
third parties, may not result in patents being issued.
We rely on trade secrets related to the manufacture of certain products.
In addition to patents, we rely on trade secrets and proprietary know-how.
The manufacturing processes covered by these trade secrets are performed by our
contract manufacturers. Accordingly, our contract manufacturers and we must
maintain confidentiality. We seek protection, in part, through confidentiality
and proprietary information agreements. These agreements may not provide
meaningful protection or adequate remedies for our technology in the event of
unauthorized use or disclosure of confidential and proprietary information.
We may be subject to intellectual property litigation which could be costly and
time-consuming.
The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights.
The defense and prosecution of intellectual property suits, U.S Patent and
Trademark Office interference proceedings and related legal and administrative
proceedings in the U.S. and internationally are costly and time-consuming to
pursue and their outcome is uncertain. If we become involved in any of these
proceedings, we will incur substantial expense and the efforts of our technical
and management personnel will be significantly diverted. An adverse
determination may subject us to significant liabilities or require us to seek
licenses that may not be available from third parties on satisfactory terms, or
at all.
Our products could infringe on the intellectual property rights of others, which
could lead to costly litigation and, if unsuccessful, could also lead to
substantial damages and prohibit us from selling our products.
Third parties may assert infringement or other intellectual property claims
against us. We may have to pay substantial damages, including treble damages,
for past infringement if it is ultimately
9
<PAGE>
determined that our products infringe a third party's proprietary rights.
Further, we may be prohibited from selling our products or may need to attempt
to obtain a license, which, if available at all, may require us to pay
substantial royalties. Even if these claims are without merit, defending a
lawsuit takes significant time, may be expensive and may divert management
attention from other business concerns. Any public announcements related to
litigation or interference proceedings initiated or threatened against us could
cause our stock price to decline.
If we cannot enter into new licensing arrangements, our future product
development could be adversely affected.
An important component of our business strategy is in-licensing drug
compounds developed by academic research laboratories and pharmaceutical and
biotechnology companies. If we are not able to identify future licensing
opportunities or enter into future licensing arrangements on acceptable terms,
our product development could be adversely affected.
If physicians and patients do not accept our products, our ability to generate
revenue will be adversely affected.
Our drug candidates may not gain market acceptance among physicians,
patients, and the medical community. If any of our drug candidates fails to
achieve market acceptance, we may be unable to successfully market and sell the
product, which would adversely affect our revenue and results of operations. The
degree of market acceptance of any drug candidate depends on a number of
factors, including:
- demonstration of clinical efficacy and safety;
- cost-effectiveness;
- convenience and ease of administration;
- potential advantage over alternative treatment methods; and
- marketing and distribution support.
Physicians will not recommend our products until such time as clinical data
or other factors demonstrate the safety and efficacy of our drugs as compared to
other treatments. In practice, competitors may be more effective in marketing
their drugs. Even if the clinical safety and efficacy of our antibiotic products
is established, physicians may elect not to recommend products.
If we fail to obtain acceptable prices or adequate reimbursement from
third-party payors, our ability to generate revenue from product sales will be
impaired.
In both domestic and foreign markets, sales of our drug candidates will
depend in part upon the availability of reimbursement from government health
administration authorities, managed care providers, private health insurers and
other organizations. These third-party payors are increasingly challenging the
price and examining the cost effectiveness of medical products and services. In
addition, significant uncertainty exists as to the reimbursement status of newly
approved health care products. For example, in the U.S., Medicare and
third-party payors are increasingly attempting to contain health care costs by
limiting both the coverage and the level of reimbursement for new drugs and by
refusing to provide coverage for use of approved drugs for disease indications
for which the FDA has not granted labeling approval. Adequate third-party
reimbursement may not be available to enable us to maintain price levels
sufficient to realize an appropriate return on our investment in product
development. If the government and third-party payors fail to provide adequate
coverage and reimbursement rates for our drug candidates, sales of our products
will be adversely affected.
10
<PAGE>
If we are unable to establish sales, marketing and distribution capabilities or
enter into agreements with third parties to perform these services, we will be
unable to commercialize our drug products.
We do not currently have marketing, sales or distribution capabilities. For
our initial products, we intend to establish a direct marketing and sales force
in the U.S. and Canada. To market any of our products directly we must develop a
marketing and sales force with technical expertise and distribution
capabilities. We may not successfully develop marketing and sales experience or
have sufficient resources to do so. We intend to enter into arrangements with
third parties to market and sell most of our products outside of the U.S. and
Canada. We may not be able to enter into marketing and sales arrangements with
others on acceptable terms, if at all. To the extent that we enter into
marketing and sales arrangements with other companies, our revenues will be
lower than if we marketed the products directly and will depend on the efforts
of others. If we fail to establish successful marketing and sales capabilities
or fail to enter into successful marketing arrangements with third parties, we
would be unable to commercialize our drug products.
If we fail to recruit and retain key personnel, our product development and
commercialization efforts will be adversely affected.
We are highly dependent on our scientific and management staff. Competition
for personnel is intense. If we lose the services of any of our key personnel,
our product development and commercialization efforts would be adversely
affected. In order to pursue product development, marketing and
commercialization plans, we will need to hire additional qualified scientific
personnel to perform research and development. We will also need to hire
personnel with expertise in clinical testing, government regulation,
manufacturing, marketing and finance. We may not be able to attract and retain
personnel on acceptable terms given the competition for such personnel among
biotechnology, pharmaceutical and other companies.
In addition, we rely on consultants to assist us in formulating our research
and clinical development strategy. All of our consultants are employed by other
entities. They may have commitments to, or relationships with, other entities
that may limit their availability to us. If we lose the services of these
personnel, our research and development efforts may be delayed.
If product liability lawsuits are successfully brought against us, we could face
substantial liabilities.
The use of any of our drug candidates in clinical trials, and the sale of
any approved products, may expose us to liability claims. These claims might be
made directly by consumers, health care providers or by pharmaceutical
companies. If we cannot successfully defend ourselves against product liability
claims, we may incur substantial damages that could exceed our financial
resources. We currently have clinical trial insurance, but we do not carry
product liability insurance. We intend to expand our insurance coverage to
include the sale of commercial products if marketing approval is obtained for
our drug candidates. However, insurance coverage is becoming increasingly
expensive. We may not be able to obtain product liability coverage at a
reasonable cost or in sufficient amounts to protect us against losses.
If we use hazardous materials in a way that violates laws or causes injury, we
may be liable for damages or governmental fines.
Our research and manufacturing activities involve the controlled use of
potentially harmful biological, chemical and radioactive materials. We cannot
eliminate the risk of accidental contamination or injury from the storage,
handling, use and disposal of these materials. In the event of an accident or
environmental discharge, we may be held liable for any resulting damages, which
11
<PAGE>
may exceed our financial resources. We are subject to federal, state and local
laws and regulations governing the use, storage, handling and disposal of these
materials. The costs of compliance with these laws and regulations could be
significant, and we could face significant penalties for noncompliance.
Risks Related to This Offering
Directors, executive officers, principal stockholders and affiliated entities
own a significant portion of our capital stock and will have substantial control
over our activities.
Upon completion of this offering, our directors, executive officers,
principal stockholders and affiliated entities will beneficially own, in the
aggregate, approximately % of our outstanding common stock. These
stockholders, if acting together, will be able to significantly influence all
matters requiring approval by our stockholders. Such matters include the
election of directors and the approval of mergers or other business combination
transactions. We may be adversely impacted by the control that such stockholders
will have with respect to matters affecting us.
Antitakeover provisions in our charter documents and under Delaware law may make
an acquisition of us more difficult.
Provisions of our certificate of incorporation and bylaws could make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. Our amended and restated certificate of incorporation
requires that upon completion of the public 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 certificate of incorporation:
- eliminates 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 without stockholder approval.
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 between 60 and 90 days prior to the first anniversary of the last
annual meeting of stockholders. The authorized number of directors is fixed by
resolution of the board. Our amended and restated certificate of incorporation
and bylaws provide for a classified board of directors, in which approximately
one third of the directors will be elected each year. Our board of directors may
appoint new directors to fill vacancies or newly created directorships. Our
bylaws also limit who may call a special meeting of stockholders. In addition,
because we are incorporated in Delaware, we are governed by the provisions of
Section 203 of the Delaware General Corporation Law which may prohibit large
stockholders from consummating a merger with or acquisition of us. These
provisions may prevent a merger or acquisition that would be attractive to
stockholders and could limit the price that investors would be willing to pay in
the future for our common stock.
If our stockholders sell substantial amounts of our common stock after the
offering, the market price of our common stock may decline.
If stockholders sell substantial amounts of common stock after the offering,
including shares issued upon the exercise of outstanding options and warrants,
the market price of our common stock may decline. The number of shares of common
stock available for sale in the public market is limited by restrictions under
federal securities law and under lockup agreements with our
12
<PAGE>
underwriters. These lockup agreements restrict our stockholders from disposing
of their shares for 180 days after the date of this prospectus without the prior
written consent of Deutsche Bank Securities Inc. However, Deutsche Bank
Securities Inc. may release all or any portion of the common stock from the
restrictions in the lockup agreements. The following table indicates when the
21,081,054 shares of our common stock which are not being sold in this offering
but which were outstanding at December 31, 1999, will be eligible for sale into
the public market:
<TABLE>
<CAPTION>
Shares Eligible
Days After Prospectus Date for Sale Comment
-------------------------- --------------- -------
<S> <C> <C>
Upon effectiveness........................ 213,101 Freely tradable shares eligible for sale
under Rule 144(k) and not locked-up
90 days................................... 531,030 Shares not locked-up and saleable under
Rules 144 and 701
180 days.................................. 17,211,923 Lock-up released; shares saleable under
Rules 144 and 701
Various dates thereafter.................. 3,125,000 Restricted securities held for one year
or less as of 180 days following
effectiveness
</TABLE>
Our stock price may be volatile, and the value of your investment may decline.
Prior to this offering there has been no public market for our common stock.
An active public market for our stock may not develop or be sustained after the
offering. The initial public offering price will be determined by negotiations
between us and our underwriters and may not be indicative of future market
prices. The market prices for securities of biotechnology companies in general
have been highly volatile and our stock may be subject to volatility. The
following factors, in addition to the 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;
- publicity regarding actual or perceived adverse events in our clinical
trials or relating to products under development by our competitors;
- regulatory developments in the U.S. or foreign countries;
- litigation;
- significant short selling in our common stock;
- economic and other external factors; and
- period-to-period fluctuations in our financial results and changes in
analysts' recommendations.
New investors in our common stock will experience immediate and substantial
dilution.
The initial public offering price is substantially higher than the book
value per share of our common stock. Investors purchasing common stock in the
offering will therefore incur immediate dilution in the net tangible book value
per share of common stock. In addition, the number of shares available for
issuance under our stock option and employee stock purchase plans will
automatically increase without stockholder approval. Investors will incur
additional dilution upon the exercise of outstanding stock options and warrants.
13
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
We make many statements in the prospectus under the captions Summary, Risk
Factors, Management's Discussion and Analysis of Financial Condition and Results
of Operations and Business and elsewhere that are forward-looking and are not
based on historical facts. These statements relate to our future plans,
objectives expectations and intentions. We may identify these statements by the
use of words such as believe, expect, will, anticipate, intend and plan and
similar expressions. These forward looking statements involve a number of risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those we discuss in Risk Factors and elsewhere in this prospectus.
These forward-looking statements speak only as of the date of this prospectus,
and we caution you not to rely on these statements without considering the risks
and uncertainties associated with these statements and our business that are
addressed in this prospectus.
These forward-looking statements are included, for example, in the
discussion about:
- our strategy;
- sufficiency of cash resources;
- product development;
- our research and development and other expenses; and
- operational and legal risks.
Given these uncertainties, you should not place undue reliance on such
forward-looking statements. We are not under any duty to update any of the
forward-looking statement after the date of this prospectus to conform these
statements to actual results except as required by law.
Information regarding market and industry statistics contained in the
Summary and Business sections is included based on information available to us
that we believe is accurate. It is generally based on academic and other
publications that are not produced for purposes of securities offerings or
economic analysis. We have not reviewed or included data from all sources and
cannot assure you of the accuracy of the data we have included.
14
<PAGE>
USE OF PROCEEDS
Our net proceeds from the sale of shares of common stock we are
offering are estimated to be $ million ($ million if the underwriters'
over-allotment option is exercised in full) assuming an initial public offering
price of $ per share and after deducting the underwriting discounts and
commissions and our estimated offering expenses. We intend to use the net
proceeds of the offering primarily for funding clinical trials and the
development and scale up of manufacturing processes by our contract
manufacturers. The balance of the proceeds, as well as existing cash, will be
used to fund other research and development activities including identification,
testing and acquisition of additional potential in-licensing candidates, further
development of our other programs currently in process, expansion of research
and development capabilities, working capital and other general corporate
purposes. We may also use a portion of the proceeds for the acquisition of, or
investment in, companies, technologies or assets that complement our business.
However, we have no present understandings, commitments or agreements to enter
into any potential acquisitions and investments.
The amount and timing of our actual expenditures will depend on many factors
including the timing, extent, cost and progress of clinical trials, the costs
and success of manufacturing drug substances, and opportunities for in-licensing
technologies and compounds. Until the funds are used as described above, we
intend to invest the net proceeds of the offering in short-term, interest-
bearing, investment grade securities.
DIVIDEND POLICY
The payment of dividends is within the discretion of our board of directors.
Our ability to pay any future dividends will depend on our earnings, operating
and financial condition, projected capital requirements and restrictions under
our credit facilities. In this regard, our term loan and security agreement with
Silicon Valley Bank prohibits the payment of dividends without the consent of
the lender. We have never declared or paid any cash dividends on shares of our
capital stock and do not intend to do so at any time in the foreseeable future.
15
<PAGE>
CAPITALIZATION
The following table sets forth the following information:
- our actual capitalization as of December 31, 1999;
- our pro forma capitalization as of that date after giving effect to the
conversion of all outstanding shares of preferred stock into 19,741,900
shares of common stock upon completion of this offering; and
- our pro forma capitalization as adjusted to reflect the receipt of net
proceeds from our sale of shares of common stock at an assumed
initial public offering price of $ per share in this offering, less
the underwriting discounts and commissions and estimated offering
expenses.
<TABLE>
<CAPTION>
December 31, 1999
----------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands except share
and per share data)
<S> <C> <C> <C> <C>
Long-term obligations, less current portion.................. $ 1,725 $ 1,725 $ 1,725
-------- -------- --------
Stockholders' equity:
Preferred stock, $0.001 par value; 40,937,873
shares authorized, actual and pro forma,
5,000,000 shares authorized, pro forma as
adjusted: 39,483,873 shares issued and
outstanding, actual; none issued and outstanding
pro forma and pro forma as
adjusted................................................... 79,609 -- --
Common stock, $0.001 par value; 67,500,000 shares
authorized; actual and pro forma; 50,000,000
shares authorized pro forma as adjusted;
1,339,154 shares issued and outstanding, actual;
21,081,054 shares issued and outstanding, pro
forma; and shares issued and outstanding,
pro forma as
adjusted................................................... 2 42
Additional paid-in capital................................... 13,828 93,396
Deferred stock compensation.................................. (12,650) (12,650) (12,650)
Accumulated deficit.......................................... (52,874) (52,874) (52,874)
-------- -------- --------
Total stockholders' equity................................... 27,914 27,914
-------- -------- --------
Total capitalization......................................... $ 29,639 $ 29,639 $
======== ======== ========
</TABLE>
The number of shares of common stock referenced above excludes as of
December 31, 1999:
- 3,746,896 shares of common stock issuable upon exercise of outstanding
options at a weighted average exercise price of $1.16 per share.
- 677,000 shares of common stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $9.50.
- 123,501 shares of common stock available for issuance under our stock plan
as of December 31, 1999, and 5,500,000 additional shares of common stock
that were approved for issuance under stock plans after December 31, 1999.
16
<PAGE>
DILUTION
Our pro forma net tangible book value of the common stock as of
December 31, 1999 was approximately $27.9 million, or approximately $1.32 per
share of common stock assuming conversion of all outstanding preferred stock
into an aggregate of 19,741,900 shares of common stock upon the closing of the
offering. After giving effect to the sale of shares of common stock in
this offering at an assumed price of $ per share and after deduction of the
underwriting discount and estimated offering expenses, our pro forma net
tangible book value after the offering would have been approximately
$ million, or $ per share.
Pro forma net tangible book value per share before the offering has been
determined by dividing pro forma net tangible book value (total tangible assets
less total liabilities) by the pro forma number of shares of common stock
outstanding at December 31, 1999. The offering will result in an increase in pro
forma as adjusted net tangible book value of $ per share to existing
investors and an immediate dilution of $ per share to new investors, or
approximately % of the assumed offering price of $ per share. Dilution
is determined by subtracting pro forma net tangible book value per share after
the offering from the assumed initial public offering price. 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
December 31, 1999...................................... $1.32
Increase per share attributable to new investors........
-----
Pro forma net tangible book value per share after
offering..................................................
-----
Dilution per share to new investors......................... $
=====
</TABLE>
The following table summarizes, on a pro forma basis as of December 31,
1999, the differences between the number of shares of common stock issued by
IntraBiotics, the total consideration paid and the average price per share paid
by the existing stockholders and by new investors, before deducting underwriting
discounts and commissions and estimated offering expenses, at an assumed initial
public offering price of $ per share.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
---------------------- ----------------------- Price Per
Number Percent Amount Percent Share
----------- -------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................... 21,081,054 % $81,394,000 % $3.86
New investors...........................
---------- --- ----------- --- -----
Total................................... 100% 100% $
========== === =========== === =====
</TABLE>
These tables do not assume exercise of stock options and warrants
outstanding at December 31, 1999. At December 31, 1999, there were 3,746,896
shares of common stock issuable upon exercise of outstanding stock options at a
weighted average exercise price of $1.16 per share and 677,000 shares of common
stock issuable upon exercise of outstanding warrants at a weighted average
exercise price of $9.50 per share. Giving effect to the full vesting and
exercise of the options and warrants outstanding of December 31, 1999, the pro
forma net tangible book value per share would be $1.52, the dilution per share
to new investors would be $ .
17
<PAGE>
SELECTED FINANCIAL DATA
This section presents our historical financial data. You should read
carefully the financial statements included in this prospectus, including the
notes to the financial statements, and Management's Discussion and Analysis of
Financial Condition and Results of Operations. The statement of operations data
for the years ended December 31, 1997, 1998 and 1999 and the balance sheet data
as of December 31, 1998 and 1999 have been derived from our financial statements
that have been audited by Ernst & Young LLP, independent auditors, and are
included elsewhere in this prospectus. The statement of operations data for the
years ended December 31, 1995 and 1996 and the balance sheet data as of
December 31, 1995, 1996 and 1997 have been derived from financial statements
that have been audited by Ernst & Young LLP, and are not included elsewhere in
this prospectus. 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 net loss per share.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
Contract revenue.......................... $ -- $ -- $ 3,507 $ 5,357 $ 7,863
License fee and milestone revenue......... -- -- 2,000 1,000 --
------- ------- ------- -------- --------
Total revenue........................... -- -- 5,507 6,357 7,863
Operating expenses:
Research and development.................. 2,181 4,049 8,103 21,997 26,102
General and administrative................ 682 949 1,960 2,533 6,082
------- ------- ------- -------- --------
Total operating expenses................ 2,863 4,998 10,063 24,530 32,184
------- ------- ------- -------- --------
Operating loss.............................. (2,863) (4,998) (4,556) (18,173) (24,321)
Interest income, net........................ 41 182 481 791 1,206
------- ------- ------- -------- --------
Net loss.............................. $(2,822) $(4,816) $(4,075) $(17,382) $(23,115)
======= ======= ======= ======== ========
Basic and diluted net loss per share........ $(14.25) $(11.92) $ (6.39) $ (20.89) $ (21.62)
======= ======= ======= ======== ========
Shares used in computing basic and diluted
net loss per share........................ 198 404 638 832 1,069
======= ======= ======= ======== ========
Pro forma basic and diluted net loss per
share..................................... $ (1.27)
========
Shares used in computing pro forma basic and
diluted net loss per share................ 18,172
========
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and short-term
investments.............................. $ 1,280 $ 4,713 $ 20,779 $ 29,869 $ 31,429
Working capital............................ 815 4,252 18,851 21,279 25,743
Total assets............................... 1,712 5,312 24,987 32,099 35,958
Long-term obligations, less current
portion.................................. 302 407 1,036 867 1,725
Deferred stock compensation................ -- -- -- (1,145) (12,650)
Accumulated deficit........................ (3,487) (8,302) (12,377) (29,759) (52,874)
Total stockholders' equity................. 923 4,410 19,765 22,498 27,914
</TABLE>
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ TOGETHER WITH "SELECTED FINANCIAL DATA" AND OUR
FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS.
THIS DISCUSSION AND ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS, UNCERTAINTIES AND ASSUMPTIONS. THE ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY
FACTORS, INCLUDING BUT NOT LIMITED TO THOSE SET FORTH UNDER "RISK FACTORS" AND
ELSEWHERE IN THIS PROSPECTUS.
Overview
We are engaged in the development of novel antibiotic drugs for the
prevention or treatment of serious infectious diseases. Since our inception in
January 1994, we have devoted substantially all of our resources to the
acquisition, preclinical research and clinical development of antibiotic
compounds. We currently have two antibiotic drug candidates, Ramoplanin Oral and
Protegrin IB-367 Rinse in late stage clinical development.
Our sole source of revenue has been a development and commercialization
collaboration agreement entered into in October 1997 with Pharmacia & Upjohn
S.p.A for Protegrin IB-367 Rinse. This agreement was terminated by mutual
agreement of the parties in July 1999 with funding continuing through the end of
1999. We will not receive any additional revenue under this agreement.
Since our inception, we have been unprofitable and, as of December 31, 1999,
we had an accumulated deficit of approximately $52.9 million. The process of
developing our drugs will require significant additional research and
development, preclinical studies and clinical trials, as well as regulatory
approval and manufacturing and commercialization activities. These activities,
together with our general and administrative expenses, are expected to result in
significant additional operating losses for the foreseeable future. We will
receive revenue from product sales only if we complete clinical trials, obtain
regulatory approvals and successfully commercialize at least one of our drug
candidates.
Results of Operations
YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
REVENUE. Revenue increased to $7.9 million for the year ended December 31,
1999, from $6.4 million for the year ended December 31, 1998, and $5.5 million
for the year ended December 31, 1997. To date, all of our revenue has been
generated under the prior agreement with Pharmacia & Upjohn. The increases from
1998 to 1999 and 1997 to 1998 were primarily the result of increased contract
revenue under the terms of this agreement, partially offset by the timing of
license fees and milestone revenue recognized under this agreement. We
recognized a nonrefundable, noncreditable license fee of $2.0 million in 1997
upon execution of the license with Pharmacia & Upjohn. There were no future
performance obligations in connection with the grant of the license. We also
recognized revenue based upon reimbursement of expenses and the number of
full-time equivalent employees working on the Protegrin IB-367 Rinse program. In
1998, we recognized a nonrefundable payment of $1.0 million upon completion of a
development milestone. The contract was terminated in July 1998, and we will not
recognize any additional revenue under this agreement. We do not anticipate any
product revenue in the near future.
RESEARCH AND DEVELOPMENT. Research and development expenses increased to
$26.1 million for the year ended December 31, 1999, from $22.0 million for the
year ended December 31, 1998, and $8.1 million for the year ended December 31,
1997. The increase in 1999 was primarily due to
19
<PAGE>
the phase II clinical trials for Protegrin IB-367 Rinse and Ramoplanin Oral, an
increase in research and development personnel and expenses related to a new
facility. Research and development expenses in 1999 included amortization of
$648,000 of deferred stock compensation in connection with the grant of stock
options to officers and employees. The increase from 1997 to 1998 was primarily
the result of increases in clinical costs associated with expanding from one to
four clinical programs. In addition, in 1998, $3.1 million in license fees and
milestones were paid to third parties in connection with rights to develop and
commercialize product candidates. We expect that research and development
expenses will increase significantly in the future as new and existing product
candidates advance into later stages of clinical development, in particular
phase III clinical trials for Protegrin IB-367 Rinse and Ramoplanin Oral.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
to $6.1 million for the year ended December 31, 1999, from $2.5 million for the
year ended December 31, 1998, and $2.0 million for the year ended December 31,
1997. The increases in both 1998 and 1999 were primarily due to an increase in
finance and administrative personnel and expenses related to the new facility.
General and administrative expenses in 1999 included amortization of $333,000 of
deferred stock compensation in connection with the grant of stock options to
officers and employees. We expect that general and administrative expenses will
continue to increase as we build infrastructure to support our product
development efforts, establish our sales and marketing capabilities and to
operate as a public company.
INTEREST INCOME, NET. Interest income, net increased to $1.2 million for
the year ended December 31, 1999, from $791,000 for the year ended December 31,
1998, and $481,000 for the year ended December 31, 1997. The increase from 1998
to 1999 was primarily due to increased cash balances resulting from the sale of
preferred stock, partially offset by interest paid on the outstanding portion of
equipment financing arrangements. The increase from 1997 to 1998 was primarily
due to increased cash balances resulting from the sale of preferred stock,
license fee and milestone payments and contract revenue from the Pharmacia &
Upjohn agreement, partially offset by interest paid on equipment financing
arrangements.
Income Taxes
Since inception, we have incurred operating losses and accordingly have not
recorded a provision for income taxes for any of the periods presented. As of
December 31, 1999, our net operating loss carryforwards for federal and state
income tax purposes were approximately $46.0 million and $23.0 million,
respectively. We also had federal research and development tax credit
carryforwards of approximately $1.0 million. If not utilized, the net operating
loss and credit carryforwards will expire at various dates beginning in 2002
through 2019. Utilization of net operating losses and credits may be subject to
a substantial annual limitation due to ownership change limitations provided by
the Internal Revenue Code of 1986. The annual limitation may result in the
expiration of our net operating loss and credit carryforwards before they can be
used. Please read note 8 of the notes to financial statements for further
information.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through private
placements of preferred stock and warrants, funds received from our prior
collaboration with Pharmacia & Upjohn and from the proceeds of equipment
financing arrangements. As of December 31, 1999, we had raised aggregate net
proceeds from the sale of preferred stock and warrants of $79.6 million. Prior
to termination of the Pharmacia & Upjohn agreement, we received an aggregate of
$21.4 million in cash payments under this agreement, of which $1.7 million of
unused development funding will be returned to Pharmacia & Upjohn.
20
<PAGE>
Cash, cash equivalents and short-term investments were $31.4 million at
December 31, 1999, compared to $29.9 million at December 31, 1998. Net cash used
for operating activities was $24.7 million and $9.3 million for the years ended
December 31, 1999 and 1998, respectively. The increase from 1998 to 1999
consisted primarily of operating expenses related to conducting clinical trials
and other research, development and administrative activities, and the timing of
cash payments related to these activities. Net cash used for investing
activities was $15.1 million and $597,000 for the years ended December 31, 1999
and 1998, respectively. The increase from 1998 to 1999 was primarily related to
$12.6 million in purchases, net of maturities, of short-term investments and a
$1.9 million increase in capital expenditures in 1999. Net cash provided by
financing activities was $28.8 million and $19.0 million for the years ended
December 31, 1999 and 1998, respectively. This increase was primarily related to
the sale of preferred stock and additional equipment financing received in 1999.
In March 1999, we entered into an equipment financing agreement with GE
Capital, to finance up to $3.0 million of equipment. The term of the loan is
42 months. The interest rate varies according to U.S. Treasury rates. As of
December 31, 1999, we had drawn down a total of approximately $2.0 million at an
average interest rate of 10.0%. We currently have $967,000 available under this
arrangement which can be drawn down on or before February 29, 2000. We
anticipate we will utilize substantially all of this balance.
In addition, we have two prior equipment financing arrangements with
GE Capital with a balance of $900,000 as of December 31, 1999. We are currently
repaying this amount at an annual average interest rate of 11.0%. In connection
with these equipment financings, we issued a warrant to purchase 54,000 shares
of, Series B Preferred Stock, which converts into a warrant to purchase 27,000
shares of common stock at an exercise price of $2.00 per share upon the closing
of the offering. This warrant expires in July 2001. We also issued a warrant to
purchase 50,000 shares of Series D Preferred Stock at an exercise price of $2.50
per share which expires upon this offering.
In August 1999, we entered into a term loan agreement with Silicon Valley
Bank for $5.0 million. As of December 31, 1999, we had not drawn down funds on
the loan arrangement. The loan may be drawn down prior to August 2000 and will
bear interest at the bank's prime rate of interest plus 1.25%. We anticipate
using this loan by August 2000 to fund our in-licensing programs, and ongoing
general corporate needs. This term loan will require us to comply with various
financial covenants, including minimum tangible net worth of $10.0 million and
minimum liquidity of two times the amount outstanding on the loan.
We expect to continue to incur substantial operating losses. We believe that
existing capital resources together with the net proceeds of this offering and
interest income will be sufficient to fund our operations for at least the next
12 months. This forecast is a forward-looking statement that involves risks and
uncertainties, and actual results could vary. Our future capital requirements
will depend on many factors, including:
- the timing, cost, extent and results of clinical trials;
- payments to third parties for manufacturing scale up;
- the costs and timing of regulatory approvals;
- the costs of establishing sales, marketing and distribution capabilities;
- the progress of our research and development activities;
- availability of technology in-licensing opportunities; and
- future opportunities for raising capital.
Until we can generate sufficient cash from our operations, which we do not
expect for the foreseeable future, we expect to finance future cash needs
through private and public financings,
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including equity financings. We cannot be certain that additional funding will
be available when needed or on favorable terms. If funding is not available, we
may need to delay or curtail our development and commercialization activities to
a significant extent.
Stock Compensation
In connection with the grant of stock options to employees, we recorded
deferred compensation totaling $12.5 million for the year ended December 31,
1999 and $1.2 million for the year ended December 31, 1998, representing the
difference between the exercise price and the deemed fair value of our common
stock for financial reporting purposes on the date those options were granted.
This amount is initially recorded as a component of stockholders' equity and is
being amortized over the vesting period of the individual options. We amortized
deferred stock compensation expense of $981,000 for the year ended December 31,
1999 and $48,000 for the year ended December 31, 1998. At December 31, 1999, we
had a total of $12.7 million remaining to be amortized over the vesting periods
of the stock options.
We expect to amortize deferred stock compensation for options granted as of
December 31, 1999 as follows:
<TABLE>
<CAPTION>
Year Amount
- ---- ------------
<S> <C>
2000............................................. $2.8 million
2001............................................. 2.8 million
2002............................................. 2.7 million
2003............................................. 2.2 million
2004............................................. 1.7 million
2005............................................. 0.5 million
</TABLE>
In addition, we expect to record additional deferred compensation of
approximately $2.1 million for options granted in January 2000, which will also
be amortized over the vesting periods of these options. Please read note 6 of
the notes to financial statements for more information.
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" which provides a comprehensive mechanism
and consistent standard for the recognition and measurement of derivatives and
hedging activities. SFAS 133, as deferred by SFAS 137, is effective for our
fiscal year ended December 31, 2001. SFAS 133 is not anticipated to have an
impact on our results of operations or financial condition when adopted as we do
not currently hold any derivative financial instruments and do not engage in
hedging activities.
Quantitative and Qualitative Disclosure Regarding Market Risk
The primary objective of our investment activities is to preserve our
capital until it is required to fund operations while at the same time
maximizing the income we receive from our investments without significantly
increasing risk. We own financial instruments that are sensitive to market risks
as part of our investment portfolio. To minimize this risk, we maintain a
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. The average duration of all our investments in
1999 was less than one year. Due to the short term nature of these investments,
a 10% movement in market interest rates would not have a significant impact on
the total value of our portfolio as of December 31, 1999.
Year 2000 Compliance
We are not aware of any significant adverse effects of the year 2000 issue
on any of our systems and those of our vendors.
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BUSINESS
IntraBiotics develops and intends to commercialize novel antibacterial and
antifungal drugs for the prevention or treatment of serious infectious diseases.
Our clinical and development programs focus on solving medical problems for
patients who currently have few or no therapeutic alternatives. Because our drug
candidates use novel mechanisms of action to kill bacteria or fungi, we expect
them to be particularly useful in fighting microorganisms that are resistant to
currently available antibiotics. The incidence of multi-drug resistant bacterial
infections is increasing throughout the world, a problem referred to as the
antibiotics crisis. As a result, there is a critical need for new and effective
antibiotic drug therapies.
Our current product portfolio includes two drug candidates, Ramoplanin Oral
and Protegrin IB-367 Rinse, that are about to begin phase III clinical trials.
Ramoplanin Oral is being developed to prevent bloodstream infections caused by
vancomycin resistant enterococcus, or VRE. VRE infections are a particular
problem in hospitalized patients, and in many cases, prove fatal. Protegrin
IB-367 Rinse is being developed to treat oral mucositis. Oral mucositis is a
common debilitating side effect of cancer therapy and is characterized by severe
mouth ulcers that often become infected. We recently completed the phase II
clinical trials for both Ramoplanin Oral and Protegrin IB-367 Rinse in which
both drugs were well tolerated and achieved statistically significant clinical
results. In December 1999, we reviewed data and discussed our proposed phase III
protocols with the FDA. We expect to begin the phase III trials for both
products in the first half of 2000.
Antibiotics Overview
Since the discovery of penicillin more than 50 years ago, many types of
antibiotics have been developed to fight microorganisms. Every antibiotic kills
or inhibits bacteria in a specific way. For example, penicillins, cephalosporins
and vancomycin interfere with the bacterial cell's ability to manufacture cell
walls. Erythromycin and tetracyclines stop the production of proteins within the
cell that are needed for the bacteria to grow. Ciprofloxacin interferes with the
cell's replication of DNA necessary for survival of the bacteria.
Until recently, these traditional antibiotics have successfully treated
infectious disease. Over time, bacteria and fungi have grown resistant to
traditional antibiotics, a worldwide phenomenon commonly referred to as the
antibiotics crisis. Bacterial and fungal resistance developed because of the
prolonged exposure of the bacteria and fungi to sub-lethal doses of antibiotics,
allowing them to evolve until the antibiotics are no longer effective.
Microorganisms have developed resistance to antibiotics by:
- blocking the entry of the drug into the cell;
- changing the part of the cell that was the drug's original target;
- creating new ways to metabolize the drug; and
- developing ways to pump the drug out of the bacteria or fungi.
The incidence of antibiotic-resistant bacterial infections is increasing.
For example, one type of bacteria that has demonstrated increased resistance is
enterococcus, a type of bacteria commonly found in the intestines. In 1997, the
Centers for Disease Control and Prevention, or CDC, reported that 23% of all
enterococcal samples from patients in intensive care units were resistant to the
antibiotic vancomycin. This is an alarming increase from 0.4% in 1989.
Vancomycin resistance presents a serious challenge since the enterococci are
frequently also resistant to most other currently available antibiotics.
Researchers at The Johns Hopkins University reported that in 1999 31% of
patients with VRE bloodstream infections died as a result of their infections.
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There is also an increasing population of patients with impaired immune
systems who are at increased risk of infection. These include the millions of
patients undergoing chemotherapy or radiotherapy to treat cancer, patients
undergoing major surgical or organ transplant procedures, and patients affected
by HIV or other diseases that impair or destroy the patients' immune systems.
These patients often spend significant time in the hospital, where multi-drug
resistant bacteria and fungi are usually found.
The antibiotics crisis was not widely recognized as a significant medical
problem until the 1990s. As a result, until recently, many pharmaceutical
companies believed there was little need for new antibiotics and diverted
research funds to other diseases. The number of antibiotics at all stages of
development decreased in the 1980s with a corresponding decrease in antibiotic
drug approvals. Consequently, at the same time that new, resistant strains of
bacteria began to emerge, development of antibiotics began to decrease.
Our Business Strategy
IntraBiotics is responding to the challenge raised by the antibiotics
crisis. We intend to develop and commercialize antibiotics specifically targeted
for multi-drug resistant microorganisms as well as other organisms that cause
serious diseases.
ACQUIRE PROMISING NEW ANTIBIOTIC CANDIDATES. We believe that in-licensing
is the most cost-effective way to build a diverse portfolio of drug candidates
at various stages of development. This allows us to capitalize on research
conducted and funded by others, including academic research laboratories and
pharmaceutical and biotechnology companies. We believe that our approach saves
substantial time and money and increases the probability of successfully
developing a new antibiotic. We evaluate new in-licensing opportunities by
rigorously screening each product candidate against a diverse set of criteria
that are designed to allow us to assess the economic return against the cost and
probability of success of each development program. Using this evaluation
process, we have identified and in-licensed Ramoplanin and Protegrin technology.
We intend to continue to evaluate and acquire new compounds that have shown
potential for use as antibiotics.
TARGET DRUG CANDIDATES THAT ADDRESS SIGNIFICANT UNMET MEDICAL NEEDS. We
have deliberately chosen to target diseases where the medical need is high and
the current therapy options are limited or non-existent. This increases the
likelihood that successful drug candidates will initially have limited
competition. The lack of existing therapies also allows us to test our drug
candidates against placebos, which permits us to use smaller, less costly and
less time consuming clinical trials compared to non-placebo trials. In addition,
there is great interest in the medical community to participate in the clinical
testing of new drugs for unsolved medical problems. We believe this increased
interest will facilitate enrollment in the clinical trials of our drug
candidates.
UTILIZE THIRD PARTY MANUFACTURERS. We intend to use contract manufacturers
to prepare our drugs instead of developing an internal manufacturing capability.
We have contracted for supply of bulk drug substance for our two lead
candidates. We have not yet selected contract manufacturers for final
formulation of commercial products. By using third party manufacturers, we can
leverage their expertise and capital investment.
DEVELOP MULTIPLE PRODUCT CANDIDATES IN PARALLEL TO OPTIMIZE THE CHANCE OF
SUCCESS DURING THE DRUG DEVELOPMENT PROCESS. We intend to have multiple drug
candidates at various stages of clinical development to improve the chance of
successful development. Historically, we have conducted our two lead programs
roughly in parallel from phase II to the beginning of phase III. In addition, we
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have two drug programs which we are pursuing in parallel which are beginning
phase I clinical trials and three programs in preclinical research. We are
constantly evaluating new in-licensing opportunities to add depth and breadth to
our portfolio.
DEVELOP NEW PRODUCTS BASED ON A SINGLE SUCCESSFUL ANTIBIOTIC. Once we have
sufficient indication of clinical safety and efficacy for a drug candidate, we
intend to develop new drug products using different formulations of the same
antibiotic for other clinical uses. We expect this to allow us to leverage our
prior development effort and expense. For example, Protegrin IB-367 Gel is in
development for ventilator-associated pneumonia, or VAP, based on the experience
and data gained from the Protegrin IB-367 Rinse program. The preclinical
research, and clinical development and manufacturing scale-up conducted for
Protegrin IB-367 Rinse may allow us to develop the drug for VAP more quickly and
with lower costs.
MARKET AND SELL OUR OWN PRODUCTS IN THE U.S. If we gain approval on our
lead product candidates, we plan to market and sell our products through a
direct sales force in the U.S. and Canada. We believe that a relatively small
sales force will initially be effective, as our first two products target
oncology-related indications treated by roughly the same group of physicians.
This sales force may also be used to market and sell our future products.
Initially, our plan is to focus our product sales efforts primarily in hospital
settings. In the future, we may target sales in outpatient settings, as well. We
plan to partner with other pharmaceutical companies to commercialize our
products abroad. This will allow us to utilize their expertise in foreign
regulations and existing relationships and avoid the cost of establishing a
foreign sales force.
Our Development Programs
Since our inception six years ago, we have in-licensed five antibiotic
technologies. These include Protegrins from the University of California,
Ramoplanin from Biosearch Italia, antibacterial compounds, the IB-880 series,
and antifungal compounds, IB-863 series, from BioSource Pharm, Inc., and an
antifungal compound, the IB-974 series, from NAEJA Pharmaceuticals, Inc. From
these technologies, we have advanced four product candidates into clinical
trials, including two programs that are entering phase III and two programs
entering phase I clinical trials.
[Chart showing the intended clinical uses and territorial rights for the
Company's product portfolio.]
Preclinical research includes laboratory evaluation of product chemistry,
toxicity and formulation, as well as animal studies. Phase I trials usually
involve the initial introduction of an investigational new drug into a limited
number of healthy volunteers to evaluate its safety and dose. Phase II usually
involves trials in a limited patient population to evaluate dose, identify
possible adverse side effects and safety risks and evaluate preliminarily the
efficacy of the drug for specific indications. Phase III trials further assess
clinical efficacy of a drug and further test for safety by using a drug in its
final form in an expanded patient population.
Ramoplanin Oral for Prevention of VRE Infections
DISEASE CHARACTERIZATION
Enterococci are bacteria that typically are found in the intestinal tract of
healthy humans. Under various circumstances, they may cause infections at sites
outside the intestine, including in the bloodstream, urinary tract and surgical
wounds. This species of bacteria is receiving increased medical attention
because many strains of the species have become highly resistant to almost all
antibiotic drugs. Infections caused by VRE are a serious threat to patients
because these infections often cannot be successfully treated with vancomycin or
any other currently available antibiotics.
Some patients are at greater risk for VRE infection than others. While many
people may carry VRE in their intestines, it is harmless either until the
patient's immune system is weakened or the
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patient's intestinal tract is damaged, enabling VRE to cross over into the
patient's bloodstream. For example, patients undergoing cancer treatments,
patients who have had solid organ transplants, patients with AIDS, patients on
hemodialysis, and patients in intensive care units are at an increased risk of
developing VRE infections.
In many cases, VRE bloodstream infections prove fatal. According to a study
conducted by the CDC, 36% of patients with VRE bloodstream infections died as a
result of their infection as compared to 16% of those with bloodstream
infections that could be treated with vancomycin.
MARKET OPPORTUNITY FOR RAMOPLANIN ORAL
Since the identification of VRE in 1989, a rapid increase in the incidence
of this strain has occurred in the U.S. The CDC tracks the occurrence of VRE
infections as part of its national surveillance efforts. In 1997, it found that
23% of all enterococcal samples from patients in intensive care units were
vancomycin-resistant, which is an increase from 0.4% in 1989. Some hospitals
have reported rates of vancomycin resistance among specific enterococcal strains
as high as 60%.
There are an estimated 3 million patients hospitalized each year in
intensive care. Based on a 1999 surveillance program, approximately 26% of these
patients are expected to carry VRE bacterial in their intestines. In addition,
based on the medical literature, 14% to 20% of patients with low white blood
cell count and VRE bacteria in their intestines are expected to develop a VRE
bloodstream infection. Researchers from The Johns Hopkins University have
reported that each case of treated VRE bloodstream infection generates an
average of $86,000 in incremental health care costs. In addition, VRE
bloodstream infections are often fatal. Because of the high economic burden on
our health care system and the severity of the disease, there is a substantial
economic and public health interest in the prevention of these infections.
PRODUCT DESCRIPTION
Ramoplanin is a naturally occuring peptide produced by fermentation of a
microorganism. Many microorganisms produce antibiotic compounds to attack other
microorganisms competing for resources in their environment. In the laboratory,
microorganisms can be fermented in carefully controlled conditions to produce
large amounts of these antibiotic compounds such as Ramoplanin.
Ramoplanin kills many types of bacteria by blocking the action of one of the
enzymes needed to make the cell wall. Although many antibiotics block cell wall
production, Ramoplanin is novel because it interferes with a different bacterial
enzyme than other currently available antibiotics. To date, more than
800 bacterial samples have been tested, showing Ramoplanin's uniform ability to
kill bacteria.
In laboratory studies, bacterial resistance to Ramoplanin was not detected
under conditions that might be expected to foster resistance. We believe that
this is due to the different mechanism of action of Ramoplanin on bacterial cell
wall production. We cannot guarantee that certain species of bacteria may not
develop resistance in the future to Ramoplanin.
We are developing Ramoplanin Oral to prevent VRE bloodstream infections in
hospitalized patients. Initially we will focus on patients undergoing
chemotherapy or bone marrow transplants. Ramoplanin is administered as an oral
solution to patients known to have VRE bacteria in their intestinal tracts. By
killing the intestinal VRE bacteria while the patient undergoes chemotherapy or
other procedures that leave the patient at high risk for infection, Ramoplanin
Oral may reduce the overall number of VRE bloodstream infections. In addition to
being very active against VRE, Ramoplanin Oral appears not to be absorbed from
the intestines into the bloodstream. As a result, Ramoplanin Oral will not be
developed to treat VRE bloodstream infections. However, we believe
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that this lack of absorption makes it a good candidate for development against
other disease-causing bacteria in the intestines and makes it less likely to
have side effects in other parts of the body.
CLINICAL STUDY RESULTS
Our clinical trials have demonstrated that Ramoplanin Oral can reduce
intestinal levels of VRE by at least 99.9% to undetectable levels. In a recently
completed randomized, double-blind, placebo-controlled phase II clinical trial,
18 of the 20 (90%) patients treated with Ramoplanin Oral had no detectable VRE
bacteria in their intestines after seven days of treatment. All of the patients
treated with placebo had detectable levels of VRE in their intestines after
seven days of treatment. The difference between placebo and Ramoplanin Oral was
highly statistically significant, with a p-value of less than 0.01. This means
that, applying widely-used statistical methods, the chance that these results
occurred by accident is less than 1 in 100. Ramoplanin Oral was well tolerated
by the subjects, and no serious adverse effects related to Ramoplanin Oral were
reported.
In December 1999, we reviewed this data and discussed our proposed phase III
protocol with the FDA. We intend to initiate in the first half of 2000 a
randomized, double-blind, placebo-controlled phase III trial to evaluate
Ramoplanin Oral's ability to prevent VRE infections in cancer patients
undergoing chemotherapy or bone marrow transplantation. In this study, our goal
will be to demonstrate a reduction in VRE bloodstream infections in patients
treated with Ramoplanin Oral, in contrast to to the phase II clinical trial
which demonstrated a reduction in VRE levels in the intestines. If our phase III
trial is successful, we will submit the results to the FDA to support regulatory
approval of the product. However, we cannot be certain that Ramoplanin Oral will
prove to be safe or effective in preventing VRE infections, will receive
regulatory approvals, or will be successfully commercialized. We have applied
with the FDA for a fast track designation for Ramoplanin Oral. The FDA issues
fast track designation for some drugs under development with the potential to
address unmet medical needs for serious, life-threatening conditions. We cannot
be certain that we will receive fast track designation for Ramoplanin Oral. See
Government Regulation for a discussion of the benefits associated with fast
track designation.
Protegrin IB-367 Rinse for Reduction in Severity of Oral Mucositis
DISEASE CHARACTERIZATION
Oral mucositis, a common side effect of chemotherapy and radiation therapy
in cancer patients, is characterized by sores and painful ulcers in the mouth.
Chemotherapy and radiation therapy damage the cells that line the mouth,
allowing the bacteria and fungi normally found inside the mouth to invade tissue
and cause infection. Oral mucositis is often identified by cancer patients as
the single worst side effect of chemotherapy and radiation therapy, causing pain
so severe as to prevent eating and sleeping. Often, patients receive intravenous
nourishment and narcotic painkillers to treat the condition, and in some cases
are forced to interrupt cancer treatment. Oral mucositis also creates a
significant risk of infection elsewhere in the body.
MARKET OPPORTUNITY FOR PROTEGRIN IB-367 RINSE
According to a recent report by the Transplant Registries, there are over
30,000 bone marrow transplants performed annually in the U.S. and Europe
combined. The treatment for certain leukemias and some solid cancers involves
administration of near lethal doses of chemotherapy to maximize eradication of
the cancer. Academic studies report that these very aggressive cancer and bone
marrow transplant treatments cause oral mucositis in approximately 75% of the
patients. Two recent studies by researchers from the International Bone Marrow
Transplant Registry and the
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Department of Oral Medicine at Harvard University have estimated the duration of
hospitalization is increased by two to 11 days for bone marrow transplant
patients who experience oral mucositis. They incur on average an increase of
approximately $20,000 in hospital charges.
In addition, as reported in the National Cancer Data Base, more than 80,000
head and neck cancer patients in the U.S. and Europe are treated with radiation
therapy. Oral mucositis is reported as a side effect in approximately 80% of
these patients. As reported by the International Society for Pharmacoeconomic
Outcomes, management of severe oral mucositis in these patients costs
approximately $4,500 in additional costs per patient. The treatment of oral
mucositis places a high economic burden on our health care system, resulting in
substantial interest for a new treatment option.
PRODUCT DESCRIPTION
Protegrin IB-367 is a synthetic analog of the Protegrin family of antibiotic
peptides found in mammals. Antibiotic peptides with differing structures can be
found in all living creatures, where they form part of the first line of defense
against invading bacteria and fungi. In mammals, antibiotic peptides cover moist
surfaces, such as those in the mouth and in the airways of the lungs, and are
present in the types of white blood cells that engulf and kill invading
microorganisms.
Protegrin IB-367 destroys the cell membranes of bacteria and fungi, thus
damaging the structural integrity of the microorganism. Protegrin's chemical
structure and its mechanism of action are different from traditional
antibiotics. Protegrin IB-367 kills an unusually wide variety of microorganisms,
including bacteria and certain fungi, and is effective against many of the
serious drug resistant, disease causing bacteria. In addition, Protegrin IB-367
kills microorganisms extremely rapidly. We have demonstrated that Protegrin
IB-367 can reduce the number of bacteria in a test tube by at least 100,000-fold
in less than five minutes. In contrast, with traditional antibiotics a treatment
time of between four and 24 hours is needed to obtain a similar reduction in the
number of bacteria.
In preclinical studies we have conducted, bacteria have not become highly
resistant to Protegrin IB-367 under laboratory conditions that cause significant
resistance to traditional antibiotics. We believe that this difference results
from the fact that Protegrin IB-367 targets the cell membrane, a structure that
bacteria cannot readily change, and because Protegrin IB-367 kills
microorganisms extremely rapidly. By comparison, traditional antibiotics target
single enzymes or structures that the bacteria can change more easily.
Traditional antibiotics are also slower to kill or inhibit growth of the
bacteria, allowing the bacteria time to develop resistance mechanisms. We cannot
guarantee that some species of bacteria may not develop resistance in the future
to Protegrin IB-367.
We are developing Protegrin IB-367 Rinse for the reduction in severity of
oral mucositis. Cancer patients who are undergoing aggressive chemotherapy or
radiation treatment will swish Protegrin IB-367 Rinse in their mouths several
times per day while undergoing cancer therapy in an attempt to eliminate the
bacteria and lessen the severity of the ulcers. We believe Protegrin IB-367 is
well suited for the treatment of oral mucositis because it quickly kills the
bacteria and fungi found in the mouth.
CLINICAL STUDY RESULTS
In clinical trials, Protegrin IB-367 Rinse has been well tolerated and does
not appear to be absorbed into the bloodstream. In a recently completed
randomized, double-blind, placebo-controlled phase II clinical trial, Protegrin
IB-367 Rinse reduced the severity of oral mucositis in patients undergoing
chemotherapy. A total of 180 patients were randomized to receive either
Protegrin IB-367 Rinse or a placebo six times a day. Protegrin IB-367 Rinse was
found to reduce the severity of oral mucositis by 22% in the 134 evaluable
patients, a clinically meaningful reduction. These
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results were statistically significant with a p-value of less than 0.05. This
means that, applying widely-used statistical methods, the chance that these
results occurred by accident is less than 1 in 20.
Approximately one half of the patients in this trial started treatment with
Protegrin IB-367 Rinse at the same time as they started their chemotherapy. In
the group of 76 patients who started treatment early with Protegrin IB-367
Rinse, there was a 40% reduction (p = 0.047) in the severity of oral mucositis,
which represents a statistically significant improvement over the patients who
were treated with a placebo. In our phase II trial, there were a large number of
patients who discontinued the trial early while they still had oral mucositis.
They included both patients who were given a placebo as well as those who were
given Protegrin IB-367 Rinse. This prevented us from determining the duration of
their disease and whether Protegrin IB-367 Rinse was able to reduce the length
of time the patients had severe ulcers. In our management of the phase III
trial, we intend to implement several changes that are designed to improve
compliance.
In December 1999, we reviewed this data and discussed our proposed phase III
protocol with the FDA. We intend to initiate two randomized, double-blind,
placebo-controlled phase III trials to further assess its safety and efficacy in
the reduction in severity of oral mucositis in cancer patients receiving either
chemotherapy or radiotherapy.
If our phase III trials are successful, we intend to submit the results to
the FDA to support regulatory approval of the product. However, we cannot be
certain after further study that Protegrin IB-367 will prove to be safe or
effective in reducing the severity of oral mucositis in cancer patients
receiving either chemotherapy or radiotherapy, will receive regulatory
approvals, or will be successfully commercialized.
Protegrin IB-367 Gel for Prevention of Ventilator-Associated Pneumonia
Patients who need mechanical breathing assistance are at risk of developing
pneumonia. Because these patients have ventilator tubes in their mouths and
throats, microorganisms in their saliva can get into their lungs and cause
pneumonia. By killing these bacteria, we believe that we may be able to reduce
the incidence of this ventilator-associated pneumonia, or VAP. There are
presently no therapies approved for the prevention of VAP.
In the U.S., there are approximately 740,000 patients placed on ventilators
each year. The risk of acquiring VAP varies widely and is based on each
patient's condition and length of time on mechanical ventilation. It is
estimated that between 25% and 40% of patients who undergo mechanical
ventilation for more than 48 hours will develop VAP. Academic sources report
that 10% to 15% of patients who have contracted VAP will die from their
pneumonia. Patients contracting VAP require significant hospital resources,
including prolongation of their hospital stay by an average of four to 13 days.
Published clinical trials of other antibiotics applied in the mouth have
demonstrated a reduction in the number of patients who develop VAP. The use of
these antibiotics for this indication is not widespread because of the need to
combine several antibiotic products to achieve the desired effect. Physicians
are reluctant to prescribe these antibiotics to prevent VAP because of the risk
of developing resistant strains of the microorganisms. Protegrin IB-367 kills
most types of bacteria and yeast that are typically found in the mouth very
quickly. To date, there has been little evidence of bacterial resistance
developing to Protegrin IB-367.
A gel form of Protegrin IB-367 is being developed to kill bacteria that
might reside in the mouth. In a phase I clinical trial of Protegrin IB-367 Gel
conducted in healthy volunteers, the number of bacteria and fungi found in the
mouth one hour after treatment was reduced by 99.9%. An additional phase I trial
of Protegrin IB-367 Gel in ventilated patients evaluating safety and
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antimicrobial activity is planned for the first half of 2000. However, we cannot
be certain that Protegrin IB-367 Gel will prove to be safe or effective in the
prevention of VAP or that Protegrin IB-367 Gel will receive regulatory
approvals, or will be successfully commercialized.
Protegrin IB-367 Aerosol for Treatment of Respiratory Infections
Currently available antibiotics have not been effective in treating many of
the most severe forms of respiratory infection, including those associated with
cystic fibrosis. According to the Cystic Fibrosis Registry, cystic fibrosis
afflicts an estimated 23,000 people annually in the U.S. More than 95% of these
patients develop chronic respiratory infections, many of which are fatal. Over
the course of repeated treatments, bacteria colonize in patients' airways and
slowly become resistant to antibiotics. As the airway infection persists, the
patients develop progressive, destructive lung disease. The median survival age
for these patients is 31 years.
We believe Protegrin IB-367 Aerosol, when inhaled into the lung, may be
effective in treating respiratory infections. The initial goal of our clinical
development program is to determine whether Protegrin IB-367 Aerosol can safely
reduce the levels of bacteria in the lungs of patients with cystic fibrosis. We
are currently conducting a phase I trial to evaluate the safety of a single dose
of Protegrin IB-367 Aerosol in cystic fibrosis patients with chronic respiratory
infections. To date, this study has demonstrated that single inhaled doses of
Protegrin IB-367 Aerosol are well tolerated. We cannot be certain that Protegrin
IB-367 Aerosol will prove to be safe or effective in treating respiratory
infections, will receive regulatory approvals, or will be successfully
commercialized.
Our Research Programs
Our research focuses on discovering and developing compounds with novel
chemical structures and mechanisms of antimicrobial activity against bacteria or
fungi. We are also modifying the structure of some existing antibiotics to
improve their toxicity and efficacy profiles. We intend to file patent
applications on these compounds when appropriate. We currently have three
compounds in the preclinical research stage.
IB-880 SERIES
We are conducting a research program focused on a particular class of
antibiotics produced by microbial fermentation. This program is conducted in
collaboration with BioSource Pharm, Inc. We produced synthetic derivatives of
the natural products that have demonstrated efficacy against infections in
animals. We are in the process of further testing to identify a candidate drug
for clinical testing.
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IB-863 SERIES
We are also collaborating with BioSource Pharm, Inc. to identify appropriate
candidates for a new antifungal drug. To date, we have produced proprietary new
drug candidates with improved efficacy and reduced toxicity in animals compared
to other existing antifungals. A patent application has been filed on these new
compounds and further work is ongoing to select the best candidate compound for
preclinical evaluation.
IB-974 SERIES
We are collaborating with NAEJA Pharmaceuticals, Inc. on the development of
novel antifungal compounds that, in laboratory tests, kill a wide variety of
yeasts and other fungi. This new type of compound is chemically distinct from
the two main types of antifungal drugs currently on the market. We are in the
process of identifying appropriate candidates for preclinical testing.
Strategic Relationships
BIOSEARCH ITALIA S.P.A., GERENZANO, ITALY
In May 1998, we entered into a license agreement with Biosearch, under which
we have exclusive rights in the U.S. and Canada to develop and commercialize
products containing certain formulations of Ramoplanin for the treatment or
prevention of human disease. In addition to a licensing fee, we will make
payments to Biosearch upon the occurrence of specific development milestones. We
will share clinical data with Biosearch to assist in registration of products
containing Ramoplanin elsewhere in the world. Biosearch is also responsible for
the manufacture of Ramoplanin and will receive royalties and a manufacturing
margin on our sales of products containing Ramoplanin within the U.S. and
Canada. We have rights to manufacture Ramoplanin or to transfer manufacturing to
third parties in the event that Biosearch ceases or is unable to supply
Ramoplanin or if Biosearch's supply price for Ramoplanin rises above agreed
levels. We may terminate the agreement at will with respect to the U.S. or
Canada at any time prior to governmental approval.
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
In April 1994, we entered a license agreement with The Regents of the
University of California, under which we have exclusive rights, to develop and
commercialize Protegrin-based products. In addition to a licensing fee, we are
obligated to make payments to the Regents upon the occurrence of specific
development milestones. We will also make royalty payments to the Regents based
on sales of Protegrin-based products.
We may terminate the agreement upon written notice. The Regents may
terminate the agreement if any of the following occur: we fail to use diligent
efforts to develop and commercialize Protegrin-based products, we are unable to
meet certain targets for raising capital or expending resources for development
and commercialization of Protegrin-based products, or we cannot achieve the
commercialization milestones stated in a development plan that we present to the
Regents.
PolyPeptide Laboratories A/S, Hiller /, Denmark
In January 1997, we entered into both a Development Supply Agreement and a
Purchase Supply Agreement with PolyPeptide for the development of manufacturing
processes for Protegrin IB-367 and for the clinical and commercial manufacture
and supply of Protegrin IB-367, as a bulk
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drug substance. Under the Development Supply Agreement, we make payments to
PolyPeptide upon achievement of certain development milestones. Under the
Purchase Supply Agreement, we will pay PolyPeptide for set volumes and at set
prices.
The Development Supply Agreement will terminate after certain files relating
to Protegrin IB-367 are ready for submission to the FDA in connection with an
NDA. PolyPeptide is manufacturing Protegrin IB-367 exclusively for us. However,
we can transfer the manufacturing process to a third party if we choose.
Manufacturing
We intend to use contract manufacturers to prepare our drugs instead of
developing this capability internally. We have contracted for supply of bulk
drug substance for our two lead candidates. We have not yet selected contract
manufacturers for final formulation for commercialization. By using third party
manufacturers we can leverage their expertise and capital investment.
We have contracted with Biosearch for the manufacture of Ramoplanin.
Biosearch uses proprietary fermentation and purification processes to
manufacture Ramoplanin. Biosearch has improved the fermentation process, and
full-scale fermentation and purification at the proposed commercial
manufacturing site is currently ongoing. See "Strategic Relationships."
We have contracted with PolyPeptide for the manufacture of Protegrin IB-367.
PolyPeptide has manufactured the peptide on a pilot scale to our specifications.
The manufacturing process is now being scaled up at the proposed commercial
facility in advance of the commencement of our phase III clinical trial.
PolyPeptide is an established world leader in peptide manufacturing.
PolyPeptide and Biosearch are our single source suppliers of bulk drug
substance Ramoplanin and Protegrin, respectively. We have long-term supply
agreements in place and we expect to have sufficient capacity to enable
commercialization. If our contract manufacturers are unable or fail to produce
the required quantities of our drug candidates for clinical use on a timely
basis, at commercially reasonable prices, our current and future clinical trials
and our product development efforts will be delayed. If these facilities become
unavailable for any reason, if our contract manufacturers fail to comply with
the FDA's current good manufacturing practices, or if our contract manufacturers
terminate their agreements with us, we would have to find an alternative source
for manufacturing our drug candidates. Contract manufacturers often encounter
difficulties in scaling up production, including problems involving production
yields, quality control and quality assurance and shortage of qualified
personnel. If our contract manufacturers are unable to scale up production to
meet our commercial needs, our revenue may be adversely affected.
Intellectual Property
Pursuant to the agreement relating to Biosearch's manufacture of Ramoplanin,
we have licensed from Biosearch intellectual property providing U.S. and
Canadian development and marketing rights. This intellectual property consists
of trade secret protection of the fermentation and purification process used to
make Ramoplanin and a U.S. patent expiring in 2007 that covers certain aspects
of the fermentation process.
We own a U.S. patent covering Protegrin IB-367. This patent contains claims
to composition of matter, pharmaceutical compositions and methods of use. This
patent expires in 2015. Additional U.S. patent applications are also pending on
certain specific methods of use for Protegrin IB-367. In addition, we are either
the assignee, or the exclusive licensee, from the University of California of
four other U.S. patents that cover similar Protegrin structures. International
patent applications covering Protegrin IB-367 and the related peptides are
pending. In addition, we have filed a U.S. patent application for the IB-863
Series of antifungal compounds.
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We cannot guarantee that patents will be issued as a result of any patent
application or that patents that have issued will be sufficient to protect our
technology or products. We cannot predict the enforceability or scope of any
issued patent or those that may issue in the future. Moreover, others may
independently develop similar technologies or duplicate the technology we have
developed. We also rely on trade secrets and proprietary know-how for protection
of certain of our intellectual property. We cannot guarantee that our
confidentiality agreements provide adequate protection or remedies in the event
of unauthorized use or disclosure of our intellectual property. Third parties
may assert infringement or other claims against us. Even if these claims are
without merit, defending a lawsuit takes significant time, may be expensive and
may divert management attention from other business concerns and if
unsuccessful, we may be forced to license the intellectual property or
discontinue sales.
Marketing and Sales
We intend to market and sell our two initial products through a direct sales
force in the U.S. and Canada. We believe that a relatively small sales force can
be used for these products because prescribing decisions will be made by roughly
the same group of physicians, primarily oncologists. We plan to begin hiring
this sales force upon successful completion of phase III trials. This sales
force will initially target the largest 200 hospitals and cancer centers in the
U.S. We cannot guarantee that we will develop a sales force with the necessary
technical expertise and distribution capabilities.
We are evaluating opportunities to partner with other pharmaceutical
companies to develop and commercialize our products for which we have rights
abroad. We cannot guarantee that we will successfully develop or commercialize
our product candidates, achieve significant market penetration, or generate any
revenues from our products.
Competition
There are no products currently approved for the prevention of VRE
bloodstream infections. However there are products in development and on the
market for the treatment of VRE blood-stream infections. Currently, there is no
FDA approved treatment for oral mucositis. Ice chips, local painkillers and
narcotics are often used to reduce the patient's pain. Doctors routinely
prescribe mouthwashes containing traditional antibacterial and antifungal drugs
for the treatment of oral mucositis, although most clinical trials have shown
that they have suboptimal efficacy.
There are two additional means of addressing oral mucositis currently under
development in the pharmaceutical industry: chemoprotection and growth
modulation. Chemoprotection is a strategy to protect the rapidly dividing cells
that line the inside of the mouth from the side effects of the chemotherapy so
that this protective barrier is not destroyed, and microorganisms do not invade
the tissue. The growth modulation strategy seeks to reestablish the protective
barrier in the mouth to keep microorganisms out of the tissue by encouraging the
growth of new cells. These two approaches are currently under development and
can be used together with our antibiotic approach. We believe that these
therapies may be used in combination.
Our competitors include fully integrated pharmaceutical companies and
biotechnology companies. We are aware that several of these companies are
actively engaged in research and development in the areas related to cancer
therapy and antibiotic development, including some companies that address the
same disease indications as we address. Many of these companies have
substantially greater experience, financial and other resources than we do. In
addition, they may have greater experience in developing drugs, obtaining
regulatory approvals and manufacturing and marketing products. We cannot
guarantee that we can effectively compete with these other
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pharmaceutical and biotechnology companies. We believe the principal bases for
competition for our drug candidates are effectiveness, price and reimbursement
status, ease of administration and side effect profile.
Government Regulation
The research, development, testing, manufacture, labeling, promotion,
advertising, distribution, and marketing, among other things, of our products
are extensively regulated by governmental authorities in the U.S. and other
countries. The FDA regulates drugs, including antibiotics, under the Federal
Food, Drug, and Cosmetic Act and its implementing regulations. Failure to comply
with the applicable U.S. requirements may subject us to administrative or
judicial sanctions, such as FDA refusal to approve pending new drug
applications, warning letters, product recalls, product seizures, total or
partial suspension of production or distribution, injunctions, and/or criminal
prosecution.
The steps required before a drug may be marketed in the U.S. include:
- preclinical laboratory tests, animal studies, and formulation studies;
- submission to the FDA of an investigational new drug exemption, or IND,
for human clinical testing, which must become effective before human
clinical trials may commence;
- adequate and well-controlled clinical trials to establish the safety and
efficacy of the drug for each indication;
- submission to the FDA of new drug application, or NDA;
- satisfactory completion of an FDA inspection of the manufacturing facility
or facilities at which the drug is produced to assess compliance with
current good manufacturing practices; and
- FDA review and approval of the NDA.
Preclinical tests include laboratory evaluation of product chemistry,
toxicity, and formulation, as well as animal studies. The results of the
preclinical tests, together with manufacturing information and analytical data,
are submitted to the FDA as part of an IND, which must become effective before
human clinical trials may be commenced. An IND will automatically become
effective 30 days after receipt by the FDA, unless before that time the FDA
raises concerns or questions about issues such as the conduct of the trials as
outlined in the IND. In such a case, the IND sponsor and the FDA must resolve
any outstanding FDA concerns or questions before clinical trials can proceed. We
cannot be sure that submission of an IND will result in the FDA allowing
clinical trials to commence.
Clinical trials involve the administration of the investigational drug to
human subjects under the supervision of qualified investigators. Clinical trials
are conducted under protocols detailing the objectives of the study, the
parameters to be used in monitoring safety, and the effectiveness criteria to be
evaluated. Each protocol must be submitted to the FDA as part of the IND.
Clinical trials typically are conducted in three sequential phases, but the
phases may overlap or be combined. Each trial must be reviewed and approved by
an independent Institutional Review Board before it can begin. Phase I usually
involves the initial introduction of the investigational drug into people to
evaluate its safety, dosage tolerance, pharmacodynamics, and, if possible, to
gain an early indication of its effectiveness. Phase II usually involves trials
in a limited patient population to:
- evaluate dosage tolerance and appropriate dosage;
- identify possible adverse effects and safety risks; and
- evaluate preliminarily the efficacy of the drug for specific indications.
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Phase III trials usually further evaluate clinical efficacy and test further
for safety by using the drug in its final form in an expanded patient
population. We cannot guarantee that phase I, phase II, or phase III testing
will be completed successfully within any specified period of time, if at all.
Furthermore, we or the FDA may suspend clinical trials at any time on various
grounds, including a finding that the subjects or patients are being exposed to
an unacceptable health risk.
Assuming successful completion of the required clinical testing, the results
of the preclinical studies and of the clinical studies, together with other
detailed information, including information on the manufacture and composition
of the drug, are submitted to the FDA in the form of an NDA requesting approval
to market the product for one or more indications. Before approving an NDA, the
FDA usually will inspect the facility or the facilities at which the drug is
manufactured, and will not approve the product unless current good manufacturing
practices compliance is satisfactory. If the FDA determines the NDA and the
manufacturing facilities are acceptable, the FDA will issue an approval letter.
If the FDA determines the NDA submission or manufacturing facilities are not
acceptable, the FDA will outline the deficiencies in the submission and often
will request additional testing or information. Notwithstanding the submission
of any requested additional information, the FDA ultimately may decide that the
NDA does not satisfy the regulatory criteria for approval. The testing and
approval process requires substantial time, effort, and financial resources, and
we cannot be sure that any approval will be granted on a timely basis, if at
all. After approval, certain changes to the approved product, such as adding new
indications, manufacturing changes, or additional labeling claims are subject to
further FDA review and approval.
If regulatory approval is obtained, we will be required to comply with a
number of post-approval requirements. For example, as a condition of the NDA
approval, the FDA may require postmarketing testing and surveillance to monitor
the drug's safety or efficacy. In addition, holders of an approved NDA are
required to report certain adverse reactions, if any, to the FDA, and to comply
with certain requirements concerning advertising and promotional labeling for
their products. Also, quality control and manufacturing procedures must continue
to conform to current good manufacturing practices after approval, and the FDA
periodically inspects manufacturing facilities to assess compliance with current
good manufacturing practices. Accordingly, manufacturers must continue to expend
time, money, and effort in the area of production and quality control to
maintain compliance with current good manufacturing practices.
We use and will continue to use third-party manufacturers to produce our
products in clinical and commercial quantities, and we cannot be sure that
future FDA inspections will not identify compliance issues at our facilities or
at the facilities of our contract manufacturers that may disrupt production or
distribution, or require substantial resources to correct. In addition,
discovery of problems with a product may result in restrictions on a product,
manufacturer, or holder of an approved NDA, including withdrawal of the product
from the market. Also, new government requirements may be established that could
delay or prevent regulatory approval of our products under development.
The FDA's fast track program is intended to facilitate the development and
expedite the review of drugs intended for the treatment of serious or
life-threatening diseases and that demonstrate the potential to address unmet
medical needs for such conditions. Under this program, the FDA can, for example,
review portions of an NDA for a fast track product before the entire application
is complete, thus potentially beginning the review process at an earlier time.
We have applied for fast track status for Ramoplanin and we may seek to have
some of our other drug candidates designated as fast track products, with the
goal of reducing the development and review time. We cannot guarantee that the
FDA will grant any of our requests for fast track designation, that any fast
track designation would affect the time of review, or that the FDA will approve
the NDA submitted for any of our drug candidates, whether or not fast track
designation is granted. Additionally, the FDA approval of a fast track product
can include restrictions on the product's use or distribution
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(such as permitting use only for specified medical procedures or limiting
distribution to physicians or facilities with special training or experience).
Approval of fast track products can be conditional with a requirement for
additional clinical studies after approval.
FDA procedures also provide priority review of NDAs submitted for drugs
that, compared to currently marketed products, offer a significant improvement
in the treatment, diagnosis, or prevention of a disease. The FDA is supposed to
review NDAs that are granted priority status more quickly than NDAs given
standard status. FDA's current goal is to act on 90% of priority NDAs within six
months of receipt. Although the FDA historically has not met such goals, the
agency has made significant improvements in the timeliness of the review
process. We anticipate seeking priority review of Ramoplanin, and may do so with
regard to some of our other drug candidates. We cannot guarantee that the FDA
will grant priority review status in any instance, that priority review status
would affect the time review, or that the FDA will approve the NDA submitted for
any of our drug candidates, whether or not priority review status is granted.
Under certain circumstances, the FDA provides periods of marketing
exclusivity for new drugs that are the subject of an approved NDA. Ramoplanin
and Protegrin IB-367, if approved, may qualify for marketing exclusivity, which
would prevent any competitors from seeking approval of a generic version until
five years (four years, in some cases) after approval of our product. We cannot
be sure, however, that Ramoplanin, Protegrin IB-367 or any of our other products
will qualify for marketing exclusivity. Among other reasons, until recently,
antibiotics were not able to obtain such exclusivity, and the new law making
antibiotics eligible for exclusivity includes transition provision that could
lead the FDA to conclude that certain of our antibiotic products are not
eligible for marketing exclusivity. Additionally, even if a product is approved
and granted exclusivity, that does not guarantee that a competing product might
be approved and brought to market.
Outside the U.S., our ability to market our products will also be contingent
upon receiving marketing authorizations from the appropriate regulatory
authorities. The foreign regulatory approval process includes all the risks
associated with FDA approval described above. The requirements governing conduct
of clinical trials and marketing authorization vary widely from country to
country.
Under a new regulatory system in the European Union, marketing
authorizations may be submitted either under a centralized or decentralized
procedure. The centralized procedure provides for the grant of a single
marketing authorization that is valid for all European Union member states. The
decentralized procedure provides for mutual recognition of national approval
decisions. Under this procedure, the holder of a national marketing
authorization may submit an application to the remaining member states. Within
90 days of receiving the applications and assessment report, each member state
must decide whether to recognize approval.
We plan to choose the appropriate route of European regulatory filing in an
attempt to accomplish the most rapid regulatory approvals. However, the chosen
regulatory strategy may not secure regulatory approvals or approvals of the
chosen product indications. In addition, these approvals, if obtained, may take
longer than anticipated. We cannot guarantee that any of our products will prove
to be safe or effective, will receive regulatory approvals, or will be
successfully commercialized.
Employees
As of January 15, 2000, we had 93 full-time employees, 72 of whom were
engaged in product development and research activities and 21 of whom were
engaged in general and administrative activities. Many of our current employees
hold post-graduate degrees, including 6 M.D.s and 22 Ph.D.s. Our employees are
not represented by a collective bargaining agreement. We believe our relations
with our employees are good.
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Facilities
We are currently leasing three adjacent facilities in Mountain View,
California. These facilities provide approximately 16,000 square feet, 18,000
square feet and 7,000 square feet respectively. The leases on the two larger
facilities, containing laboratory and office space, expire in July 2004. The
lease for the smaller facility expires at the end of 2001. We intend to add two
additional facilities in Mountain View, California. These facilities provide
approximately 58,000 square feet and 60,000 square feet. These leases will
expire in 2010 and 2011, respectively. These facilities are adequate for our
current requirements.
Legal Proceedings
We are not a party to any material legal proceedings.
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MANAGEMENT
Executive Officers and Directors
The following table sets forth information regarding our executive officers
and directors as of December 31, 1999.
<TABLE>
<CAPTION>
Name Age Position
- ---- -------- --------
<S> <C> <C>
Kenneth J. Kelley............................ 40 President, Chief Executive Officer, and Director
Karen S. Campbell............................ 45 Vice President, Marketing
John C. Fiddes, Ph.D......................... 48 Vice President, Research and Development
Henry J. Fuchs, M.D.......................... 42 Vice President, Clinical Affairs
Chee-liang Leo Gu, Ph.D...................... 49 Vice President, Pharmaceutical Development
Natalie McClure, Ph.D........................ 47 Vice President, Regulatory Affairs
Sandra J. Wrobel............................. 40 Vice President, Corporate Strategy and Finance
Jane E. Shaw, Ph.D........................... 60 Director, Chairman of the Board
Michael F. Bigham............................ 42 Director
Fritz Buhler, Prof. Dr. med.................. 59 Director
Kathleen D. LaPorte.......................... 38 Director
Gary A. Lyons................................ 48 Director
John M. Padfield, Ph.D....................... 53 Director
Liza Page Nelson............................. 40 Director
Jack S. Remington, M.D....................... 69 Director
</TABLE>
- ------------------------
KENNETH J. KELLEY founded IntraBiotics in 1994 and has served as President,
Chief Executive Officer and Director since our inception. Prior to founding
IntraBiotics, Mr. Kelley co-founded Calydon, a biotechnology company focused on
prostate cancer and has served as a director since its founding in 1994. From
1988 to 1993, Mr. Kelley was a Senior Associate at Institutional Venture
Partners, a venture capital firm. From 1991 to 1992, Mr. Kelley served as Chief
Operating Officer for CV Therapeutics, a cardiovascular biotechnology company.
Mr. Kelley has also held positions at McKinsey & Company, an international
consulting firm, and at Integrated Genetics (now Genzyme, Inc.). Mr. Kelley
holds an M.B.A. degree from Stanford Graduate School of Business and a B.A.
degree in biochemical sciences from Harvard University.
KAREN S. CAMPBELL has served as our Vice President, Marketing since
July 1998. From 1995 to 1998, Ms. Campbell was the Director of Marketing for
Roche Laboratories, a global pharmaceutical company and focused primarily on
building the U.S. Transplant and Autoimmune Diseases business. From 1983 to
1994, Ms. Campbell held various marketing, sales and new product development
positions at Syntex Laboratories Inc., a pharmaceutical company. Ms. Campbell
holds an M.A. degree in Public Administration and a B.A. degree in Political
Science from the University of Delaware.
JOHN C. FIDDES, PH.D., has served as our Vice President, Research and
Development since June 1994. From 1991 to 1994, Dr. Fiddes was Vice President of
Discovery Research at ImmuLogic Pharmaceutical Corporation, a biotechnology
company. Dr. Fiddes conducted postdoctoral research in molecular biology at the
Department of Biochemistry and Biophysics at the University of California, San
Francisco and received a Ph.D. in molecular biology from King's College,
Cambridge University, where he conducted research at the MRC Laboratory for
Molecular Biology. Dr. Fiddes also holds a B.Sc. degree in molecular biology
from the University of Edinburgh in the United Kingdom.
HENRY J. FUCHS, M.D., has served as our Vice President, Clinical Affairs
since October 1996. From 1987 to 1996, Dr. Fuchs held various positions at
Genentech, a biotechnology company,
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where among other things, he had responsibility for the clinical program that
led to the approval for Genentech's Pulmozyme-Registered Trademark-. Dr. Fuchs
was also responsible for the Phase III development program that led to the
approval of Herceptin-Registered Trademark- to treat metastatic breast cancer.
Dr. Fuchs received an M.D. degree from George Washington University and a B.A.
degree in biochemical sciences from Harvard University.
CHEE-LIANG LEO GU, PH.D., has served as our Vice President, Pharmaceutical
Development since October 1999. From 1995 to 1999, Dr. Gu served as our Senior
Director of Pharmaceutical Development. Prior to joining IntraBiotics, Dr. Gu
held a series of senior scientific and management positions in pharmaceutical
development and formulation for Syntex Corporation (now Roche Bioscience), a
pharmaceutical company, and served as director in charge of manufacturing and
controls for CellCept-Registered Trademark-. Dr. Gu received his Ph.D. degree in
physical organic chemistry from the University of California, Los Angeles and
his B.S. degree in chemistry from National Taiwan University.
NATALIE MCCLURE, PH.D., has served as our Vice President, Regulatory Affairs
since October 1999. Dr. McClure has over 20 years experience in regulatory
affairs. From 1993 to 1999, Dr. McClure held various regulatory affairs
positions including Vice President, and Quality Assurance for Matrix
Pharmaceutical, Inc., a pharmaceutical company. Dr. McClure has seven chemical
publications and patents. Dr. McClure received her Ph.D. in organic chemistry
from Stanford University and her B.S. in chemistry from the University of
Michigan.
SANDRA J. WROBEL has served as our Vice President, Corporate Strategy and
Finance since October 1999. From 1987 to 1999, Ms. Wrobel held various positions
with Strategic Decisions Group (currently Navigant Consulting, Inc.), a
management consulting firm, where most recently she was Senior Managing Director
of its Pharmaceuticals and Life Sciences Strategy Consulting Practice. Prior to
this position, Ms. Wrobel was Managing Director of Strategic Decisions Group's
180-person headquarters office in Menlo Park, CA. While at Strategic Decisions
Group, Ms. Wrobel specialized in corporate strategy development, Research and
Development portfolio management, decision process transformation and
organizational change. Ms. Wrobel received her M.B.A. from the Stanford
University Graduate School of Business and her B.S. in Chemical and Petroleum
Refining Engineering from the Colorado School of Mines.
JANE E. SHAW, PH.D., has served as our Chairman of the Board since August
1996 and a director of the company since May 1996. Dr. Shaw is Chairman and
Chief Executive Officer of AeroGen, Inc., a privately held drug delivery
company. From 1987 to 1994 Dr. Shaw was President and Chief Operating Officer of
ALZA Corporation, a pharmaceutical company, where she held various other senior
management positions after starting her career at ALZA as a research scientist
in 1970. Dr. Shaw is a member of the Board of Directors of Intel Corporation,
McKesson Corporation, Boise Cascade Corporation, and Aviron. She received her
D.Sc. from Worcester Polytechnic Institute in Worcester, Massachusetts, and her
Ph.D. and B.Sc. degrees in Physiology from Birmingham University in the United
Kingdom.
MICHAEL F. BIGHAM has served as a director since October 1996. Mr. Bigham is
currently President and Chief Executive Officer of Coulter
Pharmaceutical, Inc., a publicly-traded biotechnology company focused on
oncology therapeutics. From 1988 to 1996, Mr. Bigham was Executive Vice
President and Chief Financial Officer of Gilead Sciences, Inc., a biotechnology
company. From 1984 to 1988, Mr. Bigham was the co-head of Healthcare Investment
Banking at Hambrecht & Quist, LLC. Mr. Bigham currently serves on the boards of
Datron Systems, Inc. and LJL BioSystems, Inc. Mr. Bigham is a CPA and received
his M.B.A. from Stanford Graduate School of Business and his B.S. degree in
Commerce from the University of Virginia.
FRITZ R. BUHLER, PROF. DR. MED., has served as a director since
December 1998. Prof. Dr. Buhler is currently Vice Chairman of the Board of
International Biomedicine Management Partners Inc. and
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Director of the European Center for Pharmaceutical Medicine at the University
Hospital of Basel in Switzerland. From 1991 to 1995, Prof. Dr. Buhler was
responsible for worldwide clinical research and development at F. Hoffmann-La
Roche Ltd., a pharmaceutical company. From 1987 to 1990, Prof. Dr. Buhler was
head of the Department of Research at the University Hospital of Basel in
Switzerland and did clinical work as a cardiologist at the University Hospitals,
as well as at Columbia University in New York and Harvard University in Boston.
Prof. Dr. Buhler received his M.D. from University of Basel, Switzerland.
KATHLEEN D. LAPORTE has served as a director since January 1994. From
January 1993 to the present, Ms. LaPorte has been affiliated with the Sprout
Group, the venture capital affiliate of Donaldson, Lufkin & Jenrette, and has
served as a general partner since December 1993. From August 1987 to
January 1993 Ms. LaPorte was a principal at Asset Management Company, a venture
capital firm focused on early stage biotechnology investments. Ms. LaPorte
currently serves on the boards of other companies including Lynx Therapeutics
and four privately held companies. She holds a B.S. in Biology from Yale
University and an M.B.A. from Stanford Graduate School of Business.
GARY A. LYONS has served as a director since December 1999. From 1993 to the
present, Mr. Lyons has been President and Chief Executive Officer of Neurocrine
Biosciences, Inc, a biopharmaceutical company. From 1983 to 1993, Mr. Lyons was
affiliated with Genentech and served as Vice President of Business Development
and Vice President of Sales. Mr. Lyons is a member of the Board of Directors of
Vical Inc., a gene delivery biopharmaceutical company. Mr. Lyons holds a B.S. in
Marine Biology from the University of New Hampshire and an M.B.A. from
Northwestern University's J.L. Kellogg Graduate School of Management.
JOHN M. PADFIELD, PH.D., has served as a director since June 1998. From 1999
to the present Dr. Padfield has been the Chief Executive Officer of Nycomed
Amersham Imaging, a diagnostic imaging and biotechnology supply company based in
Buckinghamshire, England and a member of the Board of Directors of Nycomed
Amersham plc, a health care company. From 1994 to the present Dr. Padfield was
Chief Executive Officer of Chiroscience Group plc, an emerging pharmaceutical
company based in Cambridge, England. His is also the past Chairman of the Board
of Directors of the BioIndustry Association in the United Kingdom. From 1979 to
1994 Dr. Padfield was affiliated with Glaxo Holdings plc, where he held board
positions in several subsidiary companies, most recently as Managing Director of
Glaxo Manufacturing Services Ltd. Dr. Padfield has a B.S. and Ph.D. in Pharmacy
from the University of Nottingham, England.
LIZA PAGE NELSON has served as a director since December 1999. From 1998 to
the present Ms. Nelson has been a Managing Director at Investor Growth, Inc., a
private equity investment group that advises Investor AB and its affiliates
(including Investor Guernsey Ltd.) on investments in healthcare and information
technology. Investor AB is an industrial holding company publicly traded in
Stockholm and London. From 1988 to 1998 Ms. Nelson was affiliated with
Pfizer Inc., a pharmaceutical company, where she held a variety of business
development and strategic planning positions including, Senior Director-Business
Development for Pfizer US Pharmaceuticals and Pfizer Health Solutions, Inc.
Ms. Nelson holds a B.A. in Economics from Wesleyan University and an M.B.A. from
Yale University's School of Management.
JACK S. REMINGTON, M.D., has served as a director since October 1996.
Dr. Remington is a nationally recognized authority in the field of infectious
disease medicine, and received the 1996 Bristol Award of the Infectious Disease
Society of America (IDSA). Dr. Remington currently serves as Chairman,
Department of Immunology and Infectious Diseases at the Research Institute of
the Palo Alto Medical Foundation and Professor, Department of Medicine, Division
of Infectious Diseases and Geographic Medicine, Stanford University School of
Medicine. In addition, Dr. Remington consults to leading pharmaceutical
companies with regard to antibiotic research and
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development and serves on numerous editorial boards of medical journals. In the
past, he has served as the President of the Infectious Disease Society of
America. Dr. Remington served his internship and residency at the University of
California, San Francisco, and received his M.D. and B.S. degrees from the
University of Illinois.
Committees of the Board of Directors
Our compensation committee consists of Dr. Shaw, Mr. Bigham, and
Dr. Padfield. The compensation committee makes recommendations regarding our
various incentive compensation and benefit plans and determines salaries for our
executive officers and incentive compensation for our employees and consultants.
Our audit committee consists of Dr. Shaw, Ms. LaPorte, and Ms. Nelson. The
audit committee makes recommendations to the board of directors regarding the
selection of our independent auditors, reviews the results and scope of the
audit and other services provided by our independent auditors and reviews and
evaluates our internal controls.
Board Composition
We currently have nine directors. Upon the closing of this offering the
terms of office of the board of directors will be divided into three classes. As
a result, a portion of our board of directors will be elected each year.
- The class I directors will be Ms. Nelson, Mr. Remington and Mr. Bigham and
their term will expire at the annual meeting of stockholders to be held in
2001.
- The class II directors will be Ms. LaPorte, Mr. Lyons and Dr. Shaw and
their term will expire at the annual meeting of stockholders to be held in
2002.
- The class III directors will be Mr. Kelley, Dr. Padfield and Dr. Buhler
and their term will expire at the annual meetings of stockholders to be
held in 2003.
At each annual meeting of stockholders after the initial classification, the
successors to directors whose term will then expire will be elected to serve
from the time of election and qualification until the third annual meeting
following election. In addition, the authorized number of directors may be
changed only by resolution of the board of directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the directors. This classification of the board of
directors may have the effect of delaying or preventing changes in control or
management of IntraBiotics.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee was, at any time since our
formation, an officer or employee of IntraBiotics. None of our executive
officers serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of our
board of directors or compensation committee.
Director Compensation
Our directors receive no cash compensation for their services as directors
but are reimbursed for their reasonable expenses in attending board meetings.
All directors are eligible to participate in the 1995 Stock Option Plan and the
2000 Equity Incentive Plan. Employee directors will be eligible to participate
in our 2000 Employee Stock Purchase Plan. See "Employee Benefit Plans" for
additional information relating to these plans.
41
<PAGE>
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. These people are referred to as the named executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Securities
-------------------- Underlying
Name and Principal Position Salary Bonus Options
- --------------------------- --------- -------- ------------
<S> <C> <C> <C>
Kenneth J. Kelley......................................... $277,083 $50,000 75,000
President, Chief Executive Officer
and Director
Henry J. Fuchs, M.D....................................... 221,667 -- 34,791
Vice President, Clinical Affairs
John C. Fiddes, Ph.D...................................... 205,423 -- 21,875
Vice President, Research
and Development
Karen S. Campbell......................................... 195,417 -- 35,416
Vice President, Marketing
Chee-liang Leo Gu, Ph.D................................... 158,333 -- 57,500
Vice President, Pharmaceutical
Development
</TABLE>
In accordance with the rules of the Commission, the compensation described
in this table does not include medical, group life insurance or other benefits
received by the named executive officers that are available generally to all our
salaried employees and certain perquisites and other personal benefits received
by the named executive officers, which do not exceed the lesser of $50,000 or
10% of any such officer's salary and bonus disclosed in this table.
42
<PAGE>
Option Grants in 1999
The following table sets forth each grant of stock options granted during
1999 to each of the named executive officers.
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable Value
Securities Options of Assumed Annual Rates
Total Granted to of Stock Price Appreciation
Underlying Employees Exercise for Option Term
Options in Fiscal Price (per Expiration -----------------------------
Name Granted Year share) Date 5% 10%
- ---- ----------- ----------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth J. Kelley............... 75,000 3.6% $1.50 6/10/09
Henry J. Fuchs, M.D............. 34,791 1.7% 1.50 6/10/09
John C. Fiddes, Ph.D............ 21,875 1.0% 1.50 6/10/09
Karen S. Campbell............... 35,416 1.7% 1.50 6/10/09
Chee-liang Leo Gu, Ph.D......... 57,500 2.7% 1.50 9/16/09
</TABLE>
The information regarding stock options granted to named executive officers
as a percentage of total options granted to employees in the fiscal year, as
disclosed in the table is based upon options to purchase an aggregate of
2,098,782 shares of common stock that were granted to all employees as a group,
including the named executive officers, in the fiscal year ended December 31,
1999.
The exercise price per share of each option granted was equal to the fair
market value of the common stock as determined by the board of directors on the
date of the grant.
Potential realizable values are computed by (a) multiplying the number of
shares of common stock subject to a given option by an assumed initial offering
price of per share, (b) assuming that the aggregate stock value derived
from that calculation compounds at the annual 5% or 10% rate shown in the table
for the entire ten-year term of the option and (c) subtracting from that result
the aggregate option exercise price. The 5% and 10% assumed annual rates of the
stock price appreciation are mandated by the rules of the Commission and do not
represent our estimate or projection of future common stock prices.
Aggregate Option Exercises in 1999 and Year-end Values at December 31, 1999
The following table sets forth, as to the named executive officers,
information concerning stock options granted during the fiscal year ended
December 31, 1999.
The information regarding the value realized reflects the fair market value
of our common stock underlying the option of date of exercise minus the
aggregate exercise price of the option.
The information regarding the value of unexercised in-the-money options is
based on a value of $ per share, the initial public offering price, minus
the per share exercise price, multiplied by the number of shares underlying the
option.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money options at
Shares December 31, 1999 December 31, 1999
Acquired on Value -------------------------- ----------------------------
Name Exercise Realized Vested Unvested Exercisable Unexercisable
- ---- ------------ -------- -------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth J. Kelley............... 75,520 $55,624 73,439 376,041
Henry J. Fuchs, M.D............. -- -- 92,707 152,084
John C. Fiddes, Ph.D............ -- -- 77,604 134,271
Karen S. Campbell............... -- -- 35,416 100,000
Chee-liang Leo Gu, Ph.D......... 48,000 63,900 28,092 71,408
</TABLE>
43
<PAGE>
Employee Benefit Plans
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
GENERAL. Our board of directors adopted our Amended and Restated 1995 Stock
Option Plan in February 1995, and our stockholders approved it in April 1995.
The stock option plan will terminate as of the effective date of this initial
public offering. The termination of the stock option plan will have no effect on
the options that have been granted thereunder. However, following the
termination of the stock option plan, no new stock options may be granted under
it.
CORPORATE TRANSACTIONS. If we dissolve or liquidate, then stock options
outstanding under the stock option plan will terminate immediately prior to such
event. However, we treat outstanding stock options differently in the following
situations:
- a merger or consolidation in which we are not the surviving corporation;
or
- a sale of substantially all of our property.
In these situations, the surviving corporation may either assume all outstanding
stock options under the stock option plan or substitute other options for the
outstanding options. In addition, in these situations, all outstanding options
held by employees who are not officers will become immediately vested and
exercisable as to one-half of the then unvested shares subject to such options.
Options held by employees who are officers will become fully vested and
exercisable in the event that such officers are involuntarily terminated without
cause or voluntarily resign for good reason, in either case within thirteen
months following the transaction described above. If the surviving corporation
does not assume or substitute, then, the options will terminate immediately
prior to the occurrence of the event described above.
STOCK OPTIONS GRANTED. As of December 31, 1999, we had issued 653,157
shares upon the exercise of options under the stock option plan and options to
purchase 3,746,896 shares at a weighted average exercise price of $1.16 were
outstanding.
2000 EQUITY INCENTIVE PLAN
GENERAL. Our board of directors adopted our 2000 Equity Incentive Plan in
January 2000, and our stockholders approved it in 2000. The 2000 Equity
Incentive Plan is intended to replace and supersede our 1995 Stock Option Plan.
SHARE RESERVE. We have reserved a total of 5,000,000 shares of our common
stock for issuance under the incentive plan. On December 31 of each year
starting with December 31, 2000 and continuing through and including
December 31, 2008, the share reserve will automatically be increased by a number
of shares equal to the LEAST of:
- 5% of our then outstanding shares of common stock on a fully-diluted
basis;
- 2,000,000 shares; or
- a lesser number of shares determined by our board of directors prior to
each anniversary date.
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.
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
44
<PAGE>
well as to determine the recipients of awards under the incentive plan and the
terms of such awards including the number of shares subject to the awards, the
vesting and/or exercisability of the awards and the exercise price of the
awards.
ELIGIBILITY. The board may grant incentive stock options qualified 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.
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 and nonstatutory stock options with an exercise price as low as
85% of the fair market value of a share on the grant date.
Incentive stock options granted to persons who, at the time of the grant,
own or are deemed to own stock possessing more than 10% of our total combined
voting power or the total combined voting power of one of our affiliates must
have an exercise price of at least 110% of the fair market value of the stock on
the grant date and a term of five or fewer years. For other options, the maximum
term is 10 years.
No employee may receive incentive stock options that exceed the $100,000 per
year fair market value limitation set forth in Section 422(d) of the Internal
Revenue Code. To determine whether the $100,000 per year limitation has been
exceeded, we calculate the fair market value of the aggregate number of shares
under all incentive stock options granted to an employee that will become
exercisable for the first time during a calendar year. Under the incentive plan,
options covering stock in excess of the $100,000 limitation are automatically
converted into nonstatutory stock options.
The board may provide for exercise periods of any length following an
optionholder's termination of service in individual options. Generally, options
will provide that they terminate three months after the optionholder's service
to us and our affiliates terminates. In the case of an optionholder's disability
or death, the exercise period generally is extended to 12 months or 18 months,
respectively.
The board may provide for the transferability of nonstatutory stock options
but not incentive stock options. However, the optionholder may designate as
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 by will or the laws of descent and
distribution.
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. In order
to qualify options granted under the incentive plan for an exemption for
performance based compensation provided under Section 162(m), no employee may be
granted options under the incentive plan covering an aggregate of more than
1,500,000 shares in any calendar year.
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.
45
<PAGE>
OTHER PROVISIONS. In the event of certain corporate transactions not
involving our receipt of consideration, such as a merger, consolidation,
reorganization, stock dividend, or stock split, the board will appropriately
adjust the incentive plan and outstanding awards as to the class and the maximum
number of shares subject to the incentive plan and to the Section 162(m) limit.
If we dissolve or liquidate, then outstanding stock awards will terminate
immediately prior to such event. Upon certain change in control transactions,
the surviving corporation may 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 the awards will accelerate and
will terminate immediately prior to the occurrence of the change in control. In
addition, upon certain change in control transactions, all outstanding awards
held by employees who are not officers will become immediately vested and
exercisable as to one-half of the then unvested shares subject to such awards.
Awards held by employees who are officers will become fully vested and
exercisable in the event that such officers are involuntarily terminated without
cause or voluntarily resign for good reason, in either case within thirteen
months following the change in control.
STOCK AWARDS GRANTED. No stock awards have been issued under the incentive
plan.
PLAN TERMINATION. The incentive plan will terminate in 2010 unless the
board terminates it sooner.
2000 EMPLOYEE STOCK PURCHASE PLAN
GENERAL. Our board adopted the 2000 Employee Stock Purchase Plan in January
2000, and our stockholders approved it in 2000.
SHARE RESERVE. We have authorized the issuance of 500,000 shares of our
common stock pursuant to purchase rights granted to eligible employees under the
purchase plan. On December 31 of each year, starting with December 31, 2000, and
continuing through and including December 31, 2008, 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 on a fully diluted
basis; or
- a number of shares to be determined by the 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.
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
46
<PAGE>
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.
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 25% 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.
Limitations on Liability and Indemnification Matters
Our amended and restated certificate of incorporation includes a provision
that eliminates the personal liability of our directors for monetary damages to
the fullest extent permitted by law. Current Delaware law does not permit the
elimination of monetary damages:
- for any breach of the director's duty of loyalty to the corporation or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; and
47
<PAGE>
- for any transaction from which the director derived an improper personal
benefit.
Our bylaws provide that:
- we must indemnify our directors and officers to the fullest extent
permitted by applicable law, subject to very limited exceptions;
- we may indemnify our other, employees and other agents to the same extent
that we indemnify our directors and officers, unless such indemnification
is prohibited by law; and
- we may secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the bylaws would permit indemnification.
We have entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, indemnify our directors and executive officers
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 us arising out of such person's services as our director or executive
officer, any of our subsidiaries or any other company or enterprise to which the
person provides services at our request. We believe that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers. Currently, there is no pending litigation or proceeding
involving any of our directors, executive officers or employees for which
indemnification is sought, nor are we aware of any threatened litigation that
may result in claims for indemnification.
We plan to obtain directors' and officers' liability insurance prior to the
effectiveness of this offering.
48
<PAGE>
CERTAIN TRANSACTIONS
PREFERRED STOCK SALES
In April 1997, we issued and sold an aggregate of 5,714,286 shares of
Series D preferred stock at a price per share of $1.75. These shares currently
convert into common stock at the rate of one share of common stock for each two
shares of Series D preferred stock.
In October 1997, we issued and sold an aggregate of 2,725,000 shares of
Series E preferred stock at a price per share of $2.75. These shares currently
convert into common stock at the rate of one share of common stock for each two
shares of Series E preferred stock.
In October 1997 and May 1998, we issued and sold an aggregate of 750,000
shares of Series F preferred stock at a price per share of $4.00. These shares
currently convert into common stock at the rate of one share of common stock for
each two shares of Series F preferred stock.
From November 1998 to January 1999, we issued and sold an aggregate of
7,656,981 shares of Series G preferred stock at a price per share of $3.00.
These shares currently convert into common stock at the rate of one share of
common stock for each two shares of Series G preferred stock.
In October 1999 we issued and sold an aggregate of 6,250,000 shares of
Series H preferred stock at a price per share of $4.00. In addition, we issued
warrants to purchase an aggregate of 1,250,000 shares of Series H preferred
stock, 1,100,000 of which were issued to Investor (Guernsey) Ltd., at an
exercise price of $5.00 per share. These shares currently convert into common
stock at the rate of one share of common stock for each two shares of Series H
preferred stock.
49
<PAGE>
The following 5% stockholders and stockholders associated with certain of
our officers and directors purchased shares in the financings. Upon the closing
of this offering, the following shares of preferred stock convert into common
stock at the rate of one share of common stock for each two shares of preferred
stock.
<TABLE>
<CAPTION>
Shares of Shares of Shares of Shares of Shares of
Series D Series E Series F Series G Series H
Preferred Preferred Preferred Preferred Preferred Total Aggregate
Purchaser Stock Stock Stock Stock Stock Shares Consideration
- --------- --------- --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ENTITIES AFFILIATED WITH THE
SPROUT GROUP
Sprout Capital VI, L.P.... 281,803 -- -- -- -- 281,803 $ 493,155
Sprout Capital VII,
L.P...................... 427,791 -- -- -- -- 427,791 $ 748,634
DLJ Capital Corporation... 44,719 -- -- -- -- 44,719 $ 78,258
Sprout CEO Fund, L.P...... 4,969 -- -- -- -- 4,969 $ 8,695
ENTITIES AFFILIATED WITH
SPINNAKER TECHNOLOGIES
Spinnaker Technology Fund,
L.P...................... 2,571,429 459,836 -- -- -- 3,031,265 $ 5,764,550
Spinnaker Technology
Offshore Fund, Ltd....... -- 425,389 -- -- -- 425,389 $ 1,169,820
Spinnaker Founders Fund... -- 1,454,600 -- -- -- 1,454,600 $ 4,000,150
Spinnaker Clipper Fund,
L.P...................... -- 35,175 -- -- -- 35,175 $ 96,731
Lawrence Bowman........... -- 285,714 -- -- -- 285,714 $ 785,714
ENTITIES AFFILIATED WITH
ST. PAUL VENTURE CAPITAL
St. Paul Fire and Marine
Insurance Company........ -- -- -- -- -- -- --
St. Paul Venture Capital
IV LLC................... 114,286 -- -- -- -- 114,286 $ 200,000
New York Life Insurance
Company................... 685,715 -- -- -- -- 685,715 $ 1,200,001
International BM Biomedicine
Holdings Inc.............. -- -- -- 1,833,334 -- 1,833,334 $ 5,500,002
Investor (Guernsey)
Ltd.(1)................... -- -- -- -- 5,500,000 5,500,000 $22,000,000
Beatrice G. Fuchs........... -- -- -- 120,000 -- 120,000 $ 360,000
Darlene & David Bossen...... -- -- -- 33,334 -- 33,334 $ 100,002
</TABLE>
- --------------------------
(1) In connection with this purchase, Investor (Guernsey) Ltd, was issued a
warrant to purchase 1,100,000 shares at an exercise price of $5.00 per
share.
