<PAGE>
As filed with the Securities and Exchange Commission on May 8, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
TREGA BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0336233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9880 Campus Point Drive
San Diego, California 92121
(858) 410-6500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MICHAEL G. GREY COPIES TO:
CHIEF EXECUTIVE OFFICER THOMAS E. SPARKS, JR.
TREGA BIOSCIENCES, INC. JOHN L. DONAHUE
9880 Campus Point Drive Pillsbury Madison & Sutro LLP
San Diego, California 92121 50 Fremont Street
(858) 410-6500 San Francisco, California 94120
Name, address, including zip code, (415) 983-1000
and telephone number, including
area code, of agent for service)
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _____
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / / _____
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
PROPOSED
MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 3,886,668 Shares $3.86 $15,002,538 $3,961
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the high and low prices
of the Registrant's Common Stock on the Nasdaq National Market on May 5,
2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 8, 2000
PROSPECTUS
3,886,668 SHARES
TREGA
BIOSCIENCES, INC.
COMMON STOCK
----------------------
These shares may be offered and sold at various times by the
stockholders identified in this prospectus. The offering is not being
underwritten.
The selling stockholders may offer and sell their shares in
transactions on the Nasdaq National Market, in negotiated transactions, or both.
These sales may occur at fixed prices that are subject to change, at prices that
are determined by prevailing market prices, or at negotiated prices.
The selling stockholders may sell shares to or through broker-dealers,
who may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders, the purchasers of the shares, or
both. We will not receive any of the proceeds from the sale of the shares.
Our common stock is traded on the Nasdaq National Market under the
symbol "TRGA."
----------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE __.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------
The date of this prospectus is May 8, 2000
<PAGE>
We have not authorized anyone to provide you with information or to
represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. The selling stockholders are
offering to sell, and seeking offers to buy, only the shares of Trega common
stock covered by this prospectus, and only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date, regardless of the time of delivery of
this prospectus or of any sale of the shares.
You should read carefully the entire prospectus, as well as the
documents incorporated by reference in the prospectus, before making an
investment decision. All references to "we," "us," "our," the "Company," or
"Trega" in this prospectus mean Trega Biosciences, Inc.
FORWARD-LOOKING STATEMENTS
When used in this prospectus, the words "expects," "anticipates,"
"estimates," "plans," and similar expressions are intended to identify
forward-looking statements. These are statements that relate to future periods
and include statements under the captions "Risk Factors" and "The Company" as to
the adequacy of capital resources, growth in operations, the ability to
commercialize products developed under collaborations and alliances, and the
performance and utility of our products and services. Forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected. These risks and uncertainties include, but are
not limited to, risks relating to the development of new IDEA-TM- predictive
models and expansion of our Chem.Folio-Registered Trademark- combinatorial
libraries and their use by our potential customers, and the risks set forth
under "Risk Factors."
<TABLE>
Table of Contents
<S> <C>
THE COMPANY....................................................................3
RISK FACTORS...................................................................5
PROCEEDS FROM THE OFFERING....................................................13
SELLING STOCKHOLDERS..........................................................14
PLAN OF DISTRIBUTION..........................................................15
LEGAL MATTERS.................................................................15
EXPERTS.......................................................................16
WHERE YOU CAN FIND MORE INFORMATION...........................................16
DOCUMENTS INCORPORATED BY REFERENCE...........................................16
</TABLE>
2
<PAGE>
THE COMPANY
We develop information-based products for pharmaceutical and
biotechnology companies designed to improve the probability of identifying
successful drug candidates and accelerate the drug discovery and development
process. Specifically, we develop and market our propriety IDiscovery-TM-
technologies, comprised of our IDEA -TM- predictive computer models And our
Chem.Folio-Registered Trademark- compound libraries.
The first stage of the drug discovery process is the identification of
a biological target, such as a receptor, that is responsible for causing a
medical condition. The second stage in early discovery is the synthesis of
compounds to be screened against the desired target, followed by high throughput
screening. High throughput screening involves the testing of hundreds of
thousands of compounds to identify potentially hundreds of compounds that
demonstrate activity against the target of choice. Active compounds resulting
from this process are known as "hits." The hits are then chemically modified in
a series of sequential steps to identify compounds that (1) have improved
activity at the target, (2) are absorbed following oral administration, (3) have
appropriate metabolism characteristics and (4) do not have toxic effects. This
series of steps, if successful, results in the identification of drug
candidates. The testing used to develop the candidate is called "lead
optimization," and generally involves animal models, which are low throughput
and poorly predictive of ultimate success. A drug candidate then undergoes
preclinical development and three phases of human clinical development before
being filed for approval with the U.S. Food and Drug Administration. The total
time of this process has typically ranged from 12-16 years and the failure rate
is high.
The IDEA-TM- predictive models are a set of physiologically and
structure based computer simulations that we are developing to predict the ADME
(absorption, distribution, metabolism and excretion) characteristics of
compounds. We believe that, upon development and commercialization, the IDEA-TM-
predictive models will enable pharmaceutical companies to prioritize their hit
compounds for further development based upon their drug-like ADME
characteristics. Our IDEA-TM- absorption module, which is based on actual human
clinical data contributed by a consortium of major pharmaceutical companies, is
designed to predict the absorption of compounds in humans and is in the early
rollout phase of commercialization.
Our Chem.Folio-Registered Trademark- combinatorial libraries and
services include: (i) Chem.Folio-Registered Trademark- screening libraries which
offer off-the-shelf compound libraries for immediate screening for compounds
active against a particular biological target or hit finding, (ii) custom
synthesis based on customer templates and chemical motifs and (iii) rapid
creation of chemical analogues using Chem.Folio-Registered Trademark- virtual
library and proprietary Tea Bag synthesis technology. Chem.Folio-Registered
Trademark- combinatorial libraries consist of drug-like molecules suitably
formatted for modern screening techniques. In addition to the
Chem.Folio-Registered Trademark- compounds, we provide related synthesis
protocols, information on solubility and cytotoxicity, and other information
relevant to compounds' status as potential drug candidates and suitability for
screening.
Since our inception, we have utilized combinatorial chemistry as a
foundation for our drug discovery activities, first, for the production of
peptides, then mixtures of small molecules, and finally, for singles-based
compound arrays. This technology enables us to develop and offer a wide range of
small-molecule libraries, including our Chem.Folio-Registered Trademark-
compound libraries, which are constructed in singles-based compound arrays. In
1993, we used our combinatorial chemistry technologies to discover a family of
proprietary compounds that appear to influence the production and activity of
certain cytokines through interaction with melanocortin receptors. These
compounds include HP-228, which has completed a Phase II clinical trial in the
treatment of post-operative pain in hip and knee replacements. As part of our
activities, we formed collaborative partnerships in the area of drug discovery
and development. Coinciding with this focus, we entered into collaborations with
certain pharmaceutical companies to develop compounds active against certain
melanocortin receptors.
The continuing development of our combinatorial chemistry libraries led
to the development of information relevant to the drug discovery process, and
such information is regularly supplied to library purchasers. The development of
this information and a growing belief in the importance of information in the
drug discovery process caused us to investigate opportunities to acquire
technologies directed at creating information germane to the drug discovery
process. In 1998, we acquired our wholly owned subsidiary, NaviCyte, Inc.
("NaviCyte"), whose business included the development of products and services
to facilitate the rapid screening of compounds for pharmacokinetic
characteristics through the use of computer models. With the technology acquired
from NaviCyte,
3
<PAGE>
we developed and released the first of the IDEA-TM- predictive models, the
absorption module. We have combined our Chem.Folio-Registered Trademark-
libraries and IDEA-TM- predictive models in a collection of technologies called
IDiscovery-TM-.
On February 11, 2000, we announced that we did not intend to continue
to support any of our internal drug discovery programs that are not funded by a
collaborator. We believe this strategic shift will permit us to better focus our
efforts and resources on the continuing development and commercialization of our
iDiscovery-TM- technologies. We are currently carrying out a collaborative
program in the area of diabetes, obesity and syndrome X, which is funded by
Novartis Pharma AG ("Novartis").
Trega was incorporated in Delaware in 1991. Our executive offices are
located at 9880 Campus Point Drive, San Diego, California 92121 and our
telephone number is (858) 410-6500.
4
<PAGE>
RISK FACTORS
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY; IRREGULAR
REVENUE FLOW
We have experienced significant operating losses since inception. For
the years ended December 31, 1999, 1998 and 1997, we had net losses of
approximately $8.7 million, $12.8 million and $9.4 million, respectively. As of
December 31, 1999, we had an accumulated deficit of approximately $77.1 million.
We expect that our ability to achieve profitability will be in large
part dependent upon our ability to market and sell our IDiscovery-TM-
technologies, which includes our IDEA-TM- predictive models and Chem.Folio(R)
compound libraries. There can be no assurance that we will be successful in
marketing our products in a manner, including through collaborative ventures,
which will result in additional revenues. Although we changed our strategic
focus to concentrate on the development and marketing of our IDiscovery-TM-
technologies, we still depend in part on revenues from collaborative
arrangements in our internal drug discovery programs. There can be no assurance
that we will be successful in entering into additional collaboration
arrangements that will result in revenues or that we will receive additional
revenues under existing collaboration arrangements in our internal drug
discovery programs. If we are unable to receive significant additional revenues
from our IDiscovery-TM- or internal drug discovery programs, we expect to incur
additional operating losses in the future and expect cumulative losses to
increase as our research and development efforts are expanded. Any revenues from
the achievement of milestones, royalties or license fees from the discovery,
development or sale of a commercial drug by a collaborator are not expected to
be material to our financial position for several years, if at all. We have been
unprofitable since our inception and, while we have set as an objective reaching
positive quarterly cash flow by the end of 2000, we are unable to predict when,
if ever, we will become profitable or give assurances that our positive cash
flow objective will be met.
As a result of factors affecting our business (including the importance
to us of collaborative arrangements and our inability to control the actions,
timing, funding or success of our current and potential collaborative partners),
our revenues may vary substantially from period to period. In addition, we have
limited experience marketing our first IDEA-TM- module, the absorption module,
which was launched in December 1999. We believe that the absorption module is
the first of its kind. As such, we anticipate that initial customers for the
IDEA-TM- absorption module will wish to perform extensive validation studies.
The sales cycle of such product is therefore unknown. Thus, our results for any
one period may not be indicative of the results that can be expected for any
other period.
NEW AND UNCERTAIN TECHNOLOGIES AND BUSINESS
Drug discovery methods based upon the IDEA-TM- predictive models and
combinatorial chemistry technologies, such as our Chem.Folio-Registered
Trademark- libraries, are new compared to traditional methods of drug discovery.