In connection with the above transactions, we entered into agreements with
the investors providing for registration rights with respect to these shares.
The most recent such agreement is an Amended and Restated Investor Rights
Agreement dated October 15, 1999, which restates and incorporates the
registration rights of all investors. For more information regarding this
agreement, see "Description of Capital Stock--Registration Rights."
Ms. LaPorte, our director, is a general partner of Sprout Capital VI, L.P.
and Sprout Capital VII, L.P., funds managed by The Sprout Group, the venture
capital affiliate of Donaldson, Lufkin & Jenrette. Dr. Buhler, our director, is
Vice Chairman of the Board of International Biomedicine
50
<PAGE>
Management Partners Inc. the management company of International BM Biomedicine
Holdings Inc. Ms. Nelson, our director, is a managing director at Investor
Growth Capital, Inc. and advises Investor (Guernsey) Ltd. on investments in
health care and information technology.
Dr. Fuchs, our Vice President, Clinical Affairs, is the son of Beatrice
Fuchs and the son-in-law of Darlene and David Bossen.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with our officers and
directors containing provisions which may require us, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as officers or directors. See Management--Limitations of
Liability and Indemnification Matters for more information regarding
indemnification of our officers and directors.
51
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table provides summary information regarding the beneficial
ownership of our outstanding common stock as of December 31, 1999:
- each person or group who beneficially owns more than 5% of our common
stock;
- each of our directors;
- each of the executive officers named in the Summary Compensation Table;
and
- all of our executive officers and directors 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 21,081,054 shares of common stock outstanding as of
December 31, 1999, after giving effect to the conversion of all outstanding
shares of preferred stock into common stock upon the closing of the offerings,
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 IntraBiotics Pharmaceuticals, Inc., 1255 Terra Bella Ave., Mountain View,
California 94043.
<TABLE>
<CAPTION>
Percentage of Shares
Outstanding
--------------------------------
Name and Address Shares Before Offering After Offering
- ---------------- --------- --------------- --------------
<S> <C> <C> <C>
Entities affiliated with The Sprout Group (1)........ 3,651,932 17.3%
3000 Sand Hill Road, Suite 4-270
Menlo Park, CA 94025
Investor (Guernsey) Ltd. (2)......................... 3,300,000 15.3
P.O. Box 626
National Westminster House
Le Truchot St. Peter Port
Guernsey Channel Island
GY1 4PW
Entities affiliated with Spinnaker Technology (3).... 2,751,596 13.1
1875 South Grant Street, Suite 600
San Mateo, CA 94402
Entities affiliated with St. Paul Venture Capital
Inc. (4)........................................... 1,943,971 9.2
10400 Viking Dr., Suite 550
Eden Prairie, MN 55344
New York Life Insurance Company...................... 1,225,209 5.8
51 Madison Avenue, Suite 207
New York, NY 10010
Michael F. Bigham (5)................................ 51,726 *
Fritz Buhler, Prof. Dr. med. (6)..................... 916,667 4.3
Kenneth J. Kelley (7)................................ 796,412 3.8
Gary A. Lyons........................................ 0 *
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Percentage of Shares
Outstanding
--------------------------------
Name and Address Shares Before Offering After Offering
- ---------------- --------- --------------- --------------
<S> <C> <C> <C>
Kathleen D. LaPorte (1).............................. 3,651,932 17.3
Liza Page Nelson (2)................................. 3,300,000 15.3
John M. Padfield, Ph.D. (8).......................... 3,666 *
Jack S. Remington, M.D. (9).......................... 9,416 *
Jane E. Shaw, Ph.D. (10)............................. 38,536 *
Karen S. Campbell (11)............................... 39,583 *
John C. Fiddes, Ph.D (12)............................ 231,770 1.1
Henry J. Fuchs (13).................................. 97,916 *
Chee-Liang Leo Gu, Ph.D. (14)........................ 95,052 *
All executive officers and directors as a group
(15 people) (15)................................... 9,232,680 41.9
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares of common stock.
(1) Includes of 2,052,933 shares held by Sprout Capital VII, L.P., 1,352,727
shares held by Sprout Capital VI, L.P., 214,093 shares held by DLJ Capital
Corporation and 23,846 shares held by Sprout CEO Fund, L.P. Also includes
8,333 shares that DLJ Capital Corporation has the right to acquire pursuant
to options exercisable within 60 days of December 31, 1999. DLJ Capital
Corporation is the managing general partner of the Sprout funds.
Ms. LaPorte, a director of IntraBiotics, is a general partner of Sprout
Capital VI, L.P. and Sprout Capital VII, L.P., funds managed by The Sprout
Group. In such capacity, Ms. LaPorte may be deemed to have an indirect
pecuniary interest in an indeterminate portion of the shares beneficially
owned by the Sprout funds and DLJ Capital Corporation. Ms. LaPorte disclaims
beneficial ownership of the shares held by the Sprout funds and DLJ Capital
Corporation within the meaning of Rule 13d-3 under the Securities Act of
1934.
(2) Includes 550,000 shares Investor (Guernsey) Ltd. has the right to acquire
pursuant to an outstanding warrant exercisable within 60 days of
December 31, 1999. Ms. Nelson disclaims beneficial ownership of these shares
within the meaning of Rule 13d-3 under the Securities Act of 1934.
(3) Includes of 1,118,626 shares held by Spinnaker Technology Fund, L.P.,
797,199 shares held by Spinnaker Technology Offshore Fund, Ltd., 675,327
shares held by Spinnaker Founders Fund, 17,587 shares held by Spinnaker
Clipper Fund, L.P. and 142,857 shares held by Lawrence Bowman, president of
Bowman Capital Management. Bowman Capital Management is the fund manager for
the various Spinnaker funds.
(4) Includes of 1,886,828 shares held by St. Paul Fire and Marine Insurance
Company and 57,143 shares held by St. Paul Venture Capital IV LLC.
(5) Includes 9,412 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(6) All of these shares are held by International BM Biomedicine Holdings Inc.
Dr. Buhler, a director of IntraBiotics, is Vice Chairman of the Board of
International Biomedicine Management Partners Inc. In such capacity,
Dr. Buhler be deemed to have an indirect interest in an indeterminate
portion of the shares beneficially owned by International BM Biomedicine
Holdings Inc, Dr. Buhler disclaims beneficial ownership of the shares held
by International BM Biomedicine Holdings Inc. within the meaning of
Rule 13d-3 under the Securities Act of 1934.
53
<PAGE>
(7) Includes 84,896 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(8) Includes 3,666 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(9) Includes 9,416 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(10) Includes 24,250 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(11) Includes 39,583 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(12) Includes 81,770 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(13) Includes 97,916 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999.
(14) Includes 32,052 shares issuable upon exercise of options exercisable within
60 days of December 31, 1999 and 5,000 shares held in the name of Dr. Gu's
minor children.
(15) See footnotes 1,2 and 5 through 14 above, as applicable.
54
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Authorized and Outstanding Capital Stock
Our authorized capital stock as of December 31, 1999 consisted of 67,500,000
shares of common stock, and 40,937,873 shares of preferred stock. As of
December 31, 1999 our outstanding stock was held of record by a total of 163
stockholders.
Upon the closing of this offering:
- our certificate of incorporation will be amended and restated to provide
for a total of authorized capital consisting of 50,000,000 shares of
common stock and 5,000,000 shares of preferred stock; and
- all shares of preferred stock will convert into common stock, and a total
of shares of common stock and no shares of preferred stock will be
outstanding, based on the number of shares outstanding as of December 31,
1999 and assuming no exercise of the underwriters' over-allotment option,
after giving effect to the sale of the common stock we are offering.
COMMON STOCK
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 IntraBiotics, 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
According 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 5,000,000 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 diminish 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 IntraBiotics, 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, we had the following warrants outstanding:
- a warrant to purchase 54,000 shares of Series B preferred stock was
outstanding at an exercise price of $1.00 per share, which expires in
July 2001. Upon the closing of this
55
<PAGE>
offering, the warrant to purchase Series B preferred stock will become
exercisable for common stock at a rate of one share of common stock for
each two shares of Series B preferred stock at an exercise price of $2.00
per share.
- a warrant to purchase 50,000 shares of Series D preferred stock was
outstanding at an exercise price of $2.50 per share, which expires upon
the closing of this offering. Upon the closing of this offering, the
warrant to purchase Series D preferred stock will become exercisable for
common stock at a rate of one share of common stock for each two shares of
Series D preferred stock.
- warrants to purchase an aggregate of 1,250,000 shares of Series H
preferred stock were outstanding at an exercise price of $5.00 per share,
which expire in December 2001. Upon the closing of this offering, the
warrants to purchase Series H preferred stock will become exercisable for
common stock at a rate of one share of common stock for each two shares of
Series H Preferred Stock.
Each of the warrants contain provisions for the adjustment of the exercise
price and the aggregate number of shares issuable upon the exercise of the
warrants in the event of stock dividends, stock splits, reorganizations and
reclassifications and consolidations.
Registration Rights
Upon completion of this offering, holders of an aggregate of 19,603,479
shares of common stock (and warrants to purchase an aggregate of 625,000 shares
of common stock) will be entitled to rights to register these shares under the
Securities Act. These rights are provided under the Amended and Restated
Investor Rights Agreement, dated October 15, 1999. If we propose to register any
of our securities under the Securities Act after this offering, 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. 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 the
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 Delaware Law and Charter Provisions
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 that 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
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
56
<PAGE>
- on or subsequent to that date, the business combination is approved by our
board of directors and is authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least two-thirds of the outstanding voting stock 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 this 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
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 without stockholder approval.
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 90 days prior nor earlier than 120 days prior to the
first anniversary of the last annual meeting of stockholders. The authorized
number of directors is fixed by resolution of our board of directors. Our
amended and restated certificate of incorporation and bylaws provide for a
classified board of directors, in which approximately one third of the directors
will be elected each year. Our board of directors may appoint new directors to
fill vacancies or newly created directorships. Our 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
.
57
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have shares of common stock
outstanding. Of these shares, the shares sold in this offering will
be freely tradable without restriction under the Securities Act, unless
purchased by our "affiliates," as that term is defined in Rule 144 under the
Securities Act. A significant number of shares of our stock outstanding prior to
this offering is subject to 180-day lock-up agreements, and may not be sold in
the public market prior the expiration of the lock-up agreements. Deutsche Bank
Securities Inc. may release the shares subject to the lock-up agreements in
whole or in part at any time without prior public notice. However, Deutsche Bank
Securities Inc. has no current plans to effect such a release. Upon the
expiration of the lock-up agreements, approximately 17,211,923 additional shares
will be available for sale in the public market, subject in some cases to
compliance with the volume and other limitations of Rule 144.
<TABLE>
<CAPTION>
Days after Date Shares
of this Prospectus Eligible for Sale Comment
- ------------------ ----------------- -------
<S> <C> <C>
Upon effectiveness........................ 213,101 Freely tradable shares eligible for sale
under Rule 144(k) and not locked-up
90 days................................... 531,030 Shares not locked-up and saleable under
Rules 144 and 701
180 days.................................. 17,211,923 Lock-up released; shares saleable under
Rules 144 and 701
Various dates thereafter.................. 3,125,000 Restricted securities held for one year
or less as of 180 days following
effectiveness
</TABLE>
Rule 144
In general, under Rule 144 a person (or persons whose shares are aggregated)
who has beneficially owned shares for at least one year is entitled to sell
within any three-month period commencing 90 days after the date of this
prospectus a number of shares that does not exceed the greater of
- 1% of the then outstanding shares of our common stock (approximately
shares immediately after this offering) or
- the average weekly trading volume during the four calendar weeks preceding
such sale, subject to the filing of a Form 144 with respect to the sale.
A person (or persons whose shares are aggregated) who is not deemed to have
been our affiliate at any time during the 90 days immediately preceding the sale
who has beneficially owned his or her shares for at least two years is entitled
to sell these shares pursuant to Rule 144(k) without regard to the limitations
described above. Affiliates must always sell pursuant to Rule 144, even after
the applicable holding periods have been satisfied.
We cannot estimate the number of shares that will be sold under Rule 144, as
this will depend on the market price for our common stock, the personal
circumstances of the sellers and other factors. Prior to this offering, there
has been no public market for our common stock, and there can be no assurance
that a significant public market for our common stock will develop or be
sustained after this offering. Any future sale of substantial amounts of our
common stock in the open market may adversely affect the market price of our
common stock.
58
<PAGE>
Lock-Up Agreements
We and our directors, executive officers and certain of our stockholders
have agreed pursuant to the underwriting agreement and other agreements not to
sell any of our common stock without the prior consent of Deutsche Bank
Securities Inc. until 180 days from the date of this prospectus. Transfers or
dispositions can be made sooner only with the prior written consent of Deutsche
Bank Securities Inc.
Stock Options
We intend to file a registration statement on Form S-8 under the Securities
Act to register shares of our common stock that are subject to outstanding
options or reserved for issuance under our 1995 Stock Option Plan, our 2000
Equity Incentive Plan and our 2000 Employee Stock Purchase Plan immediately
following the effectiveness of this registration statement, which permits the
resale of these shares by nonaffiliates in the public market without restriction
under the Securities Act.
Rule 701
Any of our employees or consultants who purchased his or her shares pursuant
to a written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701, which permits nonaffiliates to sell their Rule 701
shares without having to comply with the public information, holding period,
volume limitations or notice provisions of Rule 144 and permits affiliates to
sell their Rule 701 shares without having to comply with the Rule 144
holding period restrictions, in each case commencing 90 days after the date of
this prospectus.
Registration Rights
After this offering the holders of 19,603,479 shares of our common stock
will be entitled to certain rights with respect to registration of such shares
under the Securities Act. Registration of these shares under the Securities Act
would result in these shares becoming freely tradable without restriction under
the Securities Act except for shares purchased by affiliates. See Description of
Capital Stock--Registration Rights.
59
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the
underwritings named below, through their representatives Deutsche Bank
Securities Inc., Warburg Dillon Read LLC, SG Cowen Securities Corporation and
Adams, Harkness & Hill, Inc. have severally agreed to purchase from IntraBiotics
the following respective number of shares of common stock at a public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus:
<TABLE>
<CAPTION>
Number of
Underwriter Shares
- ----------- ---------
<S> <C>
Deutsche Bank Securities Inc................................
Warburg Dillon Read LLC.....................................
SG Cowen Securities Corporation.............................
Adams, Harkness & Hill, Inc.................................
---------
Total...................................................
=========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions precedent and that the underwriters will purchase all
shares of the common stock offered hereby, other than those covered by the
over-allotment option described below, if any of these shares are purchased.
The underwriters propose to offer the shares of common stock to the public
at the public offering price set forth on the cover of this prospectus and to
dealers at a price that represents a concession not in excess of $ per
share under the public offering price. The underwriters may allow, and these
dealers may re-allow, a concession of not more than $ per share to other
dealers. After the initial public offering, representatives of the underwriters
may change the offering price and other selling terms.
We have granted to the underwriters an option, exercisable not later than
30 days after the date of this prospectus, to purchase up to
additional shares of common stock at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
prospectus. The underwriters may exercise this option only to cover
over-allotments made in connection with the sale of the common stock offered
hereby. To the extent that the underwriters exercise this option, each of the
underwriters will become obligated, subject to conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above tables bears
to the total number of shares of common stock offered hereby. We will be
obligated, pursuant to the option, to sell these additional shares of common
stock to the underwriters to the extent the option is exercised. If any
additional shares of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the shares
are being offered.
The underwriting fee is equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting fee is currently expected to be approximately 7% of the
initial public offering price. We have agreed to pay the underwriters the
following fees, assuming either no exercise or full exercise by the underwriters
of the underwriters' over-allotment option:
<TABLE>
<CAPTION>
Total Fees
---------------------------------------------
With Full Exercise of
Without Exercise of Over-Allotment
Fee Per Share Over-Allotment Option Option
------------- --------------------- ---------------------
<S> <C> <C> <C>
Fees paid by IntraBiotics................ $ $ $
</TABLE>
60
<PAGE>
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $ .
We have agreed to indemnify the underwriters against some specified types of
liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect of any of these
liabilities.
Each of our officers and directors, and certain holders of our stock, have
agreed not to offer, sell, contract to sell or otherwise dispose of, or enter
into any transaction that is designed to, or could be expected to, result in the
disposition of any shares of our common stock or other securities convertible
into or exchangeable or exercisable for shares of our common stock or
derivatives of our common stock owned by these persons prior to this offering or
common stock issuable upon exercise of options or warrants held by these persons
for a period of 180 days after the effective date of the registration statement
of which this prospectus is a part without the prior written consent of Deutsche
Bank Securities Inc. This consent may be given at any time without public
notice. We have entered into a similar agreement with the representatives of the
underwriters, except that we may grant options and issue shares under our 1995
Plan, and 2000 Equity Incentive Plan and sell shares under our 2000 Employee
Stock Purchase Plan. In addition, we can sell up to an aggregate of 1,000,000
shares to strategic and corporate partners and equipment lessors without such
consent. There are no agreements between the representatives and any of our
stockholders or affiliates releasing them from these lock-up agreements prior to
the expiration of the 180-day period.
The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
In order to facilitate the offering of our common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of our common stock. Specifically, the underwriters may over-allot
shares of our common stock in connection with this offering, thus creating a
short position in our common stock for their own account. A short position
results when an underwriter sells more shares of common stock than that
underwriter is committed to purchase. Additionally, to cover these
over-allotments or to stabilize the market price of our common stock, the
underwriters may bid for, and purchase shares of our common stock in the open
market. Finally, the representatives, on behalf of the underwriters, may also
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of our common
stock at a level above that which might otherwise prevail in the open market.
These transactions may be effected on the Nasdaq National Market or otherwise.
The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to shares for our vendors, employees, family
members of employees, customers and other third parties. The number of shares of
our common stock available for sale to the general public will be reduced to the
extent these reserved shares are purchased. Any reserved shares that are not
purchased by these persons will be offered by the underwriters to the general
public on the same basis as the other shares in this offering.
61
<PAGE>
Pricing of This Offering
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock has
been determined by negotiation among us and the representatives of the
underwriters. Among the primary factors considered in determining the public
offering price were:
- prevailing market conditions;
- our results of operations in recent periods;
- the present stage of our development;
- the market capitalization and stage of development of other companies that
we and the representatives of the underwriters believe to be comparable to
our business; and
- estimates of our business potential.
The estimated initial public offering price range set forth on the cover of
this preliminary prospectus is subject to change as a result of market
conditions and other factors.
62
<PAGE>
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. Latham &
Watkins, Costa Mesa, California, will pass upon certain legal matters related to
the offering for the underwriters.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements as of December 31, 1998 and 1999 and for each of the three years in
the period ended December 31, 1999. We have included our financial statements in
this prospectus and elsewhere in the registration statement in reliance on
Ernst & Young LLP's report, given upon their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission 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) 526-6800.
63
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<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-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
IntraBiotics Pharmaceuticals, Inc.
We have audited the accompanying balance sheets of IntraBiotics
Pharmaceuticals, Inc. as of December 31, 1998 and 1999, and the related
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1999. 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 IntraBiotics
Pharmaceuticals, Inc. at December 31, 1998 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Palo Alto, California
January 14, 2000,
except as to the second paragraph of Note 1,
as to which the date is
, 2000
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the reverse stock split described in Note 1 to the financial statements.
/s/ ERNST & YOUNG LLP
Palo Alto, California
January 26, 2000
F-2
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Pro forma
stockholders'
December 31, equity to
------------------- December 31,
1998 1999 1999 (Note 1)
-------- -------- -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, including restricted deposits
of $350.................................................. $ 29,869 $ 18,862
Short-term investments.................................... -- 12,567
Other current assets...................................... 144 633
-------- --------
Total current assets.................................... 30,013 32,062
Property and equipment, net................................. 2,045 3,828
Other assets................................................ 41 68
-------- --------
Total assets............................................ $ 32,099 $ 35,958
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,773 $ 2,295
Accrued clinical costs.................................... 1,310 916
Other accrued liabilities, principally related to
development milestones in 1998........................... 3,408 535
Amount payable to contract partner........................ -- 1,677
Deferred revenue.......................................... 738 --
Current portion of equipment financing obligations........ 505 896
-------- --------
Total current liabilities............................... 8,734 6,319
Long-term equipment financing obligations................... 867 1,725
Commitments
STOCKHOLDERS' EQUITY:
Preferred stock, at amounts paid in, $0.001 par value:
35,205,892 and 40,937,873 convertible shares authorized at
December 31, 1998 and 1999, 5,000,000 shares of preferred
stock authorized pro forma; 32,388,207 and 39,483,873
shares issued and outstanding at December 31, 1998 and
1999, respectively (aggregate liquidation preference of
$81,245), no shares of preferred stock issued and
outstanding pro forma..................................... 52,152 79,609 $ --
Common stock, $0.001 par value: 60,000,000 and 67,500,000
shares authorized at December 31, 1998 and 1999,
50,000,000 shares authorized pro forma; 1,001,030 and
1,339,154 shares issued and outstanding at December 31,
1998 and 1999, respectively, 21,081,054 shares issued and
outstanding pro forma..................................... 1 1 21
Additional paid-in capital.................................. 1,249 13,828 93,417
Deferred stock compensation................................. (1,145) (12,650) (12,650)
Accumulated deficit......................................... (29,759) (52,874) (52,874)
-------- -------- --------
Total stockholders' equity.............................. 22,498 27,914 $ 27,914
-------- -------- ========
Total liabilities and stockholders' equity................ $ 32,099 $ 35,958
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Contract revenue.......................................... $ 3,507 $ 5,357 $ 7,863
License fee and milestone revenue......................... 2,000 1,000 --
------- -------- --------
Total revenues.............................................. 5,507 6,357 7,863
------- -------- --------
Operating expenses:
Research and development.................................. 8,103 21,997 26,102
General and administrative................................ 1,960 2,533 6,082
------- -------- --------
Total operating expenses.................................... 10,063 24,530 32,184
------- -------- --------
Operating loss.............................................. (4,556) (18,173) (24,321)
Interest income............................................. 575 963 1,372
Interest expense............................................ (94) (172) (166)
------- -------- --------
Net loss.................................................... $(4,075) $(17,382) $(23,115)
======= ======== ========
Basic and diluted net loss per share........................ $ (6.39) $ (20.89) $ (21.62)
======= ======== ========
Shares used to compute basic and diluted net loss per
share..................................................... 638 832 1,069
======= ======== ========
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (1.27)
========
Shares used to compute pro forma basic and diluted net loss
per share (unaudited)..................................... 18,172
========
</TABLE>
See accompanying notes.
F-4
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Convertible Additional Deferred Total
Preferred Common Paid-In Stock Accumulated Stockholders'
Stock Stock Capital Compensation Deficit Equity
----------- --------- ---------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996......... $12,697 $1 $ 14 $ -- $ (8,302) $ 4,410
Issuance of 17 shares of common stock
upon exercise of options for cash... -- -- 3 -- -- 3
Issuance of 5,714 shares of Series D
convertible preferred stock for cash
(net of issuance costs of $50)...... 9,950 -- -- -- -- 9,950
Issuance of 2,725 shares of Series E
convertible preferred stock for cash
(net of issuance costs of $17)...... 7,477 -- -- -- -- 7,477
Issuance of 500 shares of Series F
convertible preferred stock for
cash................................ 2,000 -- -- -- -- 2,000
Net loss and comprehensive loss....... -- -- -- -- (4,075) (4,075)
------- -- ------- -------- -------- --------
Balances at December 31, 1997......... 32,124 1 17 -- (12,377) 19,765
Issuance of 205 shares of common stock
upon exercise of options for cash... -- -- 39 -- -- 39
Issuance of 250 shares of Series F
convertible preferred stock for
technology license.................. 1,000 -- -- -- -- 1,000
Issuance of 6,811 shares of Series G
convertible preferred stock for cash
(net of issuance costs of $1,406)... 19,028 -- -- -- -- 19,028
Deferred stock compensation........... -- -- 1,193 (1,193) -- --
Amortization of deferred stock
compensation........................ -- -- -- 48 -- 48
Net loss and comprehensive loss....... -- -- -- -- (17,382) (17,382)
------- -- ------- -------- -------- --------
Balances at December 31, 1998......... 52,152 1 1,249 (1,145) (29,759) 22,498
Issuance of 338 shares of common stock
upon exercise of options for cash... -- -- 93 -- -- 93
Issuance of 846 shares of Series G
convertible preferred stock for
cash................................ 2,580 -- -- -- -- 2,580
Issuance of 6,250 shares of Series H
convertible preferred stock and
warrants to purchase 1,250 shares of
Series H convertible preferred stock
for cash (net of issuance costs of
$123)............................... 24,877 -- -- -- -- 24,877
Deferred stock compensation........... -- -- 12,486 (12,486) -- --
Amortization of deferred stock
compensation........................ -- -- -- 981 -- 981
Net loss and comprehensive loss....... -- -- -- -- (23,115) (23,115)
------- -- ------- -------- -------- --------
Balances at December 31, 1999......... $79,609 $1 $13,828 $(12,650) $(52,874) $ 27,914
======= == ======= ======== ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Operating activities
Net loss.................................................. $(4,075) $(17,382) $(23,115)
Adjustments to reconcile net loss to net cash used in
operating activities:
Preferred stock issued in exchange for technology
license expense........................................ -- 1,000 --
Depreciation and amortization........................... 204 489 740
Amortization of deferred stock compensation............. -- 48 981
Changes in assets and liabilities:
Accounts receivable................................... (2,225) 2,225 --
Other current assets.................................. 1 (111) (489)
Other assets.......................................... -- (28) (27)
Accounts payable...................................... 237 2,316 (478)
Accrued clinical costs................................ 632 678 (394)
Other accrued liabilities............................. 861 2,440 (2,873)
Amount payable to contract partner.................... -- -- 1,677
Deferred revenue...................................... 1,705 (967) (738)
------- -------- --------
Net cash used in operating activities............... (2,660) (9,292) (24,716)
Investing activities
Capital expenditures...................................... (1,589) (597) (2,523)
Purchases of short-term investments....................... -- -- (14,862)
Maturities of short-term investments...................... -- -- 2,295
------- -------- --------
Net cash used in investing activities..................... (1,589) (597) (15,090)
Financing activities
Proceeds from issuance of preferred stock, net of issuance
costs.................................................... 19,427 19,028 27,457
Proceeds from issuance of common stock.................... 3 39 93
Proceeds from equipment financing......................... 1,131 397 2,033
Payments on equipment financing........................... (246) (485) (784)
------- -------- --------
Net cash provided by financing activities............... 20,315 18,979 28,799
------- -------- --------
Net increase (decrease) in cash and cash equivalents........ 16,066 9,090 (11,007)
Cash and cash equivalents at beginning of period............ 4,713 20,779 29,869
------- -------- --------
Cash and cash equivalents at end of period.................. $20,779 $ 29,869 $ 18,862
======= ======== ========
Supplemental disclosure of cash flow information
Interest paid............................................... $ 94 $ 172 $ 166
</TABLE>
See accompanying notes.
F-6
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
IntraBiotics Pharmaceuticals, Inc. ("IntraBiotics" or the "Company"), was
incorporated in the state of Delaware on January 19, 1994. IntraBiotics develops
and intends to commercialize novel antibacterial and antifungal drugs for the
prevention or treatment of serious infectious diseases. The Company has devoted
substantially all of its efforts and resources since incorporation to research
and development related to its antimicrobial products.
REVERSE STOCK SPLIT
In January 2000, the Company effected a one-for-two reverse split of its
common stock. All common share and per share amounts have been retroactively
restated to reflect the split in the accompanying financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, including amounts accrued for clinical trial costs. Actual
results could differ from those estimates.
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. Cash equivalents and
short-term investments include money market funds, commercial paper, and
government and commercial debt securities. All cash equivalents and short-term
investments are classified as available-for-sale and mature within one year.
Available-for-sale securities are carried at amortized cost, which approximated
fair value at December 31, 1998 and 1999. Material unrealized gains and losses,
if any, are reported in stockholders' equity and included in other comprehensive
loss. Fair value is estimated based on available market information. The cost of
securities sold is based on the specific identification method. For the years
ended December 31, 1998 and 1999, gross realized gains and losses on
available-for-sale securities were immaterial.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments, including cash and cash
equivalents, short-term investments, and equipment financing approximate their
carrying value. The fair value of the equipment financing is estimated using
discounted cash flow analyses, based on the Company's current incremental
borrowing rate for similar types of borrowing arrangements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation,
which is provided using the straight-line method over the estimated useful lives
of the respective assets, generally three to five years. Leasehold improvements
are depreciated over the terms of the building leases of up to seven years.
F-7
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
Contract revenue from collaboration research and development reimbursement
funding is recognized as earned, according to the terms of the collaboration
agreement, and is based on contract expenses incurred during the period and the
number of full-time equivalent employees working on the contract. These funds
are generally received in advance and are recorded as deferred revenue until
earned. Revenue related to license fees with noncancelable, nonrefundable terms
and no significant future performance obligations is recognized upon execution
of the collaboration agreement when collection is assured. Revenue associated
with milestones is recognized as earned, based on completion of development
milestones, either upon receipt, or when collection is assured.
RESEARCH AND DEVELOPMENT
Research and development expenditures are charged to operations as incurred.
Research and development expenses, including direct and allocated expenses,
consist of independent research and development costs, costs associated with
collaborative research and development arrangements, and, in 1998, license fees
related to the acquisition of in-process research and development with no
alternative future use.
STOCK-BASED COMPENSATION
The Company has elected to account for employee stock-based compensation in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"), using an intrinsic value approach to
measure compensation expense, if any. Deferred stock compensation calculated
according to APB 25 is amortized over the vesting period of the options, ranging
from four to six years, on a straight-line basis. Appropriate pro forma net loss
disclosures using a fair value-based method, as provided by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), are also reflected in Note 6. Options issued to
nonemployees are accounted for in accordance with SFAS 123 and EITF Consensus
96-18 using a fair value approach, and are subject to revaluation over their
vesting terms.
COMPREHENSIVE LOSS
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, "Reporting Comprehensive Income" ("SFAS 130"). The
Company's comprehensive loss was not materially different from the net loss for
the years ended December 31, 1997, 1998, and 1999.
NET LOSS PER SHARE
Net loss per share has been computed according to Financial Accounting
Standards Board Statement No. 128, "Earnings Per Share" ("SFAS 128"), which
requires disclosure of basic and diluted earnings per share. Basic and diluted
earnings per share is calculated using the weighted-average number of shares of
common stock outstanding during the period, less shares subject to repurchase.
Diluted earnings per share includes the impact of potentially dilutive
securities. As the
F-8
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Company's potentially dilutive securities (convertible preferred stock, stock
options, and warrants) were antidilutive for all periods, they were not included
in the computation of weighted-average shares used in computing diluted net loss
per share. Pro forma basic and diluted net loss per common share, as presented
in the statements of operations, has been computed for the year ended
December 31, 1999 as described above, and also gives effect to the conversion of
the convertible preferred stock which will automatically convert to common stock
immediately prior to the completion of the Company's initial public offering
(using the if-converted method) from the original date of issuance.
Following the guidance given by the Securities and Exchange Commission Staff
Accounting Bulletin No. 98, common stock and convertible 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 diluted net loss per common share as if these shares
had been outstanding for all periods presented. To date, the Company has not
issued or granted shares for nominal consideration.
The following is a reconciliation of the numerator and denominator of basic
and diluted net loss per share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Basic and diluted:
Net loss.................................................. $(4,075) $(17,382) $(23,115)
======= ======== ========
Weighted-average shares of common stock outstanding....... 783 856 1,069
Less: weighted-average shares subject to repurchase....... (145) (24) --
------- -------- --------
Weighted-average shares used in computing basic and
diluted net loss per share............................... 638 832 1,069
======= ======== ========
Basic and diluted net loss per share........................ $ (6.39) $ (20.89) $ (21.62)
======= ======== ========
Pro forma basic and diluted:
Shares used above......................................... 1,069
Pro forma adjustment to reflect weighted-average effect of
assumed conversion of preferred stock from the date of
issuance................................................. 17,103
--------
Total weighted-average shares of common stock outstanding
pro forma................................................. 18,172
========
Basic and diluted pro forma loss per share.................. $ (1.27)
========
</TABLE>
The total number of shares excluded from the calculations of diluted net
loss per share, prior to application of the treasury stock method for options,
warrants and convertible preferred stock was 14,147,012, 18,462,550, and
24,165,796 for the years ended December 31, 1997, 1998, and 1999, respectively.
Such securities, had they been dilutive, would have been included in the
computations of diluted net loss per share (see Note 6 for further information
on these securities).
F-9
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities" ("SFAS 133"), which establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as "derivatives") and for hedging
activities. SFAS 133 (as deferred by SFAS 137) is effective for the Company's
year ending December 31, 2001. As the Company does not currently hold
derivatives or engage in hedging transactions, there would be no current impact
to the Company's results of operations, financial position, or cash flows upon
the adoption of SFAS 133.
3. COLLABORATION AGREEMENT WITH PHARMACIA & UPJOHN S.p.A.
In October 1997, the Company entered into a collaboration agreement with
Pharmacia & Upjohn S.p.A. ("Pharmacia"), to develop and commercialize the
Company's Protegrin IB-367, on a worldwide basis. The Company was to receive up
to $35,000,000 in research and milestone payments, if specified research and
development goals were achieved, an equity investment, and license fees. A
nonrefundable license fee of $2,000,000 associated with the transfer of
development and commercialization rights to Pharmacia was received and
recognized as revenue in 1997. A nonrefundable development milestone of
$1,000,000 was received and recognized as revenue in 1998.
Pharmacia shared equally with the Company the costs of developing Protegrin
IB-367 for the United States market. Both parties had the right to codevelop,
copromote, and share defined profits and losses in the United States, should
IB-367 result in a marketable drug. Pharmacia had the right to develop and
promote Protegrin IB-367 outside the United States and would pay the Company
royalties on defined profits, if any. The Company recognized research contract
revenues of $3,507,000, $5,357,000, and $7,863,000 in 1997, 1998, and 1999,
respectively, relating to the reimbursement of shared development costs.
In connection with the collaboration, the Company sold to Pharmacia 500,000
shares of Series F preferred stock at $4.00 per share for an aggregate purchase
price of $2,000,000 in 1997.
The Company mutually agreed with Pharmacia in July 1999 to terminate the
agreement with funding through December 31, 1999. As a result of the
termination, the Company has retained global rights to Protegrin IB-367.
Pharmacia has no further obligations to pay future milestones or development
expenses, or to purchase additional shares of common stock subsequent to the
termination. Approximately $1.7 million of unused development funding will be
returned to Pharmacia.
F-10
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Machinery and equipment........................... $1,802 $ 2,753
Furniture and fixtures............................ 116 320
Construction in progress.......................... 34 --
Leasehold improvements............................ 970 2,372
------ -------
2,922 5,445
Less accumulated depreciation and amortization.... (877) (1,617)
------ -------
Property and equipment, net....................... $2,045 $ 3,828
====== =======
</TABLE>
The Company has financed an aggregate of $2,251,000 and $4,284,000 at
December 31, 1998 and 1999, respectively, of equipment purchased under equipment
financing agreements totaling $5,500,000. The loans are secured by the related
assets.
5. LEASE COMMITMENTS AND EQUIPMENT FINANCINGS
The Company leases its facilities under operating lease agreements which
expire in December 2001 and July 2004. At December 31, 1999, the Company has
made available letters of credit for $350,000 in connection with these leases.
Total rent expense for the years ended December 31, 1997, 1998, and 1999 was
approximately $342,000, $502,000, and $786,000, respectively.
At December 31, 1999, future minimum lease payments under operating leases
and principal payments under the equipment financing arrangements are as follows
(in thousands):
<TABLE>
<CAPTION>
Operating Financing
Leases Arrangements
--------- ------------
<S> <C> <C>
2000................................................ $1,050 $ 896
2001................................................ 838 822
2002................................................ 860 764
2003................................................ 873 139
2004................................................ 462 --
------ ------
Total minimum payments required..................... $4,083 2,621
======
Less current portion................................ (896)
------
Long-term portion................................... $1,725
======
</TABLE>
In August 1999, the Company entered into a term loan agreement with Silicon
Valley Bank for $5,000,000. The loan agreement has a revolving draw period
expiring in August 2000, and bears interest at prime plus 1.25%. Interest-only
payments are due until August 2000, and thereafter principal and interest is
payable thereafter over four years. The term loan also includes various
financial covenents and a restriction on paying dividends. No amounts had been
drawn under this arrangement at December 31, 1999.
F-11
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. STOCKHOLDERS' EQUITY
COMMON STOCK RESERVED FOR FUTURE ISSUANCE
Shares of common stock of the Company reserved for future issuance at
December 31, 1999 were as follows:
<TABLE>
<S> <C>
Conversion of convertible preferred stock................... 19,741,900
Stock option plan........................................... 3,870,397
Warrants.................................................... 677,000
----------
24,289,297
==========
</TABLE>
CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue 40,937,873 shares of convertible
preferred stock at December 31, 1999. Each share of convertible preferred stock
has voting rights equal to shares of common stock on an "if-converted" basis.
The convertible preferred stock authorized, issued and outstanding at
December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Shares Issued Aggregate
Shares and Liquidation
Authorized Outstanding Preference
----------- ------------- -----------
(In
thousands)
<S> <C> <C> <C>
Series A.............................. 821,429 821,429 $ 411
Series B.............................. 5,803,996 5,749,996 4,025
Series C.............................. 9,816,181 9,816,181 8,344
Series D.............................. 5,764,286 5,714,286 10,000
Series E.............................. 2,725,000 2,725,000 7,494
Series F.............................. 750,000 750,000 3,000
Series G.............................. 7,656,981 7,656,981 22,971
Series H.............................. 7,600,000 6,250,000 25,000
---------- ---------- -------
40,937,873 39,483,873 $81,245
========== ========== =======
</TABLE>
Series A, B, C, D, E, F, G, and H stockholders are entitled to noncumulative
quarterly dividends, when and as declared by the board of directors, at the rate
of $0.04, $0.06, $0.07, $0.15, $0.23, $0.35, $0.25, and $0.35 per share,
respectively (as adjusted for any stock dividends, combinations, or splits with
respect to such shares). No dividends have been declared or paid by the Company.
In the event of a liquidation or winding up of the Company, holders of
Series A, B, C, D, E, F, G, and H stockholders are entitled to a liquidation
preference of $0.50, $0.70, $0.85, $1.75, $2.75, $4.00, $3.00, and $4.00 per
share, respectively, plus all declared but unpaid dividends. After payment has
been made to the preferred stockholders, the remaining assets of the Company
legally available for distribution, if any, shall be distributed ratably to the
holders of the common stock and preferred stock on an if-converted basis.
Each two shares of preferred stock are convertible at any time at the option
of the holder into one share of common stock adjusted, if applicable, for unpaid
dividends, stock splits, combinations,
F-12
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. STOCKHOLDERS' EQUITY (Continued)
and certain other events. Conversion of the preferred stock into common stock is
automatic at the earlier of an initial public offering in excess of $25,000,000
at an offering price of not less than $12.00 per share (subsequently reduced to
$10.00 per share in January 2000), or the election by more than 66 2/3% of the
shares held by the preferred stockholders, voting together as a class.
At the election of the holders of at least 50% of the outstanding preferred
stock, the Company shall file a registration statement with an aggregate
offering price to the public in excess of $3,000,000.
Prior to an initial public offering, certain preferred stockholders have the
right of first refusal with respect to certain future issuances of preferred or
common stock.
WARRANTS
In July 1995 and October 1997, the Company issued warrants to purchase
54,000 and 50,000 shares of the Company's Series B and D preferred stock at
exercise prices of $1.00 and $2.50 per share, respectively. These warrants were
issued in connection with an equipment financing agreement. The 1995 warrants
expire on the earlier of July 2001 or the sale of substantially all of the
Company's assets. The 1997 warrants expire on the earlier of October 2003 or the
closing of the Company's initial public offering, the merger of the Company with
or into another corporation and the sale of substantially all of the Company's
assets. The value assigned to these warrants was not material.
In October 1999, the Company issued warrants to purchase 1,250,000 shares of
the Company's Series H preferred stock at an exercise price of $5.00 per share.
These warrants were issued in connection with the Series H preferred stock
financing, and expire on December 31, 2001. The value of these warrants is
included with the Series H preferred stock issued on that date.
Through December 31, 1999, no warrants have been exercised.
1995 INCENTIVE STOCK PLAN
The 1995 Incentive Stock Plan (the "Plan") was amended and restated in 1999
and allows the granting of options for up to 4,523,554 shares of common stock to
employees, consultants, and directors.
Stock options granted under the Plan may be either incentive stock options
or nonstatutory stock options. Incentive stock options may be granted to
employees with exercise prices of no less than the fair value and nonstatutory
options not less than 85% of the fair value of the common stock on the date of
grant, as determined by the board of directors. All options are to have a term
not greater than 10 years from the date of grant. The board of directors shall
determine the time or times during the term when the options may be exercised
and the number of shares for which an option may be granted. Options generally
vest ratably over a period ranging from four to six years.
F-13
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. STOCKHOLDERS' EQUITY (Continued)
A summary of the Company's stock option activity and related information
follows:
<TABLE>
<CAPTION>
Options Outstanding
--------------------------
Weighted-
Number of Average
Shares Exercise Price
--------- --------------
<S> <C> <C>
Balance at December 31, 1996....................... 935,575 $0.17
Granted.......................................... 527,650 $0.45
Exercised........................................ (17,446) $0.19
Canceled......................................... (14,194) $0.27
---------
Balance at December 31, 1997....................... 1,431,585 $0.27
Granted.......................................... 1,128,800 $0.99
Exercised........................................ (205,253) $0.19
Canceled......................................... (138,650) $0.53
---------
Balance at December 31, 1998....................... 2,216,482 $0.63
Granted.......................................... 2,160,782 $1.54
Exercised........................................ (338,124) $0.27
Canceled......................................... (292,244) $0.92
---------
Balance at December 31, 1999....................... 3,746,896 $1.16
=========
</TABLE>
At December 31, 1997, 1998, and 1999, options to purchase 520,298, 690,253,
and 818,569 shares, respectively, of common stock were exercisable. The
following tables summarize information about options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ----------------------------------------------------------------------------- -------------------------------------
Weighted-
Average Weighted- Weighted-
Range of Number of Remaining Average Exercise Number of Average Exercise
Exercise Price Shares Contractual Life Price Shares Price
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(Years)
<S> <C> <C> <C> <C> <C>
$0.10-$0.90 765,207 6.4 $0.31 570,900 $0.28
$1.00-$1.00 1,210,907 8.5 $1.00 194,590 $1.00
$1.50-$1.50 1,276,182 9.6 $1.50 51,258 $1.50
$2.00-$2.00 494,600 10.0 $2.00 1,821 $2.00
----------------- -----------------
3,746,896 8.6 $1.16 818,569 $0.53
================= =================
</TABLE>
The weighted-average fair value of options granted during 1997, 1998, and
1999 was $0.05, $0.09, and $5.50, respectively.
F-14
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. STOCKHOLDERS' EQUITY (Continued)
Pro forma information regarding net income (loss) is required by SFAS 123,
and has been determined as if the Company had accounted for its employee stock
options under the fair value method of that statement. The fair value for these
options was estimated at the date of grant using the minimum value method with
the following weighted-average assumptions:
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------
1997 1998 1999
-------- -------- ---------
<S> <C> <C> <C>
Risk-free interest rates....................... 6.5% 5.0% 5.5%
Dividend yield................................. -- -- --
Expected life of option........................ 4 years 4 years 4.5 years
</TABLE>
Pro forma net loss information applying the minimum value method to the
Company's stock options granted in 1997, 1998, and 1999 is as follows. Future
pro forma net income (loss) results may be materially different from actual
amounts reported.
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net loss--as reported......................... $(4,075) $(17,382) $(23,115)
Net loss--pro forma........................... $(4,096) $(17,429) $(25,172)
Basic and diluted net loss per share--as
reported.................................... $ (6.39) $ (20.89) $ (21.62)
Basic and diluted net loss per share--pro
forma....................................... $ (6.42) $ (20.95) $ (23.55)
</TABLE>
During the years ended December 31, 1998 and 1999, in connection with the
grant of certain stock options to employees and officers, the Company recorded
deferred stock compensation of $1,193,000 and $12,486,000, respectively,
representing the difference between the exercise price and the deemed fair value
of the Company's common stock for financial reporting purposes on the date such
stock options were granted. Deferred compensation is included as a component of
stockholders' equity and is being amortized to expense on a straight-line basis
over the vesting period of the options, ranging from four to six years. During
the years ended December 31, 1998 and 1999, the Company recorded amortization of
deferred stock compensation expense of approximately $48,000 and $981,000,
respectively. Additional deferred compensation of approximately $2,100,000
(unaudited) is expected to be recorded based on the deemed fair value of common
stock options granted to employees during January 2000.
7. LICENSING, RESEARCH, AND TECHNOLOGY CONTRACTS
The Company has entered into agreements with academic institutions under
which it obtained certain licenses to technology under development. In exchange
for the licenses, the Company made certain payments, and agreed to pay the
institutions additional amounts and specified royalties upon the occurrence of
certain events. The academic institutions may terminate the agreements upon the
occurrence of certain events.
F-15
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
7. LICENSING, RESEARCH, AND TECHNOLOGY CONTRACTS (Continued)
In January 1997, the Company entered into an agreement with a company to
develop a manufacturing process and is obligated to pay up to an aggregate of
$2,895,000 based on the achievement of certain development milestones. The
Company also entered into a related purchase and supply agreement. For the years
ended December 31, 1997, 1998 and 1999, the Company has incurred development and
milestone payments of $910,000, $1,025,000 and $750,000, respectively, under the
agreement, which were charged to research and development expense.
During 1998, the Company recorded $2,000,000 in license fee expense in
connection with the purchase of rights to develop and commercialize a
clinical-stage drug. The purchase price, which was expensed as in-process
research and development as the rights had no alternative future use, consisted
of the issuance of 250,000 shares of Series F preferred stock and $1,000,000 in
cash. The Company may pay up to an additional $14,000,000 in license fees and
milestone payments, if specified research and development goals are reached.
8. INCOME TAXES
As of December 31, 1999, the Company had federal and state net operating
loss carryforwards of approximately $46,000,000 and $23,000,000, respectively.
The Company also had federal research and development tax credit carryforwards
of approximately $1,000,000. The net operating loss and credit carryforwards
will expire at various dates beginning on 2002 through 2019, if not utilized.
Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the "change in ownership" provisions of 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.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets for financial reporting and the amount
used for income tax purposes. Significant components of the Company's deferred
tax assets for federal and state income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1999
----------- --------
<S> <C> <C>
Net operating loss carryforwards..................... $ 11,000 $ 17,300
Research credits..................................... 1,100 1,300
Capitalized research and development................. 500 1,200
Intangible assets.................................... -- 1,500
Other................................................ -- (200)
-------- --------
Total deferred tax assets............................ 12,600 21,100
Valuation allowance.................................. (12,600) (21,100)
-------- --------
Net deferred tax assets.............................. $ -- $ --
======== ========
</TABLE>
Because of the Company's lack of earnings history, the deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $2,000,000, $7,400,000 and $8,500,000 during the years ended
December 31, 1997, 1998 and 1999, respectively.
F-16
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
9. EVENTS SUBSEQUENT TO THE DATE OF INDEPENDENT AUDITORS' REPORT
PUBLIC OFFERING
In January 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 is consummated under the terms currently anticipated,
the convertible 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 December 31, 1999 reflects
conversion of the outstanding preferred stock into 19,741,900 shares of common
stock.
2000 EQUITY INCENTIVE PLAN
In January 2000, the board adopted, subject to stockholder approval, the
2000 Equity Incentive Plan (the "equity incentive plan"). The aggregate number
of shares that may be issued pursuant to stock awards granted under the equity
incentive plan is 5,000,000 shares. On the first nine anniversaries of the
effective date of this offering, starting with 2001, the authorized shares will
automatically be increased by a number of shares equal to the lesser of:
- 5% of the then outstanding shares of common stock on a fully-diluted
basis;
- 2,000,000 shares; or
- a lesser number of shares determined by the board of directors prior to
each anniversary date.
2000 EMPLOYEE STOCK PURCHASE PLAN
In January 2000, the board adopted, subject to stockholder approval, the
2000 Employee Stock Purchase Plan (the "purchase plan"), authorizing the
issuance of 500,000 shares of common stock pursuant to purchase rights granted
to employees. On each of the first nine anniversaries of the effective date of
the purchase plan, beginning in January 2001, the number of shares authorized
under the purchase plan will automatically be increased by the lesser of 1% of
the total number of shares outstanding on the anniversary date, or
shares.
The purchase plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended. As of the date hereof, no shares of common stock have been purchased
under the purchase plan.
The purchase plan permits eligible employees to purchase common stock at a
discount, but only through payroll deductions, during defined offering periods.
The price at which stock is purchased under the purchase plan is equal to 85% of
the fair market value of the common stock on the first or last day of the
offering period, whichever is lower. The initial offering period will commence
on the effective date of the offering.
F-17
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide information different from that contained in
this prospectus. We are offering to sell, and seeking offers to buy, shares of
common stock only in jurisdictions where offers and sales are permitted. 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 our common stock.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Summary................................... 1
Risk Factors.............................. 5
Special Note Regarding Forward-Looking
Statements and Industry Data............ 14
Use of Proceeds........................... 15
Dividend Policy........................... 15
Capitalization............................ 16
Dilution.................................. 17
Selected Financial Data................... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 19
Business.................................. 23
Management................................ 38
Certain Transactions...................... 49
Principal Stockholders.................... 52
Description of Capital Stock.............. 55
Shares Eligible for Future Sale........... 58
Underwriting.............................. 60
Legal Matters............................. 63
Experts................................... 63
Where You Can Find Additional
Information............................. 63
Index to Financial Statements............. F-1
</TABLE>
Until , 2000 (25 days after the date of this prospectus), all dealers
that buy, sell or trade in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. Dealers are also
obligated to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
[LOGO]
Shares
Common Stock
Deutsche Banc Alex. Brown
Warburg Dillon Read LLC
SG Cowen
Adams, Harkness & Hill, Inc.
Prospectus
, 2000
<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>
<CAPTION>
<S> <C>
SEC registration fee........................................ $ 23,760
NASD filing fee............................................. 9,500
Nasdaq National Market listing fee.......................... 95,000
Blue Sky Fees and expenses.................................. 5,000
Transfer Agent and Registrar fees........................... 10,000
Accounting fees and expenses................................ 250,000
Legal fees and expenses..................................... 450,000
Printing and engraving costs................................ 165,000
Miscellaneous expenses...................................... 41,740
----------
Total..................................................... $1,050,000
==========
</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 officers and may indemnify our 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 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 IntraBiotics
Pharmaceuticals, Inc., 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 IntraBiotics Pharmaceuticals, Inc., 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>
Item 15. RECENT SALES OF UNREGISTERED SECURITIES
The following table sets forth information regarding all securities sold by
the Registrant since January 1, 1997:
1. In April 1997, we issued and sold 5,714,286 shares of Series D preferred
stock, each two of which will convert into one share of common stock upon
completion of this offering, at $1.75 per share to 17 accredited investors,
787,854 of which were sold to two of our executive officers and/or directors
(and related entities).
2. In October 1997, we issued a warrant to purchase 50,000 shares of Series D
preferred stock, which will convert into a warrant to purchase shares of
common stock upon the completion of this offering, to one accredited
investor, at an exercise price of $2.50 per share.
3. In October 1997, we issued and sold 2,725,000 shares of Series E preferred
stock, each two of which will convert into one share of common stock upon
completion of this offering, at $2.75 per share to five accredited
investors.
4. In October 1997 and May 1998, we issued and sold 500,000 and 250,000 shares
of Series F preferred stock, respectively, each two of which will convert
into one share of common stock upon completion of this offering, at $4.00
per share to two accredited investors.
5. In November 1998, December 1998 and January 1999, we issued and sold
6,197,315, 614,000 and 845,666 shares of Series G preferred stock,
respectively, each two of which will convert into one share of common stock
upon completion of this offering, at $3.00 per share to 62 accredited
investors, 1,833,334 of which were sold to one of our executive officers
and/or directors (and related entities).
6. In October 1999, we issued and sold 6,250,000 shares of Series H preferred
stock, each two of which will convert into one share of common stock upon
completion of this offering, at $4.00 per share to four accredited
investors, 5,500,000 of which were sold to one of our executive officers
and/or directors (and related entities).
7. In October 1999, we issued warrants to purchase an aggregate of 1,250,000
shares of Series H preferred stock, which will convert into warrants to
purchase shares of common stock upon the completion of this offering, to
four accredited investors, at an exercise price of $5.00 per share. One
warrant to purchase 1,100,000 shares was issued to one of our executive
officers/directors (and related entities).
8. Between January 1, 1997 and January 15, 2000, we granted options to purchase
an aggregate of 4,153,232 shares of common stock at exercise prices ranging
from $0.20 to $4.00 per share with a weighted exercise price of $1.45 per
share.
The sales and issuances of common stock made pursuant to the exercise of
stock options granted under the 1995 Incentive Stock Plan to our officers,
directors, employees and consultants as described in paragraph (8) above were
made in reliance on Rule 701 promulgated under the Securities Act.
The sales and issuances of securities in the transactions described in
paragraphs (1) through (7) above were made in reliance of Rule 506 of
Regulation D promulgated under the Securities Act. These sales were made without
general solicitation or advertising. Each purchaser was a sophisticated investor
with access to all relevant information necessary to evaluate the investment and
represented to the Registrant that the shares were being acquired for
investment.
II-2
<PAGE>
Item 16. (A) EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Exhibit
Number Description
------------- ------------------------------------------------------------
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation, as
currently in effect.
3.2 Form of Certificate of Amendment of Certificate of
Incorporation.
3.3 Form of Amended and Restated Certificate of Incorporation,
to be filed prior to the closing of this offering.
3.4 Form of Amended and Restated Certificate of Incorporation,
to be filed upon the closing of this offering.
3.5 Bylaws, as currently in effect.
3.6 Form of Bylaws to be effective upon the closing of this
offering.
4.1* Specimen Common Stock Certificate.
4.2 Amended and Restated Investor Rights Agreement, dated
October 15, 1999.
5.1* Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement.
10.2 Amended and Restated 1995 Stock Option Plan and related
documents.
10.3 2000 Equity Incentive Plan and related documents.
10.4+ Purchase Supply Agreement by and between IntraBiotics and
Polypeptide dated January 3, 1997.
10.5+ Development Supply Agreement by and between IntraBiotics and
Polypeptide dated January 3, 1997.
10.6+ Second Amendment to the License Agreement by and
IntraBiotics and The Regents of the University of California
dated June 12, 1996.
10.7+ Third Amendment to the License Agreement by and between
IntraBiotics and The Regents of the University of California
dated September 16, 1997.
10.8+ License and Supply Agreement by and between IntraBiotics and
Biosearch Italia S.p.A. dated May 8, 1998.
10.9 2000 Employee Stock Purchase Plan and related documents.
10.10 Lease by and between IntraBiotics and 1245 Terra Bella
Partners dated April 30, 1997.
10.11 Standard Industrial/Commercial Single Tenant Lease by and
between IntraBiotics and Clint S. Carter and Esther Carter
Family Trust dated July 31, 1998 and First Amendment to
Standard Industrial/Commercial Single Tenant Lease by and
between IntraBiotics and Clint S. Carter and Esther Carter
Family Trust dated August 12, 1998.
10.12 Financing Agreement by and between IntraBiotics and G.E.
Capital Equipment dated March 15, 1999.
10.13 Loan and Security Agreement by and between IntraBiotics and
Silicon Valley Bank dated August 25, 1999.
10.14 Warrant to Purchase Series H Preferred Stock dated October
15, 1999 to Investor (Guernsey) Ltd.
10.15 Warrant to Purchase Series H Preferred Stock dated
October 15, 1999 to Vulcan Ventures, Inc.
10.16 Warrant to Purchase Series H Preferred Stock dated
October 15, 1999 to New England Partners Capital, Inc.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
10.17 Warrant to Purchase Series H Preferred Stock dated
October 15, 1999 to Jonathan Reingold.
10.18 Warrant to Purchase Series D Preferred Stock dated
October 10, 1997 to Lease Management Services, Inc.
10.19 Warrant to Purchase Series B Preferred Stock dated July 20,
1995 to Lease Management, Inc.
23.1 Consent of Ernst & Young LLP
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 with respect to certain portions of this
exhibit. Omitted portions have been filed separately with the Securities and
Exchange Commission.
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
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.
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 1993, as amended, the
Registrant has caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Mountain View, State
of California on the 26(th) day of January, 2000.
<TABLE>
<S> <C> <C>
INTRABIOTICS PHARMACEUTICALS INC.
By: /s/ KENNETH J. KELLEY
-----------------------------------------
Kenneth J. Kelley
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Kenneth
J. Kelley and Russell L. Hughes as his true and lawful attorney-in-fact and
agent, each acting alone, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement on Form S-1, and to sign any registration statement filed under
Rule 642 under the Securities Act of 1933, as amended, including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ KENNETH J. KELLEY President, Chief Executive
-------------------------------------- Officer and Director (Principal January 26, 2000
Kenneth J. Kelley Executive Officer)
/s/ RUSSELL L. HUGHES
-------------------------------------- Controller (Principal Financial January 26, 2000
Russell L. Hughes and Accounting Officer)
/s/ JANE E. SHAW
-------------------------------------- Director January 26, 2000
Jane E. Shaw
/s/ MICHAEL F. BIGHAM
-------------------------------------- Director January 26, 2000
Michael F. Bigham
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ FRITZ BUHLER
-------------------------------------- Director January 26, 2000
Fritz Buhler
/s/ GARY A. LYONS
-------------------------------------- Director January 26, 2000
Gary A. Lyons
/s/ KATHLEEN D. LAPORTE
-------------------------------------- Director January 26, 2000
Kathleen D. LaPorte
/s/ LIZA PAGE NELSON
-------------------------------------- Director January 26, 2000
Liza Page Nelson
/s/ JOHN M. PADFIELD
-------------------------------------- Director January 26, 2000
John M. Padfield
/s/ JACK S. REMINGTON
-------------------------------------- Director January 26, 2000
Jack S. Remington
</TABLE>
II-6
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------------------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation, as
currently in effect.
3.2 Form of Certificate of Amendment of Certificate of
Incorporation.
3.3 Form of Amended and Restated Certificate of Incorporation,
to be filed prior to the closing of this offering.
3.4 Form of Amended and Restated Certificate of Incorporation,
to be filed upon the closing of this offering.
3.5 Bylaws, as currently in effect.
3.6 Form of Bylaws to be effective upon the closing of this
offering.
4.1* Specimen Common Stock Certificate.
4.2 Amended and Restated Investor Rights Agreement, dated
October 15, 1999.
5.1* Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement.
10.2 Amended and Restated 1995 Stock Option Plan and related
documents.
10.3 2000 Equity Incentive Plan and related documents.
10.4+ Purchase Supply Agreement by and between IntraBiotics and
Polypeptide dated January 3, 1997.
10.5+ Development Supply Agreement by and between IntraBiotics and
Polypeptide dated January 3, 1997.
10.6+ Second Amendment to the License Agreement by and
IntraBiotics and The Regents of the University of California
dated June 12, 1996.
10.7+ Third Amendment to the License Agreement by and between
IntraBiotics and The Regents of the University of California
dated September 16, 1997.
10.8+ License and Supply Agreement by and between IntraBiotics and
Biosearch Italia S.p.A. dated May 8, 1998.
10.9 2000 Employee Stock Purchase Plan and related documents.
10.10 Lease by and between IntraBiotics and 1245 Terra Bella
Partners dated April 30, 1997.
10.11 Standard Industrial/Commercial Single Tenant Lease by and
between IntraBiotics and Clint S. Carter and Esther Carter
Family Trust dated July 31, 1998 and First Amendment to
Standard Industrial/Commercial Single Tenant Lease by and
between IntraBiotics and Clint S. Carter and Esther Carter
Family Trust dated August 12, 1998.
10.12 Financing Agreement by and between IntraBiotics and G.E.
Capital Equipment dated March 15, 1999.
10.13 Loan and Security Agreement by and between IntraBiotics and
Silicon Valley Bank dated August 25, 1999.
10.14 Warrant to Purchase Series H Preferred Stock dated October
15, 1999 to Investor (Guernsey) Ltd.
10.15 Warrant to Purchase Series H Preferred Stock dated
October 15, 1999 to Vulcan Ventures, Inc.
10.16 Warrant to Purchase Series H Preferred Stock dated
October 15, 1999 to New England Partners Capital, Inc.
10.17 Warrant to Purchase Series H Preferred Stock dated
October 15, 1999 to Jonathan Reingold.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.18 Warrant to Purchase Series D Preferred Stock dated
October 10, 1997 to Lease Management Services, Inc.
10.19 Warrant to Purchase Series B Preferred Stock dated July 20,
1995 to Lease Management, Inc.
23.1 Consent of Ernst & Young LLP
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 with respect to certain portions of this
exhibit. Omitted portions have been filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INTRABIOTICS PHARMACEUTICALS, INC.
The undersigned, Kenneth J. Kelley, hereby certifies that:
ONE: He is the duly elected and acting President, of said corporation,
which was originally incorporated in Delaware on January 19, 1994.
TWO: The Amended and Restated Certificate of Incorporation of said
corporation shall be amended and restated to read in full as follows:
"ARTICLE I
The name of this corporation is IntraBiotics Pharmaceuticals, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is the Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
A. CLASSES OF STOCK. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the corporation is authorized to issue
is One Hundred Eight Million Four Hundred Thirty Seven Thousand Eight Hundred
Seventy Three (108,437,873) shares, par value $0.001. Sixty Seven Million Five
Hundred Thousand (67,500,000) shares shall be Common Stock and Forty Million
Nine Hundred Thirty Seven Thousand Eight Hundred Seventy Three (40,937,873)
shares shall be Preferred Stock.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
Preferred Stock authorized by this Certificate of Incorporation may be issued
from time to time in one or more series. The rights, preferences, privileges,
and restrictions granted to and imposed on the Series A Preferred Stock, which
series shall consist of Eight Hundred Twenty-One Thousand Four Hundred
Twenty-Nine (821,429) shares, the Series B Preferred Stock, which series shall
consist of Five Million Eight Hundred Three Thousand Nine Hundred Ninety-Six
(5,803,996) shares, the Series C Preferred Stock, which series shall consist of
Nine Million Eight Hundred Sixteen Thousand One Hundred Eighty-One (9,816,181)
shares, the Series D Preferred Stock which series shall consist of Five Million
Seven Hundred Sixty-Four Thousand Two Hundred Eighty-Six (5,764,286) shares, the
Series E Preferred Stock which series shall consist of Two Million Seven Hundred
Twenty Five Thousand (2,725,000) shares, the Series F Preferred Stock which
series shall consist of Seven Hundred Fifty Thousand (750,000) shares, the
Series G Preferred Stock which series shall consist of Seven Million Six Hundred
Fifty Six Thousand Nine Hundred
<PAGE>
Eighty One (7,656,981) shares and the Series H Preferred Stock which series
shall consists of Seven Million Six Hundred Thousand (7,600,000) shares, are as
set forth below in this Article III(B). The Board of Directors is hereby
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon additional series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or of any of
them. Subject to compliance with applicable protective voting rights which have
been or may be granted to the Preferred Stock or series thereof in Certificates
of Determination or this corporation's Certificate of Incorporation ("Protective
Provisions"), but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, PARI PASSU with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series (other than the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or Series H
Preferred Stock), prior or subsequent to the issue of that series, but not below
the number of shares of such series then outstanding. In case the number of
shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
1. DIVIDEND PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders of
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock shall be entitled
to receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock of this corporation) on the Common Stock of this corporation, at the rate
of (i) $0.04 per share per annum for the Series A Preferred Stock, (ii) $0.06
per share per annum for the Series B Preferred Stock, (iii) $0.07 per share per
annum for the Series C Preferred Stock, (iv) $0.15 per share per annum for the
Series D Preferred Stock, (v) $0.23 per share per annum for the Series E
Preferred Stock, (vi) $0.35 per share per annum for the Series F Preferred
Stock, (vii) $0.25 per share per annum for the Series G Preferred Stock or
(viii) $0.35 per share per annum for the Series H Preferred Stock or, if greater
(as determined on a per annum basis and an as converted basis for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock), an amount equal to that paid on
any other outstanding shares of this corporation, payable quarterly when, as and
if declared by the Board of Directors.
Such dividends shall not be cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of this corporation, either voluntary or involuntary, subject to the
rights of series of Preferred Stock that may from time to time come into
existence, (i) the holders of Series A Preferred Stock shall be
2.
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entitled to receive, prior and in preference to any distribution of any of the
assets of this corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to the sum of (A) $0.50 for each
outstanding share of Series A Preferred Stock (the "Original Series A Issue
Price") and (B) an amount equal to declared but unpaid dividends on such share
(such amount of declared but unpaid dividends being referred to herein as the
"Premium"); (ii) the holders of Series B Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of
this corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (C) $0.70 for each outstanding
share of Series B Preferred Stock (the "Original Series B Issue Price") and (D)
an amount equal to the Premium on such share; (iii) the holders of Series C
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (E) $0.85 for each outstanding share of Series C Preferred Stock (the
"Original Series C Issue Price") and (F) an amount equal to the Premium on such
share; (iv) the holders of Series D Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any assets of this
corporation to the holders of Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of (G) $1.75 for each outstanding share of
Series D Preferred Stock (the "Original Series D Issue Price") and (H) an amount
equal to the Premium on such share; (v) the holders of Series E Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
assets of this corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to the sum of (I) $2.75 for each
outstanding share of Series E Preferred Stock (the "Original Series E Issue
Price") and (J) an amount equal to the Premium on such share; (vi) the holders
of Series F Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any assets of this corporation to the holders
of Common Stock by reason of their ownership thereof, an amount per share equal
to the sum of (K) $4.00 for each outstanding share of Series F Preferred Stock
(the "Original Series F Issue Price") and (L) an amount equal to the Premium on
such share; (vii) the holders of Series G Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any assets of this
corporation to the holders of Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of (M) $3.00 for each outstanding share of
Series G Preferred Stock (the "Original Series G Issue Price") and (N) an amount
equal to the Premium on such share; and (viii) the holders of Series H Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any assets of this corporation to the holders of Common Stock by reason of
their ownership thereof, an amount per share equal to the sum of (O) $4.00 for
each outstanding share of Series H Preferred Stock (the "Original Series H Issue
Price") and (P) an amount equal to the Premium on such share. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
the corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
in proportion to the preferential amount each such holder is otherwise entitled
to receive.
3.
<PAGE>
(b) After the distributions described in subsection
(a) above have been paid, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the remaining assets of the
corporation available for distribution to stockholders shall be distributed
among the holders of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock and
Common Stock pro rata based on the number of shares of Common Stock held by each
(as if all such shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
had been converted to Common Stock).
(c) (i) For purposes of this Section 2, a
liquidation, dissolution or winding up of this corporation shall be deemed to be
occasioned by, or to include (A) the acquisition of the corporation by another
person or entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation, but
excluding any merger effected exclusively for the purpose of changing the
domicile of the corporation, the sale and issuance of shares of the Series A
Preferred Stock and Series B Preferred Stock by the corporation on or about
November 10, 1994, the sale and issuance of shares of Series C Preferred Stock
by the corporation on or about April 9, 1996, the sale and issuance of shares of
Series D Preferred Stock by the corporation on or about April 8, 1997, the sale
and issuance of shares of Series E Preferred Stock by the corporation on or
about October 16, 1997, the sale and issuance of shares of Series F Preferred
Stock by the corporation on or about October 24, 1997, the sale and issuance of
shares of Series G Preferred Stock by the corporation on or about November 24,
1998 and the sale and issuance of the Series H Preferred Stock by the
corporation on or about October 15, 1999); or (B) a sale of all or substantially
all of the assets of the corporation (the transactions described in this Section
2(c)(i)(A) and 2(c)(i)(B) hereinafter collectively referred to as a "Sale of the
Corporation"); UNLESS (x) the corporation's stockholders of record as
constituted immediately prior to such acquisition or sale will, immediately
after such acquisition or sale (by virtue of securities issued as consideration
for the corporation's acquisition or sale or otherwise) hold at least fifty
percent (50%) of the voting power of the surviving or acquiring entity or (Y)
the holders of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock, voting
together as a single class, elect in writing otherwise.
(ii) In any of such events, if the
consideration received by the corporation is other than cash, its value will be
deemed its fair market value. Any securities shall be valued as follows:
(A) Securities not subject to
investment letter or other similar restrictions on free marketability covered by
(B) below:
(1) If traded on a
securities exchange or through Nasdaq National, the value shall be deemed to be
the average of the closing prices of the securities on such exchange over the
thirty-day period ending three (3) days prior to the closing;
4.
<PAGE>
(2) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the thirty-day period ending three
(3) days prior to the closing; and
(3) If there is no active
public market, the value shall be the fair market value thereof, as mutually
determined in good faith by the corporation and the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all then
outstanding shares of Preferred Stock.
(B) The method of valuation of
securities subject to investment letter or other restrictions of free
marketability (other than restrictions arising solely by virtue of a
stockholder's status as an affiliate or former affiliate) shall be to make an
appropriate discount from the market value determined as above in (A) (1), (2)
or (3) to reflect the approximate fair market value thereof, as mutually
determined in good faith by the corporation and the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all then
outstanding shares of such Preferred Stock.
(iii) In the event the requirements of this
subsection 2(c) are not complied with, this corporation shall forthwith either:
(A) cause such closing to be
postponed until such time as the requirements of this Section 2 have been
compiled with; or
(B) cancel such transaction, in
which event the rights, preferences and privileges of the holders of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall revert to and be the same as
such rights, preferences and privileges of such series existing immediately
prior to the date of the first notice referred to in subsection 2(c)(iv) hereof.
(iv) The corporation shall give each holder
of record of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock written
notice of such impending transaction not later than twenty (20) days prior to
the stockholders' meeting called to approve such transaction, or twenty (20)
days prior to the closing of such transaction, whichever is earlier, and shall
also notify such holders in writing of the final approval of such transaction.
The first of such notices shall describe the material terms and conditions of
the impending transaction and the provisions of this Section 2, and the
corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than twenty (20)
days after the corporation has given the first notice provided for herein or
sooner than ten (10) days after the corporation has given notice of any material
changes provided for herein; provided, however, that such periods may be
shortened upon the written consent of the holders of Preferred Stock that are
entitled to such notice rights or similar notice rights and that represent at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all then
outstanding shares of such Preferred Stock.
5.
<PAGE>
3. REDEMPTION. The Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock are not redeemable.
4. CONVERSION. The holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall be convertible, at the option
of the holder thereof, at any time after the date of issuance of such share, at
the office of this corporation or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing the Original Series A Issue Price, the Original Series B Issue
Price, the Original Series C Issue Price, the Original Series D Issue Price, the
Original Series E Issue Price, the Original Series F Issue Price, the Series G
Original Issuance Price and the Series H Original Issuance Price, as applicable,
by the Conversion Price applicable to such share, determined as hereafter
provided, in effect on the date the certificate is surrendered for conversion.
The initial Conversion Price per share for shares of Series A Preferred Stock
shall be the Original Series A Issue Price, the initial Conversion Price per
share for shares of Series B Preferred Stock shall be the Original Series B
Issue price, the initial Conversion Price per share for shares of Series C
Preferred Stock shall be the Original Series C Issue Price, the initial
Conversion Price per share for shares of Series D Preferred Stock shall be the
Original Series D Issue Price, the initial Conversion Price per share for shares
of Series E Preferred Stock shall be the Original Series E Issue Price, the
initial Conversion Price per share for shares of Series F Preferred Stock shall
be the Original Series F Issue Price, the Initial Conversion Price per share for
shares of Series G Preferred Stock shall be the Original Series G Issue Price
and the Initial Conversion Price per share for shares of Series H Preferred
Stock shall be the Original Series H Issue Price; provided, however, the
respective Conversion Prices for the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock shall be subject to adjustment as set forth in subsection 4(d)
and (g).
(b) AUTOMATIC CONVERSION. Each share of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall automatically be converted
into shares of Common Stock at the Conversion Price at the time in effect for
such Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock or Series H Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 4(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement on Form S-1 under the Securities Act of
1933, as amended, the public offering price of which was not less than $6.00 per
share (adjusted to reflect subsequent stock dividends, stock splits,
combinations or recapitalizations) and the aggregate offering price of which was
not less than $25,000,000 or (ii)
6.
<PAGE>
the date specified by written consent or agreement of the holders of sixty-six
and two-thirds percent (66-2/3%) of the then outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock voting together as a single class.
(c) MECHANICS OF CONVERSION. Before any holder of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock shall be entitled to
convert the same into shares of Common Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, and shall give written notice to this corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. This corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock or Series H Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or Series H
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date. If the conversion is in connection with an underwritten offering
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock for conversion, be conditioned upon the closing with
the underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock shall not be deemed to have
converted such Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK
FOR CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The respective
Conversion Prices of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
shall be subject to adjustment from time to time as follows:
7.
<PAGE>
(i) In the event the corporation should at
any time or from time to time after the date shares of Series H Preferred Stock
are first issued and sold by the corporation (the "Series H Purchase Date") fix
a record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents" (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the respective Conversion Prices of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of each such series shall be increased in proportion to
such increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents.
(ii) If the number of shares of Common Stock
outstanding at any time after the Series G Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then following the record
date of such combination, the respective Conversion Prices for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of each such series shall be decreased in proportion to such decrease in
outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event this
corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection 4
(d) (i), then, in each such case for the purpose of this subsection 4 (e), the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of the corporation into
which their shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock are
convertible as of the recorded date fixed for the determination of the holders
of Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 4 or Section 2) provision shall be made so that the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock
8.
<PAGE>
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock, as applicable, the number
of shares of stock or other securities or property of the corporation or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the applicable Conversion
Prices then in effect and the number of shares purchasable upon conversion of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
(g) SALE OF SHARES BELOW SERIES H PREFERRED
CONVERSION PRICE.
(i) If at any time or from time to time
after the Series H Purchase Date, the corporation issues or sells, or is deemed
by the express provisions of this Section 4(g) to have issued or sold,
Additional Shares of Common Stock (as defined in subsection (iv) below), other
than as a dividend or other distribution on any class of stock as provided in
Section (e) above, and other than a subdivision or combination of shares of
Common Stock as provided in Section (d) above, for an Effective Price (as
defined in subsection (iv) below) less than the then effective Series H
Conversion Price, then and in each such case the then existing Series H
Conversion Price shall be reduced, as of the opening of business on the date of
such issue or sale, to a price determined by multiplying the Series H Conversion
Price by a fraction (I) the numerator of which shall be (A) the number of shares
of Common Stock deemed outstanding (as defined below) immediately prior to such
issue or sale, plus (B) the number of shares of Common Stock which the aggregate
consideration received (as defined in subsection (ii) by the corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Series H Conversion Price, and (II) the denominator of which shall be the
number of shares of Common Stock deemed outstanding (as defined below)
immediately prior to such issue or sale plus the total number of Additional
Shares of Common Stock so issued. For the purposes of the preceding sentence,
the number of shares of Common Stock deemed to be outstanding as of a given date
shall be the sum of (A) the number of shares of Common Stock actually
outstanding, (B) the number of shares of Common Stock into which the then
outstanding shares of Series A, Series B, Series C, Series D, Series E, Series
F, Series G and Series H Preferred Stock could be converted if fully converted
immediately prior to such issue or sale, and (C) the number of shares of Common
Stock which could be obtained through the exercise or conversion of all other
rights, options and convertible securities outstanding immediately prior to such
issue or sale.
(ii) For the purpose of making any
adjustment required under this Section (g)(i), the consideration received by the
corporation for any issue or sale of securities shall (A) to the extent it
consists of cash, be computed at the net amount of cash received by the
corporation after deduction of any underwriting or similar commissions,
compensation or concessions paid or allowed by the corporation in connection
with such issue or sale but without deduction of any expenses payable by the
corporation, (B) to the extent it consists of property
9.
<PAGE>
other than cash, be computed at the fair value of that property as determined in
good faith by the Board of Directors, and (C) if Additional Shares of Common
Stock, Convertible Securities (as defined in subsection (iii)) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of the corporation for a consideration which covers both, be computed as
the portion of the consideration so received that may be reasonably determined
in good faith by the Board of Directors to be allocable to such Additional
Shares of Common Stock, Convertible Securities or rights or options.
(iii) For the purpose of the adjustment
required under this Section (4)(g), if the corporation issues or sells (I) stock
or other securities convertible into, Additional Shares of Common Stock (such
convertible stock or securities being herein referred to as "Convertible
Securities") or (II) rights or options for the purchase of Additional Shares of
Common Stock or Convertible Securities, and if the Effective Price of such
Additional Shares of Common Stock is less than the Series H Conversion Price, in
each case the corporation shall be deemed to have issued at the time of the
issuance of such rights or options or Convertible Securities the maximum number
of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
corporation for the issuance of such rights or options or Convertible
Securities, plus, in the case of such rights or options, the minimum amounts of
consideration, if any, payable to the corporation upon the exercise of such
rights or options, plus, in the case of Convertible Securities, the minimum
amounts of consideration, if any, payable to the corporation (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion thereof; PROVIDED THAT if in the case of
Convertible Securities the minimum amounts of such consideration cannot be
ascertained, but are a function of antidilution or similar protective clauses,
the corporation shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; PROVIDED FURTHER that if the
minimum amount of consideration payable to the corporation upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; PROVIDED
FURTHER that if the minimum amount of consideration payable to the corporation
upon the exercise or conversion of such rights, options or Convertible
Securities is subsequently increased, the Effective Price shall be again
recalculated using the increased minimum amount of consideration payable to the
corporation upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Series H Conversion Price,
as adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Series H Conversion Price as adjusted upon the
issuance of such rights, options or Convertible Securities shall be readjusted
to the Series H Conversion Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by
10.
<PAGE>
the corporation upon such exercise, plus the consideration, if any, actually
received by the corporation for the granting of all such rights or options,
whether or not exercised, plus the consideration actually received for issuing
or selling the Convertible Securities actually converted, plus the
consideration, if any, actually received by the corporation (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities, provided that such
readjustment shall not apply to prior conversions of Series H Preferred.
(iv) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the corporation or deemed to be
issued pursuant to this Section (g)(i), other than (A) shares of Common Stock
issued upon conversion of the Series A, Series B, Series C, Series D, Series E,
Series F, Series G or Series H Preferred Stock; (B) up to 9,047,108 shares of
Common Stock and/or options, warrants or other Common Stock purchase rights, and
the Common Stock issued pursuant to such options, warrants or other rights (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like) after the Series H Purchase Date to employees, officers or directors
of, or consultants or advisors to the corporation or any subsidiary pursuant to
stock purchase or stock option plans or other arrangements; (C) shares of Common
Stock issued pursuant to the exercise of options, warrants or convertible
securities outstanding as of the Series H Purchase Date; (D) shares of Common
Stock and/or options, warrants or other Common Stock purchase rights, and the
Common Stock issued pursuant to such options, warrants or other rights issued
for consideration other than cash pursuant to a merger, consolidation,
acquisition or similar business combination approved by the Board; (E) shares of
Common Stock issued pursuant to the exercise of warrants to purchase Series H
Preferred Stock pursuant to any equipment leasing arrangement, or debt financing
from a bank or similar financial institution approved by the Board; and (F) the
shares of Common Stock issuable upon exercise of the warrants held by the
holders of Series H Preferred Stock. References to Common Stock in the
subsections of this clause (iv) above shall mean all shares of Common Stock
issued by the corporation or deemed to be issued pursuant to this Section 4(g).
The "Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the corporation
under this subsection (i), into the aggregate consideration received, or deemed
to have been received by the corporation for such issue under this subsection
(i), for such Additional Shares of Common Stock.
(v) No adjustment to the Series H Conversion
Price pursuant to this Section 4(g) shall be required unless such adjustment
would increase or decrease the Series H Conversion Price by at least one cent
($.01); provided that any adjustments not required to be made by virtue of this
sentence shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one tenth (1/10) of a
cent or of a share, as the case may be.
(h) NO IMPAIRMENT. This corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or
11.
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appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock against impairment.
(i) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued
upon the conversion of any share or shares of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of the total
number of shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock the holder
is at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment
or readjustment of the Conversion Price of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and/or
Series H Preferred Stock pursuant to this Section 4, this corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and/or Series H Preferred Stock, as applicable, a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. This corporation shall,
upon the written request at any time of any holder of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(c) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock, as applicable.
(j) NOTICES OF RECORD DATE. In the event of any
taking by this corporation 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 (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, at least twenty (20) days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such
12.
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dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
This corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock, in addition to such other remedies
as shall be available to the holder of such Preferred Stock, this corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to these articles.
(l) NOTICES. Any notice required by the provisions of
this Section 4 to be given to the holders of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his address
appearing on the books of this corporation.
5. VOTING RIGHTS
(a) GENERAL. Except as set forth below, the holder of
each share of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock shall have
the right to one vote for each share of Common Stock into which such Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock or Series H Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders'
meeting in accordance with the Bylaws of this corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote. Fractional votes
shall not, however, be permitted and any fractional voting rights available on
an as-converted basis (after aggregating all shares into which shares of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H
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Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).
(b) VOTING FOR ELECTION OF DIRECTORS.
(i) So long as no fewer than Eight Hundred
Fifty Thousand (850,000) shares of Series B Preferred Stock remain outstanding
(as adjusted for stock splits, recombinations or reclassifications), the holders
of the Series B Preferred Stock then outstanding shall be entitled to elect two
directors of this corporation at each election of directors.
(ii) So long as no fewer than Three Million
(3,000,000) outstanding shares of Series C Preferred Stock (as adjusted for
stock splits, recombinations or reclassifications) are held by Sprout Capital
VII, L.P. ("Sprout"), Sprout shall be entitled to elect one director of this
corporation at each election of directors.
(iii) So long as no fewer than Three Million
(3,000,000) outstanding shares of Series C Preferred Stock (as adjusted for
stock splits, recombinations or reclassifications) are held by all holders of
Series C Preferred Stock other than Sprout (collectively, the "Series C Group"),
the Series C Group shall be entitled to elect one director of this corporation
at each election of directors.
(iv) So long as no fewer than One Million
Seven Hundred Fifty Thousand (1,750,000) outstanding shares of Series G
Preferred Stock (as adjusted for stock splits, recombinations or
reclassifications) are held by International BM Biomedicine Holdings Inc.
("Biomedicine"), Biomedicine shall be entitled to elect one director of this
corporation at each election of directors.
(v) So long as no fewer than One Million Two
Hundred Fifty Thousand (1,250,000) outstanding shares of Series H Preferred
Stock (as adjusted for stock splits, recombinations or reclassifications) are
held by Investor (Guernsey) Ltd. and its affiliates ("Investor (Guernsey)
Ltd."), Investor (Guernsey) Ltd. shall be entitled to elect one director of this
corporation at each election of directors.
(vi) The remaining directors of this
corporation shall be elected by the holders of a majority of the outstanding
shares of the capital stock of the corporation.
(vii) Any vacancy occurring because of the
death, resignation, or removal of a director elected by the holders of Series B
Preferred Stock, Sprout, the Series C Group, Biomedicine or Investor (Guernsey)
Ltd. shall be filled by the vote or written consent of the holders of a majority
of the then outstanding shares of the Series B Preferred Stock, Sprout, the
Series C Group, Biomedicine or Investor (Guernsey) Ltd., respectively, or in the
absence of such action by such holders, by action of the remaining directors
then in office. Any vacancy occurring because of the death, resignation or
removal of a director elected by the holders of a majority of the outstanding
shares of capital stock of this corporation shall be filled by the vote or
written consent of the holders of a majority of the then outstanding shares of
capital stock or, in the absence of such action by such holders, by action of
the remaining directors then in office.
14.
<PAGE>
(viii) So long as Investor (Guernsey) Ltd.
holds at least One Million Two Hundred Fifty Thousand (1,250,000) shares of
Series H Preferred Stock, Section 5(b)(v) shall not be amended without the
written consent of the holders of at least a majority of the outstanding shares
of Series H Preferred Stock.
6. PROTECTIVE PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence and except to
the extent the vote of any series of Preferred Stock is required by the Delaware
General Corporation Law, so long as Eight Hundred Fifty Thousand (850,000)
shares of Preferred Stock are outstanding (as adjusted for stock splits,
recombinations or reclassifications), this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock, voting
together as a single class:
(a) sell, convey, or otherwise dispose of or encumber
all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the corporation is
disposed of;
(b) alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock or Series H Preferred Stock
so as to affect adversely the shares;
(c) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Common Stock, Preferred
Stock or any series of Preferred Stock;
(d) authorize or issue, or obligate itself to issue,
any other equity security, including any other security convertible into or
exercisable for any equity security having a preference over, or being on a
parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock with
respect to voting, dividends or upon liquidation; or
(e) redeem, purchase or otherwise acquire (or pay
into or set aside for a sinking fund for such purpose) any share or shares of
Common Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the corporation or any
subsidiary pursuant to agreements under which the corporation has the option to
repurchase such shares at cost or at cost upon the occurrence of certain events,
such as the termination of employment provided further, however, that the total
amount applied to the repurchase of shares of Common Stock shall not exceed
$100,000 during any twelve-month period;
15.
<PAGE>
(f) do any act or thing which would result in
taxation of the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock or Series H Preferred Stock
under Section 305 of the Internal Revenue Code of 1986, as amended; or
(g) change the authorized number of directors of the
corporation.
7. STATUS OF CONVERTED STOCK. In the event any shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock shall be converted pursuant
to Section 4 hereof, the shares so converted shall be canceled and shall not be
issuable by the corporation. The Certificate of Incorporation of this
corporation shall be appropriately amended to effect the corresponding reduction
in the corporation's authorized capital stock.
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of this corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE IV
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of the corporation.
ARTICLE V
Subject to Section 6(g) of Division (B) of Article III hereof, the
number of directors of the corporation which shall constitute the whole Board of
Directors shall be fixed exclusively by one or more resolutions adopted by the
Board of Directors from time to time by a bylaw or amendment thereof duly
adopted by the Board of Directors or by the stockholders.
16.
<PAGE>
ARTICLE VI
Elections of directors need not be by written ballot unless the Bylaws
of the corporation shall so provide.
ARTICLE VII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the corporation may be kept
(subject to ally provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated. from time to time by the
Board of Directors or in the Bylaws of the corporation.
ARTICLE VIII
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
any improper personal benefit. If the General Corporation Law of the State of
Delaware is amended after approval by the stockholders of this Article VIII to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
Any repeal or modification or the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE IX
To the fullest extent permitted by applicable law, the corporation is
authorized to provide indemnification of (and advancement of expenses to) agents
of the corporation (and any other persons to which Delaware law permits the
corporation to provide indemnification) through bylaw provisions, agreements
with such agents or other persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and advancement
otherwise permitted by Section 145 of the General Corporation Law of the State
of Delaware, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
corporation, its stockholders and others.
ARTICLE X
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation."
17.
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THREE: That thereafter said amendment and restatement was duly adopted
in accordance with the provisions of Section 242 and Section 245 of the General
Corporation Law of the State of Delaware, and was approved by written consent of
the corporation's board of directors and stockholders holding the requisite
number of shares required by statute, given in accordance with and pursuant to
Sections 141 and 228 of the General Corporation Law of the State of Delaware
with written notice given to those stockholders who did not consent as provided
in said Section 228.
[Signature page follows]
18.
<PAGE>
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been signed by the President of the corporation this 15th
day of October, 1999.
INTRABIOTICS PHARMACEUTICALS, INC.
By: /s/ KENNETH J. KELLEY
-----------------------------------
Kenneth J. Kelley, President
19.
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
INTRABIOTICS PHARMACEUTICALS, INC.
INTRABIOTICS PHARMACEUTICALS, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is INTRABIOTICS PHARMACEUTICALS,
INC.
SECOND: The date on which the Certificate of Incorporation of the
Corporation was originally filed with the Secretary of State of the State of
Delaware was January 19, 1994.
THIRD: Article III, Section A of the Amended and Restated Certificate
of Incorporation of the Corporation is amended to read in its entirety as
follows:
" A. CLASSES OF STOCK. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock.." The total number of shares which the corporation is
authorized to issue is One Hundred Eight Million Four Hundred Thirty Seven
Thousand Eight Hundred Seventy Three (108,437,873) shares, par value $0.001.
Sixty Seven Million Five Hundred Thousand (67,500,000) shares shall be Common
Stock and Forty Million Nine Hundred Thirty Seven Thousand Eight Hundred
Seventy Three (40,937,873) shares shall be Preferred Stock. Upon the filing
of this Certificate of Amendment to Amended and Restated Certificate of
Incorporation, every two (2) outstanding shares of Common Stock shall be
combined into one (1) share of Common Stock. No fractional shares shall
issue, and cash at the fair market value shall be paid in lieu of fractional
shares."
FOURTH: Article III, Section B(4)(b) shall be amended to read in
its entirety as follows:
" (b) AUTOMATIC CONVERSION. Each share of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred
Stock and Series H Preferred Stock shall automatically be converted into
shares of Common Stock at the Conversion Price at the time in effect for such
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 4(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement on Form S-1 under the Securities Act of
1933, as amended, the public offering price of which was not less than $5.00
per share (as adjusted to reflect stock dividends, stock splits, combinations
or recapitalizations) and the aggregate offering price of which was not less
than $25,000,000 or (ii) the date specified by written consent or agreement
of the holders of sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred
Stock voting together as a single class."
<PAGE>
FIFTH: The Board of Directors of the Corporation, acting in accordance
with the provisions of Sections 141 and 242 of the General Corporation Law of
the State of Delaware, has duly approved the foregoing amendment.
SIXTH: Thereafter pursuant to a resolution of the Board of Directors,
this Certificate of Amendment was submitted to the stockholders of the
Corporation for their approval, and was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, IntraBiotics Pharmaceuticals, Inc. has caused this
Certificate of Amendment to be signed by its President and attested to by its
Secretary this _____ day of ___________, 2000.
INTRABIOTICS PHARMACEUTICALS, INC.
By:
----------------------------------
Kenneth J. Kelley, President
ATTEST:
- ------------------------------------
Robert L. Jones, Secretary
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INTRABIOTICS PHARMACEUTICALS, INC.
The undersigned, Kenneth J. Kelley, hereby certifies that:
ONE: He is the duly elected and acting President, of said corporation,
which was originally incorporated in Delaware on January 19, 1994.
TWO: The Amended and Restated Certificate of Incorporation of said
corporation shall be amended and restated to read in full as follows:
"ARTICLE I
The name of this corporation is IntraBiotics Pharmaceuticals, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is the Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
A. CLASSES OF STOCK. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the corporation is authorized to issue
is One Hundred Eight Million Four Hundred Thirty Seven Thousand Eight Hundred
Seventy Three (108,437,873) shares, par value $0.001. Sixty Seven Million Five
Hundred Thousand (67,500,000) shares shall be Common Stock and Forty Million
Nine Hundred Thirty Seven Thousand Eight Hundred Seventy Three (40,937,873)
shares shall be Preferred Stock.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
Preferred Stock authorized by this Certificate of Incorporation may be issued
from time to time in one or more series. The rights, preferences, privileges,
and restrictions granted to and imposed on the Series A Preferred Stock, which
series shall consist of Eight Hundred Twenty-One Thousand Four Hundred
Twenty-Nine (821,429) shares, the Series B Preferred Stock, which series shall
consist of Five Million Eight Hundred Three Thousand Nine Hundred Ninety-Six
(5,803,996) shares, the Series C Preferred Stock, which series shall consist of
Nine Million Eight Hundred Sixteen Thousand One Hundred Eighty-One (9,816,181)
shares, the Series D Preferred Stock which series shall consist of Five Million
Seven Hundred Sixty-Four Thousand Two Hundred Eighty-Six (5,764,286) shares, the
Series E Preferred Stock which series shall consist of Two Million Seven Hundred
Twenty Five Thousand (2,725,000) shares, the Series F Preferred Stock which
series shall consist of Seven Hundred Fifty Thousand (750,000) shares, the
Series G Preferred Stock which series shall consist of Seven Million Six Hundred
Fifty Six Thousand Nine Hundred
<PAGE>
Eighty One (7,656,981) shares and the Series H Preferred Stock which series
shall consists of Seven Million Six Hundred Thousand (7,600,000) shares, are as
set forth below in this Article III(B). The Board of Directors is hereby
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon additional series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or of any of
them. Subject to compliance with applicable protective voting rights which have
been or may be granted to the Preferred Stock or series thereof in Certificates
of Determination or this corporation's Certificate of Incorporation ("Protective
Provisions"), but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, PARI PASSU with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series (other than the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or Series H
Preferred Stock), prior or subsequent to the issue of that series, but not below
the number of shares of such series then outstanding. In case the number of
shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
1. DIVIDEND PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders of
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock shall be entitled
to receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock of this corporation) on the Common Stock of this corporation, at the rate
of (i) $0.04 per share per annum for the Series A Preferred Stock, (ii) $0.06
per share per annum for the Series B Preferred Stock, (iii) $0.07 per share per
annum for the Series C Preferred Stock, (iv) $0.15 per share per annum for the
Series D Preferred Stock, (v) $0.23 per share per annum for the Series E
Preferred Stock, (vi) $0.35 per share per annum for the Series F Preferred
Stock, (vii) $0.25 per share per annum for the Series G Preferred Stock or
(viii) $0.35 per share per annum for the Series H Preferred Stock or, if greater
(as determined on a per annum basis and an as converted basis for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock), an amount equal to that paid on
any other outstanding shares of this corporation, payable quarterly when, as and
if declared by the Board of Directors. Such dividends shall not be cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of this corporation, either voluntary or involuntary, subject to the
rights of series of Preferred Stock that may from time to time come into
existence, (i) the holders of Series A Preferred Stock shall be
2.
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entitled to receive, prior and in preference to any distribution of any of the
assets of this corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to the sum of (A) $0.50 for each
outstanding share of Series A Preferred Stock (the "Original Series A Issue
Price") and (B) an amount equal to declared but unpaid dividends on such share
(such amount of declared but unpaid dividends being referred to herein as the
"Premium"); (ii) the holders of Series B Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of
this corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (C) $0.70 for each outstanding
share of Series B Preferred Stock (the "Original Series B Issue Price") and (D)
an amount equal to the Premium on such share; (iii) the holders of Series C
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (E) $0.85 for each outstanding share of Series C Preferred Stock (the
"Original Series C Issue Price") and (F) an amount equal to the Premium on such
share; (iv) the holders of Series D Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any assets of this
corporation to the holders of Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of (G) $1.75 for each outstanding share of
Series D Preferred Stock (the "Original Series D Issue Price") and (H) an amount
equal to the Premium on such share; (v) the holders of Series E Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
assets of this corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to the sum of (I) $2.75 for each
outstanding share of Series E Preferred Stock (the "Original Series E Issue
Price") and (J) an amount equal to the Premium on such share; (vi) the holders
of Series F Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any assets of this corporation to the holders
of Common Stock by reason of their ownership thereof, an amount per share equal
to the sum of (K) $4.00 for each outstanding share of Series F Preferred Stock
(the "Original Series F Issue Price") and (L) an amount equal to the Premium on
such share; (vii) the holders of Series G Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any assets of this
corporation to the holders of Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of (M) $3.00 for each outstanding share of
Series G Preferred Stock (the "Original Series G Issue Price") and (N) an amount
equal to the Premium on such share; and (viii) the holders of Series H Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any assets of this corporation to the holders of Common Stock by reason of
their ownership thereof, an amount per share equal to the sum of (O) $4.00 for
each outstanding share of Series H Preferred Stock (the "Original Series H Issue
Price") and (P) an amount equal to the Premium on such share. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
the corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
in proportion to the preferential amount each such holder is otherwise entitled
to receive.
3.
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(b) After the distributions described in subsection
(a) above have been paid, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the remaining assets of the
corporation available for distribution to stockholders shall be distributed
among the holders of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock and
Common Stock pro rata based on the number of shares of Common Stock held by each
(as if all such shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
had been converted to Common Stock).
(c) (i) For purposes of this Section 2, a
liquidation, dissolution or winding up of this corporation shall be deemed to be
occasioned by, or to include (A) the acquisition of the corporation by another
person or entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation, but
excluding any merger effected exclusively for the purpose of changing the
domicile of the corporation, the sale and issuance of shares of the Series A
Preferred Stock and Series B Preferred Stock by the corporation on or about
November 10, 1994, the sale and issuance of shares of Series C Preferred Stock
by the corporation on or about April 9, 1996, the sale and issuance of shares of
Series D Preferred Stock by the corporation on or about April 8, 1997, the sale
and issuance of shares of Series E Preferred Stock by the corporation on or
about October 16, 1997, the sale and issuance of shares of Series F Preferred
Stock by the corporation on or about October 24, 1997, the sale and issuance of
shares of Series G Preferred Stock by the corporation on or about November 24,
1998 and the sale and issuance of the Series H Preferred Stock by the
corporation on or about October 15, 1999); or (B) a sale of all or substantially
all of the assets of the corporation (the transactions described in this Section
2(c)(i)(A) and 2(c)(i)(B) hereinafter collectively referred to as a "Sale of the
Corporation"); UNLESS (x) the corporation's stockholders of record as
constituted immediately prior to such acquisition or sale will, immediately
after such acquisition or sale (by virtue of securities issued as consideration
for the corporation's acquisition or sale or otherwise) hold at least fifty
percent (50%) of the voting power of the surviving or acquiring entity or (Y)
the holders of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock, voting
together as a single class, elect in writing otherwise.
(ii) In any of such events, if the consideration
received by the corporation is other than cash, its value will be deemed its
fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment
letter or other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities
exchange or through Nasdaq National, the value shall be deemed to be the average
of the closing prices of the securities on such exchange over the thirty-day
period ending three (3) days prior to the closing;
4.
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(2) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the thirty-day period ending three
(3) days prior to the closing; and
(3) If there is no active public
market, the value shall be the fair market value thereof, as mutually determined
in good faith by the corporation and the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of all then outstanding shares
of Preferred Stock.
(B) The method of valuation of securities
subject to investment letter or other restrictions of free marketability (other
than restrictions arising solely by virtue of a stockholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount from the
market value determined as above in (A) (1), (2) or (3) to reflect the
approximate fair market value thereof, as mutually determined in good faith by
the corporation and the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all then outstanding shares of such Preferred
Stock.
(iii) In the event the requirements of this
subsection 2(c) are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until
such time as the requirements of this Section 2 have been compiled with; or
(B) cancel such transaction, in which event
the rights, preferences and privileges of the holders of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred
Stock and Series H Preferred Stock shall revert to and be the same as such
rights, preferences and privileges of such series existing immediately prior to
the date of the first notice referred to in subsection 2(c)(iv) hereof.
(iv) The corporation shall give each holder of record
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock written notice of such
impending transaction not later than twenty (20) days prior to the stockholders'
meeting called to approve such transaction, or twenty (20) days prior to the
closing of such transaction, whichever is earlier, and shall also notify such
holders in writing of the final approval of such transaction. The first of such
notices shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 2, and the corporation shall
thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after the
corporation has given the first notice provided for herein or sooner than ten
(10) days after the corporation has given notice of any material changes
provided for herein; provided, however, that such periods may be shortened upon
the written consent of the holders of Preferred Stock that are entitled to such
notice rights or similar notice rights and that represent at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of all then outstanding shares
of such Preferred Stock.
5.
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3. REDEMPTION. The Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock are not redeemable.
4. CONVERSION. The holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall be convertible, at the option
of the holder thereof, at any time after the date of issuance of such share, at
the office of this corporation or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing the Original Series A Issue Price, the Original Series B Issue
Price, the Original Series C Issue Price, the Original Series D Issue Price, the
Original Series E Issue Price, the Original Series F Issue Price, the Series G
Original Issuance Price and the Series H Original Issuance Price, as applicable,
by the Conversion Price applicable to such share, determined as hereafter
provided, in effect on the date the certificate is surrendered for conversion.
The initial Conversion Price per share for shares of Series A Preferred Stock
shall be the Original Series A Issue Price, the initial Conversion Price per
share for shares of Series B Preferred Stock shall be the Original Series B
Issue price, the initial Conversion Price per share for shares of Series C
Preferred Stock shall be the Original Series C Issue Price, the initial
Conversion Price per share for shares of Series D Preferred Stock shall be the
Original Series D Issue Price, the initial Conversion Price per share for shares
of Series E Preferred Stock shall be the Original Series E Issue Price, the
initial Conversion Price per share for shares of Series F Preferred Stock shall
be the Original Series F Issue Price, the Initial Conversion Price per share for
shares of Series G Preferred Stock shall be the Original Series G Issue Price
and the Initial Conversion Price per share for shares of Series H Preferred
Stock shall be the Original Series H Issue Price; provided, however, the
respective Conversion Prices for the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock shall be subject to adjustment as set forth in subsection 4(d)
and (g).