There can be no assurance that such methods will lead to the discovery or
development of commercial pharmaceutical products or that we will be able to
employ these or other methods of drug discovery successfully. Moreover, our
technology development programs, including certain of the IDEA-TM- modules, such
as metabolism, are at early stages of development or have not yet commenced, and
there can be no assurance that such technology programs will be developed,
employed or commercialized successfully, work efficiently or otherwise enhance
our ability to engage in the acceleration of the drug discovery process. The
efficacy of the IDEA-TM- predictive models, the types of combinatorial libraries
we are capable of offering, the nature of the compounds we are able to
synthesize, and the relative value of any other drug development technologies
that we may be able to provide will, in large part, determine the demand for our
drug discovery capabilities. An inability to offer competitive or commercially
viable predictive technologies or compound libraries or other drug discovery
technologies, or an inability to synthesize compounds that have actual or
potential utility, would have a material adverse effect on us. Failures in the
field of drug discovery, including predictive models and combinatorial
chemistry, could also have a material adverse effect on us.
EARLY STAGE OF PRODUCT DEVELOPMENT
Certain of our technology development programs, including our IDEA-TM-
predictive technologies, may not result in additional products or services that
can be utilized within the foreseeable future, if ever. Although the
5
<PAGE>
IDEA-TM- consortium has validated the IDEA-TM- predictive technologies,
potential customers have not commercially validated them. There can be no
assurances that these programs will be successfully completed or result in
products or services that are efficacious, perceived as valuable by
pharmaceutical partners or customers, useful in our internal development
programs or otherwise an enhancement to our ability to accelerate the drug
discovery process.
Our internal drug discovery programs, including our program with
respect to potential drug candidates for the treatment of diseases believed to
be mediated by the melanocortin receptor pathway, are at early stages. We only
intend to proceed with such internal drug discovery programs if, and to the
extent, collaborators fund them. The development of any lead compounds resulting
from our research and development programs, such as HP-228, will be under the
control of our partners. In addition, such compounds are not expected to be
commercially available for a number of years, if ever, even if any such
compounds are successfully developed and are proven to be safe and effective.
There can be no assurances that any of our product development efforts will be
successfully completed, that development arrangements with pharmaceutical
partners will be established on acceptable terms, if at all, that regulatory
approvals will be obtained or will be as broad as sought, that any candidate
products will be capable of being produced in commercial quantities at
reasonable cost, or that any products, if introduced, will achieve market
acceptance or profitability.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The commitment of substantial additional funds is required to continue
our development of the IDEA-TM- predictive models and to maintain the
competitiveness of our combinatorial chemistry technologies. Our future capital
requirements will depend on many factors, including, among others: (i) continued
scientific progress in our research and development programs, (ii) the costs
involved in developing and refining the IDEA-TM- predictive models, (iii) the
costs involved in further developing and sustaining internal combinatorial
chemistry, including the Chem.Folio-Registered Trademark- compound libraries,
(iv) the costs involved in developing additional drug discovery technologies,
(v) the revenues generated by the sale and/or licensing of our IDEA-TM-
predictive models and Chem.Folio-Registered Trademark- combinatorial libraries,
(vi) the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims, (vii) competing technological and market developments,
and (viii) changes in our existing collaborations. While we have set an
objective of reaching positive quarterly cash flow by the end of 2000, we cannot
provide assurances that such objective will be met. In the event that we are
unable to meet this goal, assuming a level of Chem.Folio-Registered Trademark-
compound library revenues for the next twelve months that is comparable to
Chem.Folio-Registered Trademark- compound library revenues in fiscal 1999 (a
portion of which is covered by existing product sales agreements) we anticipate
that our existing capital resources, funding under an existing research and
development collaboration, and our currently available property and equipment
financing and line of credit, will be sufficient to fund our current and planned
operations through the next 12 months. The failure to materialize of any one or
more of its anticipated sources of revenue could have a material adverse impact
on us.
We intend to consider the acquisition or licensing of technologies that
will add value to our iDiscovery-TM- technologies. We anticipate that we will be
required to raise additional capital over a period of several years in order to
acquire such complementary technologies. Such capital may be raised through
additional public or private financings, as well as collaborative arrangements,
borrowings and other available sources. There can be no assurance that
additional financing will be available on acceptable terms, if at all. If
adequate funds are not available, we may be required to delay, reduce the scope
of, or eliminate our acquisition activities, which could have a material adverse
effect on us.
DEPENDENCE ON COLLABORATORS
Our strategy for the utilization and development of our drug discovery
technologies, such as the iDiscovery-TM- technologies depends, at least in part,
upon the formation of collaborations and arrangements with corporate
collaborators, licensors, licensees and others. We intend to proceed with our
internal drug discovery programs and the development, clinical testing,
manufacturing and commercialization of any lead compounds only if collaborators
are available to fully fund such programs. There may only be a limited number of
pharmaceutical and biotechnology companies that would potentially collaborate
with us. Historically, pharmaceutical and biotechnology companies have conducted
lead compound identification and optimization within their own research
departments, due to the highly proprietary nature of the activities being
conducted, the central importance of these activities to their drug discovery
and development efforts and the desire to obtain maximum patent and other
6
<PAGE>
proprietary protection on the results of their internal programs. Pharmaceutical
and biotechnology companies must be convinced that our drug discovery
technologies and expertise justify outsourcing these programs to us. The amount
and timing of resources that current and future collaborators, if any, devote to
collaborations with us are not within our control. There can be no assurance
that such collaborators will perform their obligations as expected or that we
will derive any additional revenue from such arrangements. Because our
arrangements with our collaborators may entail the provision of identical or
similar libraries, or compound technologies or information to multiple parties,
there can be no assurance that conflicts will not arise between collaborators as
to proprietary rights to particular libraries or particular compounds in our
libraries. Moreover, our collaborations and licenses may be terminated under
certain circumstances by the other parties thereto, which terminations could
result in us relinquishing rights to products, if any, developed jointly with
its collaborators. Any such conflicts or terminations could have a material and
adverse effect on us.
There can be no assurance that (i) our present or any future
collaborators will not pursue their existing or alternative technologies in
preference to ours, (ii) any product will be developed and marketed as a result
of such collaborations or (iii) we will be able to negotiate additional
collaborative arrangements in the future on acceptable terms, if at all, or that
such current or future collaborative arrangements will be successful. To the
extent that we choose not to or are unable to establish such arrangements, (i)
it will require substantially greater capital to undertake the research,
development and marketing of products, such as our IDEA-TM- predictive models
and Chem.Folio-Registered Trademark- libraries, at our own expense and (ii) in
the case of our internal drug discovery programs, we will not pursue the
continuation of such programs. In addition, we may encounter significant delays
in developing compounds or find that the development, manufacture or sale of our
proposed products is materially and adversely affected by the absence of such
collaborative agreements.
COMPETITION
We are engaged in a highly competitive and rapidly changing industry.
Our IDEA-TM- predictive models compete not only with the products of other
predictive modeling companies, but also companies employing more mature and
established technologies, including cell-based and animal testing technologies.
Our combinatorial chemistry business competes with other combinatorial chemistry
companies and companies that may utilize other technologies for the same
objectives. Competition from fully integrated pharmaceutical companies,
biotechnology companies and other drug discovery companies is intense and is
expected to increase. Many pharmaceutical and biotechnology companies, which
represent the largest potential market for our predictive models, combinatorial
chemistry and other drug discovery technologies, have developed or are
developing internal predictive modeling and/or combinatorial chemistry programs
or have entered into collaborations with companies conducting such programs.
Many of these pharmaceutical and biotechnology companies, as compared with us,
have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical and clinical testing, obtaining
regulatory approvals and marketing. Smaller companies may also prove to be
significant competitors, particularly through collaborative arrangements with
large pharmaceutical and established biotechnology companies. Academic
institutions, governmental agencies and other public and private research
organizations also conduct research, seek patent protection and establish
collaborative arrangements for products and clinical development and marketing
which may be competitive with our efforts. These companies and institutions
compete with us in recruiting and retaining highly qualified management,
scientific, software development and other personnel. There is also competition
for access to novel pharmacophores, and any inability by us to develop novel
pharmacophores would have a material adverse effect on us. There can be no
assurance that our competitors will not develop more effective or more
affordable technology or products, or achieve earlier product development and
commercialization than us, thus rendering our technologies and/or products
obsolete, non-competitive or uneconomical.
A number of companies have indicated that they have developed or are
developing predictive models. We are aware of one company that has launched a
product that might be competitive with the IDEA-TM- predictive models. We
believe that the principal competitive factors affecting our market in the
predictive modeling industry include performance, price, ease of use, product
reputation, patent position, quality, customer service and support,
effectiveness of sales and marketing efforts and company reputation. Although we
believe that we currently compete favorably with respect to such factors, there
can be no assurance that we can maintain such a position against current or
potential competitors in the predictive modeling industry.
7
<PAGE>
In combinatorial chemistry and other drug discovery technologies, we
face competition based on a number of factors, including price, size, diversity
of libraries, ease of use of libraries, purity, target specificity, speed and
costs of identifying and optimizing potential lead compounds, access to novel
pharmacophores, patent position and the ability to provide drug discovery
technologies desired by or useful to potential partners. In view of the
competitive nature of our industry, we expect to face continued and substantial
downward pressure on the prices that we are able to charge for our products and
services.
In addition, products and therapies that will compete directly with any
compounds that we seek to develop (such as HP-228), or that our collaborative
partners may seek to develop, currently exist or are being developed. In product
development and marketing, we and our collaborative partners will face
competition based on product efficacy and safety, the timing and scope of
regulatory approvals, availability of supply, marketing and sales capability,
reimbursement coverage, price and patent position.
PATENTS AND PROPRIETARY TECHNOLOGY
Our success will depend in part on our ability to obtain patents for
our methodologies and the compounds and other products, if any, resulting from
the application of such methodologies, defend patents once obtained, maintain
trade secrets and operate without infringing upon the proprietary rights of
others, both in the U.S. and in foreign countries. The patent positions of
pharmaceutical and biotechnology companies, and companies utilizing drug
discovery technologies such as predictive modeling and combinatorial chemistry
(including us), are uncertain and involve complex legal and factual questions
for which important legal principles are largely unresolved. There can be no
assurance that we will develop or obtain the rights to products or processes
that are patentable, that patents will issue from any of the pending
applications or that claims allowed will be sufficient to protect our
technologies or products. Pending patent applications for which rights are
uncertain include applications being prosecuted by us with respect to our
IDEA-TM- predictive technologies, combinatorial chemistry libraries and certain
uses for HP-228. There can be no assurance that our patents of, or with respect
to which rights have been licensed to us, will not be challenged, invalidated or
circumvented, or that the rights granted or licensed to us will provide us with
proprietary protection or competitive advantages. Such patents include a U.S.
patent for the Tea Bag technology, which is licensed to us, and our U.S. patent
for the composition of matter of HP-228 and certain uses of HP-228. The U.S.
patent on the Tea Bag technology, that we believe is important to our business,
expires in 2003. Competitors (some of which have, or are affiliated with
companies having, substantially greater resources than us) may have filed
applications, may have been issued patents or may obtain additional patents and
proprietary rights to or the use of certain methodologies relating to products
or processes competitive with ours or which could block our efforts to obtain
patents or conduct our business.