(b) AUTOMATIC CONVERSION. Each share of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall automatically be converted
into shares of Common Stock at the Conversion Price at the time in effect for
such Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock or Series H Preferred Stock immediately upon the
earlier of (i) except as provided below in subsection 4(c), the corporation's
sale of its Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement on Form S-1 under the Securities Act of
1933, as amended, the public offering price of which was not less than $10.00
per share (adjusted to reflect subsequent stock dividends, stock splits,
combinations or recapitalizations) and the aggregate offering price of which was
not less than $25,000,000 or (ii)
6.
<PAGE>
the date specified by written consent or agreement of the holders of sixty-six
and two-thirds percent (66-2/3%) of the then outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock voting together as a single class.
(c) MECHANICS OF CONVERSION. Before any holder of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock shall be entitled to
convert the same into shares of Common Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, and shall give written notice to this corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. This corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock or Series H Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or Series H
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date. If the conversion is in connection with an underwritten offering
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock for conversion, be conditioned upon the closing with
the underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock shall not be deemed to have
converted such Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK
FOR CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The respective
Conversion Prices of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock
shall be subject to adjustment from time to time as follows:
7.
<PAGE>
(i) In the event the corporation should at
any time or from time to time after the date shares of Series H Preferred Stock
are first issued and sold by the corporation (the "Series H Purchase Date") fix
a record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents" (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the respective Conversion Prices of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of each such series shall be increased in proportion to
such increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents.
(ii) If the number of shares of Common Stock
outstanding at any time after the Series G Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then following the record
date of such combination, the respective Conversion Prices for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of each such series shall be decreased in proportion to such decrease in
outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event this
corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection 4
(d) (i), then, in each such case for the purpose of this subsection 4 (e), the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of the corporation into
which their shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock are
convertible as of the recorded date fixed for the determination of the holders
of Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 4 or Section 2) provision shall be made so that the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock
8.
<PAGE>
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock, as applicable, the number
of shares of stock or other securities or property of the corporation or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and
Series H Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the applicable Conversion
Prices then in effect and the number of shares purchasable upon conversion of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
(g) SALE OF SHARES BELOW SERIES H PREFERRED
CONVERSION PRICE.
(i) If at any time or from time to time
after the Series H Purchase Date, the corporation issues or sells, or is deemed
by the express provisions of this Section 4(g) to have issued or sold,
Additional Shares of Common Stock (as defined in subsection (iv) below), other
than as a dividend or other distribution on any class of stock as provided in
Section (e) above, and other than a subdivision or combination of shares of
Common Stock as provided in Section (d) above, for an Effective Price (as
defined in subsection (iv) below) less than the then effective Series H
Conversion Price, then and in each such case the then existing Series H
Conversion Price shall be reduced, as of the opening of business on the date of
such issue or sale, to a price determined by multiplying the Series H Conversion
Price by a fraction (I) the numerator of which shall be (A) the number of shares
of Common Stock deemed outstanding (as defined below) immediately prior to such
issue or sale, plus (B) the number of shares of Common Stock which the aggregate
consideration received (as defined in subsection (ii) by the corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Series H Conversion Price, and (II) the denominator of which shall be the
number of shares of Common Stock deemed outstanding (as defined below)
immediately prior to such issue or sale plus the total number of Additional
Shares of Common Stock so issued. For the purposes of the preceding sentence,
the number of shares of Common Stock deemed to be outstanding as of a given date
shall be the sum of (A) the number of shares of Common Stock actually
outstanding, (B) the number of shares of Common Stock into which the then
outstanding shares of Series A, Series B, Series C, Series D, Series E, Series
F, Series G and Series H Preferred Stock could be converted if fully converted
immediately prior to such issue or sale, and (C) the number of shares of Common
Stock which could be obtained through the exercise or conversion of all other
rights, options and convertible securities outstanding immediately prior to such
issue or sale.
(ii) For the purpose of making any
adjustment required under this Section (g)(i), the consideration received by the
corporation for any issue or sale of securities shall (A) to the extent it
consists of cash, be computed at the net amount of cash received by the
corporation after deduction of any underwriting or similar commissions,
compensation or concessions paid or allowed by the corporation in connection
with such issue or sale but without deduction of any expenses payable by the
corporation, (B) to the extent it consists of property
9.
<PAGE>
other than cash, be computed at the fair value of that property as determined in
good faith by the Board of Directors, and (C) if Additional Shares of Common
Stock, Convertible Securities (as defined in subsection (iii)) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of the corporation for a consideration which covers both, be computed as
the portion of the consideration so received that may be reasonably determined
in good faith by the Board of Directors to be allocable to such Additional
Shares of Common Stock, Convertible Securities or rights or options.
(iii) For the purpose of the adjustment
required under this Section (4)(g), if the corporation issues or sells (I) stock
or other securities convertible into, Additional Shares of Common Stock (such
convertible stock or securities being herein referred to as "Convertible
Securities") or (II) rights or options for the purchase of Additional Shares of
Common Stock or Convertible Securities, and if the Effective Price of such
Additional Shares of Common Stock is less than the Series H Conversion Price, in
each case the corporation shall be deemed to have issued at the time of the
issuance of such rights or options or Convertible Securities the maximum number
of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
corporation for the issuance of such rights or options or Convertible
Securities, plus, in the case of such rights or options, the minimum amounts of
consideration, if any, payable to the corporation upon the exercise of such
rights or options, plus, in the case of Convertible Securities, the minimum
amounts of consideration, if any, payable to the corporation (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion thereof; PROVIDED THAT if in the case of
Convertible Securities the minimum amounts of such consideration cannot be
ascertained, but are a function of antidilution or similar protective clauses,
the corporation shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; PROVIDED FURTHER that if the
minimum amount of consideration payable to the corporation upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; PROVIDED
FURTHER that if the minimum amount of consideration payable to the corporation
upon the exercise or conversion of such rights, options or Convertible
Securities is subsequently increased, the Effective Price shall be again
recalculated using the increased minimum amount of consideration payable to the
corporation upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Series H Conversion Price,
as adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Series H Conversion Price as adjusted upon the
issuance of such rights, options or Convertible Securities shall be readjusted
to the Series H Conversion Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the
corporation upon such exercise, plus the consideration, if any, actually
received by
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the corporation for the granting of all such rights or options, whether or not
exercised, plus the consideration actually received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the corporation (other than by cancellation of liabilities
or obligations evidenced by such Convertible Securities) on the conversion of
such Convertible Securities, provided that such readjustment shall not apply to
prior conversions of Series H Preferred.
(iv) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the corporation or deemed to be
issued pursuant to this Section (g)(i), other than (A) shares of Common Stock
issued upon conversion of the Series A, Series B, Series C, Series D, Series E,
Series F, Series G or Series H Preferred Stock; (B) up to 9,047,108 shares of
Common Stock and/or options, warrants or other Common Stock purchase rights, and
the Common Stock issued pursuant to such options, warrants or other rights (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like) after the Series H Purchase Date to employees, officers or directors
of, or consultants or advisors to the corporation or any subsidiary pursuant to
stock purchase or stock option plans or other arrangements; (C) shares of Common
Stock issued pursuant to the exercise of options, warrants or convertible
securities outstanding as of the Series H Purchase Date; (D) shares of Common
Stock and/or options, warrants or other Common Stock purchase rights, and the
Common Stock issued pursuant to such options, warrants or other rights issued
for consideration other than cash pursuant to a merger, consolidation,
acquisition or similar business combination approved by the Board; (E) shares of
Common Stock issued pursuant to the exercise of warrants to purchase Series H
Preferred Stock pursuant to any equipment leasing arrangement, or debt financing
from a bank or similar financial institution approved by the Board; and (F) the
shares of Common Stock issuable upon exercise of the warrants held by the
holders of Series H Preferred Stock. References to Common Stock in the
subsections of this clause (iv) above shall mean all shares of Common Stock
issued by the corporation or deemed to be issued pursuant to this Section 4(g).
The "Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the corporation
under this subsection (i), into the aggregate consideration received, or deemed
to have been received by the corporation for such issue under this subsection
(i), for such Additional Shares of Common Stock.
(v) No adjustment to the Series H Conversion
Price pursuant to this Section 4(g) shall be required unless such adjustment
would increase or decrease the Series H Conversion Price by at least one cent
($.01); provided that any adjustments not required to be made by virtue of this
sentence shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one tenth (1/10) of a
cent or of a share, as the case may be.
(h) NO IMPAIRMENT. This corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or
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appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock against impairment.
(i) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be issued
upon the conversion of any share or shares of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of the total
number of shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock the holder
is at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment
or readjustment of the Conversion Price of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and/or
Series H Preferred Stock pursuant to this Section 4, this corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and/or Series H Preferred Stock, as applicable, a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. This corporation shall,
upon the written request at any time of any holder of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(c) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock, as applicable.
(j) NOTICES OF RECORD DATE. In the event of any
taking by this corporation 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 (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, at least twenty (20) days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such
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dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
This corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock and Series H Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock, in addition to such other remedies
as shall be available to the holder of such Preferred Stock, this corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to these articles.
(l) NOTICES. Any notice required by the provisions of
this Section 4 to be given to the holders of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock or
Series H Preferred Stock shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his address
appearing on the books of this corporation.
5. VOTING RIGHTS
(a) GENERAL. Except as set forth below, the holder of
each share of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock shall have
the right to one vote for each share of Common Stock into which such Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock or Series H Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders'
meeting in accordance with the Bylaws of this corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote. Fractional votes
shall not, however, be permitted and any fractional voting rights available on
an as-converted basis (after aggregating all shares into which shares of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock and Series H
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Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).
(b) VOTING FOR ELECTION OF DIRECTORS.
(i) So long as no fewer than Eight Hundred
Fifty Thousand (850,000) shares of Series B Preferred Stock remain outstanding
(as adjusted for stock splits, recombinations or reclassifications), the holders
of the Series B Preferred Stock then outstanding shall be entitled to elect two
directors of this corporation at each election of directors.
(ii) So long as no fewer than Three Million
(3,000,000) outstanding shares of Series C Preferred Stock (as adjusted for
stock splits, recombinations or reclassifications) are held by Sprout Capital
VII, L.P. ("Sprout"), Sprout shall be entitled to elect one director of this
corporation at each election of directors.
(iii) So long as no fewer than Three Million
(3,000,000) outstanding shares of Series C Preferred Stock (as adjusted for
stock splits, recombinations or reclassifications) are held by all holders of
Series C Preferred Stock other than Sprout (collectively, the "Series C Group"),
the Series C Group shall be entitled to elect one director of this corporation
at each election of directors.
(iv) So long as no fewer than One Million
Seven Hundred Fifty Thousand (1,750,000) outstanding shares of Series G
Preferred Stock (as adjusted for stock splits, recombinations or
reclassifications) are held by International BM Biomedicine Holdings Inc.
("Biomedicine"), Biomedicine shall be entitled to elect one director of this
corporation at each election of directors.
(v) So long as no fewer than One Million Two
Hundred Fifty Thousand (1,250,000) outstanding shares of Series H Preferred
Stock (as adjusted for stock splits, recombinations or reclassifications) are
held by Investor (Guernsey) Ltd. and its affiliates ("Investor (Guernsey)
Ltd."), Investor (Guernsey) Ltd. shall be entitled to elect one director of this
corporation at each election of directors.
(vi) The remaining directors of this
corporation shall be elected by the holders of a majority of the outstanding
shares of the capital stock of the corporation.
(vii) Any vacancy occurring because of the
death, resignation, or removal of a director elected by the holders of Series B
Preferred Stock, Sprout, the Series C Group, Biomedicine or Investor (Guernsey)
Ltd. shall be filled by the vote or written consent of the holders of a majority
of the then outstanding shares of the Series B Preferred Stock, Sprout, the
Series C Group, Biomedicine or Investor (Guernsey) Ltd., respectively, or in the
absence of such action by such holders, by action of the remaining directors
then in office. Any vacancy occurring because of the death, resignation or
removal of a director elected by the holders of a majority of the outstanding
shares of capital stock of this corporation shall be filled by the vote or
written consent of the holders of a majority of the then outstanding shares of
capital stock or, in the absence of such action by such holders, by action of
the remaining directors then in office.
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(viii) So long as Investor (Guernsey) Ltd.
holds at least One Million Two Hundred Fifty Thousand (1,250,000) shares of
Series H Preferred Stock, Section 5(b)(v) shall not be amended without the
written consent of the holders of at least a majority of the outstanding shares
of Series H Preferred Stock.
6. PROTECTIVE PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence and except to
the extent the vote of any series of Preferred Stock is required by the Delaware
General Corporation Law, so long as Eight Hundred Fifty Thousand (850,000)
shares of Preferred Stock are outstanding (as adjusted for stock splits,
recombinations or reclassifications), this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock and Series H Preferred Stock, voting
together as a single class:
(a) sell, convey, or otherwise dispose of or encumber
all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the corporation is
disposed of;
(b) alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock or Series H Preferred Stock
so as to affect adversely the shares;
(c) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Common Stock, Preferred
Stock or any series of Preferred Stock;
(d) authorize or issue, or obligate itself to issue,
any other equity security, including any other security convertible into or
exercisable for any equity security having a preference over, or being on a
parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, Series G Preferred Stock or Series H Preferred Stock with
respect to voting, dividends or upon liquidation; or
(e) redeem, purchase or otherwise acquire (or pay
into or set aside for a sinking fund for such purpose) any share or shares of
Common Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the corporation or any
subsidiary pursuant to agreements under which the corporation has the option to
repurchase such shares at cost or at cost upon the occurrence of certain events,
such as the termination of employment provided further, however, that the total
amount applied to the repurchase of shares of Common Stock shall not exceed
$100,000 during any twelve-month period;
(f) do any act or thing which would result in
taxation of the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred
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Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred
Stock or Series H Preferred Stock under Section 305 of the Internal Revenue Code
of 1986, as amended; or
(g) change the authorized number of directors of the
corporation.
7. STATUS OF CONVERTED STOCK. In the event any shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,
Series G Preferred Stock or Series H Preferred Stock shall be converted pursuant
to Section 4 hereof, the shares so converted shall be canceled and shall not be
issuable by the corporation. The Certificate of Incorporation of this
corporation shall be appropriately amended to effect the corresponding reduction
in the corporation's authorized capital stock.
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article III hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of this corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE IV
For the management of the business and for the conduct of the affairs of the
corporation, and in further definition, limitation and regulation of the powers
of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. BOARD OF DIRECTORS.
1. POWERS; NUMBER OF DIRECTORS. The management of the business
and the conduct of the affairs of the corporation shall be vested in its Board
of Directors. The number of directors which shall constitute the whole Board of
Directors shall be fixed exclusively by one or more resolutions adopted by the
Board of Directors.
2. ELECTION OF DIRECTORS. Subject to the rights of the holders
of any series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the initial public offering pursuant to
an effective registration statement under the
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Securities Act of 1933, as amended (the "1933 Act"), covering the offer and sale
of Common Stock to the public (the "Initial Public Offering"), the directors
shall be divided into three classes designated as Class I, Class II and Class
III, respectively. Directors shall be assigned to each class in accordance with
a resolution or resolutions adopted by the Board of Directors. At the first
annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class I directors shall expire and Class I
directors shall be elected for a full term of three years. At the second annual
meeting of stockholders following the closing of the Initial Public Offering,
the term of office of the Class II directors shall expire and Class II directors
shall be elected for a full term of three years. At the third annual meeting of
stockholders following the closing of the Initial Public Offering, the term of
office of the Class III directors shall expire and Class III directors shall be
elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
3. REMOVAL OF DIRECTORS
a. Neither the Board of Directors nor any individual
director may be removed without cause.
b. Subject to any limitation imposed by law, any
individual director or directors may be removed with cause by the holders of a
majority of the voting power of the corporation entitled to vote at an election
of directors.
4. VACANCIES
(a) Subject to the rights of the holders of any
series of Preferred Stock, any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of directors,
shall, unless the Board of Directors determines by resolution that any such
vacancies or newly created directorships shall be filled by the stockholders,
except as otherwise provided by law, be filled only by the affirmative vote of a
majority of the directors then in office, even though less than a quorum of the
Board of Directors, and not by the stockholders. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified.
(b) If at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
increase), the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent (10%) of the total
number of the shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the
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directors chosen by the directors then in offices as aforesaid, which election
shall be governed by Section 211 of the Delaware General Corporation Law.
B.
1. Subject to paragraph (h) of Section 43 of the Bylaws, the
Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote
of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of
all of the then-outstanding shares of the voting stock of the corporation
entitled to vote. The Board of Directors shall also have the power to adopt,
amend, or repeal Bylaws.
2. The directors of the corporation need not be elected by
written ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the
corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws or by written consent of stockholders in accordance
with the Bylaws prior to the closing of the Initial Public Offering and
following the closing of the Initial Public Offering no action shall be taken by
the stockholders by written consent.
4. Advance notice of stockholder nominations for the election
of directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
ARTICLE V
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. Any repeal or modification of this Article V shall be prospective
and shall not affect the rights under this Article V in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
ARTICLE VI
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B of this
Article VI, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles IV, V
and VI."
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THREE: That this said Amended and Restated Certificate of Incorporation
was duly adopted in accordance with the provisions of Section 242 and Section
245 of the General Corporation Law of the State of Delaware, and was approved by
written consent of the corporation's board of directors and stockholders holding
the requisite number of shares required by statute, given in accordance with and
pursuant to Sections 141 and 228 of the General Corporation Law of the State of
Delaware with written notice given to those stockholders who did not consent as
provided in said Section 228.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been signed by the President of the corporation this ___ day
of ________________, 2000.
INTRABIOTICS PHARMACEUTICALS, INC.
By:
------------------------------------
Kenneth J. Kelley, President
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EXHIBIT 3.4
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
INTRABIOTICS PHARMACEUTICALS, INC.
The undersigned, Kenneth J. Kelley, hereby certifies that:
ONE: He is the duly elected and acting President, of said corporation, which was
originally incorporated in Delaware on January 19, 1994.
TWO: The Amended and Restated Certificate of Incorporation of said corporation
shall be amended and restated to read in full as follows:
"
I.
The name of this corporation is IntraBiotics Pharmaceuticals, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is Corporation Trust Company, 1209 Orange Street, City of Wilmington,
County of New Castle, and the name of the registered agent of the corporation in
the State of Delaware at such address is the Corporation Trust Company.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Fifty-Five Million
(55,000,000) shares. Fifty Million (50,000,000) shares shall be Common Stock,
each having a par value of one-tenth of one cent ($.001). Five Million
(5,000,000) shares shall be Preferred Stock, each having a par value of
one-tenth of one cent ($.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law
("DGCL"), to fix or alter from time to time the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions of any wholly unissued series of Preferred Stock, and to
establish from time to time the number of shares constituting any such series or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be decreased in accordance with the foregoing sentence, the
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shares constituting such decrease shall resume the status that they had prior to
the adoption of the resolution originally fixing the number of shares of such
series.
V.
For the management of the business and for the conduct of the affairs of the
corporation, and in further definition, limitation and regulation of the powers
of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. BOARD OF DIRECTORS.
1. POWERS; NUMBER OF DIRECTORS. The management of the business
and the conduct of the affairs of the corporation shall be vested in its Board
of Directors. The number of directors which shall constitute the whole Board of
Directors shall be fixed exclusively by one or more resolutions adopted by the
Board of Directors.
2. ELECTION OF DIRECTORS. Subject to the rights of the holders
of any series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the initial public offering pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), covering the offer and sale of Common Stock to the public (the
"Initial Public Offering"), the directors shall be divided into three classes
designated as Class I, Class II and Class III, respectively. Directors shall be
assigned to each class in accordance with a resolution or resolutions adopted by
the Board of Directors. At the first annual meeting of stockholders following
the closing of the Initial Public Offering, the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term of
three years. At the second annual meeting of stockholders following the closing
of the Initial Public Offering, the term of office of the Class II directors
shall expire and Class II directors shall be elected for a full term of three
years. At the third annual meeting of stockholders following the closing of the
Initial Public Offering, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders, directors shall be elected
for a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting.
Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
3. REMOVAL OF DIRECTORS
a. Neither the Board of Directors nor any individual
director may be removed without cause.
b. Subject to any limitation imposed by law, any
individual director or directors may be removed with cause by the holders of a
majority of the voting power of the corporation entitled to vote at an election
of directors.
2.
<PAGE>
4. VACANCIES
a. Subject to the rights of the holders of any series
of Preferred Stock, any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of directors,
shall, unless the Board of Directors determines by resolution that any such
vacancies or newly created directorships shall be filled by the stockholders,
except as otherwise provided by law, be filled only by the affirmative vote of a
majority of the directors then in office, even though less than a quorum of the
Board of Directors, and not by the stockholders. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified.
b. If at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole board (as constituted immediately prior to any such
increase), the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent (10%) of the total
number of the shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the directors chosen by the directors
then in offices as aforesaid, which election shall be governed by Section 211 of
the DGCL.
B.
1. Subject to paragraph (h) of Section 43 of the Bylaws, the
Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote
of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of
all of the then-outstanding shares of the voting stock of the corporation
entitled to vote. The Board of Directors shall also have the power to adopt,
amend, or repeal Bylaws.
2. The directors of the corporation need not be elected by
written ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the
corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws and no action shall be taken by the stockholders by
written consent.
4. Advance notice of stockholder nominations for the election
of directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
3.
<PAGE>
B. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII."
* * *
THREE: This Amended and Restated Certificate of Incorporation was duly adopted
in accordance with the provisions of Section 242 and Section 245 of the General
Corporation Law of the State of Delaware, and was approved by the Board of
Directors of the Corporation and stockholders holding the requisite number of
shares required by statute, given in accordance with and pursuant to Section 141
and 228 of the General Corporation Law of the State of Delaware with written
notice given to those stockholders who did not consent as provided in said
Section 228.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been subscribed this ___ day of __________, 2000 by the
undersigned who affirms that the statements made herein are true and correct.
INTRABIOTICS PHARMACEUTICALS, INC.
By:
----------------------------------------
Kenneth J. Kelley
President and Chief Executive Officer
4.
<PAGE>
EXHIBIT 3.5
BYLAWS
OF
INTRABIOTICS PHARMACEUTICALS, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 CORPORATE OFFICES..................................................................2
1.1 Registered Office...............................................................2
1.2 Other OFfices...................................................................2
ARTICLE 2 MEETINGS OF STOCKHOLDERS...........................................................2
2.1 Place Of Meetings...............................................................2
2.2 Annual Meeting..................................................................2
2.3 Special Meeting.................................................................2
2.4 Notice Of Stockholders' Meetings................................................3
2.5 Manner Of Giving Notice; Affidavit Of Notice....................................3
2.6 Quorum..........................................................................3
2.7 Adjourned Meeting; Notice.......................................................3
2.8 Voting..........................................................................4
2.9 Waiver Of Notice................................................................4
2.10 Stockholder Action By Written Consent Without A Meeting.........................4
2.11 Record Date For Stockholder Notice; Voting; Giving Consents.....................5
2.12 Proxies.........................................................................5
2.13 List Of Stockholders Entitled To Vote...........................................6
2.14 Conduct Of Business.............................................................6
ARTICLE 3 DIRECTORS..........................................................................6
3.1 Powers..........................................................................6
3.2 Number Of Directors.............................................................6
3.3 Election, Qualification And Term Of Office Of Directors.........................7
3.4 Resignation And Vacancies.......................................................7
3.5 Place Of Meetings; Meetings By Telephone........................................8
3.6 First Meetings..................................................................8
3.7 Regular Meetings................................................................8
3.8 Special Meetings; Notice........................................................9
3.9 Quorum..........................................................................9
3.10 Waiver Of Notice................................................................9
3.11 Adjourned Meeting; Notice.......................................................9
3.12 Board Action By Written Consent Without A Meeting..............................10
3.13 Fees And Compensation Of Directors.............................................10
3.14 Approval Of Loans To Officers..................................................10
3.15 Removal Of Directors...........................................................10
ARTICLE 4 COMMITTEES........................................................................10
4.1 Committees Of Directors........................................................10
4.2 Committee Minutes..............................................................11
4.3 Meetings And Action Of Committees..............................................11
ARTICLE 5 OFFICERS..........................................................................12
5.1 Officers.......................................................................12
5.2 Election Of Officers...........................................................12
5.3 Subordinate Officers...........................................................12
5.4 Removal And Resignation Of Officers............................................12
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
5.5 Vacancies In Offices...........................................................12
5.6 Chairman Of The Board..........................................................13
5.7 President......................................................................13
5.8 Vice Presidents................................................................13
5.9 Secretary......................................................................13
5.10 Treasurer......................................................................14
5.11 Assistant Secretary............................................................14
5.12 Assistant Treasurer............................................................14
5.13 Authority And Duties Of Officers...............................................14
ARTICLE 6 INDEMNITY.........................................................................15
6.1 Indemnification Of Directors And Officers......................................15
6.2 Indemnification Of Others......................................................15
6.3 Insurance......................................................................16
6.4 Non-exclusivity Of Rights......................................................16
6.5 Other Indemnification..........................................................16
6.6 Amendment Or Repeal............................................................16
ARTICLE 7 RECORDS AND REPORTS...............................................................16
7.1 Maintenance And Inspection Of Records..........................................16
7.2 Inspection By Directors........................................................17
7.3 Annual Statement To Stockholders...............................................17
7.4 Representation Of Shares Of Other Corporations.................................17
ARTICLE 8 GENERAL MATTERS...................................................................18
8.1 Checks.........................................................................18
8.2 Execution Of Corporate Contracts And Instruments...............................18
8.3 Stock Certificates: Partly Paid Shares.........................................18
8.4 Special Designation On Certificates............................................19
8.5 Lost Certificates..............................................................19
8.6 Construction; Definitions......................................................19
8.7 Dividends......................................................................19
8.8 Fiscal Year....................................................................20
8.9 Seal...........................................................................20
8.10 Transfer Of Stock..............................................................20
8.11 Stock Transfer Agreements......................................................20
8.12 Registered Stockholders........................................................20
8.13 Interested Directors; Quorum...................................................20
ARTICLE 9 AMENDMENTS........................................................................21
ARTICLE 10 DISSOLUTION.......................................................................21
ARTICLE 11 CUSTODIAN.........................................................................22
11.1 Appointment Of A Custodian In Certain Cases....................................22
11.2 Duties Of Custodian............................................................22
</TABLE>
ii.
<PAGE>
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE.
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES.
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS.
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the registered
office of the corporation.
2.2 ANNUAL MEETING.
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the third
Tuesday of April in each year at 9:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected and any
other proper business may be transacted.
2.3 SPECIAL MEETING.
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, by the president, or by the
chief executive officer, or by one or more stockholders holding shares in the
aggregate entitled to cast not less than ten percent of the votes at that
meeting.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president, chief
executive officer, any vice president or the secretary of the corporation. No
business may be transacted at such special meeting otherwise than specified in
such notice. The officer receiving
<PAGE>
the request shall cause notice to be promptly, given to the stockholders
entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5, and
that a meeting will be held at the time requested by the person or persons who
called the meeting, not less than thirty-five (35) nor more than sixty (60) days
after the receipt of the request, If the notice is not given within twenty (20)
days after the receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS.
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM.
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (i) the chairman of the meeting or (ii)
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provisions of the statutes or of the certificate
of incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of the question.
2.7 ADJOURNED MEETING; NOTICE.
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are
2.
<PAGE>
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business that might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
2.8 VOTING.
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgers and joint owners
of stock and to voting trusts and other voting agreements).
Except as provided in the last paragraph of this Section 2.8, or as may
be otherwise provided in the certificate of incorporation, each stockholder
shall be entitled to one vote for each share of capital stock held by such
stockholder.
At all meetings of stockholders for the election of directors a
plurality of the votes cast shall be sufficient to elect. All other elections
and questions shall, unless otherwise provided by law, the certificate of
incorporation or these bylaws, be decided by the votes which could be cast by
the holders of all shares of stock entitled to vote thereon which are present in
person or represented by proxy at the meeting.
2.9 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Unless otherwise provided in the certificate of incorporation, any
action required by the General Corporation Law of Delaware to be taken at any
annual or special meeting of stockholders of a corporation, or any action that
may be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice, and without a vote if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in
3.
<PAGE>
writing. If the action which is consented to is such as would have required the
filing of a certificate under any section of the General Corporation Law of
Delaware if such action had been voted on by stockholders at a meeting thereof,
then the certificate filed under such section shall state, in lieu of any
statement required by such section concerning any vote of stockholders, that
written notice and written consent have been given as provided in Section 228 of
the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
be not more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed.
(iii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact.
4.
<PAGE>
The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of Section 212(c) of the General Corporation Law
of Delaware. A stockholder may revoke any proxy which is not irrevocable by
attending the meeting and voting in person or by filing an instrument in writing
revoking the proxy or another duly executed proxy bearing a later date with the
Secretary of the corporation.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at
the meeting and the number of shares held by each of them.
2.14 CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall determine the order
of business and the procedures at the meeting, including such matters as the
regulation of the manner of voting and conduct of business.
ARTICLE III
DIRECTORS
3.1 POWERS.
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
3.2 NUMBER OF DIRECTORS.
The authorized number of directors of the corporation shall not be less
than one (1) nor more than seven (7) until changed by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the stockholders. The
exact number of directors shall be fixed from time to time, within the limits
set forth in this Section by the board of directors, or by a bylaw or amendment
thereof duly adopted by the stockholders. Subject to the foregoing, the
authorized number of directors shall initially be fixed at one (1).
5.
<PAGE>
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified Or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES.
Any director may resign at any time upon written notice to the
corporation. When one or more directors so resigns and the resignation is
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as
provided in this section in the filling of other vacancies.
A vacancy created by the removal of a director by the vote or written
consent of the stockholders or by a court order may be filled only by the vote
of a majority of the outstanding shares entitled to vote thereon represented at
a duly held meeting at which a quorum is present, or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the stockholders and until a
successor has been elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of
6.
<PAGE>
Chancery for a decree summarily ordering an election as provided in Section 211
of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board(as constituted immediately prior to any such increase), then the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, similarly order an
election to be held to fill any such vacancies or newly created directorships;
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
A director elected or appointed to fill a vacancy shall serve until the
next annual meeting of stockholders or until a successor shall be elected and
qualified.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS.
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.7 REGULAR MEETINGS.
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by the
board.
7.
<PAGE>
3.8 SPECIAL MEETINGS; NOTICE.
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone, by facsimile or by telegram, it shall be delivered personally or by
telephone, by facsimile or to the telegraph company at least forty-eight (48)
hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The notice need not
specify the purpose or the place of the meeting, if the meeting is to be held at
the principal executive office of the corporation.
3.9 QUORUM.
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
3.10 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE.
If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
8.
<PAGE>
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance of each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefore. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
3.14 APPROVAL OF LOANS TO OFFICERS.
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.15 REMOVAL OF DIRECTORS.
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of director.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS.
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate
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members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors or
in the bylaws of the corporation, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers that may require it; but no such committee shall have the
power or authority to (i) amend the certificate of incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) of the General Corporation Law of Delaware, fix
any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), (ii) adopt an agreement of merger or consolidation
under Sections 251 or 252 of the General Corporation Law of Delaware, (iii)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES.
Meetings and actions of committees shall be governed by, and held and
taken in accordance with; the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.7 (regular
meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum),
Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of
adjournment), and Section 3.12 (action without a meeting), with such changes in
the context of those bylaws as are necessary to substitute the committee and its
members for the board of directors and its members; provided, however, that the
time of regular meetings of committees may also be called by resolution of the
board of directors and that notice of special meetings of committees shall also
be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
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ARTICLE V
OFFICERS
5.1 OFFICERS.
The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a treasurer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
5.2 ELECTION OF OFFICERS.
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be chosen by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS.
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES.
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
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5.6 CHAIRMAN OF THE BOARD.
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENTS.
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY.
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if
special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
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The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 TREASURER.
The treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all money and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
5.11 ASSISTANT SECRETARY.
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.12 ASSISTANT TREASURER.
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.13 AUTHORITY AND DUTIES OF OFFICERS.
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
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ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
The corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made Only upon receipt of an undertaking
by the director or officer to repay all amounts advanced if it should be
ultimately determined that the director or officer is not entitled to be
indemnified under this Article or otherwise.
If a claim for indemnification or payment of expenses under this
Article is not paid in full within sixty (60) days after a written claim
therefor has been received by the corporation the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such claim. In any such
action the corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses under
applicable law.
6.2 INDEMNIFICATION OF OTHERS.
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
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6.3 INSURANCE.
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware.
6.4 NON-EXCLUSIVITY OF RIGHTS.
The rights conferred on any person by this Article vi shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, these bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.
6.5 OTHER INDEMNIFICATION.
The corporation's obligation, if any, to indemnify any person who was
or is serving at its request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, enterprise or non-profit
entity shall be reduced by any amount such person may collect as indemnification
from such other corporation, partnership, joint venture, trust, enterprise or
non-profit enterprise.
6.6 AMENDMENT OR REPEAL.
Any repeal or modification of the foregoing provisions of this Article
VI shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS.
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath
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shall be accompanied by a power of attorney or such other writing that
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in Delaware or at its principal place of business.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS.
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
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ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS.
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES: PARTLY PAID SHARES.
The Shares of a corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to
the corporation. Notwithstanding the adoption of such a resolution by the board
of directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
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8.4 SPECIAL DESIGNATION ON CERTIFICATES.
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES.
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS.
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS.
The directors of the corporation, subject to any restrictions contained
in the certificate of incorporation, may declare and pay dividends upon the
shares of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
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8.8 FISCAL YEAR.
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL.
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK.
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS.
The corporation shall have power to enter into and perform any
agreement with any number of shareholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS.
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
8.13 INTERESTED DIRECTORS; QUORUM.
No contract or transaction between the corporation and one or more of
its directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason or solely because the director
or officer is present at or participates in the meeting of the board of
directors or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if: (i) the
material facts as to his relationship or interest and as to the Contract or
transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the
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contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the board of
directors, a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the board of directors or of a committee which authorizes the contract or
transaction.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of
directors of the corporation that the corporation should be dissolved, the
board, after the adoption of a resolution to that effect by a majority of the
whole board at any meeting called for that purpose, shall cause notice to be
mailed to each stockholder entitled to vote thereon of the adoption of the
resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent
in writing, either in person or by duly authorized attorney, to a dissolution,
no meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of . Delaware. Upon such consent becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall have
attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
attached to the consent a
20.
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certification by the secretary or some other officer of the corporation setting
forth the names and residences of the directors and officers of the corporation.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES.
The Court of Chancery, upon application of any stockholder, may appoint
one or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders' are so divided that they have failed to elect successors to
directors whose terms have expired or would have expired upon qualification of
their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation that the required
vote for action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate or distribute its
assets.
11.2 DUTIES OF CUSTODIAN.
The custodian shall have all the powers and title of a receiver
appointed under Section 291 of the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the corporation
and not to liquidate its affairs and distribute its assets, except when the
Court of Chancery otherwise orders and except in cases arising under Sections
226(a) (3) or 352(a)(2) of the General Corporation Law of Delaware.
21.
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AMENDMENT TO BYLAWS OF
INTRABIOTICS PHARMACEUTICALS, INC.
The first sentence of Section 3.2 of the Bylaws is amended and restated to read
as follows:
"The authorized number of directors of this corporation shall not be less than
six (6) nor more than ten (10) until changed by a bylaw amending this Section
3.2, duly adopted by the Board of Directors or by the stockholders."
Adopted by the Board of Directors on November 9, 1998.
<PAGE>
EXHIBIT 3.6
BYLAWS
OF
INTRABIOTICS PHARMACEUTICALS, INC.
(A DELAWARE CORPORATION)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I OFFICES.....................................................................................1
Section 1. Registered Office......................................................................1
Section 2. Other Offices..........................................................................1
ARTICLE II CORPORATE SEAL..............................................................................1
Section 3. Corporate Seal.........................................................................1
ARTICLE III STOCKHOLDERS' MEETINGS......................................................................1
Section 4. Place Of Meetings......................................................................1
Section 5. Annual Meetings........................................................................1
Section 6. Special Meetings.......................................................................3
Section 7. Notice Of Meetings.....................................................................4
Section 8. Quorum.................................................................................4
Section 9. Adjournment And Notice Of Adjourned Meetings...........................................5
Section 10. Voting Rights..........................................................................5
Section 11. Joint Owners Of Stock..................................................................5
Section 12. List Of Stockholders...................................................................6
Section 13. Action Without Meeting.................................................................6
Section 14. Organization...........................................................................7
ARTICLE IV DIRECTORS...................................................................................7
Section 15. Number And Term Of Office..............................................................7
Section 16. Powers.................................................................................7
Section 17. Classes of Directors...................................................................8
Section 18. Vacancies..............................................................................8
Section 19. Resignation............................................................................8
Section 20. Removal................................................................................9
Section 21. Meetings...............................................................................9
Section 22. Quorum And Voting.....................................................................10
Section 23. Action Without Meeting................................................................10
Section 24. Fees And Compensation.................................................................10
Section 25. Committees............................................................................10
Section 26. Organization..........................................................................12
i.
<PAGE>
ARTICLE V OFFICERS...................................................................................12
Section 27. Officers Designated...................................................................12
Section 28. Tenure And Duties Of Officers.........................................................12
Section 29. Delegation Of Authority...............................................................13
Section 30. Resignations..........................................................................13
Section 31. Removal...............................................................................14
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
CORPORATION................................................................................14
Section 32. Execution Of Corporate Instruments....................................................14
Section 33. Voting Of Securities Owned By The Corporation.........................................14
ARTICLE VII SHARES OF STOCK............................................................................14
Section 34. Form And Execution Of Certificates....................................................14
Section 35. Lost Certificates.....................................................................15
Section 36. Transfers.............................................................................15
Section 37. Fixing Record Dates...................................................................15
Section 38. Registered Stockholders...............................................................16
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION........................................................17
Section 39. Execution Of Other Securities.........................................................17
ARTICLE IX DIVIDENDS..................................................................................17
Section 40. Declaration Of Dividends..............................................................17
Section 41. Dividend Reserve......................................................................17
ARTICLE X FISCAL YEAR................................................................................18
Section 42. Fiscal Year...........................................................................18
ARTICLE XI INDEMNIFICATION............................................................................18
Section 43. Indemnification Of Directors, Executive Officers, Other Officers, Employees
And Other Agents......................................................................18
ARTICLE XII NOTICES....................................................................................21
Section 44. Notices...............................................................................21
ARTICLE XIII AMENDMENTS.................................................................................22
Section 45. Amendments............................................................................22
ARTICLE XIV LOANS TO OFFICERS..........................................................................23
ii.
<PAGE>
Section 46. Loans To Officers.....................................................................23
</TABLE>
iii.
<PAGE>
BYLAWS
OF
INTRABIOTICS PHARMACEUTICALS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Wilmington, County of New
Castle.
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
SECTION 5. ANNUAL MEETINGS.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors. Nominations of persons
for election to the Board of Directors of the corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders: (i) pursuant to the corporation's notice of meeting of
stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by
any stockholder of the corporation who was a stockholder of record at the time
of giving of notice provided for in the following paragraph, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
Section 5.
1.
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(b) At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of Section 5(a) of these
Bylaws, (i) the stockholder must have given timely notice thereof in writing to
the Secretary of the corporation, (ii) such other business must be a proper
matter for stockholder action under the Delaware General Corporation Law
("DGCL"), (iii) if the stockholder, or the beneficial owner on whose behalf any
such proposal or nomination is made, has provided the corporation with a
Solicitation Notice (as defined in this Section 5(b)), such stockholder or
beneficial owner must, in the case of a proposal, have delivered a proxy
statement and form of proxy to holders of at least the percentage of the
corporation's voting shares required under applicable law to carry any such
proposal, or, in the case of a nomination or nominations, have delivered a proxy
statement and form of proxy to holders of a percentage of the corporation's
voting shares reasonably believed by such stockholder or beneficial owner to be
sufficient to elect the nominee or nominees proposed to be nominated by such
stockholder, and must, in either case, have included in such materials the
Solicitation Notice, and (iv) if no Solicitation Notice relating thereto has
been timely provided pursuant to this section, the stockholder or beneficial
owner proposing such business or nomination must not have solicited a number of
proxies sufficient to have required the delivery of such a Solicitation Notice
under this Section 5. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation not later
than the close of business on the ninetieth (90th) day nor earlier than the
close of business on the one hundred twentieth (120th) day prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced more than thirty (30)
days prior to or delayed by more than thirty (30) days after the anniversary of
the preceding year's annual meeting, notice by the stockholder to be timely must
be so delivered not earlier than the close of business on the one hundred
twentieth (120th) day prior to such annual meeting and not later than the close
of business on the later of the ninetieth (90th) day prior to such annual
meeting or the tenth (10th) day following the day on which public announcement
of the date of such meeting is first made. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth: (A) as to each person whom the stockholder proposed to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "1934 Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (B) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (C) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the corporation's books, and of
such beneficial owner, (ii) the class and number of shares of the corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner, and (iii) whether either such stockholder or beneficial owner
intends to deliver a proxy statement and form of proxy to holders of, in the
case of the proposal, at least the percentage of the corporation's voting shares
required under applicable law to carry the proposal or, in the case of
2.
<PAGE>
a nomination or nominations, a sufficient number of holders of the corporation's
voting shares to elect such nominee or nominees (an affirmative statement of
such intent, a "Solicitation Notice").
(c) Notwithstanding anything in the second sentence of Section
5(b) of these Bylaws to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the corporation
at least one hundred (100) days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Section 5 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Section 5 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 5. Except as otherwise provided by law, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made, or proposed, as the
case may be, in accordance with the procedures set forth in these Bylaws and, if
any proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.
(e) Notwithstanding the foregoing provisions of this Section
5, in order to include information with respect to a stockholder proposal in the
proxy statement and form of proxy for a stockholders' meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Nothing in these Bylaws shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.
(f) For purposes of this Section 5, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation
may be called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption).
(b) If a special meeting is properly called by any person or
persons other than the Board of Directors, the request shall be in writing,
specifying the general nature of the
3.
<PAGE>
business proposed to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile transmission to the
Chairman of the Board of Directors, the Chief Executive Officer, or the
Secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The Board of Directors shall
determine the time and place of such special meeting, which shall be held not
less than thirty-five (35) nor more than one hundred twenty (120) days after the
date of the receipt of the request. Upon determination of the time and place of
the meeting, the officer receiving the request shall cause notice to be given to
the stockholders entitled to vote, in accordance with the provisions of Section
7 of these Bylaws. If the notice is not given within one hundred (100) days
after the receipt of the request, the person or persons properly requesting the
meeting may set the time and place of the meeting and give the notice. Nothing
contained in this paragraph (b) shall be construed as limiting, fixing, or
affecting the time when a meeting of stockholders called by action of the Board
of Directors may be held.
(c) Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the corporation's notice of meeting (i) by or at
the direction of the Board of Directors or (ii) by any stockholder of the
corporation who is a stockholder of record at the time of giving notice provided
for in these Bylaws who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 6(c). In the event
the corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the corporation's notice of meeting, if the
stockholder's notice required by Section 5(b) of these Bylaws shall be delivered
to the Secretary at the principal executive offices of the corporation not
earlier than the close of business on the one hundred twentieth (120th) day
prior to such special meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in
4.
<PAGE>
person or by proxy duly authorized, of the holders of a majority of the
outstanding shares of stock entitled to vote shall constitute a quorum for the
transaction of business. In the absence of a quorum, any meeting of stockholders
may be adjourned, from time to time, either by the chairman of the meeting or by
vote of the holders of a majority of the shares represented thereat, but no
other business shall be transacted at such meeting. The stockholders present at
a duly called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by
statute, the Certificate of Incorporation or these Bylaws, in all matters other
than the election of directors, the affirmative vote of the majority of shares
present in person or represented by proxy at the meeting and entitled to vote on
the subject matter shall be the act of the stockholders. Except as otherwise
provided by statute, the Certificate of Incorporation or these Bylaws, directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Where a separate vote by a class or classes or series is required,
except where otherwise provided by the statute or by the Certificate of
Incorporation or these Bylaws, a majority of the outstanding shares of such
class or classes or series, present in person or represented by proxy, shall
constitute a quorum entitled to take action with respect to that vote on that
matter and, except where otherwise provided by the statute or by the Certificate
of Incorporation or these Bylaws, the affirmative vote of the majority
(plurality, in the case of the election of directors) of the votes cast by the
holders of shares of such class or classes or series shall be the act of such
class or classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with
5.
<PAGE>
respect to voting shall have the following effect: (a) if only one (1) votes,
his act binds all; (b) if more than one (1) votes, the act of the majority so
voting binds all; (c) if more than one (1) votes, but the vote is evenly split
on any particular matter, each faction may vote the securities in question
proportionally, or may apply to the Delaware Court of Chancery for relief as
provided in the DGCL, Section 217(b). If the instrument filed with the Secretary
shows that any such tenancy is held in unequal interests, a majority or
even-split for the purpose of subsection (c) shall be a majority or even-split
in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Unless otherwise provided in the Certificate of
Incorporation, any action required by statute to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated consent delivered to the corporation in the
manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed by a
sufficient number of stockholders to take action were delivered to the
corporation as provided in Section 228 (c) of the DGCL. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the DGCL if such action had been voted on by stockholders at a
meeting thereof, then the certificate filed under such section shall
6.
<PAGE>
state, in lieu of any statement required by such section concerning any vote of
stockholders, that written consent has been given in accordance with Section 228
of the DGCL.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock
of the corporation (the "Initial Public Offering").
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the
Board of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, a chairman of the meeting chosen by a
majority in interest of the stockholders entitled to vote, present in person or
by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
(b) The Board of Directors of the corporation shall be
entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board of Directors, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order of
business for the meeting, rules and procedures for maintaining order at the
meeting and the safety of those present, limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of
directors of the corporation shall be fixed in accordance with the Certificate
of Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
7.
<PAGE>
SECTION 17. CLASSES OF DIRECTORS. Subject to the rights of the holders
of any series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the Initial Public Offering, the
directors shall be divided into three classes designated as Class I, Class II
and Class III, respectively. Directors shall be assigned to each class in
accordance with a resolution or resolutions adopted by the Board of Directors.
At the first annual meeting of stockholders following the closing of the Initial
Public Offering, the term of office of the Class I directors shall expire and
Class I directors shall be elected for a full term of three years. At the second
annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class II directors shall expire and Class II
directors shall be elected for a full term of three years. At the third annual
meeting of stockholders following the closing of the Initial Public Offering,
the term of office of the Class III directors shall expire and Class III
directors shall be elected for a full term of three years. At each succeeding
annual meeting of stockholders, directors shall be elected for a full term of
three years to succeed the directors of the class whose terms expire at such
annual meeting.
Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 18. VACANCIES.
(a) Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Section 18 in the
case of the death, removal or resignation of any director.
(b) If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors.
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When one or more directors shall resign from the Board of Directors, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
SECTION 20. REMOVAL.
(a) Neither the Board of Directors nor any individual
director may be removed without cause.
(b) Subject to any limitation imposed by law, any
individual director or directors may be removed with cause by the affirmative
vote of a majority of the voting power of the corporation entitled to vote at an
election of directors.
SECTION 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately before or after the annual meeting of
stockholders and at the place where such meeting is held. No notice of an annual
meeting of the Board of Directors shall be necessary and such meeting shall be
held for the purpose of electing officers and transacting such other business as
may lawfully come before it.
(b) REGULAR MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may be
held at any time or date and at any place within or without the State of
Delaware which has been designated by the Board of Directors and publicized
among all directors. No formal notice shall be required for regular meetings of
the Board of Directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the President or any two of the directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors,
or of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Notice of the time and place of all
special meetings of the Board of Directors shall be orally or in writing, by
telephone, including a voice messaging system or other system or technology
designed to record and communicate messages, facsimile, telegraph or telex, or
by electronic mail or other electronic means, during normal business hours, at
least twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will
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be waived by any director by attendance thereat, except when the director
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the directors not present shall sign a written
waiver of notice. All such waivers shall be filed with the corporate records or
made a part of the minutes of the meeting.
SECTION 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 43 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; PROVIDED, HOWEVER, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b) At each meeting of the Board of Directors at which a
quorum is present, all questions and business shall be determined by the
affirmative vote of a majority of the directors present, unless a different vote
be required by law, the Certificate of Incorporation or these Bylaws.
SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
SECTION 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and provided
in the resolution of the Board of
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Directors shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to (i) approving or adopting, or recommending to the stockholders, any
action or matter expressly required by the DGCL to be submitted to stockholders
for approval, or (ii) adopting, amending or repealing any bylaw of the
corporation.
(b) OTHER COMMITTEES. The Board of Directors may, from time to
time, appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall any such committee have the powers denied to
the Executive Committee in these Bylaws.
(c) TERM. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to any requirements of any
outstanding series of preferred Stock and the provisions of subsections (a) or
(b) of this Bylaw, may at any time increase or decrease the number of members of
a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any director by attendance thereat, except when the director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall
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constitute a quorum for the transaction of business, and the act of a majority
of those present at any meeting at which a quorum is present shall be the act of
such committee.
SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President (if a director), or if the President is absent, the
most senior Vice President (if a director), or, in the absence of any such
person, a chairman of the meeting chosen by a majority of the directors present,
shall preside over the meeting. The Secretary, or in his absence, any Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.
SECTION 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
Unless some other officer has been elected Chief Executive Officer of the
corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision,
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direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers, as the Board of
Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume
and perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders and of all meetings of the Board of Directors and any committee
thereof requiring notice. The Secretary shall perform all other duties given him
in these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation
in a thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not
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be necessary to make it effective. Any resignation shall be without prejudice to
the rights, if any, of the corporation under any contract with the resigning
officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION
SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or
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registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent, or registrar at the date of issue. Each
certificate shall state upon the face or back thereof, in full or in summary,
all of the powers, designations, preferences, and rights, and the limitations or
restrictions of the shares authorized to be issued or shall, except as otherwise
required by law, set forth on the face or back a statement that the corporation
will furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional, or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Within a
reasonable time after the issuance or transfer of uncertificated stock, the
corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to this section or otherwise required by law or with respect to this
section a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Except as otherwise expressly provided by law, the rights and
obligations of the holders of certificates representing stock of the same class
and series shall be identical.
SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to agree to indemnify the corporation in such manner as it shall
require or to give the corporation a surety bond in such form and amount as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.
SECTION 36. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the DGCL.
SECTION 37. FIXING RECORD DATES.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall, subject to applicable law, not be more than sixty (60) nor less than
ten (10)
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days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
PROVIDED, HOWEVER, that the Board of Directors may fix a new record date for the
adjourned meeting.
(b) Prior to the Initial Public Offering, in order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall promptly, but in
all events within ten (10) days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has been
fixed by the Board of Directors within ten (10) days of the date on which such a
request is received, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by applicable law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty (60) days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; PROVIDED, HOWEVER, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation and applicable law, if any, may be declared by the Board of
Directors pursuant to law at any regular or special meeting. Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation and applicable law.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
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ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS AND OFFICERS. The corporation shall indemnify
its directors and officers to the fullest extent not prohibited by the DGCL or
any other applicable law; PROVIDED, HOWEVER, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
officers; and, PROVIDED, FURTHER, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized by the Board of
Directors of the corporation, (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the DGCL or any other applicable law or (iv) such
indemnification is required to be made under subsection (d).
(b) OTHER EMPLOYEES AND OTHER AGENTS. The corporation shall
have power to indemnify its other employees and other agents as set forth in the
DGCL or any other applicable law. The Board of Directors shall have the power to
delegate the determination of whether indemnification shall be given to any such
person to such officers or other persons as the Board of Directors shall
determine.
(c) EXPENSES. The corporation shall advance to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director or
executive officer, of the corporation, or is or was serving at the request of
the corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Section 43 or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Section 43, no advance shall be made by the corporation to
an officer of the corporation (except by reason of the fact that such officer is
or was a director of the corporation in which event this paragraph shall not
apply) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and promptly
made (i) by the
18.
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Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding, or (ii) if such quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation.
(d) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Section 43 to a director or executive officer shall
be enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
DGCL or any other applicable law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the DGCL or any other applicable law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct. In any suit
brought by a director or executive officer to enforce a right to indemnification
or to an advancement of expenses hereunder, the burden of proving that the
director or executive officer is not entitled to be indemnified, or to such
advancement of expenses, under this Section 43 or otherwise shall be on the
corporation.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any applicable statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law, or by any other applicable law.
19.
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(f) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the DGCL or
any other applicable law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Section 43.
(h) AMENDMENTS. Any repeal or modification of this Section 43
shall only be prospective and shall not affect the rights under this Bylaw in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Section 43 that
shall not have been invalidated, or by any other applicable law. If this Section
43 shall be invalid due to the application of the indemnification provisions of
another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full extent under any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed
and shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the giving of
testimony in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
(2) The term "expenses" shall be broadly construed
and shall include, without limitation, court costs, attorneys' fees, witness
fees, fines, amounts paid in settlement or judgment and any other costs and
expenses of any nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Section 43 with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include, without
limitation, situations where such
20.
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person is serving at the request of the corporation as, respectively, a
director, executive officer, officer, employee, trustee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
(5) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Section 43.
ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to
any director may be given by the method stated in subsection (a), or by
overnight delivery service, facsimile, telex or telegram, except that such
notice other than one which is delivered personally shall be sent to such
address as such director shall have filed in writing with the Secretary, or, in
the absence of such filing, to the last known post office address of such
director.
(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the name
and address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.
(d) TIME NOTICES DEEMED GIVEN. All notices given by mail or by
overnight delivery service, as above provided, shall be deemed to have been
given as at the time of mailing, and all notices given by facsimile, telex or
telegram shall be deemed to have been given as of the sending time recorded at
time of transmission.
(e) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
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(f) FAILURE TO RECEIVE NOTICE. The period or limitation of
time within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the DGCL, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever
notice is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the DGCL, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to this
paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the voting stock of the
corporation entitled to vote. The Board of Directors shall also have the power
to adopt, amend, or repeal Bylaws.
22.
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ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
23.
<PAGE>
Exhibit 4.2
INTRABIOTICS PHARMACEUTICALS, INC.
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
OCTOBER 15, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
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<S> <C>
1. REGISTRATION RIGHTS......................................................................................1
1.1 Definitions.....................................................................................1
1.2 Request for Registration........................................................................2
1.3 Company Registration............................................................................4
1.4 Obligations of the Company......................................................................4
1.5 Furnish Information.............................................................................5
1.6 Expenses of Demand Registration.................................................................6
1.7 Expenses of Company Registration................................................................6
1.8 Underwriting Requirements.......................................................................6
1.9 Delay of Registration...........................................................................7
1.10 Indemnification.................................................................................7
1.11 Reports under Securities Exchange Act of 1934...................................................9
1.12 Form S-3 Registration...........................................................................9
1.13 Assignment of Registration Rights..............................................................10
1.14 Limitations on Subsequent Registration Rights..................................................10
1.15 "Market Stand-Off" Agreement...................................................................11
1.16 Termination of Registration Rights.............................................................11
2. COVENANTS OF THE COMPANY................................................................................12
2.1 Delivery of Financial Statements...............................................................12
2.2 Inspection.....................................................................................13
2.3 Right of First Offer...........................................................................13
2.4 IRC Section 305................................................................................14
2.5 Key-Person Insurance...........................................................................14
2.6 Confidentiality Agreements.....................................................................15
2.7 Announcements..................................................................................15
2.8 Transactions With Affiliates...................................................................15
2.9 Issuance of Series H Preferred Stock...........................................................15
2.10 Termination Of Covenants.......................................................................15
3. MISCELLANEOUS...........................................................................................15
3.1 Successors and Assigns.........................................................................15
3.2 Governing Law..................................................................................16
3.3 Counterparts...................................................................................16
i
<PAGE>
<CAPTION>
PAGE
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<S> <C>
3.4 Titles and Subtitles...........................................................................16
3.5 Notices........................................................................................16
3.6 Expenses.......................................................................................16
3.7 Amendments and Waivers.........................................................................16
3.8 Severability...................................................................................16
3.9 Aggregation of Stock...........................................................................16
3.10 Entire Agreement...............................................................................16
</TABLE>
ii
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT (this
"Agreement") is made as of the 15th day of October, 1999, by and between
INTRABIOTICS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and
the investors listed on Schedule A hereto, each of which is herein referred to
as an "Investor."
RECITALS
WHEREAS, the Company and certain of the Investors ("New
Investors") are parties to the Series H Preferred Stock and Warrant Purchase
Agreement of even date herewith (the "Stock Purchase Agreement"); and
WHEREAS, the Company and the remaining Investors (the "Existing
Investors") are parties to the existing Amended and Restated Investors' Rights
Agreement dated as of November 24, 1998, as amended (the "Existing Agreement");
and
WHEREAS, in order to induce further investment in the Company
pursuant to the Stock Purchase Agreement, the Existing Investors and the Company
hereby agree that this Agreement shall amend and restate the Existing Agreement
and shall govern the rights of the Investors to cause the Company to register
shares of Common Stock issuable to the Investors and certain other matters as
set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements,
covenants, and conditions set forth herein, the Company and each of the
Investors hereby agree that effective upon the closing of the issuance and sale
of Series H Preferred Stock to the New Investors pursuant to the Stock Purchase
Agreement, all of the provisions of the Existing Agreement shall be null and
void and superseded by the rights and obligations set forth in this Agreement,
and further agree as follows:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933,
as amended.
(b) The term "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(c) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.
<PAGE>
(e) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(f) The term "Registrable Securities" means (i) the
Common Stock of the Company issuable or issued upon conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock of the Company and Series H Preferred Stock and (ii) any Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i) and (ii) above, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such person's
rights under this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities
then outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(h) The term "SEC" shall mean the Securities and
Exchange Commission.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after
the earlier of (i) December 31, 2000, or (ii) six (6) months after the effective
date of the first registration statement for a public offering of securities of
the Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a SEC Rule 145 transaction), a written request from
the Holders of a majority of the Registrable Securities then outstanding that
the Company file a registration statement under the Act, the gross proceeds of
which would exceed $3,000,000, then the Company shall:
(i) within ten (10) days of the receipt
thereof, give written notice of such request to all Holders; and
(ii) effect as soon as practicable, and in
any event within sixty (60) days of the receipt of such request, the
registration under the Act of all Registrable Securities which the Holders
request to be registered, subject to the limitations of subsection 1.2(b),
within twenty (20) days of the mailing of such notice by the Company in
accordance with Section 3.5.
(b) If the Holders initiating the registration
request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subsection 1.2(a)
and the Company shall include such information in the written notice referred to
in subsection 1.2(a). The underwriter will be selected by the Company and
2.
<PAGE>
shall be reasonably acceptable to a majority in interest of the Initiating
Holders. In such event, the right of any Holder to include such Holder's
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration pursuant to this Section 1.2,
a certificate signed by the Chief Executive Officer of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any
twelve-month period.
(d) In addition, the Company shall not be obligated
to effect, or take any action to effect, any registration pursuant to this
Section 1.2:
(i) after the Company has effected two
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective:
(ii) if within thirty (30) days of receipt
of a written request from Initiating Holders pursuant to Section 1.2(a), the
Company gives notice to the Holders of the Company's intention to make its first
registered public offering within ninety (90) days;
(iii) during the period starting with the
date of filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a registration subject to Section 1.3 hereof; provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or
(iv) if the Initiating Holders propose to
dispose of shares of Registrable Securities that may be immediately registered
on Form S-3 pursuant to a request made pursuant to Section 1.12 below.
3.
<PAGE>
1.3 COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than the Company's first registered
public offering of its securities, a registration relating solely to the sale of
securities to participants in a Company stock plan, a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities or a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities which are also being
registered), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred twenty (120) days or until the distribution contemplated in the
registration statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (I) includes any prospectus required by
Section 10(a)(3) of the Act or (II) reflects facts or events representing a
material of fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
4.
<PAGE>
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.
(e) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered
pursuant hereto to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereto and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
5.
<PAGE>
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2; provided
further, however, that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to Section
1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but in no event shall (i) the amount of securities
of the selling Holders included in the offering be reduced below twenty percent
(20%) of the total amount of securities included in such offering, or (ii)
notwithstanding (i) above, any shares being sold by a stockholder exercising a
demand registration right similar to that granted in Section 1.2 be excluded
from such offering. For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder which is a Holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and stockholders of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a
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single "selling stockholder," and any pro-rata reduction with respect to such
"selling stockholder," shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling stockholder," as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations (each, a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, or the 1934 Act or any state securities
law; and the Company will pay to each such Holder, underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, or the 1934 Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection
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1.10(b), in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(b), shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 1.10(b) exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.10 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this
Section 1.10 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and Holders under
this Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
8.
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1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder who holds more than two percent (2%) of the Company's outstanding
stock a written request that the Company effect a registration on Form S-3 and
any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within fifteen (15) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section
1.12: (1) if Form S-3 is not available for such offering by the Holders; (2) if
the Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if
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any) at an aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $1,000,000; (3) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
registration to be effected at such time, in which event the company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than sixty (60) days after receipt of the request of the
Holder or Holders under this Section 1.12; provided, however, that the Company
shall not utilize this right more than once in any twelve-month period; (4) if
the Company has already effected three registrations on Form S-3 for the Holders
pursuant to this Section 1.12; or (5) in any particular jurisdiction in which
the Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification of
compliance.
(c) Subject to the foregoing, the Company shall file
a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All expenses incurred in connection with
a registration requested pursuant to this Section 1.12, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling Holder
or Holders and counsel for the Company, but excluding any underwriters'
discounts or commissions associated with Registrable Securities, shall be borne
by the Company. Registrations effected pursuant to this Section 1.12 shall not
be counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee
or assignee of such securities who, after such assignment or transfer, holds
at least 500,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of
this Agreement, including without limitation the provisions of Section 1.15
below; and (c) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership
(including spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) shall be aggregated together and with the partnership;
provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices
or taking any action under Section 1.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of sixty-six and two-thirds percent (66-2/3%) of the
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would
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allow such holder or prospective holder (a) to include such securities in any
registration filed under Section 1.2 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of his securities will
not reduce the amount of the Registrable Securities of the Holders which is
included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of either
of the dates set forth in subsection 1.2(a) or within one hundred twenty (120)
days of the effective date of any registration effected pursuant to Section 1.2.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Investor hereby agrees
that, during the period of duration specified by the Company and an underwriter
of common stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except common stock included in such
registration or common stock purchased after the effective date of the Company's
first registration statement filed under the Act which are purchased in an open
market transaction; provided, however, that:
(a) such agreement shall be applicable only to the
first such registration statement of the Company which covers Common Stock (or
other securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company
(whether or not pursuant to this Agreement) enter into similar agreements; and
(c) such market stand-off time period shall not exceed
one hundred eighty (180) days.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in
this Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-14 or Form S-15 or similar forms which may be promulgated
in the future.
1.16 TERMINATION OF REGISTRATION RIGHTS.
(a) No Holder shall be entitled to exercise any
right provided for in this Section 1 after five (5) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public.
(b) In addition, the right of any Holder to request
registration or inclusion in any registration pursuant to Section 1.3 shall
terminate on the closing of the first
11.
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Company-initiated registered public offering of Common Stock of the Company if
all shares of Registrable Securities held or entitled to be held upon conversion
by such Holder may immediately be sold under Rule 144 during any 90-day period,
or on such date after the closing of the first Company-initiated registered
public offering of Common Stock of the Company as all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder may
immediately be sold under Rule 144 during any 90-day period; provided, however,
that the provisions of this Section 1.16(b) shall not apply to any Holder who
owns more than one percent (1%) of the Company's outstanding stock until such
time as such Holder owns less than one percent (1%) of the outstanding stock of
the Company.
2. COVENANTS OF THE COMPANY.
2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver to
each Investor:
(a) who holds at least 500,000 shares of Series B,
Series C, Series D, Series E, Series F, Series G or Series H Preferred Stock or
Common Stock issued upon conversion thereof (as adjusted for subsequent stock
splits, recombinations or reclassifications), as soon as practicable, but in any
event within ninety (90) days after the end of each fiscal year of the Company,
an income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by independent public accountants of
nationally recognized standing selected by the Company; and
(b) who holds at least 850,000 shares of Series B,
Series C, Series D, Series E, Series F, Series G or Series H Preferred Stock or
Common Stock issued upon conversion thereof (as adjusted for subsequent stock
splits, recombinations or reclassifications) (a "Major Investor"):
(i) as soon as practicable, but in any
event within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Company, an unaudited profit or loss
statement, statement of cash flows for such fiscal quarter and an unaudited
balance sheet as of the end of such fiscal quarter;
(ii) within thirty (30) days of the end of
each month, an unaudited income statement, statement of cash flows and balance
sheet for and as of the end of such month, in reasonable detail;
(iii) as soon as practicable, but in any
event thirty (30) days prior to the end of each fiscal year, a budget and
business or operating plan for the next fiscal year in the form approved by the
Board of Directors of the Company, prepared on a monthly basis including balance
sheets and sources and applications of funds statements for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
(iv) with respect to the financial
statements called for in subsections (i) and (ii) of this Section 2.1(b), an
instrument executed by the Chief Financial Officer or President of the Company
and certifying that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with the
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exception of footnotes that may be required by GAAP) and fairly present the
financial condition of the Company and its results of operation for the period
specified, subject to year-end audit adjustment;
(v) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Major Investor or any assignee of the Major Investor may from time to time
request, provided, however, that the Company shall not be obligated under this
subsection (v) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.2 INSPECTION. The Company shall permit each Major Investor, at
such Major Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers and outside accountants, all at such
reasonable times as may be requested by such Major Investor; provided, however,
that the Company shall not be obligated pursuant to this Section 2.2 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
2.3 RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this Section 2.4, the Company hereby grants to each Major Investor
a right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined). For purposes of this Section 2.4, Major Investor
includes any general partners and affiliates of a Major Investor. A Major
Investor shall be entitled to apportion the right of first offer hereby granted
it among itself and its partners and affiliates in such proportions as it deems
appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified
mail ("Notice") to the Major Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Shares.
(b) Within twenty (20) calendar days after receipt
of the Notice, each Major Investor may elect to purchase or obtain, at a price
and on the terms specified in the Notice, up to that portion of such Shares
which equals the proportion that the number of shares of Common Stock issued and
held, or issuable upon conversion of the Series A, Series B, Series C, Series D,
Series E, Series F, Series G and Series H Preferred Stock then held, by such
Major Investor bears to the total number of shares of Common Stock of the
Company then outstanding (assuming full conversion of all convertible
securities). The Company shall promptly, in writing, inform each Major Investor
which purchases all the shares available to it ("Fully-Exercising Investor") of
any other Major Investor's failure to do likewise. During the ten-day period
commencing after receipt of such information, each Fully-Exercising Investor
shall be entitled to obtain that portion of the Shares for which Major Investors
were entitled to subscribe but which were not subscribed for by the Major
Investors which is equal to the proportion that the number of shares of Common
Stock issued and held, or issuable upon conversion of Series A, Series B,
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Series C, Series D, Series E, Series F, Series G and Series H Preferred Stock
then held, by such Fully-Exercising Investor bears to the total number of shares
of Common Stock issued and held, or issuable upon conversion of the Series A,
Series B, Series C, Series D, Series E, Series F, Series G and Series H
Preferred Stock then held, by all Fully-Exercising Investors who wish to
purchase some of the unsubscribed shares.
(c) If all Shares which Investors are entitled to
obtain pursuant to subsection 2.4(b) are not elected to be obtained as provided
in subsection 2.4(b) hereof, the Company may, during the 30-day period following
the expiration of the period provided in subsection 2.4(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Shares within such period, or if such agreement is not consummated
within thirty (30) days of the execution thereof, the right provided hereunder
shall be deemed to be revived and such Shares shall not be offered unless first
reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2.4
shall not be applicable (i) to the issuance or sale of not to exceed 9,047,108
shares of Common Stock (or options therefor) to members of the Company's
Scientific Advisory Board, consultants or employees for the primary purpose of
soliciting or retaining their employment or services, (ii) to or after
consummation of a bona fide, firmly underwritten public offering of shares of
common stock, registered under the Act pursuant to a registration statement on
Form S-1, the aggregate offering price of which exceeds $25,000,000 in the
aggregate, (iii) to the issuance of securities pursuant to the conversion or
exercise of convertible or exercisable securities, (iv) to the issuance of
securities as consideration payable to the sellers in connection with a bona
fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, or (v) to
the issuance or sale of shares of Series H Preferred Stock pursuant to the Stock
Purchase Agreement.
(e) The right of first offer set forth in this
Section 2.4 may not be assigned or transferred, except that (i) such right is
assignable by each Major Investor to any wholly owned subsidiary or parent of,
or to any corporation or entity that is, within the meaning of the Act,
controlling, controlled by or under common control with, any such Major
Investor, and (ii) such right is assignable between and among any of the Major
Investors.
2.4 IRC SECTION 305. So long as any shares of Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock or Series H Preferred
Stock remain outstanding, the Company will not, without approval of holders of a
majority of the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, or Series H Preferred Stock, respectively, then outstanding, do
any act or thing which would result in taxation of the holders of shares of the
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
Series H Preferred Stock, respectively, under Section 305 of the Internal
Revenue Code of 1986, as amended (or any comparable provision of the Internal
Revenue Code as hereafter from time to time amended).
2.5 KEY-PERSON INSURANCE. As of the date hereof, the Company shall
have from financially sound and reputable insurers term life insurance on the
life of Kenneth J. Kelley in the amount of $1,000,000 and on the life of John
Fiddes in the amount of $1,000,000, except as
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otherwise decided in accordance with policies adopted by the Company's Board of
Directors. The Company will cause to be maintained the term life insurance
required by this Section 2.6, except as otherwise decided in accordance with
policies adopted by the Company's Board of Directors. Such policies shall name
the Company as loss payee and shall not be cancelable by the Company without
prior approval of the Board of Directors.
2.6 CONFIDENTIALITY AGREEMENTS. The Company shall use its best
efforts to cause all outside service providers of the Company to enter into the
Company's standard form of confidentiality agreement and to prevent any
violations of such agreements by such service providers.
2.7 ANNOUNCEMENTS. So long as Investor (Guernsey) Ltd. Or its
Affiliates as defined herein ("Investors Guernsey") is a stockholder of the
Company, the Company shall not make any public announcement with respect to the
Stock Purchase Agreement or the transactions contemplated thereby, without the
prior written consent of Investor Guernsey, except (i) pursuant to a press
release mutually agreeable to the Company and Investor Guernsey in connection
with the closing of the transactions contemplated by the Stock Purchase
Agreement; (ii) the disclosure of the identity of any Investor as a stockholder
of the Company; or (iii) as otherwise required by applicable laws, rules or
regulations.
2.8 TRANSACTIONS WITH AFFILIATES. The Company shall not engage in
any transaction with a director, officer or employee of the Company or an
affiliate of director, officer or employee of the Company unless the transaction
is on terms no less favorable than those that would exist in an arm's-length
transaction and is approved by a majority of the directors of the Company who do
not have an interest in the transaction and except for transactions related to
the compensation or employment of such director, officer or employee.
2.9 ISSUANCE OF SERIES H PREFERRED STOCK. The Company shall not
issue any shares, or rights to acquire shares, of Series H Preferred Stock other
than the Series H Preferred Stock and warrant to purchase Series H Preferred
Stock to be issued pursuant to the Stock Purchase Agreement and an additional
aggregate amount of 100,000 shares of Series H Preferred Stock (as adjusted for
stock splits, combinations, recapitalizations and the like) to be issued in
connection with any equipment leasing or loan arrangement or debt financing from
a bank or similar financial institution. The authorized number of shares of
Series H Preferred Stock shall not exceed 7,600,000 shares (as adjusted for
stock splits, combinations, recapitalizations and the like).
2.10 TERMINATION OF COVENANTS. The covenants set forth in
subsections 2.1(b) through 2.9 (other than subsection 2.7) shall terminate and
be of no further force or effect when the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall
first occur.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective
15.
<PAGE>
successors and assigns of the parties (including transferees of any shares of
Registrable Securities). Nothing in this Agreement, express or implied, is
intended to confer upon any party other then the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.2 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.3 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.
3.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified; (ii)
when sent by confirmed facsimile; or (iii) upon deposit with an overnight or
similar courier service and addressed to the party to be notified at the address
indicated for such party on the signature page hereof or on the Company's
records, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties.
3.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
sixty-six and two-thirds percent (66-2/3%) of the Registrable Securities then
outstanding; provided, however, that subsections 2.7 and 2.9 shall not be
amended without the prior written consent of Investor Guernsey. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities and the Company.
3.8 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
3.9 AGGREGATION OF STOCK. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
3.10 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto, if any) constitutes the full and entire understanding and
agreement between the parties
16.
<PAGE>
with regard to the subjects hereof and thereof. This Agreement hereby amends and
restates the Existing Agreement in its entirety.
[Signature page follows]
17.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
INTRABIOTICS PHARMACEUTICALS, INC.
BY: /s/ Kenneth J. Kelley
---------------------------------------
NAME: Kenneth J. Kelley
TITLE: President
ADDRESS: 1255 Terra Bella
Mountain View, CA 94043
INVESTOR (GUERNSEY) LTD.
BY: /s/ David Jeffreys /s/ Marc Hollander
--------------------------------------
NAME: David Jeffreys and Marc Hollander
-------------------------------------
TITLE: Director
------------------------------------
ADDRESS: National Westminster House
Le Truchot, St. Peter Port
Guernsey, Channel Islands
GYI 4PW United Kingdom
AND:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 24th Floor
New York, NY 10112
Telephone: (212) 408-2400
Facsimile: (212) 728-5950
Attn: Harvey M. Eisenberg, Esq.
Signature Page
Investor Rights Agreement
IntraBiotics Pharmaceuticals, Inc.
<PAGE>
VULCAN VENTURES, INC.
BY: /s/ William D. Savoy
---------------------------------------
NAME: William D. Savoy
-------------------------------------
TITLE: Vice President
-------------------------------------
ADDRESS: 110 110th Avenue, N.E.
Suite 550
Bellevue, WA 98004
Attn: William H. Savoy
NEW ENGLAND PARTNERS CAPITAL, L.P.
By: NEP Capital, Inc, General Partner
---------------------------------------
BY: /s/ John Rousseau
---------------------------------------
NAME: John Rousseau
--------------------------------
TITLE: President
-------------------------------
ADDRESS: One Boston Place
Suite 2100
Boston, MA 02108
Attn: John Rousseau
/s/ Jonathan Reingold
------------------------------------------
JONATHAN REINGOLD
ADDRESS: 9403 N.E. 26th Street
Bellevue, WA 98004
Signature Page
Investor Rights Agreement
IntraBiotics Pharmaceuticals, Inc.
<PAGE>
------------------------------------------
Investor Name
By:
---------------------------------------
------------------------------------------
Printed Name/Title
Address:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Signature Page
Investor Rights Agreement
IntraBiotics Pharmaceuticals, Inc.
<PAGE>
SCHEDULE A - SCHEDULE OF INVESTORS
SERIES A PREFERRED STOCK
INVESTOR
Herb L. Heyneker
Howard B. Rosen
John J. Lauter, Jr.
John Selling
Jonathan J. MacQuitty
Leland F. Wilson
Michael F. Bigham
Michael J. Ross
Patrick O'Connor
Paul R. De Stefano
P&E Ventures
Richard Miller
DLJ Capital Corp.
Sprout Capital VI, L.P.
SERIES B PREFERRED STOCK
INVESTOR
Sprout Capital VI, L.P.
DLJ Capital Corp.
St. Paul Fire and Marine Insurance Company
Brinson MAP Venture Capital Fund III
Brinson Venture Capital Fund III, L.P.
Nancy Olson
Becket & Company, Inc.
Steve Burrill
SERIES C PREFERRED STOCK -- FIRST CLOSING (APRIL 10, 1996)
INVESTOR
Brinson Venture Capital Fund, III, L.P.
Brinson MAP Venture Capital Fund III
Sprout Capital VII, L.P.
St. Paul Fire and Marine Insurance Company
New York Life Insurance Company
Singapore Bio-Innovations Pte. Ltd.
Sextant Group, Inc.
John C. Hou
A-1.
<PAGE>
SERIES C PREFERRED STOCK -- SECOND CLOSING (JUNE 20, 1996)
INVESTOR
Sprout Capital VI, L.P.
Sprout Capital VII, L.P.
Sprout CEO Fund, L.P.
DLJ Capital Corp.
IASD Health Services Corp.
Michael J. Ross
Robert R. Tillman Living Trust
John Selling and Lydia Selling
Edward S. Andrle
Herbert L. Heyneker
Michael F. Bigham
SERIES D PREFERRED STOCK
INVESTOR
Edward Andrle
Lawrence Bowman
Brinson MAP Venture Capital Fund III, L.P.
Brinson Venture Capital Fund III, L.P.
DLJ Capital Corp.
IASD Health Services Corporation
New York Life Insurance Company
Peter Frederick & Jane Elizabeth Carpenter
TTEE Carpenter 1985 Irrevocable Trust
dated 4/29/85, Jane Shaw, Trustee28,572
Prince Capital Master Fund, L.P.
John Selling
Singapore Bio-Innovations Pte. Ltd.
Spinnaker Technology Fund, L.P.
Spinnaker Technology Offshore Fund, Ltd.
Sprout Capital VI, L.P.
Sprout Capital VII, L.P.
Sprout CEO Fund
St. Paul Venture Capital IV LLC
Dr. Lance Willsey
SERIES E PREFERRED STOCK
INVESTOR
Spinnaker Technology Fund, L.P.
Spinnaker Technology Offshore Fund, Ltd.
Spinnaker Founders Fund, L.P.
Spinnaker Clipper Fund, L.P.
A-2.
<PAGE>
SERIES F PREFERRED STOCK
INVESTOR
Pharmacia & Upjohn S.p.A.
Biosearch Italia S.p.A.
SERIES G PREFERRED STOCK
INVESTORS
Arnold S. & Bette G. Joffman, JTWROS
ASX 11036 ApS
Paul Bancroft
Bank Julius Baer & Co. Ltd. Custodian for
International BM biomedicine Holdings Inc.
Bent Kjeldahl ApS
Peper Bohnsen
Helge Bom
Darlene and David Bossen
Peter Bracken
James Brinkley
Peter Clausen
Eva Falck Crone
Curran Partners L.P.
Danica Aktieinvest ApS
Donald L. Dell
Robert Donovan
Lindsey D. Dryden
E.M. Marketing ApS
Eaton Vance Worldwide Health Services Fund
Beatrice G. Fuchs
Peter S. Garcia
Harris Antibiotic Partners
Richard Himelfarb
Iron Block Partners, LLC
William B. Jones
Henry E. Jorgensen
Kaufmann Fund, Inc.
Lars-Erik Houmann Christensen ApS
John J. Lauter, Jr.
Legg Mason Custodian fbo Stephen C. Eastham
Money Purchase Plan
Seth J. Lehr
Landsnakke A/A
Norman Lockshin
Daniel Luczak
Raymond A. Mason
MarvinMcIntyre
Donald Metzger
MLRS Investment Associates, LLC
A-3.
<PAGE>
Chr. V. Nellemann
New England Parnters Capital, L.P.
Henrik Norling
Hans Jorgen Petersen
Jens Poulsen
Preben Bech ApS
Jonathen Reingold
David Reznick
Robert Sabelhaus
Martin J. Salzman
Scanhybrid ApS
Hanne Schaldemose
Brian E. Schindler
Sears Family Trust, California Living
Trust DTD 3/11/91
Richard Sharp
Niels Henrik Sliben
Alexsander Stewart
Gary Sudhalter
Stephen Sudovar
Per Lund Thoft
Topholm & Westerman Holding ApS Ny
Vestergaardsvej 25
Soren Truelsen
Vulcan Ventures, Inc.
Soren Erik Westermann
SERIES H PREFERRED STOCK - FIRST CLOSING (OCTOBER 15, 1999)
INVESTORS
Vulcan Ventures, Inc.
New England Partners Capital, L.P.
Jonathan Reingold
SERIES H PREFERRED STOCK - SECOND CLOSING (NOVEMBER 3, 1999)
INVESTORS
Investor (Guernsey) Ltd.
A-4.
<PAGE>
EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of
________________, 2000 by and between INTRABIOTICS PHARMACEUTICALS, INC., a
Delaware corporation (the "Corporation"), and __________________________________
("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in his
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
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 solely 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 is established by a
final judgment as knowingly fraudulent or deliberately dishonest or that
constituted willful misconduct;
(c) on account of Agent's conduct that is established by a
final judgment as constituting a breach of Agent's duty of loyalty to the
Corporation or resulting 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
2.
<PAGE>
proceeding was authorized by the Board of Directors of the Corporation, (iii)
such indemnification is provided by the Corporation, in its sole discretion,
pursuant to the powers vested in the Corporation under the Code, or (iv) the
proceeding is initiated pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify Agent for the portion thereof to
which Agent is entitled.
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, and so notified the Corporation, that
there is an actual 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
3.
<PAGE>
action, in each of which cases the fees and expenses of Agent's separate counsel
shall be at the expense of the Corporation. The Corporation shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of the Corporation or as to which Agent shall have made the conclusion
provided for in clause (ii) above; and
(c) the Corporation shall not be liable to indemnify Agent
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
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.
<PAGE>
(b) If to the Corporation, to:
INTRABIOTICS PHARMACEUTICALS, INC.
1255 TERRA BELLA AVENUE
MOUNTAIN VIEW, CA 94043
ATTENTION: PRESIDENT
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.
INTRABIOTICS PHARMACEUTICALS, INC.
By:
--------------------------------------
President and Chief Executive Officer
AGENT
By:
--------------------------------------
Name:
------------------------------------
Address:
---------------------------------
---------------------------------
6.
<PAGE>
EXHIBIT 10.2
INTRABIOTICS PHARMACEUTICALS, INC.
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
ADOPTED FEBRUARY 15, 1995
AMENDED ON JUNE 13, 1996
AMENDED ON JULY 29, 1997
AMENDED ON OCTOBER 21, 1997
AMENDED ON OCTOBER 22, 1998
AMENDED ON JUNE 10, 1999
AMENDED ON JANUARY 25, 2000
1. PURPOSE OF THE PLAN. The purposes of this Amended and Restated 1995
Stock Option Plan are to attract and retain the best available personnel for
positions' of substantial responsibility, to provide additional incentive to the
Employees and Consultants of the Company and to promote the success of the
Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMITTEE" shall mean the Committee appointed by the
Board in accordance with paragraph (a) of Section 4 of the Plan, or, if no
Committee is appointed, then the Board.
(d) "COMMON STOCK" shall mean the Common Stock, $0.001 par
value per share, of the Company.
(e) "COMPANY" shall mean IntraBiotics Pharmaceuticals, Inc., a
Delaware corporation.
(f) "CONSULTANT" shall mean any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services, including
serving on the Company's Scientific Advisory Board, and is compensated for such
consulting services, and any director of the Company whether compensated for
such services or not; provided that if and in the event the Company registers
any class of any equity security pursuant to Section 12 of the Exchange Act, the
term Consultant shall thereafter not include directors who are not compensated
for their services or are paid only a director's fee by the Company.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall
mean the absence of any interruption or termination of service as an Employee or
Consultant. Continuous
1.
<PAGE>
Status as an Employee or Consultant shall not be considered interrupted in the
case of sick leave, military leave or any other leave of absence approved by the
Board; provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
(h) "DISINTERESTED PERSON" shall mean a director (i) who is
not, during the one year prior to service as an administrator of the Plan
pursuant to Section 4(a), or during such service, granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any of its
affiliates except as permitted by Rule 16b-3(c)(2)(i)(A)-(D) under the Exchange
Act or (ii) who is otherwise considered to be a "disinterested person" in
accordance with Rule 16b-3(c)(2)(i), or any other applicable rules, regulations
or interpretation of the Securities Exchange Commission. Any such person shall
otherwise comply with the requirements of Rule 16b-3 under the Exchange Act.
(i) "EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(k) "INCENTIVE STOCK OPTION" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(l) "NONSTATUTORY STOCK OPTION" shall mean an Option not
intended to qualify as an Incentive Stock Option.
(m) "OPTION" shall mean a stock option granted pursuant to the
Plan.
(n) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(o) "OPTIONEE" shall mean an Employee or Consultant who
receives an Option.
(p) "PARENT" shall mean a "parent corporation" whether now or
hereafter existing, as defined in Section 425(e) of the Code.
(q) "PLAN" shall mean this Amended and Restated 1995 Stock
Option Plan.
(r) "SHARE" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(s) "STOCK OPTION AGREEMENTS" shall mean Stock Option
Agreements and Amended and Restated Stock Option Agreements as defined in
Section 16 of the Plan.
(t) "SUBSIDIARY" shall mean a "subsidiary corporation" whether
now or hereafter existing, as defined in Section 425(f) of the Code.
2.
<PAGE>
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is nine million forty-seven thousand one hundred eight
(9,047,108) Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
Shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board.
(i) The Board may appoint a Committee consisting of
not less than two members of the Board to administer the Plan on behalf of the
Board, subject to such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. Members of the Board who are either eligible for Options or have been
granted Options may vote on any matters affecting the administration of the Plan
or the grant of any Options pursuant to the Plan, except that no such member
shall act upon the granting of an Option to himself, but any such member may be
counted in determining the existence of a quorum at any meeting of the Board
during which action is taken with respect to the granting of Options to him.
(ii) Notwithstanding the foregoing subparagraph (i),
if and in any event the Company registers any class of any equity security
pursuant to Section 12 of the Exchange Act, any grants of Options to officers or
directors shall only be made by the Board, if each member of the Board is a
Disinterested Person; provided, however, if each member of the Board is not a
Disinterested Person, then grants of Options to officers or directors shall only
be made by a Committee of two or more directors, each of whom is a Disinterested
Person.
(iii) Subject to the foregoing subparagraphs (i) and
(ii), from time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused, or
remove all members of the Committee and thereafter directly administer the Plan.
(b) POWERS OF THE COMMITTEE. Subject to the provisions of the
Plan, the Committee shall have the authority, in its discretion: (i) to grant
Incentive Stock Options or Nonstatutory Stock Options; (ii) to determine, upon
review of relevant information and in accordance with Section 8(b) of the Plan,
the fair market value of the Common Stock; (iii) to determine the exercise price
per share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the Employees or
Consultants to whom, and the time or times at which, Options shall be granted
and the number of shares to be represented by each Option; (v) to interpret the
Plan; (vi) to prescribe, amend and rescind rules and regulations relating to the
Plan; (vii) to determine the terms and provisions of
3.
<PAGE>
each Option granted (which need not be identical) and, with the consent of the
holder thereof, modify or amend each Option; (viii) to defer (with the consent
of the Optionee) the exercise date of any Option, consistent with the provisions
of Section 5 of the Plan; (ix) to authorize any person to execute on behalf of
the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and binding
on all Optionees and any other holders of any Options granted under the Plan.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options may be granted only to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option may, if he
is otherwise eligible, be granted an additional Option or Options.
(b) When any Options designated as Incentive Stock Options
become first available for purchase, and when the aggregate of all Incentive
Stock Options granted to an Employee by the Company or any Parent or Subsidiary
would result in Shares having an aggregate fair market value (determined for
each Share as of the date of grant of the Option covering such Share) in excess
of $100,000, then upon exercise of one or more Incentive Stock Options during
any calendar year, any Options in excess of such dollar amount shall be treated
for all purposes as Nonstatutory Stock Options.
(c) Section 5(b) of the Plan shall apply only to an Incentive
Stock Option evidenced by an "Incentive Stock Option Agreement" which sets forth
the intention of the Company and the Optionee that such Option shall qualify as
an Incentive Stock Option. Section 5(b) of the Plan shall not apply to any
Option evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 17 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 13 of the Plan.
Termination of the Plan shall not affect the obligations of the Company or the
rights of Optionees pursuant to Options outstanding on the date of termination.
7. TERM OF OPTION. The term of each Incentive Stock Option shall be ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement. The term of each Nonstatutory
Stock Option shall be ten (10) years from the
4.
<PAGE>
date of grant thereof or such shorter term as may be provided in the
Nonstatutory Stock Option Agreement. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Committee, but' shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee or Consultant
who, at the time of the grant of such Incentive Stock Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the fair market value per Share on the date of
grant.
(B) granted to an Employee or Consultant,
the per Share exercise price shall be no less than 100% of the fair market value
per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to an Employee or Consultant
who, at the time of the grant of such Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the fair market value per Share on the date of the grant.
(B) granted to an Employee or Consultant,
the per Share exercise price shall be no less than 85% of the fair market value
per Share on the date of grant.
(b) The fair market value shall be determined by the Committee
in its discretion; provided, however, that where there is a public market for
the Common Stock, the fair market value per Share shall be the mean of the bid
and asked prices (or the closing price per share if the Common Stock is listed
on the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System) of the Common Stock for the date of grant, as reported
in the Wall Street Journal (or, if not so reported, as otherwise reported by the
NASDAQ System) or, in the event the Common Stock is listed on a stock exchange,
the fair market value per Share shall be the closing price on such exchange on
the date of grant of the Option, as reported in the Wall Street Journal.
(c) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Committee and may consist entirely of cash, check or other Shares of
Common Stock which (i) either have been owned by the Optionee for more than six
(6) months on the date of surrender or were not
5.
<PAGE>
acquired, directly or indirectly, from the Company, and (ii) have a fair market
value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, or any combination of such
methods of payment.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE. Any Option granted hereunder shall
be exercisable at such times and under such conditions as determined by the
Board, including performance criteria with respect to the Company and/or the
Optionee, and as shall be permissible under the terms of the Plan.
(i) STOCK OPTION AGREEMENT. Each grant of an Option
under the Plan shall be evidenced by a Stock Option Agreement.
(ii) EXERCISABILITY. The Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. An Option shall become exercisable at the rate of at least twenty
percent (20%) per year over five (5) years from the date the Option is granted.
Subject to the preceding sentence, the vesting of any Option shall be determined
by the Committees at its sole discretion.
(iii) NO FRACTIONAL SHARES. An Option may not be
exercised for a fraction of a Share.
(iv) EXERCISE. An Option shall be deemed to be
exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the Stock Option Agreement by the person entitled
to exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment may, as
authorized by the Committee, consist of consideration and method of payment
allowable under Section 8(c) of the Plan.
(v) NO RIGHTS AS A STOCKHOLDER. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of the
Plan.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, at any time within thirty
(30) days or such longer period of time, not exceeding three (3) months in the
case of an Incentive Stock Option or six (6) months in the case of a
Nonstatutory Stock Option as determined by the Board (with such determination in
the case of a Incentive Stock Option being made at the time of grant of the
Option), after the date of such termination (but in no event later than the date
of expiration of the term of such Option as set forth in the Stock Option
Agreement), exercise his Option to the extent that he was entitled to exercise
it at the date of such termination. To the extent that he was not entitled to
exercise the
6.
<PAGE>
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his disability, he may, at
any time within six (6) months or such longer period of time, not exceeding
twelve (12) months as determined by the Board (with such determination in the
case of an Incentive Stock Option being made at the time of grant of the
Option), from the date of such termination (but in no event later than the date
of expiration of the term of such Option as set forth in the Stock Option
Agreement), exercise his Option to the extent he was entitled to exercise it at
the date of such termination. To the extent that he was not entitled to exercise
the Option at the date of termination, or if he does not exercise such Option'
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee:
(i) during the term of an Option held by an Optionee
who was, at the time of his death, an Employee or Consultant of the Company and
who shall have been in Continuous Status as an Employee or Consultant since the
date of grant of the Option, the Option may be exercised, at any time within six
(6) months following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Stock Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had the Optionee continued living and
remained in Continuous Status as an Employee or Consultant six (6) months after
the date of death, subject to the limitation set forth in Section 5(b); or
(ii) within thirty (30) days or such other period of
time, not exceeding three (3) months as determined by the Board (with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option), after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Stock Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise that had
accrued at the date of termination.
10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
7.
<PAGE>
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock or similar transaction. Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
the Board shall notify the Optionee at least fifteen (15) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
will terminate immediately prior to the consummation of such proposed action. In
the event of a merger of the Company with or into another corporation in which
the Company is not the surviving corporation or upon the sale of substantially
all of the property of the Company to another corporation or person, the
surviving corporation may assume any Options outstanding under the Plan or an
equivalent option may be substituted' by such successor employer corporation or
a parent or subsidiary of such successor corporation, if such successor
corporation agrees to assume the Options or to substitute an equivalent option.
Notwithstanding the vesting schedules set forth in Options
outstanding under the Plan, in the event of a merger or sale of the Company
described above, (i) Options held by persons who are then Employees of the
Company shall become vested as to one-half (1/2) of the then unvested shares
subject to such Options as of the effective date of the change in control;
and (ii) the remaining invested shares under the Options held by persons who
are then Employees who are officers of the Company shall become fully vested
in the event that such officers' service with the Company is involuntarily
terminated without Cause (as defined below) or voluntarily terminated for
Good Reason (as defined below), in either case within thirteen months
following the change in control.
For purposes of this option, "Cause" means that, in the reasonable
determination of the Company, the officer:
(i) has been indicted or convicted of any felony or any crime
involving dishonesty that is likely to inflict or has inflicted demonstrable and
material injury on the business of the Company;
(ii) has participated in any fraud against the Company; or
(iii) has intentionally damaged any property of the Company
thereby causing demonstrable and material injury to the business of the Company;
PROVIDED THAT Cause shall not exist based on conduct described in clause (ii) or
clause (iii) unless the conduct described in such clause has not been cured
within fifteen (15) days following the officer's receipt of written notice from
the Company specifying the particulars of the conduct constituting Cause.
For purposes of this option, "Good Reason" means that any of the
following is undertaken without the officer's express written consent:
8.
<PAGE>
(i) the assignment to the officer of any duties or
responsibilities that results in a significant diminution in the officer's
function as in effect immediately prior to the effective date of the change in
control; provided, however, that a mere change in the officer's title or
reporting relationships shall not constitute Good Reason;
(ii) a material reduction by the Company in the officer's
annual base salary, as in effect on the effective date of the change in control
or as increased thereafter;
(iii) any failure by the Company to continue in effect any
benefit plan or program, including fringe benefits, incentive plans and plans
with respect to the receipt of securities of the Company, in which the officer
is participating immediately prior to the effective date of the change in
control (hereinafter referred to as "Benefit Plans"); or the taking of any
action by the Company that would adversely affect the officer's participation in
or reduce the officer's benefits under the Benefit Plans; provided, however,
that "Good Reason" shall not exist under this paragraph following a change in
control if the Company offers a range of benefit plans and programs that, taken
as a whole, are comparable to the Benefit Plans; or
(iv) a relocation of the officer's business office to a
location more than fifty (50) miles from the location at which the officer
performs duties as of the effective date of the change in control, except for
required travel by the officer on the Company's business to an extent
substantially consistent with the officer's business travel obligations prior to
the change in control.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Committee makes the determination
granting such Option. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.
13. AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend, suspend or
terminate the Plan at any time in such respects as the Board may deem advisable;
provided that the following revisions or amendments shall require approval of
the stockholders of the Company in the manner described in Section 17 of the
Plan:
(i) any increase in the number of Shares subject to
the Plan, other than in connection with an adjustment under Section 11 of the
Plan;
(ii) any change in the designation of the class of
persons eligible to be granted options; or
(iii) if the Company has a class of equity securities
registered under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to participants under
the Plan.
(b) STOCKHOLDER APPROVAL. If any amendment requiring
stockholder approval under Section 13(a) of the Plan is made subsequent to the
first registration of any class
9.
<PAGE>
of equity securities by the Company under Section 12 of the Exchange Act, such
stockholder approval shall be solicited as described in Section 17 of the Plan.
(c) EFFECT OF AMENDMENT, SUSPENSION OR TERMINATION. Any such
amendment, suspension or termination of the Plan shall not affect Options
already granted and such Options shall remain in full force and effect as if
this Plan had not been amended, suspended or terminated, unless mutually agreed
otherwise between the Optionee and the Committee, which agreement must be in
writing and signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
Any Shares issued upon exercise of an Option shall be subject to such
rights of repurchase, rights of first refusal and other transfer restrictions as
the Committee may determine. Such restrictions shall be set forth in the
applicable Stock Option Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
16. STOCK OPTION AGREEMENTS. All Options shall be evidenced by written
Stock Option Agreements or Amended and Restated Stock Option Agreements in such
form as the Committee shall approve. The provisions of the various Stock Option
Agreements need not be identified.
17. STOCKHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by
the stockholders of the Company within twelve (12) months after the date the
Plan is adopted. Any Option exercised before stockholder approval is obtained
shall be rescinded if stockholder approval is
10.
<PAGE>
not obtained within twelve (12) months after the plan is adopted. Such Shares
shall not be counted in determining whether such approval is obtained.
(b) If and in the event that the Company registers any class
of equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the stockholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.
(c) If any required approval by the stockholders of the Plan
itself or of any amendment thereto is solicited at any time otherwise than as
described in Section 17(b) hereof, then the Company shall, at or prior to the
first annual meeting of stockholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing to the stockholders entitled
to vote for the Plan substantially the same information which would be required
(if proxies to be voted with respect to approval or disapproval of the Plan or
amendment were then being solicited) by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and
(ii) file with, or marl for filing to, the Securities
and Exchange Commission four (4) copies of the written information referred to
in subsection (i) hereof not later than the date on which such information is
first sent or given to stockholders.
18. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, financial statements at least annually and copies of all annual
reports and other information which are provided to all stockholders of the
Company. The Company shall not be required to provide such information if the
issuance of Options under the Plan is limited to key employees whose duties in
connection with the Company assure their access to equivalent information.
11.
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
AMENDED AND RESTATED STOCK OPTION AGREEMENT
IntraBiotics Pharmaceuticals, Inc. a Delaware corporation (the
"Company"), desiring to afford an opportunity to the Grantee named below to
purchase certain shares of the Company's Common Stock, $0.001 par value, and
to provide the Grantee with an added incentive as an employee or consultant
of the Company, hereby grants to Grantee, and the Grantee hereby accepts, an
option to purchase the number of such shares optioned as specified below (the
"Option"), during the term ending at midnight (prevailing local time at the
Company's principal offices) on the expiration date of this Option specified
below, at the option exercise price specified below, subject to and upon the
following terms and conditions:
1. IDENTIFYING PROVISIONS. As used in this Option, the following
terms shall have the following respective meanings:
(a) Grantee: < < FirstName > > < < LastName > >
(b) Date of grant: < < GrantDate > >
(c) Vesting start date: < < VestingDate > >
(d) Number of shares optioned: < < NumberofShares > >
(e) Option exercise price per share: < < ExercisePrice > >
(f) Expiration date: < < ExpirationDate > >
This Option is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code unless
this sentence has been manually lined out and its deletion is followed by the
signature of the corporate officer who signed this Option on behalf of the
Company: __________ __________________.
2. TIMING OF PURCHASES. This Option shall vest over a period of FOUR
(4) years. This Option is not exercisable in any part until one (1) year after
the Vesting Start Date. Upon the expiration of one (1) year after the Vesting
Start Date and subject to the provisions for termination and acceleration
herein, this Option shall become exercisable in installments as follows: This
Option may not in the aggregate be exercised as to more than 25% of the total
number of shares optioned until one (1) year after the Vesting Start Date. At
the end of each calendar month thereafter an amount equal to 1/48th of the
optioned shares shall vest and shall be subject to exercise hereunder; in each
case to the nearest whole share. Upon the expiration of FOUR years after the
Vesting Start Date this
-1-
<PAGE>
Option may be exercised as to all optioned shares for which it had not
previously been exercised, until and including the expiration date of this
Option whereupon the Option shall expire and may thereafter no longer be
exercised.
3. RESTRICTIONS ON EXERCISE. The following additional provisions
shall apply to the exercise of this Option:
(i) TERMINATION OF STATUS. If the Grantee's status as
an employee or consultant of the Company or a parent or subsidiary thereof is
terminated for any reason other than death, only that portion of this Option
exercisable at the time of such termination may thereafter be exercised, and
it may not be exercised more than thirty (30) days after such termination nor
after the expiration date of this Option, whichever date is sooner, unless
such termination is by reason of the Grantee's disability, in which case such
period of thirty (30) days shall be extended to six (6) months. In all other
respects, this Option shall terminate upon such termination.
(ii) DEATH OF GRANTEE. If the Grantee shall die
during the term of this Option, the Grantee's legal representative or
representatives, or the person or persons entitled to do so under the
Grantee's last will and testament or under applicable intestate laws, shall
have the right to exercise this Option, but only for the number of shares as
to which the Grantee was entitled to exercise this Option in accordance with
Section 2 hereof on the date of his death, and such right shall expire and
this Option shall terminate six (6) months after the date of the Grantee's
death or on the expiration date of this Option, whichever date is sooner. In
all other respects, this Option shall terminate upon such death.
(iii) CONTINUITY OF STATUS. This Option shall not be
exercisable by the Grantee in any part unless at all times beginning with the
date of grant and ending no more than thirty (30) days prior to the date of
exercise, the Grantee has, except for military service leave, sick leave or
other bona fide leave of absence (such as temporary employment by the United
States Government or as otherwise approved by the Board of Directors), been
in continuous service as an employee or consultant of the Company or a parent
or subsidiary thereof, except that such period of thirty (30) days shall be
six (6) months following any termination by reason of his permanent and total
disability.
4. NON-TRANSFERABLE. The Grantee may not transfer this Option
except by will or the laws of descent and distribution. This Option shall
not be otherwise transferred, assigned, pledged, hypothecated or disposed of
in any way, whether by operation of law or otherwise, and shall be
exercisable during the Grantee's lifetime only by the Grantee or his guardian
or legal representative.