A number of pharmaceutical companies, biotechnology companies,
universities and research institutions have filed patent applications or
received patents in the fields of combinatorial chemistry and other drug
discovery technologies and with respect to products and therapies that may have
potential uses which are similar to the our current research and development
areas. Our commercial success will depend in part on not infringing patents and
not breaching the patent and know-how licenses upon which any of our
technologies or compounds is based or having such licenses breached or
terminated by others. Certain patent applications or patents may conflict with
our patent applications and patents either by claiming the same methods or
compounds or by claiming methods or compounds that would dominate ours. A U.S.
patent application is maintained under conditions of confidentiality while the
application is pending in the U.S. Patent and Trademark Office ("PTO") so that
we cannot determine the inventions being claimed in pending patent applications
filed by our competitors in the PTO. Any such conflicts could result in a
significant reduction of the coverage of our issued or licensed patents and our
ability to obtain issuance of significant patent protection from our
applications. In addition, if patents are issued to other companies that contain
competitive or conflicting claims, we may be required to obtain licenses to
these patents or to develop or obtain alternative technology. If any license is
required, there can be no assurance that we will be able to obtain any such
license on commercially favorable terms, if at all. If such licenses are not
obtained, we could be prevented from pursuing the development or
commercialization of our technologies or potential products. Our breach of an
existing license or failure to obtain a license to any technology that we may
need to commercialize our technologies or potential products may have a material
adverse impact on us.
Litigation, which could result in substantial costs to us, may also be
necessary to enforce any patents issued or licensed to us or to determine the
scope and validity of third party proprietary rights. There can be no assurance
8
<PAGE>
that our issued or licensed patents would be held valid by a court of competent
jurisdiction or that an alleged infringer would be found to be infringing.
Further, with respect to certain technology in-licensed by us, we do not have
the right to control any litigation with respect to such technology. An adverse
outcome could subject us to significant liabilities to third parties, require
disputed rights to be licensed from third parties or require us to cease using
such technology, any of which could have a material adverse effect on us.
Moreover, merely the uncertainties resulting from commencement and continuation
of any technology-related litigation could have a material adverse effect on our
ability to compete in the marketplace or raise capital, pending resolution of
the disputed matters. If our competitors prepare and file patent applications in
the U.S. that claim technology also claimed by us, we may have to participate in
interference proceedings declared by the PTO to determine the priority of the
invention, which could result in substantial cost to us, even if the outcome is
favorable to us. An adverse outcome could subject us to significant liabilities
to third parties and require us to license disputed rights from third parties or
discontinue using the technology.
We also rely on trade secrets to protect technology, especially where
patent protection is not believed to be appropriate or obtainable. We attempt to
protect our proprietary technology and processes in part through confidentiality
agreements with our employees, consultants and certain contractors. There can be
no assurance, however, that these agreements will not be breached or terminated,
that we would have adequate remedies for any breach, or that our trade secrets
will not otherwise become known or be independently discovered by competitors.
We, as well as our consultants and research collaborators in their work for us,
use intellectual property owned by others. Disputes may arise as to the rights
in technology resulting from collaborations and in the related know-how and
inventions. We rely on certain technologies to which we do not have exclusive
rights or which may not be patentable or proprietary and thus may be available
to competitors.
CACO-2 CELL LICENSES
We presently receive a limited amount of revenues from the sale by us
of non-exclusive Caco-2 cell licenses. Although we believe that the Caco-2 cell
line is currently the most widely used cell line for in-vitro estimation of the
oral absorption of compounds, there can be no assurances that third parties will
continue to use such cells or seek to license related rights or acquire Caco-2
cells or any derivatives from us. Furthermore, we are aware that certain third
parties are claiming the right to use Caco-2 cells without a license from us.
The enforcement of our rights would require litigation.
MANAGEMENT AND EMPLOYEES
Our success will depend upon the effective management of our drug
discovery technologies and capabilities and current and prospective
collaborative relationships, including maintaining confidentiality of the
research being provided for collaborators as well as the maintenance and further
development of our technologies in our research and development programs. We are
highly dependent on the principal members of our management, scientific and
software development staff, the loss of whose services might adversely impact
the achievement of our goals. To further develop our technologies (including our
IDEA-TM- predictive models and combinatorial chemistry), and to pursue our
product development plans, we will be required to hire additional qualified
scientific personnel to perform research and development, as well as personnel
with software development expertise. These requirements, as well as the
management of current and prospective collaborative arrangements, are expected
to demand the addition of management personnel and the development of additional
expertise by existing management personnel. There is currently a shortage of
skilled candidates, which is likely to continue. As a result, competition for
skilled personnel by pharmaceutical, biotechnology and software companies,
universities, and other research institutions is intense, and the turnover rate
can be high. Failure to recruit and retain personnel could impair our ability to
develop products and services and to pursue additional collaborations.
GOVERNMENT REGULATION
The manufacturing and marketing of certain products developed by our
collaborators or us will be subject to regulation for safety and efficacy by
governmental authorities in the U.S. and other countries. In the U.S.,
pharmaceuticals are subject to rigorous regulation by the Food and Drug
Administration ("FDA"). The Federal Food, Drug and Cosmetic Act and the Public
Health Service Act govern the testing, manufacture, safety, efficacy, labeling,
storage, record keeping, approval, advertising and promotion of pharmaceutical
products. Product
9
<PAGE>
development and approval within this regulatory framework takes a number of
years and involves the expenditure of substantial resources.
The steps required before a pharmaceutical agent may be marketed in the
U.S. include (i) preclinical laboratory and animal tests, (ii) submission to the
FDA of an Investigational New Drug application ("IND"), which must be deemed
acceptable before human clinical trials may commence, (iii) adequate and
well-controlled human clinical trials to establish the safety and efficacy of
the drug, (iv) submission of a New Drug Application ("NDA") or Product License
Application ("PLA") to the FDA and (v) FDA approval of the NDA or PLA prior to
any commercial sale or shipment of the drug. In addition to obtaining FDA
approval for each product, each domestic drug manufacturing facility is subject
to inspections every two years by the FDA and must comply with current Good
Laboratory Practices and Good Manufacturing Practices ("GMP"). To supply
products for use in the U.S., foreign manufacturing facilities also must comply
with GMP and are subject to periodic inspection by the FDA or by regulatory
authorities in such countries under reciprocal agreements with the FDA.
Preclinical tests include laboratory evaluation of product chemistry
and animal studies to assess the safety and efficacy of the product and its
formulation. The results of the preclinical tests are submitted to the FDA as
part of an IND and, unless the FDA objects, the company submitting the IND may
start clinical studies 30 days following its submission to the FDA.
Clinical trials involve the administration of the pharmaceutical
product to volunteers or to patients identified as having the condition for
which the pharmaceutical is being tested. The pharmaceutical is administered
under the supervision of a qualified principal investigator. Clinical trials are
conducted in accordance with protocols previously submitted to the FDA as part
of the IND which detail the objectives of the study, the parameters used to
monitor safety and the efficacy criteria evaluated. Each clinical study is
conducted under the auspices of an independent Institutional Review Board
("IRB") at the institution at which the study is conducted. The IRB considers,
among other things, ethical factors, the safety of the human subjects and the
possible liability risk for the institution.
Clinical trials are typically conducted in three sequential phases that
may overlap. Phase I consists of the initial introduction of the pharmaceutical
into human volunteers, and the emphasis is on testing for safety (adverse
effects), dosage tolerance, absorption, metabolism, distribution, excretion and
clinical pharmacology. Phase II involves studies in a limited patient population
to determine the efficacy of the pharmaceutical for specific targeted
indications, to determine dosage tolerance, optimal dosage and dosing frequency,
and to identify possible adverse side effects and safety risks. Once a compound
is found to be effective and to have an acceptable safety profile in Phase II
evaluations, Phase III trials are undertaken to further evaluate both clinical
efficacy and safety within an expanded patient population at multiple clinical
study sites. The FDA reviews both the clinical plans and results of the trials
and may order suspension of the trials at any time if there are significant
safety issues.
Results of the preclinical and clinical trials are submitted to the FDA
in the form of an NDA or PLA for marketing approval. The testing and approval
process is likely to require substantial time and effort, and there can be no
assurance that any approval will be granted on a timely basis, if at all. The
approval process is affected by a number of factors, including severity of the
disease, availability of alternative treatments, and risks and benefits
demonstrated in clinical trials. Additional animal studies or clinical trials
may be requested during the FDA review process and may delay marketing approval.
After FDA approval for the initial indications, further clinical trials are
necessary to gain approval for use of the product for any additional
indications. The FDA may also require post-marketing testing to monitor for
adverse effects, which can involve significant expense. Failure to comply with
applicable regulatory requirements after obtaining regulatory approval can,
among other things, result in the suspension of regulatory approval, as well as
possible civil and criminal sanctions. In addition, changes in regulations could
have a material adverse effect on this industry.
For marketing outside the U.S., we and our collaborators will also be
subject to foreign regulatory requirements governing human clinical trials and
marketing approval for pharmaceutical products. The requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary
widely from country to country.
10
<PAGE>
With respect to any potential products that enter clinical trials (such
as HP-228), there can be no assurance that our collaborators will be permitted
to continue or undertake new human clinical testing of such potential products,
or, if permitted, that such potential products will be demonstrated to be safe
and efficacious. Our lead compounds, or those of our collaborators, may prove to
have undesirable and unintended side effects or other characteristics that may
prevent or limit their commercial use. In addition, there can be no assurance
that any of our potential products or those of our collaborators will ultimately
obtain FDA or foreign marketing approval for any indication, that an approved
compound will be capable of being produced in commercial quantities at
reasonable cost or that any such compound will be successfully marketed.
Furthermore, even if approval is ultimately obtained, delays in the approval
process could have a material adverse effect on us.
In addition to regulations enforced by the FDA, we are also subject to
other regulation, including regulation under the Occupational Safety and Health
Act, the Environmental Protection Act, the Toxic Substances Control Act, the
Resource Conservation and Recovery Act, regulations promulgated by the United
States Department of Agriculture, and other federal, state and local laws and
regulations.
MANUFACTURING
We have no manufacturing facilities for our pharmaceutical products and
will need to rely on our collaborators or contract manufacturers to produce
these items (including any compounds for clinical trials and commercialization).
Our products under development have never been manufactured on a commercial
scale and there can be no assurance that such products can be manufactured at a
cost or in quantities necessary to make them commercially viable. Moreover,
contract manufacturers must adhere to GMP regulations enforced by the FDA
through its facilities inspection program. If these facilities cannot pass a
pre-approval plant inspection, the FDA pre-market approval of the products will
not be granted.
RISK OF PRODUCT LIABILITY; POTENTIAL UNAVAILABILITY OF INSURANCE
Our business may expose us to potential product liability risks that
are inherent in the testing, manufacturing and marketing of human therapeutic
products and other facets of the drug development process. We do have product
liability insurance, but there can be no assurance that we will be able to
maintain such insurance on acceptable terms or that this insurance will provide
adequate coverage against potential liabilities. We also have clinical trial
liability insurance, but there can be no assurance that we will be able to
maintain such insurance for any of our clinical trials or that such insurance
will provide adequate coverage against potential liabilities.
POTENTIAL LIABILITY REGARDING HAZARDOUS MATERIALS
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. We are subject
to federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of such materials and certain waste products. The
risk of accidental contamination or injury from these materials cannot be
completely eliminated. In the event of such an accident, we could be held liable
for any damages that result and any such liability could exceed our resources.
In addition, there can be no assurance that we will not be required to incur
significant costs to comply with environmental laws and regulations in the
future.
POSSIBLE VOLATILITY OF STOCK PRICE
The market prices for securities of life sciences companies have been
highly volatile and the market has experienced significant price and volume
fluctuations, some of which are unrelated to the operating performance of
particular companies. Announcements of technological innovations or new
commercial products or failures of potential products by us, our collaborators
or our competitors, developments in our relationships with current or future
collaborative partners, developments concerning proprietary rights, including
patents and litigation matters, publicity regarding actual or potential results
with respect to compounds under development by us or our collaborators,
regulatory developments in both the U.S. and foreign countries, public concern
as to the efficacy of predictive models, combinatorial chemistry or other new
drug discovery technologies, changes in reimbursement policies, general market
conditions, as well as quarterly fluctuations in our revenues and financial
results and other
11
<PAGE>
factors, may have a significant impact on the market price of our Common Stock.
In particular, the realization of any of the risks described in these "Risk
Factors" may have a material adverse impact on such market price.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND DELAWARE LAW
Our Amended and Restated Certificate of Incorporation (the "Certificate
of Incorporation") authorizes the Board of Directors to issue, without
stockholder approval, 5,000,000 shares of preferred stock with voting,
conversion and other rights and preferences that could adversely affect the
voting power and other rights of the holders of our Common Stock. Although we
have no current plans to issue any shares of preferred stock, the issuance of
preferred stock or of rights to purchase preferred stock could be used to
discourage an unsolicited acquisition proposal. In addition, the possible
issuance of preferred stock could discourage a proxy contest, make more
difficult the acquisition of a substantial block of our Common Stock or limit
the price that investors might be willing to pay in the future for shares of our
Common Stock. Our Certificate of Incorporation provides for staggered terms for
the members of the Board of Directors. A staggered Board of Directors and
certain provisions of our by-laws, Certificate of Incorporation and Delaware law
applicable to us could delay or make more difficult a merger, tender offer or
proxy contest involving us. In addition, we are subject to Section 203 of the
General Corporate Law of Delaware which, subject to certain exceptions,
restricts certain transactions and business combinations between a corporation
and a stockholder owning 15% or more of the corporation's outstanding voting
stock (an "interested stockholder") for a period of three years from the date
the stockholder becomes an interested stockholder. These provisions, and certain
other provisions of the Certificate of Incorporation and our by-laws, may have
the effect of delaying or preventing a change of control of the Company without
action by the stockholders and, therefore, could adversely affect the price of
our Common Stock.
UNCERTAINTY OF PHARMACEUTICAL PRICING AND HEALTH CARE REFORM
We expect that significantly all of our revenues in the foreseeable
future will be derived from products and services provided to the pharmaceutical
and biotechnology industries. Accordingly, our success in the foreseeable future
is directly dependent upon the success of the companies within those industries
and their continued demand for our products and services. The levels of revenues
and profitability of pharmaceutical companies may be affected by the continuing
efforts of governmental and third party payors to contain or reduce the costs of
health care through various means and the initiatives of third party payors with
respect to the availability of reimbursement. For example, in certain foreign
markets, pricing or profitability of prescription pharmaceuticals is subject to
governmental control. In the U.S., there have been, and we expect that there
will continue to be, a number of federal and state proposals to implement
similar governmental control. It is uncertain what legislative proposals may be
adopted or what actions federal, state or private payors for health care goods
and services may take in response to any health care reform proposals or
legislation. To the extent that such proposals or reforms have a material
adverse effect on the business, financial condition and profitability of
pharmaceutical or biotechnology companies that are actual or prospective
customers for our products and services, our market value, access to financing,
business, financial condition and results of operations could be materially and
adversely affected.
12
<PAGE>
PROCEEDS FROM THE OFFERING
We will not receive any proceeds from the sale of the shares by the
selling stockholders. All proceeds from the sale of the shares will be for the
account of the selling stockholders, as described below.
See "Selling Stockholders" and "Plan of Distribution" below.
13
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information as of May 1, 2000 regarding
the beneficial ownership of our common stock by each of the selling stockholders
and the shares being offered by the selling stockholders. Information with
respect to beneficial ownership is based upon information obtained from the
selling stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR
TO OFFERING NUMBER OF SHARES
------------------------------
SELLING STOCKHOLDERS NUMBER PERCENT BEING OFFERED
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BayStar Capital, L.P. 300,000 1.07 300,000
BayStar International, LTD 200,000 * 200,000
Cypress VI Partners 33,333 * 33,333
EGM Medical Technology Fund LP 199,667 * 109,667
EGM Medical Technology Offshore Fund 135,600 * 72,000
First Security Van Kasper (1) 220,000 * 220,000
Jackson Square Partners, L.P. 181,667 * 181,667
Narragansett I, LP 30,934 * 30,934
Narragansett Offshore Ltd. 22,400 * 22,400
Paul M. Ginsburg 33,333 * 33,333
Pequot Scout Fund, L.P. 300,000 1.07 300,000
Special Situations Private Equity Fund, L.P. 300,000 1.07 300,000
The Timken Living Trust U/A/D 9/14/99 83,334 * 83,334
T. Rowe Price Associates, Inc.(2) 2,089,600 7.48 2,000,000(2)
</TABLE>
* Less than 1%
(1) Represents the number of shares of our common stock issuable upon the
exercise of a warrant granted to First Security Van Kasper for financial
services it provided in connection with the Equity Financing as herein
defined.
(2) Includes 1,333,334 shares held by T. Rowe Price New Horizons Fund, Inc.,
440,666 shares held by T. Rowe Price Health Sciences Fund, Inc. and 226,000
shares held by Green Line Mutual Funds - Green Line Health Sciences Fund.
On April 4 and April 11, 2000, we agreed to sell 3,666,668 shares of our common
stock (the "Equity Financing") and grant a warrant to First Security Van Kasper,
the placement agent for the Equity Financing, to purchase up to 220,000
additional shares of our common stock. In connection with this Equity Financing,
we agreed to file a registration statement with the SEC covering the resale of
the shares issued or issuable to each selling shareholder and agreed to
indemnify each selling shareholder against claims made against them arising out
of among other things, statements made in this registration statement. We agreed
to cause this registration statement to remain effective until the earliest (a)
the date on which all the common stock has been re-sold (b) two years after
April 11, 2000, or (c) the date on which each selling stockholder's shares could
be sold in a single three-month period pursuant to Rule 144 of the Securities
Act of 1933 (the "Securities Act").
14
<PAGE>
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold at
various times by the selling stockholders. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The shares may be sold by or for the account of the selling
stockholders in transactions on the Nasdaq National Market, the over-the-counter
market, or otherwise. These sales may be made at fixed prices, at market prices
prevailing at the time of sale, at prices related to prevailing market prices,
or at negotiated prices. The shares may be sold by means of one or more of the
following methods:
- a block trade in which the broker-dealer so engaged will attempt
to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by that
broker-dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions in which the broker solicits
purchasers;
- in connection with short sales, in which the shares are
redelivered to close out short positions;
- in connection with the loan or pledge of shares registered
hereunder to a broker-dealer, and the sale of the shares so
loaned or the sale of the shares so pledged upon a default;
- in connection with the writing of non-traded and exchange-traded
call options, in hedge transactions and in settlement of other
transactions in standardized or over-the-counter options;
- privately negotiated transactions; or
- in a combination of any of the above methods.
In effecting sales, broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in resales. Broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the selling stockholders or from the purchasers of the shares or from both.
This compensation may exceed customary commissions.
The selling stockholders and any broker-dealers, agents or underwriters
that participate with the selling stockholders in the distribution of the shares
may be deemed to be "underwriters" within the meaning of the Securities Act. Any
commissions paid or any discounts or concessions allowed to any of those
persons, and any profits received on the resale of the shares purchased by them,
may be deemed to be underwriting commissions or discounts under the Securities
Act.
We have agreed to bear all expenses of registration of the shares
(other than fees and expenses, if any, of legal counsel or other advisors to the
selling stockholders). Any commissions, discounts, concessions or other fees, if
any, payable to broker-dealers in connection with any sale of the shares will be
borne by the selling stockholders selling those shares.
LEGAL MATTERS
Certain legal matters with respect to the validity of common stock
offered by this prospectus are being passed upon for us by Pillsbury Madison &
Sutro LLP, San Francisco, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements included in our Annual Report on Form 10-K
for the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the
registration statement. Our consolidated financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and
other information with the Securities and Exchange Commission. You may read and
copy any materials we file with the Commission at the Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Commission at 1-800-SEC-0330 for more information on its public reference
rooms. The Commission also maintains an Internet Website at http://www.sec.gov
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission.
We have filed with the Commission a registration statement (which
contains this prospectus) on Form S-3 under the Securities Act of 1933. The
registration statement relates to the common stock offered by the selling
stockholders. This prospectus does not contain all of the information set forth
in the registration statement and the exhibits and schedules to the registration
statement. Please refer to the registration statement and its exhibits and
schedules for further information with respect to us and our common stock.
Statements contained in this prospectus as to the contents of any contract or
other document are not necessarily complete and, in each instance, we refer you
to the copy of that contract or document filed as an exhibit to the registration
statement. You may read and obtain a copy of the registration statement and its
exhibits and schedules from the Commission, as described in the preceding
paragraph.
DOCUMENTS INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be a part of this prospectus, and later information that we
file with the Commission will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the Commission under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until this offering is completed.
The documents we incorporate by reference are:
- Our Annual Report on Form 10-K for the year ended December 31,
1999.