-2-
<PAGE>
5. ADJUSTMENTS AND CORPORATE REORGANIZATIONS. Subject to the
provisions of the Company's Amended and Restated 1995 Stock Option Plan under
which this Option is granted, if the outstanding shares of the class then
subject to this Option are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result
of one or more reorganizations, recapitalizations, stock splits, reverse
stock splits, stock dividends or the like, appropriate adjustments shall be
made in the number and/or kind of shares or securities for which the
unexercised portions of this Option may thereafter be exercised, all without
any change in the aggregate exercise price applicable to the unexercised
portions of this Option, but with a corresponding adjustment in the exercise
price per share or other unit. No fractional share of stock shall be issued
under this Option or in connection with any such adjustment. Such
adjustments shall be made by or under authority of the Company's Board of
Directors whose determinations as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which
the outstanding securities of the class then subject to this Option are
changed into or exchanged for cash or property or securities not of the
Company's issue, or any combination thereof, or upon a sale of substantially
all the property of the Company to another corporation or person, this Option
shall terminate, unless provision be made in writing in connection with such
transaction for the assumption of options theretofore granted under the
Amended and Restated 1995 Stock Option Plan under which this Option was
granted, or the substitution for such options of any options covering the
stock of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices,
in which event this Option shall continue in the manner and under the terms
so provided. If this Option shall terminate pursuant to the foregoing
sentence, the Grantee shall have the right, at such time prior to the
consummation of the transaction causing such termination as the Company shall
designate, to exercise the unexercised portions of this Option to the extent
then exercisable in accordance with Section 2 hereof.
6. EXERCISE, PAYMENT FOR AND DELIVERY OF STOCK. This Option may
be exercised by the Grantee or other person then entitled to exercise it by
giving five (5) business days' written notice of exercise to the Company
specifying the number of shares to be purchased and the total purchase price,
accompanied by a check to the order of the Company in payment of such price.
If the Company is required to withhold an account of any present or future
tax imposed as a result of such exercise, the notice of exercise shall be
accompanied by a check to the order of the Company in payment of the amount
of such withholding.
7. RIGHTS IN SHARES BEFORE ISSUANCE AND DELIVERY. No person shall
be entitled to the privileges of stock ownership in respect of any shares
issuable upon exercise of this Option, unless and until such shares have been
issued to such person as fully paid shares.
-3-
<PAGE>
8. REQUIREMENTS OF LAW AND OF STOCK EXCHANGES. By accepting this
Option, the Grantee represents and agrees for himself and his transferees by
will or the laws of descent and distribution that, unless a registration
statement under the Securities Act of 1933, as amended, is in effect as to
shares purchased upon any exercise of this Option, (i) any and all shares so
purchased shall be acquired for his personal account and not with a view to
or for sale in connection with any distribution, and (ii) each notice of the
exercise of any portion of this Option shall be accompanied by a
representation and warranty in writing, signed by the person entitled to
exercise the same, that the shares are being so acquired in good faith for
his personal account and not with view to or for sale in connection with any
distribution.
No certificate or certificates for shares of stock purchased
upon exercise of this Option shall be issued and delivered prior to the
admission of such shares to listing on notice of issuance on any stock
exchange on which shares of that class are then listed, nor unless and until,
in the opinion of counsel for the Company, such securities may be issued and
delivered without causing the Company to be in violation of or incur any
liability under any federal, state or other securities laws, any requirement
of any securities exchange listing agreement to which the Company may be a
party, or any other requirement of law or of any regulatory body having
jurisdiction over the Company.
9. RESTRICTED STOCK PROVISIONS. Shares of stock issued on
exercise of this Option shall upon issuance be subject to the following
restrictions (and, as used herein, "restricted stock" means shares issued on
exercise of this Option which are still subject to the restrictions imposed
under this paragraph that have not yet expired or terminated):
(a) Such shares of restricted stock may not be sold or
otherwise transferred or hypothecated except pursuant to Rule 144 or an
available exemption under the Securities Act of 1933, as amended, and shall
be subject to the following right of first refusal:
(i) If Grantee desires to sell any of his
shares pursuant to a bona fide, arm's length offer from a third party
(the "Proposed Transferee"), Grantee shall submit a written offer (the
"Offer") to sell such shares (the "Offered Shares") to the Company on
the same terms and conditions, including price as Grantee proposes to
sell the Offered Shares to the Proposed Transferee. The Offer shall
disclose the identity of the Proposed Transferee and the number of
Offered Shares proposed to be sold.
(ii) If the Company desires to purchase all of
the Offered Shares, the Company shall communicate in writing its
election to purchase (an "Acceptance") to the Grantee, which
Acceptance shall be delivered in person or mailed to the Grantee
within twenty (20) days of the date the Offer was made.
(iii) If the Company does not accept the Offer
as provided above, the Company may assign its purchase right to
holders of its Preferred Stock.
-4-
<PAGE>
(iv) If the Company and/or any purchasing
holders of Preferred Stock do not agree to purchase all of the Offered
Shares, then, the Offered Shares may be sold by the Grantee at any
time within one hundred and twenty (120) days after the date the Offer
was made. Any such sale shall be to the Proposed Transferee, at not
less than the price and upon other terms and conditions, if any, not
more favorable to the Proposed Transferee than those specified in the
Offer. Any Offered Shares not sold within such 120-day period shall
continue to be subject to the requirements of a prior offer pursuant
to this Section 9(a).
(b) Notwithstanding (a) above, if the service status of the
Grantee with the Company is terminated for any reason other than his death,
normal or early retirement in accordance with his employer's established
retirement policies and practices, or total disability, the Company (or any
subsidiary designated by it) shall have the option for ninety (90) days after
such termination to purchase for cash all or any part of his restricted stock
at the greater of (i) the price paid therefor upon exercise of this Option,
or (ii) the Fair Market Value (as defined below) of the restricted stock on
the date of such termination. The Company's repurchase right hereunder may
be assigned by the Company to the holders of the Company's Preferred Stock
and any other person who may be granted such a right by the Company.
The restrictions imposed under this Section 9 shall apply as
well to all shares or other securities issued in respect of restricted stock
in connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spin-off, split-off, merger,
consolidation or reorganization, but such restrictions shall expire or
terminate on the earliest to occur of the following:
(i) The ninetieth (90th) day after the date on
which shares of the same class of stock as such restricted stock first
become publicly traded on a stock exchange or automated quotation
system provided, however, that the Company's repurchase right shall
terminate on the date the Company's shares become publicly traded;
(ii) The tenth (10th) anniversary of the date
of grant hereof;
(iii) As to any shares for which the Company's
ninety (90) day option to purchase upon termination of employment
shall have become exercisable but shall expire without having been
exercised, on the first business day of the calendar month next
following the expiration of such ninety (90) day option period;
(iv) The first business day of the calendar
month next following the termination of the Grantee's service status
with the Company or a subsidiary because of his death, normal or early
retirement in accordance with his employer's established employment
policies or practices, or total disability; or
-5-
<PAGE>
(v) The occurrence of any event or transaction
upon which this Option terminates by reason of the provisions of
Section 5 hereof.
Any certificates evidencing shares of restricted stock may
contain such legends as the Company may deem necessary or advisable to
reflect and give effect to the restrictions imposed thereon hereunder.
For purposes of this section, Fair Market Value of shares shall
be calculated on the basis of the closing price of stock of that class, on
the date of termination of service status with the Company (or, if such day
is not a trading day in the U.S. securities markets, on the nearest preceding
trading day), as reported with respect to the market (or the composite of the
markets, if more than one) in which such shares are then traded, or if no
such closing prices are reported on the basis of the lowest independent offer
quotation reported therefor for that day in Level 2 of NASDAQ, or if no such
quotations are reported on the basis of the most nearly comparable valuation
method as determined by the Company's Board of Directors.
10. AMENDED AND RESTATED 1995 STOCK OPTION PLAN. This Option is
subject to, and the Company and the Grantee agree to be bound by, all of the
terms and conditions of the Company's Amended and Restated 1995 Stock Option
Plan (the "Plan") under which this Option was granted, as the same shall have
been amended from time to time in accordance with the terms thereof, provided
that no such amendment shall deprive the Grantee, without his consent, of
this Option or any of his rights hereunder. Pursuant to said Plan, the Board
of Directors of the Company, or its committee established for such purposes,
is vested with final authority to interpret and construe the Plan and this
Option, and is authorized to adopt rules and regulations for carrying out the
Plan. A copy of the Plan in its present form is available for inspection
during business hours by the Grantee or other persons entitled to exercise
this Option at the Company's principal office.
11. NOTICES. Any notice to be given to the Company shall be
addressed to the Company in care of its Secretary at its principal office,
and any notice to be given to the Grantee shall be addressed to him at the
address given beneath his signature hereto or at such other address as the
Grantee may hereafter designate in writing to the company. Any such notice
shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified, and deposited,
postage and registry or certification fee prepaid, in a post office or branch
post office regularly maintained by the United States Postal Service.
12. LAWS APPLICABLE TO CONSTRUCTION. This Agreement has been
executed and delivered by the Company in the State of California, and this
Agreement shall be construed and enforced in accordance with the laws of said
State.
IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.
-6-
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
___________________________________
Kenneth J. Kelley
President and
Chief Executive Officer
ATTACHMENTS:
IntraBiotics Pharmaceuticals, Inc. Amended and Restated 1995 Stock
Option Plan Regulation 260.141.11
-7-
<PAGE>
(a) I acknowledge that I have received the foregoing option and the
attachments referenced in it and I understand that all rights and liabilities
with respect to this option are set forth or referred to in the option and
the Plan; and
(b) I acknowledge that as of the date of grant of this option, this option
and its exhibits set forth the entire understanding between myself and the
Company and any Related Companies regarding the acquisition of stock in the
Company and supersedes all prior oral and written agreements on that subject
with the exception of (i) the options previously granted and delivered to me
under the Plan, and (ii) the following agreements only:
NONE _____________________ (Initial)
OTHER
_________________________________
_________________________________
_________________________________
_________________________________
(c) I acknowledge receipt of a copy of Section 260.141.11 of Title 10 of
the California Code of Regulations.
ACCEPTED:
______________________________
Grantee
______________________________
Date
______________________________
Street Address
______________________________
City and State
-8-
<PAGE>
- ------------------------------------------------------------------------------
INTRABIOTICS PHARMACEUTICALS INC
NOTICE OF GRANT OF STOCK OPTIONS ID: 94-3200380
AND OPTION AGREEMENT 1255 Terra Belta Avenue
Mountain View, CA 94043
650-526-6800
- ------------------------------------------------------------------------------
EMPLOYEE NAME AND ADDRESS OPTION NUMBER:
PLAN: 1995
ID:
- ------------------------------------------------------------------------------
Effective [date], you have granted a(n) [ ] Stock Option to buy [ ]
shares of IntraBiotics Pharmaceuticals Inc (the Company) stock at [$ price].
The total option price of the shares granted .
Shares in each period will become fully vested on the date shown.
<TABLE>
<CAPTION>
SHARES VEST TYPE FULL VEST EXPIRATION
------ --------- --------- ----------
<S> <C> <C> <C>
</TABLE>
- ------------------------------------------------------------------------------
By your signature and the Company's signature below, you and the Company
agree that these options are granted under the governed by the terms and
conditions of the Company's Stock Option Plan as amedned and the Option
Agreements, all of which are attached and made a part of this document.
- ------------------------------------------------------------------------------
- --------------------------------- -----------------------------
IntraBiotics Pharmaceuticals Inc Date
- --------------------------------- -----------------------------
Date
<PAGE>
EXHIBIT 10.3
INTRABIOTICS PHARMACEUTICALS, INC.
2000 EQUITY INCENTIVE PLAN
EFFECTIVE DATE: JANUARY 25, 2000
APPROVED BY STOCKHOLDERS _______________, ______
TERMINATION DATE: JANUARY 24, 2010
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. 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.
(c) GENERAL PURPOSE. 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 IntraBiotics 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 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
1.
<PAGE>
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.
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
2.
<PAGE>
(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 IntraBiotics Pharmaceuticals, Inc. 2000 Equity
Incentive Plan.
(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.
3.
<PAGE>
(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.
(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
4.
<PAGE>
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 and subject to the increases in
the number of reserved shares described below, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate five
million (5,000,000) shares of Common Stock (the "Reserved Shares"). On
December 31 of each year starting with December 31, 2000, and continuing
through and including December 31, 2008, the number of Reserved Shares
automatically will be increased by the least of (i) five percent (5%) of the
number of shares of the Common Stock outstanding on a fully diluted basis on
the anniversary date, (ii) two million (2,000,000) 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).
(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.
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(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.
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(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 twelve (12)
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.
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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.
<PAGE>
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.
(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
13.
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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.
Notwithstanding the vesting schedules set forth in Stock Awards
outstanding under the Plan, in the event of a change in control of the Company
described above, (i) Stock Awards held by persons who are then Employees but not
Officers of the Company shall become vested and immediately exercisable as to
one-half (1/2) of the then unvested shares subject to such Stock Awards as of
the effective date of the change in control; and (ii) Stock Awards held by
persons who are then Officers of the Company shall become fully vested in the
event that such Officers' service with the Company is involuntarily terminated
without Cause (as defined below) or voluntarily terminated for Good Reason (as
defined below), in either case within thirteen months following the change in
control.
For purposes of this Section 11, "Cause" means that, in the reasonable
determination of the Company, the Officer:
(i) has been indicted or convicted of any felony or any crime
involving dishonesty that is likely to inflict or has inflicted demonstrable and
material injury on the business of the Company;
(ii) has participated in any fraud against the Company; or
(iii) has intentionally damaged any property of the Company
thereby causing demonstrable and material injury to the business of the Company;
PROVIDED THAT Cause shall not exist based on conduct described in clause (ii) or
clause (iii) unless the conduct described in such clause has not been cured
within fifteen (15) days following the Officer's receipt of written notice from
the Company specifying the particulars of the conduct constituting Cause.
For purposes of this Section 11, "Good Reason" means that any of the
following is undertaken without the Officer's express written consent:
(i) the assignment to the Officer of any duties or
responsibilities that results in a significant diminution in the Officer's
function as in effect immediately prior to the effective date of the change in
control; provided, however, that a mere change in the Officer's title or
reporting relationships shall not constitute Good Reason;
(ii) a material reduction by the Company in the Officer's
annual base salary, as in effect on the effective date of the change in control
or as increased thereafter;
(iii) any failure by the Company to continue in effect any
benefit plan or program, including fringe benefits, incentive plans and plans
with respect to the receipt of securities of the Company, in which the Officer
is participating immediately prior to the effective
14.
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date of the change in control (hereinafter referred to as "Benefit Plans"); or
the taking of any action by the Company that would adversely affect the
Officer's participation in or reduce the Officer's benefits under the Benefit
Plans; provided, however, that "Good Reason" shall not exist under this
paragraph following a change in control if the Company offers a range of benefit
plans and programs that, taken as a whole, are comparable to the Benefit Plans;
or
(iv) a relocation of the Officer's business office to a
location more than fifty (50) miles from the location at which the Officer
performs duties as of the effective date of the change in control, except for
required travel by the Officer on the Company's business to an extent
substantially consistent with the Officer's business travel obligations prior to
the change in control.
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.
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 Effective Date the Plan described in Section 14 or the
date on which the Plan is approved by the
15.
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stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) 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 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 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.
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INTRABIOTICS 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, IntraBiotics 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;
2.
<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) six (6) months after the termination of your
Continuous Service due to your Disability;
(d) twelve (12) 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 fifteen (15) 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.
3.
<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.
5.
<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 10.4
PURCHASE/SUPPLY AGREEMENT
REGARDING
IB-367
BETWEEN
FERRING PEPTIDE PRODUCTION AB
P.O. BOX 30047, SOLDATTORPSVAGEN 5
S-20061 MALMO
SWEDEN
AND
POLYPEPTIDE LABORATORIES A/S
HERREDSVEJEN 2
3400 HILLER0D
DENMARK
JOINTLY REFERRED TO AS "POLYPEPTIDE"
AND
INTRABIOTICS PHARMACEUTICALS, INC.
816 KIFER ROAD
SUNNYVALE
CALIFORNIA 94086
USA
[ * ] = 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>
This Agreement is entered into on the 3rd day of January, 1997,
between POLYPEPTIDE LABORATORIES A/S, a Danish company incorporated under the
laws of Denmark, with its registered offices at Herredsvejen 2,3400 Hillerod,
Denmark and FERRING PEPTIDE PRODUCTION AB, a Swedish company incorporated
under the laws of Sweden, with its registered office at Soldattorpsvagen 5,
S-20061 Malmo, Sweden (hereinafter jointly referred to as POLYPEPTIDE), and
INTRABIOTICS PHARMACEUTICALS, INC., a company incorporated in the state of
Delaware under the laws of the United States, with its registered offices at
816 Kifer Road, Sunnyvale, California 94086, USA (hereinafter referred to as
INTRABIOTICS).
WHEREAS, the parties now wish to enter into a long-term business
relationship under which POLYPEPTIDE will supply to INTRABIOTICS the Drug
Substance IB-367 hereafter referred to as the "Product" for marketing
world-wide. Therefore the parties agree on the following:
As used herein, each of the following defined terms shall have the
meaning specified:
"Affiliate" of a Party shall mean an entity: (i) in which at least 50
per cent of the voting shares or other means of control of such entity are owned
or controlled by such Party, or (ii) which owns or controls at least 50 per cent
of the voting shares of such Party, or (iii) in which at least 50 per cent of
such ownership or control is owned or controlled by an entity owning or
controlling at least 50 per cent of the voting shares of such Party.
"cGMP" shall mean the current good manufacturing practices regulations
now set forth in Part 211 of Title 21 of the U.S. Code of Federal Regulations,
as hereafter revised and amended.
"Product" shall mean the compound as described in the Specification
manufactured according to the process developed under the Development Supply
Agreement entered into between INTRABIOTICS and POLYPEPTIDE on the date hereof.
"Specification" shall mean the specifications set forth in Annex 1 to
this Agreement as may be modified from time to time as directed by IntraBiotics.
"Party" shall mean INTRABIOTICS or POLYPEPTIDE and, when used in the
plural, shall mean INTRABIOTICS and POLYPEPTIDE.
"Manufacturing Cost" shall mean, for each gram of Product
manufactured, the cost to POLYPEPTIDE for [ * ] relating to the manufacture
of Product, and other costs to manufacture Product under current generally
accepted accounting principles, all such costs and charges to be calculated
on the basis consistently applied to all other products manufactured by
POLYPEPTIDE at the facility or facilities used to manufacture Product.
1. SUPPLY ARRANGEMENT
This entire agreement is conditional upon:
- INTRABIOTICS deciding to use the Process developed under the
Development Supply Agreement entered into between INTRABIOTICS
and POLYPEPTIDE on the date hereof for producing the Product for
commercial sale.
[ * ] = 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>
- INTRABIOTICS notifying POLYPEPTIDE on its decision to produce the
Product for commercial sales with the lead times stated in clause
3.1.
Given that these conditions are fulfilled POLYPEPTIDE shall supply to
INTRABIOTICS and its sublicensees and distributors bulk quantities of the
Product made in accordance with the Specification. The supply of the Product is
made to INTRABIOTICS in accordance with Annex 2, Purchase/Supply Schedules,
which shall be provided by INTRABIOTICS to POLYPEPTIDE according to clause 3.2
and 3.3, and the individual purchase orders placed by INTRABIOTICS consistent
herewithwhereby the actual delivery dates are defined.
2. PURCHASE/SUPPLY
Under this Agreement and subject to POLYPEPTIDE's ability to supply,
INTRABIOTICS is obliged to purchase at least [ * ] per cent of its world-wide
needs of the Product on an annual basis from POLYPEPTIDE. If INTRABIOTICS
licenses the Product to a third party it shall in good faith attempt to obtain
for the benefit of POLYPEPTIDE a purchase/supply agreement between the licensee
and POLYPEPTIDE on substantially the same terms as this Agreement.
If INTRABIOTICS licenses the Product to a third party and such third
party does not enter into a purchase/supply agreement with POLYPEPTIDE and as a
consequence the purchases made by INTRABIOTICS under this Agreement come to an
end or are significantly reduced (a significant reduction for this purpose being
a reduction of [ * ]% within any [ * ] period as compared to the preceding
[ * ]) then:
(a) In the case that the purchases are significantly reduced
INTRABIOTICS shall honour existing purchase orders on the scheduled dates and
shall within [ * ] of the occurrence of the significant reduction in
purchases, purchase a proportional part (corresponding to the percentage
reduction in purchases) of existing stocks of finished inventory of Product
produced on the basis of INTRABIOTICS Purchase/Supply Schedules in accordance
with clause 3 at the then established price according to clause 4. [ * ] sole
option, [ * ] shall within [ * ] of the occurrence of the significant
reduction in purchases, either purchase a proportional part (corresponding to
the percentage reduction in purchases) of the inventory of raw materials
purchased and intermediates produced on the basis of INTRABIOTICS
Purchase/Supply Schedules in accordance with clause 3 at a price equal to
[ * ], or request POLYPEPTIDE to complete the manufacture of such raw
materials and intermediates into finished inventory of Product which
INTRABIOTICS will purchase at the then established price according to clause
4.
(b) In the case that the purchases come to an end INTRABIOTICS
shall honour existing purchase orders on the scheduled dates and shall within
[ * ] of the last existing purchase order being delivered purchase all
existing stocks of finished inventory of Product produced on the basis of
INTRABIOTICS Purchase/Supply Schedules in accordance with clause 3 at the
then established price according to clause 4. At INTRABIOTICS sole option,
INTRABIOTICS shall within [ * ] of the last existing purchase order being
delivered either purchase all of the inventory of raw materials purchased and
intermediates produced on the basis of INTRABIOTICS Purchase/Supply Schedules
in accordance with Clause 3 at a price equal 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.
3.
<PAGE>
[* ], or request POLYPEPTIDE to complete the manufacture of such raw materials
and intermediates into finished inventory of Product which INTRABIOTICS will
purchase at the then established price according to clause 4.
3. PURCHASE/SUPPLY SCHEDULES
Following the completion of Phase II clinical studies INTRABIOTICS
shall advise POLYPEPTIDE of its estimate of the market potential of the Product
to assist POLYPEPTIDE in its long term planning. Such estimates are indicative
only and shall be non-binding on the Parties.
3.1 For quantities of Product to be delivered during the first
year of commercial supply of the Product the following shall apply:
(a) For quantities up to [ * ] the purchase order from
INTRABIOTICS shall be given [ * ] in advance.
(b) For quantities in excess of [ * ] and up to [ * ]
purchase orders shall be given at least [ * ] in advance.
(c) For quantities between [ * ] purchase orders shall be
given at least [ * ] in advance.
(d) For quantities above [ * ] purchase orders shall be
given at least [ * ] in advance.
3.2 From the first anniversary of the first delivery of the
Product hereunder and onwards INTRABIOTICS shall by [ * ] of each calendar year
render to POLYPEPTIDE newly revised Purchase/Supply Schedules. Each
Purchase/Supply Schedule will be for the following [ * ] months.
POLYPEPTIDE is obliged to supply the Product according to INTRABIOTICS'
purchase order provided that such purchase order is placed [ * ] prior to the
requested delivery date. If INTRABIOTICS places orders for quantities in any
calendar quarter exceeding [ * ] of the quantities purchased in the previous
calendar quarter then POLYPEPTIDE will use its best efforts to deliver the
additional quantities within a reasonable period of time.
With respect to each Purchase/Supply Schedule in effect from time to
time INTRABIOTICS is obliged to purchase at least [ * ] of the volume of the
first [ * ] of such Purchase/Supply Schedule.
3.3 The supply and forecasting procedure outlined above in clause
3.2 shall govern annual supplies of Product up to [ * ]. For annual supplies
above [ * ] the Parties shall negotiate in good faith a new supply and
forecasting procedure to replace 3.2.
In the event that the Parties fail to agree a new procedure, clause 3.2
shall remain in force and govern the supply of up to [ * ] of Product per year.
INTRABIOTICS in addition may place additional binding purchase orders at least
[ * ] in advance of the requested delivery date for such
[ * ] = 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>
additional supplies of Product provided that such additional supplies are within
the volumes in the Purchase/Supply Schedules in effect from time to time and
provided that the purchase orders for any given calendar [ * ] period do not
exceed the preceding calendar [ * ] period by more than [ * ]. POLYPEPTIDE shall
accept such purchase orders.
3.4 If at any time POLYPEPTIDE shall be unable to supply
Product to INTRABIOTICS (other than as excused hereunder by virtue of force
majeure) then this shall be considered a material breach of this Agreement.
In addition, if POLYPEPTIDE shall be unable to supply or POLYPEPTIDE
terminates this Agreement other than pursuant to clause 9.2, POLYPEPTIDE
shall grant to INTRABIOTICS the [ * ] right to manufacture the Product under
[ * ], and shall promptly disclose and transfer to INTRABIOTICS at [ * ],
such information as INTRABIOTICS shall reasonably require in order to make
such Product or have such Product made on its behalf. Upon request by
INTRABIOTICS, POLYPEPTIDE shall further provide to INTRABIOTICS at [ * ]
assistance from and access to appropriate POLYPEPTIDE personnel as reasonably
required to facilitate the establishment of a reliable source of supply of
materials to INTRABIOTICS with a minimum of "down-time".
4. PRICES
4.1 The price per delivery shall be based on the total quantity
to be purchased by INTRABIOTICS for the [ * ] according to the
Purchase/Supply Schedule. For the period from the signature of this agreement
until [ * ] the prices shall be calculated pursuant to the following scale:
<TABLE>
<CAPTION>
VOLUME BAND
[ * ] PRICE USD PER [ * ]
<S> <C> <C>
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
</TABLE>
4.2 The prices stated in clause 4.1 are based on the following two
basic assumptions: (i) that the cyclization of the linear peptide to form the
Product through the formation of the two disulfide bridges has a yield of at
least [ * ] as measured by [ * ] with [ * ] at [ * ], and (ii) the Specification
is as set out in Annex 1 upon signing this Agreement.
When the commercial scale-up process is defined the parties shall
review any change in price in the light of the then calculated Manufacturing
Cost based on the then current Specification and process. Provided that the
cyclization yield is still at least [ * ] and there have been no changes to the
Specification affecting Manufacturing Cost, then the price formula as outlined
in clause 4.3 shall be applicable to the prices listed in clause 4.1. If either
of the two basic
[ * ] = 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>
assumptions have changed and it can be demonstrated that these changes have
increased or decreased the Manufacturing Cost of the Product then the parties
shall negotiate appropriate changes in the prices listed in clause 4.1. In the
event that the Parties are unable to reach agreement on a revised price within
[ * ] of starting negotiations then, upon notice from either Party, [ * ].
4.3 Every [ * ] thereafter the prices shall be negotiated and
approved by the parties for the forthcoming [ * ] period. These negotiations
will end no later than 1 month before the beginning of the forthcoming [ * ]
period. The negotiations on the price shall take into consideration increases or
decreases in the costs of [ * ], and the interest of both parties to optimise
the overall profitability. The adjusted price applies to all deliveries in the
following [ * ] period. In the event that the exchange rate between the Danish
Kroner and US Dollar fluctuates more than [ * ] in the intervening period
between [ * ] price reviews, the Parties shall review, within [ * ] of such
fluctuation being identified by either Party, the effect of such currency
fluctuation on costs and revenues and prices in accordance with this clause.
4.4 If the parties cannot agree an a new price and POLYPEPTIDE's
Manufacturing Cost within the same Volume Band above has increased, the former
agreed price shall be changed for the next [ * ] period by an amount
corresponding to the change of the lower of [ * ] for the preceding [ * ],
published by the US Department of Commerce, or the [ * ] over the preceding
[ * ].
If the parties cannot agree on a new price and POLYPEPTIDE's
Manufacturing Cost within the same Volume Band above has decreased, the former
agreed price shall be decreased for the next [ * ] period by an amount
corresponding to [ * ] percent of [ * ].
4.5 If at any time after the scale-up Process has been defined,
cf. clause 4.2, INTRABIOTICS shall modify the Specification and it can be
demonstrated that such modifications have increased or decreased the
Manufacturing Cost of the Product, then the Parties shall negotiate appropriate
changes in the then current prices. In the event that the Parties are unable to
reach agreement on a revised price within [ * ] of starting negotiations then,
upon notice from either Party, [ * ].
4.6 If during a given [ * ] period INTRABIOTICS has obtained
supplies of the Product at prices based on a Purchase/Supply Schedule which
INTRABIOTICS has not been able to fulfil, or has purchased quantities in excess
of the quantities on which the prices have been based, INTRABIOTICS' [ * ] for
the [ * ] period in question shall be adjusted accordingly in the following
[ * ]. Any amount owed by INTRABIOTICS to POLYPEPTIDE due to such adjustment
shall be paid no later than [ * ] after the beginning of the next [ * ] period.
Any amount owed by POLYPEPTIDE to INTRABIOTICS shall be [ * ].
5. PAYMENTS
5.1 The Product shall be invoiced at shipment to INTRABIOTICS in
US dollars ("USD").
[ * ] = 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>
5.2 Payments shall be made by INTRABIOTICS to POLYPEPTIDE at the
latest [ * ] from date of invoice. Date of invoice shall not precede date of
shipment of the Product together with information necessary to verify acceptable
quality and conformance to all applicable specifications for each batch
manufactured by POLYPEPTIDE.
6. DELIVERY AND ORDERING OF THE PRODUCT
6.1 POLYPEPTIDE shall deliver to INTRABIOTICS all the Product in a
timely fashion, subject to the requirements of this Agreement and individual
purchase orders. Based on the Purchase/Supply Schedule INTRABIOTICS shall give
to POLYPEPTIDE confirmed purchase orders at least [ * ] prior to the requested
delivery date unless otherwise stated in this Agreement and POLYPEPTIDE shall
deliver the Product no later than the requested delivery date provided such
purchase orders are in keeping with the most recently revised Purchase/Supply
Schedule as outlined in clause 3.1, 3.2 and 3.3. All Product shall be shipped to
INTRABIOTICS by POLYPEPTIDE at least [ * ] before the Product's date of
reanalysis according to the Specification.
6.2 The Product is to be shipped [ * ], as that term is generally
understood in accordance with "Incoterms". POLYPEPTIDE shall package materials
for shipment in accordance with the Specification and all applicable laws, as
supplemented (to the extent not inconsistent therewith) by POLYPEPTIDE's then
current standard operating practices. POLYPEPTIDE shall split shipments upon the
reasonable request of INTRABIOTICS.
POLYPEPTIDE shall provide shipping documentation in accordance with
that requested in INTRABIOTICS' purchase order, as well as (in advance if
possible): (i) a certificate of analysis, (ii) batch record, and (iii) such
other documentation relating to the Product as INTRABIOTICS may reasonably
request in writing from time to time, for each production lot included in the
shipment.
6.3 In the event of loss or damaged shipment hereunder subject to
clause 6.4 POLYPEPTIDE shall use its reasonable best efforts to replace said
shipment within [ * ] of notification of loss or damage by INTRABIOTICS.
6.4 (a) INTRABIOTICS shall be deemed to have accepted
delivery of Product supplied hereunder unless INTRABIOTICS shall have notified
POLYPEPTIDE of any non-conformity in respect of a shipment within [ * ]
following INTRABIOTICS' receipt of same.
(b) Any claim of nonconformity hereunder shall be
accompanied by a report of analysis of the allegedly nonconforming material
prepared by or on behalf of INTRABIOTICS. If POLYPEPTIDE confirms INTRABIOTICS'
claim of nonconformity, POLYPEPTIDE shall replace the nonconforming goods with
conforming goods within [ * ] and refund the entire purchase price of the
nonconforming goods to INTRABIOTICS within [ * ]. INTRABIOTICS shall pay for the
replacement conforming goods within [ * ] of receipt. Pursuant to written
directions from POLYPEPTIDE, INTRABIOTICS shall either return the nonconforming
goods to POLYPEPTIDE, or destroy same, [ * ].
[ * ] = 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>
(c) In case of disagreement between the parties regarding
the conformity or nonconformity of a delivery of the Product, the parties shall
refer the matter for review and/or analysis and final settlement to an
independent expert laboratory to be agreed by both of them. The costs of such
expertise and analysis shall [ * ].
7. POLYPEPTIDE MANUFACTURING FACILITIES
7.1 POLYPEPTIDE represents and warrants that it will maintain
suitable manufacturing facilities and equipment for manufacturing of the Product
pursuant to this Agreement.
7.2 POLYPEPTIDE will comply with the requirements set forth by
relevant governmental authorities for POLYPEPTIDE's facilities for manufacture
of the Product for use in human pharmaceuticals. Relevant governmental
authorities include but is not limited to the regulatory authorities of the
United States of America, the European Union, other European states, and [ * ].
7.3 [ * ] shall maintain and regularly update the DMF as necessary
to comply with applicable laws and regulations and to accurately reflect its
then current manufacturing procedures. [ * ] shall have the [ * ] right to
reference and otherwise use or direct the use of the DMF; provided, however,
that INTRABIOTICS shall be free, in its sole discretion, to [ * ]. [ * ] shall
not abandon or otherwise fail to maintain the DMF without first offering to
assign the DMF to [ * ].
7.4 Product supplied by POLYPEPTIDE to INTRABIOTICS shall be
manufactured, stored, and shipped by POLYPEPTIDE in compliance with all
applicable laws and regulations, including cGMP regulations, in accordance with
the master batch record maintained by POLYPEPTIDE, the DMF submitted by
POLYPEPTIDE, and the Specification. POLYPEPTIDE shall be free to change its
manufacturing specification or manufacturing directions with respect to the
Product only with the prior consent of INTRABIOTICS. Such consent shall not be
unreasonably withheld.
7.5 POLYPEPTIDE shall perform or cause to be performed all quality control tests
and assays on raw and packaging materials and intermediates used in preparing
and shipping Product hereunder, all in a manner consistent with the
Specification and with POLYPEPTIDE'S reasonable internal quality control
procedures. POLYPEPTIDE shall retain records pertaining to such testing and, to
the extent required by law or as reasonably required by INTRABIOTICS in order to
prepare for or defend against litigation brought by third parties, POLYPEPTIDE
shall provide INTRABIOTICS and its licensees with access to and copies of such
batch records and file samples.
7.6 POLYPEPTIDE shall notify INTRABIOTICS promptly of any
correspondence to or from, or inspections by, relevant governmental authorities
relating to the Product or the manufacture thereof and shall promptly provide
copies of such correspondence or reports of such inspections. This includes any
FDA form 483 in the form that would be available under 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.
8.
<PAGE>
Freedom of Information Act or other equivalent forms from another relevant
regulatory authority.
7.7 POLYPEPTIDE shall promptly inform INTRABIOTICS of any
complaint or inquiry of which it becomes aware which raise potentially serious
quality, health, safety or regulatory concerns regarding the Product.
7.8 Should the relevant governmental authorities, for reasons for
which POLYPEPTIDE bears the responsibility, withdraw the approval of manufacture
of the Product for use in human pharmaceuticals and as a consequence thereof
demand that the Product delivered under this agreement may not be used by
INTRABIOTICS in its products. INTRABIOTICS shall have the right to terminate
this agreement in accordance with Clause 9 and shall have the rights described
in clause 3.4, and POLYPEPTIDE shall [ * ] within [ * ] of receipt of the stock.
Apart therefrom neither party shall incur any liability towards the other party.
INTRABIOTICS shall either return the Product still in stock at INTRABIOTICS to
POLYPEPTIDE or destroy same, each at [ * ].
7.9 INTRABIOTICS has the right to authorise a representative to
inspect POLYPEPTIDE's premises used for the production of the Product. Before an
inspection takes place INTRABIOTICS shall reveal the full identity of its
authorised representative to POLYPEPTIDE, who shall accept the representative,
unless it has objectively valid reasons for not doing so. Inspections shall take
place at INTRABIOTICS' own costs and shall not limit POLYPEPTIDE's
responsibility for the manufacture of the Product. For this purpose,
INTRABIOTICS' authorised representative shall be granted, upon previous request,
access during business hours, to the part of POLYPEPTIDE's premises where the
Product is manufactured.
8. OWNERSHIP OF INTELLECTUAL PROPERTY
8.1 [ * ] shall own and will have [ * ] and will own [ * ]
relating to the [ * ] or its external advisors in [ * ]. All [ * ] will be
paid by [ * ] will direct all [ * ]. In order to [ * ] will ensure that the
[ * ] is [ * ] and execute such documents, including but not limited to [ * ],
as are necessary for [ * ]. [ * ] will supply to [ * ] copies of [ * ] when
relevant. [ * ] is entitled to [ * ].
8.2 The DMF on the Product based on the facilities, technology, and
knowledge of POLYPEPTIDE is the property of [ * ], which is only permitted to
make use of the DMF for [ * ].
9. TERM AND TERMINATION 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.
9.
<PAGE>
9.1 This Agreement shall have an initial term of [ * ] full
calendar years following the first supplies of the Product hereunder and shall
then automatically renew for [ * ] periods unless POLYPEPTIDE terminates with
[ * ] written notice, or INTRABIOTICS terminates with [ * ] written notice given
prior to the commencement of any such renewal period.
9.2 Each contract party shall be entitled to terminate the
present contract without notice in the event of material breaches of contract
by the other party or if bankruptcy or composition proceedings are opened on
the estate of the other party. Notice of termination for a material breach of
contract shall only be admissible if the other party was requested to rectify
the contract impediment within [ * ] period of grace without any response
being forthcoming from the other party. Notice may only be served within one
month after the end of the aforesaid limit.
10. LIABILITY
10.1 INTRABIOTICS shall indemnify, defend and hold POLYPEPTIDE and
its agents, employees and directors (the "POLYPEPTIDE Indemnitees") harmless
from and against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of third party claims or suits resulting
from the use, sale or promotion of Product or a product containing Product by
INTRABIOTICS, its sublicensees, distributors or agents, except to the extent
that such claims or suits result from negligence or intentional misconduct of
POLYPEPTIDE or a POLYPEPTIDE Indemnitee in the manufacture of the Product. Upon
assertion of such claim or suit, the POLYPEPTIDE Indemnitees shall promptly
notify INTRABIOTICS thereof and INTRABIOTICS shall appoint counsel reasonably
acceptable to the POLYPEPTIDE Indemnitees to represent the POLYPEPTIDE
Indemnitees with respect to any claim or suit for which indemnification is
sought. The POLYPEPTIDE Indemnitees shall not settle any such claim or suit
without the prior written consent of INTRABIOTICS, unless they shall have first
waived their rights to indemnification hereunder.
10.2 POLYPEPTIDE shall indemnify, defend and hold INTRABIOTICS
and its agents, employees and directors (the "INTRABIOTICS Indemnitees")
harmless from and against any and all liability, damage, loss, cost or
expense (including reasonable attorneys' fees) arising out of third party
claims or suits resulting from negligence or intentional misconduct in the
manufacture of Product by POLYPEPTIDE, except to the extent such claims or
suits result from the negligence or wilful misconduct of INTRABIOTICS or an
INTRABIOTICS Indemnitee. Upon assertion of such claim or suit, the
INTRABIOTICS Indemnitees shall promptly notify POLYPEPTIDE thereof and
POLYPEPTIDE shall appoint counsel reasonably acceptable to the INTRABIOTICS
Indemnitees to represent the INTRABIOTICS Indemnitees with respect to any
claim or suit for which indemnification is sought. The INTRABIOTICS
Indemnitees shall not settle any such claim or suit without the prior written
consent of POLYPEPTIDE, unless they shall have first waived their rights to
indemnification hereunder.
10.3 In no event shall either Party be liable to the other for
incidental or consequential damages or for punitive damages us a result of any
breach of this Agreement.
11. ASSIGNMENT/TRANSFER
[ * ] = 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>
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
party shall assign its rights and obligations under this Agreement without first
obtaining the written consent of the other parties, which consent shall not be
unreasonably withheld. Each of the parties may assign its rights and obligations
to an Affiliate provided that the assigning party shall guarantee its
Affiliate's performance and obligations under this Agreement, or to any
successor by virtue of a merger or acquisition of substantially the entire
business to which this Agreement relates or in the case of INTRABIOTICS to a
licensee of the Product, without consent, but upon notice to the other party.
12. FORCE MAJEURE
Neither party is liable for failing to perform or having delayed the
performance of its obligation under this agreement, if the performance is
delayed or precluded by circumstances beyond its control, including but not
limited to fire, flood, war, strike, lock-out, failure or shortage of public
utilities due to governmental decrees, orders or legislation and court
injunctions.
The party, whose performance is delayed or precluded, shall immediately
inform the other party of the circumstances preventing the performance.
In the event that the circumstances preventing the performance continue
for more than [ * ], each party will have a right to cancel the Agreement and
neither of the parties will have a right to reimbursement or to any claim for
damages as a result of the cancellation of the Agreement.
In the event that POLYPEPTIDE's ability to supply Product in whole or
in part to INTRABIOTICS is restricted by factors beyond its control and this
Agreement is not terminated, POLYPEPTIDE shall treat and supply INTRABIOTICS in
the same equitable manner as all of POLYPEPTIDES other major customers.
13. OTHER PROVISIONS
13.1 All amendments and changes to the present Agreement must be
made in writing and signed by both Parties in order to be valid.
13.2 Except as expressly provided herein, nothing in this Agreement
is intended or shall be deemed to constitute a partnership, agency or
employer-employee relationship between the Parties. Neither Party shall have the
right to incur any debts or make any commitments for the other.
13.3 If individual provisions of the present Agreement are wholly
or partially in breach of cogent law or if they are or become invalid for any
other reason, the validity of the other provisions shall not be affected
thereby. The present Agreement shall if necessary be amended by a valid
provision which comes as close as possible to the original intention of the
parties.
13.4 Except as otherwise required by law, neither Party shall make
any public disclosure as to the terms or existence of this Agreement without the
prior written consent of 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.
11.
<PAGE>
other. Notwithstanding this clause, INTRABIOTICS may publish that such an
agreement has been entered into between the parties subject to pre-approval
by POLYPEPTIDE of the wording.
13.5 THE PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY PATENTS, UNLESS
OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT.
13.6 INTRABIOTICS and POLYPEPTIDE each represents and warrants to
the other that, as of the Effective Date: (i) it is free to enter this
Agreement; (ii) in so doing it will not violate any other agreement to which it
is a party; (iii) it is a corporation duly organised and validly existing under
the laws of the jurisdiction indicated above and, by virtue of such
jurisdiction's laws, is in good standing as a domestic corporation of such
jurisdiction; and (iv) it is qualified to do business in all jurisdictions in
which qualification is necessary in order to perform its obligations hereunder.
13.7 All disputes between the parties relating to this Agreement,
including its interpretation that cannot be settled amicably by the parties,
shall be settled by binding arbitration in the state of the defending party in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration carried out hereunder shall apply to the exclusion
of regular legal means, provided that the rights of the Parties in urgent
situations in which time is of the essence to obtain proper remedies in courts
of law or equity shall remain unimpaired.
14. APPLICABLE LAW AND JURISDICTION
All matters arising under or related to the Agreement shall be governed
by and construed under and pursuant to the laws of the State of California
without regard to conflict of laws principles.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorised officers as of the day and year
first above written, each copy of which shall for all purposes be deemed to be
original.
POLYPEPTIDE LABORATORIES A/S INTRABIOTICS PHARMACEUTICALS, INC.
/s/ Erik Lorentsen /s/ Thomas Shepherd
- --------------------------------- -------------------------------------
Erik Lorentsen Thomas Shepherd
General Manager Vice President Corporate Development
FERRING PEPTIDE PRODUCTION AB
[ * ] = 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>
/s/ Anders J. Andersen
- ---------------------------------
Anders J. Andersen
General Manager
[ * ] = 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>
ANNEX 1
SPECIFICATION
TABLE OF CONTENTS:
Pages 1 and 2 INTRABIOTICS QUALITY SPECIFICATION No.: [ * ]
Page 3 - Storage
- Shipment
[ * ] = 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>
INTRABIOTICS QUALITY SPECIFICATION
QA ISSUED COPY
SPECIFICATION NO., [ * ]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MATERIAL:
IB-367-03 FOR INFORMATION ONLY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DATE EFFECTIVE: SUPERCEDES: PAGE:
Nov 26, 1996 [ * ] 1 of 2
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
AUTHOR: DEPT.: DATE:
/s/ MISSING SIGNATURE Analytical Development 11/26/96
- ----------------------------------------------------------------------------------------------------------------------
APPROVED: DEPT.: DATE:
/s/ MISSING SIGNATURE Quality Assurance 11/26/96
- ----------------------------------------------------------------------------------------------------------------------
APPROVED: DEPT.: DATE:
/s/ MISSING SIGNATURE Pharmaceutical Development 11/26/96
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION:
[ * ]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TEST SPECIFICATION METHOD
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
2. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
3. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
4. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
5. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086
[ * ] = 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>
INTRABIOTICS QUALITY SPECIFICATION
QA ISSUED COPY
SPECIFICATION NO., [ * ]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MATERIAL:
IB-367-03 FOR INFORMATION ONLY
- ----------------------------------------------------------------------------------------------------------------------
DATE EFFECTIVE: SUPERCEDES: PAGE:
<S> <C> <C>
Nov 26, 1996 [ * ] 2 of 2
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TEST SPECIFICATION METHOD
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
7. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
8. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
9. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
10. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
11. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
12. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
13. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
14. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086
[ * ] = 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>
ANNEX 1
SPECIFICATION
STORAGE: Store at recommended storage conditions. [ * ].
SHIPMENT: the [ * ].
NB. The storage container and shipping conditions may be modified in the future
once the proper stability data are available.
[ * ] = 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 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 10.5
DEVELOPMENT SUPPLY AGREEMENT
regarding
IB-367
between
Ferring Peptide Production AB
P.O. Box 30047, Soldattorpsvagen 5
S-20061 Malmo
Sweden
and
Polypeptide Laboratories A/S
Herredsvejen 2
3400 Hillerod
Denmark
and
IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale
California 94086
USA
<PAGE>
THIS AGREEMENT is entered into on the 3rd day of January, 1997, between
POLYPEPTIDE LABORATORIES A/S, a Danish company incorporated under the laws of
Denmark, with its registered offices at Herredsvejen 2, 3400 Hillerod, Denmark
and FERRING PEPTIDE PRODUCTION AB, a Swedish company incorporated under the laws
of Sweden, with its registered office at Soldattorpsvagen 5, S-20061 Malmo,
Sweden (hereinafter jointly referred to as POLYPEPTIDE), and INTRABIOTICS
PHARMACEUTICALS, INC., a company incorporated in the state of Delaware under the
laws of the United States, with its registered offices at 816 Kifer Road,
Sunnyvale, California 94086, USA (hereinafter referred to as INTRABIOTICS).
RECITALS
WHEREAS, POLYPEPTIDE has developed or acquired patented and
non-patented inventions, manufacturing and testing practices and procedures, and
know-how, relating to the manufacture and testing of peptides, and owns
production facilities for large scale manufacturing of pharmaceutical peptides;
WHEREAS, INTRABIOTICS has the priority rights to IB-367 (hereinafter
referred to as "Product"), the specification of which is described in Annex 1
(the "Specification");
WHEREAS, INTRABIOTICS desires to have POLYPEPTIDE develop a [ * ]
manufacturing process for the Product and to enter into a Supply Agreement with
POLYPEPTIDE for the manufacture and supply of IB-367 for commercial use,
NOW THEREFORE, the parties hereto agree as follows:
As used herein, "Affiliate" or a Party shall mean an entity: (i) in
which at least 50 percent of the voting share or other means of control of such
entity are owned or controlled by such Party, or (ii) which owns or controls at
least 50 percent of the voting shares of such Party, or (iii) in which at least
50 percent of such ownership or control is owned or controlled by an entity
owning or controlling at least 50 percent of the voting shares of such Party.
AGREEMENT
1. DEVELOPMENT PROJECT
1.1 POLYPEPTIDE will develop a commercial scale solution phase
manufacturing process which will yield Product according to the Specification
contained in Annex 1 (the "Specification"). The Specification of the Product may
be changed from time to time as directed by INTRABIOTICS. Significant changes to
the Specification may result in cost and timing changes to the project. The
parties will negotiate in good faith and make only those necessary changes of
the Time Schedule and/or the Compensation payable to POLYPEPTIDE which are a
direct consequence of the change in the Specification.
1.2 POLYPEPTIDE will conduct the development project in four phases and
in accordance with the Time Schedule set out in the project plan (Annex 2). Each
phase will have a number of milestones as described in Annex 3.
[ * ] = 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>
1.3 PHASE I; will consist of development of the strategy and the
method for [ * ] of the Product, with a [ * ] process ("Process"). In the
course of Phase I, POLYPEPTIDE will produce [ * ] of Product, whereof [ * ]
shall be delivered to INTRABIOTICS and the remaining [ * ] shall be used by
POLYPEPTIDE for [ * ]. Phase I will be completed [ * ] based on signing of
this agreement on or before 3 January 1997.
1.4 PHASE II; will consist of development and validation of [ * ] of
the Product, preparing of the necessary documentation (including
specifications for raw materials or intermediates, batch records and
in-process controls) and scaling up of the Process. In the course of scaling
up the Process POLYPEPTIDE shall deliver to INTRABIOTICS [ * ] Product for
clinical trials. The [ * ] will be in accordance with [ * ]. The Product for
clinical trials shall be delivered in the amount of [ * ] in [ * ].
Furthermore [ * ] will prepare and maintain Drug Master Files ("DMF") for the
purpose of the IND filing of the Product. [ * ], (as supportive data), will
be conducted by POLYPEPTIDE with Product manufactured in this Phase II.
1.5 PHASE III; will consist of production and delivery of at least
[ * ]manufactured in [ * ] consecutive conforming batches of at least [ * ]
each utilising the final production process for registration [ * ]. The exact
batch sizes to be mutually agreed upon between the parties but in the absence
of agreement, the batch size shall be [ * ]. [ * ]. POLYPEPTIDE will with
regard to technology and equipment be able to scale up the batch size to at
least [ * ] for later commercial use.
1.6 PHASE IV; will consist of [ * ] in accordance with the
Specification and the then current ICH guidelines and the compilation of the
DMF for registration purpose.
1.7 INTRABIOTICS will provide to POLYPEPTIDE existing analytical
methods for testing the Product and a reference sample. POLYPEPTIDE shall use
the analytical methods as outlined in the Specification subject to
modifications to be agreed during the project.
2. COMPENSATION
INTRABIOTICS will pay POLYPEPTIDE upon completion of each milestone as
agreed and set out in Annex 3. The total sum for each phase amounts to:
<TABLE>
<S> <C> <C>
Phase I USD [ * ]
Phase II USD [ * ]
Phase III USD [ * ] (based on delivery of [ * ] of the Product)
Phase IV USD [ * ]
</TABLE>
Payments under this Development Supply Agreement will be made by wire
transfer within [ * ] from the date of completion of the respective milestone
and upon receipt of a corresponding invoice to an account indicated by
POLYPEPTIDE.
[ * ] = 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>
3. REPORTS AND VISITS
During each phase of the development project, POLYPEPTIDE, will make a
monthly status report to INTRABIOTICS by fax with originals by mail (Att.:
Senior Director of Pharmaceutical Development). On a quarterly basis a meeting
will be conducted between the parties to discuss the progress of the development
project. Upon reasonable notice, POLYPEPTIDE will receive visitors from
INTRABIOTICS or another company authorised by INTRABIOTICS to discuss with them
any issue which may arise in connection with the development project.
4. DELAYS OF THE DEVELOPMENT PROJECT
4.1 POLYPEPTIDE acknowledges that in light of the time schedule of the
clinical trial and Product registration, timely completion of the development
project is of essential importance to INTRABIOTICS and POLYPEPTIDE shall use its
best efforts to complete the project according to the Time Schedule in Annex 2.
4.2 If any unforeseen problem arises which may delay the completion of
a phase, POLYPEPTIDE will promptly inform INTRABIOTICS of such problem and
provide its best estimate for the completion of the affected development phase.
If necessary, POLYPEPTIDE will employ [ * ] outside specialists (subject to
confidentiality undertakings pursuant to Section 10) and do its best to overcome
the problem and achieve the timely completion of the development project.
5. OWNERSHIP OF INTELLECTUAL PROPERTY
5.1 [ * ] shall own and will have [ * ] and will own [ * ] relating
to the [ * ] or its external advisors in the course of [ * ]. All [ * ] will
be paid by [ * ] will direct all [ * ]. In order to [ * ] will ensure that
the [ * ] is [ * ], and execute such documents, including but not limited to
[ * ], as are necessary for [ * ]. [ * ] will supply to [ * ] copies of [ * ]
on a quarterly basis. Such reports shall also [ * ] is entitled to [ * ].
5.2 The DMF developed based on the facilities, technology and knowledge
of POLYPEPTIDE is the property of [ * ], which is only permitted to make use of
the DMF [ * ].
[ * ] = 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>
6. PRODUCTION, CGMP AND QUALITY CONTROL
6.1 GMP PRODUCTION:
POLYPEPTIDE will manufacture the Product in phases [ * ] of the
development project according to current Good Manufacturing Practice guidelines
("cGMP") as described in the Code of Federal Regulations, Title 21, Part 211 (21
CFR 211) as applicable to Bulk Pharmaceutical Chemicals. Furthermore, [ * ] will
authorise the United States Food and Drug Administration ("FDA") and any other
regulatory agency around the world to review the Drug Master File in support of
the Product registration applications. [ * ] reserves the right to review the
DMF prior to its submission to the FDA. If during the course of this contract
POLYPEPTIDE is inspected by FDA, it will promptly inform INTRABIOTICS that such
inspection has taken place and supply a copy of any FDA Form 483, in the form
that would be available under the Freedom of Information Act, and all other
documentation applicable to the manufacturing of the Product.
6.2 ACTIVE DRUG SUBSTANCE
(a) POLYPEPTIDE will procure, test, and release the necessary
raw material ingredients for the manufacturing of each batch/lot of bulk drug
substance according to the Specification.
(b) Certificates of Analysis, copies of Batch Records for
manufacturing, and all Release Documents for items supplied to INTRABIOTICS must
be submitted prior to the receipt of the materials at INTRABIOTICS or its
designee, unless an alternative procedure has been agreed in writing between the
parties.
6.3 TESTING
(a) POLYPEPTIDE is responsible for [ * ]. Testing shall
conform to the Specification and current specifications in the United States
Pharmacopoeia ("USP") or the National Formulary (NF), or the European
Pharmacopoeia if available and/or internal specifications. INTRABIOTICS reserves
the right to review and approve all such specifications prior to their use in
the production of intermediates or bulk drug substance. Such approval shall not
be unreasonably withheld.
(b) POLYPEPTIDE and INTRABIOTICS agree that in the event of
unresolved inter-laboratory differences, a mutually agreed upon independent
testing facility shall resolve said discrepancies.
(c) All testing laboratories shall have an acceptable retest
and re-sampling procedure on file which is consistent with the Specification and
meets current cGMP laboratory guidelines.
(d) The testing laboratory shall be equipped with sufficient
equipment which is maintained in a calibration program adequate to perform
required testing.
[ * ] = 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>
(e) All methods used to evaluate and release drug substance
shall be validated for use or conform to [ * ]. All validation procedures
shall be in accordance with ICH guidelines.
(f) POLYPEPTIDE will conduct and furnish the appropriate
inspection, testing and release documents for the following items as part of the
batch record, or minimally reference these documents in the batch record:
- [ * ]
- [ * ]
- [ * ]
- [ * ]
- [ * ]
- [ * ].
6.4 LABELLING
(a) POLYPEPTIDE shall label each container of bulk drug
substance according to the Specification including manufacturer name, name of
product, product code, storage temperature, expiration date (if available),
and quantity and number of containers. Each container will carry a caution
statement as required by the applicable regulations in the country of
shipping, transit and destination. INTRABIOTICS reserves the right to review
and approve the master sample of the bulk drug container labels prior to
their use.
(b) Each container will contain a status label such as "IN
QUARANTINE" or "RELEASED" etc.
(c) Copies of labels used to label the bulk container will be
kept as part of the batch record.
6.5 POLYPEPTIDE will maintain reserve samples for each lot of bulk
drug substance sufficient to complete all Certificate of Analysis testing [ * ]
times. Reserve samples shall be stored at the temperature recommended in the
Specification, or if no recommendation, at [ * ]. Samples to be stored by
POLYPEPTIDE for [ * ] unless otherwise agreed between the parties in writing.
6.6 LOT INFORMATION:
(a) POLYPEPTIDE will provide a copy of all information and
records relating to the batch/lot (e.g., expected lot size, yield,
manufacturing deviations or rework).
(b) INTRABIOTICS will have the right to review and/or audit
all batch records and test and release data prior to acceptance of the material.
(c) Changes to manufacturing parameters or specifications that
may impact the quality or integrity of the Product shall be subject to review
and approval by the INTRABIOTICS QA/QC unit prior to shipment to INTRABIOTICS.
[ * ] = 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>
6.7 MASTER BATCH RECORDS:
(a) POLYPEPTIDE will prepare Master Batch Records to include
directions in sufficient detail to manufacture the bulk drug substance under
cGMP guidelines. INTRABIOTICS reserves the right to review and approve the
Master Batch Records prior to their use in the production of intermediates or
bulk drug substance.
(b) POLYPEPTIDE will notify INTRABIOTICS of proposed
changes to the Master Batch Record in advance of the proposed implementation.
A verbal telephone call outlining significant changes to responsible person
is acceptable, but shall be confirmed in writing; telefax transmission is
acceptable. INTRABIOTICS acceptance or rejection of the proposed changes will
be provided in writing before implementation; telefax transmission is
acceptable.
(c) INTRABIOTICS shall be notified about proposed
deviations in a timely manner. INTRABIOTICS will respond to proposed
deviations in writing; telefax transmission is acceptable.
(d) Master Batch Record changes shall be finalised in typed
written format and approved in writing by representatives of both POLYPEPTIDE
and INTRABIOTICS.
6.8 MANUFACTURING:
(a) POLYPEPTIDE will provide qualified labour to manufacture
the Product according to approved Master Batch Records, and in full compliance
with the Specification and cGMP rules and regulations. Training records for all
labour utilised shall be made available for INTRABIOTICS' review upon written
requested.
(b) Upon request of INTRABIOTICS, POLYPEPTIDE will allow to
have a QA audit of the production operation while in process and a complete
review of all documentation pertaining to the manufacture and test of the
Product. Regular audits of POLYPEPTIDES cGMP compliance status will also be
allowed with adequate advance notice. INTRABIOTICS reserves the right to retain
third party auditors to perform these audits if necessary.
6.9 STORAGE:
(a) POLYPEPTIDE will store the bulk drug Product according to
the Specification, [ * ] for up to [ * ] after release to INTRABIOTICS.
6.10 SHIPMENT:
(a) POLYPEPTIDE will furnish the shipping containers according
to the Specification.
(b) POLYPEPTIDE will use its best efforts to deliver the
Product within [ * ] of release.
[ * ] = 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>
(c) POLYPEPTIDE may at the request of INTRABIOTICS prepare one
set of pre-delivery samples to INTRABIOTICS or INTRABIOTICS' designated party.
(d) INTRABIOTICS will communicate to POLYPEPTIDE the shipping
address in writing at least 30 days prior to the delivery date.
(e) All shipments must be sent to the above address by
overnight courier (24 hours delivery) under [ * ] (Incoterms 1990) delivery
terms unless otherwise agreed.
6.11 The responsibility of each of the parties concerning Quality
Assurance and Quality Control matters is specified in Annex 4.
6.12 (a) INTRABIOTICS shall be deemed to have accepted delivery of
Product supplied hereunder unless INTRABIOTICS shall have notified POLYPEPTIDE
of any non-conformity in respect of a shipment within [ * ] following
INTRABIOTICS' receipt of same.
(b) Any claim of nonconformity hereunder shall be accompanied
by a report of analysis of the allegedly nonconforming material prepared by or
on behalf of INTRABIOTICS. If POLYPEPTIDE confirms INTRABIOTICS' claim, of
nonconformity, POLYPEPTIDE shall within [ * ] from POLYPEPTIDES confirmation of
nonconformity replace the nonconforming goods with conforming goods to
INTRABIOTICS. Pursuant to written directions from POLYPEPTIDE, INTRABIOTICS
shall either return the nonconforming goods to POLYPEPTIDE, or destroy same,
each [ * ].
(c) In case of disagreement between the parties regarding the
conformity or nonconformity of a delivery of the Product, the parties shall
refer the matter for review and/or analysis and final settlement to an
independent expert laboratory to be agreed by both of them. The costs of such
expertise and analysis shall be [ * ].
7. COMMERCIAL PURCHASE AND SUPPLY
If INTRABIOTICS decides to use the Process for producing the Product
for commercial sale, INTRABIOTICS agrees to use POLYPEPTIDE as the primary
supplier of the Product under the terms of the Purchase/Supply Agreement entered
into on the date hereof ("Purchase/Supply Agreement").
8. EFFECTIVE DATE, EXPIRATION AND TERMINATION
8.1 This Agreement becomes effective on the day of signature.
8.2 This Agreement will expire [ * ] after [ * ] that the DMF is ready
for submission to FDA for registration purposes provided that POLYPEPTIDE will
complete any ongoing work required for registration. In case INTRABIOTICS after
expiration of this Agreement decides not to continue the registration process of
the Product INTRABIOTICS shall immediately notify POLYPEPTIDE and POLYPEPTIDE
shall have no obligation to continue any such ongoing work for registration.
[ * ] = 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>
8.3 In case INTRABIOTICS is in need of further Product after the
completion of this agreement but before the approval by the United States Food
and Drug Administration such Product shall be delivered by POLYPEPTIDE under the
terms of this agreement, [ * ].
8.4 Each party may terminate this Agreement by written notice if the
other party is breaching materials terms of this Agreement and does not remedy
such breach within [ * ] after receiving written notice specifying the breach
from the non-breaching party.
8.5 If POLYPEPTIDE has not met the [ * ] or if commercial, clinical, or
toxicological data presented by documentation show that further progress on the
development project cannot be commercially justified by INTRABIOTICS,
INTRABIOTICS may terminate this Agreement by written notice effective [ * ] from
the date of receipt by POLYPEPTIDE. In this event, INTRABIOTICS will pay to
POLYPEPTIDE [ * ] plus all costs [ * ].
8.6 Clauses 5.1, 5.2, 6.1, 6.5, 7, 8.3, 10 and 11 will survive the
expiration or termination of this agreement.
9. WARRANTIES
POLYPEPTIDE warrants that it has the necessary permits, facilities,
knowledge, specialists, and personnel for the manufacture of the Product
(including the scale-up) pursuant to the terms of this Agreement, including that
POLYPEPTIDE is registered with the US FDA as a manufacturer of bulk substances.
POLYPEPTIDE warrants that all Product supplied to INTRABIOTICS pursuant
to this Agreement shall be manufactured, stored and shipped in accordance with
the applicable Specifications and Master Batch Record and in compliance with all
applicable laws and regulations, including cGMP regulations.
10. CONFIDENTIALITY
This Clause shall replace any prior confidentiality agreement entered
into between the parties INTRABIOTICS and POLYPEPTIDE concerning IB-367.
10.1 Both POLYPEPTIDE and INTRABIOTICS mutually acknowledge and
recognise the valuable and proprietary nature of POLYPEPTIDE Confidential
Information and INTRABIOTICS Confidential Information and agree that the
Confidential Information of the other party shall remain confidential
throughout the term of this Agreement, and until 5 years after its
termination. In this regard, the parties agree to receive and maintain the
Confidential Information of the other party in confidence and to refrain from
any use thereof, in whole or in part, except for the express purposes
authorised by this Agreement.
10.2 In recognition of the proprietary nature and value of the
Confidential Information and the likelihood of loss of business by the other
party in the event of unauthorised disclosure of its Confidential Information,
the parties agree that the obligations of the Paragraph shall continue unabated
regardless of 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.
8.
<PAGE>
10.3 INTRABIOTICS and POLYPEPTIDE may disclose such Confidential
Information of the other party as is necessary or appropriate in order to have
qualified employees act hereunder. However, no disclosure shall be made without
taking suitable steps to assure that such employee is bound under the
confidentiality requirements at least equal in scope to those of this Agreement.
All reasonable steps shall be taken to assure that the disclosure of the
Confidential Information of the other party to any employee will be limited to
those having a need to know to fulfil the terms and conditions of this
Agreement. Further the receiving party will take all reasonable steps to assure
that its employees will maintain the confidential nature of the other's
Confidential Information. In case external resources are being used, the
provisions for employees also apply for such external resources.
10.4 Neither party shall be obligated or required to maintain in
confidence any information, even though deemed by the disclosing party to be its
Confidential Information, for which it can be demonstrated by competent
documentary evidence that it was:
(a) In the public knowledge prior to the earliest disclosure
made between the parties at any time, whether before, during or after the
effective date of this Agreement; or
(b) In the possession of the receiving party without binder of
secrecy prior to the earliest disclosure made between the parties at any time,
whether during or before the effective date of this Agreement; or
(c) While originally Confidential Information, subsequently is
received without binder of secrecy from a third party who is free to disclose
the information, as of the date of such third party disclosure; or
(d) While originally Confidential Information, and
subsequently becomes part of the public knowledge through no fault of the
receiving party; or
(e) Independently developed by the receiving party's employees
or agents provided that those employees or agents had no access to any
corresponding Confidential Information of the disclosing party received
hereunder.
10.5 The parties may disclose Confidential Information pursuant to an
order of a competent court or administrative agency, provided that the party
subject to such order has informed the other party thereof, and has used
reasonable efforts to limit the scope of the disclosure and to obtain
confidential treatment by the court or administrative agency of Confidential
Information disclosed pursuant to such order.
10.6 INTRABIOTICS may disclose Confidential Information to potential
and established licensees of the Product, potential and established investors in
INTRABIOTICS, and to other relevant business partners under a separate
confidentiality agreement. However, no disclosure shall be made without taking
suitable steps to assure that such receiving party is bound under the
confidentiality requirements at least equal in scope to those of this Agreement.
10.7 The parties may disclose Confidential Information to the United
States Food and Drug Administration or such other relevant regulatory agency
world-wide in the course of seeking regulatory approval for the Product.
[ * ] = 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>
11. PRODUCT LIABILITY AND INDEMNIFICATIONS
11.1 INTRABIOTICS shall indemnify, defend and hold POLYPEPTIDE and its
agents, employees and directors (the "POLYPEPTIDE Indemnitees") harmless from
and against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of third party claims or suits resulting
from the use, sale or promotion of Product or a product containing Product by
INTRABIOTICS, its sublicensees, distributors or agents, except to the extent
that such claims or suits result from negligence or intentional misconduct of
POLYPEPTIDE or a POLYPEPTIDE Indemnitee in the manufacture of the Product. Upon
assertion of such claim or suit, the POLYPEPTIDE Indemnitees shall promptly
notify INTRABIOTICS thereof and INTRABIOTICS shall appoint counsel reasonably
acceptable to the POLYPEPTIDE Indemnitees to represent the POLYPEPTIDE
Indemnitees with respect to any claim or suit for which indemnification is
sought. The POLYPEPTIDE Indemnitees shall not settle any such claim or suit
without the prior written consent of INTRABIOTICS, unless they shall have first
waived their rights to indemnification hereunder.
11.2 POLYPEPTIDE shall indemnify, defend and hold INTRABIOTICS and its
agents, employees and directors (the "INTRABIOTICS Indemnitees") harmless from
and against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of third party claims or suits resulting
from negligence or intentional misconduct in the manufacture of Product by
POLYPEPTIDE, except to the extent such claims or suits result from the
negligence or willful misconduct of INTRABIOTICS or an INTRABIOTICS Indemnitee.
Upon assertion of such claim or suit, the INTRABIOTICS Indemnitees shall
promptly notify POLYPEPTIDE thereof and POLYPEPTIDE shall appoint counsel
reasonably acceptable to the INTRABIOTICS Indemnitees to represent the
INTRABIOTICS Indemnitees with respect to any claim or suit for which
indemnification is sought. The INTRABIOTICS Indemnitees shall not settle any
such claim or suit without the prior written consent of POLYPEPTIDE, unless they
shall have first waived their rights to indemnification hereunder.
11.3 In no event shall either Party be liable to the other for
incidental or consequential damages or for punitive damages as a result of any
breach of this Agreement.
12. FORCE MAJEURE
12.1 Neither party is liable for failing to perform or having delayed
the performance of its obligation under this agreement, if the performance is
delayed or precluded by circumstances beyond its control, including but not
limited to fire, flood, war, strike, lock-out, failure or shortage of public
utilities due to governmental decrees, orders or legislation and court
injunctions.
The party, whose performance is delayed or precluded, shall immediately
inform the other party of the circumstances preventing the performance.
In the event that the circumstances preventing the performance continue
for more than [ * ], each party will have a right to cancel the Agreement and
neither of the parties will have a right to reimbursement or to any claim for
damages as a result of the cancellation of the Agreement.
13. ASSIGNMENT
[ * ] = 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>
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
party shall assign its rights and obligations under this Agreement without first
obtaining the written consent of the other parties, which consent shall not be
unreasonably withheld. Each of the parties may assign its rights and obligations
to an Affiliate provided that the assigning party shall guarantee its
Affiliate's performance and obligations under this Agreement, or to any
successor by virtue of a merger or acquisition of substantially the entire
business to which this Agreement relates or in the case of INTRABIOTICS to a
licensee of the Product, without the consent, but upon notice to the other
party.
14. SEVERABILITY
Should any provision or part of this agreement be held invalid,
illegal, or unenforceable in whole or in part by any court of competent
jurisdiction, this Agreement is deemed modified to the extent necessary to make
it valid and enforceable and the Agreement as thus modified shall be in force to
give effect to the intention of the parties to the extent possible.
15. APPLICABLE LAW AND JURISDICTION
All matters arising under or related to the Agreement shall be governed
by and construed under and pursuant to the laws of the State of California
without regard to conflict of laws principles.
16. ARBITRATION
All disputes between the parties relating to this Agreement, including
its interpretation that cannot be settled amicably by the parties, shall be
settled by binding arbitration in the state/country of the defending party in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration carried out hereunder shall apply to the exclusion
of regular legal means, provided that the rights of the Parties in urgent
situations in which time is of the essence to obtain proper remedies in court of
law or equity shall remain unimpaired.
17. PUBLISHING OF THIS AGREEMENT
Except as otherwise required by law, neither Party shall make any
public disclosure as to the terms or existence of this Agreement without the
prior written consent of the other. Notwithstanding this clause, INTRABIOTICS
may publish that such an agreement has been entered into between the Parties
subject to pre-approval by POLYPEPTIDE of the wording.
18. COMPLETE AGREEMENT
The provisions contained in this agreement and its appendices and the
Purchase/Supply Agreement set out the entire agreement between the parties
with respect to the subject matter of this agreement and shall supersede all
previous communication, representations or agreements with respect to the same
subject and may not be amended except by an instrument in writing signed by or
on behalf of the parties.
[ * ] = 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>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorised officers as of the day and year
first above written, each copy of which shall for all purposes be deemed to be
original.
POLYPEPTIDE LABORATORIES A/S INTRABIOTICS PHARMACEUTICALS INC.
/s/ Erik Lorentsen /s/ Thomas Shepherd
- ------------------------------------- -------------------------------------
Erik Lorentsen Thomas Shepherd
General Manager Vice President Corporate; Development
FERRING PEPTIDE PRODUCTION AB
/s/ Anders J. Andersen
- ------------------------------------
Anders J. Andersen
General Manager
[ * ] = 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>
ANNEX 1
SPECIFICATION
TABLE OF CONTENTS:
PAGES 1 AND 2 INTRABIOTICS QUALITY SPECIFICATION NO.: [ * ]
PAGE 3 - STORAGE
- SHIPMENT
[ * ] = 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>
INTRABIOTICS QUALITY SPECIFICATION
QA ISSUED COPY
SPECIFICATION NO.: [ * ]
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
MATERIAL: FOR INFORMATION ONLY
IB-367-03
- ----------------------------------------------------------------------------------------------------------------------
DATE EFFECTIVE: SUPERCEDES: PAGE:
NOV 26 1996 [ * ] 1 of 2
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
AUTHOR: DEPT.: DATE:
/s/ Jodi L. Fausnaugh Analytical Development 11/26/96
- ----------------------------------------------------------------------------------------------------------------------
APPROVED: DEPT.: DATE:
/s/ William R. Trilsch Quality Assurance 11/26/96
- ----------------------------------------------------------------------------------------------------------------------
APPROVED: DEPT.: DATE:
/s/ Leo Gu Pharmaceutical Development 11-26-96
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION:
[ * ]
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TEST SPECIFICATION METHOD
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
2. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
3. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
4. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
5. [ * ] [ * ] [ * ]
- ---------------------------------------- --------------------------------------------------------- -------------------
</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>
INTRABIOTICS QUALITY SPECIFICATION
QA ISSUED COPY
SPECIFICATION NO.: [ * ]
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
MATERIAL: FOR INFORMATION ONLY
IB-367-03
- ----------------------------------------------------------------------------------------------------------------------
DATE EFFECTIVE: SUPERCEDES: PAGE:
NOV 26 1996 [ * ] 2 of 2
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TEST SPECIFICATION METHOD
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
7. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
8. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
9. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
10. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
11. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
12. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
13. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
14. [ * ] [ * ] [ * ]
- ----------------------------------------------------------------------------------------------------------------------
</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>
ANNEX 1
SPECIFICATION
STORAGE: Store at recommended storage conditions. [ * ].
SHIPMENT: [ * ].
NB. The storage container and shipping conditions may be modified in the future
once the proper stability data are available.
[ * ] = 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>
ANNEX 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.
<PAGE>
ANNEX 3
MILESTONES AND MILESTONE PAYMENTS
1st Milestone [ * ]
Payment of [ * ] will be effected by completion of [ * ] in the Time
Schedule meaning the completion of the development of [ * ].
POLYPEPTIDE will at the first milestone supply a small sample of the
Product (non GMP) together with a written method for the manufacture of
[ * ] of the Product. [ * ]
2nd Milestone [ * ]
Is reached after the completion of [ * ], meaning completion of [ * ]
including the delivery of [ * ] of the Product to INTRABIOTICS. [ * ]
3rd Milestone [ * ]
After the completion of the [ * ] and the [ * ] for the Product [ * ]
4th Milestone [ * ]
After the completion of [ * ], meaning completion [ * ] including the
development of the [ * ] the Product. [ * ]
5th Milestone [ * ]
After the completion of [ * ] including the supply of [ * ]
6th, 7th, 8th, 9th Milestone [ * ]
After each [ * ] according to [ * ] and upon receiving [ * ]
10th Milestone [ * ]
After [ * ] with the written notification from [ * ]
[ * ] = 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>
ANNEX3, PAGE 2 OF 2
ANNEX 3
MILESTONE AND MILESTONE PAYMENTS
[ * ]
[ * ] = 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>
ANNEX 4
MATRIX OF RESPONSIBILITY OF THE PARTIES CONCERNING
QUALITY ASSURANCE AND QUALITY CONTROL
Product:IB-367
<TABLE>
<CAPTION>
RESPONSIBLE FOR POLYPEPTIDE INTRABIOTICS
<S> <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>
ANNEX 4 CONTINUED POLYPEPTIDE INTRABIOTICS
RESPONSIBLE FOR
<S> <C> <C>
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ].
</TABLE>
Contact person regarding Quality Assurance and Control
POLYPEPTIDE:
[ * ], Director QA & QC
[ * ].
[ * ] = 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>
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
SECOND AMENDMENT TO
LICENSE AGREEMENT
M940121
(UNMARKED)
THIS AMENDMENT is made and is effective this 12th day of June 1996,
(the "Effective Date") by and between THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA, a California corporation having its corporate offices located at 300
Lakeside Drive, 22nd Floor, Oakland, California 94612-3550, acting through its
offices located at Box 951525, 1106 Ueberroth Bldg, Los Angeles, California
90095-1525, hereinafter referred to as "The Regents," and INTRABIOTICS
PHARMACEUTICALS, INC., a Delaware corporation having a principal place of
business at 816 Kifer Road, Sunnyvale, CA 94086, hereinafter referred to as
"IntraBiotics," and amends License Agreement No. M940121, dated April 22, 1994,
and the First Amendment to License Agreement M940121, dated July 31, 1995.
RECITALS
WHEREAS, This second amendment to License Agreement No. M940121 has
become necessary as a result of new inventions having been made at IntraBiotics
over the past year or so ("IBP Inventions"), which inventions are complementary
both to inventions made at UCLA during the same time period [ * ] and to other
inventions licensed under this Agreement, (collectively, "UCLA Inventions");
WHEREAS, IntraBiotics and The Regents wish to combine the subject
matter of IBP Inventions with relevant subject matter of UCLA Inventions in
joint patent applications, in order to strengthen the patent rights that the
parties expect will cover Licensed Products; and
WHEREAS, IntraBiotics anticipates making additional inventions that
will support claims in the joint patent applications, and, because of certain
patent provisions governing the filing of continuation-in-part applications, it
is to the advantage of both parties that IntraBiotics is a sole owner of the
joint patent applications; and
WHEREAS, The Regents agrees to assign its undivided ownership interest
in such joint patent applications to IntraBiotics, so that patent rights
covering Licensed Products are strengthened; and
WHEREAS, The Regents and IntraBiotics agree that the patent rights
covering Licensed Products are further strengthened if the patent application
under Regents' Patent Rights that describes the inventions in [ * ] is
abandoned, and that such inventions are covered in the joint patent applications
described above; and
WHEREAS, as a result of IntraBiotics' contribution to strengthen and
broaden patent rights covering Licensed Products, The Regents agrees that for
Licensed Products covered only
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by the joint patent applications and continuation-in-part applications thereof,
IntraBiotics may pay royalties to The Regents that are [ * ] the royalties due
for Licensed Products covered by Regents' Patent Rights; and
WHEREAS, the UCLA Inventions were developed with United States
Government funds, and The Regents will grant to the U.S. Government royalty-free
nonexclusive licenses to patent rights covering the UCLA Inventions, as required
under 35 U.S.C. Section 201-212; and
WHEREAS, In this Amendment, additions to the original Agreement dated
April 22, 1994 will be underlined, as shown, and deletions will be, as shown, in
a marked version of the Amendment, and an unmarked version of the Amendment will
also be executed by the parties, and the amendments to Appendix A that were made
in The First Amendment to License Agreement M940121 on July 3l, 1995 is further
amended in this Second Amendment to License Agreement No. M940121.
NOW, THEREFORE, the parties agree to amend License Agreement No.
M940121 as follows.:
1. DEFINITIONS
1.1 "REGENTS' PATENT RIGHTS" means patent rights to any subject matter
claimed in or covered by the patents and applications listed in Appendix A; any
continuing applications thereof including divisions and continuation-in-part
applications, but only to the extent that such continuation-in-part applications
have claims directed to subject matter enabled and described in the patent
applications named above; any patents issuing on said applications or continuing
applications including reissues and reexaminations; and any corresponding
foreign patents or patent applications; all of which will be automatically
incorporated in and added to Appendix A attached to this Agreement and made a
part hereof.
1.2 "JOINT PATENT RIGHTS" means patent rights to any subject matter
claimed in or covered by the patents and applications listed in Appendix B; any
continuing applications thereof including divisions and continuation-in-part
applications; any patents issuing on said applications or continuing
applications including reissues and reexaminations; and any corresponding
foreign patents or patent applications; all of which will be automatically
incorporated in and added to Appendix B attached to this Agreement and made a
part hereof.
1.3 "LICENSED PRODUCT" means any article, composition, apparatus,
substance, chemical, or any other material covered by Regents' Patent Rights or
Joint Patent Rights, or whose manufacture, use or sale would constitute an
infringement of any claim within Regents' Patent Rights or Joint Patent Rights,
or any service, article, composition, apparatus, chemical, substance, or any
other material made, used, or sold for use with or by a Licensed Method.
1.4 "LICENSED METHOD" means any process or method which is covered by
Regents' Patent Rights or Joint Patent Rights or whose use or practice would
constitute an infringement of any claim within Regents' Patent Rights or Joint
Patent 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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1.5 "FIELD" means medical applications, including all human
pharmaceutical (including, therapeutic, prophylactic, disinfectant and
preservative), diagnostic and veterinary uses, but specifically excludes [ * ]
uses that are not medically related.
1.6 "AFFILIATE" means any company or other legal entity other than
IntraBiotics in whatever country organized, controlling, controlled by or under
common control with IntraBiotics. The term "control" means possession, direct or
indirect, of the powers to direct or cause the direction of the management and
policies of IntraBiotics, whether through the ownership of voting securities, by
contract or otherwise.
1.7 "FIRST COMMERCIAL SALE" means the first sale of any Licensed
Product by IntraBiotics or its Affiliates, following approval of its marketing
by the appropriate governmental agency for the country in which the sale is to
be made, and when governmental approval is not required, the first sale in that
country.
1.8 "NET SALES" means the total amount received by IntraBiotics or its
Affiliates from the sale or distribution of Licensed Products less the sum of
the following deductions where applicable: cash, trade, or quantity discounts
(including Medicaid and other government mandated rebates); sales, use, tariff,
import/export duties or other excise taxes imposed upon particular sales;
transportation charges and allowances or credits to customers because of
rejections or returns. Sales between or among IntraBiotics and its Affiliates or
sublicensees shall be excluded from the computation of Net Sales, except where
such Affiliates or sublicensees are end users, but Net Sales shall include the
subsequent final sales to third parties by such Affiliates or sublicensees.
1.9 "SUBLICENSE" is defined in Paragraph 4.1.
1.10 "SUBLICENSEE" means any third party sublicensed by IntraBiotics to
make, have made, use or sell one or more Licensed Products or to practice one or
more Licensed Methods.
1.11 "SUBLICENSING INCOME" means consideration received by IntraBiotics
under or on account of Sublicenses, such consideration to include payments such
as license issue fees, license maintenance fees, and milestone payments, but
specifically to exclude equity purchase or royalties on sale or distribution of
Licensed Products or the practice of Licensed Methods. Income received by
IntraBiotics as payment or reimbursement for research costs or expenses
conducted by or for IntraBiotics, including costs or expenses associated with
materials, equipment, clinical testing or otherwise, shall not be included in
the definition of Sublicensing Income hereunder.
2. GRANT
2.1 The Regents hereby grants to IntraBiotics an exclusive license (the
"License") under Regents' Patent Rights, in jurisdictions where Regents' Patent
Rights exist, to make, have made, use and sell Licensed Products in the Field
and to practice Licensed Methods.
2.2 The Regents hereby assigns to IntraBiotics its undivided interest
in Joint Patent Rights (the "Assignment").
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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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2.3 The License and the Assignment shall be subject to any overriding
obligations to the United States federal government under 35 U.S.C.
Section 201-212.
2.4 The Regents expressly reserves the right to use Regents' Patent
Rights and Joint Patent Rights and associated technology for educational,
research and clinical purposes and for any other non-commercial purpose that is
not inconsistent with the rights granted to IntraBiotics hereunder.
3. INTRABIOTICS CONFIDENTIAL INFORMATION
3.1 During the term of this Agreement, it is contemplated that
IntraBiotics will disclose to The Regents proprietary and confidential
technology, inventions, technical and business information and the like which
are owned or controlled by IntraBiotics or which IntraBiotics is obligated to
maintain in confidence and which is designated in writing by IntraBiotics prior
to disclosure to The Regents as confidential ("IntraBiotics' Confidential
Information"). The Regents agrees to retain such IntraBiotics' Confidential
Information in confidence and not to disclose any such IntraBiotics'
Confidential Information to a third party without the prior written consent of
IntraBiotics and to use such IntraBiotics' Confidential Information only for the
purposes of this Agreement. But The Regents need only use the same degree of
care which it uses with its own information of like character.
3.2 The obligation of confidentiality under paragraph 3.1 will not
apply to IntraBiotics' Confidential Information which:
(a) was known to The Regents or generally known to the public
prior to its disclosure hereunder; or,
(b) subsequently becomes known to the public by some means
other than a breach of this Agreement, including publication and/or laying open
to inspection of any patent applications or patents; or,
(c) is subsequently disclosed to The Regents by a third party
having a lawful right to make such disclosure.
3.3 The Regents shall be permitted to disclose IntraBiotics'
Confidential Information if required under the California Public Records Act or
if otherwise required by law; provided, however that The Regents shall give
IntraBiotics thirty (30) days advance notice, where possible, of any such
required disclosure of IntraBiotics' Confidential Information.
3.4 The obligations of The Regents under this Article 3 shall remain in
effect during the term of this Agreement or for five (5) years from the date of
IntraBiotics' disclosure to The Regents of IntraBiotics' Confidential
Information, whichever is longer.
4. SUBLICENSEES
4.1 The Regents also grants to IntraBiotics the right to issue
exclusive or nonexclusive sublicenses ("Sublicenses") to third parties to make,
have made, use and sell
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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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Licensed Products and to practice Licensed Methods in the Field in any
jurisdiction under which IntraBiotics has exclusive rights under this Agreement.
All such Sublicenses shall be subject to the rights of The Regents under this
Agreement, with the exception that Sublicensees need not pay the license issue
fee provided for in Article 5, or patent costs provided for in Article 8. To the
extent that IntraBiotics licenses third parties to make, have made, use and sell
Licensed Products and to practice Licensed Methods that are covered solely by
Joint Patent Rights, for the purposes of this Agreement, such licenses shall be
considered Sublicenses. To the extent applicable, Sublicenses shall also be
subject to the rights of the United States federal government under 35 U.S.C.
Section 201-212.
4.2 IntraBiotics shall pay to The Regents, upon the Net Sales of
Licensed Products sold or disposed of by Sublicensees, an earned royalty equal
to [ * ] of the royalties received by IntraBiotics from its Sublicensees for
products covered by Regents' Patent Rights, and an earned royalty equal to [ * ]
for products covered solely by Joint Patent Rights.
4.3 IntraBiotics shall pay to The Regents [ * ] of all Sublicensing
Income. Such payments shall be made quarterly in accordance with the payment
schedule described in paragraph 10.3.
4.4 IntraBiotics shall provide to The Regents a copy of each Sublicense
granted by IntraBiotics and a copy of all information submitted to IntraBiotics
by Sublicensees relevant to the computation of the payments due from
IntraBiotics to The Regents under this Article 4.
4.5 IntraBiotics shall use its best efforts to write its sublicense
agreements so that upon termination of this Agreement for any reason, all
outstanding Sublicenses will be assigned to The Regents and will remain in full
force and effect under the same terms and conditions with The Regents as the
licensor thereunder in the stead of IntraBiotics, but the duties of The Regents
under such assigned Sublicenses shall not be greater than the duties of The
Regents under this Agreement.
5. CONSIDERATION
5.1 In consideration for the License, IntraBiotics agrees to pay to The
Regents a license issue fee of [ * ] according to the following schedule: [ * ]
within thirty (30) days of [ * ] This fee is [ * ] an advance against royalties.
5.2 For the first Licensed Product to reach the milestones indicated
below, IntraBiotics will pay to The Regents the following payments, or, at the
option of The Regents and provided that such stock is not publicly traded,
IntraBiotics will grant to The Regents [ * ] stock in IntraBiotics [ * ] as
determined by IntraBiotics' most recent sale, in an arms length transaction, of
the [ * ] stock to [ * ], within [ * ] of reaching the milestones:
(a) [ * ] upon the filing of an [ * ]; and
(b) [ * ] either upon the [ * ], or upon filing an [ * ],
whichever comes first; and
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(c) [ * ] upon [ * ].
6. ROYALTIES
6.1 For Licensed Products covered by Regents' Patent Rights,
IntraBiotics shall pay to The Regents for sale of such Licensed Products in the
Field sold by IntraBiotics or its Affiliates, an earned royalty of [ * ].
6.2 The royalties payable pursuant to Paragraph 6.1 (and not those
payable under Paragraph 4.2) shall be reduced (but in no event to less than
[ * ]) by amounts equal to [ * ] the sum of royalties, if any, payable to third
parties with respect to Net Sales of Licensed Products, unless such third party
royalties result from a combination package as described below, in which case no
third party deductions shall be allowed hereunder.
6.3 For Licensed Products covered by Joint Patent Rights but not
covered by Regents' Patent Rights, IntraBiotics shall pay to The Regents for
sale of such Licensed Products in the Field sold by IntraBiotics or its
Affiliates, an earned royalty of [ * ].
6.4 In the event a Licensed Product is sold in a combination package
with one or more other products not covered by Regents' Patent Rights or Joint
Patent Rights, or is sold as part of a single product containing such other
products, for purposes of calculating earned royalties on such package, Net
Sales will be calculated by multiplying the Net Sales of such package by the
fraction A/(A+B), where A is the gross selling price of the Licensed Products
when sold separately and B is the gross selling price of the other products(s)
when sold separately. In no event will the Net Sales of the Licensed Product in
such a combination package be less than the Net Sales of the Licensed Product
when sold separately. In the event that the Licensed Products are sold in a
combination package and there have been no separate sales of a Licensed Product
but there have been separate sales of the other product(s) in the combination
package, Net Sales shall be the difference between the gross selling price of
the combination package and that of the other product(s), irrespective of how
IntraBiotics may invoice the selling price of such combination package. In the
event that neither the Licensed Product nor the other product or products
contained in a combination package have had separate sales, Net Sales will be
calculated by multiplying the Net Sales of the combination product by the
fraction A/(A+B), where A is the fully burdened manufacturing cost of the
Licensed Product and B is the fully burdened manufacturing cost of other
products contained in a combination package.
6.5 Paragraphs 1.1, 1.2, 1.3, 1.4 and 1.5 define Regents' Patent
Rights, Joint Patent Rights, Licensed Products, Licensed Methods and the Field
so that royalties shall be payable on a country by country basis on products
covered by pending patent applications and issued patents. If patents have not
issued before the First Commercial Sale, earned royalties on the sale of
Licensed Products shall accrue for [ * ] or, when patent(s) are extended under
the Drug Price Competition and Patent Term Restoration Act of 1984 or by other
acts of law, for [ * ] plus the term of the extension. If patents have issued
before the First Commercial Sale, earned royalties on the sale of Licensed
Products shall accrue for [ * ], respectively. The term of earned royalties due
The Regents on the sale of Licensed Products covered under Regents' Patent
Rights shall be
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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independent of the term of earned royalties due The Regents on the sale of
Licensed Products covered under Joint Patent Rights.
6.6 Royalties accruing to The Regents shall be paid to The Regents on a
quarterly basis. Each such payment will be for royalties which accrued within
the most recently completed calendar quarter and payment shall be made by
IntraBiotics within [ * ] of the end of such calendar quarter.
6.7 All monies due The Regents shall be payable in United States funds
collectible in Los Angeles, California. When Licensed Products are sold for
monies other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such Licensed
Products were sold and then converted into equivalent United States funds. The
exchange rate will be that established by the Bank of America in San Francisco,
California on the last day of the reporting period.
6.8 Any tax for the account of The Regents required to be withheld by
IntraBiotics under the laws of any foreign country shall be promptly paid by
IntraBiotics for and on behalf of The Regents to the appropriate governmental
authority, and IntraBiotics shall use its best efforts to furnish The Regents
with proof of payment of such tax. All payments made by IntraBiotics in
fulfillment of The Regents' tax liability in any particular country shall be
credited against earned royalties or fees due The Regents for that country.
6.9 If at any time legal restrictions prevent the prompt remittance of
part or all royalties by IntraBiotics with respect to any country where a
Licensed Product is sold, IntraBiotics shall have the right and option to make
such payments by depositing the amount thereof in local currency to The Regents'
account in a bank or other depository in such country. If after [ * ] of
good-faith efforts by The Regents to recover the monies, the royalties still
cannot be returned to the United States, and if IntraBiotics has been able to
recover its revenues from Net Sales of Licensed Products, IntraBiotics will be
responsible for payment in the United States.
6.10 In the event that any patent or any claim thereof included within
the Regents' Patent Rights or Joint Patent Rights shall be held invalid or
unenforceable in a final decision by a court of competent jurisdiction from
which no appeal has or can be taken, all obligation to pay royalties based on
such patent or claim or any claim patentably indistinct therefrom shall cease as
of the date of such final decision. IntraBiotics shall not, however, be relieved
from paying any royalties that accrued before such decision or that are based on
another patent or claim not involved in such decision.
6.11 In the event that no patents covering Licensed Products or
Licensed Methods have issued in a country after [ * ] from the Effective Date,
the royalty obligations under paragraph 6.1 and paragraph 6.3 shall cease in
such country until such time as patents covering Licensed Products and Licensed
Methods do issue, after which time The Regents shall notify IntraBiotics, and
IntraBiotics' payment obligations shall be resumed as of the issue date of the
patents.
7. DUE DILIGENCE
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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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7.1 Upon the execution of this Agreement, IntraBiotics, shall
diligently proceed with the development, manufacture and sale (collectively
referred to as "commercialization") of Licensed Products and shall earnestly and
diligently endeavor to market the same within a reasonable time after execution
of this Agreement and in quantities sufficient to meet the market demands
therefor.
7.2 IntraBiotics shall present to The Regents within [ * ] from the
Effective Date, a Product Development Plan describing its proposed plans and its
estimated timetable for the commercialization of Licensed Products. The Product
Development Plan will be maintained confidential pursuant to Article 3, and may
be revised from time to time in good faith by IntraBiotics. The Regents must
approve any such revision but shall approve such revision if IntraBiotics has
demonstrated best efforts to execute the previous Product Development Plan.
7.3 If IntraBiotics is unable to complete or perform any of the
following with respect to the commercialization of Licensed Products:
(a) within [ * ] from the date of the original Agreement,
April 22, 1994, raise at least [ * ] in capital for the ongoing operations of
IntraBiotics;
(b) in the first [ * ] from the date of the original
Agreement, April 22, 1994, apply a cumulative amount of resources of at least
[ * ] toward the development and commercialization of Licensed Products;
(c) in each year following the [ * ] from the date of the
original Agreement, April 22, 1994, apply an amount of resources of at least
[ * ], or [ * ] of IntraBiotics' cumulative expenditures for research or
development, including manufacturing scale-up, clinical or related expenses
during the same period, whichever is less, toward the development and
commercialization of Licensed Products;
(d) meet the commercialization milestones as stated in the
Product Development Plan; then The Regents shall have the right and option to
terminate this Agreement. This right, if exercised by The Regents, supersedes
the rights granted in Article 2 (Grant).
7.4 To exercise its right to terminate this Agreement under Paragraph
7.3, The Regents shall give IntraBiotics written notice of the deficiency.
IntraBiotics thereafter shall have [ * ] to cure the deficiency, or to present
to The Regents a plan to cure the deficiency, or to request arbitration. If The
Regents has not received a written request for arbitration, or satisfactory
tangible evidence that the deficiency has been cured by the end of the [ * ]
period, or a plan for curing the deficiency that, in the sole judgement of The
Regents is acceptable to The Regents, then The Regents may, at its option,
terminate this Agreement, amend the grant in Paragraph 2.1 to nonexclusive, or
limit the Field to exclude areas for which IntraBiotics has failed to meet any
of the above terms by giving written notice to IntraBiotics. These notices shall
be subject to Article 20 (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.
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7.5 IntraBiotics shall endeavor to obtain all necessary governmental
approvals for the commercialization of Licensed Products.
7.6 IntraBiotics shall have the sole discretion for making all
decisions as to how to commercialize Licensed Products.
8. PATENT FILING, PROSECUTION AND MAINTENANCE
8.1 The Regents shall file, prosecute and maintain the patents and
applications comprising Regents' Patent Rights. Such patents shall be held in
the name of The Regents and shall be obtained with counsel of The Regents'
choice. The Regents shall provide IntraBiotics with copies of each patent
application, office action, response to office action, request for terminal
disclaimer, and request for reissue or reexamination of any patent or patent
application under Regents' Patent Rights. The Regents will give due
consideration to any comments or suggestions by IntraBiotics related to patent
prosecution, and The Regents will not unreasonably deny a request by
IntraBiotics to change patent counsel. The Regents shall be able to take action
to preserve rights and minimize costs whether or not IntraBiotics has commented.
8.2 All reasonable costs incurred beginning on [ * ] and during the
term of this Agreement in the preparation, filing, prosecution and maintenance
of patent applications and patents in Regents' Patent Rights shall be borne by
IntraBiotics.
8.3 IntraBiotics shall have the right to request patent protection on
the Inventions in foreign countries if available and if it so desires.
IntraBiotics must notify The Regents within [ * ] of the filing of the
corresponding United States application of its decision to obtain foreign
patents. This notice concerning foreign filing shall be in writing, must
identify the countries desired, and reaffirm IntraBiotics' obligation to
underwrite the costs thereof. The absence of such a notice from IntraBiotics to
The Regents shall be considered an election not to secure foreign rights.
8.4 If IntraBiotics elects not to secure foreign patent rights, The
Regents shall have the right to file patent applications at its own expense in
any country in which IntraBiotics has not elected to secure patent rights, and
such applications and resultant patents shall not be subject to this Agreement.
8.5 IntraBiotics' obligation to underwrite and to pay all United States
and foreign patent costs shall continue for so long as this Agreement remains in
effect; provided, however, that IntraBiotics may terminate its obligations with
respect to any given patent application or patent upon [ * ] written notice to
The Regents. The Regents will use its best efforts to curtail patent costs
chargeable to IntraBiotics under this Agreement after such a notice is received
from IntraBiotics. The Regents may continue prosecution and/or maintenance of
such application(s) or patent(s) at its sole discretion and expense, and
IntraBiotics shall have no further rights or licenses thereunder.
8.6 The Regents shall use its best efforts to not allow any Regents'
Patent Rights for which IntraBiotics is licensed and is underwriting the costs
of to lapse or become abandoned
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without IntraBiotics authorization or reasonable notice, except for the filing
of continuations, divisionals, etc. The Regents shall notify IntraBiotics [ * ]
prior to the proposed abandonment. Within [ * ] after receipt of such notice,
IntraBiotics must, in writing, either (a) concur in the abandonment or (b) elect
to assume responsibility for the prosecution and maintenance of all Patent
Rights that The Regents proposes to abandon. Lack of written response to The
Regents within [ * ] shall be deemed to constitute concurrence.
8.7 IntraBiotics shall file, prosecute and maintain the patents and
applications comprising Joint Patent Rights. Such patents shall be held in the
name of IntraBiotics and shall be obtained with counsel of IntraBiotics choice.
IntraBiotics shall provide The Regents with copies of each patent application,
office action, response to office action, request for terminal disclaimer, and
request for reissue or reexamination of any patent or patent application under
Joint Patent Rights, in sufficient time for The Regents to consider such
documents and provide comments to IntraBiotics. IntraBiotics will give due
consideration to any comments or suggestions by The Regents related to patent
prosecution, and will accommodate The Regents' request to add claims in
prosecution, if such claims would strengthen or broaden patent coverage under
Joint Patent Rights.
8.8 IntraBiotics shall use [ * ] efforts to not allow any Joint Patent
Rights to lapse or become abandoned without The Regent's authorization or
reasonable notice, except for the filing of continuations, divisionals, etc.
IntraBiotics shall notify The Regents [ * ] prior to the proposed abandonment.
Within [ * ] after receipt of such notice, The Regents' must, in writing, either
(a) concur in the abandonment or (b) elect to assume responsibility for the
prosecution and maintenance of all Joint Patent Rights that IntraBiotics
proposes to abandon. Lack of written response to IntraBiotics within [ * ] shall
be deemed to constitute concurrence.
8.9 If IntraBiotics elects not to secure foreign patent rights under
Joint Patent Rights, The Regents shall have the right to direct IntraBiotics to
file patent applications at the Regents' expense in any country in which
IntraBiotics has not elected to secure patent rights, but such applications and
resultant patents are still owned by IntraBiotics and shall be subject to this
Agreement.
8.10 The Regents shall cooperate with IntraBiotics in applying for an
extension of the term of any patent included within Regents' Patent Rights or
Joint Patent Rights, if appropriate under the Drug Price Competition and Patent
Term Restoration Act of 1984. IntraBiotics shall prepare all such documents, and
The Regents agree to execute such documents and to take such additional action
as IntraBiotics may reasonably request in connection therewith.
8.11 IntraBiotics shall have the continuing responsibility to notify
The Regents if IntraBiotics or any of its Sublicensees or Affiliates is not a
small entity (as defined by the United States Patent and Trademark Office) under
the provisions of 35 USC 41 (h).
9. PATENT INFRINGEMENT
9.1 In the event that either party learns of the substantial
infringement in the Field of any patent in Regents' Patent Rights or Joint
Patent Rights, that party shall so inform other party
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in writing and shall provide reasonable evidence of such infringement. Both
parties to this Agreement agree that during the period and in a jurisdiction
where IntraBiotics has exclusive rights under this Agreement, neither party will
notify a third party of the infringement of any of Regents' Patent Rights
without first obtaining consent of the other party, which consent shall not be
unreasonably denied. Both parties shall use their best efforts in cooperation
with each other to terminate such infringement without litigation.
9.2 After notification of The Regents as described in Paragraph 9.1,
IntraBiotics may take legal action against the infringement of Joint Patent
Rights. In the case of Regents' Patent Rights, IntraBiotics may request that The
Regents take legal action against the infringement of Regents' Patent Rights in
the Field. Such request shall be made in writing and shall include reasonable
evidence of such infringement and damages to IntraBiotics. If the infringing
activity has not been abated within [ * ] following the effective date of such
request, The Regents shall have the right to (a) commence suit on its own
account or (b) refuse to participate in such suit. The Regents shall give notice
of its election in writing to IntraBiotics by the end of the [ * ] after
receiving notice of such request from IntraBiotics. IntraBiotics may thereafter
bring suit for patent infringement in its own name, if and only if The Regents
elects not to commence suit and if the infringement occurred during the period
and in a jurisdiction where IntraBiotics possesses exclusive rights under this
Agreement. However, in the event IntraBiotics elects to bring suit in accordance
with this paragraph, The Regents may thereafter join such suit at its own
expense. In the case where only Joint Patent Rights are infringed, The Regents
must have the consent of IntraBiotics in order to join such suit. IntraBiotics
shall have the right to join any such litigation brought by The Regents at
IntraBiotics' cost and expense and with counsel of IntraBiotics' choice.