- The description of our common stock contained in our registration
statement on Form 8-A filed under the Exchange Act March 13,
1996.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and number:
Cynthia Reindal
Associate Corporate Communications and Investor Relations
Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, California 92121
Telephone (858) 410-6500
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered hereby. Normal commission expenses and brokerage fees are payable
individually by the selling stockholders. All amounts are estimated except the
Commission registration fee and the Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT
<S> <C>
SEC registration fee....................................... $ 3,961.00
Nasdaq National Market listing fee......................... $ 17,500.00
Accounting fees and expenses............................... $ 10,000.00
Legal fees and expenses.................................... $ 20,000.00
Miscellaneous fees and expenses............................ $ 25,000.00
Total.................................... $ 76,461.00
============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our charter documents provide for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the Delaware General Corporation Law. The
Registrant has also entered into agreements with its directors and officers that
will require the Registrant, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as
directors or officers to the fullest extent not prohibited by law.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------ -----------------------
<S> <C>
4.1 Subscription Agreement by and among Trega and certain
Investors, dated as of April 4, 2000.
4.2 Warrant, dated April 11, 2000, for common stock of
Trega issued to First Security Van Kasper.
5.1 Opinion of Pillsbury Madison & Sutro LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Pillsbury Madison & Sutro LLP (included
in its opinion filed as Exhibit 5.1 to this
Registration Statement).
24.1 Power of Attorney (see page II-3).
</TABLE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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
II-1
<PAGE>
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel or 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 undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on May 8, 2000.
TREGA BIOSCIENCES, INC.
/s/ Michael G. Grey
-------------------------------------
Michael G. Grey
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael G. Grey and Gerard A. Wills, his
or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments, including
post-effective amendments, to this Registration Statement, and to file the same,
with exhibits thereto and other 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, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ Robert S. Whitehead
- ----------------------------
Robert S. Whitehead Chairman of the Board of Directors May 8, 2000
/s/ Michael G. Grey
- ----------------------------
Michael G. Grey Director, President and Chief Executive May 8, 2000
Officer
/s/ James C. Blair, Ph.D.
- ----------------------------
James C. Blair, Ph.D. Director May 8, 2000
/s/ Bruce L.A. Carter, Ph.D.
- ----------------------------
Bruce L.A. Carter, Ph.D. Director May 8, 2000
/s/ Lawrence D. Muschek, Ph.D.
- ----------------------------
Lawrence D. Muschek, Ph.D. Director May 8, 2000
/s/ Harvey S. Sadow, Ph.D.
- ----------------------------
Harvey S. Sadow, Ph.D. Director May 8, 2000
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ Ronald R. Tuttle, Ph.D.
- ----------------------------
Ronald R. Tuttle, Ph.D. Director May 8, 2000
/s/ Myra N. Williams, Ph.D.
- ----------------------------
Myra N. Williams, Ph.D. Director May 8, 2000
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------
<S> <C>
4.1 Subscription Agreement by and among Trega and certain
Investors, dated as of April 4, 2000.
4.2 Warrant, dated April 11, 2000, for common stock of Trega
issued to First Security Van Kasper.
5.1 Opinion of Pillsbury Madison & Sutro LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Pillsbury Madison & Sutro LLP (included in its
opinion filed as Exhibit 5.1 to the Registration Statement).
24.1 Power of Attorney (see page II-3).
</TABLE>
<PAGE>
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is made and entered into
as of April 4, 2000 by and among Trega Biosciences, Inc., a Delaware corporation
(the "Company"), and those parties listed on the signature page hereof as
"Investors" (who are referred to individually as an "Investor" and collectively
as the "Investors").
In consideration of the above recitals and the mutual covenants made
herein, the parties hereby agree as follows:
1. SALE OF COMMON STOCK; CLOSING; DELIVERY.
(a) PURCHASE AND SALE OF COMMON STOCK. Subject to the terms
and conditions hereof, the Company will issue and sell to each Investor, and
each Investor will purchase from the Company, at the Closing (as defined below)
the number of shares ("Shares") of common stock, $0.001 par value, ("Common
Stock") of the Company, set forth opposite each Investor's name on Exhibit A.
The Company is offering for sale on a "best efforts" basis, a minimum of
2,500,000 Shares at $3.00 a Share for a purchase price of $7,500,000 (the
"Minimum Offering Amount"), up to a maximum of 3,900,000 Shares at $3.00 a share
for a purchase price of $11,700,000 (the "Maximum Offering Amount").
(b) ESCROW. All funds received from investors and accepted by
the Company will be deposited into an escrow account with Imperial Bank (the
"Escrow Account"). The escrow agreement provides that funds may be released from
the Escrow Account only upon the satisfaction of certain conditions, including
the deposit of at least the Minimum Offering Amount in the Escrow Account on or
before March 31, 2000; (the "Initial Closing") provided, however, that the
Initial Closing may be extended to April 7, 2000 by the Company, and may be
further extended to April 14, 2000 by the mutual consent of First Security Van
Kasper (the "Placement Agent") and the Company. All payments received by the
Escrow Agent prior to the Initial Closing shall be held in a trust account for
the benefit of the Investors pending Initial Closing.
(c) CLOSING. Subject to the deposit of the Minimum Offering
Amount in the Escrow Account, the Initial Closing shall take place at the
offices of counsel for the Company at Pillsbury Madison & Sutro, 50 Fremont
Street, San Francisco, California at 10:00 a.m., PDT, or such other time(s) and
place(s) as the Company and the Placement Agent shall agree; provided, however,
that the Initial Closing shall take place on or before April 7, 2000, unless
extended by mutual consent of the Company and the Placement Agent to no later
than April 14, 2000. In the event that additional funds are raised subsequent to
the Initial Closing, one or more later closings may be held until the Maximum
Offering Amount of Shares is sold or until April 14, 2000. The Initial Closing
and the date any subsequent closings are hereinafter referred to as the
"Closing".
(d) DELIVERY. Subject to the terms and conditions of this
Agreement, at each Closing, the Company will deliver to each Investor a stock
certificate representing the
-1-
<PAGE>
Shares to be purchased by such Investor against payment of the purchase price
therefor by a check, payable to the order of the Company, or by wire transfer of
immediately available funds submitted to the Escrow Account in accordance with
instructions to be provided to the Investors by the Placement Agent.
2. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor
represents and warrants, severally, to the Company that:
(a) AUTHORIZATION. This Agreement constitutes the valid and
legally binding obligation of such Investor, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally and
equitable remedies, and except as indemnity provisions in the enforcement of
Section 4 of this Agreement (relating to registration rights) may be limited by
law, and such Investor (if an individual) is over 18 years of age, and such
Investor has full legal capacity, power and authority to enter into and be bound
by this Agreement.
(b) PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Such Investor is
purchasing the Shares for investment purposes only and not with a view to, or
for sale in connection with, a distribution of the Shares within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). Such Investor has
no present intention of selling or otherwise disposing of all or any portion of
the Shares.
(c) ACCESS TO INFORMATION. Such Investor has had an
opportunity to ask questions of the Company's representatives concerning the
Company, its present and prospective business, assets, liabilities and financial
condition that such Investor reasonably considers important in making the
decision to purchase the Shares.
(d) UNDERSTANDING OF RISKS. Such Investor is fully aware of:
(i) the highly speculative nature of the investment in the Shares; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares, and the
restrictions on the transferability of the Shares, (e.g., that such Investor may
not be able to sell or dispose of the Shares, or use them as collateral for
loans); and (iv) the tax consequences of investment in the Shares.
(e) INVESTOR'S QUALIFICATIONS. Such Investor is an
"accredited" investor as defined under Rule 501 of Regulation D promulgated
under the Securities Act. Such Investor is aware of the general business and
financial circumstances of the Company and, by reason of such Investor's
business or financial experience, such Investor is capable of evaluating the
merits and risks of this investment and is financially capable of bearing a
total loss of this investment.
(f) COMPLIANCE WITH SECURITIES LAWS. Such Investor understands
and acknowledges that, in reliance upon the representations and warranties made
by such Investor herein, the Shares are not being registered with the U.S.
Securities and Exchange Commission ("SEC" or "Commission") under the Securities
Act, but instead are being issued under an exemption from the registration
requirements of the Securities Act.
-2-
<PAGE>
(g) RESTRICTIONS ON TRANSFER. Such Investor understands that
such Investor may not transfer any of the Shares, unless such Shares, are
registered under the Securities Act unless, in the opinion of counsel to the
Company, an exemption from such registration requirement is available. Such
Investor understands that only the Company may file a registration statement
with the SEC. Such Investor has also been advised that an exemption from
registration may not be available or may not permit such Investor to transfer
all or any of the Shares in the amounts or at the times proposed by such
Investor.
(h) RULE 144. In addition, such Investor has been advised that
SEC Rule 144 ("Rule 144") promulgated under the Securities Act, which permits
certain limited sales of unregistered securities is not presently available due
to the holding periods required thereunder and, in any event, requires that the
Shares be held for a minimum of one year, and in certain cases two years, after
they have been purchased and paid for (within the meaning of Rule 144), before
they may be resold under Rule 144. Such Investor understands that Rule 144 may
indefinitely restrict transfer of the Shares if such Investor is an "affiliate"
of the Company and "current public information" about the Company (as defined in
Rule 144) is not publicly available.
(i) LEGENDS AND STOP-TRANSFER ORDERS. Such Investor
understands that certificates or other instruments representing any of the
Shares acquired by such Investor may bear legends substantially similar to the
following, in addition to any other legends required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. 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
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 UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT.
In order to ensure and enforce compliance with the restrictions imposed
by applicable law and those referred to in the foregoing legend, or elsewhere
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing the Shares, or if the Company transfers its own securities, it may
make appropriate notations to the same effect in the Company's records. Any
legend endorsed on a certificate pursuant to this Subsection (i) and the related
stop transfer instructions with respect to such securities shall be removed, and
the Company shall issue a certificate without such legend to the holder thereof,
if such securities are registered
-3-
<PAGE>
under the Securities Act and a prospectus meeting the requirements of Section 10
of the Securities Act is available, if such legend may be properly removed under
the terms of Rule 144 promulgated under the Securities Act or if such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company, to the effect that a sale,
transfer or assignment of such securities may be made without registration.
(j) RESTRICTION ON SALES, SHORT SALES AND HEDGING
TRANSACTIONS. Such Investor will not, prior to the effectiveness of the
registration statement to be filed pursuant to Section 4 of this Agreement,
sell, offer to sell, solicit offers to buy, dispose of, loan, pledge, or grant
any right with respect to (collectively, a "Disposition") the Common Stock of
the Company, nor will Investor engage in any hedging or other transaction which
is designed to or could reasonably be expected to lead to or result in a
Disposition of Common Stock of the Company by the Investor or any other person
or entity. Such prohibited hedging or other transactions would include, without
limitation, effecting any short sale or having in effect any short position
(whether or not such sale or position is against the box and regardless of when
such position was entered into) or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to the Common
Stock of the Company or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from the Common Stock of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investors that as of the date hereof, except as
set forth in this Section, or on the Schedule of Exceptions attached hereto as
Exhibit B (the "Schedule of Exceptions"), with any disclosure thereon being
deemed disclosure for all purposes and all relevant subsections hereof, which
exceptions will be deemed to be representations and warranties as if made
hereunder:
(a) ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all necessary corporate power and
authority to own its assets and to carry on its business as now being conducted
and presently proposed to be conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which its ownership or leasing of assets, or the conduct of its business,
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a material adverse effect on the Company and
its subsidiaries considered as a whole.
(b) REQUISITE POWER AND AUTHORIZATION. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to issue the Shares and to carry out the provisions of this Agreement. All
corporate action on the part of the Company required for the lawful execution
and delivery of this Agreement, and issuance and delivery of the Shares has been
taken. Upon execution and delivery, this Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforcement may be limited by insolvency and similar laws affecting
the enforcement of creditors' rights generally and equitable remedies, and
except as the indemnity
-4-
<PAGE>
provisions of Section 4 of this Agreement (relating to registration rights) may
be limited by law. The Shares when issued in compliance with the provisions of
this Agreement as the case may be, will be duly authorized and validly issued,
fully paid, non-assessable, and issued in compliance with federal securities
laws and the securities laws of the State of California. No stockholder of the
Company or other person has any preemptive or similar right with respect to the
Shares.
(c) SEC DOCUMENTS. The Company has furnished to each Investor
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, excluding exhibits, and, upon request, all documents that the Company was
required to file, which it represents and warrants it did timely file, with the
SEC under Sections 13 or 14(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since December 31, 1998 (collectively, the "SEC
Documents"). As of their respective filing dates, or such later date on which
such reports were amended, the SEC Documents complied in all material respects
with the requirements of the Exchange Act. The SEC Documents as of their
respective dates, or such later date on which such reports were amended, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
financial statements included in the SEC Documents ("Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. Except as may be indicated in the notes to the Financial
Statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC, the Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied and fairly present
the consolidated financial position of the Company and any subsidiaries at the
dates thereof and the consolidated results of their operations and consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, recurring adjustments).
(d) CAPITAL STOCK. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, $0.001 par value per share. As of
March 7, 2000, there were 19,552,344 shares of Common Stock issued and
outstanding. All outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable. As of March 7, 2000,
(a) 6,032,221 shares of Common Stock were reserved for future issuance pursuant
to options granted or which may be granted under the Company's stock option
plans or stock option plans assumed by the Company, (b) 43,555 shares of Common
Stock were reserved for future issuance pursuant to outstanding warrants, and
(c) 294,167 shares of Common Stock were reserved for future issuance pursuant to
a warrant. Except as set forth above, the Company has no outstanding securities
convertible into or exchangeable for Common Stock and no contracts, rights,
options or warrants to purchase or otherwise acquire Common Stock or securities
convertible into or exchangeable for Common Stock. Since March 7, 2000, the
Company has not issued any shares of capital stock or any options, warrants or
other rights with respect thereto except for shares issued upon exercise of
options, warrants and rights, as set forth above.
-5-
<PAGE>
(e) COMPLIANCE WITH OTHER AGREEMENTS. Neither the execution
and delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by, this Agreement, nor the issuance of the Shares has
constituted or resulted in, or will constitute or result in, a material default
under or breach or violation of any term or provision of the Company's Bylaws,
Certificate of Incorporation, or material contracts with third parties, state or
federal laws, rules or regulations, writs, orders or judgments or decrees which
are applicable to the Company or its properties.
(f) INTELLECTUAL PROPERTY. The Company and each of its
subsidiaries owns or is licensed to use all patents, patent applications,
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, permits and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) which are material to the conduct of its
business as now being conducted (collectively, "Intangibles"). Neither the
Company nor any of its subsidiaries has received written notice that it is
infringing upon or in conflict with any third party intangibles. Neither the
Company nor any of its subsidiaries has entered into any consent,
indemnification, forbearance to sue or settlement agreements with respect to the
validity of the Company's or such subsidiary's ownership or right to use its
Intangibles. No Intangible is the subject of adversarial proceedings. To its
knowledge, the Company has complied with its contractual obligations relating to
the protection of the Intangibles used pursuant to licenses. To the Company's
knowledge, no person is infringing on or violating any Intangible.
(g) CONSENTS. All consents necessary for the Company to
perform its respective obligations hereunder have been obtained, except for the
approval of the SEC of the registration statement contemplated by Section 4.
(h) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999,
except as set forth in the Offering Memorandum delivered to each Investor, there
has not been:
(i) any changes in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse to
the Company and its subsidiaries taken as a whole;
(ii) any material change, except in the ordinary course
of business, in the contingent obligations of the Company whether by way of
guarantee, endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties or
business of the Company; or
(iv) any declaration or payment of any dividend or
other distribution of the assets of the Company.
(i) INSURANCE. The Company and its subsidiaries maintain such
insurance relating to their business, operations, assets as is appropriate to
their business, assets and
-6-
<PAGE>
operations, in such amounts and against such risks as are customarily carried
and insured against by owners of comparable businesses, assets and operations,
and such insurance coverages will be continued in full force and effect to and
including the Closing Date other than those insurance coverages in respect of
which the failure to continue in full force and effect could not reasonably be
expected to have a Material Adverse Effect.
(j) LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of this Agreement, or the right
of the Company to enter into such agreements, or to consummate the transactions
contemplated hereby, or that might result, either individually or in the
aggregate, in any material adverse changes in the business, assets, condition,
affairs or prospects of the Company, financially or otherwise, or any change in
the current equity ownership of the Company.
4. REGISTRATION RIGHTS.
(a) DEFINITIONS. For purposes of this Section 4:
(i) "Register", "registered", and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
(ii) "Registrable Securities" means all shares of
Common Stock of the Company issued or issuable under this Agreement, excluding
in all cases, however, all Registrable Securities sold pursuant to Rule 144.
(iii) "Holder" means any person owning of record
Registrable Securities that have not been sold to the public or any assignee of
record of such Registrable Securities to whom rights under this Section 4
(and/or, with respect to the rights of the Investors set forth in Section 5,
under such Section 5) have been assigned in accordance with this Agreement.
(b) SHELF REGISTRATION.
(i) The Company will file as soon as practicable, and
in no event later than 30 days after the final Closing, a registration statement
with the SEC under the Securities Act for the sale and distribution of all of
the Holders' Registrable Securities and thereafter shall use its best efforts to
secure the effectiveness of such registration statement as soon as practicable
thereafter.
(ii) The Company will pay all expenses incurred in
connection with any registration, qualification and compliance requested
hereunder (excluding underwriters' or brokers' discounts and commissions and the
fees and disbursements of counsel for any Investor), including without
limitation all filing, registration and qualification, printers' and accounting
fees and the fees and disbursements of counsel for the Company.
-7-
<PAGE>
(iii) The Company will use its best efforts to cause
the registration statement to remain effective until the earliest of (A) the
date ending two years after the final Closing, (B) the date on which all the
Registrable Securities have been resold, or (C) the date on which each Holder of
Registrable Securities is able to sell all of such Holder's Registrable
Securities in a single three (3) month period without registration under the
Securities Act pursuant to Rule 144.
(c) OBLIGATIONS OF THE COMPANY. In order to effect the
registration of any Registrable Securities under Section 4(b) of this Agreement,
the Company will, as expeditiously as reasonably possible:
(i) 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 deliver such
registration statement, at the time of such filing, to each Holder.
(ii) 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 Securities Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to the Holders such number of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are included in
such registration.
(iv) 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 will be reasonably requested by the
Holders, provided that the Company will 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.
(v) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and upon such notice the Company shall use its best efforts to
promptly correct such misstatement or omission and deliver to each Holder copies
of such corrected prospectus. The Company shall have the right, upon such
notice, to suspend the delivery of prospectuses included in such registration
statement from the date of notice until the date of such correction. The period
during which the Company is required to keep any registration statement filed
pursuant to Section 4(b) effective shall be extended for the amount of time
required to amend such registration statement and deliver such prospectus
relating thereto.
-8-
<PAGE>
(d) FURNISH INFORMATION. It will be a condition precedent to
the obligations of the Company to take any action pursuant to Section 4(b)
hereof that the selling Holders will furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as will be required to effect the
registration of their Registrable Securities.
(e) INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under Section 4(b) hereof:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, stockholders, officers
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages, or liabilities to which they may become jointly or severally
liable subject under the Securities Act, the Exchange Act or other federal or
state securities 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 (collectively, a "Violation"):
(A) 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;
(B) 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
(C) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any federal or state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any federal or state securities law in connection with the offering
covered by such registration statement;
and the Company will reimburse each such Holder, partner, stockholder, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 4(e)(i) will 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
will not be unreasonably withheld), nor will 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 such Holder, partner, stockholder, officer, director,
underwriter or controlling person of such Holder.
(ii) 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 have
-9-
<PAGE>
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter and any other Holder
selling securities under such registration statement or any of such other
Holder's partners, directors or officers or stockholders or any person who
controls such Holder within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling person, underwriter
or other such Holder, partner or director, officer, stockholder or controlling
person of such other Holder may become subject under the Securities Act, the
Exchange 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 that arises solely as a result of written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director, stockholder or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 4(e)(ii) will 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 will not be unreasonably withheld; and provided further, that the total
amounts payable in indemnity by a Holder under this Section 4(e)(ii) in respect
of any Violation will not exceed the aggregate proceeds (net of discounts)
received by such Holder upon the sale of the Shares.
(iii) Promptly after receipt by an indemnified party
under this Section 4(e) 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 4(e),
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party will 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 will
have the right to retain its own 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
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 the indemnifying party is materially prejudiced thereby,
will relieve such indemnifying party of liability, but only to the extent that
such indemnifying party is prejudiced with respect to a specific claim.
(iv) The foregoing indemnity agreement with respect to
any prospectus shall not inure to the benefit of any Holder or underwriter, or
any person controlling such Holder or underwriter, from whom the person
asserting any losses, claims, damages or liabilities purchased Registrable
Securities, if a copy of the prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) provided by
the Company was not sent or given by or on behalf of such Holder or underwriter
to such person, if required by law so to have been delivered, at or prior
-10-
<PAGE>
to the written confirmation of the sale of the Registrable Securities to such
person, and if the prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability.