9.3 Such legal action as is decided upon shall be at the expense of
[ * ] and, with the exception of Paragraph 9.5 herein, all recoveries recovered
thereby shall [ * ]; provided, however, that legal action brought jointly by The
Regents and IntraBiotics and fully participated in by both shall be [ * ] and
all recoveries shall be [ * ].
9.4 Each party agrees to cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the party on account of
whom suit is brought. Such litigation shall be controlled by the party bringing
the suit, except that The Regents may be represented by counsel of its choice
pursuant to The Regents' determination in any suit brought by IntraBiotics.
9.5 In the event that IntraBiotics alone shall undertake the
enforcement and/or defense of any Regents' Patent Rights or Joint Patent Rights
by litigation, any recovery of damages by IntraBiotics for any such suit shall
be applied [ * ] the suit. The balance remaining from any such recovery shall be
[ * ] shall pay [ * ].
10. PROGRESS AND ROYALTY REPORTS
10.1 Commencing on July 1, 1994, IntraBiotics shall submit to The
Regents semi-annual progress response covering IntraBiotics' activities related
to the development and testing of all Licensed Products and the obtaining of the
governmental approvals necessary for marketing. These progress reports shall be
made for each Licensed Product until 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.
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Commercial Sale and shall be marked confidential and maintained confidentially
in accordance with Article 3.
10.2 IntraBiotics also agrees to report to The Regents in its
immediately subsequent progress and royalty report the date of First Commercial
Sale.
10.3 After the First Commercial Sale of a Licensed Product,
IntraBiotics will make quarterly royalty reports to The Regents on or before
each [ * ] of each year (i.e., within [ * ] from the end of each calendar
quarter). Each such royalty report will cover IntraBiotics' most recently
completed calendar quarter and will show: (a) the [ * ] of Licensed Products
sold by IntraBiotics during the most recently completed calendar quarter, (b)
the number of each type of Licensed Product sold; and (c) the royalties payable
hereunder with respect to such.
11. BOOKS AND RECORDS
11.1 IntraBiotics shall keep books and records accurately showing all
Licensed Products manufactured, used, and/or sold under the terms of this
Agreement. Such books and records shall be preserved for at least [ * ] from the
date of the royalty payment to which they pertain and shall be open to
inspection by representatives or agents of The Regents at reasonable times.
11.2 The fees and expenses of The Regents' representatives performing
such an examination shall be borne by The Regents. However, if an error in
royalties favoring IntraBiotics of more than [ * ] of the total royalties due
for any year is discovered, then the fees and expenses of the representatives
shall be borne by IntraBiotics.
12. LIFE OF THE AGREEMENT
12.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement shall be
in force from the Effective Date recited on page one and shall remain in effect
for the life of the last-to-expire patent in Regents' Patent Rights; or until
the last patent application licensed under this Agreement is abandoned and no
patent in Regents' Patent Rights ever issues, or for [ * ] from the First
Commercial Sale, whichever occurs first, after which time IntraBiotics shall
have a fully paid up, royalty-free license to Regents' Patent Rights to make,
have made, use and sell Licensed Products and to practice Licensed Methods in
the Field.
Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement shall be
in force from the Effective Date recited on page one and shall remain in effect
for the life of the last-to-expire patent in Joint Patent Rights; or until the
last patent application licensed under this Agreement is abandoned and no patent
in Joint Patent Rights ever issues, or for [ * ] from the First Commercial Sale,
whichever occurs first, after which time IntraBiotics shall have unrestricted,
irrevocable ownership of Joint 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.
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12.2 Upon termination of this Agreement, IntraBiotics shall have no
further right to make, use or sell Licensed Products except as provided for in
Article 15 (Disposition of Licensed Products on Hand Upon Termination).
12.3 Any termination of this Agreement shall not affect the rights and
obligations set forth in the following Articles:
Article 11 Books and Records
Article 15 Disposition of Licensed Products on Hand upon Termination
Article 17 Use of Names and Trademarks
Article 19 Indemnification
Article 24 Failure to Perform.
13. TERMINATION BY THE REGENTS
13.1 If IntraBiotics violates or fails to perform any material term or
covenant of this Agreement, then The Regents may give written notice of such
default ("Notice of Default") to IntraBiotics. If IntraBiotics fails to repair
such default within [ * ] after the effective date of the Notice of Default, The
Regents shall have the right to terminate this Agreement and the license of
Regents' Patent Rights by a second written notice ("Notice of Termination") to
IntraBiotics. In the case where IntraBiotics' default relates to its obligations
with respect to Joint Patent Rights, IntraBiotics shall have [ * ] following the
Notice of Default to cure the deficiency, or to present to The Regents a plan to
cure the deficiency, or to request arbitration. If a Notice of Termination is
sent to IntraBiotics, this Agreement shall automatically terminate on the
effective date of such notice. Such termination shall not relieve IntraBiotics
of its obligation to pay any royalty or license fees owing at the time of such
termination and shall not impair any accrued right of The Regents. These notices
shall be subject to Article 20 (Notices).
13.2 In the event of termination by The Regents for failure to meet the
requirements of Article 7 (Due Diligence) or in the event of bankruptcy,
IntraBiotics shall [ * ] The Regents its [ * ]. Where termination as a result of
a breach or default under Paragraph 13.1 is solely due to IntraBiotics' failure
to pay fees or royalties (or in the event of an unresolved dispute over such
payments), the remedy for such breach or default shall not include IntraBiotics'
[ * ] the Regents.
14. TERMINATION BY INTRABIOTICS
14.1 IntraBiotics shall have the right at any time to terminate this
Agreement in whole or as to any portion of Regents' Patent Rights or Joint
Patent Rights by giving notice in writing to The Regents. In the event of
termination by IntraBiotics under this Paragraph 14.1, IntraBiotics shall [ * ]
The Regents [ * ]. Such notice of termination shall be subject to Article 20
(Notices) and shall be effective [ * ] after the effective date of such notice.
14.2 Any termination pursuant to Paragraph 14.1 shall not relieve
IntraBiotics of any obligation or liability accrued hereunder prior to such
termination or rescind anything done by IntraBiotics or any payments made to The
Regents hereunder prior to the time such termination
[ * ] = 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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becomes effective, and such termination shall not affect in any manner any
rights of The Regents arising under this Agreement prior to such termination.
15. DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION
Upon termination of this Agreement, IntraBiotics shall have the right
to dispose of all previously made or partially made Licensed Products, but no
more, within a period of [ * ]; provided, however, that the sale of such
Licensed Products shall be subject to the terms of this Agreement including, but
not limited to, the payment of royalties at the rate and at the time provided
herein and the rendering of reports.
16. PATENT MARKING
16.1 IntraBiotics agrees to mark all Licensed Products made, used or
sold under the terms of this Agreement, or their containers, in accordance with
the applicable patent marking laws.
17. USE OF NAMES AND TRADEMARKS
17.1 Nothing contained in this Agreement shall be construed as
conferring any right to use in advertising, publicity, or other promotional
activities any name, trade name, trademark, or other designation of either party
hereto or either party's employees (including contraction, abbreviation or
simulation of any of the foregoing). Unless required by law, the use of the
name, "The Regents of the University of California" or the name of any campus of
the University of California is expressly prohibited.
18. LIMITED WARRANTY
18.1 The Regents warrants to IntraBiotics that it has the lawful right
to grant this license.
18.2 This License and the associated Inventions are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. THE REGENTS MAKES NO REPRESENTATION OR WARRANTY
THAT THE LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY
RIGHT.
18.3 IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF
THE INVENTION, OR, OR LICENSED PRODUCTS OR THE USE OR THE PRACTICE OF LICENSED
METHODS.
18.4 Nothing in this Agreement shall be construed as:
(a) a warranty or representation by The Regents as to the
validity or scope of any Regents' Patent Rights or Joint Patent Rights; 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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(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 of third parties; or,
(c) an obligation to bring or prosecute actions or suits
against third parties for patent infringement except as provided in Article 7
(Patent Infringement); or,
(d) conferring by implication, estoppel or otherwise any
license or rights under any patents of The Regents other than Regents' Patent
Rights or Joint Patent Rights as defined herein, regardless of whether such
patents are dominant or subordinate to Regents' Patent Rights or Joint Patent
Rights; or,
(e) an obligation to furnish any know-how not provided in
Regents' Patent Rights or Joint Patent Rights.
19. INDEMNIFICATION
19.1 IntraBiotics agrees to indemnify, hold harmless and defend The
Regents, its officers, employees, and agents; and the inventors of the patents
and patent applications in Regents' Patent Rights and The Regents' inventors
named in Joint Patent Rights from and against any and all liability from third
parties, including all claims, suits, losses, damages, costs, fees, and expenses
resulting from or arising out of exercise of this license of Regents' Patent
Rights and this assignment of Joint Patent Rights.
19.2 IntraBiotics, at its sole cost and expense, shall insure its
activities in connection with the work under this Agreement and obtain, keep in
force and maintain Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
(a) [ * ]
(b) [ * ]
(c) [ * ]
(d) [ * ]
19.3 It should be expressly understood, however, that the coverages and
limits referred to under Paragraph 19.2 shall not in any way limit the liability
of IntraBiotics. Upon written request, IntraBiotics shall furnish The Regents
with certificates of insurance evidencing compliance with all requirements.
IntraBiotics shall not be required to insure its activities relative to the
products' liability risks until commencing use of Licensed Products in human
subjects. Such insurance shall:
(a) provide for thirty (30) day advance written notice to The
Regents of any modification;
[ * ] = 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) indicate that The Regents of the University of California
has been endorsed as an Insured under the coverages referred to under Paragraph
19.2; and
(c) include a provision that the coverages will be primary and
will not participate with nor will be excess over any valid and collective
insurance or program of self-insurance carried or maintained by The Regents.
20. NOTICES
20.1 Any notice or payment required to be given to either party shall
be deemed to have been properly given and to be effective (a) on the date of
delivery if delivered in person or (b) five (5) days after mailing if mailed by
first-class certified mail, postage paid, to the respective addresses given
below, or to such other address designated by written notice.
For IntraBiotics: INTRABIOTICS PHARMACEUTICALS CORPORATION
816 Kifer Road
Sunnyvale, CA 94086
Attention: Mr. Kenneth J. Kelley
Chairman and President
For The Regents: THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
Business Research Partnerships
1106 Ueberroth Building
University of California, Los Angeles
Box 951525
Los Angeles, California 90095-1525
Attention: Mr. Christopher T. Moulding
Licensing Associate
21. ASSIGNABILITY
21.1 This Agreement is binding upon and shall inure to the benefit of
The Regents, its successors and assigns, but shall be personal to IntraBiotics
and assignable by IntraBiotics only with [ * ] prior notification to The Regents
and provided that the rights and obligations due The Regents under this
Agreement are not reduced by any such assignment.
22. LATE PAYMENTS
22.1 In the event royalty payments or fees are not received by The
Regents when due, IntraBiotics shall pay to The Regents interest charges at a
rate per annum of [ * ] simple interest calculated from the date payment was due
until actually received by The Regents.
[ * ] = 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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23. WAIVER
23.1 It is agreed that no waiver by either party hereto of any breach
or default of any of the covenants or agreements herein set forth shall be
deemed a waiver as to any subsequent and/or similar breach or default.
24. FAILURE TO PERFORM
24.1 In the event of a failure of performance due under the terms of
this Agreement and if it becomes necessary for either party to undertake legal
action against the other on account thereof, then the prevailing party shall be
entitled to reasonable attorney's fees in addition to costs and necessary
disbursements.
25. GOVERNING LAWS
THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, but the scope and validity of any patent or
patent application shall be governed by the applicable laws of the country of
such patent or patent application.
26. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION
26.1 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, IntraBiotics shall assume all legal obligations to do so.
27. EXPORT CONTROL LAWS
27.1 IntraBiotics shall observe all applicable United States and
foreign laws with respect to the transfer of Licensed Products and related
technical data to foreign countries, including, without limitation, the
International Traffic in Arms Regulations (ITAR) and the Expert Administration
Regulations.
28. PREFERENCE FOR UNITED STATES INDUSTRY
28.1 Because this Agreement grants an exclusive right to a particular
use of the Inventions, IntraBiotics agrees that any products embodying these
Inventions or produced through the use thereof will be manufactured in the
United States to the extent required by 35 U.S.C. ss.201-212.
29. FORCE MAJEURE
29.1 The parties to this Agreement shall be excused from any
performance required hereunder if such performance is rendered impossible or
unfeasible due to any catastrophe or other major event beyond their reasonable
control, including, without limitation, war, riot, and insurrection; laws,
proclamations, edicts, ordinances or regulations; strikes, lockouts or other
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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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serious labor disputes; and floods, fires, earthquakes, explosions, or other
natural disasters. When such events have abated, the parties' respective
obligations hereunder shall resume.
30. ARBITRATION
30.1 At the request of either party, any controversy or claim arising
out of or relating to the diligence provisions or the provisions of paragraph
13.1 of this Agreement related to arbitration shall be settled by arbitration
conducted in Los Angeles, California in accordance with the then current
Licensing Agreement Arbitration Rules of the American Arbitration Association.
Judgment upon the award rendered by the Arbitrator(s) shall be binding on the
parties and may be entered by either party in the court or forum, state or
federal, having jurisdiction.
31. MISCELLANEOUS
31.1 The headings of the several sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
31.2 This Agreement will not be binding upon the parties until it has
been signed below on behalf of each party, in which event, it shall be effective
as of the dated recited on page one.
31.3 No amendment or modification hereof shall be valid or binding upon
the parties unless made in writing and signed on behalf of each party.
31.4 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, except for the Secrecy Agreement dated October 18, 1993,
which shall continue to the extent it is not inconsistent with this Agreement.
31.5 If any provisions contained in this Agreement are or become
invalid, are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in effect
during the term hereof, it is the intention of the parties that the remainder of
this Agreement shall not be affected thereby, provided that a party's rights
under this Agreement are not materially affected. It is further the intention of
the parties that in lieu of each such provision which is invalid, illegal, or
unenforceable, there be substituted or added as part of this Agreement a
provision which shall be as similar as possible in economic and business
objectives as intended by the parties to such invalid, illegal or unenforceable,
provision, but shall be valid, legal and enforceable.
[ * ] = 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, both The Regents and IntraBiotics have executed
this Agreement, in duplicate originals, by their respective officers hereunto
duly authorized, on the day and year hereinafter written.
<TABLE>
<CAPTION>
INTRABIOTICS PHARMACEUTICALS, INC. THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
<S> <C>
By: /s/ Kenneth J. Kelley By: /s/ Christopher T. Moulding
------------------------------------------------ ------------------------------------------------
Name: Kenneth J. Kelley Name: Christopher T. Moulding
---------------------------------------------- ----------------------------------------------
Title: President and CEO Title: Licensing Associate
---------------------------------------------- ----------------------------------------------
Date: June 12, 1996 Date: June 5, 1996
---------------------------------------------- ----------------------------------------------
</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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APPENDIX A
REGENTS' PATENT RIGHTS
UPDATED MAY 28, 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.
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REGENTS' PATENT RIGHTS
DOCKET FORMAT
<TABLE>
<CAPTION>
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
CASE NO. DOCKET NO. FILE DATE SERIAL NO. PATENT NO. ISSUE DATE COMMENTS
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
US RIGHTS
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
FOREIGN RIGHTS
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
- ----------------------- -------------- ----------- -------------- -------------- ------------- ------------------------------
</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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APPENDIX B
JOINT PATENT RIGHTS
UPDATED MAY 23, 1996
[ * ].
Appendix A and Appendix B will be changed and replaced within a few weeks after
execution of this 2nd Amendment, to reflect the actual patent documents
contained in Regents' Patent Rights and Joint 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.
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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 10.7
THIRD AMENDMENT TO
LICENSE AGREEMENT
M940121
(MARKED)
This Amendment is made and is effective this 16th day of September, 1997 (the
"Effective Date") by and between THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,
a California corporation, having its offices located at 300 Lakeside Drive,
22nd Floor, Oakland, California, 94612, acting through its offices at Box
951525, 1106 Ueberroth Building, Los Angeles, California, 90095, hereinafter
referred to as "The Regents", and INTRABIOTICS PHARMACEUTICALS, INC., a
Delaware corporation, having a principal place of business at 816 Kifer Road,
Sunnyvale, California, 94086, hereinafter referred to as "IntraBiotics" and
amends License Agreement No. M940121, dated April 22, 1994, and the First
Amendment to License Agreement M940121, dated July 31, 1995, and the Second
Amendment to License Agreement M940121, dated June 12, 1996.
RECITAL
WHEREAS, this third amendment to License Agreement M940121 has become necessary
to clarify sublicensing and royalty and obligations of IntraBiotics in order for
IntraBiotics to enter into corporate partnerships.
NOW THEREFORE, the parties agree to amend License Agreement No. M940121 and
replace Article 4.2 as follows (with changes indicated by underline):
4.2 IntraBiotics shall pay to the Regents, upon the Net Sales of
Licensed Products sold or disposed of by Sublicensees, an earned royalty equal
to [ * ] of the royalties received by IntraBiotics from its Sublicensees, not to
exceed [ * ], for products covered by Regents' Patent Rights, and an earned
royalty equal to [ * ] from its Sublicensees, not to exceed [ * ], for products
covered solely by Joint Patent Rights.
<TABLE>
<CAPTION>
INTRABIOTICS PHARMACEUTICALS, INC. THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
<S> <C>
By: /s/ Kenneth J. Kelley By: /s/ Fredrica S. Reiter
------------------------------------------ ------------------------------------------------
Name: Kenneth J. Kelley Name: Fredrica S. Reiter
--------------------------------------- ---------------------------------------------
Title: President and CEO Title: Technology Transfer Officer
--------------------------------------- ---------------------------------------------
Date: September 16, 1997 Date: September 16, 1997
--------------------------------------- ---------------------------------------------
</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.
1
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND IS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.8
LICENSE AND SUPPLY AGREEMENT
INTRABIOTICS PHARMACEUTICALS, INC.
AND
BIOSEARCH ITALIA S.P.A.
MAY 8, 1998
<PAGE>
LICENSE AND SUPPLY AGREEMENT
THIS LICENSE AND SUPPLY AGREEMENT (the "Agreement") is made effective
as of the 8th day of May, 1998 (the "Effective Date") by and between
INTRABIOTICS PHARMACEUTICALS, INC., a Delaware corporation having its principal
place of business at 1245 Terra Bella Avenue, Mountain View, California, USA
94043 ("IntraBiotics") and BIOSEARCH ITALIA, S.P.A. an Italian corporation with
its principal place of business at via Lepetit, 34, 21040 Gerenzano, Italy
("BioSearch"). IntraBiotics and BioSearch are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
RECITALS
A. IntraBiotics is a biotechnology company interested in the
development of products useful for the treatment of infectious diseases or
conditions, and BioSearch is a pharmaceutical company interested in the
identification and development of naturally produced compounds useful for the
treatment of infectious disease, and the commercialization of products based
upon such compounds in Europe.
B. BioSearch discovered and is developing a proprietary compound,
Ramoplanin, that is believed to be useful for the treatment and prevention of
infectious diseases or conditions.
C. BioSearch is currently conducting clinical trials in Europe of [ * ]
formulation of Ramoplanin for the treatment or prevention of [*], and is also
developing a [*] formulation of Ramoplanin for the treatment of [*].
D. IntraBiotics desires to develop and commercialize formulations of
Ramoplanin other than [*] formulations for the treatment or prevention of
infectious diseases and conditions in the United States and Canada (including
the territories and possessions of each such country).
ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings as used in this Agreement:
1.1 "AFFILIATE" means an entity that, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with BioSearch or IntraBiotics.
1.2 "BIOSEARCH KNOW-HOW" means Information which (i) BioSearch
discloses to IntraBiotics under this Agreement and (ii) is within the Control of
BioSearch. Notwithstanding anything herein to the contrary, BioSearch Know-how
shall exclude BioSearch 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.
1.
<PAGE>
1.3 "BIOSEARCH PATENT" means a Patent which covers the discovery,
evaluation, manufacture, use, sale, offer for sale and/or importation of
Licensed Products within the Field, which Patent is owned or Controlled by
BioSearch, including without limitation BioSearch's interest in any Joint
Patents.
1.4 "BULK LICENSED COMPOUND" means the bulk form of the Licensed
Compound used to manufacture Licensed Products under this Agreement.
1.5 "COMMERCIALIZATION" shall mean all activities undertaken by
IntraBiotics relating to the manufacture and sale of Licensed Product in the
Territory, including advertising, education, marketing, distribution and
post-approval product support clinical studies conducted after Regulatory
Approval of a Licensed Product for a particular indication.
1.6 "CONTROL" means possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement
or other arrangement with any Third Party.
1.7 "COST OF GOODS SOLD" means the aggregate of the cost to BioSearch
of [*] expenses reasonably incurred in connection with the above.
1.8 "DEVELOPMENT" means all activities relating to obtaining Regulatory
Approval of a Licensed Product, Licensed Product delivery systems and new
indications thereof and all activities relating to developing the ability to
manufacture the same.
1.9 "DRUG APPROVAL APPLICATION" means an application for Regulatory
Approval required before commercial sale or use of a Licensed Product as a drug
in a regulatory jurisdiction.
1.10 "EXCLUDED FORMULATIONS" means the formulations of the Licensed
Compound suitable solely for (i) [*] delivery of the Licensed Compound, (ii)
[*].
1.11 "FIELD" means the treatment or prevention of any human disease.
1.12 "IND" (OR "INVESTIGATIONAL NEW DRUG APPLICATION") means an
application as defined in the United States Food, Drug and Cosmetic Act and
applicable regulations promulgated thereunder to the United States Food and Drug
Administration (the "FDA"), or the equivalent application to the equivalent
agency in jurisdictions outside the United States, the filing of which is
necessary to commence clinical testing of Licensed Products in humans.
1.13 "INFORMATION" means (i) techniques and data within the Field,
including inventions, practices, methods, knowledge, know-how, skill,
experience, test data including pharmacological, toxicological and clinical test
data, analytical and quality control data or descriptions and (ii) compounds,
compositions of matter, assays and biological materials within the Field.
[ * ] = 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>
1.14 "INTRABIOTICS KNOW-HOW" means Information which (i) IntraBiotics
discloses to BioSearch under this Agreement and (ii) is within the Control of
IntraBiotics. Notwithstanding anything herein to the contrary, IntraBiotics
Know-how shall exclude IntraBiotics Patents.
1.15 "INTRABIOTICS PATENT" means a Patent which covers the manufacture,
use, sale, offer for sale and/or import of Licensed Products within the Field,
which Patent is owned or Controlled by IntraBiotics, including IntraBiotics'
interest in any Joint Patents.
1.16 "JOINT PATENT" shall have the meaning set forth in Section 10.3.
1.17 "KNOW-HOW" means BioSearch Know-how and/or IntraBiotics Know-how.
1.18 "LICENSED COMPOUND" means the compound known as Ramoplanin, which
was the subject of the Original IND.
1.19 "LICENSED PRODUCT" means any product including or incorporating
any formulation of the Licensed Compound other than an Excluded Formulation.
1.20 "NET SALES" means the amount invoiced for sales of a Licensed
Product in final dosage form by IntraBiotics, its Affiliates or its sublicensees
to a Third Party end user, less (i) discounts, including cash discounts, or
rebates (including government-mandated rebates), retroactive price reductions or
allowances actually allowed or granted from the billed amount, (ii) credits or
allowances actually granted upon claims, rejections or returns of such Licensed
Products, including recalls, (iii) freight, postage, shipping and insurance
charges paid for delivery of Licensed Product, to the extent billed, and (iv)
taxes, duties or other governmental charges levied on or measured by the billing
amount when included in billing, as adjusted for rebates and refunds.
In the event a Party is receiving royalties under this Agreement from
any Licensed Product sold in the form of a combination product containing one or
more active ingredients in addition to the Licensed Compound, Net Sales for such
combination product will be calculated by multiplying actual [*], as determined
by market prices of such portions if separately priced and sold, or if not so
priced and sold, as determined by mutual agreement of the parties. As used
herein, the term "active ingredient" does not include ingredients the primary
effect of which is the enhancement of drug delivery, even if such ingredients
have pharmacological activity.
1.21 "ORIGINAL IND" means IND number [*], which [*] filed for [*]
formulation of Ramoplanin with [*] and which was subsequently withdrawn on [*].
1.22 "OTHER LICENSEE" means any Third Party to which BioSearch has
granted a license under the BioSearch Patents and BioSearch Know-how for the
development or commercialization of Licensed Products or other products
containing the Licensed Compound.
1.23 "PATENT" means (i) valid and enforceable patents, re-examinations,
reissues, renewals, extensions, term restorations and foreign counterparts
thereof, and (ii) pending (at any
[ * ] = 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>
time during the term of this Agreement) applications for United States patents
and foreign counterparts thereof.
1.24 "PHASE II CLINICAL TRIALS" means those trials on sufficient
numbers of patients that are designed to establish safety and assess the
biological activity of a drug for its intended use, and to define warnings,
precautions and adverse reactions that are associated with the drug in the to be
prescribed dosage range.
1.25 "PHASE III CLINICAL TRIALS" means those trials on sufficient
numbers of patients that are designed to establish that a drug is safe and
efficacious for its intended use, and to define warnings, precautions and
adverse reactions that are associated with the drug in the to be prescribed
dosage range, and supporting Regulatory Approval of such drug.
1.26 "PHASE III MILESTONE REPORT" means the report containing an
analysis of the Phase III Clinical Trial of a Licensed Product in the Territory
and an analysis of reported adverse experiences from such trial.
1.27 "REGULATORY APPROVAL" means any approvals (including pricing and
reimbursement approvals, if appropriate), product and/or establishment licenses,
registrations or authorizations of any federal, state or local regulatory
agency, department, bureau or other governmental entity, necessary for the
manufacture, use, storage, import, export or sale of Licensed Products in a
regulatory jurisdiction.
1.28 "SUPPLY PRICE" shall have the meaning set forth in Section 8.2.
1.29 "TERRITORY" means the United States and Canada and the territories
and possessions of each of the foregoing countries.
1.30 "THIRD PARTY" means any entity other than BioSearch or
IntraBiotics or their Affiliates.
1.31 "TRANSFER PRICE" shall have the meaning set forth in Section 7.9.
1.32 "VALID CLAIM" means a claim of (a) an issued patent, which claim
has not lapsed, been cancelled, or become abandoned and which claim has not been
declared invalid or unenforceable by a court of competent jurisdiction in a
decision from which no appeal has or can be taken, or (b) a patent application,
so long as such application is being prosecuted and the claim in question has
not been abandoned by the owner of the application (with the period of presumed
validity of a pending application not to exceed [*] years in countries).
ARTICLE 2
DEVELOPMENT
2.1 GENERAL. IntraBiotics shall be responsible for the Development of
Licensed Products in the Field and in the Territory, with support from BioSearch
as provided in this
[ * ] = 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>
Agreement. Development of products including the Licensed Compound (including
without limitation Licensed Products) outside of the Territory, development of
products other than Licensed Products including the Licensed Compound in the
Field and in the Territory, and development of products including the Licensed
Compound (including without limitation Licensed Products) outside the Field and
in the Territory shall be conducted by BioSearch and/or the Other Licensees, if
any, outside the scope of this Agreement. However, in order to avoid the
duplication of cost and effort, and to optimize the results of worldwide
Development of Licensed Products, the Parties agree to exchange information
regarding their respective activities related to the Development of Licensed
Products as provided in this Agreement. In particular, the Parties intend to
exchange information regarding the clinical and non-clinical testing of products
including the Licensed Compound (including without limitation Licensed Products)
for indications in the Field.
2.2 DEVELOPMENT OF LICENSED PRODUCTS BY INTRABIOTICS.
(a) INTRABIOTICS COMMITMENT. IntraBiotics shall have the right
to utilize all relevant non-clinical and clinical data received from BioSearch
prior to the Effective Date and during the term of this Agreement pursuant to
Sections 2.3 and 2.4 for purposes of obtaining Regulatory Approval of Licensed
Products in the Field and in the Territory. IntraBiotics hereby agrees to
conduct, [*], all additional non-clinical and clinical Development necessary to
obtain Regulatory Approvals for Licensed Products in the Field and in the
Territory. IntraBiotics shall not have any obligation to Develop Licensed
Products for any particular indication but may, at its option, develop Licensed
Products for any indication in the Field.
(b) DILIGENCE. IntraBiotics shall work diligently, consistent
with accepted business practices and legal requirements, to develop Licensed
Products in the Field and in the Territory.
(c) DELIVERY OF INFORMATION. IntraBiotics will provide to
BioSearch its Information regarding the Development of Licensed Products in the
Field, as set forth in Section 2.4, for use in development and commercialization
of products by BioSearch and, subject to Section 2.6, any Other Licensees
outside of the Territory. BioSearch and, subject to Section 2.6, any Other
Licensees shall be permitted to use and reference all such Information regarding
Development of Licensed Products in (i) any Drug Approval Application filed
outside the Territory and (ii) any Drug Approval Application filed within the
Territory with respect to either Licensed Products outside the Field, or
products other than Licensed Products that contain the Licensed Compound within
the Field. Notwithstanding the foregoing, BioSearch agrees that it shall treat
all Information provided by IntraBiotics pursuant to this Section 2.2(c) as
Confidential Information subject to the terms of Article 9.
[ * ] = 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>
(d) REGULATORY MATTERS.
(i) COMPLIANCE WITH REGULATIONS. IntraBiotics shall
conduct its efforts hereunder in compliance with all applicable regulatory
requirements.
(ii) DRUG APPROVAL APPLICATIONS. IntraBiotics shall
be responsible for preparing and filing Drug Approval Applications and seeking
Regulatory Approvals for Licensed Products in the Field and in the Territory,
including preparing all reports necessary for filing a Drug Approval Application
for Licensed Products in the Territory. IntraBiotics shall be responsible for
prosecuting all such Drug Approval Applications, and BioSearch and, subject to
Section 2.6, any Other Licensees shall have the right of cross reference with
respect thereto. In connection with all Drug Approval Applications being
prosecuted by IntraBiotics hereunder, IntraBiotics agrees to provide BioSearch
with a copy of all filings to regulatory agencies that it makes hereunder.
IntraBiotics shall provide to BioSearch reports regarding the status of each
pending and proposed Drug Approval Application in the Territory within [*] after
each [*] during the term of this Agreement. In the event that any regulatory
agency threatens or initiates any action to remove a Licensed Product from the
market in the Territory, IntraBiotics shall promptly notify BioSearch of such
communication.
2.3 DEVELOPMENT OBLIGATIONS OF BIOSEARCH.
(a) ACCESS TO BIOSEARCH AND OTHER LICENSEE INFORMATION.
(i) BioSearch has, prior to the Effective Date,
provided IntraBiotics a copy of the Original IND. BioSearch will comply with all
steps necessary to allow IntraBiotics to use the information contained in the
Original IND to file another IND for Licensed Products, including, if necessary,
[*] to the Original IND to IntraBiotics, provided that in the event [*] any
necessary rights of reference or access to the Original IND in connection with
BioSearch's development of the Excluded Formulations within the Territory.
(ii) BioSearch will, as soon as possible after the
Effective Date, provide IntraBiotics copies of all regulatory filings and the
results of all clinical and non-clinical testing of Licensed Products under the
control of or performed by BioSearch or any Other Licensees prior to the
Effective Date, to the extent that BioSearch is not restricted from providing
any such information that is owned or Controlled by such Other Licensees and to
the extent that such filings or information has not already been provided to
IntraBiotics.
(iii) During the term of this Agreement, BioSearch
will provide to IntraBiotics all Information in its possession regarding
Licensed Products in the Field (including Information it receives from any Other
Licensees without restrictions on disclosure of such Information), as such
Information becomes available, for use in IntraBiotics' Development efforts.
IntraBiotics shall be permitted to use and reference all BioSearch and any Other
Licensee reports provided to IntraBiotics pursuant to this Agreement in any Drug
Approval Application for Licensed Products in the Territory. Notwithstanding the
foregoing, IntraBiotics
[ * ] = 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>
agrees that it shall treat all Information provided by BioSearch or any Other
Licensee pursuant to this Section 2.3 as Confidential Information, subject to
the terms of Article 9.
(b) TECHNICAL ASSISTANCE. BioSearch shall provide reasonable
technical assistance to IntraBiotics for Development of Licensed Products.
(c) SUPPLY OF CLINICAL MATERIALS. BioSearch shall use [*]
efforts to supply, or cause to be supplied amounts of Bulk Licensed Compound
sufficient for IntraBiotics to obtain Regulatory Approval of Licensed Products
in the Field and in the Territory as set forth in Article 7.
(d) SCALE UP OF MANUFACTURING PROCESS. BioSearch shall use [*]
efforts to scale up its manufacturing process for Bulk Licensed Compound, at
[*].
2.4 REPORTS; PROJECT LEADERS. Each Party shall provide to the other
Party reports summarizing such Party's development (including scale-up of the
manufacturing process for Bulk Licensed Compound performed pursuant to Sections
2.3 and 7.3) and commercialization of products containing the Licensed Compound.
Such reports will be provided by each Party within [*] after the end of each
calendar quarter and shall summarize such Party's efforts during the previous
quarter. Additionally, each Party shall, within [*] after the Effective Date,
appoint a project leader to facilitate transfer of information regarding the
Licensed Compound and Licensed Products to the other Party. The project leaders
shall meet on a quarterly basis, and each Party may send one or more additional
representatives to each such meeting. Each Party shall bear all costs incurred
by its project leader and other representative(s) with respect to their
attendance of such meetings. The site of the project leader meetings shall
alternate between IntraBiotics' facility in Mountain View, California and
BioSearch's facility in Gerenzano, Italy.
2.5 ADVERSE EVENT REPORTING. Each Party agrees to report to the other,
immediately upon receipt of the information by such Party, any serious adverse
event which is reported to occur in connection with the use of a Licensed
Product or the Licensed Compound. Each Party agrees to provide to the other
copies of all reports that are made to regulatory authorities concerning
material safety, efficacy or quality matters with respect to any Licensed
Product or the Licensed Compound. Prior to the first Regulatory Approval for a
product containing a Licensed Compound anywhere in the world, the Parties shall
agree on a formal adverse event reporting protocol to conform with the
respective regulatory obligations of IntraBiotics, BioSearch, and any Other
Licensees throughout the world.
2.6 OTHER LICENSEES.
(a) BioSearch agrees to [*] from any Other Licensees
permission for BioSearch to provide to IntraBiotics any information that, if
such information were owned or Controlled by BioSearch, would be Information
that BioSearch must provide to IntraBiotics pursuant to Section 2.3, and shall
endeavor to [*] as provided in Section 5.7(c). BioSearch will require the Other
Licensees to provide to IntraBiotics, either directly or through BioSearch, all
information owned 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>
Controlled by such Other Licensee that, if such information were owned or
Controlled by BioSearch, would be Information that BioSearch must provided to
IntraBiotics pursuant to Section 2.5. BioSearch may provide any Information it
receives from IntraBiotics pursuant to Section 2.5 to the Other Licensees, if
any, and may grant to Other Licensees a sublicense under the license granted to
BioSearch in Section 5.4 with respect to Information BioSearch receives from
IntraBiotics pursuant to Section 2.5.
(b) BioSearch shall not provide any Information it receives
from IntraBiotics pursuant to this Article 2 (other than Information relating to
adverse events provided by IntraBiotics pursuant to Section 2.5) to any Other
Licensee unless and until (i) such Other Licensee permits BioSearch to provide
to IntraBiotics any and all information owned or Controlled by such Other
Licensee that, if such information were owned or Controlled by BioSearch, would
be Information that BioSearch must provide to IntraBiotics pursuant to Section
2.3, and (ii) such Other Licensee has paid to IntraBiotics an amount equal to
[*]. BioSearch may not grant to any Other Licensee a sublicense under the
license granted to BioSearch in Section 5.4 with respect to Information
disclosed to it by IntraBiotics pursuant to this Article 2 (other than
Information relating to adverse events provided by IntraBiotics pursuant to
Section 2.5) to any Other Licensee that does not allow BioSearch to provide to
IntraBiotics information of such Other Licensee as provided in this Section 2.6,
and any such Other Licensee shall not have a right of reference as provided in
2.2.
ARTICLE 3
EXCLUSIVITY
3.1 DEVELOPMENT OF LICENSED COMPOUNDS BY BIOSEARCH. The Parties
recognize that the Licensed Compound may be useful both within and outside of
the Field. In this regard, the Parties agree as follows:
(a) BioSearch, its Affiliates and other sublicensees shall not
develop or commercialize the Licensed Compound in any formulation other than an
Excluded Formulation in the Territory for use in the Field during the term of
this Agreement.
(b) BioSearch, its Affiliates and other sublicensees may
develop and commercialize the Licensed Compound in any formulation for any use
outside of the Territory, and in any Excluded Formulation for any use in the
Field and in the Territory during the term of this Agreement.
ARTICLE 4
LICENSING FEE; MILESTONE PAYMENTS
4.1 LICENSING FEE. As partial payment for the patent licenses granted
by BioSearch pursuant to Article 5 of this Agreement, IntraBiotics shall (i) pay
to BioSearch, within [*] after the Effective Date, [*] and (ii) issue to
BioSearch, within ten (10) days after the Effective Date,
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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.
8.
<PAGE>
[*] of IntraBiotics Series F Preferred Stock pursuant to a stock purchase
agreement substantially in the form provided by IntraBiotics to BioSearch prior
to the Effective Date.
4.2 MILESTONE PAYMENTS. IntraBiotics or its sublicensee shall make the
following milestone payments to BioSearch within [*] after the first achievement
of each of the following milestones with respect to Licensed Products in the
Field and in the Territory. Any grant by IntraBiotics of a sublicense to a Third
Party as permitted in Section 5.5 shall not affect BioSearch's right to receive
milestone payments as provided in this Section 4.2. IntraBiotics shall remain
responsible for the payments due to BioSearch pursuant to this Section 4.2 in
the event it grants any such sublicense. The following amounts are nonrefundable
and noncreditable.
<TABLE>
<CAPTION>
MILESTONE PAYMENT
------------------------------------------------------------------ ------------------------------
<S> <C>
(i) Commencement of the Phase II Clinical Trials in the United States $[ *]
(ii) Commencement of the Phase III Clinical Trials in the United $[ *]
States
(iii) Filing of the first NDA for a Licensed Product in the United $[ *]
States
(iv) The first Regulatory Approval in the United States of a Licensed $[ *]
Product in [*] formulation
(v) The first Regulatory Approval in the United States of a Licensed $[ *]
Product in a formulation [*]
(vii) The first Regulatory Approval of a Licensed Product in Canada $[ *]
</TABLE>
* If IntraBiotics provides to BioSearch the [*] conducted in the
United States prior to [*], the amount due to BioSearch for milestone (iv) shall
be reduced to [*]. IntraBiotics shall not be responsible for any milestone
payment set forth above if IntraBiotics gives notice of termination of this
Agreement under Sections 11.2 or 11.3 prior to the date the milestone is due.
ARTICLE 5
LICENSES
5.1 PATENT LICENSES TO INTRABIOTICS. BioSearch hereby grants to
IntraBiotics an exclusive (even as to BioSearch) license under the BioSearch
Patents to make, have made, use, import, offer, sell, offer for sale and have
sold Licensed Products in the Field and in the Territory. Such license shall not
include the right to make or have made Bulk Licensed Compound unless
IntraBiotics elects to manufacture Bulk Licensed Compound as provided 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>
Section 7.2. Such license shall be subject to the terms and conditions of this
Agreement, including payment of the amounts set forth in Articles 4, 7 and 8
hereof.
5.2 PATENT LICENSES TO BIOSEARCH. IntraBiotics hereby grants to
BioSearch an exclusive (even as to IntraBiotics), paid-up license under
IntraBiotics Patents to make, have made, use, import, offer, sell, offer for
sale and have sold (i) inside the Territory, products containing the Licensed
Compound (including without limitation Licensed Products) for any and all uses
outside of the Field, (ii) inside the Territory, products containing the
Licensed Compound in any Excluded Formulation for any and all uses within the
Field, and (iii) outside of the Territory, products containing the Licensed
Compound (including without limitation Licensed Products) for any and all uses.
5.3 KNOW-HOW LICENSE TO INTRABIOTICS. Subject to Article 9, BioSearch
grants to IntraBiotics a paid-up, nonexclusive license to use BioSearch Know-how
within the Territory for any purpose consistent with the rights and obligations
contained in this Agreement.
5.4 KNOW-HOW LICENSE TO BIOSEARCH. Subject to Article 9, IntraBiotics
grants to BioSearch a paid-up, nonexclusive worldwide license to use
IntraBiotics Know-how for any purpose consistent with the rights and obligations
contained in this Agreement.
5.5 SUBLICENSING. IntraBiotics may grant sublicenses under this Article
5 without the consent of BioSearch to its Affiliates or to Third Parties as
necessary to conduct Development and Commercialization of Licensed Products
within the Field and within the Territory. IntraBiotics will provide to
BioSearch reasonable notice in the event IntraBiotics intends to grant a
sublicense pursuant to this Section 5.5. BioSearch may grant sublicenses under
this Article 5 without the consent of IntraBiotics to its Affiliates within the
scope of licenses granted under IntraBiotics Patents or IntraBiotics Know-how,
respectively. Subject to Section 5.7, BioSearch may grant sublicenses to Other
Licensees within the scope of license granted under Section 5.4 solely to the
extent necessary to allow Other Licensees to use IntraBiotics' Information as
permitted under Article 2.
5.6 RIGHT OF NEGOTIATION FOR [*] FORMULATIONS OF THE LICENSED COMPOUND.
If BioSearch wishes to offer to any Third Party the opportunity to participate
in the research, development and commercialization of products including any [*]
formulation of the Licensed Compound for any indication in the Field and in the
Territory, BioSearch shall, prior to the time it first makes any such offer to a
Third Party, notify IntraBiotics of its intention to enter into such
discussions. If IntraBiotics requests within the [*] period following its
receipt of such notice to discuss with BioSearch the terms upon which
IntraBiotics may research, develop and commercialize in the Territory the
Licensed Compound in a [*] formulation, (either solely or jointly with
BioSearch), then the Parties shall meet and negotiate in good faith the
potential terms of an agreement on such terms. If the Parties do not enter into
such an agreement within [*] after IntraBiotics so requests to negotiate such
opportunity with BioSearch, then BioSearch shall thereafter be free to offer
such opportunity to a Third Party with respect to such [*] formulation of the
Licensed Compound; provided, however, that BioSearch must provide to
IntraBiotics any information that BioSearch provides to any Third Party that
materially differs
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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.
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from the information that BioSearch provided to IntraBiotics with respect
thereto, in which case IntraBiotics may again exercise its right of negotiation
under this Section 5.6. However, BioSearch shall not be obligated to negotiate
or enter into any agreement, either with a Third Party or with IntraBiotics,
with respect to the research, development and commercialization of any such
products.
5.7 THIRD PARTY TECHNOLOGY.
(a) The licenses granted under Article 5, to the extent they
include sublicenses of Third Party technology, shall be subject to the terms and
conditions of the license agreement pursuant to which such sublicense is
granted. BioSearch represents to IntraBiotics that no Third Party technology is
included in the BioSearch Patents or in the BioSearch Know-how as of the
Effective Date.
(b) Any royalties payable to Third Parties in connection with
the sale of Licensed Products in the Territory shall be allocated as provided in
Section 8.2.
(c) BioSearch will endeavor to assist IntraBiotics in
obtaining access to, and licenses under, technology relating to Licensed
Products that is owned or Controlled by any Other Licensee which is developing
or commercializing products containing the Licensed Compound (including without
limitation Licensed Products) outside of the Territory, or products containing
the Licensed Compound (including without limitation Licensed Products) within
the Territory, in each case solely to the extent such technology is necessary or
useful for the Development or Commercialization of Licensed Products in the
Field.
ARTICLE 6
COMMERCIALIZATION
6.1 GENERAL. The Commercialization of Licensed Products in the Field
and in the Territory shall be conducted independently by IntraBiotics and its
Affiliates.
6.2 INTRABIOTICS EFFORTS. IntraBiotics will use [*] to promote, sell
and distribute the Licensed Products in the Territory after it obtains
Regulatory Approval therefor, consistent with accepted business practices.
6.3 FORMULATION, PACKAGING AND LABELING. IntraBiotics will be
responsible for formulating Bulk Licensed Compound into final dosage form and
packaging the Licensed Product for sale under this Agreement, including, without
limitation, designing and producing all packaging materials and product inserts,
all in forms consistent with the requirements of the regulatory authorities in
the Territory.
6.4 EXPENSES. All expenses incurred [*] in connection with [*] this
Article 6 will be [*]. IntraBiotics will be responsible for appointing its own
employees, agents and representatives, who will be compensated by IntraBiotics.
[ * ] = 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.
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6.5 RESTRICTIONS ON DISTRIBUTORS AND DEALERS. BioSearch shall not, and
shall also insure that any of its distributors or dealers (including its
Affiliates and non-Affiliates) to whom BioSearch sells products containing the
Licensed Compound (including without limitation Licensed Products) for resale
shall not, sell the Licensed Product for use in the Field to any customer
located in the Territory.
6.6 PRICING. IntraBiotics shall determine, in its sole discretion, the
pricing, discounting policy and other commercial terms relating to Licensed
Products in the Field and in the Territory.
ARTICLE 7
MANUFACTURE AND SUPPLY; TRANSFER PRICE AND SUPPLY PRICE
7.1 MANUFACTURE AND SUPPLY OF BULK LICENSED COMPOUND BY BIOSEARCH.
Subject to the terms and conditions of this Article 7, BioSearch will
manufacture, or arrange for manufacture of, IntraBiotics' requirements of Bulk
Licensed Compounds for Development and Commercialization of Licensed Products in
the Field and in the Territory (unless IntraBiotics elects also to manufacture
Bulk Licensed Compound as permitted under this Article 7), subject to the
payment of a Transfer Price for preclinical and clinical supply pursuant to
Section 7.9 and a Supply Price for commercial supply as provided in Section 8.2.
IntraBiotics, at [*], will be responsible for having the Bulk Licensed Compound
that is manufactured by BioSearch pursuant to this Article 7 processed into the
final form of Licensed Product for commercial sale in the Field.
7.2 MANUFACTURE BY INTRABIOTICS. Although the Parties intend that
BioSearch shall supply IntraBiotics' requirements of Bulk Licensed Compound,
BioSearch recognizes that IntraBiotics may desire to establish a second
manufacturing capability for Bulk Licensed Compound, [*], as protection against
possible disruptions to supply. IntraBiotics may elect to perform all of the
manufacture of its forecasted requirements of Bulk Licensed Compound either if
BioSearch is unable or unwilling to meet its supply obligations as outlined in
this Article 7, if BioSearch ceases development and scale-up of manufacturing of
the Bulk Licensed Compound, or as set forth in Section 8.2(c). BioSearch shall
provide prompt notice to IntraBiotics either if BioSearch anticipates that it
will be unable to meet IntraBiotics' forecasted or actual requirements for Bulk
Licensed Compound, or if BioSearch intends to cease development and scale-up of
manufacturing of the Bulk Licensed Compound. If IntraBiotics manufactures Bulk
Licensed Compound pursuant to this Section 7.2, then IntraBiotics shall pay to
BioSearch a royalty equal to the average Royalty (as defined in Section 8.2)
paid to BioSearch on Net Sales during the [*] preceding the commencement of
IntraBiotics' manufacture of the Bulk Licensed Compound [*] pursuant to Section
8.2. If IntraBiotics elects to manufacture Bulk Licensed Compound, then
BioSearch shall be relieved of its obligation to supply Bulk Licensed Compound,
although the Parties may then separately agree that BioSearch may continue to
supply a portion of IntraBiotics' requirements of Bulk Licensed Compound. Upon
IntraBiotics' request, BioSearch shall, and shall cause its manufacturing
contractors to, transfer to IntraBiotics or its designee, and fully enable
IntraBiotics or its designee with the then most current version of
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all [*] materials, know-how, and expertise necessary to manufacture the Bulk
Licensed Compound, including all production and quality control specifications.
BioSearch shall periodically update such materials. IntraBiotics may use such
materials to manufacture Bulk Licensed Compounds only as provided in this
Agreement. (In regard to the foregoing, the Parties agree to cooperate to obtain
all necessary assurances and cooperation from any of BioSearch's Third Party
contract manufacturers.) If IntraBiotics elects to manufacture Bulk Licensed
Compounds, BioSearch shall promptly provide to IntraBiotics all process and
manufacturing technology, material and data and provide access to regulatory
filings sufficient to enable IntraBiotics to produce its requirements of such
Bulk Licensed Compound. In addition, BioSearch shall provide a right of
reference and access to appropriate regulatory filings for the manufacture of
such Bulk Licensed Compound to IntraBiotics.
7.3 PROCESS DEVELOPMENT, MANUFACTURING APPROVALS. BioSearch will use
[*] efforts to develop a process for the manufacture of Bulk Licensed Compounds
according to the specifications therefor and to scale up that process to a scale
sufficient to manufacture and supply IntraBiotics' anticipated requirements for
clinical and commercial supply of Licensed Products. BioSearch will use [*]
efforts to make necessary filings to obtain, or to cause a Third Party
manufacturer of Bulk Licensed Compounds to make necessary filings to obtain,
Regulatory Approval for the manufacture of Bulk Licensed Compounds as part of
the approval of a Drug Approval Application for each Licensed Product in the
Field and in the Territory.
7.4 SPECIFICATIONS. The current specifications for Bulk Licensed
Compound are attached to this Agreement in Exhibit 7.4. Either Party may at any
time during the term of this Agreement propose to the other Party changes to the
specifications for Bulk Licensed Compound. The Parties may during the term of
this Agreement modify the specifications for Bulk Licensed Compound if
regulatory authorities within the Territory recommend or require changes
thereto, or if one Party submits a proposal for changing such specifications to
the other Party and the other Party agrees to such changes. Either Party shall
give prior notice to the other of any changes in the specifications for Bulk
Licensed Compound that are recommended or required by the regulatory authorities
within the Territory. Any material changes to the specifications for Bulk
Licensed Compound may not be made without prior written consent of both Parties.
Notwithstanding the previous sentence, both Parties shall use their [*] efforts
to implement changes in the specifications which are required by the regulatory
authorities within the Territory unless both Parties agree to the contrary in
writing. At the request of IntraBiotics, BioSearch shall arrange for
IntraBiotics' designated representatives to inspect and visit from time to time
the facilities at which Bulk Licensed Compound is manufactured, stored or tested
for the purpose of determining that the manufacture of Bulk Licensed Compound
complies with the requirements of this Agreement. Such inspections shall occur
during regular business hours upon reasonable notice.
7.5 FORECASTING. IntraBiotics will provide BioSearch with rolling
forecasts of its expected requirements of Bulk Licensed Compound over the [*]
following the Effective Date on a [*] basis. Such forecasts shall set forth (i)
IntraBiotics' actual requirements for Bulk Licensed Compound for the following
[*], which portion of the forecast shall be binding and serve as an order for
Bulk Licensed Compound, and (ii) IntraBiotics' best estimate of its requirements
for
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the following [*] quarters. In no event shall BioSearch be required to deliver
more Bulk Licensed Compound in any given quarter than was estimated for such
quarter in the last [*] applicable forecasts. In addition, except with the
written consent of BioSearch, IntraBiotics may not increase its forecast of any
material requirements in a particular calendar quarter by more than [* ] of its
forecast for such quarter as set forth in the immediately preceding forecast for
such quarter. However, BioSearch shall use [*] efforts to supply any additional
quantities requested by IntraBiotics in excess of the amounts previously
forecasted by IntraBiotics, it being recognized that substantial increases in
production levels may require significant advance notice.
7.6 SHIPMENT OF BULK LICENSED COMPOUND. BioSearch shall ship Bulk
Licensed Compound it manufactures for IntraBiotics pursuant to this Article 7 to
location(s) designated by IntraBiotics by such method and carrier as
IntraBiotics shall request. Unless otherwise agreed by the Parties, all
shipments of Bulk Licensed Compound by BioSearch shall be [*] to a mutually
agreed delivery site within the Territory. BioSearch shall use [*] efforts to
deliver Bulk Licensed Compound on the dates specified by IntraBiotics. BioSearch
will bear all transportation expenses for the delivery of material to
IntraBiotics, and shall bear all risk of loss of any material following shipment
from the place of manufacture until delivered to IntraBiotics.
7.7 INVOICES. BioSearch will invoice IntraBiotics for each batch of
material supplied to IntraBiotics under this Article 7 and accepted by
IntraBiotics as provided in Section 7.8. IntraBiotics shall pay such invoices
within [*] after its receipt thereof.
7.8 ACCEPTANCE. Upon receipt of a shipment of Bulk Licensed Compound
from BioSearch, IntraBiotics may determine whether such shipment meets the
specifications. IntraBiotics shall notify BioSearch in writing promptly if such
Bulk Licensed Compound manufactured by BioSearch fails to meet the
specifications therefor. If BioSearch has not received such written notice
within [*] after such material has been received by IntraBiotics, then such
shall be deemed to have met the specifications. Upon receipt of any such written
notice of non-conformance, BioSearch shall either acknowledge that the subject
Bulk Licensed Compound does not meet the specifications or resample the lot or
batch in question and have said samples tested by an independent laboratory
acceptable to IntraBiotics. If such independent laboratory determines that such
samples fail to meet the specifications, then BioSearch shall at IntraBiotics
option either replace the non-conforming Bulk Licensed Compound at no additional
cost as soon as reasonably possible or refund IntraBiotics' payments for such
non-conforming materials.
7.9 TRANSFER PRICE FOR CLINICAL SUPPLY. Prior to receipt of Regulatory
Approval of the Licensed Product in the Territory, IntraBiotics will purchase
clinical supplies of Bulk Licensed Compound at a price (the "Transfer Price")
equal to [*] for such Bulk Licensed Compound.
7.10 MANUFACTURING REPORTS. The reports that BioSearch shall provide to
IntraBiotics pursuant to Section 2.4 shall include a summary of BioSearch's
efforts to scale up the manufacturing process for Bulk Licensed Compound
pursuant to Section 2.3.
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7.11 RETENTION OF BACK-UP SUPPLY OF BULK LICENSED COMPOUND. To help
protect against interruptions in supply of Bulk Licensed Compounds pursuant to
this Article 7, BioSearch shall retain under appropriate conditions a [*] supply
of Bulk Licensed Compound at all times after the parties commence production of
Licensed Products for commercial launch. IntraBiotics shall notify BioSearch at
least [*] prior to commencement of commercial scale manufacture of Bulk Licensed
Compound of the amount of Bulk Licensed Compound that constitutes a [*] supply
for the purpose of this Section 7.11 (the "Retained Amount"). IntraBiotics may
re-establish the Retained Amount from time to time as necessary or desirable in
view of its good faith estimate of its requirements for Bulk Licensed Compounds
during the remainder of the term of this Agreement.
7.12 DISCUSSIONS REGARDING LONG TERM SUPPLY CAPACITY. The parties
acknowledge that IntraBiotics will gain knowledge regarding the potential market
for Licensed Products in the Field and in the Territory as the development of
Licensed Products progresses. Accordingly, it is possible that IntraBiotics'
full commercial requirements for Bulk Licensed Compounds either upon commercial
launch of Licensed Products or thereafter may exceed the capacity at BioSearch's
manufacturing facility therefor. If at any time IntraBiotics' good faith
estimate of the market for Licensed Products indicates that BioSearch's current
manufacturing facility may not have sufficient capacity for manufacturing
IntraBiotics' requirements for Bulk Licensed Compound over the term of this
Agreement, then IntraBiotics and BioSearch shall discuss in good faith
acceptable mechanisms for any such actual or potential inability of BioSearch to
supply IntraBiotics' requirements, which may include without limitation for the
establishment of a second manufacturing site by BioSearch. If the parties do not
agree on such mechanisms for assuring sufficient supply of Bulk Licensed
Compound and appropriate amendments to this Agreement implementing such
mechanisms, then IntraBiotics may elect to establish a second manufacturing site
as provided in Section 7.2 or to pursue other remedies available to it under law
or in equity or under this Agreement.
ARTICLE 8
SUPPLY PRICE PAYMENTS; PAYMENT PROCEDURES; RECORDS
8.1 SUPPLY OBLIGATION; DURATION. During the term of this Agreement,
IntraBiotics shall purchase all of its requirements for Bulk Licensed Compound
from BioSearch, subject to Section 7.2. The price for commercial supply to
IntraBiotics of all Bulk Licensed Compound manufactured by BioSearch shall be as
provided in Section 8.2.
8.2 SUPPLY PRICE.
(a) IntraBiotics will pay to BioSearch a price for commercial
supply of Bulk Licensed Compounds by BioSearch (a "Supply Price") that will have
two components, a transfer price (the "Transfer Price") and a royalty payment
(the "Royalty"). The Transfer Price will be equal to the greater of (i) [*], or
(ii) [*] of Bulk Licensed Compound. Subject to Section 8.2(b), the Royalty will
be equal to [*] subject to the following adjustment: if the Transfer Price
exceeds [*] of Licensed Products, then the Royalty will be reduced by [*] of the
amount by
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which the Transfer Price exceeds [*]. Any royalties due to Third Parties with
respect to the manufacture, use, sale, offer for sale or import of Licensed
Products in the Field and in the Territory shall be borne solely by BioSearch.
(b) If a generic form of a Licensed Product is introduced by a
Third Party in any country in the Territory in which the manufacture, use, sale,
offer for sale and import of a Licensed Product by a Third Party would not
infringe a Valid Claim of a BioSearch Patent, then the Royalty portion of the
Supply Price due to BioSearch pursuant to Section 8.2(a) shall be reduced to [*]
in such country.
(c) In the event that the sum of the Supply Price payments due
to BioSearch pursuant to Sections 8.2(a) and (b), and the costs incurred by
IntraBiotics or its sublicensee in manufacturing Licensed Product from Bulk
Licensed Compound supplied by BioSearch and performing labeling and packaging of
such Licensed Products (such sum referenced herein as "Total Costs") is greater
than [*] for more than [*] consecutive calendar quarters, then the Parties
shall, promptly after request by IntraBiotics, meet and discuss in good faith an
appropriate mechanism to reduce the Total Costs. If the Parties do not agree
upon such an appropriate mechanism within [*] after IntraBiotics requests a
meeting pursuant to this Section 8.2(c), then IntraBiotics may elect to
manufacture or have manufactured by a Third Party its requirements of Bulk
Licensed Compound and thereafter pay to BioSearch a royalty equal to the average
Royalty portion of the Supply Price due to BioSearch pursuant to Sections 8.2(a)
and (b) during the [*] immediately preceding IntraBiotics' request for a meeting
pursuant to this Section 8.2(c), notwithstanding Sections 7.2, 8.2(a) or 8.2(b).
8.3 SALES BY SUBLICENSEES. If IntraBiotics grants a sublicense under
the rights granted to it pursuant to Section 5, then such sublicense shall
include an obligation for the sublicensee to account for and report its Net
Sales of such Licensed Products on the same basis as if such sales were Net
Sales by IntraBiotics, and IntraBiotics shall pay the Supply Price to BioSearch
on such sales as if the Net Sales of the sublicensee were Net Sales of
IntraBiotics.
8.4 TRANSFER PRICE PAYMENTS, ROYALTY PAYMENTS AND SUBLICENSE REVENUE
PAYMENTS.
(a) BioSearch shall invoice IntraBiotics for Bulk Licensed
Compound supplied at an estimated transfer price equal to [*] of Bulk Licensed
Compound. IntraBiotics shall pay for such material at such estimated transfer
price within [*] of the invoice date. IntraBiotics will deliver a report showing
in detail its calculation of the Net Sales of any Licensed Products during a
given calendar quarter to BioSearch within [*] following the end of each
calendar quarter and [*] following the end of each calendar year for which
Transfer Price payments are due from IntraBiotics. Any differences between the
total estimated transfer price payments made and the actual Transfer Price
payments due to BioSearch pursuant to Section 8.2 for any quarter shall be
reconciled within [*] following the delivery of such quarterly report.
(b) IntraBiotics will deliver a report showing in detail its
calculation of the Net Sales of any Licensed Products during a given calendar
quarter to BioSearch within [*]
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following the end of each calendar quarter and [*] following the end of each
calendar year for which Royalty or other royalty payments are due from
IntraBiotics. IntraBiotics shall pay the Royalty or other royalty due on Net
Sales for the calendar quarter covered by a given report under this Section
8.4(b) within [*] after IntraBiotics provides such report to BioSearch.
(c) IntraBiotics will deliver a report showing in detail its
calculation of the Net Sales of any Licensed Products received by IntraBiotics
from its sublicensees during a given calendar quarter to BioSearch within [*]
following the end of each calendar quarter and [*] following the end of each
calendar year for which payments are due from IntraBiotics to BioSearch thereon.
IntraBiotics shall pay the amounts due to BioSearch on Net Sales by
IntraBiotics' sublicensees pursuant to Section 8.2 and 8.3 for a given calendar
quarter covered by such reports within [*] after IntraBiotics provides such
report to BioSearch.
8.5 EXCHANGE RATE: MANNER AND PLACE OF PAYMENT. All amounts paid to
BioSearch hereunder shall be paid in United States currency. Net Sales shall be
accounted for on a monthly basis in U.S. Dollars for each month on the last
banking day of such month. All payments due to BioSearch under this Agreement
shall be made by wire transfer at a bank and to an account designated by
BioSearch, unless otherwise specified by BioSearch.
8.6 LATE PAYMENTS. In the event that any payment due hereunder is not
made when due, the payment shall accrue interest from the date due at the rate
of [* ] per month; provided that in no event shall such rate exceed the maximum
legal annual interest rate. The payment of such interest shall not limit any
Party from exercising any other rights it may have as a consequence of the
lateness of the payment.
8.7 RECORD KEEPING. During the term of this Agreement, IntraBiotics
shall keep full and accurate books and records setting forth, for the Licensed
Product on which Supply Price payments are due, including gross sales, all
deductions allowed in arriving at Net Sales and any other information necessary
and in sufficient detail to allow the calculation of Supply Price payments to be
paid by IntraBiotics. During the term of this Agreement and for a period of [*]
thereafter, IntraBiotics shall permit BioSearch, at BioSearch's expense, by
independent certified public accountants employed by BioSearch and reasonably
acceptable to IntraBiotics, to examine relevant books and records at any
reasonable time, not more often than once each calendar year, within [*] of the
payment of such Supply Price. If it is determined that there was an underpayment
of Supply Price due BioSearch of [* ] or more, without prejudice to any other
rights BioSearch may have, IntraBiotics shall promptly pay to BioSearch the
balance of the amounts due and shall also reimburse BioSearch for the cost of
such verification examination.
8.8 TAX AND WITHHOLDINGS. Any withholding taxes levied by tax
authorities in the Territory on the payments hereunder shall be borne by
BioSearch and deducted by IntraBiotics from the sums otherwise payable by it
hereunder for payment to the proper tax authorities on behalf of BioSearch. In
such event, IntraBiotics shall deliver to BioSearch evidence of the payment of
such taxes. IntraBiotics agrees to cooperate with BioSearch in the event
BioSearch claims exemption from such withholding or seeks deductions under any
double taxation or other similar treaty or agreement from time to time in force.
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ARTICLE 9
CONFIDENTIALITY
9.1 CONFIDENTIALITY; EXCEPTIONS. 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
receiving Party shall keep confidential and shall not publish or otherwise
disclose or use for any purpose other than as provided for in this Agreement any
Information and other information and materials furnished to it by the other
Party pursuant to this Agreement, or any provisions of this Agreement that are
the subject of an effective order of the Securities Exchange Commission granting
confidential treatment pursuant to the Securities Act of 1934, as amended
(collectively, "Confidential Information"), except to the extent that it can be
established by the receiving Party 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 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.
9.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information hereunder to the extent such disclosure is reasonably necessary in
filing or prosecuting patent applications, prosecuting or defending litigation,
complying with applicable governmental regulations or conducting 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 [*] to secure confidential treatment of such
Confidential Information required to be disclosed. In addition, each Party shall
be entitled to disclose, under a binder of confidentiality containing provisions
as protective as those of this Article 9, Confidential Information to any Third
Party for the purpose of carrying out activities authorized under this
Agreement, including disclosures to authorized sublicensees, and subject to
Sections 2.5 and 2.6 disclosures by BioSearch for purposes of the development
and commercialization of products other than Licensed Products anywhere in the
world outside of the Field, and of Licensed Products either outside of the Field
and within the Territory, or within the Field and outside of the Territory.
Nothing in this Article 9 shall restrict any Party from using for any purpose
any Information developed by it during the course of the
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collaboration hereunder. BioSearch acknowledges that if IntraBiotics files a
registration statement covering the sale of its securities in the United States,
it will be required to file a copy of this Agreement with its public disclosure
statement. IntraBiotics agrees to seek confidential treatment of at least the
economic terms of this Agreement with respect to any such filing.
9.3 SURVIVAL. This Article 9 shall survive the termination or
expiration of this Agreement for a period of five (5) years.
9.4 TERMINATION OF PRIOR AGREEMENT. This Agreement supersedes the
Confidentiality Agreement between BioSearch and IntraBiotics dated May 23, 1997.
All Information exchanged between the Parties under that Agreement shall be
deemed Confidential Information and shall be subject to the terms of this
Article 9, and shall be included within the definitions of BioSearch Know-how
and IntraBiotics Know-how.
9.5 PUBLICATIONS. Except as required by law, each Party agrees that it
shall not publish or present Information relating to the Licensed Compound or to
products containing the Licensed Compound without providing to the other Party
the opportunity for prior review of such publication or presentation. The Party
desiring to publish or present such Information (the "Proposing Party") shall
provide to the other Party the opportunity to review such proposed publication
or presentation (including information to be presented verbally) as early as
reasonably practical, but not later than twenty (20) days prior to the
anticipated date of submission or disclosure to a Third Party. The Party
reviewing such publication or presentation shall respond to the Proposing Party
with comments thereon within ten (10) days of receiving such materials from the
Proposing Party. The Proposing Party agrees, upon written request from the other
Party, not to submit such abstract or manuscript for publication or to make such
presentation until the other Party consents, which agreement shall not be
unreasonably withheld.
ARTICLE 10
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
10.1 OWNERSHIP. Each Party shall solely own, and it alone shall have
the right to apply for, Patents within and outside of the Territory for any
inventions made solely by that Party's employees or consultants in the course of
performing work under this Agreement. Inventions made jointly by personnel of
BioSearch and IntraBiotics shall be jointly owned by the Parties, subject to the
licenses granted to IntraBiotics pursuant to Article 5.
10.2 DISCLOSURE OF PATENTABLE INVENTIONS. Each Party shall provide to
the other any patent application disclosing an invention relating to Licensed
Products within the Field arising during the term of this Agreement. Such patent
applications disclosing inventions made solely by a Party shall be provided to
the other Party promptly after submission of such application to a governmental
Patent authority, which shall in no event be later than [*] days after the date
the disclosure was submitted. Any such patent applications disclosing inventions
made jointly by the Parties shall be provided by BioSearch to IntraBiotics
reasonably in advance of the intended date for submission of such application to
a governmental Patent authority.
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10.3 PATENT FILINGS.
(a) BIOSEARCH RESPONSIBILITIES. BioSearch shall prepare, file,
prosecute and maintain Patents to cover inventions relating to the discovery,
evaluation, manufacture, use or sale of Licensed Products that are made solely
by BioSearch personnel (all of which shall be included in BioSearch Patents) or
that are made jointly by personnel of BioSearch and IntraBiotics in the course
of the collaboration ("Joint Patents," all of which shall be included in both
the BioSearch Patents and IntraBiotics Patents). BioSearch shall keep
IntraBiotics informed of the status of each BioSearch Patent and Joint Patent
and shall give reasonable consideration to any suggestions or recommendations of
IntraBiotics concerning the preparation, filing, prosecution and maintenance
thereof. The Parties shall cooperate reasonably in the prosecution of all
BioSearch Patents and Joint Patents under this Section 10.3(a) and shall share
all material Information relating thereto promptly after receipt of such
Information. If, during the term of this Agreement, BioSearch intends to allow
any issued BioSearch Patent or Joint Patent to which IntraBiotics has a license
under this Agreement to expire for failure to make maintenance fee payments,
BioSearch shall notify IntraBiotics of such intention at least [*] prior to the
date upon which such issued BioSearch Patent or Joint Patent shall expire, and
IntraBiotics shall thereupon have the right, but not the obligation, to assume
responsibility for the maintenance thereof.
(b) INTRABIOTICS RESPONSIBILITIES. IntraBiotics shall file,
prosecute and maintain Patents to cover inventions relating to the discovery,
evaluation, manufacture, use or sale of Licensed Products that are made solely
by IntraBiotics personnel (all of which shall be included in IntraBiotics
Patents). IntraBiotics shall keep BioSearch informed of the status of each
IntraBiotics Patent and shall give reasonable consideration to any suggestions
or recommendations of BioSearch concerning the preparation, filing, prosecution
and maintenance thereof. The Parties shall cooperate reasonably in the
prosecution of all IntraBiotics Patents under this Section 10.3(b) and shall
share all material Information relating thereto promptly after receipt of such
Information. If, during the term of this Agreement, IntraBiotics intends to
allow any issued IntraBiotics Patent to which BioSearch has a license under this
Agreement to expire for failure to make maintenance fee payments, IntraBiotics
shall notify BioSearch of such intention at least [*] prior to the date upon
which such IntraBiotics Patent shall expire, and BioSearch shall thereupon have
the right, but not the obligation, to assume responsibility for the maintenance
thereof.
10.4 THIRD PARTY PATENT RIGHTS. No Party makes any warranty with
respect to the validity, perfection or dominance of any Patent or other
proprietary right or with respect to the absence of rights in Third Parties
which may be infringed by the manufacture or sale of the Licensed Product. Each
Party agrees to bring to the attention of the other Party any patent or patent
application it discovers, or has discovered, and which relates to the subject
matter of this Agreement.
10.5 ENFORCEMENT RIGHTS.
(a) INFRINGEMENT BY THIRD PARTIES. If any BioSearch Patent or
IntraBiotics Patent is infringed by a Third Party in the Territory in connection
with the manufacture, import,
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use, sale or offer for sale of a product competitive with a Licensed Product
("Competitive Product Infringement"), the Party to this Agreement first having
knowledge of such infringement shall promptly notify the other in writing. The
notice shall set forth the facts of that infringement in reasonable detail.
IntraBiotics shall have the primary right, but not the obligation, to institute,
prosecute or control any action or proceeding with respect to such infringement
of a BioSearch Patent (including Joint Patents) within the Field and within the
Territory, or of an IntraBiotics Patent other than a Joint Patent anywhere in
the world both within and outside of the Field, by counsel of its own choice.
BioSearch shall have the right to participate in such action and to be
represented by counsel of its own choice. BioSearch shall have the primary
right, but not the obligation, to institute, prosecute, and control any action
or proceeding with respect to such infringement of BioSearch Patents (including
Joint Patents) occurring within the Territory that is outside of the Field, or
occurring anywhere else in the world both within and outside of the Field, by
counsel of its own choice. Solely within the Territory with respect to BioSearch
Patents other than Joint Patents and anywhere in the world with respect to Joint
Patents, IntraBiotics shall have the right to participate in such action brought
by BioSearch pursuant to the foregoing sentence and to be represented by counsel
of its own choice therein. If the Party primarily responsible for bringing suit
under this Section 10.5(a) (the "Responsible Party") fails to bring an action or
proceeding within a period of [*] after having knowledge of that infringement,
then, solely with respect to infringement occurring inside the Field and inside
the Territory with respect to infringement of patents other than Joint Patents
and anywhere in the world with respect to infringement of Joint Patents, the
other Party shall have the right to bring and control any such action by counsel
of its own choice, and the Responsible Party shall have the right to participate
in such action and be represented by counsel of its own choice. If a Responsible
Party brings any such action or proceeding hereunder, the other Party agrees to
be joined as a party plaintiff and to give the Responsible Party reasonable
assistance and authority to control, file and prosecute the suit as necessary.
The costs and expenses of the Party bringing suit under this Section (including
the internal costs and expenses specifically attributable to said suit) shall
[*]. Any remaining damages shall be [* ] to BioSearch and [*] to IntraBiotics.
No settlement or consent judgment or other voluntary final disposition of a suit
under this Section 10.5(a) may be entered into without the joint consent of
BioSearch and IntraBiotics.
(b) DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS AGAINST
LICENSED PRODUCTS. If a Third Party asserts that a patent or other right owned
by it is infringed by the manufacture, import, use, sale or offer for sale of
any Licensed Product, the Party first obtaining knowledge of such a claim shall
immediately provide the other Party notice of such claim and the related facts
in reasonable detail. Defense of any such claim in the Field and in the
Territory shall be controlled by IntraBiotics; provided that BioSearch shall
have the right to participate in such defense and to be represented in any such
action by counsel of its selection at its sole discretion. IntraBiotics shall
also have the right to control settlement of such claim with respect to a
Licensed Product in the Field and in the Territory; PROVIDED, HOWEVER, that no
settlement shall be entered into without the written consent of BioSearch, which
consent shall not be withheld unreasonably.
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(c) ALLOCATION OF EXPENSES INCURRED PURSUANT TO SECTION
10.5(b). The expenses of patent defense, settlement and judgments pursuant to
Section 10.5(b) with respect to the Licensed Products shall be borne [*].
(d) SETTLEMENT OF THIRD PARTY CLAIMS FOR INFRINGEMENT; PAYMENT
OF THIRD PARTY ROYALTIES. If a Third Party asserts that a patent or other right
owned by it is infringed by the manufacture, use, sale, offer for sale or import
of any Licensed Product, and as a result of settlement procedures or litigation
under this Section 10.5, IntraBiotics is required to pay the Third Party a
royalty or make any payment of any kind for the right to sell a Licensed Product
in a particular country, such expense shall be borne by [*].
(e) AGREEMENT OF PRIMARILY RESPONSIBLE PARTY. Notwithstanding
the provisions of Section 10.5(a), neither Party shall file and prosecute an
action for infringement of a Patent for which the other Party has the primary
responsibility to file and prosecute such action, and pursuant to which that
other Party having primary responsibility has commenced and is prosecuting at
least one such action for infringement of said Patent, without the agreement of
that other Party, which agreement shall not be unreasonably withheld.
10.6 PATENT MARKING. IntraBiotics shall mark Licensed Products with
appropriate patent numbers or indicia as necessary to maintain the
enforceability of BioSearch Patents, Joint Patents and IntraBiotics Patents.
10.7 TRADEMARKS.
(a) PRODUCT TRADEMARKS. Subject to section 10.7(c),
IntraBiotics shall select, prosecute applications for, register, maintain and
enforce the trademark for Licensed Products in the Territory, [*]. All uses of a
trademark(s) to identify a Licensed Product shall comply with all applicable
laws and regulations, including without limitation those laws and regulations
particularly applying to the proper use and designation of trademarks.
(b) INFRINGEMENT. Each Party shall notify the other Party
promptly upon learning of any actual, alleged or threatened infringement of the
trademark for Licensed Product in the Field and in the Territory or of any
unfair trade practices, trade dress imitation, passing off of counterfeit goods
or like offenses. The parties shall confer regarding the appropriate steps
necessary or useful to protect, enforce and maintain such trademark.
IntraBiotics shall make the final decision of whether and how to defend the
trademark.
(c) TRADEMARK LICENSE. If IntraBiotics so requests, BioSearch
shall grant to IntraBiotics a [*] license to use any trademarks owned or
Controlled by BioSearch under which BioSearch sells and markets products
containing the Licensed Compound (the "BioSearch Marks") solely in connection
with IntraBiotics' Commercialization of Licensed Products in the Field and in
the Territory pursuant to this Agreement. IntraBiotics may sublicense such
rights under the BioSearch Marks only in connection with a sublicense under the
rights granted to IntraBiotics pursuant to Section 5.
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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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10.8 TRADE SECRETS. The parties each acknowledge that BioSearch
maintains certain technology useful for the manufacture of the Bulk Licensed
Compound as a trade secret and that accordingly BioSearch has chosen not to seek
patent protection on such technology. BioSearch hereby agrees that it shall use
[*] efforts to maintain such technology as a trade secret (unless and until
BioSearch files a patent application claiming such technology), including
without limitation (i) disclosing such technology to third parties only under an
obligation of confidentiality and non-use with respect thereto comparable in
scope to the confidentiality and non-use obligations set forth in Article 9 with
respect to Confidential Information, (ii) not disclosing any trade secrets in
any public presentation or publication and (iii) employing other mechanisms
typically used in the pharmaceutical industry to protect trade secrets of
similar nature.
ARTICLE 11
TERM AND TERMINATION
11.1 TERM. Except as otherwise provided herein, the term of this
Agreement shall commence on the Effective Date and, unless earlier terminated as
provided in this Agreement, shall expire upon the later of (i) the date upon
which the last to expire of the BioSearch Patents and the IntraBiotics Patents
covering the manufacture, use, sale, offer for sale or import of Licensed
Products in the Field and in the Territory expires, or (ii) [*] after first
commercial sale of a Licensed Product by IntraBiotics in the Field and in the
Territory. After expiration of this Agreement pursuant to this Section 11.1,
IntraBiotics' license under the BioSearch Know-how shall remain in full force
and effect and IntraBiotics may thereafter continue to sell Licensed Products in
the Field and in the Territory on a royalty-free basis.
11.2 TERMINATION FOR CAUSE. Either Party may terminate this Agreement
upon [*] written notice upon or after the breach of any material provision of
this Agreement by the other Party if the breaching Party has not cured such
breach within the [*] period following written notice of termination by the
other Party.
11.3 OTHER TERMINATION BY INTRABIOTICS. IntraBiotics may terminate this
Agreement, [*], at will at any time prior to the first Regulatory Approval of
Licensed Products in the Territory, effective upon [*] advance written notice to
BioSearch. After IntraBiotics notifies BioSearch of any such termination, no
milestone payments that would otherwise become payable with respect to a
Licensed Product in the country or countries with respect to which IntraBiotics
has so terminated this Agreement shall become payable to BioSearch.
11.4 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement by BioSearch for
IntraBiotics' material breach pursuant to Section 11.2 or by IntraBiotics
pursuant to Section 11.3, all rights and licenses granted to IntraBiotics with
respect to the Licensed Product under Article 5 shall terminate. Furthermore,
upon termination by BioSearch pursuant to Section 11.2 or by IntraBiotics
pursuant to Section 11.3, IntraBiotics shall pay all sums accrued hereunder
which are then due (except as expressly otherwise provided in this Agreement),
and IntraBiotics shall
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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promptly assign to BioSearch all right, title and interest in and to any
regulatory filings in the Territory pertaining to Licensed Products and shall
deliver to BioSearch any IntraBiotics Information necessary to obtain the
Regulatory Approval of Licensed Products in the Territory which has not been
obtained as of the date of termination. If this Agreement is terminated by
BioSearch pursuant to Section 11.2 or by IntraBiotics pursuant to Section 11.3,
IntraBiotics shall return to BioSearch, or at BioSearch' request destroy, all
BioSearch Information and any other Confidential Information relating to the
Licensed Compound or Licensed Products, and any Bulk Licensed Compound supplied
by BioSearch for clinical development or commercial distribution. Additionally,
if BioSearch terminates this Agreement pursuant to Section 11.2 or IntraBiotics
terminates this Agreement pursuant to Section 11.3, the license granted in
Section 5.2 shall automatically become, without any further action by
IntraBiotics, an exclusive, worldwide, royalty-free license under the
IntraBiotics Patents and Joint Patents to make, have made, use, import, offer,
sell, offer for sale and have sold the Licensed Compound and pharmaceutical
products containing the Licensed Compound (including without limitation Licensed
Products) for any and all uses.
(b) Upon termination of this Agreement by IntraBiotics for
BioSearch's material breach pursuant to Section 11.2, all licenses granted to
IntraBiotics shall survive, subject to the payment of a royalty to BioSearch
equal to [*] of Licensed Products by BioSearch, its Affiliates or sublicensees,
[*]. The provisions of Sections 8.4 through 8.8 shall apply with respect to any
such royalties payable under this Section 11.4(b). If BioSearch is manufacturing
Licensed Bulk Compound at the time of any termination by IntraBiotics of this
Agreement for BioSearch's material breach, BioSearch shall continue to provide
for manufacture of Bulk Licensed Compound to the extent provided prior to notice
of such termination until such time as IntraBiotics is able to secure an
equivalent alternative commercial manufacturing source for the Territory, as
requested by IntraBiotics; PROVIDED, HOWEVER, that IntraBiotics shall pay to
BioSearch [*] plus an additional [* ] thereof. Further, upon IntraBiotics'
request, BioSearch shall provide such technical assistance as needed by
IntraBiotics to commence manufacture of Bulk Licensed Compound, at [*].
11.5 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Termination of this
Agreement shall not affect any accrued rights and remedies of either Party.
Additionally, the terms of Article 9 of this Agreement shall survive five (5)
years after termination or expiration of this Agreement and Sections 10.2
through 10.8, 11.4, 11.5 and Articles 7 (solely to the extent required to effect
the intent of Section 11.4, if applicable), 8 (solely to the extent required to
effect the intent of Section 11.4, if applicable), 12, 13 and 14 of this
Agreement shall survive any termination or expiration of this Agreement.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
12.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party hereby
represents and warrants:
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(a) CORPORATE POWER. Such Party is duly organized and validly
existing under the laws of the state or country of its incorporation and has
full corporate power and authority to enter into this Agreement and to carry out
the provisions hereof.
(b) DUE AUTHORIZATION. Such Party is duly authorized to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon it and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by such Party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a Party or by which it may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it. Such Party has not, and during the term of the
Agreement will not, grant any right to any Third Party with respect to its
Patents or Know-how that would conflict with the rights granted to the other
Party hereunder.
12.2 REPRESENTATIONS BY BIOSEARCH REGARDING MANUFACTURE OF BULK
LICENSED COMPOUNDS. BioSearch hereby warrants that the Bulk Licensed Compound
supplied hereunder will:
(a) comply with the specifications then in effect for Bulk
Licensed Compound;
(b) be manufactured, stored and shipped in compliance with all
applicable regional, federal, state and local laws and governmental regulations,
including without limitation the applicable current Good Manufacturing Practices
regulations;
(c) when shipped, will not be adulterated or misbranded within
the meaning of the Federal Food, Drug & Cosmetic Act and the regulations
promulgated thereunder; and
(d) be manufactured in accordance with all applicable laws and
governmental rules and regulations.
12.3 OTHER REPRESENTATIONS BY BIOSEARCH. BioSearch further represents
and warrants to IntraBiotics that:
(a) to the best of BioSearch's knowledge on the Effective
Date, there are no interferences or oppositions pending before any court or
administrative office or agency relating the BioSearch Patents;
(b) BioSearch has provided to IntraBiotics access to all
clinical records which describe all adverse event reports relating to Licensed
Products; and
(c) BioSearch owns all right, title and interest in and to the
Original IND, and BioSearch owns or controls all rights necessary to grant the
rights BioSearch purports to grant to IntraBiotics pursuant to this Agreement;
and
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(d) as of the Effective Date, BioSearch has not received any
notices of infringement or any written communications relating in any way to a
possible infringement with respect to the Licensed Compound or Licensed Products
in the Field, and is not aware that the practice of the BioSearch Patents and
BioSearch Know-how as contemplated by this Agreement will involve any
infringement or unauthorized use of any intellectual property rights of any
Third Party.
12.4 DISCLAIMER OF WARRANTIES. The Parties understand that the
activities to be undertaken pursuant to this Agreement will involve technologies
and products that have not been approved by any regulatory authority and that
neither Party guarantees the safety or usefulness of the Licensed Products.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY NATURE, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF NONINFRINGEMENT, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY BIOSEARCH. BioSearch hereby agrees to
indemnify, hold harmless and defend IntraBiotics against any and all expenses,
costs of defense (including without limitation attorneys' fees, witness fees,
damages, judgments, fines and amounts paid in settlement) and any amounts
IntraBiotics becomes legally obligated to pay because of any Third Party claim
or claims against it to the extent that such claim or claims result from (i)
BioSearch's negligence, (ii) BioSearch's breach or alleged breach of any
representation or warranty by BioSearch or of any other provision of this
Agreement, or (iii) the possession, manufacture, use, handling, storage, sale or
other disposition of Bulk Licensed Compound or of products containing the
Licensed Compound by BioSearch, its agents or licensees or sublicensees (other
than IntraBiotics), except to the extent such claim or claims arise from the
negligence, recklessness or willful misconduct of IntraBiotics or any breach of
any representation or warranty of IntraBiotics made pursuant to Section 12;
provided that IntraBiotics provides BioSearch with prompt notice of any such
claim and the exclusive ability to defend (with the reasonable cooperation of
IntraBiotics) and settle any such claim.
13.2 INDEMNIFICATION BY INTRABIOTICS. IntraBiotics hereby agrees to
indemnify, hold harmless and defend BioSearch against any and all expenses,
costs of defense (including without limitation attorneys' fees, witness fees,
damages, judgments, fines and amounts paid in settlement) and any amounts
BioSearch becomes legally obligated to pay because of any Third Party claim or
claims against it to the extent that such claim or claims arise out of (i)
IntraBiotics' negligence, recklessness or willful misconduct, (ii) IntraBiotics'
breach or alleged breach of any representation or warranty by IntraBiotics or of
any other provision of this Agreement, (iii) the possession, final manufacture,
use, sale or administration of Licensed Products by IntraBiotics or
IntraBiotics' Affiliates, licensees or sublicensees, except to the extent such
claim or claims arise from the negligence, recklessness or willful misconduct of
BioSearch
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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or any breach of any representation or warranty of BioSearch made pursuant to
Section 12; provided that BioSearch provides IntraBiotics with prompt notice of
any such claim and the exclusive ability to defend (with the reasonable
cooperation of BioSearch) or settle any such claim, and provided further that
such indemnities shall not apply to losses resulting from BioSearch matters
covered under Section 13.1 above.
13.3 MECHANICS. In the event that the parties cannot agree as to the
application of Sections 13.1 and 13.2 above to any particular loss or claim, the
parties may conduct separate defenses of such claim. Each Party further reserves
the right to claim indemnity from the other in accordance with Sections 13.1 and
13.2 above upon resolution of the underlying claim, notwithstanding the
provisions of Sections 13.1 and 13.2 above requiring the indemnified Party to
tender to the indemnifying Party the exclusive ability to defend such claim or
suit.
ARTICLE 14
MISCELLANEOUS
14.1 ASSIGNMENT.
(a) Either Party may assign any of its rights or obligations
under this Agreement to any Affiliates; PROVIDED, HOWEVER, that such assignment
shall not relieve the assigning Party of its responsibilities for performance of
its obligations under this Agreement, and further provided that if a proposed
assignment would have an adverse financial impact upon the other Party (e.g., by
reason of changed tax treatment of payments due under this Agreement), such
assignment shall be subject to the other Party's prior written consent.
(b) This Agreement shall survive any such merger or
reorganization of either Party with or into, or such sale of assets to, another
party and no consent for such merger, reorganization or sale shall be required
hereunder; provided, that in the event of such merger, reorganization or sale,
no intellectual property rights of the acquiring corporation shall be included
in the technology licensed hereunder.
(c) This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties. Any assignment
not in accordance with this Agreement shall be void.
14.2 DISPUTE RESOLUTION.
(a) The Parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either Party's rights and/or obligations hereunder or thereunder. It is the
objective of the Parties to establish procedures to facilitate the resolution of
disputes arising under this Agreement in an expedient manner by mutual
cooperation. To accomplish this objective, the Parties agree to follow the
procedures set forth in this Article 14 if and when a dispute arises under this
Agreement.
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Unless otherwise specifically recited in this Agreement, disputes among
the Parties will be resolved by reference first to their respective executive
officers designated below or their successors, for attempted resolution by good
faith negotiations within [*] after such notice is received. Said designated
officers are as follows:
For IntraBiotics: Chief Executive Officer
For BioSearch: President
In the event the designated executive officers are not able to resolve
such dispute, either Party may at anytime after the [*] period seek to resolve
the dispute through the means provided in Section 14.2(b).
(b) Any claim or controversy arising out of or
related to this Agreement or any breach hereof that is not resolved by the
designated officers as provided in this Agreement shall be resolved solely and
exclusively by final and binding arbitration held in New York, New York, U.S.A.
conducted by JAMS/Endispute, according to the then existing rules of
JAMS/Endispute. The arbitrator(s) selected shall have significant experience in
the biotechnology or pharmaceutical industry, and in conducting such proceeding
shall apply the substantive law of the State of New York as provided in Section
14.6, except that the interpretation of and enforcement of this Section shall be
governed by the Federal Arbitration Act. Any arbitration proceeding conducting
pursuant to this Section 14.2(b) shall take place in the city of New York, NY,
USA. Any award made by such arbitrator(s) shall be final and binding upon the
parties and a judgment of a court having jurisdiction may be entered on such
award. Notwithstanding the foregoing, disputes regarding the validity, scope or
enforceability of patents shall be submitted to a court of competent
jurisdiction in the country where such patent has issued.
14.3 FORCE MAJEURE. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, explosion, flood, strike, lockout, earthquake, embargo, act
of God, or any other similar cause beyond the control of the defaulting Party,
provided that the Party claiming force majeure has exerted all reasonable
efforts to avoid or remedy such force majeure.
14.4 COMPLIANCE WITH LAW. Each Party hereto shall comply with all
applicable laws, rules, ordinances, guidelines, consent decrees and regulations
of any applicable federal, state or other governmental authority.
14.5 EXPORT LAW COMPLIANCE. IntraBiotics understands and recognizes
that the Licensed Product and other materials made available to it hereunder may
be subject to the export administration regulations of the United States
Department of Commerce and other United States government regulations related to
the export of chemical compounds and medical devices.
14.6 GOVERNING LAW. This Agreement is deemed to have been entered into
in the State of Delaware, United States of America, as applied to contracts
entered into and performed
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entirely in Delaware by Delaware residents and its interpretation, construction,
and the remedies for its enforcement or breach are to be applied pursuant to and
in accordance with the laws of the State of Delaware.
14.7 ENTIRE AGREEMENT. This Agreement, including all Exhibits attached
hereto, and all documents delivered concurrently herewith, set forth all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto and supersede and terminate all prior
agreements and understanding between the Parties. No subsequent alteration,
amendment, change or addition to this Agreement, shall be binding upon the
Parties hereto unless reduced to writing and signed by the respective authorized
officers of the Parties.
14.8 RELATIONSHIP OF THE PARTIES. Nothing hereunder shall be deemed to
authorize either Party to act for, represent or bind the other except as
expressly provided in this Agreement.
14.9 NOTICES. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), telexed, mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by express courier service, to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice; provided, that notices of a change of address shall be
effective only upon receipt thereof).
If to BioSearch,
addressed to: BIOSEARCH ITALIA S.P.A.
Via Lepetit, 34
21040 Gerenzano, Italy
Attention: President
Telephone: 39.2.96474.341
Telecopy: 39.2.96474.400
If to IntraBiotics,
addressed to: INTRABIOTICS PHARMACEUTICALS INC.
1245 Terra Bella Avenue
Mountain View, CA 94043
Attention: Chief Executive Officer
Telephone: (650) 526-6800
Telecopy: (650) 969-0663
With copy to: COOLEY GODWARD LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: Robert L. Jones, Esq.
Telephone: (650) 843-5000
Telecopy: (650) 857-0663
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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14.10 WAIVER. Except as specifically provided for herein, the waiver
from time to time by either of the Parties of any of their rights or their
failure to exercise any remedy shall not operate or be construed as a continuing
waiver of same or of any other of such Party's rights or remedies provided in
this Agreement.
14.11 SEVERABILITY. If any term, covenant or condition of this
Agreement or the application thereof to any Party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (i) the remainder of this
Agreement, or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the Parties that the basic purposes of this Agreement are to be effectuated.
14.12 OFFICIAL LANGUAGE. The official text of this Agreement and any
appendices, exhibits and schedules hereto, or any notice given or accounts or
statements required by this Agreement shall be in English. In the event of any
dispute concerning the construction or meaning of this Agreement, reference
shall be made only to this Agreement as written in English and not to any other
translation into any other language.
14.13 HEADINGS. The Section and paragraph headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said sections or paragraphs.
14.14 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.
IN WITNESS WHEREOF, the Parties have executed this Agreement in
duplicate originals by their proper officers as of the Effective Date.
INTRABIOTICS PHARMACEUTICALS, INC. BIOSEARCH ITALIA, S.P.A.
By: /s/ Kenneth J. Kelley By:/s/ Francesco Parenti
------------------------------- -------------------------------
Title: President and CEO Title: President
---------------------------- ----------------------------
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EXHIBIT 7.4
BULK LICENSED COMPOUND SPECIFICATIONS
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TEST SPECIFICATION TEST METHOD
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EXHIBIT 10.9
INTRABIOTICS PHARMACEUTICALS, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
APPROVED BY THE BOARD OF DIRECTORS JANUARY 25, 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 IntraBiotics Pharmaceuticals, Inc.
(the "Company") and its Affiliates, as defined in subparagraph 1(b), which are
designated as provided in subparagraph 2(b), may be given an opportunity to
purchase 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
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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 five hundred
thousand (500,000) shares of Common Stock (the "Reserved Shares"). On
December 31 of each year starting with December 31, 2000, and continuing
through and including December 31, 2008, the number of
Reserved Shares will be increased automatically by the lesser of (i)
one percent (1%) of the total number of shares of Common Stock
outstanding on such anniversary date, or (ii) such lesser amount as approved
by the Board. 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 incorporated by reference into the Plan and treated as part of
the Plan. The provisions of separate
2.
<PAGE>
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 employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
3.
<PAGE>
(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
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
4.
<PAGE>
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 deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.
5.
<PAGE>
(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.
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.
6.
<PAGE>
(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 Plans. 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
participants' rights under the ongoing Offering shall terminate immediately
following such purchase.
7.
<PAGE>
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 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
8.
<PAGE>
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.
<PAGE>
INTRABIOTICS PHARMACEUTICALS, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN OFFERING
ADOPTED JANUARY 25, 2000
1. GRANT; OFFERING DATE.
(a) The Board of Directors of IntraBiotics Pharmaceuticals, Inc. (the
"Company"), pursuant to the Company's 2000 Employee Stock Purchase Plan (the
"Plan"), hereby authorizes the grant of rights to purchase shares of the common
stock of the Company ("Common Stock") to all Eligible Employees (an "Offering").
The first Offering shall begin simultaneously with the effectiveness of the
Company's registration statement under the Securities Act of 1933 with respect
to the initial public offering of the Company's Common Stock and end on June 30,
2002 (the "Initial Offering"). Offerings shall begin on the next following July
1 and thereafter every other year on July 1 and each such Offering shall end on
the day prior to the second anniversary of its Offering Date. For example, the
second Offering under the Plan shall begin on July 1, 2002 and end on June 30,
2004. The first day of an Offering is that Offering's "Offering Date." If an
Offering Date falls on a day during which the Common Stock is not actively
traded, then the Offering Date shall be the next succeeding day during which the
Common Stock is actively traded.
(b) Prior to the commencement of any Offering, the Board of Directors
(or the Committee described in subparagraph 2(c) of the Plan, if any) may change
any or all terms of such Offering and any subsequent Offerings. The granting of
rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless, prior to such date (a) the Board of Directors (or such
Committee) determines that such Offering shall not occur, or (b) no shares
remain available for issuance under the Plan in connection with the Offering.
(c) Notwithstanding anything to the contrary, in the event that the
fair market value of a share of Common Stock on any Purchase Date during an
Offering is less than the fair market value of a share of Common Stock on the
Offering Date of such Offering, then following the purchase of Common Stock on
such Purchase Date: (i) the Offering shall terminate and (ii) all participants
in the just-terminated Offering shall automatically be enrolled in a new
Offering that shall commence on the day following the Purchase Date on the same
terms on which such participants were enrolled in the terminated Offering. Such
new Offering shall end on the day prior to the second anniversary of its
Offering Date.
2. ELIGIBLE EMPLOYEES.
All employees of the Company and each of its Affiliates (as defined in
the Plan) incorporated in the United States shall be granted rights to purchase
Common Stock under each Offering on the Offering Date of such Offering, provided
that each such employee otherwise meets the employment requirements of
subparagraph 5(a) of the Plan (an "Eligible Employee"). Notwithstanding the
foregoing, the following employees shall not be Eligible Employees or be granted
rights under an Offering: (i) part-time or seasonal employees whose customary
employment is less than twenty (20) hours per week or less than five (5) months
per calendar
1.
<PAGE>
year, and (ii) 5% stockholders (including ownership through unexercised options)
described in subparagraph 5(c) of the Plan shall not be eligible to participate.
Each person who first becomes an Eligible Employee during any Offering
shall be granted a right to purchase Common Stock under such Offering on the
next January 1 or July 1 during such Offering, which right shall thereafter be
deemed to be a part of such Offering. Such right shall have the same
characteristics as any rights originally granted under the Offering except that:
(a) 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; and
(b) the Offering for such right shall begin on its Offering Date and
end coincident with the ongoing Offering.
3. RIGHTS.
(a) Subject to the limitations contained herein and in the Plan, on
each Offering Date each Eligible Employee shall be granted the right to purchase
the number of shares of Common Stock purchasable with up to fifteen percent
(15%) of such Participant's Earnings (as defined in the Plan) paid during the
period of such Offering.
(b) The maximum number of shares that may be purchased by an eligible
employee on a Purchase Date shall not exceed five thousand (5,000) shares.
The maximum aggregate number of shares available to be purchased by all Eligible
Employees under an Offering shall be the number of shares remaining available
under the Plan on the Offering Date. If the aggregate purchase of shares of
Common Stock upon exercise of rights granted under the Offering would exceed the
maximum aggregate number of shares available, the Board shall make a pro rata
allocation of the shares available in a uniform and equitable manner.
(c) Notwithstanding the foregoing, no employee shall be granted an
option under the Plan which permits such employee's right to purchase stock
under this Plan and all other employee stock purchase plans (described in
Section 423 of the Code) of the Company 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 option is granted) for each calendar year in which such option
is outstanding at any time.
4. PURCHASE PRICE.
The purchase price of the Common Stock under the Offering shall be the
lesser of (a) eighty-five percent (85%) of the fair market value of the Common
Stock on the Offering Date (or eighty-five percent (85%) of the fair market
value of the Common Stock on the first day on which the Company's Common Stock
is actively traded that immediately follows the Offering Date if an Offering
Date falls on a day during which the Company's Common Stock is not actively
traded) or (b) eighty-five percent (85%) of the fair market value of the Common
Stock on the Purchase Date (or eighty-five percent (85%) of the fair market
value of the Common Stock on the first day on which the Company's Common Stock
is actively traded that
2.
<PAGE>
immediately precedes the Purchase Date if a Purchase Date falls on a day during
which the Company's Common Stock is not actively traded).
5. PARTICIPATION.
(a) Except as otherwise provided herein or in the Plan, an Eligible
Employee may elect to begin payroll deductions under an Offering as of the
beginning of the Offering or as of the day after any Purchase Date (i.e., any
January 1 or July 1 other than July 1, 2000). Such an election shall be made by
delivering an agreement authorizing payroll deductions. Such deductions shall be
made each pay period and must be in whole percentages not to exceed fifteen
percent (15%) of Earnings. The agreement shall be made on such enrollment form
as the Company or a designated Affiliate provides and must be delivered to the
Company or designated Affiliate before the Offering Date to be effective for
such Offering, unless a later time for filing the enrollment form is set by the
Company for all Eligible Employees with respect to a given Offering Date. As to
the Initial Offering, the time for filing an enrollment form and commencing
participation for individuals who are Eligible Employees on the Offering Date
for the Initial Offering shall be determined by the Company and communicated to
such Eligible Employees. A participant may not make additional contributions
under the Plan.
(b) A participant may increase or reduce (including to zero) his or her
participation level as of any January 1 or July 1 during an Offering. Any such
change in participation shall be made by delivering a notice to the Company or a
designated Affiliate in such form and at such time as the Company provides. In
addition, a participant may withdraw from an Offering and receive his or her
accumulated payroll deductions from the Offering (reduced to the extent, if any,
such deductions have been used to acquire Common Stock for the Participant on
any prior Purchase Dates), without interest, at any time prior to the end of the
Offering, excluding the fifteen (15) day period immediately preceding the
Purchase Date, by delivering a withdrawal notice to the Company or designated
Affiliate in such form as the Company of designated Affiliate provides. A
participant who has withdrawn from an Offering shall not again participate in
such Offering but may participate in subsequent Offerings under the Plan by
submitting a new participation agreement in accordance with the terms thereof.
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date,
each participant's accumulated payroll deductions (without any increase for
interest) shall be applied to the purchase of whole shares of Common Stock, up
to the maximum number of shares permitted under the Plan and the Offering.
"Purchase Date" shall be defined as December 31, 2000, and each June 30 and
December 31 thereafter. If a Purchase Date falls on a day during which the
Common Stock is not actively traded then the Purchase Date shall be the nearest
prior day on which the Common Stock is actively traded.
7. NOTICES.
Any notices or agreements provided for in the Offering or the Plan
shall be given in writing, in a form provided by the Company, and unless
specifically provided for in the Plan or this Offering shall be deemed
effectively given upon receipt or, in the case of notices and
3.