(v) If the indemnification provided for in Sections
4(e)(i) or 4(e)(ii) hereof shall be unavailable to hold harmless an indemnified
party in respect of any liability under the Securities Act, then, and in each
such case, 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 statement or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided that in no event shall any contribution under
this subsection (v) by any Holder exceed the gross proceeds from the offering
received by such indemnifying party. No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under
this Section 4(e) will survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
(f) RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, while a public market exists for the Common Stock of the Company,
the Company will:
(i) Make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times while the Company is reporting under the Exchange Act;
(ii) Use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(iii) So long as a Holder owns any Registrable
Securities, furnish to the Holder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144,
and of the Securities Act and the Exchange Act (at any time it is subject to the
reporting requirements of the Exchange Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation
-11-
<PAGE>
of the SEC allowing a Holder to sell any such securities without registration
(at any time the Company is subject to the reporting requirements of the
Exchange Act).
(g) If any Investor shall propose to sell any Registrable
Securities pursuant to the registration statement, such Investor shall notify
the Company of its intent to do so at least three (3) full business days prior
to such sale. Such notice shall be deemed to constitute a representation that
any written information previously supplied by such Investor is accurate as of
the date of such notice. At any time within such three (3) business-day period,
the Company may notify the Investor that the Company will refuse to permit the
Investor to resell any Registrable Securities pursuant to the registration
statement for an initial period not to exceed thirty (30) days; PROVIDED,
HOWEVER, that in order to exercise this right, the Company must deliver a
certificate in writing to the Investor to the effect that a delay in such sale
is necessary because a sale pursuant to such registration statement in its
then-current form would not be in the best interests of the Company and its
stockholders due to disclosure obligations of the Company. In such event, the
Company shall use its best efforts to amend the registration statement, if
necessary, and to take all other actions reasonably necessary to allow such
sale, and shall notify the Investor promptly after it has determined that such
sale has become permissible. Notwithstanding the foregoing, the Company shall
not be entitled to exercise its right to refuse to permit a sale by any
particular Investor more than three (3) times in any calendar year or for more
than two (2) consecutive thirty (30) day periods in any calendar year; PROVIDED,
HOWEVER, that no particular Investor will be refused permission to sell under
this Section 4(g) at the same time that another Investor is permitted to sell
under the registration statement. Each Investor hereby covenants and agrees that
it will not sell any Registrable Securities pursuant to the registration
statement during the periods the registration statement is withdrawn as set
forth in this Section 4(g).
(h) INVESTOR INFORMATION. Each Investor covenants that it will
promptly notify the Company of any changes in the information set forth in the
registration statement regarding such Investor or such Investor's "Plan of
Distribution."
5. CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The obligation of each
Investor to purchase the Shares at the Closing is subject to the fulfillment on
or prior to such Closing of the following conditions, any of which may be waived
by such Investor:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct at the
time of the Closing with the same force and effect as if they had been made on
and as of said date, except for representations and warranties made as of a
specific date which shall be true and correct as of such date; and the Company
shall have performed all obligations and conditions herein required to be
performed or observed by it under this Agreement on or prior to the Closing.
(b) CONSENTS AND WAIVERS. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement), permits and
-12-
<PAGE>
waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement.
(c) COMPLIANCE CERTIFICATE. The Company shall have delivered
to the Investors a certificate, executed by the Chief Financial Officer of the
Company, dated the day of the Closing, certifying to the fulfillment of the
conditions specified in subsection (a) of this Section 5.
(d) OPINION OF COMPANY'S COUNSEL. Investors shall have
received from Pillsbury Madison & Sutro LLP, counsel to the Company, an opinion
addressed to the Investors, dated the day of the Closing and in substantially
the form attached hereto as Exhibit C.
(e) MINIMUM PURCHASE. The Company shall have received executed
Agreements to purchase Shares with an aggregate purchase price of not less than
$7,500,000 and full payment of the purchase price for all of the Shares to be
sold at the Closing.
6. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to sell and issue the Shares to each Investor at each Closing is subject
to the fulfillment on or prior to the Closing of the following conditions, any
of which may be waived by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by such Investor in Section 2 hereof shall be true and correct
when made, and shall be true and correct at the time of the Closing with the
same force and effect as if they had been made on and as of said date.
(b) CONSENTS AND WAIVERS. The condition set forth in
subsection (b) of Section 5 hereof shall have been fulfilled.
(c) MINIMUM PURCHASE. The Company shall have received executed
subscription Agreements to purchase Shares with an aggregate purchase price of
not less than $7,500,000 and full payment of the purchase price for all of the
Shares to be sold at the Closing.
7. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California
applicable to contracts made among residents of, and wholly to be performed
within, the State of California, without regard to principles of conflict of
laws or choice of laws.
(b) FURTHER INSTRUMENTS. From time to time, each party hereto
will execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
-13-
<PAGE>
(c) SUCCESSORS; NO OTHER BENEFICIARIES. This Agreement will be
binding upon and will inure to the benefit of the executors, administrators,
legal representatives, heirs, successors, and assigns of the parties hereto;
PROVIDED, HOWEVER, that (i) rights of Investors hereunder may be transferred
only in connection with (and to the transferee of) Common Stock of the Company
purchased by a Investor hereunder, but the Company may prohibit such transfer of
rights if the transfer to a particular transferee would not, in the good faith
judgment of the Company's Board of Directors, be in the Company's best
interests, and (ii) any transferee of any shares of stock of the Company
affected by this Agreement to whom rights are so transferred (a "PERMITTED
TRANSFEREE") will be required, as a condition precedent to acquiring such
shares, to agree in writing to be bound by all the terms and conditions of this
Agreement applicable to such Permitted Transferee's transferor, and (iii) upon
and after such transfer the Permitted Transferee will be deemed to be an
Investor for purposes of this Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than 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.
(d) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties signatory hereto upon such counterpart signature
by all initial parties hereto.
(e) ENTIRE AGREEMENT. This Agreement, including and
incorporating the Schedule of Exceptions and all Exhibits attached hereto and
referred to herein, constitutes and contains the entire agreement and
understanding of the parties regarding the subject matter of this Agreement and
supersedes in its entirety any and all prior negotiations, correspondence,
understandings and agreements among the parties respecting the subject matter
hereof.
(f) NOTICES. Any notice required to be given or delivered to
the Company under the terms of this Agreement shall be addressed to the
Secretary of the Company at its principal corporate offices. Any notice required
to be given or delivered to an Investor shall be addressed to the Investor at
the address indicated below or to such other address as such party may designate
in writing from time to time to the Company. Unless otherwise provided, notice
required or permitted to be given to a party pursuant to the provisions of this
Agreement will be in writing and will be effective and deemed given under this
Agreement on the earliest of (i) the date of personal delivery, or (ii) the date
of delivery by facsimile, or (iii) the business day after deposit with a
nationally recognized courier or overnight service, including Federal Express or
Express Mail, for United States deliveries or three (3) business days after such
deposit for deliveries outside of the United States, or (iv) three (3) business
days after deposit in the United States mail by registered or certified mail for
United States deliveries. All notices not delivered personally or by facsimile
will be sent with postage and other charges prepaid and properly addressed to
the party to be notified at the address set forth on the signature page, or at
such other address as such party may designate by ten (10) days' advance written
notice to the other parties hereto. All notices for delivery outside the United
States will be sent by facsimile, or by nationally recognized courier or
overnight service, including Express Mail. Any notice given hereunder to more
than one person will be deemed
-14-
<PAGE>
to have been given, for purposes of counting time periods hereunder, on the date
given to the last party required to be given such notice.
(g) BROKER'S FEE. Each Investor acknowledges that the Company
intends to pay a fee and issue warrants to the Placement Agent, in respect of
the sale of the Shares to the Investors. Each of the parties hereto hereby
represents that, on the basis of any actions and agreements by it, and except
for any finders' fees to be paid out of the Placement Agent's fee, there are no
other brokers or finders entitled to compensation in connection with the sale of
the Shares to the Investors.
(h) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of the 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 by Investors
holding at least fifty percent (50%) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 7(h) will be
binding upon the Company, each Investor, and their permitted transferees and
assignees.
(i) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions will be
excluded from this Agreement to the extent unenforceable and the balance of such
provisions, and of this Agreement, will be interpreted as if such provision or
part and hereof were so excluded and will be enforceable in accordance with its
terms.
(j) AGGREGATION OF STOCK. All shares of Common Stock held or
acquired by affiliated entities or persons will be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
(k) EXPENSES. The Company and each Investor will bear its own
costs and expenses incurred on its behalf with respect to the Agreement and the
transactions contemplated hereby, including fees of legal counsel.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
T. Rowe Price New Horizons Fund, Inc. Shares Subscribed: 1,333,334
- ------------------------------------- ---------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Charles G. Pepin
---------------------------
(Signature)
Name: Charles G. Pepin
---------------------------
Title: V.P.
---------------------------
Address: 100 East Pratt Street
----------------------------
Baltimore, Maryland 21202
- -------------------------------------
- -------------------------------------
- -------------------------------------
Tax ID:
-----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-----------------------------------
(Signature)
Name: Gerard A. Wills
-----------------------------------
Title: Vice President - Finance
-----------------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-16-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Green Line Mutual Funds - Green Line Shares Subscribed: 226,000
- ------------------------------------ -----------------
Heath Sciences Fund (Print Name of
- ------------------- Individual or
Entity)
BY: T. ROWE PRICE ASSOCIATES, ADVISOR,
- --------------------------------------
INC.
- --------------------------------------
(Print Name of Individual or Entity)
By: /s/ Charles G. Pepin
-----------------------------
(Signature)
Name: Charles G. Pepin
-----------------------------
Title: Vice President
-----------------------------
Address: 100 East Pratt Street
-----------------------------
Baltimore, Maryland 21202
- --------------------------------------
- --------------------------------------
- --------------------------------------
Tax ID:
------------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
------------------------------
(Signature)
Name: Gerard A. Wills
------------------------------
Title: Vice President - Finance
------------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
T. Rowe Price Health Sciences Fund, Inc. Shares Subscribed: 440,666
- ---------------------------------------- ----------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Charles G. Pepin
-------------------------
(Signature)
Name: Charles G. Pepin
-------------------------
Title: V.P.
-------------------------
Address: 100 East Pratt Street
-------------------------
Baltimore, Maryland 21202
- ----------------------------------
- ----------------------------------
- ----------------------------------
Tax ID:
-------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-------------------------
(Signature)
Name: Gerard A. Wills
-------------------------
Title: Vice President - Finance
-------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
EGM Technology Fund LP Shares Subscribed: 109,667
- ------------------------------------ -------------------
(Print Name of Individual or Entity) (Print Name of
Individual or Entity)
By: /s/ Marc Pentopoulos
-------------------------
(Signature)
Name: Marc Pentopoulos
-------------------------
Title: Portfolio Manager
-------------------------
Address: 1 Embarcadero Center
----------------------------
Suite 2140
----------------------------
SF, CA 94111
----------------------------
----------------------------
Tax Id: 94-334-3744
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
----------------------------
(Signature)
Name: Gerard A. Wills
----------------------------
Title: CFO
----------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-19-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
EGM Medical Technology Offshore Fund Shares Subscribed: 72,000
- ------------------------------------ ---------------------
(Print Name of Individual or Entity) (Print Name of
Individual or Entity)
By: /s/ Marc Pentopoulos
---------------------------
(Signature)
Name: Marc Pentopoulos
---------------------------
Title: Portfolio Manager
---------------------------
Address: 1 Embarcadero
---------------------------
Suite 2140
- ------------------------------------
SF, CA 94111
- ------------------------------------
- ------------------------------------
Tax ID:
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
---------------------------
(Signature)
Name: Gerard A. Wills
---------------------------
Title: CFO
---------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Special Situations Private Equity Fund, L.P. Shares 300,000
- -------------------------------------------- Subscribed: ----------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ David Greenhouse
------------------------------
(Signature)
Name: David Greenhouse
------------------------------
Title: M.D.