<PAGE>
agreements delivered by the Company, five (5) days after deposit in the United
States mail, postage prepaid.
8. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders of the Company as required 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.
9. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan), the provisions of the Plan
shall control.
4.
<PAGE>
EXHIBIT 10.10
LEASE
BY AND BETWEEN
1245 TERRA BELLA PARTNERS, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
AS LANDLORD
AND
INTRABIOTICS PHARMACEUTICALS, INC.
A DELAWARE CORPORATION
AS TENANT
APRIL 30, 1997
1.
<PAGE>
LEASE
THIS LEASE, dated April 30, 1997, for references purposes only, is made
by and between 1245 TERRA BELLA PARTNERS, LLC, a California limited liability
company ("Landlord") and INTRABIOTICS PHARMACEUTICALS, Inc. a Delaware
corporation ("Tenant"), to be effective and binding upon the parties as of the
date the last designated signatories to this Lease shall have executed this
Lease (the "Effective Date of this Lease").
ARTICLE 1
REFERENCE
1.1 REFERENCES. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
TENANT'S ADDRESS FOR NOTICE: Intrabiotics Pharmaceuticals, Inc.
AFTER COMMENCEMENT DATE: 1245 Terra Bella Avenue
Mountain View, California 94043
Attn: Ken Kelley, President
PRIOR TO COMMENCEMENT DATE: 816 Kifer Road
Sunnyvale, California 94086
Attn: Ken Kelley, President
LANDLORD'S ADDRESS FOR NOTICES: c/o Menlo Equities LLC
2180 San Hill Road
Suite 100
Menlo Park, California 94025
LANDLORD'S REPRESENTATIVE: Henry Bullock/Richard Holmstrom
PHONE NUMBER: (415) 854-4421
COMMENCEMENT DATE: July 15, 1997
TERM: Eighty-four months
LEASE EXPIRATION DATE: Eighty-four (84) months from the
Commencement Date, unless earlier
terminated by Landlord in
accordance with the terms of this
Lease.
OPTIONS TO RENEW: N/A
FIRST MONTH'S PREPAID RENT: $26,605, plus the sum of $2,504 as
estimated triple net expenses.
1.
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TENANT'S SECURITY DEPOSIT: $175,000 in cash or Letter of
Credit (See Section 3.7)
LATE CHARGE AMOUNT: Five Percent (5%) of the
Delinquent Amount.
TENANT'S REQUIRED LIABILITY: $2,000,000 Combined Single Limit
LANDLORD'S BROKER(S): Industrial Property Associates
TENANT'S BROKER: Ernst & Young, LLP & CB Madison
PROPERTY: That certain real property
situated in the City of Mountain
View, Count of Santa Clara, State
of California, as presently
improved with one (1) building(s)
(collectively, the "Building"),
which real property is shown on
the Site Plan attached hereto as
EXHIBIT "A" and is commonly known
as or otherwise described as
follows: approximately 15,650
square foot building located at
1245 Terra Bella Avenue, Mountain
View, California.
BUILDING: That certain Building within the
Property in which the Leased
Premises are located, which
Building is shown outlined on
EXHIBIT "A" hereto.
OUTSIDE AREAS: The "Outside Areas" shall mean
all areas within the Property
which are located outside the
Building, such as pedestrian
walkways, parking areas,
landscaped areas, open areas
and enclosed trash disposal
areas.
LEASED PREMISES: All the interior space within the
Building and Outside Areas as
shown on EXHIBIT "A".
BASE MONTHLY RENT: The term "Base Monthly Rent" shall
mean the following:
MONTH RENT
01-12 $26,605
13-24 $27,669
25-36 $28,776
37-48 $29,927
49-60 $31,124
2.
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MONTH RENT
61-72 $32,369
73-84 $33,664
USE: Office and Research and
Development
EXHIBITS: The term "Exhibits" shall mean the
Exhibits of this Lease which are
described as follows:
EXHIBIT "A" - Site Plan showing
the Property and
delineating the
Building in which
the Leased
Premises are
located.
EXHIBIT "B" - Work Letter
EXHIBIT "C" - Confidentiality
Agreement
EXHIBIT "D" - Form of Letter
of Credit
EXHIBIT "E" - Form of Landlord's
Waiver
EXHIBIT "F" - Hazardous
materials
Management Plan
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for Tenant's own use in the conduct of
Tenant's business and not for purposes of speculating in real estate, for the
Lease Term and upon the terms and subject to the conditions of this Lease, as
the Leased Premises, reserving and excepting to Landlord the right to fifty
percent (50%) of all assignment consideration and excess rentals as provided in
Article 7 below. Tenant's lease of the Leased Premises, together with the
appurtenant right to use the Outside Areas as described in Paragraph 2.2 below,
shall be conditioned upon and be subject to the continuing compliance by Tenant
with (i) all the terms and conditions of this Lease, (ii) all Laws governing the
use of the Leased Premises and the Property, (iii) all Private Restrictions,
easements and other matters now of public record respecting the use of the
Leased Premises and Property, and (iv) all reasonable rules and regulations from
time to time established by Landlord. Tenant acknowledges that the area
comprising the Leased Premises is as specified in Article 1 hereof and that such
area shall not be reduced irrespectively of any subsequent recalculation of the
area comprising the Leased Premises.
3.
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2.2 RIGHT TO USE OUTSIDE AREAS. As an appurtenant right to Tenant's
right to use and occupancy of the Leased Premises, Tenant shall have the right
to use the Outside Areas in conjunction with its use of the Leased Premises
solely for the purposes for which they were designated and intended and for no
other purposes whatsoever. Tenant's right to so use the Outside Areas shall be
subject to the limitations on such use as set forth in Article 1 and shall
terminate concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM. The term of this Lease shall
begin on the Commencement Date, as set forth in Article 1 (the "Lease
Commencement Date"). The term of this Lease shall in all events end on the Lease
Expiration Date (as set forth in Article 1). The Lease Term shall be that period
of time commencing on the Lease Commencement Date and ending on the Lease
Expiration Date (the "Lease Term").
2.4 DELIVERY OF POSSESSION. Landlord shall deliver to Tenant possession
of the Leased Premises at such time as the improvement Work (as defined in
Paragraph 2.5 below) is substantially completed pursuant to the Work Letter,
provided that Tenant shall have the right to occupy the office portion only upon
completion of those improvements, but Tenant shall not in any way occupy the lab
area until its completion. If Landlord is unable to so deliver possession of the
Leased Premises to Tenant in the agreed condition on or before the Commencement
Date, Landlord shall not be in default under this Lease, nor shall this Lease be
void, voidable or cancelable by Tenant until the lapse of one hundred twenty
(120) days after the Commencement Date (the "delivery grace period"). The
delivery grace period above set forth shall be extended for such number of days
as Landlord may be delayed in delivery possession of the Leased Premises to
Tenant by reason of FORCE MAJEURE (as defined in Section 13.9 hereof) or the
action or inaction of Tenant. If Landlord is unable to deliver possession of the
Leased Premises in the agreed condition to Tenant within the described delivery
grace period (including any extension thereof by reason of FORCE MAJEURE or the
actions or inactions of Tenant), then Tenant's sole remedy shall be to terminate
this Lease, and in no event shall Landlord be liable in damages to Tenant for
such delay. Tenant may not terminate this Lease at any time after the date
Landlord notifies Tenant that the Leased Premises have been put into the agreed
condition and re available for delivery to Tenant, unless Landlord's notice is
not given in good faith. If Landlord has not substantially completed the
Improvement Work and delivered possession of the Premises to Tenant prior to the
expiration of ninety (90) days from the Commencement Date (including any
extension thereof by reason of FORCE MAJEURE or the actions or inactions of
Tenant), then in addition to Tenant's right to terminate this Lease upon
expiration of the delivery grace period, as set forth hereinabove, Tenant shall
be entitled to one free day of Base Rent for each day past such date that the
Premises are so delivered to Tenant; unless tenant has terminated this Lease
upon expiration of the delivery grace period.
2.5 PERFORMANCE OF IMPROVEMENT WORK; ACCEPTANCE OF POSSESSION. Landlord
shall, pursuant to the work letter attached to and made a part of this Lease as
EXHIBIT "B" (the "Work Letter"), perform the work and make the installations in
the Leased Premises substantially as set forth in the Work Letter (such work and
installations hereinafter referred to as the "Improvement Work"). All
Improvement Work shall be constructed in accordance with all applicable
government laws, rules, regulations and codes. Without limiting the foregoing,
Landlord agrees to deliver in good working order the roof surface (which shall
be replaced by Landlord) and all existing plumbing, lighting, heating,
ventilating and air conditioning systems
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within the Leased Premises. Landlord shall (i) construct a new facade on the
exterior surface of the Building with new windows and a new entry in accordance
with the plans and specifications approved pursuant to the Work Letter, (ii)
install new landscaping at the front of and at the eastern side of the Building,
(iii) resurface and restripe the parking lot, and (iv) repaint the exterior of
the Building. If any dispute arises as to whether the Leased Premises are
substantially completed and ready for Tenant's occupancy, a certificate
furnished by the Construction manager (as defined in the Work Letter) certifying
the date of substantial completion shall be conclusive of that fact and date and
binding upon Landlord and Tenant. It is agreed that by occupying the Leased
Premises, Tenant formally accepts same and acknowledges that the Leased Premises
are in the condition called for hereunder, subject to normal punchlist items
specified by Tenant to Landlord in writing within thirty (30) days of such
occupancy and subject to the limited warranty of Landlord set forth in the Work
Letter. Tenant shall have the right to retain, at Tenant's sole cost, and
independent inspector, subject to Landlord's approval which will not be
unreasonably withheld, for purposes of preparation of the punchlist.
2.6 SURRENDER OF POSSESSION. Immediately prior to the expiration or upon
the sooner termination of this Lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other person property
from within the Leased Premises, the Building and the Outside Areas, and shall
vacate and surrender the Leased Premises, the Building, the Outside Areas and
the Property to Landlord in the same condition, broom clean, as existed at the
Lease Commencement Date, reasonable wear and tear excepted. Tenant shall repair
all damage to the Leased Premises, the exterior of the Building and the Outside
Areas caused by Tenant's removal of Tenant's property. Tenant shall patch and
refinish, to Landlord's reasonable satisfaction, all penetrations made by Tenant
or its employees to the floor, walls or ceiling of the Leased Premises, whether
such penetrations were made with Landlord's approval or not. Tenant shall repair
or replace all stained or damaged ceiling tiles, wall coverings and floor
coverings to the reasonable satisfaction of Landlord. Tenant shall repair all
damage caused by Tenant to the exterior surface of the Building and the paved
surfaces of the Outside Areas and, where necessary, replace or resurface same.
Tenant shall not be required to remove the initial Improvement Work to the
extent such Improvement Work relates to non-specialized improvements or
alterations installed on Tenant's behalf, such improvements shall remain on the
Leased Premises upon expiration or prior termination of this Lease unless
Landlord elects to require that Tenant at its sole cost remove such
improvements, in which event Tenant shall remove such improvements and shall
repair all damage caused by such removal. Landlord agrees upon specific written
request by Tenant at the time Tenant shall submit its final improvement drawings
for approval by Landlord to notify Tenant in writing which such Improvement Work
Landlord will require Tenant to remove from the Premises upon expiration of the
Lease Term pursuant to the foregoing. Notwithstanding anything to the contrary
hereinabove, Tenant shall have the right to remove any trade fixtures and other
personal property belonging to Tenant that do not constitute permanently
installed fixtures, as well as the lab benches and items set forth in
Section 6.2 attached hereto. If the Leased Premises, the Building, the Outside
Areas and the Property are not surrendered to Landlord in the condition required
by this paragraph at the expiration or sooner termination of this Lease,
Landlord may, at Tenant's expense, so remove Tenant's signs, property and/or
improvements not so removed and make such repairs and replacements not so made
or hire, at Tenant's expense, independent contractors to perform such work.
Tenant shall be liable to Landlord for all costs incurred by Landlord in
5.
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returning the Leased Premises, the Building and the Outside Areas to the
required condition, together with interest on all costs so incurred from the
date paid by landlord at the then maximum rate of interest not prohibited or
made usurious by law until paid. Tenant shall pay to Landlord the amount of
all costs so incurred plus such interest thereon, within ten (10) days of
Landlord's billing Tenant for same. Tenant shall indemnify Landlord against
loss or liability resulting from delay by Tenant in surrendering the Leased
Premises, including, without limitation, any actual claims made by any
succeeding Tenant or any losses to Landlord with respect to lost
opportunities to lease to succeeding tenants.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT. Commencing on the Lease Commencement Date (as
determined pursuant to Paragraph 2.3 above) and continuing throughout the
Lease Term, Tenant shall pay to Landlord, without prior demand, deduction or
offset, in advance on the first day of each calendar month, the amount set
forth as "Base Monthly Rent" in Article 1 (the "Base Monthly Rent"). Subject
to the provisions of Section 2.4, Base Monthly Rent shall commence on the
Lease Commencement Date regardless of whether Landlord has completed the
Improvement Work by such date.
3.2 ADDITIONAL RENT. Commencing on the Lease Commencement Date (as
determined pursuant to Paragraph 2.3 above) and continuing throughout the
Lease Term, in addition to the Base Monthly Rent and to the extent not
required by Landlord to be contracted for and paid directly by Tenant, Tenant
shall pay to Landlord as additional rent (the "Additional Rent") the
following amounts:
(a) An amount equal to all Property Operating Expenses (as defined
in Article 13) incurred by Landlord. Payment shall be made by whichever of
the following methods (or combination of methods) is (are) from time to time
designated by Landlord:
(i) Landlord may forward invoices or bills for such expenses
to Tenant, and Tenant shall, no later than ten (10) days prior to the due
date, pay such invoices or bills and deliver satisfactory evidence of such
payment to Landlord, and/or
(ii) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses)
as paid or incurred by Landlord, and Tenant shall pay to Landlord the amount
of such expenses within ten (10) days after receipt of a written bill
therefor from Landlord, and/or
(iii) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred from the ensuring calendar or fiscal year, as Landlord may
determine, and Tenant shall pay to Landlord an amount equal to the estimated
amount of such expenses for such year in equal monthly installments during
such year with the installments of Base Monthly Rent.
6.
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Landlord reserves the right to change from time to time the methods of
billing Tenant for any given expense or group of expenses or the periodic
basis on which such expenses are billed.
(b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.
(c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
(d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
Notwithstanding the foregoing, Landlord may elect by written notice to Tenant
to have Tenant pay Real Property Taxes or any portion thereof directly to the
applicable taxing authority, in which case Tenant shall make such payments
and deliver satisfactory evidence of payment to Landlord no later than ten
(10) days before such Real Property Taxes become delinquent.
3.3 YEAR-END ADJUSTMENTS. If Landlord shall have elected to bill Tenant
for the Property Operation Expenses (or any group of such expenses) on an
estimated basis in accordance with the provisions of Paragraph 3.2(a)(iii)
above, Landlord shall furnish to Tenant within three months following the end
of the applicable calendar or fiscal year, as the case may be, a statement
setting forth (i) the amount of such expenses paid or incurred during the
just ended calendar or fiscal year, as appropriate, and (ii) the amount that
Tenant has paid to Landlord for credit against such expenses for such period.
If Tenant shall have paid more than its obligation for such expenses for the
stated period, Landlord shall, at its election, either (i) credit the amount
of such overpayment toward the next ensuing payment or payments of Additional
Rent that would otherwise be due or (ii) refund in cash to Tenant the amount
of such overpayment. If such year-end statement shall how that Tenant did not
pay its obligation for such expenses in full, then Tenant shall pay to
Landlord the amount of such underpayment within ten days from Landlord's
billing of same to Tenant. The provisions of this Paragraph shall survive the
expiration or sooner termination of this Lease.
3.4 LATE CHARGE, AND INTEREST ON RENT IN DEFAULT. Tenant acknowledges
that the late payment by Tenant of any monthly installment of Base Monthly
Rent or any Additional Rent will cause Landlord to incur certain costs and
expenses not contemplated under this Lease, the exact amounts of which are
extremely difficult or impractical to fix. Such costs and expenses will
include without limitation, administration and collection costs and
processing and accounting expenses. Therefor, except as hereinafter provided,
if any installment of Base Monthly Rent is not received by landlord from
Tenant within ten (10) calendar days after the same becomes due, Tenant shall
immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article 1 as the "Late Charge Amount," and if any Additional
Rent is not received by Landlord within ten (10) calendar days after same
becomes due, Tenant shall immediately pay to Landlord a late charge in an
amount equal to 5% of the Additional Rent not so paid. Notwithstanding the
foregoing, Landlord agrees to provide Tenant with a one time written notice
of any default in the payment of Base Monthly Rent or Additional Rent and if
Tenant shall cure such default within five (5) days of delivery of such
written notice, no late charge shall be payable hereunder. Landlord shall not
thereafter be obligated to deliver any
7.
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written notice to Tenant hereunder before a late charge shall become due.
Landlord and Tenant agree that this late charge represents a reasonable
estimate of such costs and expenses and is fair compensation to Landlord for
the anticipated loss Landlord would suffer by reason of Tenant's failure to
make timely payment. In no event shall this provision for a late charge be
deemed to grant to Tenant a grace period or extension of time within which to
pay any rental installment or prevent Landlord from exercising any right or
remedy available to Landlord upon Tenant's failure to pay each rental
installment due under this Lease when due, including the right to terminate
this Lease. If any rent remains delinquent for a period in excess of ten (10)
calendar days, then, subject to the one-time notice right set forth
hereinabove and in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not so paid from said tenth (10th) day (or upon
expiration of five (5) days from the one-time written notice provided by
Landlord pursuant to the foregoing) at the then maximum rate of interest not
prohibited or made usurious by Law until paid.
3.5 PAYMENT OF RENT. Except as specifically provided otherwise in
this Lease, all rent shall be paid in lawful money of the United States,
without any abatement, reduction or offset for any reason whatsoever, to
Landlord at such address as Landlord may designate from time to time.
Tenant's obligation to pay Base Monthly Rent and all Additional Rent shall be
appropriately prorated at the commencement and expiration of the Lease Term.
The failure by Tenant to pay any Additional Rent as required pursuant to this
Lease when due shall be treated the same as a failure by Tenant to pay Base
Monthly Rent when due, and Landlord shall have the same rights and remedies
against Tenant as Landlord would have had Tenant failed to pay the Base
Monthly Rent when due.
3.6 PREPAID RENT Tenant shall, upon execution of this Lease, pay to
Landlord the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against the first payment of Base Monthly Rent
due hereunder.
3.7 SECURITY DEPOSIT; LETTER OF CREDIT.
(a) Upon execution hereof, Tenant shall deposit with Landlord an
irrevocable letter of credit in form acceptable to Landlord and issued by an
institutional lender acceptable to Landlord, in the amount set forth in
Article 1 as the "Security Deposit," as security for the prompt and complete
performance by Tenant of the obligations and terms of this Lease to be
performed by Tenant, and not as prepayment of rent (the "Letter of Credit").
The Letter of Credit shall (i) show Landlord as the account party, (ii) have
a term of not less than twelve (12) months, (iii) be renewed from time to
time during the period that the Letter or Credit must be maintained pursuant
to this Section 5.2 (such renewals to be fore a period of not less than
twelve (12) months and in the amounts required hereby), and (iv) be in the
form attached hereto as EXHIBIT "D." The term "Letter of Credit" shall, for
the purposes of this Lease, include any replacement or renewal Letter of
Credit.
(b) Landlord may upon demand draw upon the Letter of Credit and
Landlord may apply such portion or portions of the Security Deposit as are
reasonably necessary for the following purposes: (i) to remedy any default by
Tenant in the payment of Base Monthly Rent or Additional Rent or a late
charge or interest on defaulted rent, or any other monetary payment
obligation of Tenant under this Lease; (ii) to repair damage to the Leased
Premises, the Building
8.
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or the Outside Areas caused or permitted to occur by Tenant, except to the
extent covered by any insurance proceeds received by Landlord under its
casualty insurance policy; (iii) to clean and restore and repair the Leased
Premises, the Building or the Outside Areas following their surrender to
Landlord if not surrendered in the condition required pursuant to the
provisions of Article 2, except for items which Landlord would be obligated
to repair under Section 5.1(b) upon expiration of the Lease term unless any
such damage is caused by Tenant, and (iv) to remedy any other default of
Tenant to the extent permitted by Law including, without limitation, paying
in full on Tenant's behalf any sums claimed by materialmen or contractors of
Tenant to be owing to them by Tenant for work done or improvements made at
Tenant's request to the Leased Premises. In this regard, Tenant hereby waives
any restriction on the uses to which the Security Deposit may be applied as
contained in Section 1950.7(c) of the California Civil Code and/or any
successor statute. In the event the Security Deposit or any portion thereof
is so used, Tenant shall pay to Landlord, promptly upon demand, an amount in
cash sufficient to restore the Security Deposit to the full original sum. If
Tenant fails to promptly restore the Security Deposit and if Tenant shall
have paid to Landlord any sums as "Last Month's Prepaid Rent," Landlord may,
in addition to any other remedy Landlord may have under this Lease, reduce
the amount of Tenant's Last Month's Prepaid Rent by transferring all or
portions of such Last Month's Prepaid Rent to Tenant's Security Deposit until
such Security Deposit is restored to the amount set forth in Article 1.
Landlord shall not be deemed a trustee of the Security Deposit. Landlord may
use the Security Deposit in Landlord's ordinary business and shall not be
required to segregate it from Landlord's general accounts. Tenant shall not
be entitled to any interest on the Security Deposit. If Landlord transfers
the Building or the Property during the Lease Term, Landlord may pay the
Security Deposit to any subsequent owner in conformity with the provisions of
Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability
for the return of the Security Deposit. Tenant specifically grants to
Landlord (and Tenant hereby waives the provisions of California Civil Code
Section 1950.7 to the contrary) a period of ninety (90) days following a
surrender of the Leased Premises by Tenant to Landlord within which to
inspect the Leased Premises, make required restorations and repairs, receive
and verify workmen's billings therefor, and prepare a final accounting with
respect to the Security Deposit. In no event shall the Security Deposit or
any portion thereof, be considered prepaid rent.
ARTICLE 4
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE. Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall continuously and without interruption use
the Leased Premises for such purpose for the entire Lease Term. Any
discontinuance of such use for a period of sixty (60) consecutive calendar
days shall be, at Landlord's election, a default by Tenant under the terms of
this Lease. Landlord may elect upon request by Tenant to extend the period of
any vacation of the Premises by Tenant, in Landlord's sole and absolute
discretion ,and in such event may require Tenant to provide reasonable
security for the Premises. Tenant shall have the right to use the Outside
Areas in conjunction with its Permitted Use of the Leased Premises solely for
the purposes for which they were designed and intended and for no other
purposes whatsoever.
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4.2 GENERAL LIMITATIONS ON USE. Tenant shall not do or permit anything
to be done in or about the Leased Premises, the Building, the Outside Areas
or the Property which does or could (i)jeopardize the structural integrity of
the Building or (ii) cause damage to any part of the Leased Premises, the
Building, the Outside Areas or the Property. Tenant shall not operate any
equipment within the Leased Premises which does or could (i) injure, vibrate
or shake the leased Premises or the Building, (ii) damage, overload or impair
the efficient operation of any electrical, plumbing, heating, ventilating or
air conditioning systems within or servicing the Leased Premises or Building,
or (iii) damage or impair the efficient operation of the sprinkler system (if
any) within or servicing the Leased Premises or the Building. Tenant shall
not install any equipment or antennas on or make any penetrations of the
exterior walls or roof of the building, and Tenant shall not affix any
equipment to or make any penetrations or cuts in the floor, ceiling, walls or
roof of the Leased Premises. Notwithstanding the preceding sentence, Tenant
may make penetrations of the roof and exterior walls and place equipment upon
the roof to the extent such penetrations and equipment are reasonably
required in connection with Tenant's installation of hoods and equipment
required for Tenant's laboratory operations and further provided that (i)
Tenant delivers written notice to Landlord not less than five (5) business
days prior to making any such penetrations or installations specifying the
scope of work to be completed and the reasons for making any exterior
penetrations, (ii) Tenant fully repairs any damage resulting from any
penetration and restores the Building (including the roof and roof membrane)
to a good and watertight condition, (iii) Tenant pays all costs incurred in
connection with such work, (iv) such work and the improvements installed
comply with all Laws and Private Restrictions (as defined herein), (v) any
such equipment, antennae and other installations are not visible from the
exterior of the Building, and (vi) no such penetration or installation
adversely affects the structural integrity of the Building. Tenant shall not
place any loads upon the floors, walls, ceiling or roof systems which could
endanger the structural integrity of the Building or damage its floors,
foundations or supporting structural components. Tenant shall not place any
explosive, flammable or harmful fluids or other waste materials in the
drainage systems of the Leased Premises, the Building, the Outside Areas or
the Property. Tenant shall not drain or discharge any fluids in the
landscaped areas or across the paved areas of the Property. Except for
equipment located on a separate pad located outside the Building to be
constructed at Tenant's sole cost (and shown on plans and specifications
approved by Landlord as provided in the Work Letter), Tenant shall not use
any of the Outside Areas for the storage of its materials, supplies,
inventory or equipment and all such materials, supplies, inventory or
equipment shall at all times be stored within the Leased Premises. Tenant
shall not commit nor permit to be committed and waste in or about the Leased
Premises, the Building, the Outside Areas or the Property.
4.3 NOISE AND EMISSIONS. All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere
with the businesses of or annoy the occupants and/or users of adjacent
properties. All dust, fumes, odors and other emissions generated by Tenant's
use of the leased Premises shall be sufficiently dissipated in accordance
with sound environmental practice and exhausted from the Leased Premises in
such a manner so as not to interfere with the businesses of or annoy the
occupants and/or users of adjacent properties, or cause any damage to the
Leased Premises, the Building, the Outside Areas or the Property or any
component part thereof or the property of adjacent property owners.
4.4 TRASH DISPOSAL. Tenant shall provide trash bins or other adequate
garbage disposal facilities within the trash enclosure areas provided or
permitted by Landlord outside the
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Leased Premises sufficient for the interim disposal of all of its trash,
garbage and waste. All such trash, garbage and waste temporarily stored in
such areas shall be stored in such a manner so that it is not visible from
outside of such areas, and Tenant shall cause such trash, garbage and waste
to be regularly removed from the Property in a clean, safe and neat condition
free and clear of all trash, garbage, waste and/or boxes, pallets and
containers containing same at all times.
4.5 PARKING. Tenant shall not, at any time, park or permit to be parked
any recreational vehicles, inoperative vehicles or equipment in the Outside
Areas or on any portion of the Property. Tenant agrees to assume
responsibility for compliance by its employees and invitees with the parking
provisions contained herein. If Tenant or its employees park any vehicle
within the Property in violation of these provisions, then Landlord may, upon
prior written notice to Tenant giving Tenant one (1) day (or any applicable
statutory notice period, if longer than one (1) day) to remove such
vehicle(s), in addition to any other remedies Landlord may have under this
Lease, charge Tenant , as Additional Rent, and Tenant agrees to pay, as
Additional Rent, the cost of towing such vehicle.
4.6 SIGNS. Tenant shall not place or install on or within any portion of
the Leased Premises, the exterior of the Building, the Outside Areas or the
Property any sign, advertisement, banner, placard, or picture which is
visible from the exterior of the Leased Premises, except in accordance with
the rules, ordinances and regulations of the City of Mountain View. Tenant
shall not place or install on or within any portion of the Leased Premises,
the exterior of the Building, the Outside Areas or the Property any business
identification sign which is visible from the exterior or the Leased Premises
until Landlord shall have approved in writing and in its sole discretion the
location, size, content, design, method of attachment and material to be used
in the making of such sign; PROVIDED, HOWEVER, that so long as such signs are
normal and customary business directional or identification signs within the
Building, Tenant shall not be required to obtain Landlord's approval. Any
sign, once approved by Landlord, shall be installed at Tenant's sole cost and
expense and only in strict compliance with Landlord's approval, using a
person approved by Landlord to install same. Landlord may remove any signs
(which have not been approved in writing by Landlord), advertisements,
banners, placards or pictures so placed by Tenant on or within the Leased
Premises, the exterior of the Building, the Outside Areas or the Property and
charge to Tenant the cost of such removal, together with any costs incurred
by Landlord to repair any damage caused thereby, including any cost incurred
to restore the surface (upon which such sign was so affixed) to its original
condition. Tenant shall remove all of Tenant's signs, repair any damaged
caused thereby, and restore the surface upon which the sign was affixed to
its original condition, all to Landlord's reasonable satisfaction, upon the
termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Subject to the
limitations on Tenant's responsibility for Hazardous Materials as set forth
in Section 4.11 and Tenant's obligations under Section 6.3, Tenant shall
abide by and shall promptly observe and comply with, at its sole cost and
expense, all Laws and Private Restrictions respecting the use and occupancy
of the Leased Premises, the Building, the Outside Areas or the Property, and
shall defend with competent counsel, indemnify and hold Landlord harmless
from any claims, damages or liability resulting from Tenant's failure to so
abide, observe, or comply. The indemnity provision of this paragraph shall
survive the expiration or sooner termination of this Lease.
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4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS. With respect to any
insurance policies required to permitted to be carried by landlord in
accordance with the provision of this Lease, copies of which have been or
will, upon Tenant's written request therefor, be provide to Tenant, Tenant
shall not conduct nor permit any other person to conduct any activities nor
keep, store or use (or allow any other person to keep, store or use) any item
or thing within the Leased Premises, the Building, the Outside Areas or the
Property which (i) is prohibited under the terms of any such policies, (ii)
could result in the termination of the coverage afforded under any of such
policies, (iii) could give to the insurance carrier the right to cancel any
of such policies, or (iv) could cause an increase in the rates (over standard
rates) charged for the coverage afforded under any of such policies. Tenant
shall comply with all requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain,
at standard rates, the insurance coverages carried by either Landlord or
Tenant pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER. Landlord and its agents shall have the
right to enter the Leased Premises during normal business hours after giving
Tenant reasonable notice and subject to Tenant's reasonable security and
environmental health, safety measures and requirements (including execution
of Tenant's Confidentiality Agreement, a copy of which is attached hereto as
Exhibit C) for the purpose of (i) inspecting the same; (ii) showing the
Leased Premises to prospective purchasers, mortgagees or tenants; (iii)
making necessary alterations, additions or repairs; and (iv) performing any
of Tenant's obligations when Tenant has failed to do so. Landlord shall have
the right to enter the Leased Premises during normal business hours (or as
otherwise agreed), subject to Tenant's reasonable security measures
(including execution of Tenant's Confidentiality Agreement, a copy of which
is attached hereto as Exhibit C), for purposes of supplying any maintenance
or services agreed to be supplied by Landlord. Landlord shall have the right
to enter the Outside Areas during normal business hours for purposes of (i)
inspecting the exterior of the Building and Outside Areas; (ii) posting
notices of nonresponsibility (and for such purposes Tenant shall provide
Landlord at least thirty days' prior written notice of any work to be
performed on the Leased Premises); and (iii) supplying any services to be
provided by Landlord. Any entry into the Leased Premises or the Outside Areas
obtained by Landlord in accordance with this paragraph shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into,
or a detainer of, the Leased Premises, or an eviction, actual or constructive
of Tenant from the Leased Premises or any portion thereof.
4.10 USE OF OUTSIDE AREAS. Tenant, in its use of the Outside Areas,
shall at all times keep the Outside Areas in a safe condition free and clear
of all materials, equipment, debris, trash (except within existing enclosed
trash areas) inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas
by reason of, or under claim of, the express or implied authority or consent
of Tenant, then Tenant, upon demand of Landlord, shall restrain, to the
fullest extent then allowed by law, such unauthorized use, and shall initiate
such appropriate proceedings as may be required to so restrain such use.
4.11 HAZARDOUS MATERIALS; ENVIRONMENTAL PROTECTION.
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(a) As used herein, the term "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances,
materials or wastes regulated now or in the future under any of the following
statutes or regulations and any and all of those substances included within
the definitions of "hazardous substances," "hazardous materials," "hazardous
waste," "hazardous chemical substance or mixture," "imminently hazardous
chemical substance or mixture," "toxic substances," "hazardous air
pollutant," "toxic pollutant," or "solid waste" in the (a) Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA" or
"Superfund"), as amended by the Superfund Amendments and Reauthorization Act
of 1986 ("SARA"), 42 U.S.C. Section 9601 ET SEQ., (b) Resource Conservation
and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 ET SEQ., (c)
Federal Water Pollution Control ("FWPCA"), 33 U.S.C. Section 1251 ET SEQ.,
(d) Clean Air Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ., (e) Toxic
Substances Control Act ("TSCA"), 14 U.S.C. Section 2601 ET SEQ., (f)
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, ET SEQ., (g)
Carpenter-Presley-Tanner Hazardous Substance Account Act ("California
Superfund"), Cal. Health & Safety Code Section 25300 ET SEQ., (h) California
Hazardous Waste Control Act, Cal. health & Safety Code Section 25100 ET SEQ.,
(i) Porter-Cologne Water Quality Control Act ("Porter-Cologne Act"), Cal.
Water Code Section 13000 ET SEQ., (j) Hazardous Waste Disposal Land Use Law,
Cal. Health & Safety Code Section 25220 ET SEQ., (k) Safe Drinking Water and
Toxic Enforcement Act of 1986 ("Proposition 65"), Cal. Health & Safety Code
Section 25249.5 ET SEQ., (l) Hazardous Substances Underground Storage Tank
Law, Cal. Health & Safety Code Section 25280 ET SEQ., (m) Air Resources Law,
Cal. Health & Safety Code Section 39000 ET SEQ., and (n) regulations
promulgated pursuant to said laws or any replacement thereof, or as similar
terms are defined in the federal, state and local laws, statutes,
regulations, orders or rules. Hazardous Materials shall also mean any and all
other biohazardous wastes and substances, materials and wastes which are, or
in the future become, regulated under applicable Laws for the protection of
health or the environment, or which are classified as hazardous or toxic
substances, materials or wastes, pollutants or contaminants, as defined,
listed or regulated by any federal, state or local law, regulation or order
or by common law decision, including, without limitation, (i)
trichloroethylene, tetrachloroethylene, perchloroethylene and other
chlorinated solvents, (ii) any petroleum products or factions thereof, (iii)
asbestos, (iv) polychlorinted biphenyls, (v) flammable expolsives, (vi) urea
formaldehyde, (vii) radioactive materials and waste, and (viii) materials and
wastes that are harmful to or may threaten human health, ecology or the
environment.
(b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials; PROVIDED, HOWEVER, that Tenant shall not be
responsible for contamination of the Leased Premises by Hazardous Materials
existing as of the date the Leased Premises are delivered to Tenant (whether
before or after the Scheduled Delivery Date) unless caused by Tenant. Tenant
shall not store, use or dispose of any Hazardous Materials except for those
hazardous materials listed in a Hazardous Materials management plan ("HMMP")
which Tenant shall deliver to Landlord upon execution of this Lease and
update at least annually with Landlord ("Permitted Materials") which may be
used, stored and disposed of provided (i) such Permitted Materials are used,
stored, transported, and disposed of in strict compliance with applicable
Laws, (ii) such Permitted Materials shall be limited to the materials listed
on and may be used only in the quantities specified in the HMMP, and (iii)
Tenant shall provide Landlord with copies of all material safety data sheets
and other documentation required under applicable Laws in
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connection with Tenant's use of Permitted Materials as and when such
documentation is provided to any regulatory authority having jurisdiction. In
no event shall Tenant cause or permit to be discharged into the plumbing or
sewage system of the Building or onto the land underlying or adjacent to the
Building any Hazardous Materials. Tenant shall be solely responsible for and
shall defend, indemnify, and hold Landlord and its agents harmless from and
against all claims, costs and liabilities, including attorneys' fees and
costs, arising out of or in connection with Tenant's storage, use and/or
disposal of Hazardous Materials. If the presence of Hazardous Materials on
the Leased Premises caused or permitted by Tenant results in contamination or
deterioration of water or soil, then Tenant shall promptly take any and all
action necessary to clean up such contamination, but the foregoing shall in
no event be deemed to constitute permission by Landlord to allow the presence
of such Hazardous Materials. At any time prior to the expiration of the Lease
Term if Tenant has a reasonable basis to suspect that there has been any
release or the presence of Hazardous Materials in the ground or groundwater
on the Premises which did not exist upon commencement of the Lease Term,
Tenant shall have the right to conduct appropriate tests of water and soil
and to deliver to Landlord the results of such tests to demonstrate that no
contamination in excess of permitted levels has occurred as a result of
Tenant's use of the Leased Premises. Tenant shall further be solely
responsible for, and shall defend, indemnify, and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with any removal,
cleanup and restoration work and materials required hereunder to return the
Leased Premises any other property of whatever nature to their condition
existing prior to the appearance of the Hazardous Materials. Tenant's
obligation hereunder shall survive the termination of the Lease.
(c) Upon termination or expiration of the Lease, Tenant at its sole
expense shall cause all Hazardous Materials placed in or about the Leased
Premises, the Building and/or the Property by Tenant, its agents,
contractors, or invitees, and all installations (whether interior or
exterior) made by or on behalf of Tenant relating to the storage, use,
disposal or transportation of Hazardous Materials to be removed from the
Property and transported for use, storage or disposal in accordance and
compliance with all Laws and other requirements respecting Hazardous
Materials used or permitted to be used by Tenant. Tenant shall apply for and
shall obtain from all appropriate regulatory authorities (including any
applicable fire department or regional water quality control board) all
permits, approvals and clearances necessary for the closure of the Property
and shall take all other action as may be required to complete the closure of
the Building and the Property. In addition, prior to vacating the Premises,
Tenant shall undertake and submit to Landlord an environmental site
assessment from an environmental consulting company reasonably acceptable to
Landlord which site assessment shall evidence Tenant's compliance with this
Paragraph 4.11.
(d) At any time prior to expiration of the Lease Term, subject to
reasonable prior notice (not less than forty-eight (48) hours) and Tenant's
reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant's business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water
and soil to determine whether levels of any Hazardous Materials in excess of
legally permissible levels has occurred as a result of Tenant's use thereof.
Landlord shall furnish copies of all such test results and report to Tenant
and, at Tenant's option and cost, shall permit split sampling for testing and
analysis by Tenant.
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Such testing shall be at Tenant's expense if landlord has a reasonable basis
for suspecting and confirms the presence of Hazardous Materials in the soil
or surface or groundwater in, on, under, or about the Property, the Building
or the Leased Premises, which has been caused by or resulted from the
activities of Tenant, its agents, contractors, or invitees.
(e) Landlord may voluntarily cooperate in a reasonable manner with
the efforts of all governmental agencies in reducing actual or potential
environmental damage. Tenant shall not be entitled to terminate this Lease or
to any reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with the
requirements and recommendations of governmental agencies regulating, or
otherwise involved in, the protection of the environment.
4.12 RULES AND REGULATIONS. In the event IntraBiotics Pharmaceuticals,
Inc. is no longer the sole tenant of the Leased Premises, Landlord shall have
the right from time to time to establish reasonable rules and regulations
and/or amendments or additions thereto respecting the use of the Leased
Premises and the Outside Areas for the care and orderly management of the
Property. Upon delivery to Tenant of a copy of such rules and regulations or
any amendments or additions thereto, Tenant shall comply with such rules and
regulations. A violation by Tenant of any of such rules and regulations shall
constitute a default by Tenant under this Lease. If there is a conflict
between the rules and regulations and any of the provisions of this Lease,
the provisions of this Lease shall prevail. Landlord shall not be responsible
or liable to Tenant for the violation of such rules and regulations by any
other tenant of the Property. Tenant with any reports of studies in
Landlord's possession relating to Hazardous Materials on the Property,
provided that Tenant shall keep all such reports and studies strictly
confidential.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE. Except in the case of damage to or
destruction of the Leased Premises, the Building, the Outside Areas or the
Property caused by an act of God or other peril, in which case the provisions
of Article 10 shall control, the parties shall have the following obligations
and responsibilities with respect to the repair and maintenance of the Leased
Premises, the Building, the Outside Areas, and the Property.
(a) TENANT'S OBLIGATIONS. Except for Landlord's obligations under
Section 5.1(b), Tenant shall, at all times during the Lease Term and at its
sole cost and expense, regularly clean and continuously keep and maintain in
good order, condition and repair, and replace when necessary, every part of
the Leased Premises, including, without limiting the generality of the
foregoing, (i) all windows (including glazing), plate glass doors and
skylights, (ii) all electrical wiring, conduits, connectors and fixtures,
(iii) all plumbing, automatic fire extinguishers and sewage systems serving
the Building and the Outside Areas, including all pipes, sprinklers, sinks,
toilets, faucets and drains, (iv) all lighting fixtures, bulbs and lamps, (v)
all parts of the heating, ventilation and air-conditioning system the "HVAC
System") serving the Building, including all ducts, pipes, vents,
compressors, fans, air handlers, thermostats, time clocks, boilers, heaters
and supply and return gills serving the Building, (vi) all operating systems,
elevators, appliances and equipment serving the Building, (vii) all fixtures,
interior
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walls, wall coverings, partitioning, ceilings and ceiling tiles, and exterior
surface of the exterior walls, (viii) the roof membrane, including flashing
and caulking, and (ix) all landscaping and parking areas, including
maintenance, patching, resealing, repairing and restriping of the parking
areas. Tenant, if requested to do so by Landlord, shall hire, at Tenant's
sole cost and expense, a licensed heating, ventilating and air conditioning
contractor to regularly and periodically (not less frequently than every
three months) inspect and perform required maintenance on the HVAC System
serving the Leased Premises, or alternatively, Landlord may, at its election,
contract in its name with Tenant jointly for such regular and periodic
inspections of and maintenance on such heating, ventilating and air
conditioning equipment and systems and charge to Tenant, as Additional Rent,
the cost thereof, Tenant, if requested to do so by Landlord, shall hire, at
Tenant's sole cost and expense, a licensed roofing contractor to regularly
and periodically (not less frequently than every six months) inspect and
perform required maintenance on the roof of the Leased Premises, or
alternatively, Landlord may, at its election, contract in its own name for
such regular and periodic inspections of and maintenance on the roof and
charge to Tenant, as Additional Rent, the cost thereof. Tenant shall, at all
times during the Lease Term, keep the outside Areas in a clean and safe
condition. Tenant shall regularly and periodically sweep and clean the
driveways and parking areas. Tenant shall, at its sole cost and expense,
repair all damaged to the leased Premises, the Building, the Outside Areas or
the Property caused by the activities of Tenant, its employees, invitees or
contractors promptly following written notice from Landlord to so repair such
damages, except to the extent covered by any insurance proceeds received by
landlord under its casualty insurance policy. If Tenant shall fail to perform
the required maintenance or fail to make repairs required of it pursuant to
this paragraph within a reasonable period or time following notice from
Landlord to do so, then Landlord may, at its election and without waiving any
other remedy it may otherwise have under this Lease or at law, perform such
maintenance or make such repairs and charge to Tenant, as Additional Rent,
the costs so incurred by Landlord for same. All glass within or a part of the
Leased Premises, both interior and exterior, is at the sole risk of Tenant
and any broken glass shall promptly be replaced by Tenant at Tenant's expense
with glass of the same kind, size and quality.
(B) LANDLORD'S OBLIGATION. Landlord shall, at all times during the
Lease Term, maintain in good condition and repair the foundation, roof
structure, the structural portion of load-bearing and exterior walls of the
Building. Landlord shall have the right, in its sole discretion, upon written
notice to Tenant to assume the obligation to maintain the Outside Areas and
exterior surface of the exterior walls of the Building. The provisions of
this subparagraph (b) shall in no way limit the right of Landlord to charge
to Tenant, as Additional Rent pursuant to Article 3 (to the extent permitted
pursuant to Article 3), the costs incurred by Landlord in performing such
maintenance and/or making such repairs.
5.2 UTILITIES. Tenant shall arrange at its sole cost and expense and in
its own name, for the supply of gas and electricity to the Leased Premises.
In the event that such services are not separately metered, Tenant shall, at
its sole expense, cause such meters to be installed. Landlord shall maintain
the water meter(s) in its own name; PROVIDED, HOWEVER, that if at any time
during the Lease Term Landlord shall require Tenant to put the water service
in Tenant's name, Tenant shall do so at Tenant's sole cost. Tenant shall be
responsible for determining if the local supplier of water, gas and
electricity can supply the needs of Tenant and whether or not the existing
water, gas and electrical distribution systems within the Building and the
Leased Premises are adequate for Tenant's needs. Tenant shall be responsible
for determining if the
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existing sanitary and storm sewer systems now servicing the Leased Premises
and the Property are adequate for Tenant's needs. Tenant shall pay all
charges for water, gas, electricity and storm and sanitary sewer services as
so supplied to the Leased Premises, irrespective of whether or not the
services are maintained in Landlord's or Tenant's name.
5.3 SECURITY. Tenant acknowledges that Landlord has not undertaken any
duty whatsoever to provide security for the Leased Premises, the Building,
the Outside Areas or the Property and, accordingly, Landlord is not
responsible for the security of same or the protection of Tenant's property
or Tenant's employees, invitees or contractors. To the extent Tenant
determines that such security or protection services are advisable or
necessary, Tenant shall arrange for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION. Landlord may voluntarily cooperate
in a reasonable manner with the efforts of governmental agencies and/or
utility suppliers in reducing energy or other resource consumption within the
Property. Tenant shall not be entitled to terminate this Lease or to any
reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with landlord and
to abide by all reasonable rules established by Landlord (i) in order to
maximize the efficient operation of the electrical, heating, ventilating and
air conditioning systems and all other energy or other resource consumption
systems with the Property provided Landlord does not interfere with the
conduct of Tenant's laboratory activities conducted from the Premises, and/or
(ii) in order to comply with the requirements and recommendations of utility
suppliers and governmental agencies regulating the consumption of energy
and/or other resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY. Landlord shall not be liable to
Tenant for injury to Tenant, its employees, agents, invitees or contractors,
damage to Tenant's property or loss of Tenant's business or profits, nor
shall Tenant be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of (i) Landlord's failure to provide security
services or systems within the Property for the protection of the Leased
Premises, the Building or the Outside Areas, or the protection of Tenant's
property or Tenant's employees, invitees, agents or contractors, or (ii)
Landlord's failure to perform any maintenance or repairs to the Leased
Premises, the Building, the Outside Areas or the Property until Tenants shall
have first notified Landlord, in writing, of the need for such maintenance or
repairs, and then only after Landlord shall have had a reasonable period of
time following its receipt of such notice within which to perform such
maintenance or repairs, or (iii) any failure, interruption, rationing or
other curtailment in the supply of water, electric current, gas or other
utility service to the Leased Premises, the Building, the Outside Areas or
the Property from whatever cause (other than Landlord's sole active
negligence or willful misconduct), or (iv) the unauthorized intrusion or
entry into the Leased Premises by third parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT. Tenant shall not make any alterations to or modifications
of the Leased Premises or construct any improvements within the Leased
Premises until Landlord shall have first approved, in writing, the plans and
specifications therefor, which approval shall not be
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unreasonably withheld. All such modifications, alterations or improvements,
once so approved, shall be made, constructed or installed by Tenant at
tenant's expense (including all permit fees and governmental charges related
thereto), using a licensed contractor first approved by Landlord, in
substantial compliance with the Landlord-approved plans and specifications
therefor. All work undertaken by Tenant shall be done in accordance with all
Laws and in a good and workmanlike manner using new materials of good
quality. Tenant shall not commence the making of any such modifications or
alterations or the construction of any such improvements until (i) all
required governmental approvals and permits shall have been obtained, (ii)
all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord
may post and file notices of non-responsibility, and (iv) if requested by
landlord, Tenant shall have obtained contingent liability and broad form
builder's risk insurance in an amount satisfactory to Landlord in its
reasonable discretion to cover any perils relating to the proposed work not
covered by insurance carried by Tenant pursuant to Article 9. In no event
shall Tenant make any modification, alterations or improvements whatsoever to
the Outside Areas or the exterior or structural components of the Building
including, without limitation, any cuts or penetrations in the floor, roof or
exterior walls of the leased Premises. As used in this Article, the term
"modifications, alterations and/or improvements" shall include, without
limitation, the installation of additional electrical outlets, overhead
lighting fixtures, drains, sinks, partitions, doorways, or the like.
Notwithstanding the foregoing, Tenant, without Landlord's prior written
consent, shall be permitted to make non-structural alterations to the
Building, PROVIDED THAT: (a) such alterations do not exceed $10,000
individually or $50,000 in the aggregate, (b) Tenant shall timely provide
Landlord the notice required pursuant to Paragraph 4.9 above, and (c) Tenant
shall notify Landlord in writing within thirty (30) days of completion of the
alteration and deliver to Landlord a set of the plans and specifications
therefor, either "as built" or marked to show construction changes made.
Tenant shall, upon Landlord's request, remove all alterations at the
termination of the Lease and restore the Leased Premises to their condition
prior to such alteration; PROVIDED, HOWEVER, that Tenant may request by
written notice to Landlord prior to making any alteration whether Landlord
shall require Tenant to remove such alteration upon termination of the Lease.
In such event, Landlord shall be deemed to have approved Tenant's surrender
within thirty (30) days of such written request by Tenant indicating that
Landlord will require removal of such alteration upon termination of the
Lease.
6.2 OWNERSHIP OF IMPROVEMENTS. All modifications, alterations and
improvements made or added to the Leased Premises by Tenant (other than
Tenant's inventory, equipment, movable furniture, wall decorations, trade
fixtures, lab benches and those items listed on SCHEDULE 6.2 hereof, which
Tenant shall have the right from time to time to update and revise upon
written notice to Landlord) shall be deemed real property and a part of the
Leased Premises, but shall remain the property of Tenant during the Lease.
Any such modifications, alterations or improvements, once completed, shall
not be altered or removed from the Leased Premises during the Lease Term
without Landlord's written approval first obtained in accordance with the
provisions of Paragraph 6.1 above. At the expiration or sooner termination of
this Lease, all such modifications, alterations and improvements other than
Tenant's inventory, equipment, movable furniture, wall decorations and trade
fixtures, shall automatically become the property of Landlord and shall be
surrendered to Landlord as part of the Leased Premises as required pursuant
to Article 2, unless Landlord shall require Tenant to remove any of
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such modifications, alterations or improvements in accordance with the
provisions of Article 2, in which case Tenant shall so remove same. Landlord
shall have no obligations to reimburse Tenant for all or any portion of the
cost or value of any such modifications, alterations or improvements so
surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by
landlord and/or at Landlord's expense shall be deemed real property and a
part of the Leased Premises and shall be property of Landlord. All lighting,
plumbing, electrical, heating, ventilating and air conditioning fixtures,
partitioning, window coverings, wall coverings and floor coverings installed
by Tenant shall be deemed improvements to the Leased Premises and not trade
fixtures of Tenant.
6.3 ALTERATIONS REQUIRED BY LAW. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that
are required by any Law because of (i) Tenant's use or occupancy of the
Leased Premises, the Building, the Outside Areas or the Property, (ii)
Tenant's application for any permit or governmental approval, or (iii)
Tenant's making of any modifications, alterations or improvements to or
within the Leased Premises. If Landlord shall, at any time during the Lease
Term, be required by any governmental authority to make any modifications,
alterations or improvements to the Building or the Property, the cost
incurred by landlord in making such modifications, alterations or
improvements, including interest at a rate equal to the greater of (a) 12%,
or (b) the sum of that rate quoted by Wells Fargo Bank, N.T. & S.A. from time
to time as its prime rate, plus two percent (2%) ("Wells Prime Plus Two"),
shall be amortized by Landlord over the useful life of such modifications,
alterations or improvements, as determined in accordance with generally
accepted accounting principles, and the monthly amortized cost of such
modifications, alterations and improvements as so amortized shall be
considered a Property Maintenance Cost.
6.4 LIENS. Tenant shall keep the Property and every part thereof free
from any lien, and shall pay when due all bills arising out of any work
performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Property. If any such claim
of lien is recorded against Tenant's interest in this Lease, the Property or
any part thereof, Tenant shall bond against, discharge or otherwise cause
such lien to be entirely released within ten days after the same has been
recorded. Tenant's failure to do so shall be conclusively deemed a material
default under the terms of this Lease. Notwithstanding the foregoing, Tenant
shall be allowed to create consensual security interests in equipment
purchased or leased by Tenant and installed in the Leased Premises ("Financed
Equipment"), and Landlord shall waive any statutory or other lien rights that
it may have in such Financed Equipment in favor of the lender or lessor
("Equipment Financier") providing financing for the acquisition of the
Financed Equipment, subject to satisfaction of each of the following: (i)
such waiver shall be evidenced in a written waiver in form and substance
satisfactory to Landlord, (ii) Tenant and the Equipment Financier each shall
agree that it shall repair any damage and restore the Leased Premises to
their prior condition upon the removal from the Leased Premises of any
Financed Equipment and, if required by Landlord, shall post bonds or other
security to secure such obligation, (iii) the Equipment Financier shall
deliver written notice to Landlord not less than five (5) business days prior
to any entry upon the Leased Premises by such Equipment Financier or its
employees, agents or contractors, and (iv) no auction or sale of the Financed
Equipment shall be conducted from the Leased Premises. Landlord hereby
approves the form of waiver of Tenant rights attached hereto as Exhibit E.
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ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT. Tenant shall not sublet the Leased Premises or any
portion thereof or assign its interest in this Lease, whether voluntarily or
by operation of law, without Landlord's prior written consent which shall not
be unreasonably withheld. Any attempted subletting or assignment without
Landlord's prior written consent, at landlord's election, shall constitute a
default by Tenant under the terms of this Lease. The acceptance of rent by
Landlord from any person or entity other than Tenant, or the acceptance of
rent by landlord from Tenant with knowledge of a violation of the provisions
of this paragraph, shall not be deemed to be a waiver by Landlord of any
provisions of this Article or this Lease or to be a consent to any subletting
by Tenant or any assignment of Tenant's interest in this Lease. Without
limiting the circumstances in which it may be reasonable for Landlord to
withhold its consent to an assignment or subletting, Landlord and Tenant
acknowledge that it shall be reasonable for Landlord to withhold its consent
in the following instances:
(a) the proposed assignee or sublessee is a governmental agency;
(b) in Landlord's reasonable judgment, the use of the Premises by
the proposed assignee or sublessee would involve occupancy by other than
primarily general office or software engineering personnel, would entail any
alterations which would lessen the value of the leasehold improvements in the
Premises, or would require increased services by Landlord;
(c) in Landlord's reasonable judgment, the financial worth of the
proposed assignee does not meet the credit standards applied by Landlord;
(d) the proposed assignee or sublessee (or any of its affiliates)
has been in material default under a lease, has been in litigation with a
previous landlord, or in the ten years prior to the assignment or sublease
has filed for bankruptcy protection, has been the subject of an involuntary
bankruptcy, or has been adjudged insolvent;
(e) Landlord has experienced a previous default by or is in
litigation with the proposed assignee or sublessee;
(f) in Landlord's reasonable judgment, the Premises, or the
relevant part thereof, will be used in a manner that will violate any
negative covenant as to use contained in this Lease;
(g) the use of the Premises by the proposed assignee or sublessee
will violate any applicable law, ordinance or regulation;
(h) the proposed assignee or sublessee is, as of the date of this
Lease, a tenant in the Building;
(i) the proposed assignment or sublease fails to include all of
the terms and provisions required to be included therein pursuant to this
Article 7;
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(j) Tenant is in default of any obligation of Tenant under this
Lease, or Tenant has defaulted under this Lease on three or more occasions
during the 12 months preceding the date that Tenant shall request consent; or
(k) in the case of a subletting of less than the entire Premises,
if the subletting would result in the division of the Premises into more than
two subparcels or would require improvements to be made outside of the
Premises.
7.2 MERGER OR REORGANIZATION. If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or other transfer in the aggregate over the Lease Term of a controlling
percentage of the capital stock of Tenant, shall be deemed a voluntary
assignment of Tenant's interest in this Lease. The phrase "controlling
percentage" means the ownership of and the right to vote stock possessing
more than fifty percent of the total combined voting power of all classes of
Tenant's capital stock issued, outstanding and entitled to vote for the
election of directors. If Tenant is a partnership, a withdrawal or change,
voluntary, involuntary or by operation of Law, of any general partner, or the
dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant's interest in this Lease. Notwithstanding the foregoing, the
provisions of this Section 7.2 shall not apply to Tenant if (a) it is a
corporation the stock of which is listed on a national securities exchange
(as this market, or (b) Tenant merges with or into another corporation so
long as (i) Tenant gives written notice to Landlord prior to the effective
date of such merger, (ii) the surviving corporation has (and Tenant provides
Landlord prior to the effective date of such merger, (ii) the surviving
corporation and (and Tenant provides Landlord with financial statements
confirming that the surviving corporation has) a net worth of not less than
the greater of (A) the net worth of Tenant as of the date of this Lease, or
(B) the net worth of Tenant immediately prior to the effective date of such
merger, and (iii) the surviving entity executes an assumption of lease or
other documentation acceptable to Landlord confirming that the surviving
entity has assumed and agrees to perform its obligations under and is bound
by the terms of this Lease.
7.3 LANDLORD'S ELECTION. If Tenant shall desire to assign its interest
under the Lease or to sublet the Leased Premises, Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least thirty
(30) days in advance of the date it intends to so assign its interest in this
Lease or sublet the Leased Premises but not sooner than one hundred eighty
days in advance of such date, specifying in detail the terms of such proposed
assignment or subletting, including the name of the proposed assignee or
sublessee, the property assignee's or sublessee's intended use of the Leased
Premises, current financial statements (including a balance sheet, income
statement and statement of cash flow, all prepared in accordance with
generally accepted accounting principles) of such proposed assignee or
sublessee, the form of documents to be used in effectuating such assignment
or subletting and such other information as Landlord may reasonably request.
Landlord shall have a period of ten (10) business days following receipt of
such notice and the required information within which to do one of the
following (i) consent to such requested assignment or subletting subject to
Tenant's compliance with the conditions set forth in Paragraph 7.4 below, or
(ii) refuse to so consent to such requested assignment or subletting,
provided that such consent shall not be unreasonably refused, or (iii)
terminate this Lease as to the portion (including all) of the Leased Premises
that is the subject of the proposed assignment or subletting. During such ten
(10) business day period, Tenant covenants and agrees to supply to Landlord,
upon request, all necessary relevant information which Landlord may
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reasonably request respecting such proposed assignment or subletting and/or
the proposed assignee or sublessee. If Landlord shall elect to terminate this
Lease pursuant to the foregoing Tenant shall have ten (10) business days
after receipt of Landlord's written notice hereunder to notify Landlord in
writing that Tenant elects not to sublease or assign its interest under this
lease and therefore to reinstate the lease.
7.4 CONDITIONS TO LANDLORD'S CONSENT. If Landlord elects to consent,
or shall have been ordered to so consent by a court of competent
jurisdiction, to such requested assignment or subletting, such consent shall
be expressly conditioned upon the occurrence of each of the conditions below
set forth, and any purported assignment or subletting made or ordered prior
to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of Landlord, which election may be
exercised at any time following such a purported assignment or subletting but
prior to the satisfaction of each of the stated conditions, shall constitute
a material default by Tenant under this Lease until cured by satisfying in
full each such condition by the assignee or sublessee. The conditions are as
follows:
(a) Landlord having approved in form and substance the assignment
or sublease agreement and any ancillary documents, which approval shall not
be unreasonably withheld by Landlord if the requirements of this Article 7
are otherwise complied with.
(b) Each such sublessee or assignee having agreed, in writing
satisfactory to landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.
(c) Tenant shall not be under any existing event of default under
the terms of this Lease.
(d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord (provided such attorneys fees
shall not exceed One Thousand Dollars ($1,000)) in conjunction with the
processing and documentation of any such requested subletting or assignment.
(e) Tenant having delivered to Landlord a complete and
fully-executed duplicate original of such sublease agreement or assignment
agreement (as applicable) and all related agreements.
(f) Tenant having paid, or having agreed in writing to pay as to
future payments, to Landlord fifty percent (50%) of all assignment
consideration or excess rentals to be paid to Tenant or to any other on
Tenant's behalf or for Tenant's benefit for such assignment or subletting as
follows:
(i) If Tenant assigns it interest under this Lease and
if all or a portion of the consideration for such assignment is to be paid by
the assignee at the time of the assignment, that Tenant shall have paid to
Landlord and Landlord shall have received an amount equal to fifty percent
(50%) of the assignment consideration so paid or to be paid (whichever is the
greater) at the time of the assignment by the assignee; or
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(ii) If Tenant assigns it interest under this Lease and
if Tenant is to receive all or a portion of the consideration for such
assignment in future installments, that Tenant and Tenant's assignee shall
have entered into a written agreement with and for the benefit of landlord
satisfactory to Landlord and its counsel whereby Tenant and Tenant's assignee
jointly agree to pay to Landlord an amount equal to fifty percent (50%) of
all such future assignment consideration installments to be paid by such
assignee as and when such assignment consideration is so paid.
(iii) If Tenant subleases the Leased Premises, that Tenant
and Tenant's sublessee shall have entered into a written agreement with and
for the benefit of Landlord satisfactory to Landlord and its counsel whereby
Tenant and Tenant's sublessee jointly agree to pay to Landlord fifty percent
(50%) of all excess rentals to be paid by such sublessee as and when such
excess rentals are so paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED. For purposes
of this Article, including any amendment to this Article by way of addendum
or other writing, the term "assignment consideration" shall mean all
consideration to be paid by the assignee to Tenant or to any other party on
Tenant's behalf or for Tenant's benefit as consideration for such assignment,
without deduction for any commissions paid by Tenant or any other costs or
expenses (including, without limitation, tenant improvements, capital
improvements, building upgrades, permit fees, attorneys' fees, and other
consultants' fees) incurred by Tenant in connection with such assignment, and
the term "excess rentals" shall mean all consideration to be paid by the
sublessee to Tenant or to any other party on Tenant's behalf or for Tenant's
benefit for the sublease of the Leased Premises in excess of the rent due to
Landlord under the terms of this Lease for the same period, without deduction
for any commissions paid by Tenant or any other costs or expenses (including,
without limitation, tenant improvements, capital improvements, building
upgrades, permit fees, attorneys' fees, and other consultants' fees) incurred
by Tenant in connection with such sublease. Tenant agrees that the portion of
any assignment consideration and/or excess rentals arising from any
assignment or subletting by Tenant which is to be paid to Landlord pursuant
to this Article now is and shall then be the property of landlord and not the
property of Tenant.
7.6 PAYMENTS. All payments required by this Article to be made to
Landlord shall be made in cash in full as and when they become due. At the
time Tenant, Tenant's assignee or sublessee makes each such payment to
Landlord, Tenant or Tenant's assignee or sublessee, as the case may be, shall
deliver to Landlord an itemized statement in reasonable detail showing the
method by which the amount due Landlord was calculated and certified by the
party making such payment as true and correct.
7.7 GOOD FAITH. The rights granted to Tenant by this Article are
granted in consideration of Tenant's express covenant that all pertinent
allocations which are made by Tenant between the rental value of the Leased
Premises and the value of any of Tenant's personal property which may be
conveyed or leased generally concurrently with and which may reasonably be
considered a part of the same transaction as the permitted assignment or
subletting shall be made fairly, honestly and in good faith. If Tenant shall
breach this covenant, Landlord may immediately declare Tenant to be in
default under the terms of this Lease and terminate this
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Lease and/or exercise any other rights and remedies Landlord would have under
the terms of this Lease in the case of a material default by Tenant under
this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT. No subletting or assignment, even
with the consent of Landlord, shall relieve Tenant of its personal and
primary obligation to pay rent and to perform all of the other obligations to
be performed by Tenant hereunder. Consent by Landlord to one or more
assignments of Tenant's interest in this Lease or to one or more sublettings
of the Leased Premises shall not be deemed to be a consent to any subsequent
assignment or subletting. If Landlord shall have been ordered by a court of
competent jurisdiction to consent to a requested assignment or subletting, or
such and assignment or subletting shall have been ordered by a court of
competent jurisdiction over the objections of Landlord, such assignment or
subletting shall not be binding between the assignee (or sublessee) and
Landlord until such time as all conditions set forth in Paragraph 7.4 above
have been fully satisfied (to the extent not then satisfied) by the assignee
or sublessee, including, without limitation, the payment to Landlord of all
agreed assignment considerations and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE. Landlord shall not
be liable to Tenant for, and Tenant hereby releases Landlord and its
partners, principals, members, officers, agents, employees, lenders,
attorneys, and consultants from, any and all liability whether in contract,
tort or on any other basis, for any injury to or any damage sustained by
Tenant., Tenant's agents, employees, contractors or invitees, any damage to
Tenant's property, or any loss to Tenant's business, loss of Tenant's profits
or other financial loss of Tenant resulting from or attributable to the
condition of, the management of, the repair or maintenance of, the protection
or, the supply of services or utilities to, the damage in or destruction of
the Leased Premises, the Building, the Property or the Outside Areas,
including without limitation (i) the failure, interruption, rationing or
other curtailment or cessation in the supply of electricity, water, gas or
other utility service to the Property, the Building or the Leased Premises;
(ii) the vandalism or forcible entry into the Building or the Leased
Premises; (iii) the penetration of water into or onto any portion of the
Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises; (v)
the existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems
to function properly (such as the HVAC systems); (vii) the blockage of access
to any portion of the Property, the Building or the Leased Premises, except
that Tenant does not so release Landlord from such liability to the extent
such damage was promixately caused by Landlord's active negligence, willful
misconduct, or Landlord's failure to perform an obligation expressly
undertaken pursuant to this Lease after a reasonable period of time shall
have lapsed following receipt of written notice from Tenant to so perform
such obligation. In this regard, Tenant acknowledges that it is fully
apprised of the provisions of Law relating to releases, and particularly to
those provisions contained in Section 1542 of the California Civil Code which
reads as follows:
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"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intend to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall defend with
competent counsel reasonably satisfactory to Landlord any claims made or
legal actions filed or threatened against Landlord with respect to the
violation of any law, or the death, bodily injury, personal injury, property
damage, or interference with contractual or property rights suffered by any
third party occurring within the Leased Premises or resulting from Tenant's
use or occupancy of the Leased Premises, the Building or the Outside Areas,
or resulting from Tenant's activities in or about the Leased Premises, the
Building, the Outside Areas or the Property, and Tenant shall indemnify and
hold Landlord, Landlord's partners, principals, members, employees, agents
and contractors harmless from any loss liability, penalties, or expense
whatsoever (including any loss attributable to vacant space which otherwise
would have been leased, but for such activities) resulting therefrom, except
to the extent proximately caused by the active negligence or willful
misconduct of Landlord. This indemnity agreement shall survive until the
latter to occur of (i) the date of expiration, or sooner termination, of this
Lease, or (ii) the date Tenant actually vacates the Leased Premises.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with
all of the following:
(a) Tenant shall procure, pay for and keep in full force and
effect, at all times during the Lease Term, the following:
(i) Commercial general liability on claims made from
insuring Tenant against liability for personal injury, bodily injury, death
and damage to property occurring within the Leased Premises, or resulting
from Tenant's use or occupancy of the Leased Premises, the Building, the
Outside Areas or the Property, or resulting from Tenant's activities in or
about the Leased Premises or the Property, with coverage in an amount equal
to Tenant's Required Liability Coverage (as set forth in Article 1), which
insurance shall contain a "broad form liability" endorsement insuring
Tenant's performance of Tenant's obligations to indemnify Landlord as
contained in this lease. Tenant shall provide tail coverage on the commercial
general liability policy and provide proof of such coverage for the period of
all statute of limitations with respect to any possible claims under such
policy. This obligation shall survive the termination or expiration of the
Lease Term. If Tenant does not provide such coverage upon
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termination of the Lease or expiration of the Lease Term, Landlord may use
the Security Deposit to provide such coverage.
(ii) Fire and property damage insurance in so-called
"fire and extended coverage" form insuring Tenant against loss from physical
damage to Tenant's personal property, inventory, trade fixtures and
improvements within the Leased Premises with coverage for the full actual
replacement cost thereof;
(iii) Pressure vessel insurance, if applicable;
(iv) Product liability insurance (including, without
limitation, if food and/or beverages are distributed, sold and/or consumed
within the Leased Premises, to the extent obtainable, coverage for liability
arising out of the distribution, sale, use or consumption of food and/or
beverages (including alcoholic beverages, if applicable) at the Leased
Premises for not less than Tenant's Required Liability Coverage (as set forth
in Article 1);
(v) Workers' compensation insurance and any other
employee benefit insurance sufficient to comply wit hall laws; and
(vi) With respect to making of alterations or the
construction of improvements or the like undertaken by Tenant, contingent
liability and builder's risk insurance, in an amount and with coverage
reasonably satisfactory to Landlord.
(b) Each polity of liability insurance required to be carried by
Tenant pursuant to this paragraph or actually carried by Tenant with respect
to the Leased Premises or the Property; (i) shall, except with respect to
insurance required by subparagraph (a)(vi) above, name Landlord, and such
others as are designated by Landlord, as additional insureds; (ii) shall be
primary insurance providing that the insurer shall be liable for the full
amount of the loss, up to and including the total amount of liability set
forth in the declaration of coverage, without the right of contribution from
or prior payment by any other insurance coverage of Landlord; (iii) shall be
in a form satisfactory to Landlord; (iv) shall be carried with companies
reasonably acceptable to landlord with Best's ratings of at least A and XI;
(v) shall provide that such policy shall not be subject to cancellation,
lapse, reduction in scope, amount of coverage or quality except after at
least thirty (30) days prior written notice to Landlord, and (vi) shall
contain a so-called "severability" or "cross liability" endorsement. Each
policy of property insurance maintained by Tenant with respect to the Leased
Premises or the Property or any property therein (i) shall provide that such
policy shall not be subject to cancellation, lapse or change except after at
least thirty day prior written notice to Landlord and (ii) shall contain a
waiver and/or a permission to waive by the insurer of any right of
subrogation against Landlord, its partners, principals, members, officers,
employees, agents and contractors, which might arise by reason of any payment
under such policy or by reason of any act or omission of Landlord, its
partners, principals, members, officers, employees, agents and contractors.
(c) Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to Landlord, with respect to each
policy of insurance required to be carried by Tenant pursuant to this
Article, a copy of such policy (appropriately authenticated by the insurer as
having been issued, premium paid) or a certificate of the insurer certifying
in
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form satisfactory to landlord that a policy has been issued, premium paid,
providing the coverage required by this Paragraph and containing the
provisions specified herein. With respect to each renewal or replacement of
any such insurance, the requirements of this Paragraph must be complied with
prior to the expiration or cancellation of the policies being renewed or
replaced. Landlord may, at any time and from time to time, inspect and/or
copy any and all insurance policies required to be carried by Tenant pursuant
to this Article. If Landlord's Lender, insurance broker, and advisor or
counsel reasonably determines at any time that the amount of coverage set
forth in Paragraph 9.1(a) for any policy of insurance Tenant is required to
carry pursuant to this Article is not adequate, then Tenant shall increase
the amount of coverage for such insurance to such greater amount as
Landlord's Lender, insurance broker, advisor or counsel reasonably deems
adequate.
9.2 LANDLORD'S INSURANCE. With respect to insurance maintained by
Landlord:
(a) Landlord shall maintain, as the minimum coverage required of
it by this lease, fire and property damage insurance in so-called "fire and
extended coverage" form insuring Landlord (and such others as Landlord may
designate) against loss from physical damage to the Building with coverage of
not less than one hundred percent (100%) of the full actual replacement cost
hereof and against loss of rents for a period of not less than 12 months.
Such fire and property damage insurance, at Landlord's election but without
any requirements on landlord's behalf to do so, (i) may be written in
so-called "all-risk" form, excluding only those perils commonly excluded from
such coverage by Landlord's then property damage insurer; (ii) may provide
coverage for physical damage to the improvements so insured for up to the
entire full actual replacement cost thereof; (iii) may be endorsed to cover
loss or damage caused by any additional perils against which Landlord may
elect to insure, including earthquake and/or flood; and /or (iv) may provide
coverage for loss of rents for a period of up to twelve months. Landlord
shall not be required to cause such insurance to cover any of Tenant's
personal property, inventory, and trade fixtures, or any modifications,
alterations or improvements made or constructed by Tenant to or within the
Leased Premises. Landlord shall use commercially reasonable efforts to obtain
such insurance at competitive rates.
(b) Landlord shall maintain commercial general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Three Million dollars ($3,000,000). Landlord may carry such greater
coverage as Landlord or Landlord's Lender, insurance broker, advisor or
counsel may from time to time determine is reasonably necessary for the
adequate protection of Landlord and the Property.
(c) Landlord may maintain any other insurance which in the opinion
of its insurance broker, advisor or legal counsel is prudent to carry under
the given circumstances, provided such insurance is commonly carried by
owners of property similarly situated and operating under similar
circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION. Landlord hereby releases Tenant, and
Tenant hereby releases Landlord and its respective partners, principals,
members, officers, agents, employees and servants, from any and all liability
for loss, damage or injury to the property of
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the other in or about the Leased Premises or the Property which is caused by
or results from a peril or event or happening which is covered by insurance
actually carried and in force at the time of the loss by the party sustaining
such loss; PROVIDED, HOWEVER, that such waiver shall be effective only to the
extent permitted by the insurance covering such loss and to the extent such
insurance is not prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE. If the Leased Premises, the Building
or the Outside Area are damaged by any peril after the Effective Date of this
Lease, Landlord shall restore the same, as and when required by this
paragraph, unless this Lease is terminated by Landlord pursuant to Paragraph
10.3 or by Tenant pursuant to Paragraph 10.4. If this Lease is not so
terminated, then upon the issuance of all necessary governmental permits,
Landlord shall commence and diligently prosecute to completion the
restoration of the Leased Premises, the Building or the Outside Area, as the
case may be, to the extent then allowed by law to substantially the same
condition in which it existed as of the Lease Commencement Date. Landlord's
obligation to restore shall be limited to actual receipt of insurance
proceeds and to the improvements constructed by Landlord. Landlord shall have
no obligation to restore any improvements made by Tenant to the Leased
Premises or any of Tenant's personal property, inventory or trade fixtures.
Upon completion of the restoration by Landlord, Tenant shall forthwith
replace or fully repair all of Tenant's personal property, inventory, trade
fixtures and other improvements constructed by Tenant to like or similar
conditions as existed at the time immediately prior to such damage or
destruction, subject to delays resulting from disbursement of insurance
proceeds by Tenant's insurer. So long as the damage is not the result of the
act or omission of Tenant and Tenant has maintained in full force and effect
all policies of insurance required to be maintained by Tenant pursuant to
this Lease, Tenant shall not be required to expend funds to restore its
personal property, inventory, trade fixtures and other non-permanent
improvements constructed by Tenant to the extent the cost of restoration
exceeds the insurance proceeds paid to Tenant (plus any deductible or
self-insured retention by Tenant).
10.2 INSURANCE PROCEEDS. All insurance proceeds available from the fire
and property damage insurance carried by Landlord shall be paid to and become
the property of Landlord. If this Lease is terminated pursuant to either
Paragraph 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss of property that is Landlord's property or
would become Landlord's property on termination of this Lease shall be paid
to and become the property of Landlord, and the remainder of such proceeds
shall be paid to and become the property of Tenant. If this Lease is not
terminated pursuant to either Paragraph 10.3 or 10.4, all insurance proceeds
available from insurance carried by Tenant which cover loss to property that
is Landlord's property shall be paid to and become the property of landlord,
and all proceeds available from such insurance which cover loss to property
which would only become the property of Landlord upon termination of this
lease shall be paid and remain the property of Tenant. The determination of
Landlord's property and Tenant's property shall be made pursuant to Paragraph
6.2.
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10.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option
may be exercised only by delivery to Tenant of a written notice of election
to terminate within thirty (30) days after the date of such damage or
destruction:
(a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time
of such damage or destruction (an "insured peril") to such any extent that
the estimated cost to restore the Building exceeds the lesser of (i) the
insurance proceeds available from insurance required to be carried by
Landlord, or (ii) fifty percent (50%) of the then actual replacement cost
thereof;
(b) The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease.
(c) The Building is damaged by any peril and, because of the laws
then in force, the Building (i) cannot be restored at reasonable cost or (ii)
if restored, cannot be used for the same use being made thereof before such
damage.
10.4 TENANT'S RIGHT TO TERMINATE. If the Leased Premises, the Building
or the Outside Area are damaged by any peril and Landlord does not elect to
terminate this Lease or is not entitled to terminate this Lease pursuant to
this Article, then as soon as reasonably practicable, Landlord shall furnish
Tenant with the written opinion of Landlord's architect or construction
consultant as to when the restoration work required of landlord may be
complete. Tenant shall have the option to terminate this Lease in the event
any of the following occurs, which option may be exercised only by delivery
to Landlord of a written notice of election to terminate within thirty (30)
days after Tenant receives from Landlord the estimate of the time needed to
complete such restoration:
(a) If the time estimated to substantially complete the
restoration exceeds six months from and after the date the architect's or
construction consultant's written opinion is delivered; or
(b) If the damage occurred within twelve months of the last day of
the Lease Term and the time estimated to substantially complete the
restoration exceeds one hundred eight days from and after the date such
restoration is commenced.
10.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of
Paragraph 10.4 above, captioned "Tenant's Right To Terminate", are intended
to supersede and replace the provisions contained in California Civil Code,
Section 1932, Subdivision 2, and California Civil Code, Section 1934, and
accordingly, Tenant hereby waives the provisions of such Civil Code Sections
and the provisions of any successor Civil Code Sections or similar laws
hereinafter enacted.
10.6 ABATEMENT OF RENT. In the event of damage to the Leased Premises
which does not result in the termination of this Lease, the Base Monthly Rent
(and any Additional Rent) shall be temporarily abated during the period of
restoration in proportion in the degree to which Tenant's use of the Leased
Premises is impaired by such damage.
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ARTICLE 11
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE. Except as otherwise provided in
Paragraph 11.4 below regarding temporary takings, Tenant shall have the
option to terminate this lease if, as a result of any taking, (i) all of the
Leased Premises is taken, or (ii) twenty-five percent (25%) or more of the
Leased Premises is taken and the part of the Leased Premises that remains
cannot, within a reasonable period of time, be made reasonably suitable for
the continued operation of Tenant's business. Tenant must exercise such
option within a reasonable period to time, to be effective on the later to
occur of (i) the date that possession of that portion of the Leased Premises
that is condemned is taken by the condemnor or (ii) the date Tenant vacated
the Leased Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE. Except as otherwise provided in
Paragraph 11.4 below regarding temporary takings, Landlord shall have the
option to terminate this Lease if, as a result of any taking, (i) all of the
Leased Premises is taken, (ii) twenty-five percent (25%) or more of the
Leased Premises is taken and the part of the Leased Premises that remains
cannot, within a reasonable period of time, be made reasonably suitable for
the continued operation of Tenant's business, or (iii) because of the laws
then in force, the Leased Premises may not be used for the same use being
made before such taking, whether or not restored as required by Paragraph
11.3 below. Any such option to terminate by Landlord must be exercised within
a reasonable period of time, to be effective as of the date possession is
taken by the condemnor.
11.3 RESTORATION. If any part of the Leased Premises or the Building is
taken and this Lease is not terminated, then Landlord shall, to the extent
not prohibited by laws then in force, repair any damage occasioned thereby to
the remainder thereof to a condition reasonably suitable for Tenant's
continued operations and otherwise, to the extent practicable, in the manner
and to the extent provided in Paragraph 10.1.
11.4 TEMPORARY TAKING If a portion of the Leased Premises is temporarily
taken for a period of one year or less and such period does not extend beyond
the Lease Expiration Date, this Lease shall remain in effect. If any portion
of the Leased Premises is temporarily taken for a period which exceeds one
year of which extends beyond the Lease Expiration Date, then the rights of
landlord and Tenant shall be determined in accordance with Paragraphs 11.1
and 11.2 above.
11.5 DIVISION OF CONDEMNATION AWARD. Any award made for any taking of
the Property, the Building, or the Leased Premises, or any portion thereof,
shall belong to and be paid to Landlord, and Tenant hereby assigns to
Landlord all of its rights, title and interest in any such award; PROVIDED,
HOWEVER, that Tenant shall be entitled to receive any portion of the award
that is made specifically (i) for the taking of personal property, inventory
or trade fixtures belonging to Tenant, (ii) for the interruption of Tenant's
business or its moving costs, or (iii) for the value of any leasehold
improvements installed and paid for by Tenant. The rights of Landlord and
Tenant regarding any condemnation shall be determined as provided in this
Article, and each party hereby waives the provisions of Section 1265.130 of
the California Code of Civil Procedure, and the provisions of any similar law
hereinafter enacted, allowing either
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party to petition the Supreme Court to terminate this Lease and/or otherwise
allocate condemnation awards between Landlord and Tenant in the event of a
taking of the Leased Premises.
11.6 ABATEMENT OF RENT. In the event of a taking of the Leased Premises
which does not result in a termination of this Lease (other than a temporary
taking), then, as of the date possession is taken by the condemning
authority, the Base Monthly Rent shall be reduced in the same proportion that
the area of that part of the Leased Premises so taken (less any addition to
the area of the Leased Premises by reason of any reconstruction) bears to the
area of the Leased Premises immediately prior to such taking.
11.7 TAKING DEFINED. The term "taking" or "taken" as used in this
Article 11 shall mean any transfer or conveyance of all or any portion of the
Property to a public or quasi-public agency or other entity having the power
of eminent domain pursuant to or as a result of the exercise of such power by
such an agency, including any inverse condemnation and/or any sale or
transfer by Landlord of all or any portion of the Property to such an agency
under threat of condemnation or the exercise of such power.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT. Tenant shall be in default of its
obligations under this Lease if any of the following events occur:
(a) Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due, provided that Tenant shall not be deemed in default
with respect to the first such failure only until Landlord has provided
Tenant with written notice thereof and Tenant has failed to make the required
payment within five (5) days of delivery of such written notice; or
(b) Tenant shall have failed to perform any term, covenant or
condition of this Lease (except those requiring the payment of Base Monthly
Rent or Additional Rent, which failures shall be governed by subparagraph (a)
above) or shall have done or permitted to be done any act, use or thing in
its use, occupancy or possession of the Leased Premises or the Building or
the Outside Areas which is prohibited by the terms of this Lease and then
shall have failed to cure the matter within thirty (30) days after written
notice from Landlord to Tenant specifying the nature of such failure and
requesting Tenant to perform same; or
(c) Tenant shall have sublet the Leased Premises or assigned
encumbered its interest in this lease in violation of the provisions
contained in Article 7, whether voluntarily or by operation of law/ or
(d) Tenant shall have abandoned the Leased Premises; or
(e) Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the
appointment of a custodian or receiver with respect to, all or any
substantial part of the property or assets of Tenants (or such Guarantor) or
any property to asset essential to the conduct of Tenant's (or such
Guarantor's) business, and
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Tenant (or such Guarantor) shall have failed to obtain a return or release of
the same within ninety (90) days thereafter, or prior to sale pursuant to
such sequestration, attachment or levy, whichever is earlier; or
(f) Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
(g) Tenant or any Guarantor of this Lease shall have allowed (or
sought) to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or condemnation or
a reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar
statute of the United States or any state thereof; or (iii) otherwise directs
the winding up or liquidation of Tenant; PROVIDED, HOWEVER, if any decree or
order was entered without Tenant's consent or over Tenant's objection,
Landlord may not terminate this Lease pursuant to this Subparagraph if such
decree or order is rescinded or reversed within ninety (90) days after its
original entry; or
(h) Tenant shall have failed to renew the Letter of Credit within
thirty (30) days prior to its expiration date, or the financial institution
which has issued the Letter of Credit shall have failed to honor the Letter
of Credit or shall have withdrawn or terminated the Letter of Credit; or
(i) Tenant or any Guarantor of this Lease shall have availed itself
of the protection of any debtor's relief law, moratorium law or other similar
law which does not required the prior entry of a decree or order.
12.2 LANDLORD'S REMEDIES. In the event of any default by Tenant, and
without limiting Landlord's right to indemnification as provided in Article
8.2, Landlord shall have the following remedies, in addition to all other
rights and remedies provided by law otherwise provided in this Lease, to
which Landlord may resort cumulatively, or in the alternative:
(a) Landlord may, at Landlord's election, keep this Lease in effect
and enforce, by an action at law or in equity, all of its rights and remedies
under this Lease including, without limitation, (i) the right to recover the
rent and other sums as they become due by appropriate legal action, (ii) the
right to make payments required by Tenant, or perform Tenant's obligations
and be reimbursed by Tenant for the cost thereof with interest at the then
maximum rate of interest not prohibited by law form the date the sum is paid
by Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of
injunctive relief and specific performance to prevent Tenant from violating
the terms of this Lease and/or to compel Tenant to perform its obligations
under this Lease, as the case may be.
(b) Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any
termination under this subparagraph shall not relieve Tenant from its
obligation to pay to Landlord all Base Monthly Rent and Additional Rent then
or thereafter due, or any other sums due or thereafter accruing to Landlord,
or from any claim against Tenant for damages previously accrued or then
thereafter accruing. In no event shall any
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one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease constitute a termination of this
Lease:
(i) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(ii) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof
or otherwise; or
(iii) Any action taken by Landlord or its partners,
principals, members, officers, agents, employees, or servants, which is
intended to mitigate the adverse effects of any breach of this Lease by
Tenant, including, without limitation, any action taken to maintain and
preserve the leased Premises on any action taken to relet the Leased Premises
or any portion thereof for the account at Tenant and in the name of Tenant.
(c) In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not
terminate unless Landlord gives Tenant written notice of termination. If
Landlord does not terminate this Lease by giving written notice of
termination, Landlord may enforce all its rights and remedies under this
Lease, including the right and remedies provided by California Civil Code
Section 1951.4 ("lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it become sue, if lessee has right to
sublet or assign, subject only to reasonable limitations"), as in effect on
the Effective Date of this Lease.
(d) In the event Landlord terminates this lease, Landlord shall be
entitled, at Landlord's election, to the rights and remedies provide in
California Civil Code Section 1951.2, as in effect on the Effective Date of
this Lease. For purposes of computing damages pursuant to Section 1951.2, an
interest rate equal to the maximum rate of interest then not prohibited by
law shall be used where permitted. Such damages shall include, without
limitation:
(i) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco, at the time of award plus one percent; and
(ii) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would
be likely to result therefrom, including without limitation, the following:
(i) expenses for cleaning, repairing or restoring the Leased Premises, (ii)
expenses for altering, remodeling or otherwise improving the Leased Premises
for the purpose of reletting, including removal of existing leasehold
improvements and/or installation of additional leasehold improvements
(regardless of how same is funded, including reduction of rent, a direct
payment or allowance to anew tenant, or otherwise), (iii) broker's fees
allocable to the remainder of the term of this Lease, advertising costs and
other expenses of reletting the Leased Premises; (iv) costs of carrying and
maintaining the Leased Premises, such as taxes, insurance premiums, utility
charges and security precautions, (v) expenses incurred in
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removing, disposing of and/or storing any of Tenant's personal property,
inventory or trade fixtures remaining therein; (vi) reasonable attorneys'
fees, expert witness fees, court costs and other reasonable expenses incurred
by Landlord (but not limited to taxable costs) in retaking possession of the
Leased Premises, establishing damages hereunder, and releasing the Leased
Premises; and (vii) any other expenses, costs or damages otherwise incurred
or suffered as a result of Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES. In the event Landlord
fails to perform its obligations under this Lease, Landlord shall
nevertheless not be in default under the terms of this Lease until such time
as Tenant shall have first given Landlord written notice specifying the
nature of such failure to perform its obligations, and then only after
Landlord shall have had thirty (30) days following its receipt of such notice
within which to perform such obligations; PROVIDED, THAT, if longer than
thirty (30) days is reasonably required in order to perform such obligations,
Landlord shall have such longer period. In the event of Landlord's default as
above set forth, then, and only then, Tenant may then proceed in equity or at
law to compel Landlord to perform its obligations and/or to recover damages
proximately caused by such failure to perform (except as and to the extent
Tenant has waived its right to damages as provided in this Lease).
12.4 LIMITATION OF TENANT'S RECOURSE. Tenant's recourse shall be limited
to Landlord's interest in the Property. In addition, if Landlord is a
corporation, trust, parntership, joint venture, limited liability company,
unincorporated association, or other form of business entity, Tenant agrees
that (i) the obligations of Landlord under this Lease shall not constitute
personal obligations of the officers, directors, trustees, partners, joint
venturers, members, owners, stockholders, or other principals of such
business entity, and (ii) Tenant shall have no recourse to the assets of such
offices, directors, trustees, partners, joint venturers, members, owners,
stockholders or principals. Additionally, if Landlord is a partnership or
limited liability company, then Tenant covenants and agrees:
(a) No partner or member of Landlord shall be sued or named as a
party in any suit or action brought by Tenant with respect to any alleged
breach of this Lease (except to the extent necessary to secure jurisdiction
over the partnership and then only for that sole purpose);
(b) No service of process shall be made against any partner or
member of Landlord except for the sole purpose of securing jurisdiction over
the partnership; and
(c) No writ of execution will ever be levied against the assets of
any partner or member of Landlord other than to the extent of his or her
interest in the assets of the partnership or limited liability company
constituting Landlord.
Tenant further agrees that each of the foregoing covenants and agreements
shall be enforceable by Landlord and by any partner or member of Landlord and
shall be applicable to any actual or alleged misrepresentation or
nondisclosure made regarding this Lease or the Leased Premises or any actual
or alleged failure, default or reach of any covenant or agreement either
expressly or implicitly contained in this Lease or imposed by statute or at
common law.
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12.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of
Paragraph 12.3 above are intended to supersede and replace the provisions of
California Civil Code Sections 1932(1), 1941 and 1942, and accordingly,
Tenant hereby waives the provisions of California Civil Code Sections
1932(1), 1941 and 1942 and/or any similar or successor law regarding Tenant's
right to terminate this Lease or to make repairs and deduct the expenses of
such repairs from the rent due under this Lease.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY. Tenant shall pay before delinquency any
and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason
of or based upon Tenant's estate in this Lease, Tenant's ownership of
property, improvements made by Tenant to the Leased Premises or the Outside
Areas, improvements made by Landlord for Tenant's use within the Leased
Premises or the Outside Areas, Tenant's use (or estimated use) of public
facilities or services or Tenant's consumption (or estimated consumption) or
public utilities, energy, water or other resources (collectively, "Tenant's
Interest"). Upon demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments. If any such taxes, assessments, fees
or public charges are levied against Landlord, Landlord's property, the
Building or the Property, or if the assessed value of the Building or the
Property is increased by the inclusion therein of a value placed upon
Tenant's interest, regardless of the validity thereof, Landlord shall have
the right to require Tenant to pay such taxes, and if not paid and
satisfactory evidence of payment delivered to Landlord at least ten days
prior to delinquency, then Landlord shall have the right to pay such taxes on
Tenant's behalf and to invoice Tenant for the same. Tenant shall, within the
earlier to occur of (a) thirty (30) days of the date it receives an invoice
from Landlord setting forth the amount of such taxes, assessments, fees, or
public charge so levied, or (b) the due date of such invoice, pay to the
Landlord, as Additional Rent, the amount set forth in such invoice. Failure
by Tenant to pay the amount so invoiced within such time period shall be
conclusively deemed a default by Tenant under this Lease. Tenant shall have
the right to bring suit in any court of competent jurisdiction to recover
from the taxing authority the amount of any such taxes, assessments, fees or
public charges so paid.
13.2 HOLDING OVER. this Lease shall terminate without further notice on
the Lease Expiration Date (as set forth in Article 1). Any holding over by
Tenant after expiration of the Lease Term shall neither constitute a renewal
nor extension of this Lease nor give Tenant any rights in or to the Leased
Premises except as expressly provided in this Paragraph. Any such holding
over to which Landlord has consented shall be construed to be a tenancy from
month to month, on the same terms and conditions herein specified insofar as
applicable, except that the Base Monthly Rent shall be increased to an amount
equal to one hundred fifty percent (150%) of the Base Monthly Rent payable
during the last full month immediately preceding such holding over.
13.3 SUBORDINATION TO MORTGAGES. This Lease is subject to and
subordinate to all ground leases, mortgages and deeds of trust which affect
the Building or the Property and which
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are of public record as of the Effective Date of this Lease, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
However, if the lessor under any such ground lease or any lender holding any
such mortgage or deed of trust shall advise Landlord that it desires or
requires this Lease to be made prior and superior thereto, then, upon written
request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and
deliver any and all customary or reasonable documents or instruments which
Landlord and such lessor or lender deems necessary or desirable to make this
Lease prior thereto. Tenant hereby consents to Landlord's ground leasing the
land underlying the Building or the Property and/or encumbering the Building
or the Property as security for future loans on such terms as Landlord shall
desire, all of which future ground leases, mortgages or deeds of trust shall
be subject to and subordinate to this Lease. However, if any lessor under any
such future ground lease or any lender holding such future mortgage or deed
of trust shall desire or require that this Lease be made subject to and
subordinate to such future ground lease, mortgage or deed of trust, then
Tenant agrees, within ten days after Landlord's written request therefor, to
exclude, acknowledge and deliver to Landlord any and all documents or
instruments requested by Landlord or by such lessor or lender as may be
necessary or proper to assure the subordination of this Lease to such future
ground lease, mortgage or deed of trust, but only if such lessor or lender
agrees to recognize Tenant's rights under this lease and agrees not to
disturb Tenant's quite possession of the Leased Premises so long as Tenant is
not in default under this lease. If Landlord assigns the Lease as security
for a loan, Tenant agrees to execute such documents as are reasonably
requested by the lender and to provide reasonable provisions in the Lease
protecting such lender's security interest which are customarily required by
institutional lenders making loans secured by a deed of trust.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE. Tenant shall, upon request,
attorn (i) to any purchaser of the Building or the Property at any
foreclosure sale or private sale conducted pursuant to any security
instruments encumbering the Building or the Property, (ii) to any guarantee
or transferee designated in any deed given in lieu of foreclosure of any
security interest encumbering the Building or the Property, or (iii) to the
lessor under any underlying ground lease of the land underlying the Building
or the Property, should ground lease be terminated; provided that such
purchaser, grantee or lessor recognizes Tenant's rights under this Lease.
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13.5 MORTGAGEE PROTECTION. In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such
Lender or lessor a reasonable opportunity to cure the default, including time
to obtain possession of the Leased Premises by power of sale or judicial
foreclosure or other appropriate legal proceedings if reasonably necessary to
effect a cure.
13.6 ESTOPPEL CERTIFICATE. Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate (i)
certifying that this Lease is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed, and (iv) certifying such other information about this Lease as may
be reasonably requested by Landlord, its Lender or prospective lenders,
investors or purchasers of the Building or the Property. Tenant's failure to
execute and deliver such estoppel certificate within ten days after
Landlord's request therefor shall be a material default by Tenant under this
Lease, and Landlord shall have all of the rights and remedies available to
Landlord as Landlord would otherwise have in the case of any other material
default by Tenant, including the right to terminate this Lease and sue for
damages proximately caused thereby, it being agreed and understood by Tenant
that Tenant's failure to so deliver such estoppel certificate in a timely
manner could result in Landlord being unable to perform committed obligations
to other third parties which were made by Landlord in reliance upon this
covenant or Tenant. Landlord and Tenant intend that any statement delivered
pursuant to this paragraph may be relied upon by any Lender or purchaser or
prospective Lender or purchaser of the Building, the Property, or any
interest in them.
13.7 TENANT'S FINANCIAL INFORMATION. Tenant shall, within ten (10) business
days after Landlord's request therefor, deliver to Landlord a copy of
Tenant's (and any guarantor's) current financial statements (including a
balance sheet, income statement and statement of cash flow, all prepared in
accordance with generally accepted accounting principles or such other
accounting methodology recommended by Tenant's accounting firm and generally
accepted) and any such other information reasonably requested by Landlord
regarding Tenant's financial condition. If Tenant is a public corporation,
however Landlord shall not disclose any non-public financial information.
Landlord shall be entitled to disclose such financial statements or other
information to its Lender, to any present or prospective principal of or
investor in Landlord, or to any prospective Lender or purchaser of the
Building, the Property, or any portion thereof or interest therein. Any such
financial statement or other information which is marked "confidential" or
"company secrets" (or is otherwise similarly marked by Tenant) shall be
confidential and shall not be disclosed by Landlord to any third party except
as specifically provided in this paragraph, unless the same becomes a part of
the public domain without the fault of Landlord.
13.8 TRANSFER BY LANDLORD. Landlord and its successors in interest shall
have the right to transfer their interest in the Building, the Property, or
any portion thereof at any time and to any person or entity in the event of
any such transfer, the Landlord originally named herein (and in the case of
any subsequent transfer, the transferor), from the date of such transfer, (i)
shall be automatically relieved, without any further act by any person or
entity, or all liability for the performance of the obligations of the
Landlord hereunder which may accrue after the date of such transfer and (ii)
shall be relieved of all liability for the performance of the obligations of
the Landlord hereunder which have accrued before the date of transfer of its
transferee agrees to assume and perform all such prior obligations of the
Landlord hereunder, Tenant shall attorn to any such transferee. After the
date of any such transfer, the term "Landlord" as used herein shall mean the
transferee of such interest in the Building or the Property.
13.9 FORCE MAJEURE. The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligations by reason
of any strikes, lockouts or labor disputes; government restrictions,
regulations, controls, action or inaction; civil commotion; or extraordinary
weather, fire or other acts of God (collectively, "FORCE MAJEURE").
13.10 NOTICES. Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or
in lieu of personal service may be given by reputable overnight courier
service, postage prepaid, addressed to the other party as follows:
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If to Landlord: 1245 TERRA BELLA PARTNERS, LLC
c/o Menlo Equities
2180 Sand Hill Road
Suite 100
Menlo Park, California 94025
Attention: Henry Bullock/Richard Holmstrom
with a copy to: GRAY CARY WARE & FREIDENRICH
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Jeffrey A. Trant
If to Tenant: INTRABIOTICS PHARMACEUTICALS, INC.
1245 Terra Bella Avenue
Mountain View, California 94043
Attention: Ken Kelly, President
with a copy to: COOLEY GODWARD CASTRO HUDDLESON & TATUM
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attention: Tony Wise
Any notice given in accordance with the foregoing shall be deemed received
upon actual receipt or refusal to accept delivery.
13.11 ATTORNEYS' FEES. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision
of this Lease, to recover rent, to terminate this Lease, or to enforce,
protect, determine or establish any term or covenant of this Lease or rights
or quotes hereunder of either party, the prevailing party shall be entitled to
recover from the non-prevailing party as a part of such action or proceeding,
or in a separate action for that purpose brought within one year from the
determination of such proceeding, reasonable attorneys' fees, expert witness
fees, court costs and other reasonable expenses incurred by the prevailing
party.
13.12 DEFINITIONS. Any term that is given a special meaning by any
provision in this Lease shall, unless otherwise specifically stated, have
such meaning wherever used in this Lease or in any Addenda or amendment
hereto. In addition to the terms defined in Article 1, the following terms
shall have the following meanings:
(a) REAL PROPERTY TAXES. The term "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all instruments of principal and interest required to
pay any general or special assessments for public improvements and any
increases resulting from reassessments caused by any change in ownership or
new construction), now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or
indirect power to tax or levy assessments, which are levied or assessed for
whatever reason against the Property or any portion thereof, or Landlord's
interest herein, or the fixtures, equipment and other property of Landlord
that is an integral part of the Property and located thereon, or Landlord's
business of owning, leasing or managing the Property or the gross receipts,
income or rentals from the Property, (ii) all charges, levies or fees imposed
by any governmental authority against Landlord by reason of or based upon the
use of or number of parking spaces within the Property, the amount of public
services or public utilities used or consumed (E.G. water, gas, electricity,
sewage or waste water disposal) at the Property, the number of person
employed by tenants of the Property, the size (whether measured in area,
volume, number of tenants or whatever) or the value of the Property, or the
type of use or uses conducted within the Property, and all costs and fees
(including attorneys' fees) reasonably incurred by Landlord in contesting any
Real Property Tax and in negotiating with public authorities as to any Real
Property Tax. If, at any time during the Lease Term, the taxation or
assessment of the Property prevailing as of the Effective Date of this Lease
shall be altered so that in lieu of or in addition to any the Real Property
Tax described above there shall be levied, awarded or imposed (whether by
reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate, substitute, or additional
use or charge (i) on the value, size, use or occupancy of the Property or
Landlord's interest therein or (ii) on or measured by the gross receipts,
income or rentals from the Property, or on Landlord's business of owning,
leasing or managing the Property or (iii) computed in any manner with respect
to the operation of the Property, then any such tax or charge, however
designated, shall be included within the meaning of the terms "Real Property
Tax" or "Real Property Taxes" for purposes of this Lease. If any Real
Property Tax is partly based upon property or rents unrelated to the
Property, then only that part of such Real Property Tax that is fairly
allocable to the Property shall be included within the meaning of the terms
"Real Property Tax" or "Real Property Taxes." Notwithstanding the foregoing,
the terms "Real Property Tax" or "Real Property Taxes" shall not include
estate, inheritance, transfer, gifts or franchise taxes of Landlord or the
federal or state income tax imposed on Landlord's income from all sources.
24.
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(b) LANDLORD'S INSURANCE COSTS. The term "Landlord's Insurance Costs"
shall mean the costs to Landlord to carry and maintain the policies of fire
and property damage insurance for the Building and the Property and general
liability and any other insurance required or permitted to be carried by
Landlord pursuant to Article 9, together with any deductible amounts paid by
Landlord upon the occurrence of any insured casualty or loss; provided,
however, that in the event of an earthquake casualty the deductible for any
repairs or restoration of the Leased Premises or the Building shall be deemed
a capital item and shall be amortized over the useful life of such repair or
restoration, and Tenant shall be responsible for the amortized share thereof
that corresponds to the remaining Lease Term (and any extensions thereof).
(c) PROPERTY MAINTENANCE COSTS. The term "Property Maintenance Costs"
shall mean all costs and expenses (except Landlord's insurance Costs and Real
Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Property and all parts thereof,
including without limitation, (i) market rate professional management fees
(not to exceed two percent (2% of gross Rent), (ii) the amortizing portion of
any costs incurred by Landlord in the making of any modifications, alterations
or improvements required by any governmental authority as set forth in
Article 6, which are so amortized during the Lease Term, and (iii) such other
costs as may be paid or incurred with respect to operating, maintaining, and
preserving the Property, such as repairing and resurfacing the exterior
surfaces of the Building (including roofs), repairing and resurfacing paved
areas, repairing and replacing structural parts of the Building, and repairing
and replacing, when necessary, electrical, plumbing, heating, ventilating
and air conditioning systems serving the Building; PROVIDED, HOWEVER, that
with respect to items referred to in clause (iii) above that are treated as
capital items under generally accepted accounting principles, the cost of
such capital items (together with interest thereon at the rate Landlord is
or would be required to pay in order to borrow funds to finance the
replacement of any such capital item) shall be amortized over their useful
life in accordance with generally accepted accounting principals, and Tenant
shall be responsible only for such amortized portion thereof that corresponds
to the remaining Lease Term (including any extensions thereof).
(d) PROPERTY OPERATING EXPENSES. The term "Property Operating Expenses"
shall mean and include all Real Property Taxes, plus all Landlord's Insurance
Costs, plus all Property Maintenance Costs.
(e) LAW. The term "Law" shall mean any judicial decisions and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirements of any municipal, county, state, federal, or
other governmental agency or authority having jurisdiction over the parties
to this Lease, the Leased Premises, the Building or the Property, or any of
them, in effect either at the Effective Date of this Lease or at any time
during the Lease Term, including, without limitation, any regulation, order,
or policy of any quasi-official entity or body (e.g. a board of fire examiners
or a public utility or special district).
(f) LENDER. The term "Lender" shall mean the holder of any promissory
note or other evidence or indebtedness secured by the Property or any portion
thereof.
(g) PRIVATE RESTRICTIONS. The term "Private Restrictions" shall mean
(as they may exist from time to time) any and all covenants, conditions and
restrictions, private agreements, easements, and any other recorded documents
or instruments affecting the use of the Property, the Building, the Leased
Premises, or the Outside Areas.
(h) RENT. The term "Rent" shall mean collectively Base Monthly Rent and
all Additional Rent.
13.13 GENERAL WAIVERS. One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or
approval of any subsequent similar act by the other party. No waiver of any
provision hereof, or any waiver of any breach of any provision hereof, shall
be effective unless in writing and signed by the waiving party. The receipt
by Landlord of any rent or payment with or without knowledge of the breach of
any other provision hereof shall not be deemed a waiver of any such breach.
No waiver or any provision of this Lease shall be deemed a continuing waiver
unless such waiver specifically states so in writing and is signed by both
Landlord and Tenant. No delay or omission in the exercise of any right or
remedy accruing to either party upon any breach by the other party under this
Lease shall impair such right or remedy or be construed as a waiver of any
such breach theretofore or thereafter occurring. The waiver by either party
of any breach of any provision of this Lease shall not be deemed to be a
waiver of any subsequent breach of the same or any other provisions herein
contained.
13.14 MISCELLANEOUS. Should any provisions of this Lease prove to be invalid
or illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is
a factor. Any copy of this Lease which is executed by the parties shall be
deemed an original for all purposes. This Lease shall, subject to the
provisions regarding assignment, apply to and bind the respective heirs,
successors, executors, administrators and assigns of Landlord and Tenant. The
term "party" shall mean Landlord or Tenant
25.
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as the context implies. If Tenant consists of more than one person or
entity, then all members of Tenant shall be jointly and severally liable
hereunder. This Lease shall be construed and enforced in accordance with the
Laws of the State in which the Leased Premises are located. The captions in
this Lease are for convenience only and shall not be construed in the
construction or interpretation of any provision hereof. When the context of
this Lease requires, the neuter gender includes the masculine, the feminine,
a partnership, corporation, limited liability company, joint venture, or
other form of business entity, and the singular includes the plural. The
terms "must," "shall," "will," and "agree" are mandatory. The term "may" is
permissive. When a party is required to do something by this Lease, it shall
do so at its sole cost and expense without right or reimbursement from the
other party unless specific provision is made therefor. Where Landlord's
consent is required hereunder, the consent of any Lender may also be
required. Landlord and Tenant shall both be deemed to have drafted this
Lease, and the rule of construction that a document is to be construed
against the drafting party shall not be employed in the construction or
interpretation of this Lease. Where Tenant is obligated not to perform any
act or is not permitted to perform any act, Tenant is also obligated to
restrain any others reasonably within its control, including agents,
invitees, contractors, subcontractors and employees, from performing such
act. Landlord shall not become or be deemed a partner or a joint venturer
with Tenant by reason of any of the provisions of this Lease.
ARTICLE 14.
CORPORATE AUTHORITY, BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of such corporation represents and warrants
that Tenant is validly formed and duly authorized and existing, that Tenant
is qualified to do business in the State in which the Leased Premises are
located, that Tenant has the full right and legal authority to enter into
this Lease, and that he or she is duly authorized to execute and deliver this
Lease on behalf of Tenant in accordance with its terms. Tenant shall, within
thirty days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of its board of directors authorizing or ratifying the
execution of this Lease and if Tenant fails to do so, Landlord at its sole
election may elect to terminate this Lease.
14.2 BROKERAGE COMMISSIONS. Landlord and Tenant acknowledge that Landlord
has engaged Landlord's Broker (as defined in Article 1 hereof) and that
Tenant has engaged Tenant's Brokers (as defined in Article 1 hereof) in
connection with the transactions contemplated by this Lease, that Landlord
shall pay all leasing commissions owing to Landlord's Broker, and that
Landlord's Broker shall share such commissions with Tenant's Broker pursuant
to a separate agreement between Landlord's Broker and Tenant's Brokers.
Subject to the immediately preceding sentence, Tenant represents, warrants
and agrees that it has not had any dealings with any real estate broker(s),
leasing agent(s), finder(s) or salesmen (collectively "Brokers"), other than
the Tenant's Brokers with respect to the lease by Tenant of the Leased
Premises pursuant to this Lease, and that Tenant will assume all obligations
and responsibility with respect to the payment of any such Brokers (other
than Tenant's Brokers and Landlord's Broker), and that Tenant will indemnify,
defend with competent counsel, and hold Landlord harmless from any liability
for the payment of any real estate brokerage commissions, leasing commissions
or finder's fees claimed by any other Brokers to be earned or due and payable
by reason of Tenant's agreement or promise (implied or otherwise) to pay (or
to have Landlord pay) such a commission or finder's fee by reason of its
leasing and the Leased Premises pursuant to this Lease.
14.3 ENTIRE AGREEMENT. This Lease and the Exhibits (as described in
Article 1), which Exhibits are by this reference incorporated herein,
constitute the entire agreement between the parties, and there are no other
agreements, understandings or representations between the parties relating to
the lease by Landlord of the Leased Premises to Tenant, except as expressed
herein. No subsequent changes, modifications or additions to this Lease
shall be binding upon the parties unless in writing and signed by both
Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATIONS. Tenant acknowledges that neither Landlord
nor any of its agents made any representations or warranties respecting the
Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made
any representations as to (i) whether the leased Premises may be used for
Tenant's intended use under existing Law, or (ii) the suitability of the
Leased Premises for the conduct of Tenant's business, or (iii) the exact
square footage of the Leased Premises, and that Tenant relies solely upon its
own investigations with respect to such matters. Tenant expressly waives any
and all claims for damage by reason of any statement, representation,
warranty, promise or other agreement of Landlord or Landlord's agent(s), if
any, not contained in this Lease or in any Exhibit attached hereto.
ARTICLE 15.
TELEPHONE SERVICE
Notwithstanding any other provision of this Lease to the contrary.
(a) So long as the entirety of the Leased Premises is leased to Tenant:
26.
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(i) Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises
or for providing telephone service or connections from the utility to the
Leased Premises; and
(ii) Landlord makes no warranty as to the quality, continuity
or availability of the telecommunications services in the Building, and
Tenant hereby waives any claim against Landlord for any actual or
consequential damages (including damages for loss of business) in the event
Tenant's telecommunications services in any way are interrupted, damaged or
rendered less effective, except to the extent caused by the grossly negligent
or willful act or omission by Landlord, its agents or employees. Tenant
accepts the telephone equipment (including, without limitation, the INC, as
defined below) in its "AS-IS" condition, and Tenant shall be solely
responsible for contracting with a reliable third party vendor to assume
responsibility for the maintenance and repair thereof (which contract shall
contain provisions requiring such vendor to inspect the INC periodically (the
frequency of such inspections to be determined by such vendor based on its
experience and professional judgment), and requiring such vendor to meet
local and federal requirements for telecommunications material and
workmanship). Landlord shall not be liable to Tenant and Tenant waives all
claims against Landlord whatsoever, whether for personal injury, property
damage, loss of use of the Leased Premises, or otherwise, due to the
interruption or failure of telephone services to the Leased Premises. Tenant
hereby holds Landlord harmless and agrees to indemnify, protect and defend
Landlord from and against any liability for any damage, loss or expense due
to any failure or interruption of telephone service to the Leased Premises
for any reason. Tenant agrees to obtain loss of rental insurance adequate to
cover any damage, loss or expense occasioned by the interruption of
telephone service.
(b) At such time as the entirety of the Leased Premise is no longer
leased to Tenant, Landlord shall in its sole discretion have the right, by
written notice to Tenant, to elect to assume limited responsibility for INC,
as provided below, and upon such assumption of responsibility by Landlord,
this subparagraph (b) shall apply prospectively.
(i) Landlord shall provide Tenant access to such quantity of
pairs in the Building intra-building network cable ("INC") as is determined to
be available by Landlord in its reasonable discretion. Tenant's access to the
INC shall be solely by arrangements made by Tenant, as Tenant may elect,
directly with Pacific Bell or Landlord (or such vendor as Landlord may
designate), and Tenant shall pay all reasonable charges as may be imposed in
connection therewith. Pacific Bell's charges shall be deemed to be
reasonable. Subject to the foregoing, Landlord shall have no responsibility
for providing to Tenant any telephone equipment, including wiring, within the
Leased Premises or for providing telephone service or connections from the
utility to the Leased Premises, except as required by law.
(ii) Tenant shall not alter, modify, add to or disturb any
telephone wiring in the Leased Premises or elsewhere in the Building without
the Landlord's prior written consent. Tenant shall be liable to Landlord for
any damage to the telephone wiring in the Building due to the act, negligent
or otherwise, of Tenant or any employee, contractor or other agent of Tenant.
Tenant shall have no access to the telephone closets within the Building,
except in the manner and under procedures established by Landlord. Tenant
shall promptly notify Landlord of any actual or suspected failure of
telephone service to the Leased Premises.
(iii) All costs incurred by Landlord for the installation,
maintenance, repair and replacement of telephone wiring in the Building shall
be a Property Maintenance Cost.
(iv) Landlord makes no warranty as to the quality, continuity
or availability of the telecommunications services in the Building, and
Tenant hereby waives any claim against Landlord for any actual or
consequential damages (including damages for loss of business) in the event
Tenant's telecommunications services in any way are interrupted, damaged
or rendered less effective, except to the extent caused by the grossly
negligent or willful act or omission by Landlord, its agents or employees.
Tenant acknowledges that Landlord meets its duty of care to Tenant with
respect to the Building INC by contracting with a reliable third party vendor
to assume responsibility for the maintenance and repair thereof (which
contract shall contain provisions requiring such vendor to inspect the INC
periodically (the frequency of such inspections to be determined by such
vendor based on its experience and professional judgment), and requiring
such vendor to meet local and federal requirements for telecommunications
material and workmanship). Subject to the foregoing, Landlord shall not be
liable to Tenant and Tenant waives all claims against Landlord whatsoever,
whether for personal injury, property damage, loss of use of the Leased
Premises, or otherwise, due to the interruption or failure of telephone
services to the Leased Premises. Tenant hereby holds Landlord harmless and
agrees to indemnify, protect and defend Landlord from and against any
liability for any damage, loss or expense due to any failure or interruption
of telephone service to the Leased Premises for any reason. Tenant agrees to
obtain loss of rental insurance adequate to cover any damage, loss or expense
occasioned by the interruption of telephone service.
27.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound
thereby as of the Effective Date of this Lease first above set forth.
LANDLORD:
1245 TERRA BELLA PARTNERS, LLC. a
a California limited liability company
By: Menlo Equities LLC, a
California limited liability company,
its Managing Member
Dated: 4/30/97 By: /s/ [ILLEGIBLE] Member
---------------- ---------------------------------
TENANT:
INTRABIOTICS PHARMACEUTICALS, INC.,
a Delaware corporation
Dated: April 30, 1999 By: /s/ Kenneth J. Kelley
---------------- ----------------------------------------
Title: President and CEO
-------------------------------------
Dated: By:
----------------------------------------
Title:
-------------------------------------
<PAGE>
ARTICLE 6.
ALTERATIONS AND IMPROVEMENTS
6.2 OWNERSHIP OF IMPROVEMENTS
SCHEDULE 6.2: Items belonging to tenant not deemed real property including
but not limited to.
- water deionization/purification system and distribution
- house vacuum system and distribution
- house compressed dry air system and distribution
- telecommunications systems
- computer network system
- waste neutralization system
- trash compactor system
- satellite signal receivers
- compressed gas distribution system
- audio-visual equipment
- electronic security and monitoring systems
- back-up and emergency electrical power equipment
Initials: /s/ K.K.
------------------------------------
INTRABIOTICS PHARMACEUTICALS, INC.
Initials: /s/ Kenneth Kelley
------------------------------------
1245 TERRA BELLA PARTNERS, LLC
<PAGE>
EXHIBIT 10.11
STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("Lease"), dated for reference purposes only
July 31, 1998, is made by and between Clint S. Carter and Esther Carter Family
Trust ("Lessor") and IntraBiotics Pharmaceuticals, Inc, a Delaware Corporation
("Lessee"), (collectively the "Parties," or individually a "Party").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, as such
improvements to be provided by Lessor are set forth in Paragraph 7.1(a) hereof
and Section 8 of Exhibit B hereto, and commonly known as 1255 Terra Bella
Avenue, Mountain View located in the County of Santa Clara, State of California,
and generally described as an approximately 18,000 square foot R&D/Office
Building ("Premises"). (See also Paragraph 2.)
1.3 TERM: Five (5) years and ten and one-half (10.5) months ("Original
Term") commencing September 1, 1998 ("Commencement Date") and ending July 14,
2004 ("Expiration Date"). (See also Paragraph 3.)
1.4 EARLY POSSESSION: N/A ("Early Possession Date"). (See also
Paragraphs 3.2 and 3.3).
1.5 BASE RENT: $35,100.00 per month ("Base Rent"), payable on the first
(lst) day of each month commencing September 1, 1998. (See also Section 1 of the
Addendum hereto).
/X/ If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 BASE RENT PAID UPON EXECUTION: $35,100.00 as Base Rent for the
period September 1, 1998 - August 31, 1999.
1.7 SECURITY DEPOSIT: $41,040.00 in cash plus an additional $175,500
which shall be either in cash or an irrevocable letter of credit in the form of
Exhibit E attached hereto, at Lessee's sole option (collectively, "Security
Deposit"). (See also Paragraph 5.)
1.8 AGREED USE: General office and R&D use and light manufacturing
subject to the limitations set forth in Paragraph No. 6. (See also Paragraph 6.)
1.9 INSURING PARTY: Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8.)
1.10 REAL ESTATE BROKER: (See also Paragraph 15.)
(a) REPRESENTATION: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction (check applicable boxes):
/X/ Colliers Parrish International, Inc. represents Lessor exclusively
("LESSOR'S BROKER");
PAGE 1.
<PAGE>
/X/ BT Commercial and Vertex Real Estate Group represent Lessee exclusively
("LESSEE'S BROKER"); or
/ / _______________________________ represents both Lessor and Lessee ("DUAL
AGENCY").
(b) PAYMENT TO BROKERS: Upon execution and delivery of this Lease
by both Parties, Lessor shall pay to the Broker the fee agreed to in their
separate written agreement.
1.11 ADDENDA AND EXHIBITS: Attached hereto is an Addendum or Addenda
consisting of Sections 1 through 8 Exhibits A (Site Plan); B (Interior
Improvements); C (Lessor's Remedies),-D (Final Plans and Specifications) and E
(Letter of Credit), all of which constitute a part of this Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("Start Date"), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
thirty (30) days following the Start Date, represents to Lessee, to the best of
its knowledge, that the existing electrical, plumbing, fire sprinkler, lighting,
heating, ventilating and air conditioning systems ("HVAC"), loading doors,
windows and doors, if any, and all other such elements in the Premises, other
than those constructed by Lessee, shall be in good operating condition on said
date and that the structural elements of the roof and the roof membrane, bearing
walls and foundation of any buildings on the Premises (the "Building") shall be
free of material defects and in good condition and repair. If a non-compliance
with said representation exists as of the Start Date, Lessor shall, as Lessor's
sole obligation with respect to such matter, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If, after Start Date, Lessee does not give Lessor written
notice of any non-compliance with this warranty within: a. one year as to the
surface of the roof and the structural portions of the roof, foundations and
bearing walls, b. six (6) months as to the HVAC systems, c. sixty (60) days as
to the remaining systems and other elements of the Building, correction of such
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense.
2.3 COMPLIANCE. Lessor represents that, to the best of its knowledge,
the improvements on the Premises comply with all applicable laws, covenants or
restrictions of record, building codes, regulations and ordinances ("Applicable
Requirements") in effect on the Start Date. If and to the extent the
improvements on the Premises are not in such compliance and
PAGE 2.
<PAGE>
Lessee so notifies Lessor prior to Lessee's taking occupancy of the Premises,
Lessor shall render them compliant at Lessor's sole cost and expense upon
completion of the initial tenant improvements. Said representation does not
apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee. If the Applicable Requirements are hereafter changed (as opposed to
being in existence at the Start Date, which is addressed in Paragraph 6.2(e)
below) so as to require during the teem of this Lease the construction of an
addition to or an alteration of the Building, the remediation of any Hazardous
Substance, or the reinforcement or other physical modification of the Building
("Capital Expenditure"), Lessor and Lessee shall allocate the costs of such work
as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last year of this Lease and the cost thereof
exceeds six (6) months' Base Rent, Lessee may instead terminate this Lease. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least ninety (90) days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.
(b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the obligation to
pay `for such costs pursuant to the provisions of Paragraph 7.1(c); provided,
however, that if such Capital Expenditure is required during the last year of
this Lease or if Lessor reasonably determines that it is not economically
feasible to pay its share thereof, Lessor shall have the option to terminate
this Lease upon one hundred twenty (120) days prior written notice to Lessee
unless Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
interest, from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance of the Rent due
and payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.
PAGE 3.
<PAGE>
2.4 ACKNOWLEDGEMENTS. Lessee acknowledges that:
(a) it has been advised by Lessor and/or Brokers to satisfy itself
with respect to the condition of the Premises (including but not limited to the
electrical, HVAC and the fire sprinkler systems, security, environmental
aspects, and compliance with Applicable Requirements), and their suitability for
Lessee's intended use, (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor's agents, nor any Broker has made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (a) Broker has made no representations,
promises or warranties concerning Lessee's ability to honor the Lease or
suitability to occupy the Premises, and (b) it is Lessor's sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. Intentionally deleted.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including but not limited to the obligation to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. As used herein, the phrase "deliver possession" shall mean
and refer to the delivery of the building shell of the Premises as it exists as
of the date of execution hereof. If, despite said efforts, Lessor is unable to
deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall
not, however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within
thirty (30) days after the Commencement Date, Lessee may, at its option, by
notice in writing within ten (10) days after the end of such thirty (30) day
period, cancel this Lease, in which event the Parties shall be discharged from
all further obligations hereunder, and Lessor shall refund Lessee's deposits
hereunder. If such written notice is not received by Lessor within said ten (10)
day period. Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.
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3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lessee, from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
4. RENT.
4.1 RENT DEFINED. All monetary obligations of Lessee payable to Lessor
under the terms of this Lease (except for the Security Deposit) are deemed to be
rent ("Rent").
4.2 PAYMENT. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain that portion of said Security
Deposit necessary for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.
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6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste, or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.
6.2 HAZARDOUS SUBSTANCES. Intentionally omitted.
7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
(a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessor's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
excluding ordinary wear and tear (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, or adjacent to the
Premises. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph
7.1(b) below. Subject to the provisions of Paragraph 7.1(c), Lessee's
obligations shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a part thereof in good
order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a good condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary the exterior
repairing of the Building. Notwithstanding the foregoing, Lessor shall, prior to
the Start Date, install a new roofing structure and membrane, and Lessor shall
be responsible for prompt and diligent enforcement of any warranty in connection
therewith, which warranty will cover the period stipulated by the roofing vendor
but in no event less than one (1) year. Notwithstanding any contrary provision
of this Lease, Lessee shall not be responsible for the performance or cost of
repair (i) to the extent Lessor has a right of reimbursement from others
(including insurers as provided for in Lessor's property insurance policies),
(ii) of damage caused by the gross negligence or intentional misconduct of
Lessor or Lessor's agents,
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employees, officers, directors or stockholders, or (iii) of the structural
portions of the Premises, which shall be limited to the foundation, floor slabs,
exterior walls (excluding glass, for which Lessee shall be responsible), and
roof structure (unless caused by acts or omissions of Lessee or its agents,
employees or contractors).
(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) fire extinguishing systems,
including fire alarm and/or smoke detection, (iii) landscaping and irrigation
systems, (iv) roof covering and drains, and (v) driveways and parking lots.
(c) REPLACEMENT. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if any improvements or equipment, the cost of which to make or
replace would constitute a capital cost under generally accepted accounting
principles (a "Capital Item") cannot be repaired other than at a cost which is
in excess of fifty percent (50%) of the cost of replacing such Capital Items,
then such Capital Items shall be replaced by Lessor, and the cost thereof shall
be prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is the number of months of the useful life of such replacement as such
useful life is specified pursuant to Federal Income tax regulations or
guidelines for depreciation thereof (including, interest on the unamortized
balance as is then. commercially reasonable in the judgment of Lessor's
accountants), with Lessee reserving the right to prepay its obligation at any
time.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 7.1(a) (Lessor's Obligations in General), 9
(Damage or Destruction) and 14 (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee except as expressly set forth herein. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this lease.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "Utility
Installations" refers to all floor and window coverings, air lines, power
panels, electrical distribution, fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed, without doing material damage to the Premises. The term
"Alterations" shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion.
"Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
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Utility Installations in, on or about the Premises without Lessor's prior
written consent. Lessee may, however, make non-structural Utility Installations
to the interior of the Premises (excluding the roof) without such consent but
upon notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing structural
walls, and the cumulative cost thereof during this Lease as extended does not
exceed Twenty-Six Thousand Dollars ($26,000) for any one project.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications
if such have been prepared in connection with the Alteration or Utility
Installation. For work which costs an amount equal to more than $50,000.00,
Lessor may condition its consent upon Lessee providing a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use in, on or about the Premises, which claims are or may be secured
by any mechanics' or materialmens' liens against the Premises or any interest
therein. If a mechanics' or materialmen's lien is filed against the Premises,
Lessee shall be required immediately to remove the lien from title. Failure so
to do shall be a material default under this Lease.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any material work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility. As used herein, the
reference to ,,material work" shall mean and refer to work that costs more than
Ten Thousand Dollars ($10,000.00). If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond
in an amount equal to one and one-half times the amount of such contested lien,
claim or demand, indemnifying Lessor against liability for the same. If Lessor
elects to participate in any such action, Lessee shall pay Lessor's attorneys'
fees and costs.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) Lessee shall not, without Lessor's prior written consent, make
any roof penetrations. Lessor shall have the right and sole discretion to
approve the location and form of any roof penetrations. Lessor may require at
the time Lessor consents to the installation of an Alteration of Utility
Installation (if consent is required) or upon expiration or earlier termination
of this Lease (if consent is not required) that Lessee remove any or all of said
Alterations or
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Utility Installations (but not the Interior Improvements constructed in
accordance with Exhibit B) at the expiration of the Term, and restore the
Premises to their prior condition. Should Lessee make any Alterations or Utility
Installations without the prior written approval of Lessor, Lessor may required
that Lessee immediately remove all or any of the same and restore the Premises
to their prior condition. The immediately preceding two sentences shall survive
the expiration or earlier termination of this Lease.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) Unless Lessor requires their removal, as set forth in
Paragraph 7.3(a), all Alterations and Utility Installations (whether or not such
Utility Installations constitute trade fixtures of Lessee) that may be made or
placed on the Premises shall become the property of Lessor upon termination of
this Lease and remain upon and be surrendered with the Premises at the
expiration of the Term. Notwithstanding the provisions of this Paragraph 7.4(d),
Lessee's machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to the Premises,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of Paragraph 7.4(e).
(e) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee, and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Lessee shall pay for all insurance required
under Paragraphs 8.2(a) and 8.2(b) except to the extent of the cost attributable
to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within ten (10) days following
receipt of an invoice.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance
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shall be on an claims made basis providing single limited coverage in an amount
not less than $2,000,000 per occurrence with an "Additional Insured-Managers or
Lessors of Premises Endorsement" and contain the "Amendment of the Pollution
Exclusion Endorsement" for damage caused by heat, smoke or fumes from a hostile
fire. The Policy shall not contain any intra-insured exclusions as between
insured persons or organizations, but shall include coverage for liability
assumed under this Lease as an "insured contract" for the performance of
Lessee's indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance carried by Lessee shall be primary to and
not contributory with any similar insurance carried by Lessor, whose insurance
shall be considered excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall maintain liability insurance
as described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground lessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless ), including coverage for
debris removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of an coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss. At Lessor's election, such insurance shall include earthquake insurance.
Any deductible payable in connection with any earthquake insurance shall be paid
for by Lessee.
(b) RENTAL VALUE. Intentionally omitted.
(c) ADJACENT PREMISES. Intentionally omitted.
8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility
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Installations in the Premises. Such insurance shall be full replacement cost
coverage with a deductible of not to exceed Ten Thousand Dollars ($10,000.00)
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force.
(b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss
of income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide," or such other rating as may be or as otherwise approved by
Lessor in the exercise of its reasonable discretion. Lessee shall not do or
permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of the required insurance. No such policy shall be cancellable except after
thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence
of renewals or "insurance binders" evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. Such policies shall be for a term of
at least one year, or the length of the remaining term of this Lease, whichever
is less. If either Party shall fail to procure and maintain the insurance
required to be carried by it, the other Party may, but shall not be required to,
procure and maintain the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.7 INDEMNITY. Intentionally omitted.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or
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rain, or from the breakage, leakage, obstruction or other defects or pipes, fire
sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any
other cause, whether the said injury or damage results from conditions arising
upon the Premises or upon other portions of the Building of which the Premises
arc a part, or from other sources or places; provided, however, that this
provision shall in no event exempt Lessor from liability for its own gross
negligence, intentional misconduct or breach of this Lease. Lessor shall not be
liable for any damages arising from any act or neglect of any other tenant of
Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility installations
and Trade Fixtures, which cannot reasonably be repaired in six (6} months or
less from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty {30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) Intentionally omitted.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable Insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the
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event, however, such shortage was due to the fact that, by reason of the unique
nature of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to
Lessee within ten (10) days thereafter to: a. make such restoration and repair
as is commercially reasonable with Lessor paying any shortage in proceeds, in
which case this Lease shall remain in full force and effect; or b. have this
Lease terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some Insurance coverage, but
the net proceeds of any such Insurance shall be made available for the repairs
if made by either Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: a. repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or b. terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction during which time rent shall be abated. If the damage
or destruction was caused by the gross negligence or willful misconduct of
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee,
except as provided in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If any time during the last six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an Insured Loss, Lessor and Lessee may
terminate this Lease effective sixty (60) days following the date of occurrence
of such damage by giving a written termination notice to Lessee or Lessor within
thirty (30) days after the date of occurrence of such damage. Notwithstanding
the foregoing, if Lessee at that time has an exercisable option to extend this
Lease or to purchase the Premises, then Lessee may preserve this Lease by (a)
exercising such option and (b) providing Lessor with any shortage in insurance
proceeds (or adequate assurance thereof) needed
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to make the repairs on or before the earlier of a. the date which is ten (10)
days after Lessee's receipt of Lessor's written notice purporting to terminate
this Lease, or b. the day prior to the date upon which such option expires. If
Lessee duly exercises such option during such period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds
or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value Insurance. Lessor
shall have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein. If Lessor, solely through its gross
negligence or intentional misconduct, fails to repair or restore the Premises in
accordance with the terms of this Lease and such failure materially impairs
Lessee's use of the Premises, Lessee shall be entitled to rent abatement until
such repairs are made.
(b) REMEDIES. If Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration in a diligent good faith manner but in no event later than
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice, of Lessee's
election to terminate this Lease on a date not less than thirty (30) days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within thirty (30) days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within said thirty (30) days, this Lease shall continue
in full force and effect. Additionally, either party shall have the right to
terminate this Lease by providing sixty (60) days written notice to the other
party following the date of such damage to the Premises if the repairs to the
Premises cannot be reasonably completed within one hundred twenty (120) days
after the date of such damage. "Commence" shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.
9.7 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.
9.8 WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this
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Lease and hereby waive the provisions of any present or future statute to the
extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises. Notwithstanding the foregoing, "Reel Property Taxes" shall not
include any corporate, franchise or estate taxes or taxes on Lessor's income
from all sources.
10.2
(a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment or, alternatively, at the option of Lessee,
Lessee may deduct the amount of any such overpayment from the next installment
of Rent falling due. If Lessee shall fail to pay any required Real Property
Taxes, Lessor shall have the right to pay the same, and Lessee shall reimburse
Lessor therefor upon demand.
(b) ADVANCE PAYMENT. In the event Lessee incurs more than two (2)
late charges on Rent payments in any Lease year, Lessor may, at Lessor's option,
estimate the current Real Property Taxes, and require that such taxes be paid in
advance to Lessor by Lessee, either: a. in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or b. monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be an
amount equal to the amount of the estimated installment of taxes divided by the
number of months remaining before the month in which said installment becomes
delinquent. When the actual amount of the applicable tax bill is known, the
amount of such equal monthly advance payments shall be adjusted as required to
provide the funds needed to pay the applicable taxes. If the amount collected by
Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall
pay Lessor, upon demand, such additional sums as are necessary to pay such
obligations. All moneys paid to Lessor under this Paragraph may be intermingled
with other moneys of Lessor and shall not bear interest. In the event of a
Breach by Lessee in the performance of its
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obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may at the option of Lessor, be treated as an
additional Security Deposit.
(c) JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.3 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property at the time it pays Real
Property Taxes.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied during the
Term to the Premises, together with any taxes thereon. If any such services are
not separately metered to Lessee, Lessee shall pay a reasonable proportion, to
be determined by Lessor, of all charges jointed metered.
12. ASSIGNMENT AND SUBLETTING.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises, or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of fifteen (15) days following written notice to
Lessee.
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(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making
of any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. ss. 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.
(f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
13.2 REMEDIES. Intentionally omitted.
13.3 INDUCEMENT RECAPTURE. Intentionally omitted.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, upon notice to Lessee, Lessee shall pay to Lessor a one-time late
charge equal to six percent (6%) of each such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of such late payment. Acceptance of such late
charge by Lessor shall in no event constitute a waiver of Lessee's Default or
Breach with respect to such overdue amount, nor prevent the exercise of any of
the other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding any provision of this Lease to
the contrary, Base Rent shall, at Lessor's option, become due and payable
quarterly in advance.
13.5 INTEREST. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to the
prime rate
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reported in the Wall Street Journal as published closest prior to the date when
due plus four percent (4%) but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4
13.6 BREACH BY LESSOR.
(a) NOTICE OF BREACH. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall be thirty (30) days after receipt by Lessor, and any Lender whose
name and address shall have been furnished Lessee in writing for such purpose,
of written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor's obligation is such
that more than thirty (30) days are reasonably required for its performance,
then Lessor shall not be in breach if performance is commenced within such
thirty (30) day period and thereafter diligently pursued to completion and
provided further, that if the nature of Lessor's obligation is such that more
immediate action is needed to avoid injury or expense to Lessee, then a
"reasonable period" for purposes of this paragraph shall be less than thirty
(30) days.
(b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to such expense, so long as the
amount of such expense is commercially reasonable. Lessee shall document the
cost of said cure and supply said documentation to Lessor.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession,-whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
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15. BROKER'S FEE. Intentionally omitted.
16. ESTOPPEL CERTIFICATES.
(a) Each Party (as "Responding Party") shall within ten'(10)
business days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current "Estoppel Certificate" form published
by the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten (10) day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one (1) month's rent
has been paid in advance. Prospective purchasers and encumbrancers may rely upon
the Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
(c) If Lessor desires to finance, refinance, or sell the Premises,
or any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such then currently existing financial
statements as may be reasonably required by such lender or purchaser, including
but not limited to Lessee's audited financial statements for the past three (3)
years. All such financial statements shall be received by Lessor and such lender
or purchaser in confidence and shall be used only for the purposes herein set
forth.
17. DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 5.3 or the Addendum hereto.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"Days" as used in this Lease shall mean and refer to calendar days.
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20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assists for such
satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may be written
notice to the other specify a different address for notice. A copy of all
notices to Lessor shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate in writing
and to Lessee's general counsel.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
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24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of moneys or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee and Lessor are both covenants
and conditions. In construing this Lease, all headings and titles are for the
convenience of the parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
parties, but rather according to its fair meaning as a whole, as if both parties
had prepared it.
29. BINDING EFFECT/CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and a11 advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of
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Lessor under this Lease. Any Lender may elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device by giving
written notice thereof to Lessee, whereupon this Lease and such Options shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance' Agreement provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys'-fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.
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32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise upon twenty-four (24) hours' notice for the purpose of
showing the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary, subject to Lessee's reasonable security requirements. All such
activities shall be without abatement of rent or liability to Lessee. Lessor may
at any time place on the Premises any ordinary "For Sale" signs and Lessor may
during the last six (6) months of the term hereof place on the Premises an
ordinary "For Lease" signs. Lessee may at any time place on or about the
Premises any ordinary "For Sublease" sign. Lessor shall perform all such
inspections, improvements, alterations and repairs in a manner reasonably
intended to cause minimal disruption to Lessee's business activities in and use
of the Premises.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
34. SIGNS. Except for ordinary "For Sublease" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. Lessor shall
give such consent so long as the signs are in compliance with applicable city
ordinances and standards. All signs must comply with all Applicable
Requirements.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent bye deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either party disagrees-with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.
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37. OPTIONS.
37.1 DEFINITION. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
37.2 Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
Prior Options have been validly exercised.
37.3 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during
the period commencing with the giving of any notice of Default and continuing
until said Default is cured, (ii) during the period of time any Rent is overdue
and unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given in good faith three (3) or more notices of separate
monetary Default, whether or not the Defaults are cured, during the twelve (12)
month period immediately preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of thirty (30) days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), (ii)
Lessor in good faith gives to Lessee three (3) or more notices of separate
monetary Default during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.
38. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties; including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.
39. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
40. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such assessments, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such
PAGE 24.
<PAGE>
easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.
41. PERFORM-RICE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled o recover such sum or so much
thereof as it was not legally required to pay.
42. AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.
43. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
44. OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
45. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably in
connection with the obtaining of normal financing or refinancing of the
Premises.
46. MULTIPLE PARTIES. If more that one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
47. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease is (x) is not attached to this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
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<PAGE>
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE BY ANY BROKER AS
TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO.
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO. THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Menlo Park, CA Executed at: Mountain View, CA
-------------------------- -------------------------
On: July 31, 1998 On: July 27, 1998
----------------------------------- ----------------------------------
By LESSOR: By LESSEE:
Clint S. Cartier Intrabiotics Pharmaceuticals, Inc.
- -------------------------------------- -------------------------------------
Esther Family Trust
- -------------------------------------- -------------------------------------
By: /s/ Clint S. Cartier By: /s/ Kenneth J. Kelley
- -------------------------------------- -------------------------------------
Name Printed: Clint S. Cartier Name Printed: Kenneth J. Kelley
------------------------- ------------------------
Title: Trustee Title: President and CEO
-------------------------------- -------------------------------
By: /s/ Esther Cartier By: /s/ Janet I. Swearson
----------------------------------- ----------------------------------
Name Printed: Esther Cartier Name Printed: Janet I. Swearson
------------------------- ------------------------
Title: Trustee Title: Vice President & CFO
-------------------------------- -------------------------------
Address: 1330 University Drive Address: 1245 Terra Bella Ave.
------------------------------ -----------------------------
Menlo Park, CA 94025 Mountain View CA
- -------------------------------------- -------------------------------------
Telephone: (650) 325-1604 Telephone: (650) 526-6800
---------------------------- ---------------------------
Facsimile: Facsimile: (650) 969-0663
---------------------------- ---------------------------
Federal ID No: ###-##-#### Federal ID No: 94-3200380
------------------------ -----------------------
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ADDENDUM TO
STANDARD INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE -- NET
Addendum to the Standard Industrial Commercial Single-Lessee Lease dated
_________________, 1998, by and between Clint S. Carter and Esther Carter Family
Trust, as Lessor, and IntraBiotics Pharmaceuticals, Inc., a Delaware
corporation, as Lessee.
1. BASS RENT SCHEDULE: The following, monthly Base Rent Schedule shall
apply during the term of the Lease:
Months 01-12: $35,100.00
Months 13-24: $35,540.00
Months 25-36: $37,980.00
Months 37-48: $39,420.00
Months 49-60: $41,040.00
Months 60-end of term: $37,346.40
2. TENANT IMPROVEMENT ALLOWANCE: Included in the Base Rent, Lessor
shall provide to Lessee an Initial Interior Improvement Allowance of $270,000.00
in accordance with Interior Improvement Agreement (Exhibit "B"). Lessee shall
install and construct the "Tenant Improvements" (as defined in Exhibit "B"
hereto) according to the terms, conditions, criteria and provisions set forth in
said Exhibit "B"." Lessor and Lessee hereby agree to and shall be bound by the
terms, conditions and provisions of Exhibit "B".
3. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Lessor hereby
represents that the rest rooms that are part of the building shell as of the
date hereof are in compliance with the Americans with Disabilities Act. Lessor,
at Lessor's sole cost and expense, shall be responsible for compliance with ADA
regulations regarding the path of travel from parking area to the main entrance
of the Premises upon execution of the Lease. Except as aforesaid, Lessee, at
Lessee's sole cost and expense, shall be responsible for compliance with all ADA
regulations regarding the interior of the Premises occupied by Lessee.
4. ASSIGNMENT OR SUBLEASE:
A. Lessor's Consent Required: Lessee shall not voluntarily or by
operation of law assign, mortgage, sublet, or otherwise transfer or encumber all
or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent. Lessor shall not unreasonably withhold its
consent to an assignment or sublet, provided the proposed assignee or sublessee
is reasonably satisfactory to Lessor as to credit and will occupy and use the
Premises for the same purposes specified in Paragraph 1. Any attempted
assignment, transfer, mortgage, encumbrance or subletting without such consent
shall constitute a Default of this Lease and be voidable at Lessor's election.
Lessee shall pay to Lessor Five Hundred Dollars ($500) as compensation for
expenses in connection with any request by Lessee for Lessor's consent, but only
if Lessee proposes an assignment or sublease of the entire Premises.
Additionally, Lessee
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<PAGE>
shall have the right to withdraw its proposed assignment or' sublease if Lessor
notifies Less of its desire to recapture the Premises.
Whether or not Lessor consents to any assignment or subletting, no such
assignment or subletting shall (1) be effective without the express written
assumption by such assignee or sublessee of the obligations of Lessee under this
Lease, (2) release Lessee of any obligations hereunder, or (3) alter the primary
liability of Lessee for the payment of Rent and for the performance of any other
obligations to be performed by Lessee.
Lessor may accept Rent or performance of Lessee's obligations from any
person other than Lessee pending approval or disapproval of such an assignment
or sublease. Neither a delay in the approval or disapproval of such assignment
or subleasin9 nor the acceptance of Rent or performance shall constitute a
waiver or estoppel of Lessor's right to exercise its remedies for Lessee's
default or breach.
Lessor's consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.
In the event of any default or breach by Lessee, any sublessee or any
assignee, Lessor may proceed directly against Lessee, any such sublessee or
assignee or anyone else responsible for the performance of Lessee's obligations
under this Lease without first exhaustin9 Lessor's remedy against any other
person or entity responsible therefor to Lessor, or any security held by Lessor.
Any assignee of or sublessee under this Lease shall by reason of
accepting such assignment or entering into such sublease be deemed to have
assumed and agreed to conform and comply with each and every term, covenant and
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with the provisions of an assignment or sublease to which
Lessor has specifically consented in writin9.
Notwithstanding the foregoing and subject to any proposed assignee's
demonstrating to Lessor's reasonable satisfaction either that (1) that said
proposed assignee's net worth at the time of such assignment is equal to or
greater than Lessee's then net worth or (2) in each of the three (3) years prior
to said proposed assignment, said proposed assignee's fund balance or retained
earnings were equal to or greater than three (31 times the then-current Rent
hereunder, Lessee may assign this Lease or sublease the Premises without
Lessor's consent, and the provisions of this Section 4 of this Addendum shall
not apply to any transfer or assignment of this Lease, the Premises or any part
thereof (i) to any parent or subsidiary of Lessee, to any parent or subsidiary
of a parent or subsidiary of Lessee or to any other affiliate of Lessee, (ii) to
any entity which merges or consolidates with or acquires Lessee, or (iii) to any
entity which acquires all or substantially all of the assets of Lessee. As used
herein, the term "affiliate of Lessee" shall mean and refer to any entity that
controls, is controlled by or is under common control with Lessee.
B. NO RELEASE OF LESSEE: Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation, or alter
the primary liability of Lessee to pay the Rent and to perform all other
obligations to be performed by Lessee hereunder. The
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<PAGE>
acceptance of Rent by Lessor from any other person shall not be deemed to be a
waiver by Lessor of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting.
C. RECAPTURE OF PREMISES: In connection with any proposed
assignment or sublease, Lessee shall submit to Lessor in writing (i) the name of
the proposed assignee or sublessee, (ii) such information as to its financial
responsibility and standing as Lessor may reasonably require, and (iii) all of
the terms and conditions upon which the proposed assignment or subletting is to
be made. Lessor shall have an option to cancel and terminate this Lease with
respect to such portion of the Premises that is to be assigned or sublet. Lessor
may exercise said option in writing within twenty (20) days after its receipt
from Lessee of such request to assign or sublease the Premises. If Lessor shall
exercise its option, Lessee shall surrender possession of the entire Premises,
or the portion thereof which is the subject of the option. If this Lease is
cancelled as to a portion of the Premises only, the Rent after the date of
cancellation shall be reduced in the proportion that the floor area of the
cancelled portion bears to the total floor area of the Premises.
D. EXCESS SUBLEASE RENTAL: If, on account of or in connection
with any assignment or sublease, Lessee receives rent or other consideration in
excess of the Rent called for hereunder, or in the case of the sublease of a
portion of the Premises, in excess of the pro rata Rent based on the floor area
of such portion, after appropriate adjustments to assure all other payments
called for hereunder are appropriately taken into account, Lessee shall pay to
Lessor, after first deducting all costs associated with the Subleasing of the
Premises including but not limited to legal fees, leasing commissions, Lessee
improvements, etc., fifty percent (50%) of the excess of such payment of rent or
other consideration received by Lessee promptly after its receipt.
5. HAZARDOUS MATERIALS:
A. NO HAZARDOUS MATERIALS ON LEASED PREMISES: In absence of prior
written consent therefor by Lessor, Lessee shall not use, generate, store or
dispose of, or allow others to use, generate, store or dispose of, on or about
the Premises any substance, material or waste that is or becomes designated,
classified or regulated as "toxic" or "hazardous" or a "pollutant" (including,
but not limited to, asbestos, lead-based paint, petroleum or petroleum products)
or that is or becomes similarly designated, classified or regulated under any
Hazardous Materials law. Notwithstanding the foregoing, however, Lessee shall be
entitled to store and use on or about the Premises reasonable quantities of
materials commonly used for cleaning purposes in business offices so long as
such use and storage complies with all Hazardous Materials Laws. For purposes of
this Lease, "Hazardous Materials Laws" means any law, statute, ordinance or
regulation pertaining to health, industrial hygiene or the environment
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), Resources Conservation and
Recovery Act of 1976 ("RCRA"), or any other federal, state, county or municipal
law, ordinance or regulation. Lessee shall, at its sole cost and expense, comply
with all Hazardous Materials Laws during the term hereof. Notwithstanding the
foregoing, Lessee shall have no obligations with respect to Hazardous Materials
or other materials on, in or under the Premises (including the parking and
landscaped areas) as of the Commencement date ("Pre-existing Hazardous
Materials") except to the extent the acts or
PAGE 3.
<PAGE>
omissions of Lessee, Lessee's employees, officers, directors, agents and
contractors exacerbate the nature or extent of such Pre-existing Hazardous
Materials. Except to the extent of such exacerbation, Pre-existing Hazardous
Materials shall be entirely the responsibility of Lessor and no costs or
expenses incurred in connection therewith shall be Rent or otherwise
reimbursable by Lessee.
B. LESSEE'S COMPLIANCE: In the event of any release by Lessee, or
Lessee's employees, officers, directors or agents, on or into the Premises or
into the soil or groundwater under the Premises. of any Hazardous Materials
during the term, Lessee agrees to comply, at its sole cost and expense, with all
laws, regulations, ordinances and orders of any federal, state or local agency
relating to the monitoring or remediation of such Hazardous Materials.
C. LESSEE LIABILITY FOR HAZARDOUS MATERIALS: Lessee shall be
liable to Lessor for any and all damages caused by Lessee's breach of the
foregoing covenants. Except as provided in Subsection 7.G, below, Lessor shall
not be liable for any claims, damages or losses due to the effects of Hazardous
Materials on the Premises. This provision shall survive the expiration or
earlier termination of the Lease.
D. NOTIFICATION OF COMMUNICATIONS: Lessor and Lessee each agree
promptly to notify the other party of, and provide copies of, any communication
received from any governmental entity concerning Hazardous Materials or the
violation or alleged violation of Hazardous Materials Laws that relate to the
Premises.
E. TESTING: If Lessor requires testing to ascertain whether there
has been any violation of Hazardous Materials Laws on the Premises, then, upon
prior written Notice to Lessee, Lessor may require any such testing that is then
customarily used for that purpose. Such testing shall be performed at Lessor's
expense if Lessee is not in violation of any Hazardous Materials Laws or in
breach of this Section 5 of this Addendum.
F. LESSEE INDEMNIFICATION OF LESSOR FOR HAZARDOUS MATERIALS:
Except as provided in Subsection 7.G, below, Lessee shall forever indemnify,
defend, hold and save Lessor free and harmless of, from and against any and all
liabilities, remediation costs, investigation costs, claims, damages, injuries,
losses, costs, fines, judgments, causes of action and expenses whatsoever
incurred in connection with or arising in any way out of the release, treatment,
storage, use or disposal of Hazardous Materials on the Premises (except
Pre-existing Hazardous Materials) by Lessee or Lessee's employees, officers,
directors and agents, except those arising solely by reason of the active
negligence or willful misconduct of Lessor, its agents or employees.
G. LESSOR'S INDEMNIFICATION OF LESSEE FOR PRE-EXISTING HAZARDOUS
MATERIALS: Except as provided in Subsection 7.F, above, Lessor shall forever
indemnify, defend, and hold Lessee harmless from and against any and all
liabilities, remediation costs, investigation costs, claims, damages, injuries,
losses, costs, fines, judgments, causes of action and expenses whatsoever
incurred in connection with or arising in any way out of the release, treatment,
storage, use or disposal of Pre-existing Hazardous Materials by Lessor, its
agents, employees, invitees or contractors. Except as specifically set forth
herein, Lessor does not indemnify Lessee in connection with Hazardous Materials
on or about the Premises or off-site.
PAGE 4.
<PAGE>
H. NO RELEASE OF THIRD PARTIES: Nothing contained herein shall be
deemed to expand, limit, or otherwise modify or affect Lessee's or Lessor's
right to pursue any other person or entity for any claim or for any cause that
Lessee may have against any other person or entity, or under Hazardous Materials
Laws.
6. INDEMNITY: As a material part of the consideration to be rendered to
Lessor, Lessee hereby waives all claims against Lessor for damages to foods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to persons in or about said Premises, from any cause
arising at any time and to the fullest extent permitted by law. Provided Lessee
is timely notified of same, Lessee shall indemnify, protect, defend and hold
Lessor and Lessor's agents, partners and lenders, if any, exempt and harmless
from and against any and all claims, loss of rents and/or damages, liens,
judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities or injury to any person, or to the goods, waters and merchandise and
all other personal property of any person, arising from, involving or in
connection with the use and/or occupancy of the Premises, Building, and/or
Project by Lessee, its employees, contractors, agents and invitees, except to
the extent the same are caused by the gross negligence or intentional misconduct
of Lessor or Lessor's agents, employees or contractors, or Lessor's breach of
this Lease. If any action or proceeding is brought against Lessor by reason of
any of the foregoing matters, Lessee shall upon notice defend the same at
Lessee's sole cost and expense by counsel reasonably satisfactory to Lessor, and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be so defended or indemnified.
7. OPTION TO EXTEND THE LEASE TERM:
A. GRANT AND EXERCISE OF OPTION: Lessor grants to Lessee, upon and
subject to the terms and conditions set forth in this paragraph, one (1) option
(the "Option") to extend the Lease Term for an additional term (the "Option
Term"). The Option Term shall be for a period of three (3) years. Said Option
shall be exercised, if at all, by written notice to Lessor no earlier than the
date that is twelve (12) months prior to the Expiration Date but no later than
the date that is seven (7) months prior to the Expiration Date. If Lessee
exercises the Option, each of the terms, covenants and conditions of this Lease
except this paragraph shall apply during the Option Term as though the
expiration date of the Option Term was the date originally set forth herein as
the expiration date of the Option Term was the date originally set forth herein
as the Expiration Date, provided that the Base Monthly Rent to be paid by Lessee
during the Option Term shall be the greater of (i) the Base Monthly Rent
applicable to the period immediately prior to the commencement of the Option
Term or (ii) the Fair Market Rental, as hereinafter defined, for the Premises
for the Option Term. Anything contained herein to the contrary notwithstanding,
if Lessee is in monetary or material non-monetary default under any of the
terms, covenants or conditions of this Lease either at the time Lessee exercises
the Option or any time thereafter prior to the commencement date of the Option
Term, Lessor shall have, in addition to all of Lessor's other rights and
remedies provided in this Lease, the right to terminate the Option upon notice
to Lessee, in which event the expiration date of this Lease shall be and remain
the Expiration Date. As used herein, the term "Fair Market Rental" for the
Premises shall mean the rental and all other monetary payments, including any
escalations and adjustments thereto (including, without limitation, Consumer
Price Index) then being obtained for new leases of space comparable in age and
quality to the Premises in the locality of the Building that Lessor could obtain
during the
PAGE 5.
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Option Term from a third party desiring to lease the Premises for the Option
Term based upon the current use and other potential uses of the Premises. Fair
Market Rental shall take into account that (A) that Lessee in occupancy of the
Premises and making functional use of the space in its then-existing condition,
and (B) that no brokerage commission is payable. Fair Market Rental shall not
include any value attributable to the Lessee Improvements in the Premises paid
for by Lessee.
B. DETERMINATION OF FAIR MARKET RENTAL: If Lessee exercises the
Option, Lessor shall send to Lessee a notice setting forth Lessor's good faith
determination of Fair Market Rental for the Premises for the Option Term, on or
before the date that is twelve (12) months prior to the Expiration Date. If
Lessee disputes Lessor's determination of the Fair Market Rental for the Option
Term, Lessee shall, within thirty (30) days after the date of Lessor's notice
setting forth the Fair Market Rental for the Option Term, send to Lessor a
notice stating that Lessee either (i) elects to terminate its exercise of the
Option, in which even the Option shall lapse and this Lease shall terminate oh
the Expiration Date, or (ii) disagrees with Lessor's determination of Fair
Market Rental for the Option Term and elects to resolve the disagreement as
provided in Subsection 7.C, below. If Lessee does not send to Lessor a notice as
provided in the previous sentence, Lessor's determination of the Fair Market
Rental shall be the basis for determining the Base Monthly Rent to be paid by
Lessee hereunder during the Option Term. If Lessee elects to resolve the
disagreement as provided in Subsection 7.C, below, and such procedures shall not
have been concluded prior to the commencement date of the Option Term, Lessee
shall pay as Base Monthly Rent to Lessor the Fair Market Rental as determined by
Lessor in the manner provided above. If the amount of Fair Market Rental as
finally determined pursuant to Subsection 7.C, below, is greater than Lessor's
determination, Lessee shall pay to Lessor the difference between the amount paid
by Lessee and the Fair Market Rental as so determined in Subsection 7.C, below,
within thirty (30) days after the determination. If the Fair Market Rental as
finally determined in Subsection 7.C, below, is less than Lessor's
determination, the difference between the amount paid by Lessee and the Fair
Market Rental as so determined in Subsection 7.C, below, shall be credited
against the next installments of rent due from Lessee to Lessor hereunder.
C. RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any
disagreement regarding the Fair Market Rental shall be resolved as follows:
(i) Within thirty (30) days after Lessee's response to
Lessor's notice to Lessee of the Fair Market Rental, Lessor and Lessee shall
meet no less than two (2) times, at mutually agreeable time and place, to
attempt to resolve any such disagreement.
(ii) If within the thirty (30) day period referred to
Subsection 7.C.(i), above, Lessor and Lessee cannot reach agreement as to the
Fair Market Rental, they shall each select one appraiser to determine the Fair
Market Rental. Each such appraiser shall arrive at a determination of the Fair
Market Rental and submit their conclusions to Lessor and Lessee within thirty
(30) days after the expiration of the thirty (30) day consultation period
described Subsection 7.C.(i), above.
(iii) If only one appraisal is submitted within the
requisite time period, it shall be deemed to be the Fair Market Rental. If both
appraisals are submitted within such time
PAGE 6.
<PAGE>
period, and if the two appraisals so submitted differ by less than ten percent
(10%) of the higher of the two, the average of the two shall be the Fair Market
Rental. If the two appraisals differ by more than ten percent (10%) of the
higher of the two, then the two appraisers shall immediately select a third
appraiser who shall within thirty (30) days after his or her selection make a
determination of the Fair Market Rental and submit such determination to Lessor
and Lessee. This third appraisal will then be averaged with the closer of the
two previous appraisals and the result shall be the Fair Market Rental.
(iv) All appraisers specified pursuant to this paragraph
shall be members of the American Institute of Real Estate Appraisers with not
less than ten (10) years experience appraising office and industrial properties
in the Santa Clara Valley. Each party shall pay the cost of the appraiser
selected by such party and one-half of the cost of the third appraiser.
8. SERVICE CONTRACT: In addition to Section 7.1 of the Lease, Lessee
shall also be responsible, at its sole cost and expense, for the preventative
maintenance of the membrane of the roof, which responsibility shall be deemed
properly discharged if (a) Lessee contracts with a licensed roof contractor who
is reasonably satisfactory to both Lessee and Lessor, at Lessor's sole cost, to
inspect the roof membrane at least every six (6) months, with the first
inspection due the sixty (6th) month after the Commencement Date, and (b) Lessee
performs, at Lessee's sole cost, all preventive maintenance recommendations made
by such contractor with in a reasonable time after such recommendations are
made. Such preventive maintenance might include acts such as clearing storm
gutters and drains, removing debris from the roof membrane, trimming trees
overhanging the roof membrane, applying coating materials to seal roof
penetrations, repairing blisters, and other routine measures. Lessee shall
provide to Lessor a copy of such preventive maintenance contract and paid
invoices for the recommended work. Lessee agrees, at its expense, to water,
preventive maintenance contract and paid invoices for the recommended work.
Lessee agrees, at its expense, to water, maintain and replace, when necessary,
any shrubbery and landscaping.
ACKNOWLEDGED AND APPROVED: ACKNOWLEDGED AND APPROVED:
By Lessor: By Lessee:
Clint S. Carter and Esther IntraBiotics Pharmaceuticals,
Carter Family Trust Inc., a Delaware corporation
By: /s/ Clint S. Cartier By: /s/ Kenneth J. Kelley
----------------------------------- -----------------------------------
Name: Name:
Printed: Clint S. Cartier Printed: Kenneth J. Kelley
------------------------------ ------------------------------
By: /s/ Janet I. Swearson
-----------------------------------
Name:
Printed: Janet I. Swearson
------------------------------
PAGE 7.
<PAGE>
EXHIBIT B
INTERIOR IMPROVEMENT AGREEMENT
THIS IMPROVEMENT AGREEMENT is made part of that Lease dated March 26,
1998, (the "Lease") by and between Clint S. Carter and Esther Carter Family
Trust, ("Lessor"), and IntraBiotics Pharmaceuticals, Inc. ("Lessee"). Lessor and
Lessee
agree that the following terms are part of the Lease:
1. PURPOSE OF IMPROVEMENT AGREEMENT: The purpose of this Improvement
Agreement is to set forth the rights and obligations of Lessor and Lessee
with respect to the construction of Interior Improvements within the
Premises.
2. DEFINITIONS: As used in this Interior Improvement Agreement, the following
terms shall have the following meanings, and terms which are not defined
below, but which are defined in the Lease and which are used in its
Interior Improvement Agreement, shall have the meanings ascribed to them
by the Lease:
A. APPROVED SPECIFICATIONS: The term "Approved Specifications" shall
mean those specifications for the Interior Improvements to be
constructed by Lessor which are described by Exhibit "D" to the
Lease.
B. INTERIOR IMPROVEMENTS: The term "Interior Improvements" shall mean
all interior improvements to be constructed by Lessor in accordance
with the Approved Specifications (e.g., HVAC equipment and
distribution, transformer and power distribution, partitions, floor,
wall, and window covering, lighting fixtures).
C. INTERIOR IMPROVEMENT COSTS: The term "Interior Improvement Costs"
shall mean the following: (i) the total amount due pursuant to the
general construction contract entered into by Lessor to construct
the Interior Improvements, including costs for any and all building
code compliance; (ii) the cost of all governmental approvals
required as a condition to the construction of the Interior
Improvements (including all construction taxes imposed by the City
of Mountain View ) in connection with issuance of a building permit
for the Interior Improvements; (iii) all utility connection or use
fees; (iv) fees or architects or engineers for services rendered in
connection with the design and construction of the Interior
Improvements; and (v) the cost of payment and performance bonds
obtained by Lessor or Prime Contractor or assure completion of the
Interior Improvement.
D. SUBSTANTIAL COMPLETION AND SUBSTANTIALLY COMPLETE: The terms
"Substantial Completion" and "Substantially Complete" shall each
mean the date when all of the following have occurred with respect
to Interior Improvements in question: (i) the construction of the
Interior Improvements in question has been substantially completed
in accordance with the requirements of this Lease; (ii) the
architect responsible for preparing the plans shall have executed a
certificate or statement representing that the Interior Improvements
in question have been substantially completed in accordance with the
plans and specifications therefor;, and (iii) the Building
Department of the City of Mountain View has completed its final
PAGE 1.
<PAGE>
inspection of such Improvements and has "signed off" the building
inspection. card approving such work as complete.
3. SCHEDULE OF PERFORMANCE: Set forth in this paragraph is a schedule of
certain critical dates relating to Lessor's and Lessee's respective
obligations regarding the construction of the Interior Improvements (the
"Schedule of Performance"). Lessor and Lessee shall each be obligated to
use reasonable efforts to perform their respective obligations within the
time periods set forth in the Schedule of Performance and elsewhere in
this Interior Improvement Agreement. The Schedule of Performance is as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
ACTION ITEMS DUE DATE RESPONSIBLE PARTY
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
A. Delivery to Lessor of Lessee
Lessee's Interior
Requirements
- --------------------------------------------------------------------------------------------------
B. Delivery to Lessee of Lessor
Preliminary Interior
Improvement Plans
- --------------------------------------------------------------------------------------------------
C. Approval by Lessee of Within two (2) business days Lessee
Preliminary Interior Plans after Lessee receives
Preliminary Interior Plans.
- --------------------------------------------------------------------------------------------------
D. Delivery to Lessee of final Within three (3) weeks after Lessor
Interior Plans approval of the Preliminary
Interior Plans
- --------------------------------------------------------------------------------------------------
E. Approval by Lessee of Within two (2) business days Lessee
Final Interior Plans after Lessee receives Final
Interior Plans
- --------------------------------------------------------------------------------------------------
F. Commencement of Within five (5) days after Lessor
construction of Interior issuance of all necessary
Improvement governmental approvals
- --------------------------------------------------------------------------------------------------
G. Substantial Completion of Within six (6) weeks after Lessor
Interior Improvements issuance of building permit
for the Interior Improvements
- --------------------------------------------------------------------------------------------------
</TABLE>
A. Lessee shall either approve such plans or notify Lessor in writing
of its specific objections to the Preliminary Interior Plans. If
Lessee so objects, Lessor shall revise the Preliminary Interior
Plans to address such objections in a manner consistent with the
parameters for the Interior Improvements set forth in its
Improvement Agreement and the Approved Specifications and shall
resubmit such revised preliminary Interior Plans as soon as
reasonably practicable to Lessee for its approval. When such revised
Preliminary Interior Plans are resubmitted to Lessee, it shall
either approve such plans or notify Lessor of any further objections
in writing within two (2) business days after receipt thereof. If
Lessee has further objections to the revised preliminary Interior
Plans, the parties shall meet and confer to develop Preliminary
Interior Plans that are acceptable to both Lessor and Lessee within
five (5) business days after Lessee has notified Lessor of its
second set of objections. In the event Lessee and Lessor d9 not
PAGE 2.
<PAGE>
resolve all of Lessee's objections within such five (5) business
day period, Lessor and Lessee shall immediately cause Lessor's
architect to meet and confer with Lessee's architect or construction
consultant, who shall apply the standards set forth in this
Improvement Agreement to resolve Lessee's objections and'
incorporate such resolution into the Preliminary Interior Plans,
which process Lessor and Lessee shall cause to be completed within
five (5) business days after the conclusion of the five (5) business
day period referred to in the immediately preceding sentence.
B. DEVELOPMENT AND APPROVAL OF FINAL INTERIOR PLANS: Once the
Preliminary Interior Plans have been approved by Lessor and Lessee
(including all changes made to resolve Lessee's objections approved
by Lessor's architect and Lessee's architect or construction
consultant pursuant to subparagraph 4A), Lessor shall complete and
submit to Lessee for its approval final working drawings for the
Interior Improvements by the due date specified in the Schedule of
Performance. Lessee shall approve the final plans for the Interior
Improvements or notify Lessor in writing of its specific objections
by the due date specified in the Schedule of Performance. If Lessee
so objects, the parties shall confer and reach agreement upon final
working drawings for the Interior Improvements within five (5)
business days after Lessee has notified Lessor of its objections. In
the event Lessee and Lessor do not resolve all of Lessee's
objections within such five (5) business day period, Lessor and
Lessee shall immediately cause Lessor's architect to meet and confer
with Lessee's architect or construction consultant, who shall apply
the standards set forth in the Improvement Agreement to resolve
Lessee's objections and incorporate such resolution into the Final
Interior Plans, which process Lessor and Lessee shall cause to be
completed within five (5) business days after the conclusion of the
five (5) business day period referred to in the immediately
preceding sentence. The final working drawings so approved by Lessor
and Lessee (including all changes made to resolve Lessee's
objections approved by Lessor's architect and Lessee's architect or
construction consultant) are referred to herein as the "Final
Interior Plans".
C. BUILDING PERMIT: As soon as the Final Interior Plans have been
approved by "Lessor and Lessee, Lessor shall apply for a building
permit for the Interior Improvements, and shall diligently prosecute
to completion such approval process.
D. CONSTRUCTION CONTRACT: Lessor and Lessee shall cooperate to cause
the Interior Improvements to be constructed by a general contractor
who is engaged by Lessor in accordance with the procedures et forth
in subparagraph 4D (1) hereof.
1) The job constructing the Interior Improvements shall be
offered for "competitive bid", on a fixed price basis, to two
(2) general contractors selected by Lessor and approved by
Tenant. The construction contact shall be awarded to the
bidder submitting the lowest bid for the job. Lessor shall
submit to Lessee a list of general contractors acceptable to
Lessor to whom the job may be bid, and Lessee shall notify
Lessor within three (3)
PAGE 3.
<PAGE>
business days after receipt of such list of its objection to
any proposed contractor. Lessee's failure to object within
such period of time shall be deemed to be its approval of all
bidders on the list so submitted by Lessor. If the lowest bid
resulting from such competitive bidding process indicates that
the Interior Improvement Costs will exceed Two Hundred Seventy
Thousand Dollars and 00/100tbs ($270,000.00), Lessor shall
promptly notify Lessee, in writing, to that effect, and Lessee
shall have the right to propose modifications to the Final
Interior Plans within five (5) business days after Lessee's
receipt of Lessor's notice, subject to Lessors approval of
such changes, for the purpose of reducing the Interior
Improvement costs. Such revision of the final Interior Plans
shall be completed as expeditiously as possible; provided,
however, that the job shall nonetheless be awarded to the low
bidder whose price shall be adjusted based' upon the changes
requested by Lessee and approved by Lessor made to the Final
Interior Plans.
2) Lessor and Lessee shall use their best efforts to approve the
general contractor and all subcontractors so that the
construction contract may be executed as soon as possible.
E. COMMENCEMENT OF INTERIOR IMPROVEMENTS: On or before the due date
specified in the Schedule of Performance, Lessor shall commence
construction for the Inter/or Improvements and shall diligently
prosecute such construction to completion, using all reasonable
efforts to achieve Substantial Completion of the Interior
Improvements by the due date specified in the Schedule of
Performance.
4. PAYMENT OF INTERIOR IMPROVEMENT COSTS: Lessor and Lessee shall have the
following obligations with respect to the payment of Interior Improvement
Costs:
A. Lessor shall be obligated to pay an amount equal to the Lessee
Improvement Allowance as provided for in Paragraph 50 of the First
Addendum to Lease for the Payment of Interior Improvement Costs. If
the total of Interior Improvement Costs exceeds the amount of
Lessor's required contribution, Lessee shall be obligated to pay the
entire amount of such excess. If Lessee becomes obligated to
contribute toward paying Interior Improvement Costs pursuant to this
subparagraph 5A, then Lessor shall estimate the amount of such
excess prior to commencing construction of the Interior Improvements
and Lessee shall pay to Lessor, or at Lessor's option to the general
contractor, a proportionate share of each progress payment due to
the general contractor which bears the same relationship to the
total amount of the progress payment in question as the amount
Lessee is obligated to contribute to the payment of Interior
Improvement Costs bears to the total estimated Interior Improvement
Costs. Lessee shall pay Lessee's share of any progress payment to
Lessor within five (5) business days after receipt of a statement
therefor from Lessor. At the time the final accounting is rendered
by Lessor pursuant to subparagraph 5C hereof, there shall be an
adjustment between Lessor and Lessee such that each shall only be
required to contribute to the payment of Interior Improvement Costs
in accordance with the obligations set
PAGE 4.
<PAGE>
forth in this subparagraph 5A, which adjustment shall be made within
five (5) days after Lessor notifies Lessee of the required
adjustment. If Lessee is required to make a payment to Lessor,
Lessee shall make such payment even if Lessee elects to audit the
statement submitted by Lessor pursuant to subparagraph 5C. In the
event Lessee's audit discloses that an overpayment or underpayment
was made by Lessee, there shall be an adjustment between Lessor and
Lessee as soon as reasonably practicable such that each shall only
be required to contribute to the payment of costs in accordance with
the obligations set forth in this subparagraph 5A.
B. If Lessee falls to pay any amount when due pursuant to this
paragraph 5, then (i) Lessor may (but without the obligation to do
so) advance such funds on Lessee's behalf, and Lessee .shall be
obligated to reimburse Lessor for the amount of funds so advanced on
its behalf, and (ii) Lessee shall be liable for the payment of a
late charge and interest in the same manner as if Lessee had failed
to pay Base Monthly Rent when due as described in paragraph 3.4 of
the Lease. Any amounts paid to Lessor by Lessee pursuant to this
subparagraph shall be held by Lessor as Lessee's agent, for
disbursal to the general contractor in payment for work costing in
excess of Lessor's required contribution.
C. When the Interior Improvements are Substantially Completed, Lessor
shall submit to Lessee a final and detailed accounting of all
Interior Improvement Costs paid by Lessor, certified as true and
correct by Lessor's financial officers. Lessee shall have the right
to audit the books, records, and supporting documents of Lessor to
the extent necessary to determine the accuracy of such accounting
during normal business hours after giving Lessor at least two (2)
days prior written notice. Lessee shall bear the cost of such audit,
unless such audit discloses that Lessor has overstated the total of
such costs by more than two percent .(2%) of the actual amount of
such costs, in which event Lessor shall pay the cost of Lessee's
audit. Any such audit must be conducted, if at all, within ninety
(90) days after Lessor delivers such accounting to Lessee.
5. CHARGES TO APPROVED PLANS: Once the Final Interior Plans have been
approved by Lessor and Lessee, neither shall have the right to order extra
work or change orders with respect to the construction of the Interior
Improvements without the prior written consent of the other. All extra
work or change orders requested by either Lessor or Lessee shall he made
in writing, shall specify any added or reduced cost and/or construction
time resulting therefrom, and shall become effective and a part of the
Final Interior Plans once approved in writing by both parties. If a change
order requested by Lessee results in an increase in the cost of
constructing the Interior Improvements, Lessee shall pay the amount of
such increase caused by the change order requested by Lessee at the time
the change order is approved by both Lessor and Lessee if and to the
extent such change order causes the Interior Improvement Costs to exceed
Lessor's required contribution thereto described in subparagraph SA.
6. DELIVERY OF PUNCH LIST: As soon as the Interior Improvements are
Substantially Completed, Lessor and Lessee shall together walk through the
Premises and inspect all
PAGE 5.
<PAGE>
Interior Improvements so completed, using reasonable efforts to discover
all uncompleted or defective construction in the Interior Improvements.
After such inspection has been completed, each party shall sign a Punch
List, which shall include a list of all "punch list" items which the
parties agree are to be corrected by Lessor. Lessor shall use reasonable
efforts to complete and/or repair such "punch list" items within thirty
(30) days after executing the punch list. Lessee's taking possession of
any part of the Premises shall be deemed to be an acceptance by Lessee of
Lessor's work improvement in such part as complete and in accordance with
the terms of the Lease except for the punch list items noted and latent
defects that could not reasonably have been discovered by Lessee during
its inspection of the Interior Improvements prior to completion of the
punch list. Notwithstanding anything contained herein, Lessee's obligation
to pay the Base Monthly Rent and Additional Rent shall commence as
provided in the Lease, regardless of whether Lessee completes such
inspection or executes such punch list.
7. STANDARD OF CONSTRUCTION AND WARRANTY: Lessor hereby warrants that the
Interior Improvements shall be constructed substantially in accordance
with the Final Interior Plans (as modified by .change orders approved by
Lessor and Lessee), All Private Restrictions and all Laws, in a good and
workmanlike manner, and all materials and equipment furnished shall
conform to such final plans and shall be new and otherwise of good
quality. The foregoing warranty shall be subject to, and limited by the
following:
A. Once Lessor is notified in writing of any breach of the
above-described warranty, Lessor shall promptly commence the cure of
such breach and complete such cure with diligence at Lessor's sole
cost and expense.
B. Lessor's liability pursuant to such warranty shall be limited to the
cost of' correcting the defect or other matter in question. In no
event shall Lessor be liable to Lessee for any damages or liability
incurred by Lessee as a result of such defect or other matter
including without limitation damages resulting form any loss of
business by Lessee or other consequential damages.
C. Notwithstanding anything contained herein, Lessor shall not be
liable for any defect in design, construction, or equipment
furnished which is discovered and of which Lessor receives written
notice from Lessee after the first (1.st) anniversary of the
recordation of a notice of completion for the work of improvement
affected by the defect.
D. With respect to defects for which Lessor is not responsible pursuant
to subparagraph 8C, Lessee shall have the benefit of any
construction or equipment warranties existing in favor of Lessor
that would assist Lessee in correcting such defect and in
discharging its obligations regarding the repair and maintenance of
the Premises. Upon request by Lessee, Lessor shall inform Lessee of
all written construction and equipment warranties existing in favor
of Lessor which affect the Interior Improvements. Lessor shall
cooperate with Lessee in enforcing such warranties and in bringing
any suit that may be necessary to enforce liability with regard to
any defect for which Lessor is not responsible pursuant to this
paragraph so long as Lessee pays all costs reasonably incurred by
Lessor in so acting.
PAGE 6.
<PAGE>
E. Lessor makes no other express or implied warranty with respect to
the design, construction or operation of the Interior Improvement
except as set forth in this paragraph.
8. EFFECT OF AGREEMENT: In the event of any inconsistency between this
Improvement Agreement and the Lease, the terms of this Improvement
Agreement shall prevail.
LESSOR: LESSEE:
Clint S. Carter and Esther Carter IntraBiotics Pharmaceuticals, Inc.
Family Trust A Delaware corporation
By: /s/ Clint S. Cartier By: /s/ Kenneth J. Kelley
----------------------------------- ----------------------------------
By: /s/ Esther Cartier Title: President and CEO
----------------------------------- -------------------------------
Date: July 31, 1998 Date: July 29, 1998
--------------------------------- --------------------------------
By:
----------------------------------
Title:
-------------------------------
Date:
--------------------------------
PAGE 7.
<PAGE>
EXHIBIT C
LESSOR'S REMEDIES IN EVENT OF LESSEE DEFAULT
(STATE OF CALIFORNIA)
(a) TERMINATION. In the event of any Default by Lessee, then in addition
to any other remedies available to Lessor at law or in equity and under this
Lease, Lessor shall have the immediate option to terminate this Lease and all
fights of Lessee hereunder by giving written notice of such intention to
terminate. In the event that Lessor shall elect to so terminate this Lease then
Lessor may recover from Lessee:
(1) the worth at the time of award of any unpaid Rent and any
other sums due and payable which have been earned at the time of such
termination; plus
(2) the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Lessee proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable for the balance of the term of
this Lease after the time of award exceeds the amount of such rental loss that
Lessee proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Lessor for all
the detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation, any costs or expenses incurred by
Lessor (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering or
rehabilitating the Premises or any portion thereof, including such acts for
reletting to a new lessee or lessees; (iii) for leasing commissions; or (iv) for
any other costs necessary or appropriate to relet the Premises; plus
(5) such reasonable attorneys' fees incurred by Lessor as a
result of a Default, and costs in the event suit is filed by Lessor to enforce
such remedy; and plus
(6) at Lessor's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
law.
As used in subparagraphs (1) and (2) above, the "worth at the time of
award" is computed by allowing interest at an annual rate equal to twelve
percent (12%) per annum or the maximum rate permitted by law, whichever is less.
As used in subparagraph (3) above, the "worth at the time of award" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent (1%). Lessee waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Lessee is evicted or Lessor takes possession of the Premises by reason of any
Default of Lessee hereunder.
(b) CONTINUATION OF LEASE. In the event of any Default by Lessee, then
in addition to any other remedies available to Lessor at law or in equity and
under this Lease, Lessor shall have
PAGE 1.
<PAGE>
the remedy described in California Civil Code Section 1951.4 (Lessor may
continue this Lease in effect after Lessee's Default and abandonment and
recover Rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations).
(c) RE-ENTRY. In the event of any Default by Lessee, Lessor shall also
have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Lessee.
(d) RELETTING. In the event of the abandonment of the Premises by Lessee
or in the event that Lessor shall elect to re-enter or shall take possession of
the Premises pursuant to legal proceeding or pursuant to any notice provided by
law, then if Lessor does not elect to terminate this Lease as provided in
Paragraph a, Lessor may from time to time, without terminating this Lease, relet
the Premises or any port thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Lessor in its sole
discretion may deem advisable with the fight to make alterations and repairs to
the Premises. In the event that Lessor shall elect to so relet, then rentals
received by Lessor from such reletting shall be applied in the following order:
(1) to reasonable attorneys' fees incurred by Lessor as a result of a Default
and costs in the event suit is filed by Lessor to enforce such remedies; (2) to
the payment of any indebtedness other than Rent due hereunder from Lessee to
Lessor; (3) to the payment of any costs of such reletting; (4) to the payment of
the costs of any alterations and repairs to the Premises; (5) to the payment of
Rent due and unpaid hereunder; and (6) the residue, if any, shall be held by
Lessor and applied in payment of future Rent and other sums payable by Lessee
hereunder as the same may become due and payable hereunder. Should that portion
of such rentals received from such reletting during any month, which is applied
to the payment of Rent hereunder, be less than the Rent payable during the month
by Lessee hereunder, then Lessee shall pay such deficiency to Lessor. Such
deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making, such alterations and repairs not covered by the
rentals received from such reletting.
(e) Termination. No re-entry or taking of possession of the Premises by
LESSOR pursuant to this Addendum shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Lessee or
unless the termination thereof is decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Lessor because of any
Default by Lessee, Lessor may at any time after such reletting elect to
terminate this Lease for any such Default.
(f) Cumulative Remedies. The remedies herein provided are not exclusive
and Lessor shall have any and all other remedies provided herein or by law or in
equity.
(g) No Surrender. No act or conduct of Lessor, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be or
constitute an acceptance of the surrender of the Premises by Lessee prior to the
expiration of the Term, and such acceptance by Lessor of surrender by Lessee
shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Lessor. The surrender of this Lease by Lessee,
voluntarily or otherwise, shall not work a merger unless Lessor elects in
writing that such merger take place, but shall operate as an assignment to
Lessor of any and all existing
PAGE 2.
<PAGE>
subleases, or Lessor may, at its option, elect in writing to treat such
surrender as a merger terminating Lessee's estate under this Lease, and
thereupon Lessor may terminate any or all such subleases by notifying the
sublessee of its election so to do within five (5) days after such surrender.
(h) NOTICE PROVISIONS. Lessee agrees that any notice given by Lessor
pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements for
notice under California Code of Civil Procedure Section 1161, and Lessor shall
not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.
Lessee Initials Lessor Initials
- ---------------- ----------------
PAGE 3.
<PAGE>
EXHIBIT D
FINAL PLANS AND SPECIFICATIONS
(TO BE ATTACHED)
PAGE 4.
<PAGE>
FIRST AMENDMENT TO
STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE
Dated August 3, 1998
Clint S. Carter and Esther Carter Family Trust/IntraBiotics
Pharmaceuticals, Inc.
THIS FIRST AMENDMENT to Standard Industrial/Commercial Single Tenant
Lease is made effective as of August 2, 1998 to amend that certain Standard
Industrial/Commercial Single Tenant Lease dated for reference purposes only
July___, 1998 between Clint S. Carter and Esther Carter Family Trust, as
Lessor, and IntraBiotics Pharmaceuticals, Inc., as Lessee (the "Lease") as
follows:
1. The reference to an Exhibit E in Paragraph 1.7 is hereby deleted.
The Lease will have no Exhibit E.
2. Paragraph 5 is hereby renumbered and designated as "5.1 SECURITY
DEPOSIT" and the following is added as Paragraph 5.2:
"5.2 LETTER OF CREDIT.The non-cash portion of the Security
Deposit shall consist of an irrevocable standby letter of credit (the
"Letter of Credit") in the face amount specified in Paragraph 1.7
above. Lessee shall obtain and maintain the Letter of Credit throughout
the term of this Lease and any extension thereof, subject to the terms
of this Paragraph 5.2. The Letter of Credit shall be issued by a major
commercial bank reasonably acceptable to Landlord, with a San Francisco
branch servicing as a service and claim point for the Letter of Credit;
have a term of no less than one (1) year and be automatically renewable
for an additional one (1) year period unless notice of non-renewal is
given by the issuer to Landlord not later than sixty (60) days prior to
the expiration thereof; provide for payment to Landlord upon the
issuer's receipt of a sight draft from Landlord together with
Landlord's certificate certifying that the requested sum is due and
payable from Tenant and Landlord is entitled to draw on the Letter of
Credit in accordance with this Paragraph 5, and with no other
conditions; and otherwise be in form and content reasonably
satisfactory to Landlord. If Landlord draws on the Letter of Credit
pursuant to the terms hereof, Tenant shall immediately replenish the
Letter of Credit or provide Landlord with an additional letter of
credit conforming to the requirements of this Paragraph so that the
amount available to Landlord from the Letter of Credit(s) provided
hereunder is the amount specified herein. Tenant's failure to deliver
any replacement, additional or extension of the Letter of Credit, or
evidence of renewal of the Letter of Credit, within the time specified
herein shall constitute a Default under this Lease and shall entitle
Landlord to draw the full amount of the Letter of Credit then in
effect. The provisions of Paragraph 31 (Attorneys Fees) shall apply to
any action by Landlord to enforce or exercise its rights under this
Paragraph 5."
3. Except as so amended, the Lease shall remain unmodified and in full
force and effect.
1.
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In witness whereof the parties have executed this First
Amendment to be effective as of the date written above.
Dated: August 3, 1998 Dated: August 3, 1998
----------------------------- -----------------------------
LESSOR LESSEE
Clint S. Carter and Esther Carter IntraBiotics Pharmaceuticals, Inc.
Family Trust
By /s/Clint S. Carter By /s/Kenneth J. Kelley
---------------------------------- ---------------------------------
Title Trustee Title President & CEO
------------------------------- ------------------------------
By /s/Esther Carter By /s/Peter Garcia
---------------------------------- ---------------------------------
Title Title Vice President & CFO
------------------------------- ------------------------------
2.
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EXHIBIT 10.12
[LEASE MANAGEMENT SERVICES, INC. LOGO]
EQUIPMENT FINANCING AGREEMENT
(Number 10782)
THIS EQUIPMENT FINANCING AGREEMENT NUMBER 10782 ("Agreement") is dated as of
the date set forth at the foot hereof and is between LEASE MANAGEMENT
SERVICES, INC., ("Secured Party') and INTRABIOTICS PHARMACEUTICALS, INC.,
("Debtor").
1. EQUIPMENT; SECURITY INTEREST. The terms and conditions of this
Agreement cover each item of machinery, equipment and other property
(individually an "Item" or "Item of Equipment" and collectively the
"Equipment") described in a schedule now or hereafter executed by' the
parties hereto and made a part hereof (individually a "Schedule" and
collectively the "Schedules"). Debtor hereby grants Secured Party a security
interest in and to all Debtor's right, title and interest in and to the
Equipment under the Uniform Commercial Code, such gram with respect to an
Item of Equipment to be as of Debtor's execution of a related Equipment
Financing Commitment referencing this Agreement or, if Debtor then has no
interest in such Item, as of such subsequent time as Debtor acquires an
interest in the limn. Such security interest is granted by Debtor to secure
performance by Debtor of Debtor's obligations to Secured Party hereunder and
under any other agreements which Debtor has or may hereafter have obligations
to Secured Party. Debtor will ensure that such security interest will be and
remain a sole and valid first lien security interest subject only to the lien
of current taxes and assessment not in default but only if such taxes are
entitled to priority as a matter of law.
2. DEBTOR'S OBLIGATIONS. The obligations of Debtor under this Agreement
respecting an Item of Equipment, except the obligation to pay installment
payment with respect thereto which will commence as set forth in Paragraph 3
below, commence upon the grant to Secured Party of a security interest in the
Item. Debtor's obligations hereunder with respect to an Item of Equipment and
Secured Party's security interest therein will continue until payment of all
Amounts due, and performance of all terms and conditions requited hereunder
provided, however, that if this Agreement is in default said obligations and
security interest will continue during the continuance of said default. Upon
termination of Secured Party's security interest in an Item of Equipment,
Secured Party will execute such release of interest with respect thereto as
Debtor reasonably requests.
3. INSTALLMENT PAYMENTS AND OTHER PAYMENTS. Debtor will repay advances
Secured Party makes on account of the Equipment in installment payments in
the amounts and at the times set forth in the Schedules, whether or not
Secured Party has rendered an invoice therefor, at the office of Secured
Party set forth at the foot hereof, or to such person and/or at such other
place as Secured Party may from time to time designate by notice to Debtor.
Any other amounts required to be paid Secured Party by Debtor hereunder are
due upon Debtor's receipt of Secured Party's invoice therefor and will be
payable as directed in the invoice. Payments under this Agreement may be
applied to Debtor's then accrued obligations to Secured Party in such order
as Secured Party may choose.
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4. NET AGREEMENT; NO OFFSET, SURVIVAL. This Agreement is a net
agreement, and Debtor will not be entitled to any abatement of installment
payments or other payments due hereunder or any reduction thereof under any
circumstance or for any reason whatsoever. Debtor hereby waives any and all
existing and future claims, as offsets, against any installment payments or
other payments due hereunder and agrees to pay the installment payments and
other amounts due hereunder as and when due regardless of any offset or claim
which may be asserted by Debtor or on its behalf. The obligations and
liabilities of Debtor hereunder will survive the termination of the Agreement.
5. FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT.
DEBTOR ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND
ACQUIRED SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT SECURED PARTY IS NOT
AND WILL NOT BE THE VENDOR OF ANY EQUIPMENT AND THAT SECURED PARTY HAS NOT
MADE AND WILL NOT MAKE ANY AGREEMENT, REPRESENTATION OR WARRANTY WITH RESPECT
TO THE MERCHANTABILITY, CONDITION, QUALIFICATION OR FITNESS FOR A PARTICULAR
PURPOSE OR VALUE OF THE EQUIPMENT OR ANY OTHER MATTER WITH RESPECT THERETO IN
ANY RESPECT WHATSOEVER.
6. NO AGENCY. DEBTOR ACKNOWLEDGES THAT NO AGENT OF THE MANUFACTURER OR
OTHER SUPPLIER OF AN ITEM OF EQUIPMENT OR OF ANY FINANCIAL INTERMEDIARY IN
CONNECTION WITH THIS AGREEMENT IS AN AGENT OF SECURED PARTY. SECURED PARTY IS
NOT BOUND BY A REPRESENTATION OF ANY SUCH PARTY AND, AS CONTEMPLATED IN
PARAGRAPH 27 BELOW, THE ENTIRE AGREEMENT OF SECURED PARTY AND DEBTOR
CONCERNING THE FINANCING OF THE EQUIPMENT IS CONTAINED IN THIS AGREEMENT AS
IT MAY BE AMENDED ONLY AS PROVIDED IN THAT PARAGRAPH.
7. ACCEPTANCE. Execution by Debtor and Secured Party of a Schedule
covering, the Equipment or any Items thereof will conclusively establish that
such Equipment has been included under and will be subject to all the terms
and conditions of this Agreement. If Debtor has not furnished Secured Party
with an executed Schedule by the Earlier of fourteen (14) days after receipt
thereof or expiration of the commitment period set forth in the applicable
Equipment Financing Agreement, Secured Party may terminate its obligation to
advance funds as to the applicable Equipment.
8. LOCATION; INSPECTION; USE. Debtor will keep, or in the case of motor
vehicles, permanently garage and not remove from the United States, as
appropriate, each Item of Equipment in Debtor's possession and control at the
Equipment Location designated in the applicable Schedule, or at such other
location to which such Item may have been moved with the prior written
consent of Secured Party. Whenever requested by Secured Party, Debtor will
advise Secured Party as to the exact location of an Item of Equipment.
Secured Party will have the right to inspect the Equipment and observe its
use during normal business hours, subject to Debtor's security procedures and
to enter into and upon the premises where the Equipment may be located for
such purpose. The Equipment will at all times be used solely for commercial
or business purposes and operated in a careful and proper manner and in
compliance with all
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applicable laws, ordinances, roles and regulations, all conditions and
requirements of the policy or policies of insurance required to be carried by
Debtor under the terms of this Agreement and ail manufacturer's instructions
and warranty requirements. Any modifications or additions to the Equipment
required by any such governmental edict or insurance policy will be promptly
made by Debtor.
9. ALTERATIONS; SECURITY INTEREST COVERAGE. Without the prior written
consent of Secured Party, Debtor will not make any alterations, additions or
improvements to any Item of Equipment which detract from its economic value
or functional utility, except as may be required pursuant to Paragraph 8
above. Secured Party's security interest in the Equipment will include all
modifications anti additions thereto and replacements and substitutions
therefor, in whole or in pan. Such reference to replacements and
substitutions will not grant Debtor greater rights to replace or substitute
than are provided in Paragraph 11 below or as may be allowed upon the prior
written consent of Secured Party.
10. MAINTENANCE. Debtor will maintain the Equipment in good repair,
condition and working order. Debtor will also cause each Item of Equipment
for which a service contract is generally available to be covered by such a
contract which provides coverages typical to property of the type involved
and is issued by a competent servicing entity.
11. LOSS AND DAMAGE; CASUALTY VALUE. In the event of the loss of, theft
of, requisition of, damage to or destruction of an Item of Equipment
("Casualty Occurrence"), Debtor will give Secured Party prompt notice thereof
and will thereafter place such Item in good repair, condition and working
order, provided, however, that if such Item is determined by Secured Party to
be lost, stolen, destroyed or damaged beyond repair, is requisitioned or
suffers a constructive total loss as deemed in any applicable insurance
policy carried by Debtor in accordance with Paragraph 14 below, Debtor, at
Secured Party's option, will (a) replace such Item with like Equipment in
good repair, condition and working order whereupon such replacement equipment
will be deemed such Item for all purposes hereof or (b) pay Secured Party the
"Casualty Value" of such Item which will equal the total of (i) all
installment payments and other amounts due from Debtor to Secured Party at
the time of such payment and (ii) future installment payments due with
respect to such Item with each such payment including any final uneven
payment discounted at a rate equal to the discount rate of the Federal
Reserve Bank of San Francisco from the date due to the date of such payment.
Upon such replacement or payment, as appropriate, this Agreement and Secured
Party's security interest will terminate with, and only with, respect to the
Item of Equipment so replaced or as to which such payment is made in
accordance with Paragraph 2 above.
12. TITLING; REGISTRATION. Each item of Equipment subject to title
registration laws will at all times be titled and/or registered by Debtor as
Secured Party's agent and attorney-in-fact with full power and authority to
register (but without power to affect title to) the Equipment in such manner
and in such jurisdiction or jurisdictions as Secured Party directs. Debtor
will promptly notify Secured Party of any necessary or advisable retitling
and/or re-registration of an Item of Equipment in a jurisdiction other than
the one in which such Item is then titled and/or registered. Any and all
documents of title will be furnished or caused to be furnished Secured
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Party by Debtor within sixty (60) days of the date any titling or registering
or restating or reregistering, as appropriate, is directed by Secured Party.
13. TAXES. Debtor will make all filings as to and pay when due all
personal property and other ad valorem taxes and all other taxes, fees,
charges and assessments based on the ownership or use of the Equipment and
will pay as directed by Secured Party or reimburse Secured Party for all
other taxes, including, but not limited to, gross receipt taxes (exclusive of
federal and state taxes based on Secured Party's net income, unless such net
income taxes are in substitution for or relieve Debtor from any taxes which
Debtor would otherwise be obligated to pay under the terms of this Paragraph
13), fees, charges and assessments whatsoever, however designated, whether
based on the installment payments or other amounts due hereunder, levied,
assessed or imposed upon the Equipment or otherwise related hereto or to the
Equipment, now or hereafter levied; assessed or imposed under the authority
of a federal, state, or local taxing jurisdiction, regardless of when and by
whom payable. Filings with respect to such other amounts will, at Secured
Party's option, be made by Secured Party or by Debtor as directed by Secured
Party.
14. INSURANCE. Debtor will procure and continuously maintain all risk
insurance against loss or damage to the Equipment from any cause whatsoever
for not less than the full replacement value thereof naming Secured Party as
Loss Payee. Such insurance must be in a form and with companies approved by
Secured Party, must provide at least thirty (30) days advance written notice
to Secured Party of cancellation, change or modification in any term,
condition, or amount of protection provided therein, must provide full breach
of warranty protection and must provide that the coverage is "primary
coverage" (does not require contribution from any other applicable
.coverage), Debtor will provide Secured Party with an original policy or
certificate evidencing such insurance. In the event of an assignment of this
Agreement of which Debtor has notice, Debtor will cause such insurance to
provide the same protection to the assignee as its interests may appear. The
proceeds of such insurance, at the option of the Secured Party or such
assignee, as appropriate, will be applied toward (a) repair or replacement of
the appropriate Item or Items of Equipment, (b) payment of the Casualty Value
thereof and/or (c) payment of, or as provision for, satisfaction of any other
accrued obligations of Debtor hereunder. Debtor hereby appoints Secured Party
as Debtor's attorney-in-fact with full power and authority to do all things,
including, but not limited to, making claims, receiving payments and
endorsing documents, checks or drafts, necessary to secure payments due under
any policy contemplated hereby on account of a Casualty Occurrence. Debtor
and Secured Party contemplate that the jurisdictions where the Equipment will
be located will not impose any liability upon Secured Party for personal
injury and/or property damage resulting out of the possession, use, operation
or condition of the Equipment. In the event Secured Party determines that
such is not or may not be the case with respect to a given jurisdiction,
Debtor will provide Secured Party with public liability and property damage
coverage applicable to the Equipment in such amounts and in such form as
Secured Party requires.
15. SECURED PARTY'S PAYMENT. If Debtor fails to pay any amounts due
hereunder or to perform any of its other obligations under this Agreement,
Secured Party may, at its option, but without any obligation to do so, pay
such amounts or perform such obligations, and Debtor will reimburse Secured
Party the amount of such payment or cost of such performance, plus interest
at 1.5 % per month.
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16. INDEMNITY. Debtor does hereby assume liability for and does agree to
indemnify, defend, protect, save and keep harmless Secured Party from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including court costs and legal
expenses, of whatever kind and nature, imposed on, intuited by or asserted
against Secured Party (whether or not also indemnified against by any other
person) in any way relating to or arising out of this Agreement or the
manufacture, financing, ownership, delivery, possession, use, operation,
condition or disposition of the Equipment by Secured Party or Debtor,
including, without limitation, any claim alleging latent and other defects,
whether or not discoverable by Secured Party or Debtor, and any other claim
arising out of strict liability in tort, whether or not in either instance
relating to an event occurring while Debtor remains obligated under this
Agreement, and any claim for patent, trademark or copyright infringement.
Debtor agrees to give Secured Party and Secured Party agrees to give Debtor
notice of any claim or liability hereby indemnified against promptly
following learning thereof.
17. DEFAULT. Any of the following will constitute an event of default
hereunder: (a) Debtor's failure to pay when due any installment payment or
other amount due hereunder, which failure continues for ten (10) days after
the due date thereof; (b) Debtor's default in performing any other
obligation, term or condition of this Agreement or any other agreement
between Debtor and Secured Party or default under any further agreement
providing security for the performance by Debtor of its obligations hereunder
provided such default has continued for more than twenty (20) days, except as
provided in (c) and (d) hereinbelow, or, without limiting the generality of
subparagraph (1) hereinbelow, default under any lease or any mortgage or
other instrument contemplating the provision of financial accommodation
applicable to the real property where an Item of Equipment is located; (c)
any writ or order of attachment or execution or other legal process being
levied on or charged against any Item of Equipment and not being released or
satisfied within ten (10) days; (d) Debtor's failure to comply with its
obligations under Paragraph 14 above or any transfer by Debtor in violation
of Paragraph 21 below; (e) a non-appealable judgment for the payment of money
in excess of $100,000 being rendered by a court of record against Debtor
which Debtor does not discharge or make provision for discharge in accordance
with the terms thereof within ninety (90) days from the date of entry
thereof; (f) death or judicial declaration of incompetency of Debtor, if an
individual; (g) the filing by Debtor of a petition under the Bankruptcy Code
or any amendment thereto or under any other insolvency law or law providing
for the relief of debtors, including, without limitation, a petition for
reorganization, arrangement or extension, or the commission by Debtor of an
act of bankruptcy; (h) the filing against Debtor of any such petition not
dismissed or permanently stayed within thirty (30) days of the riling
thereof; (i) the voluntary or involuntary making of an assignment of
substantial portion of its assets by Debtor for the benefit of creditors,
appointment of a receiver or trustee for Debtor or for any of Debtor's
assets, institution by or against Debtor or any other type of insolvency
proceeding (under the Bankruptcy Code or otherwise) or of any formal or
informal proceeding for dissolution, liquidation, settlement of claims
against or winding up of the affairs of Debtor, Debtor's cessation of
business activities or the making by Debtor of a transfer of all or a
material portion of Debtor's assets or inventory not in the ordinary course
of business; (j) the occurrence of any event described in pans (e), (f), (g),
(h) or (i) hereinabove with respect to any guarantor or other party liable
for payment or performance of this Agreement; (k) any certificate, statement,
representation, warranty or audit heretofore or hereafter furnished with
respect hereto by or on behalf of Debtor or any guarantor or other party
liable for payment or performance of this Agreement proving to have been
false in any material
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respect at the time as of which the facts therein set forth were stated or
certified or having omitted any substantial contingent or unliquidated
liability or claim against Debtor or any such guarantor or other party; (1)
breach by Debtor of any lease or other agreement providing financial
accommodation under which Debtor or its property is bound; or (m) a transfer
of effective control of Debtor, if an organization.
18. REMEDIES. Upon the occurrence of an event of default, Secured Party
will have the rights, options, duties and remedies of a Secured Party, and
Debtor will have the rights and duties of a debtor, under the Uniform
Commercial Code (regardless of whether such Code or a law similar thereto has
been enacted in a jurisdiction wherein the rights or remedies are asserted)
and, without limiting the foregoing,' Secured Party may exercise any one or
more of the following remedies: (a) declare the Casualty Value or such lesser
amount as may be set by law immediately due and payable with respect to any
or all Items of Equipment without notice or demand to Debtor; (b) sue from
time to time for and recover all installment payments and other payments then
accrued and which accrue during the pendency of such action with respect to
any or all Items of Equipment; (c) take possession of and, if deemed
appropriate, render unusable any or all Items of Equipment, without demand or
notice, wherever same may be located, without any court order or other
process of law and without liability for any damages occasioned by such
taking of possession and remove, keep and store the same or use and operate
or lease the same until sold; (d) require Debtor to assemble any or all Items
of Equipment at the Equipment Location therefor, or at such location to which
such Equipment may have been moved with the written consent of Secured Party
or such other location in reasonable proximity to either of the foregoing as
Secured Party designates; (e) upon ten (10) days notice to Debtor or such
other notice as may be required by law, sell or otherwise dispose of any Item
of Equipment, whether or not in Secured Party's possession, in a commercially
reasonable manner at public or private sale at any place deemed appropriate
and apply the new proceeds of such sale, after deducting all costs of such
sale, including, but not limited to, costs of transportation, repossession,
storage, refurbishing, advertising and brokers' fees, to the obligations of
Debtor to Secured Party hereunder or otherwise, with Debtor remaining liable
for any deficiency and with any excess being returned to Debtor; (f) upon
thirty (30) days notice to Debtor, retain any repossessed or assembled Items
of Equipment as Secured Party's own property in full satisfaction of Debtor's
liability for the installment payments due hereunder with respect thereto,
provided that Debtor will have the right to redeem such Items by payment in
full of its obligations to Secured Party hereunder or otherwise or to require
Secured Party to sell or otherwise dispose of such Items in the manner set
forth in subparagraph (e) hereinabove upon notice to Secured Party within
such thirty (30) day period; or (g) utilize any other remedy available to
Secured Party under the Uniform Commercial Code or similar provision of law
or otherwise at law or in equity.
No right or remedy conferred herein is exclusive of any other right or remedy
conferred herein or by law; but all such remedies are cumulative of every
other right or remedy conferred hereunder or at law or in equity, by statute
or otherwise, and may he exercised concurrently or separately from time to
time. Any sale contemplated by subparagraph (e) of this Paragraph 18 may be
adjourned from time to time by announcement at the time and place appointed
for such sale, or for any such adjourned sale, without further published
notice, Secured Party may bid and become the purchaser at any such sale. Any
sale of an Item of Equipment, whether under said subparagraph or by virtue of
judicial proceedings, will operate to divest all right, rifle, interest,
claim and demand whatsoever; either at law or in equity, of Debtor in and to
said item and will
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be a perpetual bar to any claim against such Item, both at law and in equity,
against Debtor and all persons claiming by, through or under Debtor.
19. DISCONTINUANCE OF REMEDIES. If Secured Party proceeds to enforce any
right under this Agreement and such proceedings are discontinued or abandoned
for any reason or are determined adversely, then and in every such case
Debtor and Secured Party will be restored to their former positions and
rights hereunder.
20. SECURED PARTY'S EXPENSES. Debtor will pay Secured Party all costs and
expenses, including attorney's fees and court costs and sales costs not
offset against sales proceeds under Paragraph 18 above, incurred by Secured
Party in exercising any of its rights or remedies hereunder or enforcing any
of the terms, conditions or provisions hereof. This obligation includes the
payment or reimbursement of all such amounts whether an action is ultimately
filed and whether an action is ultimately dismissed.
21. ASSIGNMENT. Without the prior written consent of Secured Party,
Debtor will not sell, lease, pledge or hypothecate, except as provided in
this Agreement, any Item of Equipment or any interest therein or assign,
transfer, pledge, or hypothecate this Agreement or any interest in this
Agreement or permit the Equipment to be subject to any lien, charge or
encumbrance of any nature except the security interest of Secured Party
contemplated hereby. Debtor's interest herein is not assignable and will not
be assigned or transferred by operation of law. Consent to any of the
foregoing prohibited acts applies only in the given instance and is not a
consent to any subsequent like act by Debtor or any other person.
All rights of Secured Party hereunder may he assigned, pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without
notice to Debtor but always, however, subject to the rights of Debtor under
this Agreement. If Debtor is given notice of any such assignment, Debtor will
acknowledge receipt thereof in writing. In the event Secured Party assigns
this Agreement or the installment payments due or to become due hereunder or
any other interest herein, whether as security for any of its indebtedness or
otherwise, no breach or default by Secured Party hereunder or pursuant to any
other agreement between Secured Party and Debtor, should there be one, will
excuse performance by Debtor of any provision hereof, it being understood,
that in the event of such default or breach by Secured Party that Debtor will
pursue any rights on account thereof solely against Secured Party. No such
assignee, unless such assignee agrees in writing, will be obligated to
perform any duty, covenant or condition required to be performed by Secured
Party in connection with this Agreement.
Subject always to the foregoing, this Agreement inures to the benefit of, and
is binding upon, the heirs, legatees, personal representative, successors and
assigns of the parties hereto.
22. MARKINGS; PERSONAL PROPERTY. If Secured Party supplies Debtor with
labels, plates, decals or other markings stating that Secured Party has an
interest in the Equipment, Debtor will affix and keep the same prominently
displayed on the Equipment or will otherwise mark the Equipment or its then
location or locations, as appropriate, at Secured Party's request to indicate
Secured Party's security interest in the Equipment. The Equipment is, and at
aH times will remain, personal property notwithstanding that the Equipment or
any Item thereof may now be, or hereafter become, in any manner affixed or
attached to, or embedded in, or
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permanently resting upon real property or any improvement thereof or attached
in any manner to what is permanent as by means of cement, plaster, nails,
bolts, screws or otherwise. If requested by Secured Party, Debtor will obtain
and deliver to Secured Party waivers of interest or liens in recordable form
satisfactory to Secured Party from all persons claiming any interest in the
real property on which an Item of Equipment is or is to be installed or
located.
23. LATE CHARGES. Time is of the essence in this Agreement and if any
Installment Payment is not paid within ten (10) days after the due date
thereof, Secured Party shall have the right to add and collect, and Debtor
agrees to pay: (a) a late charge on and in addition to, such Installment
Payment equal to five percent (5%) of such Installment Payment or a lesser
amount if established by any state or federal statute applicable thereto, and
(b) interest on such Installment Payment from thirty (30) days after the due
date until paid at the highest contract rate enforceable against Debtor under
applicable law but never to exceed eighteen percent (18%) per annum.
24. NON-WAIVER. No covenant or condition of this Agreement can be waived
except by the written consent of Secured Party. Forbearance or indulgence by
Secured Party in regard to any breach hereunder will not constitute a waiver
of the related covenant or condition to be performed by Debtor.
25. ADDITIONAL DOCUMENTS. In connection with and in order to perfect and
evidence the security interest in the Equipment granted Secured Party
hereunder Debtor will execute and deliver to Secured Party such financing
statements and similar documents as Secured Party requests. Debtor authorizes
Secured Party where permitted by law to make filings of such financing
statements without Debtor's signature. Debtor further will finish Secured
Party (a) on a timely basis, Debtor's future financial statements, including
Debtor's most recent annual report, balance sheet and income statement,
prepared in accordance with generally accepted accounting principles, which
reports, Debtor warrants, shall fully and fairly represent the true financial
condition of Debtor (b) any other information normally provided by Debtor to
the public and (c) such other financial data or information relative to this
Agreement and the Equipment, including, without limitation, copies of vendor
proposals and purchase orders and agreements, listings of serial numbers or
other identification data and confirmations of such information, as Secured
Party may from time to time reasonably request. Debtor will procure and/or
execute, have executed, acknowledge, have acknowledged, deliver to Secured
Party, record and file such other documents and showings as Secured Party
deems necessary or desirable to protect its interest in and rights under this
Agreement and interest in the Equipment. Debtor will pay as directed by
Secured Party or reimburse Secured Party for all filing, search, title
report, legal and other fees incurred by Secured Party in connection with any
documents to be provided by Debtor pursuant to this Paragraph or Paragraph 22
and any further similar documents Secured Party may procure.
26. DEBTOR'S WARRANTIES. Debtor certifies and warrants that the financial
data and other information which Debtor has submitted, or will submit, to
Secured Party in connection with this Agreement is, or will be at time of
delivery, as appropriate, a true and complete statement of the matters
therein contained. Debtor further certifies and warrants: (a) this Agreement
has been duly authorized by Debtor and when executed and delivered by the
person signing on behalf of Debtor below will constitute the legal, valid and
binding obligation, contract
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and agreement of Debtor enforceable against Debtor in accordance with its
respective terms; (b) this Agreement and each and every showing provided by
or on behalf of Debtor in connection herewith may he relied upon by Secured
Party in accordance with the terms thereof notwithstanding the failure of
Debtor or other applicable party to ensure proper attestation thereto,
whether by absence of a seal or acknowledgment or otherwise; (c) Debtor has
the right, power and authority to grant a security interest in the Equipment
to Secured Party for the uses and purposes herein set forth and (d) each Item
of Equipment will, at the time such Item becomes subject hereto, he in good
repair, condition and working order.
27. ENTIRE AGREEMENT. This instrument with exhibits and related
documentation constitutes the entire agreement between Secured Party and
Debtor and will not be amended, altered or changed except by a written
agreement signed by the parties.
28. NOTICES. Notices under this Agreement must be in writing and must be
mailed by United States mail, certified mail with return receipt requested,
duly addressed, with postage prepaid, to the party involved at its respective
address set forth at the foot hereof or at such other address as each party
may provide on notice to the other from time to time. Notices will be
effective when deposited. Each party will promptly notify the other of any
change in that party's address.
29. GENDER, NUMBER: JOINT AND SEVERAL LIABILITY. Whenever the context of
this Agreement requires, the neuter gender includes the feminine or masculine
and the singular number includes the plural; and whenever the words "Secured
Party" are used herein, they include all assignees of Secured Party, it being
understood that specific reference to "assignee" in Paragraph 14 above is for
further emphasis. If there is more than one Debtor named in this Agreement,
the liability of each will be joint and several.
30. TITLES. The tides to the Paragraphs of thin Agreement are solely for
the convenience of the parties and are not an aid in the interpretation of
the instrument.
31. GOVERNING LAW; VENUE. This Agreement will be governed by and
construed in accordance with the laws of the State of California. Venue for
any action related to the Agreement will be in an appropriate court in San
Mateo County, California, to which Debtor consents, or in another court
selected by Secured Party which has jurisdiction over the parties. In the
event any provision hereof is declared invalid, such provision will be deemed
severable from the remaining provisions of this Agreement, which will remain
in full force and effect.
32. TIME. Time is of the essence of this Agreement and for each and all
of its provisions.
9
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of July 20, 1995.
DEBTOR:
INTRABIOTICS PHARMACEUTICALS, INC.
816 Kifer Road
Sunnyvale, CA 94086
By: /s/ Kenneth J. Kelley
--------------------------------------------------
Title: PRESIDENT AND CEO
-----------------------------------------------
SECURED PARTY:
LEASE MANAGEMENT SERVICES, INC.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
By: /s/ Barbara B. Kaiser
--------------------------------------------------
Title: EVP/GENERAL MANAGER
-----------------------------------------------
10
<PAGE>
[LEASE MANAGEMENT SERVICES, INC. LOGO]
ADDENDUM TO EQUIPMENT FINANCING AGREEMENT
NUMBER 10782
BETWEEN INTRABIOTICS PHARMACEUTICALS, INC. ("DEBTOR")
AND LEASE MANAGEMENT SERVICES, INC. ("SECURED PARTY")
The printed form of Equipment Financing Agreement #10782 between the parties
dated July 20,1995 is amended as follows:
1. At the end of the introductory paragraph insert "The terms and
conditions in the attached confirmation letter dated June 15, 1995 (the
"Confirmation Letter Agreement"), are specifically included as pan of this
Equipment Financing Agreement, including a commitment for a $750,000 line of
credit; PROVIDED, HOWEVER, that the "Loan Structure" shall be utilized
exclusively. In the event of a conflict between the terms of this Agreement
and the Confirmation Letter Agreement, the terms of the agreement and the
related loan documents shall govern."
2. In Section 1, line 11, after the word "agreements", insert "executed
by Debtor in connection with this Agreement", and in line 12 after the word
"Party" insert "PROVIDED, HOWEVER, that the security interest of Secured
Party in the Equipment described in any Schedule will be released by Secured
Party promptly upon payment in full of Debtor's obligations under such
schedule and will not continue to secure performance under any other Schedule
still outstanding at that time."
3. In Section 8, line 5, after the first appearance of the words
"Secured Party", insert "which consent shall not be unreasonably withheld".
4. In Section 10, line 3, after the word "contract", insert "or
equivalent servicing plan".
5. In Section 11, line 7, immediately following the phrase "at Secured
Party's option", insert "after consultation with Debtor". In clause (b)(ii)
of Section 11, delete the phrase "the discount rate of the Federal Reserve
Bank of San Francisco" and replace it with" the most current 90 day U.S.
Treasury Bill rate as quoted in The Wall Street Journal".
6. In Section 12, line 4, after the words "Secured Party", insert
"reasonably".
7. In Section 14, line 2, delete the phrase "from any cause whatsoever".
In line 5, delete the words "change or modification in any term, condition,
or amount of protection provided therein, must provide full breach of
warranty protection". To the last sentence of Section 14, add "PROVIDED,
HOWEVER, that public liability insurance (commercial general liability) with
primary limits of $1,000,000 with an excess policy of $1,000,000 shall be
deemed to satisfy this requirement."
8. In Section 16, line 4, after the words "whatever kind and nature",
insert "except such as relate to or arise out of Secured Party's gross
negligence or willful misconduct".
9. In Section 17, subsections (a) and (c), change each reference to
"days" to "business days"; in subsection (h), change "thirty (36) days" to
"sixty (60) days"; delete subsection (1) and
1.
<PAGE>
replace it with "breach by Debtor of any lease or other agreement providing
financial accommodation in excess of $100,000 under which Debtor or its
property is bound, which breach is not cured or with respect to which no
provision has been made to cure within twenty (20) days"; and change
subsection (m) to read `subject to Paragraph 21, a transfer of effective
control of Debtor, if an organization.'.
10. In Section 18, line 1, after the word "occurrence", insert "and
continuation".
11. In Section 20, line 1, insert `reasonable' to precede "costs".
12. To the end of the first paragraph of Section 21, add the following:
"In the event of a proposed statutory merger of the Debtor into another
corporation or a proposed sale or transfer by the Debtor of all or
substantially all of its assets to a third party business entity, then,
provided that (i) the Debtor is not in default under tiffs Agreement or under
any other agreement or Equipment Financing Agreement between the Debtor and
the Secured Party and (ii) the Secured Party or its assignee has been given
sufficient advance notice of the proposed merger, sale, or transfer together
with the necessary back/round as to the legal status, financial and credit
worthiness of the proposed surviving corporation, purchaser or transferee
(collectively, a "Transferee") and the Secured Party or its assignee has
approved such financial and credit worthiness of the Transferee in accordance
with its then existing credit criteria, the Secured Party agrees that it will
not unreasonably withhold it Consent to any such transfer or assignment of
this Agreement (and the transfer of the Equipment to such Transferee)
provided, further, that (a) the said Transferee assumes all of the Debtor's
obligations under this Agreement in form satisfactory to Secured Party or its
assignee (without releasing the Debtor), (b) the Secured Party is assured
that its first perfected security interest in the Equipment will continue in
full force and effect and the Transferee executes such UCC Financing
Statements as may be necessary to accomplish the same and (c) the Secured
Party is assured that the Equipment will be adequately covered by insurance
during any move thereof."
13. In section 25, insert `reasonably" to precede "requests" in line 4
and "filing' in line 17.
14. In section 25, line $, after "Secured Party", insert "upon Secured
Party's reasonable request or as set forth `m the Confirmation Letter
Agreement'.
15. In Section 27, line 1, after the word "instrument" insert ", The
Addendum to Equipment Financing Agreement between the parties of even date
herewith,".
2.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Addendum this 20
day of July, 1995.
DEBTOR:
INTRABIOTICS PHARMACEUTICALS, INC.
By: /s/ Kenneth J. Kelley
--------------------------------------------------
Title: PRESIDENT AND CEO
-----------------------------------------------
SECURED PARTY:
LEASE MANAGEMENT SERVICES, INC.
By: /s/ Barbara B. Kaiser
--------------------------------------------------
Title: EVP/GENERAL MANAGER
-----------------------------------------------
3.
<PAGE>
[LEASE MANAGEMENT SERVICES, INC. LOGO]
ADDENDUM TO
EQUIPMENT FINANCING AGREEMENT
NUMBER 10782
BY AND BETWEEN
INTRABIOTICS PHARMACEUTICALS, INC., AS DEBTOR,
AND
LEASE MANAGEMENT SERVICES, INC., AS SECURED PARTY
INTRABIOTICS PHARMACEUTICALS, INC., as Debar, hereby acknowledges its
responsibility to pay, and agrees to pay any taxes which may be due to the
State of California or where applicable, for the collateral covered under the
above referenced agreement.
DEBTOR:
INTRABIOTICS PHARMACEUTICALS, INC.
By: /s/ Kenneth J. Kelley
--------------------------------------------------
Title: PRESIDENT AND CEO
-----------------------------------------------
1.
<PAGE>
[LEASE MANAGEMENT SERVICES, INC. LETTERHEAD]
June 15, 1995
Mr. Michael P. Becket
Chief Financial Officer
IntraBiotics Pharmaceuticals, Inc.
490 San Antonio Road
Palo Alto, CA 94306
Dear Michael:
We are pleased to confirm credit approval of the equipment lease line for
IntraBiotics Pharmaceuticals, Inc.:
LESSEE: IntraBiotics Pharmaceuticals, Inc.
LESSOR: Lease Management Services, Inc.
EQUIPMENT: A master lease line of $750,000 to finance new and
previously purchased equipment as per the attached lists.
All equipment is subject to Lessor's final approval.
LEASE TERM &
RENTAL FACTOR &
END-OF-TERM: Forty-eight (48) months Rental factor. 2.719% $1.00 buyout
at the end of term.
The rental factors, above, are a per cent of equipment cost
payable monthly in advance for each lease or loan schedule.
<PAGE>
Mr. Michael P. Becket
June 15, 1995
Page 2
YIELD: The rental factors above are based on the average of the
Federal Reserve's 3-year and 5-year treasuries as reported
in The Wall Street Journal for the week ending March 3,
1995.
The yield in this transaction will remain the same for
the first 60 days from credit approval. Thereafter, if
the average of the treasury indices above increases or
decreases by more than 35 basis points, the yield will be
adjusted basis-point for basis-point over the 35 point
change. The rental factor for each schedule will be set
at the time it is documented and will be fixed for the
term.
LEASE TYPE; Net lease - insurance, personal property taxes and
maintenance paid by Lessee.
LOAN STRUCTURE: Where appropriate, for sales tax, paperwork, or other
considerations, and with Lender's approval, schedules may
be documented as loans rather than leases. Invoices paid
by Borrower must be submitted to Lender within 60 days of
payment date or funded within 60 days of credit approval.
Copies of invoices and canceled checks will be adequate
proof of purchase. (With Lender's consent, a copy of the
check front, followed by the bank statement, when
available, may be substituted for copies of canceled
checks.) Term, rental factor, end-of-term balloon,
collateral provisions, and contingencies will be the
same. Borrower will grant Lender a first security
interest in the equipment.
WARRANT: In consideration for this financing, Lessee shall grant
to Lessor a warrant to purchase 54,000 shares of Lessee's
Series "B" preferred stock. The exercise price of the
warrant will be $1.00 / share. The warrant must be
exercised within 72 months from the date of issuance.
<PAGE>
Mr. Michael P. Becket
June 15, 1995
Page 3
CONTINGENCIES: 1) Standard documentation satisfactory to Lessee and
Lessor.
2) Releases against this lease credit line are contingent
upon Lessee providing evidence of reasonable
performance against the most. current Board approved
operating plan. This credit line, unless extended in
writing, expires 6/30/96.
3) Throughout the lease term, Lessee shall provide
monthly financials within 30 days of each month-end,
and annually, an audited statement. All such
financial statements to be prepared using generally
accepted accounting principles.
4) Complete equipment specifications to be provided to
Lessor before each takedown.
All equipment to be located at Lessee's Sunnyvale,
California, headquarters.
Custom equipment; software; upgrades to equipment to
which Lessor does not have clear title or first
security interest; disposables; "soft costs' such as
plumbing, wiring, labor or installation; sales tax
and freight in excess of 15% per invoice, and
leasehold or tenant improvements in excess of
$100,000 are excluded from this line.
5) This is a statement of mutual intent and not an
agreement to Lease. The terms set forth above are not
therefore binding until a lease agreement is executed
between Lessor and Lessor.
COMMITMENT FEE: You have paid a $7,500.00 commitment fee which shall be
fully credit pro-rata to deposits or rentals due. All or a
portion of said , fee will be forfeited if this transaction
is approved by Lessor and not executed be Lessee as called
for in this proposal.
<PAGE>
Mr. Michael P. Becket
June 15, 1995
Page 4
We're delighted that you've chosen LMSI to help with your equipment financing
needs and promise to continue our efforts to give you the best service in the
business.
Best regards,
Stephanie K. Wagner ACCEPTED: INTRABIOTICS PHARMACEUTICALS, INC.
Vice President Marketing By:
----------------------------------------
Title: PRESIDENT & CEO
-------------------------------------
DATE: JULY 20, 1995
--------------------------------------
<PAGE>
[LEASE MANAGEMENT SERVICES, INC. LETTERHEAD]
July 22, 1997
Kenneth J. Kelley
President and Chief Executive Officer
IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086
Dear Ken:
We are pleased to present our proposal to IntraBiotics Pharmaceuticals, Inc.:
BORROWER: IntraBiotics Pharmaceuticals, Inc.
LENDER: Lease Management Services, Inc.
EQUIPMENT: A $1,750,000 extension to your equipment financing line of
credit for equipment as per the attached list, including
freight and sales tax up to 15% per invoice. Equipment to
consist of the following:
Group "A" Tenant improvements $850,000
Group "B" Lab equipment, computers & furniture $900,000
All equipment is subject to Lender's final approval. To
minimize paperwork, the buildout and tenant improvement
will be financed on a single loan schedule within 30 days
of credit approval. Lender will provide best efforts to
obtain credit approval and commence documentation of the
first loan schedule by 8/29/97. Borrower to provide
Lender with back-up invoices for this schedule by
10/31/97.
TERM, RENTAL
FACTOR AND
BALLOON: Forty eight (48) months at 2.47% of the loan amount,
payable monthly in advance for each schedule, plus a 5%
balloon at the end of term.
<PAGE>
Kenneth J. Kelley
July 22, 1997
Page 2
INDEXING: The yield in this transaction will remain the same for
the 30 days past credit approval; after that, it will be
adjusted relative to any increase in comparable term US
Treasury maturities based on the average of the Federal
Reserve's 3-year and 5-year treasuries (6.08%) for the
week ending 7/18/97. The payment factor for each schedule
will be set at the time it is documented and will be
fixed for the term.
STRUCTURE: Secured loan. Borrower will grant Lender a first security
interest in the equipment.
COLLATERAL: Borrower may select from one of the three collateral
options, below:
OPTION 1: In consideration for this financing, Borrower
shall grant to Lender a warrant to purchase Borrower's
Series D Preferred Stock. The warrant shares will be for
5% of equipment cost (calculated at $1.75 / share =
50,000 shares). The warrant may be exercised by cash or
net issue at $2.50 / share and will include standard
antidilution provisions. However, there shall be no price
protection and no Registration Rights associated with the
warrant or shares of stock. The exercise period shall end
at the earlier of Borrower's IPO or 72 months from the
date of issue.
OPTION 2: The warrant will be for 2.5% of equipment cost
(i.e., 25,000 shares) plus a 15% deposit on tenant
improvements. All deposits and accrued interest will be
returned to Borrower at achievement of the earlier of:
A) Such time as Borrower's net unrestricted cash is at
least $25,000,000 and equivalent to at least 36 months
cash needs, according to the most-current
Board-approved operating budget; OR,
B) In the event of an acquisition, if a credit-worthy
acquirer executes an assignment or guarantee
acceptable to Lessor.
OPTION 3: No cash collateral will be required except in
the event Lessee's unrestricted cash, excluding debt,
falls below the greater of $5,000,000 or 9 months' cash
needs. ["9 months' cash needs" will be defined as Lessee's
cash burn for the quarter just completed multiplied by a
factor of 3.3].
<PAGE>
Kenneth J. Kelley
July 22, 1997
Page 3
COLLATERAL: In that event, Lessee will provide to Lessor a cash
security deposit equivalent to 40% of original equipment
cost on all Group "A" equipment and 20% on all Group "B"
equipment. In no event will deposits held exceed the
remaining gross lease receivable.
This cash will be released when Lessee's unrestricted cash
position, excluding debt, recovers and is greater than the
above benchmark for at least one quarter and continues to
remain greater.
Interest on any deposits held shall be credited to Lessee
at the rate of 5.0% annually. Interest will be accrued
and paid with the return of the security deposit.
CONTINGENCIES: 1) Standard documentation satisfactory to Borrower and
Lender.
2) Releases against this financing line are contingent
upon Borrower providing evidence of reasonable
performance against the most current operating plan or
subsequent Board-approved plan acceptable to Lender.
This credit line, unless extended in writing, expires
6/30/98.
3) Verification of achievement of benchmarks is to be
acceptable to Lessor. Reduction or return of
deposits prior to end of term is contingent upon
receipt of all payments and financials to date as
agreed, no default under any financial obligation,
and no material adverse change in Lessee's financial
condition or management.
4) Throughout the lease term, Borrower shall provide
monthly financials within 30 days of each month-end,
and annually, an audited statement. All such financial
statements to be prepared using generally accepted
accounting principles.
5) Complete equipment specifications to be provided to
Lender before each takedown. All equipment to be
located at Borrower's Bay Area, California,
headquarters.
<PAGE>
Kenneth J. Kelley
July 22, 1997
Page 4
CONTINGENCIES: Custom equipment; software; upgrades to equipment to
which Lessor does not have clear title or first security
interest; disposables; "soft costs" such as sales tax and
freight IN EXCESS OF 15% PER invoice; plumbing, wiring,
labor, installation and leasehold or tenant improvements
IN EXCESS of $850,000 are excluded from this line.
6) Subject to final approval by Lender's Credit
Committee.
7) This is a statement of mutual intent and not a
financing agreement. The terms set forth above are not
therefore binding until an equipment financing
agreement is executed between Borrower and Lender for
specific items of equipment.
COMMITMENT FEE: $7,500.00 commitment fee. This fee will be fully
credited, pro-rata, to schedules as financed. It will be
forfeited if this transaction is approved by Lender and
not executed by Borrower as called for in this proposal.
It will be returned to Borrower promptly in the event
Lender fails to approve this transaction.
If the terms of this proposal meet with your approval, please sign and return
with your commitment fee, and we will proceed. Unless previously accepted,
this proposal will expire 8/8/97.
We're very pleased to help finance your equipment needs and promise to bring
give you the best service in the industry.
Sincerely, Collateral option selected:
Option 1 X
-------
Option 2
-------
Option 3
-------
Stephanie K. Wagner ACCEPTED: INTRABIOTICS PHARMACEUTICALS, INC.
Vice President Marketing BY:
---------------------------------------
TITLE: PRESIDENT & CEO
------------------------------------
DATE: 8-5-97
-------------------------------------
<PAGE>
[LEASE MANAGEMENT SERVICES, INC. LOGO]
1ST AMENDMENT
TO EQUIPMENT FINANCING AGREEMENT
NUMBER 10782
BY AND BETWEEN
INTRABIOTICS PHARMACEUTICALS, AS DEBTOR
AND
LEASE MANAGEMENT SERVICES, INC., AS SECURED PARTY
Debtor and Secured Party hereby agree to amend Equipment Financing Agreement
Number 10782 and all schedules thereunder, and all other related documents
(herein collectively referred to as the "Agreements") to reflect Debtor's
change in address from 816 Kifer Road, Sunnyvale, CA 94086 to 1245 Terra
Bella Avenue, Mountain View, CA 94043.
All other terms and conditions remain the same.
IN WITNESS WHEREOF, Secured Party and Debtor have each caused this Amendment
to be duly executed in their respective names.
DEBTOR: SECURED PARTY:
INTRABIOTICS PHARMACEUTICALS, INC. LEASE MANAGEMENT SERVICES, INC.
BY: /s/ [illegible] BY: /s/ Barbara B. Kaiser
------------------------------- ------------------------------------
TITLE: VP FINANCE & CFO TITLE: General Manager
---------------------------- ---------------------------------
DATE: 29 SEPTEMBER 97 DATE: 29 September 1997
----------------------------- -----------------------------------
<PAGE>
[LEASE MANAGEMENT SERVICES, INC. LETTERHEAD]
December 14, 1998
Ms. Janet I. Swearson
VP/ Chief Financial Officer
IntraBiotics Pharmaceuticals, Inc.
1245 Terra Bella Avenue
Mountain View, CA 94043
Dear Janet:
We are pleased to present the following equipment financing proposal to
IntraBiotics Pharmaceuticals, Inc.:
BORROWER: INTRABIOTICS PHARMACEUTICALS, INC.;
LENDER: Lease Management Services, Inc.
EQUIPMENT: A master line of credit of $3,000,000 to finance equipment
per the attached list, including: i
> $1,000,000 - lab & scientific equipment About Equals
500,000 - computers, lab & Office furniture, hoods,
network, phone, & similar = 1,500,000 - soft costs
(leaseholds, software, tax, & $3,000,000 similar)
Previously-purchased equipment as well as new and used
equipment may be financed under this line. All equipment is
subject to Lender's final approval.
TERM &
PAYMENT: OPTION 1: Forty-two (42) months at 2.453% of equipment cost,
plus a 15% balloon at end of term. [Subject to satisfactory
credit review, the balloon may be paid over 9 months at
1.728% per month.]
OPTION 2: Forty-eight (48) months al 2.469% of equipment
cost, plus a $1.00 payment at end of term.
<PAGE>
Ms. Janet I. Swearson
December 14, 1998
Page 2
Payment factors are quoted as a percent of equipment cost,
payable monthly in advance for each loan schedule,
There are no interim rents. Amortization begins at each
schedule start date.
The yield in this transaction will be adjusted relative
to any increase in comparable term U.S. Treasury
maturities. The payment factor for each schedule will be
set at the time it is documented and will be FIXED for
the term, The payment factors above are based on the
average of the Federal Reserve 3- and 5-year treasuries
(4,41%) for the week ending 12/4198.
STRUCTURE: Secured loan. Borrower retains title and keeps
depreciation. Borrower will grant Lender a first security
interest in the equipment to be financed.
Because this is a loan rather than a sale/leaseback, there
is no additional tax on previously purchased equipment and
no sales tax at end of term.
COVENANT:
(SOFT COSTS ONLY) No additional collateral will be required except in the
event Borrower's unrestricted cash, excluding long-term
debt, falls below the appropriate benchmark below. In that
event, Borrower will provide to Lender a cash, security
deposit equivalent to 20% of aggregate SOFT COST financed,
but in no event to exceed the remaining gross receivable.
PRE-IPO BENCHMARK: unrestricted cash, excluding long-term
debt, must be equal to the greater of $6,000,000 or 6
months' cash needs. ["6 months' cash needs" will be
defined as the cash burn for the 3 months just completed,
multiplied by a factor of 2.3.]
POST-IPO BENCHMARK: unrestricted cash, excluding
long-term debt, must be equal to the greater of
$15,000,000 or 9 months' cash needs. ["9 months' cash
needs" will be defined as the cash burn for the 3 months
just completed, multiplied by a factor of 3.2.]
<PAGE>
Ms. Janet I. Swearson
December 14, 1998
Page 3
Interest will be accrued at 3.0% annually and will be paid
with the return of the deposit.
This deposit will be released when Borrower's unrestricted
cash, excluding debt, recovers and is greater than the
appropriate benchmark above for at least one quarter and
continues to remain greater.
Alternatively, in the event of an acquisition, if a
credit-worthy acquiror executes an assignment or
guarantee acceptable to Lender, any deposits and interest
held will be returned to Borrower.
CONTINGENCIES:
1) Standard documentation satisfactory to Borrower and
Lender. (Most of the master documents for this line
are already in place.)
2) Releases against this credit line are contingent upon
no material adverse change or threatened material
adverse change in Borrower's financial condition,
management, partnerships, or Clinical progress. This
credit line, unless extended in writing, expires
12/31/99.
3) Borrower will grant Lender a continuing first
security interest in all equipment (other than
computer equipment) financed under Equipment
Financing Agreement #10782. This lien Will stay in
effect until all of Borrower's obligations under
this new financing are fulfilled.
4) Throughout the loan term, Borrower will provide
monthly financials within 30 days of each month end,
and annually, an audited statement within 90 days of
fiscal year end or at such time as Borrower's Board
receives the audit. All such financial statements
are to be prepared using generall accepted
accounting principles.
<PAGE>
Ms. Janet I, Swearson
December 14, 1998
Page 4
5) All equipment is to be located at Borrower's San
Francisco Peninsula facilities un less Lender gives
prior approval to do otherwise.
Upgrades to equipment to which Lender does not have a first
security interest and disposables are excluded from this
line.
6) Subject to final approval by Lender's Credit
Committee,
7) This is a statement of mutual intent and not an
agreement to finance. The terms set forth above are
not therefore binding until a loan agreement is
executed between Borrower and Lender for specific
items of equipment.
COMMITMENT FEE: $20,952.00 commitment fee. [The remaining commitment fee
from Borrower's prior line (About Equals $952, after
Schedule #12) will be applied to this line leaving a
balance of $20,000 to be paid.] This fee will be fully
credited pro-rata to schedules as financed. All or a
portion of said fee Will be forfeited if this transaction
is approved by Lender and not executed by Borrower as
called for in this proposal. The entire fee will be
returned to Borrower promptly in the event Lender fails
to approve this transaction.
If the terms of this proposal meet with your approval, please sign and return
with your commitment fee and we will proceed. Unless previously accepted,
this proposal will expire 12/23/98.
We look forward to meeting your equipment financing needs and continuing a
mutually rewarding relationship.
Sincerely, ACCEPTED: INTRABIOTICS PHARMACEUTICALS, INC.
BY: /s/ Kenneth J. Kelley
-----------------------------------------
Barbara B. Kaiser TITLE: President and CEO
EVP/General Manager --------------------------------------
DATE:
---------------------------------------
PRICING: Option 1: Option 2:
------ ------
<PAGE>
[LMSI VENTURE FINANCE LOGO]
NEGATIVE COVENANT PLEDGE AGREEMENT
Agreement made and catered into as of this 1st day of April 1999, by and
between INTRABIOTICS PHARMACEUTICALS, Inc., a Delaware Corporation, with its
principal place of business at 1245 Terra Bella Avenue, Mountain View, CA
94043, ("Pledgor") and LMSI VENTURE FINANCE, a division of Phoenixcor, Inc.,
a Delaware Corporation, with its principal place of business at 2500 Sand
Hill Road, Suite 101, Menlo Park, CA 94025 ("Pledgee").
In consideration of, and as an inducement for Pledgee to enter into Equipment
Financing Agreement No. 10782, and all Schedules thereunder, (referred to
hereinafter as the "Agreements") with Pledgor, and to secure the payment and
performance of all Pledgor's obligations under the Agreements, Pledgor and
Pledgee agree as follows:
1) If at any point in time from the date of this Agreement, Pledgor's
Unrestricted Cash (as defined below) falls below the financial
requirements specified in A) or B), or Pledgor is in default of the
Agreements, Pledgor agrees to provide to Pledgee within 10 days of
such occurrence a cash security deposit in an amount equal to 20% of
original, aggregate soft costs (i.e., leaseholds, software, tax, and
similar) financed under the Agreements ("Collateral pledge"), but in
no event to exceed the remaining amounts owed by Pleedgor to Pledgee.
A) PRE-IPO: In the event Unrestricted Cash falls below the
greater of $6,000,000 or 6 months' cash needs (defined as
the cash burn for the 3 months just completed, multiplied
by a factor of 2.3).
B) POST-IPO: In the event Unrestricted Cash falls below the
greater of $15,000,000 or 9 months' cash needs (defined as
the cash burn for the 3 months just completed, multiplied
by a factor of 3.2).
Pledgor shall be deemed to have granted to Pledgee a security interest
in such cash security deposit upon its delivery to Pledgee.
Unrestricted Cash shall be defined as cash on hand, including
investments in marketable securities with maturities of less than
fourteen (14) months, less all long-term debt which is not
subordinated to Pledgee.
The failure to timely provide the Collateral Pledge to Pledgee shall
constitute an event of default under the Agreements.
2) If Pledgor is a private company, then Pledgor agrees to provide
monthly financial statements, including a balance sheet, statement
of operations, and cash flow statement, to Pledgee within 30 days of
each month end, and an audited annual statement to Pledgee at such
time as Pledgor's Board receives the audit, but in no event latter
than 120 days from Pledgor's fiscal year end. If Pledgor is a public
company, then Pledgor agrees to provide quarterly and annual audited
financial statements to Pledgee within 10 days after
<PAGE>
the statements are provided to the Securities and Exchange
Commission ("SEC"). All such statements are to be prepared using
generally accepted accounting principles and are to be in compliance
with applicable SEC requirements. Failure to provide these
statements as specified herein will constitute an event of default
under the Agreements.
Additionally, at any time that Pledgor's Unrestricted Cash would
fall below the appropriate benchmark above if not augmented within 3
months, Pledgor's Chief Financial Officer or other senior officer
will, at Pledgee's request, provide Pledgee with the monthly closing
cash balance by not later than the 10th business day following each
month-end.
3) Pledgor agrees to keep all Unrestricted Cash within the following
financial institutions:
Financial Institution: ______________________________
Account Number: ______________________________
Officer Contact: ______________________________
Phone Number: ______________________________
Financial Institution: ______________________________
Account Number: ______________________________
Officer Contact: ______________________________
Phone Number: ______________________________
Financial Institution: ______________________________
Account Number: ______________________________
Officer Contact: ______________________________
Phone Number: ______________________________
Any change in the above information shall be provided in writing by
Pledgor to Pledgee within five (5) days of such change.
Pledgor hereby authorizes these financial institutions to give
specific account balance information to Pledgee and agrees to
execute any other documents or take any other action required to
provide verification of Unrestricted Cash balances.
4) Pledgee agrees to pay interest on the Collateral Pledge at a simple
interest rate equal to 3.0% per annum, which interest will accrue
from the date the Collateral Pledge is received until the date the
Collateral Pledge and interest are returned to the Pledgor.
5) Pledgor agrees to recognize the Collateral Pledge as a contingent
liability and to establish the appropriate reserves.
6) Upon any default by Pledgor under the Agreements and while the same
is continuing, interest accrual on the Collateral Pledge shall cease
and Pledgee may, at its option, apply the Collateral Pledge and any
interest accrued to that date toward the satisfaction of Pledgor's
obligations under the Agreements and the payment of all reasonable
costs and expenses incurred by Pledgee as a result of such default,
including reasonable attorney's fees. Pledgee is liable to Pledgor
only for any surplus remaining from said Collateral Pledge after the
full satisfaction of the foregoing obligations, costs and expenses.
<PAGE>
7) Pledgee shall have no duty to first commence an action against or
seek recourse from Pledgor, if an event of default occurs and is
continuing under the Agreements, before enforcing the provisions of,
and proceeding under the provisions of, this Negative Covenant
Pledge Agreement. The obligations of Pledgor under this Negative
Covenant Pledge Agreement shall be absolute and unconditional and
shall remain in full force and effect without regard to, and shall
not be released or discharged or in any way affected by:
A) any amendment or modification of or supplement to the
Agreements;
B) any exercise or non-exercise of any right, remedy or
privilege under or in respect to this Negative Covenant
Pledge Agreement, the Agreements, or any other instrument
provided for in the Agreement(s), or any waiver, consent,
explanation, indulgency or actions or inaction with respect
to any such instrument; or
C) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar
proceeding of Pledgor.
8) The entire Collateral Pledge and any accrued interest will be
returned to Pledgor when Pledgor's Unrestricted Cash exceeds the
applicable benchmark above for a period of at least one fiscal
quarter and continues to remain greater than the applicable
benchmark and Pledgor is not in default under the Agreements or
under any material financial obligation. (Alternatively, the entire
Collateral Pledge and any accrued interest will be returned
immediately in the event Pledgor's new equity or other
non-refundable cash is great enough, in Pledgee's reasonable
judgment, to keep Pledgor's Unrestricted Cash above the applicable
benchmark for at least three fiscal quarters and Pledgor is not in
default under the Agreements or under any material financial
obligation).
Alternatively, in the event of an acquisition, if a credit-worthy
acquiror executes an assignment or guarantee acceptable to Pledgee,
any deposits and accrued interest held will be returned to Pledgor.
Return of any required Collateral Pledge prior to the Termination of
the Agreements (as defined below) is contingent upon the following
additional conditions: (a) verification of all benchmarks is to be
acceptable to Pledgee; (b) Pledgor is not in default under the
Agreements; and (c) Pledgor has not suffered any material adverse
change within the past 12 months and is not aware of any prospective
material adverse change.
The "Termination of the Agreements" shall be defined as the
satisfaction of all Pledgor's obligations under the Agreements.
If the Collateral Pledge is returned prior to the Termination of the
Agreements, this Negative Covenant Pledge Agreement shall remain in
full force and effect.
9) If the Collateral Pledge has not been previously returned, upon
Termination of the Agreements Pledgee shall deliver the Collateral
Pledge (less any portion of same chased, sold, assigned or delivered
pursuant to, and under the circumstances specified in, Paragraph 6
hereof) promptly to Pledgor, and this Negative Covenant Pledge
Agreement shall thereupon be without further effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Negative Covenant
Pledge to be executed as of the date first written above.
PLEDGOR: PLEDGEE:
INTERABIOTICS PHARMACEUTICALS, INC. LMSI VENTURE FINANCE
By: /s/ Janet I. Swearson By: /s/ Barbara B. Kaiser
-------------------------------- ------------------------------------
Barbara B. Kaiser
Title: CHIEF FINANCIAL OFFICER Title: EVP/GENERAL MANAGER
----------------------------- ---------------------------------
<PAGE>
[LMSI VENTURE FINANCE LETTERHEAD]
March 15, 1999
Mr. Peter S. Garcia
Vice President/CFO
IntraBiotics Pharmaceuticals, Inc.
1245 Terra Bella Ave.
Mountain View, CA 94043
Dear Peter:
This will confirm approval of a new $3,000,000 equipment financing facility
for IntraBiotics. The terms will be as specified in the 12/14198 proposal.
Most of your master documents are already in place, so we are ready to go
when you are. Cynthia Murayama, Contract Manager, will be calling shortly to
update information regarding authorized signers, insurance, landlord, etc.
The first financing, expected 4/1, may include all equipment purchased since
the prior line expired (8/31/98) as well as all of the leaseholds for
IntraBiotics' new facility. If you prefer, we can do these on separate
schedules - one for equipment and one for leaseholds. For the equipment, we
will need copies of invoices and payment checks (front and back) for ail
previously-purchased equipment and original invoices for newly-acquired
equipment for which the vendor has not yet been paid. However, for leasehold
financing, you may follow with invoices over the next 120 days.
Please call with any questions.
Congratulations on IntraBiotics' impressive performance this year. We are
looking forward to working with you and are delighted to be able to continue
to work with IntaBiotics.
Best regards,
/s/ Barbara B. Kaiser
Barbara B. Kaiser
EVP/ General Manager
<PAGE>
EXHIBIT 10.13
- --------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
INTRABIOTICS PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
1. ACCOUNTING AND OTHER TERMS....................................................1
2. LOAN AND TERMS OF PAYMENT.....................................................1
2.1 Credit Extensions....................................................1
2.2 Interest Rate, Payments..............................................2
2.4 Additional Costs.....................................................2
3. CONDITIONS OF LOANS...........................................................2
3.1 Conditions Precedent to Initial Credit Extension.....................3
3.2 Conditions Precedent to all Credit Extensions........................3
4. CREATION OF SECURITY INTEREST.................................................3
4.1 Grant of Security Interest...........................................3
5. REPRESENTATIONS AND WARRANTIES................................................3
5.1 Due Organization and Authorization...................................3
5.2 Collateral...........................................................4
5.3 Litigation...........................................................4
5.4 No Material Adverse Change in Financial Statements...................4
5.5 Solvency.............................................................4
5.6 Regulatory Compliance................................................4
5.7 Subsidiaries.........................................................5
5.8 Full Disclosure......................................................5
6. AFFIRMATIVE COVENANTS.........................................................5
6.1 Government Compliance................................................5
6.2 Financial Statements, Reports, Certificates..........................5
6.3 Inventory; Returns...................................................6
6.4 Taxes................................................................6
6.5 Insurance............................................................6
6.6 Primary Accounts.....................................................6
6.7 Financial Covenants..................................................7
6.8 Certificate of Deposit...............................................7
6.9 Further Assurances...................................................7
7. NEGATIVE COVENANTS............................................................7
7.1 Dispositions.........................................................7
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
7.2 Changes in Business, Ownership, Management or
Business Locations ..................................................8
7.3 Mergers or Acquisitions..............................................8
7.4 Indebtedness.........................................................8
7.5 Encumbrance..........................................................8
7.6 Distributions; Investments...........................................8
7.7 Transactions with Affiliates.........................................9
7.8 Subordinated Debt....................................................9
7.9 Compliance...........................................................9
8. EVENTS OF DEFAULT.............................................................9
8.1 Payment Default......................................................9
8.2 Covenant Default.....................................................9
8.3 Material Adverse Change.............................................10
8.4 Attachment..........................................................10
8.5 Insolvency..........................................................10
8.6 Other Agreements....................................................10
8.7 Judgments...........................................................10
8.8 Misrepresentations..................................................10
9. BANK'S RIGHTS AND REMEDIES...................................................11
9.1 Rights and Remedies.................................................11
9.2 Power of Attorney...................................................11
9.3 Accounts Collection.................................................12
9.4 Bank Expenses.......................................................12
9.5 Bank's Liability for Collateral.....................................12
9.6 Remedies Cumulative.................................................12
9.7 Demand Waiver.......................................................12
10. NOTICES......................................................................12
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER...................................13
12. GENERAL PROVISIONS...........................................................13
12.1 Successors and Assigns..............................................13
12.2 Indemnification.....................................................13
12.3 Time of Essence.....................................................13
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
12.4 Severability of Provision...........................................13
12.5 Amendments in Writing, Integration..................................13
12.6 Counterparts........................................................14
12.7 Survival............................................................14
12.8 Confidentiality.....................................................14
12.9 Attorneys' Fees, Costs and Expenses.................................14
13. DEFINITIONS..................................................................14
13.1 Definitions.........................................................14
</TABLE>
iii
<PAGE>
This LOAN AND SECURITY AGREEMENT dated August 25, 1999, between SILICON
VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive, Santa Clara,
California 95054 and INTRABIOTICS PHARMACEUTICALS, INC. ("Borrower"), whose
address is 1255 Terra Bella Avenue, Mountain View, California 94043 provides the
terms on which Bank will lend to Borrower and Borrower will repay Bank. The
parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2. LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS.
Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a) Through August 25, 2000 (the "Availability End Date"), Bank
will make advances ("Advance" and, collectively, "Advances") not exceeding the
Committed Line. Amounts borrowed under this Section may be repaid and reborrowed
through the Availability End Date.
(b) Interest accrues from the date of each Advance at the rate in
Section 2.2(a) and is payable monthly until the Availability End Date occurs. On
the Availability End Date Borrower will have the option to (i) continue to have
the Advances accrue interest at the rate in Section 2.2(a) ("Option 1") or (ii)
elect to fix the interest rate at a rate equal to 350 basis point above the 48
month Treasury Yield Percentage ("Option 2").
(c) Advances outstanding on the Availability End Date are payable
in 48 equal monthly installments of principal plus accrued interest, if Borrower
elects Option 1 (or principal including accrued interest, if Borrower elects
Option 2), beginning on the 25th of each month following the Availability End
Date and ending on August 25, 2004 (the "Maturity Date"). Advances when repaid
may not be reborrowed.
(d) To obtain an Advance, Borrower must notify Bank (the notice
is irrevocable) by facsimile no later than 3:00 p.m. Pacific time 1 Business Day
before the day on which the Equipment Advance is to be made. The notice in the
form of Exhibit B (Payment/Advance Form) must be signed by a Responsible Officer
or designee.
1.
<PAGE>
2.2 INTEREST RATE, PAYMENTS.
(a) INTEREST RATE. Advances accrue interest on the outstanding
principal balance at a per annum rate of 1.25 percentage points above the Prime
Rate for Option 1 or Option 2 set forth in Section 2.1.1(b). After an Event of
Default, Obligations accrue interest at 5 percent above the rate effective
immediately before the Event of Default. The interest rate increases or
decreases when the Prime Rate changes. Interest is computed on a 360 day year
for the actual number of days elapsed. If Borrower elects Option 2, a Prepayment
Fee shall apply to any prepayment of the Advances.
(b) PAYMENTS. Interest due on the Advances is payable on the 25th
of each month. Bank may debit any of Borrower's deposit accounts including
Account Number Bank of America _________________ principal and interest payments
owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when
it debits Borrower's accounts. These debits are not a set-off. Payments received
after 12:00 noon Pacific time are considered received at the opening of business
on the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional fees or interest
accrue.
2.3 FEES.
Borrower will pay:
(a) FACILITY FEE. A fully earned, non-refundable Facility Fee of
$25,000 due on the Closing Date;
(b) NON-UTILIZATION FEE. A fully earned, non-refundable
Non-Utilization Fee equivalent to .25% per annum assessed on the average unused
portion of the Committed Line over the preceding three (3) months, payable at
the end of each calendar quarter; and
(c) BANK EXPENSES. All Bank Expenses (including reasonable
attorneys' fees and reasonable expenses) incurred through and after the date of
this Agreement, are payable when due.
2.4 ADDITIONAL COSTS.
If any new law or regulation increases Bank's costs or reduces its
income for any loan, Borrower will pay the increase in cost or reduction in
income or additional expense; provided, however, that Borrower shall not be
liable for any amount attributable to any period before 180 days prior to the
date Bank notifies Borrower of such increased costs. Bank agrees that it will
allocate any increased costs among its customers similarly affected in good
faith and in a manner consistent with Bank's customary practice.
2.
<PAGE>
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to
the condition precedent that it receive the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the
initial Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be
materially true on the date of the Payment/Advance Form and on the
effective date of each Credit Extension and no Event of Default may
have occurred and be continuing, or result from the Credit Extension.
Each Credit Extension is Borrower's representation and warranty on
that date that the representations and warranties of Section 5 remain
true.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
reasonably be expected to cause a Material Adverse Change.
The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower's formation documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which or by
which it is bound in which the default could cause reasonably be expected to
cause a Material Adverse Change.
3.
<PAGE>
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers and legal
counsel, threatened by or against Borrower or any Subsidiary in which a likely
adverse decision could reasonably be expected to cause a Material Adverse
Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any
Subsidiary, delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by
an "investment company" under the Investment Company Act. Borrower is not
engaged as one of its important activities in extending credit for margin stock
(under Regulations T and U of the Federal Reserve Board of Governors). Borrower
has complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change.
4.
<PAGE>
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading. It
being recognized by Bank that the projections and forecasts provided by Borrower
in good faith and based upon reasonable assumptions are not viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results.
6. AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be
expected to cause a material adverse effect on Borrower's business or
operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower's business or operations
or would reasonably be expected to cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but
no later than 10 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; until such time as Borrower closes its' initial public
offering ("IPO"), then such reporting shall be due quarterly within 5 days of
filing, copies of all statements, reports and notices made available to
Borrower's security holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission ("SEC"); ((ii) as soon as available, but no later than 90 days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Bank; (iii) a prompt report of
any legal actions pending or threatened against Borrower or any Subsidiary that
could result in damages or costs to Borrower or any Subsidiary of $100,000 or
more; and (iv) budgets, sales projections, operating plans or other financial
information Bank reasonably requests.
5.
<PAGE>
(b) Within 10 days after the last day of each month prior to
Borrower's IPO, Borrower will deliver to Bank with the monthly financial
statements a Compliance Certificate signed by a Responsible Officer in the form
of Exhibit C. Following Borrower's IPO, such reporting will be due quarterly,
within 5 days of filing with the SEC.
(c) At such time as Borrower's unrestricted cash and cash
equivalents falls below $15,000,000, Borrower will provide to Bank within 2 days
after the end of each week, a weekly statement of Borrower's cash position.
(c) Bank has the right to audit Borrower's Collateral at
Borrower's expense, if an Event of Default has occurred and is continuing.
NOTWITHSTANDING THE FOREGOING, IF BORROWER IS DELIVERING TO BANK THE
AFOREMENTIONED REPORTING REQUIREMENTS ON A QUARTERLY BASIS, AND BORROWER'S
LIQUIDITY FALLS BELOW (i) 2.5 TIMES THE AGGREGATE OUTSTANDING ADVANCES AND/OR
(ii) NINE (9) MONTHS AVERAGE NET CASH LOSSES, ALL FINANCIAL REPORTING SHALL BE
DUE TO BANK ON A MONTHLY BASIS.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition,
free from material defects. Returns and allowances between Borrower and its
account debtors will follow Borrower's customary practices as they exist at
execution of this Agreement. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments and will deliver
to Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks
and in amounts, as Bank may reasonably request. Insurance policies will be in a
form, with companies, and in amounts that are satisfactory to Bank in Bank's
reasonable discretion. All property policies will have a lender's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
will show the Bank as an additional insured and provide that the insurer must
give Bank at least 20 days notice before canceling its policy. At Bank's
request, Borrower will deliver certified copies of policies and evidence of all
premium payments. Proceeds payable under any policy will, at Bank's option, be
payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository and operating accounts
with Bank.
6.
<PAGE>
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month, unless
otherwise specified:
(i) DEBT/TANGIBLE NET WORTH RATIO. A ratio of Total
Liabilities less Subordinated Debt to Tangible Net Worth plus Subordinated Debt
of not more than 1.00 to 1.00.
(ii) TANGIBLE NET WORTH. A Tangible Net Worth of at least
$7,000,000 through November 30, 1999, increasing to $10,000,000 beginning with
the month ending December 31, 1999 and monthly thereafter.
(iii) QUARTERLY LOSSES. Borrower shall not report quarterly
losses in excess of $15,000,000.
(iv) LIQUIDITY COVERAGE. A Liquidity Coverage of not less
than 2 times the aggregate outstanding Advances, and 6 months Net Cash Losses.
(v) DEBT SERVICE COVERAGE (tested Quarterly). At such time
as Borrower maintains a Debt Service Coverage ratio of at least 1.50 to 1.00 for
2 consecutive fiscal quarters, the Liquidity Coverage shall be replaced by a
Debt Service Coverage of at least 1.50 to 1.00.
6.8 CERTIFICATE OF DEPOSIT.
Borrower shall maintain a certificate of deposit to be held on account
with Bank in a minimum principal amount equivalent to 105% of the aggregate
outstanding Obligations at such time as Borrower fails to meet any financial
covenants or conditions set forth in Section 6.7 of this Agreement and until
such time as Borrower restores and maintains compliance with the terms of this
Agreement. Provided Borrower maintains such certificate of deposit held on
account with Bank, it shall not be deemed an Event of Default if Borrower does
not comply with any financial covenant set forth in Section 6.7 of this
Agreement.
6.9 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively,
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers
7.
<PAGE>
(i) of Inventory in the ordinary course of business; or (ii) of worn-out or
obsolete Equipment. Notwithstanding the foregoing, Borrower may, in the ordinary
course of business; or (ii) of worn-out or obsolete Equipment. Notwithstanding
the foregoing, Borrower may, in the ordinary course of business, license its
intellectual property on a non-exclusive basis. Further, Borrower may, in the
ordinary course of business, license its intellectual property on an exclusive
basis, PROVIDED THAT (i) such exclusive licenses only permit the use or practice
of the intellectual property in countries outside of the United States, Canada
and Mexico and (ii) such intellectual property does not account for more than
10% of Borrower's net income.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its ownership or management (other than the
sale of Borrower's equity securities in a public offering or to venture capital
investors approved by Bank) of greater than 25%. Borrower will not, without at
least 30 days prior written notice, relocate its chief executive office or add
any new offices or business locations.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) result in a decrease of more than 25% of Tangible Net Worth.
A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit
any Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
8.
<PAGE>
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter or permit any material transaction with
any Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms less favorable to Borrower than would be obtained in an arm's
length transaction with a non-affiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonable be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations within 3 days after
their due date. During the additional period the failure to cure the default is
not an Event of Default (but no Credit Extension will be made during the cure
period);
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in Section 6 or violates
any covenant in Section 7 or does not perform or observe any other material
term, condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or cannot
be cured after Borrower's attempts within 10 day period, and the default may be
cured within a reasonable time, then Borrower has an additional period (of not
more than 30 days) to attempt to cure the default. During the additional time,
the failure to cure the default is not an Event of Default (but no Credit
Extensions will be made during the cure period);
9.
<PAGE>
8.3 MATERIAL ADVERSE CHANGE.
(i) If there occurs a material impairment in the perfection or
priority of the Bank's security interest in the Collateral or in the value of
such Collateral (other than normal depreciation) which is not covered by
adequate insurance or (ii) if the Bank determines, based upon information
available to it and in its reasonable judgment, that there is a reasonable
likelihood that Borrower will fail to comply with one or more of the financial
covenants in Section 6 during the next succeeding financial reporting period.
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $50,000 is
rendered against Borrower and is unsatisfied and unstayed for 10 days (but no
Credit Extensions will be made before the judgment is stayed or satisfied); or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
10.
<PAGE>
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if
an Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's
benefit under this Agreement or under any other agreement between Borrower and
Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors; (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
11.
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9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and Section 9-207
of the Code, it is not liable for: (a) the safekeeping of the Collateral; (b)
any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the
Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.7 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which
Borrower is liable.
10. NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
12.
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11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties,
13.
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and negotiations between the parties about the subject matter of this Agreement
merge into this Agreement and the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made: (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
13. DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
14.
<PAGE>
"ADVANCE" is defined in Section 2.1.1.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"AVAILABILITY END DATE" is defined in Section 2.1.1.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is the property described on EXHIBIT A.
"COMMITTED LINE" is a Credit Extension of up to $5,000,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"CREDIT EXTENSION" is each Advance or any other extension of credit by
Bank for Borrower's benefit.
"DEBT SERVICE COVERAGE" is, as measured quarterly as of the last day
of each fiscal quarter of Borrower (unless measured monthly), on a consolidated
basis determined in accordance with GAAP, the ratio of (a) an amount equal to
the sum of (i) net income, plus (ii)
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depreciation, amortization of intangible assets and other non-cash charges to
income, and (iii) accrued interest, to (b) an amount equal to the sum of all
scheduled repayments for such quarter (or month, as applicable), including
accrued interest, and mandatory prepayments of principal on account of long-term
Debt.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LIQUIDITY" is, at any date of determination, the sum of Borrower's
cash, cash equivalents, and short term investments, less any cash and cash
equivalent balances that are held in a sinking fund for the retirement of debt
or capital stock or that are held in pledge for another creditor.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
16.
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"MATURITY DATE" is defined in Section 2.1.1.
"NET CASH LOSSES" is with respect to any date determination,
determined on a consolidated basis in accordance with GAAP for Borrower and its
consolidated Subsidiaries, the reduction in cash from operations (excluding
non-recurring charges) during the three months prior to such date of
determination or if the date of determination is the last day of a fiscal
quarter, during the fiscal quarter then ending (or, if monthly reporting is
required, during the three fiscal months ending prior to such date
determination).
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or any
other Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing
Date; and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Moody's Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule
or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government
charges or levies, either not delinquent or being contested in good faith and
for which Borrower maintains adequate reserves on its Books, if they have no
priority over any of Bank's security interests;
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(c) Purchase money Liens (i) on Equipment acquired or held by
Borrower or its Subsidiaries incurred for financing the acquisition of the
Equipment, or (ii) existing on equipment when acquired, if the Lien is confined
to the property and improvements and the proceeds of the equipment;
(d) Leases or subleases and licenses or sublicenses granted in
the ordinary course of Borrower's business and any interest or title of a
lessor, licensor or under any lease or license, if the leases, subleases,
licenses and sublicenses permit granting Bank a security interest;
(e) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described in (a) through (c), but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PREPAYMENT FEE" is a fee on any portion of the Obligations with a
fixed interest rate (the "Fixed Obligations") paid before the payment due date.
"Base Interest Rate" means Bank's initial cost of funding the Fixed Obligations.
The Prepayment Fee is calculated as follows: First, Bank determines a "Current
Market Rate" based on what the Bank would receive if it loaned the remaining
amount on the prepayment date in a wholesale funding market matching maturity,
remaining principal and interest amounts and principal and interest payment
dates (the aggregate payments received are the "Current Market Rate Amount").
Bank may select any wholesale funding market rate as the Current Market Rate.
Second, Bank will take the prepayment amount and calculate the present value of
each remaining principal and interest payment which, without prepayment, the
Bank would have received during the term of the Fixed Obligations using the Base
Interest Rate. The sum of the present value calculations is the "Mark to Market
Amount." Third, the Bank will subtract the Mark to Market Amount from the
Current Market Rate Amount. Any amount greater than zero is the Prepayment Fee.
"PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
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"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness, and current portion Subordinated Debt allowed to be
paid, but excluding all other Subordinated Debt.
"TREASURY YIELD PERCENTAGE" is the average weekly yield (of the week
ending figures) in the most recent Federal Reserve Statistical Release on
actively traded U.S. Treasury obligations of similar maturity to the principal
being repaid or if a Statistical Release is not published, the arithmetic
average (to the nearest .01%) of the per annum yields to maturity for each
Business Day during the week (ending at least two Business Days before the
determination is made) of all actively traded marketable United States Treasury
fixed interest rate securities with a constant maturity of, or not more than 30
days longer or shorter than the average life of the principal and interest
payments that are being prepaid (excluding securities that can be surrendered at
face value to pay Federal estate tax, or which provide for tax benefits to the
holder).
BORROWER:
INTRABIOTICS PHARMACEUTICALS, INC.
By: /s/ Bruce Fielding
-----------------------------
Title: VP & CFO 9/20/99
--------------------------
BANK:
SILICON VALLEY BANK
By: /s/ D. Bowman
-----------------------------
Title: Vice President
-------------------------
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NEGATIVE PLEDGE AGREEMENT
This NEGATIVE PLEDGE AGREEMENT is made as of August 25, 1999 by and
between INTRABIOTICS PHARMACEUTICALS, INC. ("Borrower") and SILICON VALLEY BANK
("Bank").
In connection with, among other documents, the Loan and Security Agreement (the
"Loan Documents") being concurrently executed herewith between Borrower and
Bank, Borrower agrees as follows:
1. Borrower shall not sell, transfer, assign, mortgage, pledge, lease,
grant a security interest in, or encumber any of Borrower's intellectual
property, including, without limitation, the following:
a. Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held;
b. All mask works or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired;
c. Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
d. Any and all design rights which may be available to
Borrower now or hereafter existing, created, acquired or held;
e. All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications;
f. Any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks, including without limitation;
g. Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
h. All licenses or other rights to use any of the Copyrights,
Patents, Trademarks or Mask Works, and all license fees and royalties arising
from such use to the extent permitted by such license or rights; and
<PAGE>
i. All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks, Patents, or Mask Works; and
j. All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing;
2. It shall be an event of default under the Loan Documents between
Borrower and Bank if there is a breach of any term of this Negative Pledge
Agreement.
3. Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Documents.
BORROWER:
INTRABIOTICS PHARMACEUTICALS, INC.
By: /s/ Bruce Fielding
-----------------------------
Name: B. Fielding
---------------------------
Title: VP & CFO
--------------------------
BANK:
SILICON VALLEY BANK
By: /s/ D. Bowman
-----------------------------
Name: Debra Bowman
---------------------------
Title: Vice President
--------------------------
<PAGE>
EXHIBIT 10.14
NO. PHW-1
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 1,100,000 SHARES
OF SERIES H PREFERRED STOCK OF
INTRABIOTICS PHARMACEUTICALS, INC.
(VOID AFTER DECEMBER 31, 2001)
This certifies that Investor (Guernsey) Ltd. or its permitted
assigns (the "Holder"), for value received, is entitled to purchase from
INTRABIOTICS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
having a place of business 1255 Terra Bella, Mountain View, California, a
maximum of One Million One Hundred Thousand (1,100,000) fully paid and
nonassessable shares of the Company's Series H Preferred Stock ("Preferred
Stock") for cash at a price equal to $5.00 per share (the "Stock Purchase
Price") at any time or from time to time up to and including 5:00 p.m.
(Pacific time) on December 31, 2001 (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 upon
payment in cash or wire transfer 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 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. 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 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
<PAGE>
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.
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
2.
<PAGE>
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 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
3.
<PAGE>
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 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 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 10 calendar 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.
4.
<PAGE>
(c) The Company shall give written notice to the
Holder at least 20 calendar days prior to the date on which an Organic Change
shall take place.
(d) The Company shall give written notice to the
Holder at least 20 calendar days prior to the Closing of the Initial Public
Offering.
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 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. This Warrant is not transferable except to
an affiliate of Holder; PROVIDED that Holder provides written notice of such
transfer to the Company, such transferee agrees to be bound by the
obligations hereunder, and the Company may treat such transferee as the
absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant.
8. "MARKET-STAND-OFF" AGREEMENT. If requested by the Company, or the
representative of the underwriters of the Initial Public Offering, Holder
agrees not to sell or otherwise transfer or dispose of the shares of
Preferred Stock issuable upon exercise of this Warrant, or the shares of
Common Stock issuable upon conversion thereof, for a period specified by such
representative of the underwriters not to exceed one hundred eighty (180)
days following the date of the final prospectus forming part of the
registration statement filed pursuant to the Initial Public Offering.
5.
<PAGE>
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
[This Space Intentionally Left Blank]
6.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 15th day of
October, 1999.
INTRABIOTICS PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ Kenneth Kelley
--------------------------------------
Kenneth Kelley, President and CEO
HOLDER:
By: [illegible]
------------------------------------------------
------------------------------------------------
Printed Name and Title
Address:
------------------
------------------
------------------
<PAGE>
EXHIBIT 10.15
NO. PHW-2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 100,000 SHARES
OF SERIES H PREFERRED STOCK OF
INTRABIOTICS PHARMACEUTICALS, INC.
(VOID AFTER DECEMBER 31, 2001)
This certifies that Vulcan Ventures, Inc. or its permitted assigns (the
"Holder"), for value received, is entitled to purchase from INTRABIOTICS
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), having a place
of business 1255 Terra Bella, Mountain View, California, a maximum of One
Hundred Thousand (100,000) fully paid and nonassessable shares of the
Company's Series H Preferred Stock ("Preferred Stock") for cash at a price
equal to $5.00 per share (the "Stock Purchase Price") at any time or from
time to time up to and including 5:00 p.m. (Pacific time) on December 31,
2001 (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 upon payment in cash or wire
transfer 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 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. 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 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
<PAGE>
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.
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
2.
<PAGE>
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 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
3.
<PAGE>
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 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 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 10 calendar 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 give written notice to the Holder at
least 20 calendar days prior to the date on which an Organic Change shall
take place.
4.
<PAGE>
(d) The Company shall give written notice to the Holder at
least 20 calendar days prior to the Closing of the Initial Public Offering.
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 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. This Warrant is not transferable except to
an affiliate of Holder; PROVIDED that Holder provides written notice of such
transfer to the Company, such transferee agrees to be bound by the
obligations hereunder, and the Company may treat such transferee as the
absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant.
8. "MARKET-STAND-OFF" AGREEMENT. If requested by the Company, or the
representative of the underwriters of the Initial Public Offering, Holder
agrees not to sell or otherwise transfer or dispose of the shares of
Preferred Stock issuable upon exercise of this Warrant, or the shares of
Common Stock issuable upon conversion thereof, for a period specified by such
representative of the underwriters not to exceed one hundred eighty (180)
days following the date of the final prospectus forming part of the
registration statement filed pursuant to the Initial Public Offering.
9. 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.
5.
<PAGE>
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
[This Space Intentionally Left Blank]
6.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 15th day of
October, 1999.
INTRABIOTICS PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ Kenneth J. Kelley
----------------------------------
Kenneth J. Kelley, President and CEO
HOLDER:
By: /s/ William D. Savoy
-----------------------------
Vice President
-----------------------------
Printed Name and Title
Address: _______________________
_______________________
_______________________
<PAGE>
EXHIBIT 10.16
NO. PHW-3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 25,000 SHARES
OF SERIES H PREFERRED STOCK OF
INTRABIOTICS PHARMACEUTICALS, INC.
(VOID AFTER DECEMBER 31, 2001)
This certifies that New England Partners Capital, Inc. or its permitted
assigns (the "Holder"), for value received, is entitled to purchase from
INTRABIOTICS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
having a place of business 1255 Terra Bella, Mountain View, California, a
maximum of Twenty-Five Thousand (25,000) fully paid and nonassessable shares
of the Company's Series H Preferred Stock ("Preferred Stock") for cash at a
price equal to $5.00 per share (the "Stock Purchase Price") at any time or
from time to time up to and including 5:00 p.m. (Pacific time) on December
31, 2001 (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 upon payment in
cash or wire transfer 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 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. 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 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
<PAGE>
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.
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
2.
<PAGE>
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 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
3.
<PAGE>
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 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 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 10 calendar 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.
4.
<PAGE>
(c) The Company shall give written notice to the Holder at
least 20 calendar days prior to the date on which an Organic Change shall
take place.
(d) The Company shall give written notice to the Holder at
least 20 calendar days prior to the Closing of the Initial Public Offering.
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 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. This Warrant is not transferable except to
an affiliate of Holder; PROVIDED that Holder provides written notice of such
transfer to the Company, such transferee agrees to be bound by the
obligations hereunder, and the Company may treat such transferee as the
absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant.
8. "MARKET-STAND-OFF" AGREEMENT. If requested by the Company, or the
representative of the underwriters of the Initial Public Offering, Holder
agrees not to sell or otherwise transfer or dispose of the shares of
Preferred Stock issuable upon exercise of this Warrant, or the shares of
Common Stock issuable upon conversion thereof, for a period specified by such
representative of the underwriters not to exceed one hundred eighty (180)
days following the date of the final prospectus forming part of the
registration statement filed pursuant to the Initial Public Offering.
5.
<PAGE>
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
[This Space Intentionally Left Blank]
6.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 15th day of
October, 1999.
INTRABIOTICS PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ Kenneth J. Kelley
------------------------------------
Kenneth J. Kelley, President and CEO
HOLDER:
By: [illegible]
-----------------------------------
-----------------------------------
Printed Name and Title
Address:
------------------------------
------------------------------
------------------------------
<PAGE>
EXHIBIT 10.17
NO. PHW-4
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF
ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE 25,000 SHARES
OF SERIES H PREFERRED STOCK OF
INTRABIOTICS PHARMACEUTICALS, INC.
(VOID AFTER DECEMBER 31, 2001)
This certifies that Jonathan Reingold or its permitted assigns (the
"Holder"), for value received, is entitled to purchase from INTRABIOTICS
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), having a place of
business 1255 Terra Bella, Mountain View, California, a maximum of Twenty-Five
Thousand (25,000) fully paid and nonassessable shares of the Company's Series H
Preferred Stock ("Preferred Stock") for cash at a price equal to $5.00 per share
(the "Stock Purchase Price") at any time or from time to time up to and
including 5:00 p.m. (Pacific time) on December 31, 2001 (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 upon payment in cash or wire transfer 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 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. 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 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
<PAGE>
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.
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
2.
<PAGE>
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 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
3.
<PAGE>
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 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 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 10 calendar 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 give written notice to the Holder
at least 20 calendar days prior to the date on which an Organic Change shall
take place.
4.
<PAGE>
(d) The Company shall give written notice to the Holder
at least 20 calendar days prior to the Closing of the Initial Public Offering.
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 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. This Warrant is not transferable except to
an affiliate of Holder; PROVIDED that Holder provides written notice of such
transfer to the Company, such transferee agrees to be bound by the obligations
hereunder, and the Company may treat such transferee as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant.
8. "MARKET-STAND-OFF" AGREEMENT. If requested by the Company, or the
representative of the underwriters of the Initial Public Offering, Holder agrees
not to sell or otherwise transfer or dispose of the shares of Preferred Stock
issuable upon exercise of this Warrant, or the shares of Common Stock issuable
upon conversion thereof, for a period specified by such representative of the
underwriters not to exceed one hundred eighty (180) days following the date of
the final prospectus forming part of the registration statement filed pursuant
to the Initial Public Offering.
9. 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.
5.
<PAGE>
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
[This Space Intentionally Left Blank]
6.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 15th day of October,
1999.
INTRABIOTICS PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ Kenneth J. Kelley
---------------------------------
Kenneth J. Kelley, President and CEO
HOLDER:
By: /s/ Jonathan Reingold
---------------------------------
---------------------------------
Printed Name and Title
Address:
-----------------------------
-----------------------------
-----------------------------
<PAGE>
EXHIBIT 10.18
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER
SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION.
____________________
WARRANT TO PURCHASE 50,000 SHARES OF SERIES D PREFERRED STOCK
October 10, 1997
THIS CERTIFIES THAT, for value received, Lease Management Services, Inc.
("Holder") is entitled to subscribe for and purchase fifty-thousand (50,000)
shares of the fully paid and nonassessable Series D Preferred Stock ("the
Shares") of IntraBiotics Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), at the Warrant Price (as hereinafter defined), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, the term "Series D Preferred Stock" shall mean the Company's presently
authorized Series D Preferred Stock, and any stock into which such Series D
Preferred Stock may hereafter be exchanged.
1. WARRANT PRICE. The Warrant Price shall initially be two and 50/100 dollars
($2.50) per share, subject to adjustment as provided in Section 7 below.
2. CONDITIONS TO EXERCISE. The purchase right represented by this Warrant may
be exercised at any time, or from time to time, in whole or in part during the
term commencing on the date hereof and ending on the earlier of:
(a) 5:00 P.M. Pacific time on the sixth annual anniversary of this
Warrant; or
(b) 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"). The Company shall provide notice of
the Initial Public Offering to the Holder at least 30 days prior to the closing
thereof; or
(c) the effective date of the merger of the Company with or into, the
consolidation of the Company with, or the sale by the Company of all or
substantially all of its assets to another corporation or other entity (other
than such a transaction wherein the shareholders of the Company retain or obtain
a majority of the voting capital stock of the surviving, resulting, or
purchasing corporation); provided that the Company shall notify the registered
Holder of this Warrant of the proposed effective date of the merger,
consolidation, or sale at least 30 days prior to the effectiveness thereof.
<PAGE>
In the event that, although the Company shall have given notice of a
transaction pursuant to subparagraph (b) or subparagraph (c) hereof, the
transaction does not close within 60 days of the day specified by the Company,
unless otherwise elected by the Holder any exercise of the Warrant subsequent to
the giving of such notice shall be rescinded and the Warrant shall again be
exercisable until terminated in accordance with this Paragraph 2.
3. METHOD OF EXERCISE, PAYMENT; ISSUANCE OF SHARES; ISSUANCE OF NEW WARRANT.
(a) CASH EXERCISE. Subject to Section 2 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part, by the surrender of this Warrant (with a duly executed Notice of
Exercise in the form attached hereto) at the principal office of the Company (as
set forth in Section 18 below) and by payment to the Company, by check, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of shares then being purchased. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be in the name of, and delivered to, the Holder hereof, or as
such Holder may direct (subject to the terms of transfer contained herein and
upon payment by such Holder hereof of any applicable transfer taxes). Such
delivery shall be made within 30 days after exercise of the Warrant and at the
Company's expense and, unless this Warrant has been fully exercised or expired,
a new Warrant having terms and conditions substantially identical to this
Warrant and representing the portion of the Shares, if any, with respect to
which this Warrant shall not have been exercised, shall also be issued to the
Holder hereof within 30 days after exercise of the Warrant.
(b) NET ISSUE EXERCISE. In lieu of. exercising this Warrant pursuant to
Section 3(a), Holder may elect to receive shares equal to the value of this
Warrant (or of any portion thereof remaining unexercised) by surrender of this
Warrant at the principal-office of the Company together with notice of such
election, in which event the Company shall issue to Holder the number of shares
of the Company's Series D Preferred Stock computed using the following formula:
X = Y (A-B)
-----
A
Where X = the number of shares of Series D Preferred Stock to be issued to
Holder.
Y = the number of shares of Series D Preferred Stock purchasable under this
Warrant
(at the date of such calculation).
A = the Fair Market Value of one share of the Company's Series D Preferred
Stock
(at the date of such calculation).
B = Warrant price (as adjusted to the date of such calculation).
(c) FAIR MARKET VALUE. For purposes of this Section 3, Fair Market Value
of one share of the Company's Series D Preferred Stock shall mean:
<PAGE>
(i) In the event of an exercise in connection with an Initial
Public Offering, the per share Fair Market Value for the Series D Preferred
Stock shall be the Offering Price at which the underwriters initially sell
Common Stock to the public multiplied by the number of shares of Common Stock
into which each share of Series D Preferred Stock is then convertible; or
(ii) In the event of an exercise in connection with a merger,
acquisition or other consolidation in which the Company is not the surviving
entity, as described in Section 2(c), the per share Fair Market Value for the
Series D Preferred Stock shall be the value to be received per share of Series D
Preferred Stock by all Holders of the Series D Preferred Stock as determined by
the Board of Directors; or
(iii) In any other instance, the per share Fair Market Value for the
Series D Preferred Stock shall be as determined in good faith by the Company's
Board of Directors unless Holder elects to have such fair market value
determined by an appraiser, which election must be made by Holder within ten
(10) business days of the date the Company notifies Holder of the fair market
value as determined by its Board of Directors. In the event of such an
appraisal, the cost thereof shall be borne by the Holder unless such appraisal
results in a fair market value in excess of 115% of that determined by the
Company's Board of Directors, in which event the Company shall bear the cost of
such appraisal.
In the event of 3(c)(ii) or 3(c)(iii), above, the Company's Board of
Directors shall prepare a certificate, to be signed by an authorized Officer of
the Company, setting forth in reasonable detail the basis for and method of
determination of the per share Fair Market Value of the Series D Preferred
Stock. The Board will also certify to the Holder that this per share Fair
Market Value will be applicable to all holders of the Company's Series D
Preferred Stock. Such certification must be made to Holder at least thirty (30)
business days prior to the proposed effective date of the merger, consolidation,
sale, or other triggering event as defined in 3 (c)(ii) and 3 (c)(iii).
(d) AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, it shall be automatically exercised in accordance with Sections 3)b)
and 3(c) hereof (even if not surrendered) immediately before: (i) its expiration
or (ii) the consummation of any consolidation or merger of the Company, or any
sale or transfer of a majority of a company's assets pursuant to Section 2(c).
4. REPRESENTATIONS AND WARRANTIES OF HOLDER AND RESTRICTIONS ON TRANSFER
IMPOSED BY THE SECURITIES ACT OF 1933.
(a) REPRESENTATIONS AND WARRANTIES BY HOLDER. The Holder represents and
warrants to the Company with respect to this purchase as follows:
(i) The Holder has substantial experience in evaluating and
investing in private placement transactions of securities of companies similar
to the Company so that the Holder is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its interests.
<PAGE>
(ii) The Holder is acquiring the Warrant and the Shares of Series D
Preferred Stock issuable upon exercise of the Warrant (collectively the
"Securities") for investment for its own account and not with a view to, or for
resale in connection with, any distribution thereof. The Holder understands
that the Securities have not been registered under the Securities Act of 1933,
as amended, (the "Act") by reason of a specific exemption from the registration
provisions of the Act which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein. In this connection, the
Holder understands that, in the view of the Securities and Exchange Commission
(the "SEC"), the statutory basis for such exemption may be unavailable if this
representation was predicated solely upon a present intention to hold the
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities or for a period of one year or any other fixed period in the
future.
(iii) The Holder acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. The Holder is aware of the provisions of Rule
144 promulgated under the Act ("Rule 144") which permits limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions, including, in case the securities have been held for less
than two years, the existence of a public market for the shares, the
availability of certain public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through a "broker's transaction" or in a
transaction directly with a "market maker" (as provided by Rule 144(f) and the
number of shares or other securities being sold during any three-month period
not exceeding specified limitations.
(iv) The Holder further understands that at the time the Holder
wishes to sell the Securities there may be no public market upon which such a
sale may be effected, and that even if such a public market exists, the Company
may not be satisfying the current public information requirements of Rule 144,
and that in such event, the Holder may be precluded from selling the Securities
under Rule 144 unless (a) a two-year minimum holding period has been satisfied
and (b) the Holder was not at the time of the sale nor at any time during the
three-month period prior to such sale an affiliate of the Company.
(v) The Holder has had an opportunity to discuss the Company's
business, management and financial affairs with its management and an
opportunity to review the Company's facilities. The Holder understands that
such discussions, as well as the written information issued by the Company, were
intended to describe the aspects of the Company's business and prospects which
it believes to be material but were not necessarily a thorough or exhaustive
description.
(b) LEGENDS. Each certificate representing the Securities shall be
endorsed with the following legend: "
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION" LETTER FROM THE
SECURITIES AND
<PAGE>
EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER, A TRANSFER
MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE
COMMISSION, OR (IF REASONABLY REQUIRED BY THE COMPANY) AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER
IS EXEMPT FROM SUCH REGISTRATION.
The Company need not enter into its stock records a transfer of Securities
unless the conditions specified in the foregoing legend are satisfied. The
Company may also instruct its transfer agent not to allow the transfer of any of
the Shares unless the conditions specified in the foregoing legend are
satisfied.
(c) REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. The legend relating to
the Act endorsed on a certificate pursuant to paragraph 4(b) of this Warrant and
the stop transfer instructions with respect to the Securities represented by
such certificate shall be removed and the Company shall issue a certificate
without such legend to the Holder of the Securities if (i) the Securities are
registered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available or (ii) the Holder provides to the Company. an opinion
of counsel for the Holder reasonably satisfactory to the Company, or a no-action
letter or interpretive opinion of the staff of the SEC reasonably satisfactory
to the Company, to the effect that public sale, transfer or assignment of the
Securities may be made without registration and without compliance with any
restriction such as Rule 144.
5. CONDITION OF TRANSFER OR EXERCISE OF WARRANT. It shall be a condition to
any transfer or exercise of this Warrant that at the time of such transfer or
exercise, the Holder shall provide the Company with a representation in writing
that the Holder or transferee is acquiring this Warrant and the shares of Series
D Preferred Stock to be issued upon exercise for investment purposes only and
not with a view to any sale or distribution, or will provide the Company with a
statement of pertinent facts covering any proposed distribution. As a further
condition to any transfer of this Warrant or any or ail of the shares of Series
D Preferred Stock issuable upon exercise of this Warrant, other than a transfer
registered under the Act, the Company must have received a legal opinion, in
form and substance satisfactory to the Company and its counsel, reciting the
pertinent circumstances surrounding the proposed transfer and stating that such
transfer is exempt from the registration and prospectus delivery requirements of
the Act. Each certificate evidencing the shares issued upon exercise of the
Warrant or upon any transfer of the shares (other than a transfer registered
under the Act or any subsequent transfer of shares so registered) shall, at the
Company's option, contain a legend in form and substance satisfactory to the
Company and its counsel, restricting the transfer of the shares to sales or
other dispositions exempt from the requirements of the Act.
As further condition to each transfer, the Holder shall surrender this
Warrant to the Company and the transferee shall receive and accept a Warrant, of
like tenor and date, executed by the Company.
6. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be fully paid and nonassessable, and free from all taxes, liens, and charges
with respect to the issue thereof.
<PAGE>
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
issuance upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its Series D Preferred Stock to provide for
the exercise of the rights represented by this Warrant.
7. ADJUSTMENT FOR CERTAIN EVENTS. In the event of changes in the outstanding
Common Stock by reason of stock dividends, split-ups, recapitalizations,
reclassifications, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like, the number and class of
shares available under the Warrant in the aggregate and the Warrant Price shall
be correspondingly adjusted, as appropriate, by the Board of Directors of the
Company. The adjustment shall be such as will give the Holder of this Warrant
upon exercise for the same aggregate Warrant Price the total number, class and
kind of shares as it would have owned had the Warrant been exercised prior to
the event and had it continued to hold such shares until after the event
requiting adjustment.
8. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be adjusted
pursuant to Section 7 hereof, the Company shall prepare a certificate signed by
an officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price and number of shares issuable
upon exercise of the Warrant after giving effect to such adjustment, and shall
cause copies of such certificate to be mailed (by certified or registered mail,
return receipt required, postage prepaid) within thirty (30) days of such
adjustment to the Holder of this Warrant as set forth in Section 18 hereof.
9. "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that for a period of up
to 180 days following the effective date of the first registration statement of
the Company covering common stock (or other securities) to be sold on behalf of
the Company in an underwritten public offering, it will not, to the extent
requested by the Company and any underwriter, sell or otherwise transfer or
dispose of (other than to donees or transferees who agree to be similarly bound)
any of the Shares at any time during such period except common stock included in
such registration; provided, however, that all officers and directors of the
Company who hold securities of the Company or options to acquire securities of
the Company and all other persons with registration rights enter into similar
agreements.
10. TRANSFERABILITY OF WARRANT. This Warrant is transferable on the books
of the Company at its principal office by the registered Holder hereof upon
surrender of this Warrant properly endorsed, subject to compliance with
Section 5 and applicable federal and state securities laws. The Company
shall issue and deliver to the transferee a new Warrant representing the
Warrant so transferred. Upon any partial transfer, the Company will issue and
deliver to Holder a new Warrant with respect to the Warrant not so
transferred. Holder shall not have any right to transfer any portion of this
Warrant to any direct competitor of the Company.
11. NO FRACTIONAL SHARES. No fractional share of Series D Preferred Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional share the Company shall make a cash payment therefor upon the basis
of the Warrant Price then in effect.
<PAGE>
12. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of Series
D Preferred Stock upon the exercise of this Warrant shall be made without charge
to the Holder for any United States or state of the United States documentary
stamp tax or other incidental expense with respect to the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder.
13. NO SHAREHOLDER RIGHTS UNTIL EXERCISE. This Warrant does not entitle the
Holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
14. REGISTRY OF WARRANT. The Company shall maintain a registry showing the
name and address of the registered Holder of this Warrant. This Warrant may be
surrendered for exchange or exercise, in accordance with its terms, at such
office or agency of the Company, and the Company and Holder shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.
15. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft, or
destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant, having terms and conditions substantially identical to this
Warrant, in lieu hereof.
16. MISCELLANEOUS.
(a) ISSUE DATE. The provisions of this Warrant shall be construed and
shall be given effect in all respect as if it had been issued and delivered by
the Company on the date hereof.
(b) SUCCESSORS. This Warrant shall be binding upon any successors or
assigns of the Company.
(c) GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
(d) HEADINGS. The headings used in this Warrant are used for convenience
only and are not to be considered in construing or interpreting this Warrant.
(e) SATURDAYS, SUNDAYS, HOLIDAYS. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday in the State of
California, then such action may be taken or such right may be exercised on the
next succeeding day not a legal holiday.
(f) 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 whom enforcement is sought.
17. NO IMPAIRMENT. The Company will not, by amendment of its Certificate of
Incorporation or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the
<PAGE>
carrying out of ail 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 hereof
against impairment.
18. ADDRESSES. Any notice required or permitted hereunder shall be in writing
and shall be mailed by overnight courier, registered or certified mail, return
receipt required, and postage pre-paid, or otherwise delivered by hand or by
messenger, addressed as set forth below, or at such other address as the Company
or the Holder hereof shall have furnished to the other party.
If to the Company: IntraBiotics Pharmaceuticals, Inc.
1245 Terra Bella Avenue
Mountain View, CA 94043
Attn: Chief Financial Officer
If to the Holder: Lease Management Services, Inc.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
Attn: Barbara B. Kaiser, EVP/GM
IN WITNESS WHEREOF, IntraBiotics Pharmaceuticals, Inc. has caused this
Warrant to be executed by its officers thereunto duly authorized.
Dated as of October 10, 1997.
INTRABIOTICS PHARMACEUTICALS, INC.
By: /s/ KENNETH J. KELLEY
--------------------------------
Kenneth J. Kelley
Title: President and CEO
<PAGE>
EXHIBIT 10.19
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE .ACT OR RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
------------------------------
WARRANT TO PURCHASE 54,000 SHARES SERIES B PREFERRED STOCK
July 20 ,1995
THIS CERTIFIES THAT, for value received, Lease Management Services,
Inc., ("Holder") is entitled to subscribe for and purchase fifty four thousand
(54,000) shares of the fully paid and nonassessable Series B Preferred Stock
("the Shares") of IntraBiotics Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), at the Warrant Price (as hereinafter defined), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, the term "Series B Preferred Stock" shall mean the Company's presently
authorized Series B Preferred Stock, and any stock into which such Series B
Preferred Stock may hereafter be exchanged.
1. WARRANT PRICE. The Warrant Price shall initially be one and 00/100 dollars
($1.00), subject to adjustment as provided in Section 7 below.
2. CONDITIONS TO EXERCISE. The purchase right represented by this Warrant may be
exercised at any time, or from time to time, in whole or in part during the term
commencing on the date hereof and ending on the earlier of:
(a) 5:00 P.M. California time on the sixth annual anniversary of this
Warrant; or
(b) the effective date of the merger of the Company with or into, the
consolidation of the Company with, or the sale by the Company of all or
substantially all of its assets to another corporation or other entity (other
than such a transaction wherein the shareholders of the Company retain or obtain
a majority of the voting capital stock of the surviving, resulting, or
purchasing corporation); provided that the Company shall notify the registered
Holder of this Warrant of the proposed effective date of the merger,
consolidation, or sale at least 60 days prior to the effectiveness thereof.
In the event that, although the Company shall have given notice of a
transaction pursuant to subparagraph (b) hereof, the transaction does not close
on approximately the day specified by the Company, unless otherwise elected by
the Holder any exercise of the Warrant subsequent to the giving of such notice
shall be rescinded and the Warrant shall again be exercisable until terminated
in accordance with this Paragraph 2.
1.
<PAGE>
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF SHARES; ISSUANCE OF NEW WARRANT.
(a) CASH EXERCISE. Subject to Section 2 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part, by the surrender of this Warrant (with a duly executed Notice of
Exercise in the form attached hereto) at the principal office of the Company (as
set forth in Section 18 below) and by payment to the Company, by check, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of shares then being purchased. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be in the name of, and delivered to, the Holder hereof, or as
such Holder may direct (subject to the terms of transfer contained herein and
upon payment by such Holder hereof of any applicable transfer taxes). Such
delivery shall be made within 10 days after exercise of the Warrant and at the
Company's expense and, unless this Warrant has been fully exercised or expired,
a new Warrant having terms and conditions substantially identical to this
Warrant and representing the portion of the Shares, if any, with respect to
which this Warrant shall not have been exercised, shall also be issued to the
Holder hereof within 10 days after exercise of the Warrant.
(b) NET ISSUE EXERCISE. In lieu of exercising this Warrant pursuant to
Section 3(a), Holder may elect to receive shares equal to the value of this
Warrant (or of any portion thereof remaining unexercised) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to Holder the number of shares
of the Company's Series B Preferred Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Series B Preferred Stock to be issued
to Holder.
Y = the number of shares of Series B Preferred Stock purchasable
under this Warrant (at the date of such calculation).
A = the fair market value of one share of the Company's Series B
Preferred Stock (at the date of such calculation).
B = Warrant exercise price (as adjusted to the date of such
calculation).
(c) FAIR MARKET VALUE. For purposes of this Section 3, Fair Market
Value of one share of the Company's Series B Preferred Stock shall mean:
(i) In the event of an Initial Public Offering per share Fair
Market Value for the Series B Preferred Stock shall be the Offering Price at
which the underwriters sell Common Stock to the public multiplied by the number
of shares of Common Stock into which each share of Series B Preferred Stock is
then convertible; or
(ii) If the Common Stock is traded on NASDAQ or
Over-The-Counter or on an exchange, the per share Fair Market Value for the
Series B Preferred Stock will be the average of the closing bid and asked prices
of the Common Stock quoted in the Over-The-
2.
<PAGE>
Counter Market Summary or the closing price quoted on any exchange on which the
Series B Preferred Stock is listed, whichever is applicable, as published in the
Western Edition of The Wall Street Journal for the ten (10) trading days prior
to the date of determination of Fair Market Value multiplied by the number of
shares of Common Stock into which each share of Series B Preferred Stock is then
convertible; or
(iii) If the Company shall be subject to a merger, acquisition
or other consolidation in which the Company is not the surviving entity,
pursuant to Section 200), the per share Fair Market Value for the Series B
Preferred Stock shall be the value received per share of Series B Preferred
Stock by all Holders of the Series B Preferred Stock as determined by the Board
of Directors; or
(iv) In any other instance, the per share Fair Market Value
for the Series B Preferred Stock shall be as determined by the Board of
Directors in its reasonable business judgment.
In the event of 3(c)(iii) or 3(c)(iv), above, the Company's Board of
Directors shall prepare a certificate, to be signed by an authorized Officer of
the Company, setting forth in reasonable detail the basis for and method of
determination of the per share Fair Market Value of the Series B Preferred
Stock. The Board will also certify to the Holder that this per share Fair Market
Value will be applicable to all holders of the Company's Series B Preferred
Stock. Such certification must be made to Holder at least thirty (30) business
days prior to the proposed effective date of the merger, consolidation, sale, or
other triggering event as defined in 3(c)(iii) and 3(c)(iv).
(d) AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, it shall be automatically exercised in accordance with Sections 3(b)
and 3(c) hereof (even if not surrendered) immediately before: (i) its
expiration, or (ii) the consummation of any consolidation or merger of the
Company, or any sale or transfer of a majority of a company's assets pursuant to
Section 2(b).
4. REPRESENTATIONS AND WARRANTIES OF HOLDER AND RESTRICTIONS ON TRANSFER IMPOSED
BY THE SECURITIES ACT OF 1933.
(a) REPRESENTATIONS AND WARRANTIES BY HOLDER. The Holder represents and
warrants to the Company with respect to this purchase as follows:
(i) The Holder has substantial experience in evaluating and
investing in private placement transactions of securities of companies similar
to the Company so that the Holder is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its interests.
(ii) The Holder is acquiring the Warrant and the Shares of
Series B Preferred Stock issuable upon exercise of the Warrant (collectively the
"Securities") for investment for its own account and not with a view to, or for
resale in connection with, any distribution thereof. The Holder understands that
the Securities have not been registered under the Act by reason of a specific
exemption from the registration provisions of the Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.
In this connection, the
3.
<PAGE>
Holder understands that, in the view of the Securities and Exchange Commission
(the "SEC"), the statutory basis for such exemption may be unavailable if this
representation was predicated solely upon a present intention to hold the
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities or for a period of one year or any other fixed period in the
future.
(iii) The Holder acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. The Holder is aware of the provisions of Rule
144 promulgated under the Act ("Rule 144") which permits limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions, including, in case the securities have been held for less
than three years, the existence of a public market for the shares, the
availability of certain public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being through a "broker's transaction" or in a
transaction directly with a "market maker" (as provided by Rule 144(f)) and the
number of shares or other securities being sold during any three-month period
not exceeding specified limitations.
(iv) The Holder further understands that at the time the
Holder wishes to sell the Securities there may be no public market upon which
such a sale may be effected, and that even if such a public market exists, the
Company may not be satisfying the current public information requirements of
Rule 144, and that in such event, the Holder may be precluded from selling the
Securities under Rule 144 unless as a three-year minimum holding period has been
satisfied and b) the Holder was not at the time of the sale nor at any time
during the three-month period prior to such sale an affiliate of the Company.
(v) The Holder has had an opportunity to discuss the Company's
business, management and financial affairs with its management and an
opportunity to review the Company's facilities. The Holder understands that such
discussions, as well as the written information issued by the Company, were
intended to describe the aspects of the Company's business and prospects which
it believes to be material but were not necessarily a thorough or exhaustive
description.
(b) LEGENDS. Each certificate representing the Securities shall be
endorsed with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION" LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER, A
TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH
REGISTRATION.
4.
<PAGE>
The Company need not register a transfer of Securities unless the
conditions specified in the foregoing legend are satisfied. The Company may also
instruct its transfer agent not to register the transfer of any of the Shares
unless the conditions specified in the foregoing legend are satisfied.
(c) REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. The legend relating to
the Act endorsed on a certificate pursuant to paragraph 4(b) of this Warrant and
the stop transfer instructions with respect to the Securities represented by
such certificate shall be removed and the Company shall issue a certificate
without such legend to the Holder of the Securities if (i) the Securities are
registered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available or (ii) the Holder provides to the Company an opinion of
counsel for the Holder reasonably satisfactory to the Company, or a no-action
letter or interpretive opinion of the staff of the SEC reasonably satisfactory
to the Company, to the effect that public sale, transfer or assignment of the
Securities may be without registration and without compliance with any
restriction such as Rule 144.
5. CONDITION OF TRANSFER OR EXERCISE OF WARRANT. It shall be a condition to any
transfer or exercise of this Warrant that at the time of such transfer or
exercise, the Holder shall provide the Company with a representation in writing
that the Holder or transferee is acquiring this Warrant and the shares of Series
B Preferred Stock to be issued upon exercise, for investment purposes only and
not with a view to any sale or distribution, or a statement of pertinent facts
coveting any proposed distribution. As a further condition to any transfer of
this Warrant or any or all of the shares of Series B Preferred Stock issuable
upon exercise of this Warrant, other than a transfer registered under the Act,
the Company must have received a legal opinion, in form and substance
satisfactory to the Company and its counsel, reciting the pertinent
circumstances surrounding the proposed transfer and stating that such transfer
is exempt from the registration and prospectus delivery requirements of the Act.
Each certificate evidencing the shares issued upon exercise of the Warrant or
upon any transfer of the shares (other than a transfer registered under the Act
or any subsequent transfer of shares so registered) shall, at the Company's
option, contain a legend in form and substance satisfactory to the Company and
its counsel, restricting the transfer of the shares to sales or other
dispositions exempt from the requirements of the Act.
As further condition to each transfer, the transferee shall receive and
accept a Warrant, of like tenor and date, executed by the Company.
6. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof. 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 issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Series B
Preferred Stock to provide for the exercise of the rights represented by this
Warrant.
7. ADJUSTMENT FOR CERTAIN EVENTS. In the event of changes in the outstanding
Series B Preferred Stock by reason of stock dividends, split-ups,
recapitalizations, reclassifications, conversions, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations, liquidations,
or the like, the number and class of shares available under the
5.
<PAGE>
Warrant in the aggregate and the Warrant Price shall be correspondingly
adjusted, as appropriate, by the Board of Directors of the Company. The
adjustment shall be such as will give the Holder of this Warrant upon exercise
for the same aggregate Warrant Price the total number, class and kind of shares
as it would have owned had the Warrant been exercised prior to the event and had
it continued to hold such shares until after the event requiring adjustment.
Nothing herein shall be construed as providing Holder with antidilution rights
greater than the antidilution rights, if any, of the holders of the Series B
Preferred Stock generally, as set forth in the Company's Restated Articles of
Incorporation, as amended. No adjustment in the Warrant Price and/or the number
of Shares need be made if such adjustment would result in a change in the
Warrant Price of less than one cent ($0.01) or a change in the number of Shares
of less than one-hundredth (1/100th) of a share. Any adjustment less than these
amounts which is not made shall be carried forward and shall be made at the time
and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of at least these amounts.
8. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be adjusted pursuant
to Section 7 hereof, the Company shall prepare a certificate signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price and number of shares issuable upon
exercise of the Warrant after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (by certified or registered mail, return
receipt required, postage prepaid) within thirty (30) days of such adjustment to
the Holder of this warrant as set forth in Section 18 hereof.
9. "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that for a period of 180
days following the effective date of the first registration statement of the
Company covering Series B Preferred stock (or other securities) to be sold on
its behalf in an underwritten public offering, it will not, to the extent
requested by the Company and any underwriter, sell or otherwise transfer or
dispose of (other than to donees or transferees who agree to be similarly bound)
any of the Shares at any time during such period except Series B Preferred stock
included in such registration; provided, however, that all officers and
directors of the Company who hold securities of the Company or options to
acquire securities of the Company and all other persons with registration rights
enter into similar agreements.
10. TRANSFERABILITY OF WARRANT. This Warrant is transferable one time only, in
whole and not in part, on the books of the Company at its principal office by
the registered Holder hereof upon surrender of this Warrant properly endorsed,
subject to compliance with applicable federal and state securities laws
(including the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, if such are requested by the Company);
provided, however, that notwithstanding the foregoing, this Warrant may be
transferred to Holder's parent company or to an affiliate company as part of a
merger or consolidation and such transfer shall not count as the one permitted
transfer referred to above. The Company shall issue and deliver to the
transferee a new Warrant representing the Warrant so transferred. Upon any
partial transfer, the Company will issue and deliver to Holder a new Warrant
with respect to the Warrant not so transferred. Holder shall not have any right
to transfer any portion of this Warrant to any direct competitor of the Company.
6.
<PAGE>
11. NO FRACTIONAL SHARES. No fractional share of Series B Preferred Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional share the Company shall make a cash payment therefor upon the basis
of the Warrant Price then in effect.
12. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of Series B
Preferred Stock upon the exercise of this Warrant shall be made without charge
to the Holder for any United States or state of the United States documentary
stamp tax or other incidental expense in reject of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder.
13. NO SHAREHOLDER RIGHTS UNTIL EXERCISE. This Warrant does not entitle the
Holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
14. REGISTRY OF WARRANT. The Company shall maintain a registry showing the name
and address of the registered Holder of this Warrant. This Warrant may be
surrendered for exchange or exercise, in accordance with its terms, at such
office or agency of the Company, and the Company and Holder shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.
15. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft, or
destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant, having terms and conditions substantially identical to this
Warrant, in lieu hereof.
16. MISCELLANEOUS.
(a) ISSUE DATE. The provisions of this Warrant shall be construed and
shall be given effect in all respect as if it had been issued and delivered by
the Company on the date hereof.
(b) SUCCESSORS. This Warrant shall be binding upon any successors or
assigns of the Company.
(c) GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
(d) HEADINGS. The headings used in this Warrant are used for
convenience only and are not to be considered in construing or interpreting this
Warrant.
(e) SATURDAYS, SUNDAYS, HOLIDAYS. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday in the State of
California, then such action may be taken or such right may be exercised on the
next succeeding day not a legal holiday.
17. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or any other voluntary action, avoid or seek to avoid the
observance or 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
7.
<PAGE>
terms and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the Holder hereof against impairment.
18. ADDRESSES. Any notice required or permitted hereunder shall be in writing
and shall be mailed by overnight courier, registered or certified mail, return
receipt required, and postage pre-paid, or otherwise delivered by hand or by
messenger, addressed as set forth below, or at such other address as the Company
or the Holder hereof shall have furnished to the other party.
If to the Company: Intra Biotics Pharmaceuticals, Inc
816 Kifer Road
Sunnyvale, CA 94086
Attn: Chief Financial Officer
If to the Holder: Lease Management Services, Inc.
2500 Sand Hill Road, Ste 101
Menlo Park, CA 94025
Attn: Barbara B. Kaiser, EVP/GM
IN WITNESS WHEREOF, Kenneth J. Kelley has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated as of July 20, 1995.
/s/ Kenneth J. Kelley
-------------------------------
By: Kenneth J. Kelley
----------------------------
Title: President and CEO
-------------------------
8.
<PAGE>
EXHIBIT 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated January 14,
2000 (except the second paragraph of Note 1, as to which the date is
, 2000) in the Registration Statement (Form S-1) and related
Prospectus of IntraBiotics Pharmaceuticals, Inc. for the registration of shares
of its common stock.
ERNST & YOUNG LLP
Palo Alto, California
January , 2000
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon completion of the
reverse stock split described in Note 1 to the financial statements.
/s/ ERNST & YOUNG LLP
Palo Alto, California
January 26, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1997 JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<CASH> 0 29,869 18,862
<SECURITIES> 0 0 12,567
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 30,013 32,062
<PP&E> 0 2,922 5,445
<DEPRECIATION> 0 (877) (1,617)
<TOTAL-ASSETS> 0 32,099 35,958
<CURRENT-LIABILITIES> 0 8,734 6,319
<BONDS> 0 0 0
0 0 0
0 52,152 79,609
<COMMON> 0 1 1
<OTHER-SE> 0 (29,655) (51,696)
<TOTAL-LIABILITY-AND-EQUITY> 0 32,099 35,958
<SALES> 0 0 0
<TOTAL-REVENUES> 5,507 6,357 7,863
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 8,103 21,997 26,102
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> (94) (172) (166)
<INCOME-PRETAX> (4,075) (17,382) (23,115)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (4,075) (17,382) (23,115)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (4,075) (17,382) (23,115)
<EPS-BASIC> (6.39) (20.89) (21.62)
<EPS-DILUTED> (6.39) (20.89) (21.62)
</TABLE>