------------------------------
Address: 153 East 53Rd Street
------------------------------
New York, NY 10022
------------------------------
------------------------------
Tax ID: 13-3916551
------------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
------------------------------
(Signature)
Name: Gerard A. Wills
------------------------------
Title: CFO
------------------------------
Address: Trega Biosciences, Inc
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Pequot Scout Fund L.P. Shares Subscribed: 300,000
- ------------------------------------ ------------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ David J. Malat
---------------------------
(Signature)
Name: David J. Malat
---------------------------
Title: Chief Financial Officer
---------------------------
Address: C/o David J. Malat
---------------------------
Pequot Capital Management, Inc.
- ------------------------------------
500 Nyla Farms Road
- ------------------------------------
Westport, CT 06880
- ------------------------------------
Tax ID: 13-3741801
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-----------------------------
(Signature)
Name: Gerard A. Wills
-----------------------------
Title: CFO
-----------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Dr
San Diego, CA
Attention: General Counsel
-22-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Jackson Square Partners, L.P. Shares Subscribed: 181,667
- ------------------------------------ -------------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: Michael D. Baldridge
-----------------------------
(Signature)
Name: Michael D. Baldridge
-----------------------------
Title: Member Manager
-----------------------------
Address: Jackson Square Partners, L.P.
-----------------------------
909 Montgomery Street, Suite 600
- --------------------------------------
San Francisco, CA 94133
- --------------------------------------
- --------------------------------------
Tax ID: 94-3307834
-------------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-------------------------------
(Signature)
Name: Gerard A. Wills
-------------------------------
Title: CFO
-------------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-23-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Baystar International, LTD Shares Subscribed: 200,000
- ------------------------------------- ---------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Brian Davidson
----------------------------
(Signature)
Name: Brian Davidson
----------------------------
Title: Director
----------------------------
Address: 1500 W. Market Street
----------------------------
Suite 200
- -------------------------------------
Mequon, WI 53092
- -------------------------------------
Tax ID: NONE
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
------------------------------
(Signature)
Name: Gerard A. Wills
------------------------------
Title: CFO
------------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-24-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Baystar Capital. LP Shares Subscribed: 300,000
- ------------------------------------ ----------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Brian Davidson
---------------------------
(Signature)
Name: Brian Davidson
---------------------------
Title: Director
---------------------------
Address: 1500 W. Market Street
---------------------------
Suite 200
- ------------------------------------
Mequon, WI 53092
- ------------------------------------
- ------------------------------------
Tax ID: 39-1956054
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-----------------------------
(Signature)
Name: Gerard A. Wills
-----------------------------
Title: CFO
-----------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-25-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
NARRAGANSETT I, LP Shares Subscribed: 30,934
- ------------------------------------ ----------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Joseph L. Dowling III
---------------------------
(Signature)
Name: Joseph L. Dowling III
---------------------------
Title: Managing Member
---------------------------
Address: 374 Park Avenue
---------------------------
14Th Floor
- ------------------------------------
New York, NY 10152
- ------------------------------------
- ------------------------------------
Tax ID: 13-4032957
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-----------------------------
(Signature)
Name: Gerard A. Wills
-----------------------------
Title: CFO
-----------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-26-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Paul M. Ginsburg Shares Subscribed: 33,333
- ------------------------------------ ----------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Paul M. Ginsburg
---------------------------
(Signature)
Name: Paul M. Ginsburg
---------------------------
Title:
---------------------------
Address: P.O. Box 1774
---------------------------
Ross, CA 94957-1774
- ------------------------------------
For Delivery Via Courier:
- ------------------------------------
50 Shady Lane
- ------------------------------------
Ross, CA 94957
- ------------------------------------
Tax ID: ###-##-####
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-----------------------------
(Signature)
-----------------------------
Name: Gerard A. Wills
-----------------------------
Title: CFO
-----------------------------
Address: Trega Biosciences,
9880 Campus Point
San Diego, CA
Attention: General Counsel
-27-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
The Timken Living Trust U/A/D/ 9/14/99 Shares Subscribed: 83,334
- -------------------------------------- --------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ William R. Timken, Trustee
------------------------------
(Signature)
Name: William R. Timken
------------------------------
Title: Trustee
------------------------------
Address: Attn.: Diane L. Larson
------------------------------
7 Mercury Avenue
- ---------------------------------------
Tiburon, CA 94920
- ---------------------------------------
(415) 799-1184
- ---------------------------------------
Tax ID: ###-##-####
-------------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
--------------------------------
(Signature)
Name: Gerard A. Wills
--------------------------------
Title: CFO
--------------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-28-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Narragansett Offshore Ltd Shares Subscribed: 22,400
- ------------------------------------- ---------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Joseph L. Dowling, III
----------------------------
(Signature)
Name: Joseph L. Dowling III
----------------------------
Title: Managing Member
----------------------------
Address: 375 Park Avenue
----------------------------
14Th Floor
- -------------------------------------
New York, NY 10152
- -------------------------------------
Tax ID: N/A
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
----------------------------
(Signature)
Name: Gerard A. Wills
----------------------------
Title: CFO
----------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR TO BE COMPLETED BY INVESTOR
Cypress VI Partners Shares Subscribed: 33,333
- ------------------------------------ ----------------
(Print Name of Individual or Entity) (Print Name of
Individual or
Entity)
By: /s/ Leonard S. Eber
-----------------------------
(Signature)
Name: Leonard S. Eber
-----------------------------
Title: Managing Partner/ Cypress Partners
-------------------------------------
Address: 126 Cypress
---------------------------
Kentfield, CA 94904
- ------------------------------------
- ------------------------------------
- ------------------------------------
Tax ID: 914-3195326
----------------------------
COMPANY
TREGA BIOSCIENCES, INC.
By: /s/ Gerard A. Wills
-----------------------------
(Signature)
Name: Gerard A. Wills
-----------------------------
Title: CFO
-----------------------------
Address: Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA
Attention: General Counsel
-30-
<PAGE>
EXHIBIT A
SCHEDULE OF INVESTORS
TREGA BIOSCIENCES, INC.
SUBSCRIPTION AGREEMENT
APRIL 4, 2000
<TABLE>
<CAPTION>
Number Purchase
Purchaser of Shares Price
- --------- --------- -----
<S> <C> <C>
T. Rowe Price
New Horizons Fund, Inc. 1,333,334 $4,000,002
Green Line Mutual Funds -
Green Line Health Sciences Fund 226,000 678,000
T. Rowe Price
Health Sciences Fund, Inc. 440,666 1,321,998
EGM Medical Technology
Fund LP 109,667 329,001
EGM Medical Technology
Offshore Fund 72,000 216,000
Special Situations Private
Equity Fund, L.P. 300,000 900,000
Pequot Scout Fund, L.P. 300,000 900,000
Jackson Square Partners, L.P. 181,667 545,001
Bay Star International, LTD 200,000 600,000
Bay Star Capital, L.P. 300,000 900,000
Narragansett I, LP 30,934 92,802
Paul M. Ginsburg 33,333 99,999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number Purchase
Purchaser of Shares Price
- --------- --------- -----
<S> <C> <C>
The Timken Living Trust
U/A/D 9/14/99 83,334 $250,002
Narragansett Offshore Ltd. 83,334 67,200
Cypress VI Partners 33,333 99,999
TOTAL 3,666,668 $11,000,004
</TABLE>
<PAGE>
March 31, 2000
EXHIBIT B
SCHEDULE OF EXCEPTIONS
The following are exceptions to the representations and warranties of
the Company set forth in that certain Subscription Agreement dated as of March
___, 2000 (the "Agreement"), with reference to subsection designations of the
Agreement. The reference to specific subsections is not meant and should not be
construed as limiting the noted exceptions to that particular subsection. Any
exception noted below is deemed disclosed for all purposes of all relevant
subsections whether or not cross-referenced.
Section 3: Reference is made to the Company's filings with the Securities and
Exchange Commission, its press releases posted on the Company's web site at
WWW.TREGA.COM under "new releases" as of 8 p.m. EST, March 31, 2000.
<PAGE>
DRAFT OF 3/14/00
EXHIBIT C
OPINION OF COMPANY'S COUNSEL
To Certain Purchasers
of Common Stock of
Trega Biosciences, Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5(d) of that
certain Subscription Agreement dated as of March __, 2000 between Trega
Biosciences, Inc., a Delaware corporation (the "Company") and you (the
"Agreement"). We have acted as counsel for the Company in connection with the
proposed issuance by the Company of an aggregate of _____________ shares of its
common stock, $.001 par value ("Common Stock") to you (collectively, hereinafter
referred to as the "Purchasers") and in the amounts set forth on Exhibit A to
the Agreement, pursuant to the terms of the Agreement. The shares of Common
Stock sold to the Purchasers are herein referred to as the "Shares."
We have examined the Restated Certificate of Incorporation of the
Company and Bylaws of the Company and such other documents and certificates of
public officials and representatives of the Company as we have deemed necessary
as a basis for the opinions expressed herein. As to questions of fact material
to such opinions, we have, when relevant facts were not independently
established, relied in certain instances upon certificates of officers of the
Company.
We have assumed the genuineness of all signatures and documents
submitted as originals, that all copies submitted to us conform to the
originals, the legal capacity of all natural persons, and, as to documents
executed by entities other than the Company, that such documents have been duly
authorized, executed and delivered by, and are binding upon and enforceable
against, such entities.
We express no opinion as to the laws of any jurisdiction other than the
State of California and the United States and the General Corporation Law of the
State of Delaware, nor as to the qualification of the Shares under the
securities or blue sky laws of any jurisdiction other than the State of
California.
Based upon the foregoing and subject to the qualifications set forth
below, it is our opinion that:
1. The Company is a corporation duly incorporated, and validly existing
under the laws of the State of Delaware.
<PAGE>
2. The Shares will, if issued pursuant to the terms of the Agreement
against payment of the consideration set forth in the Agreement and when fully
paid for as provided therein, be validly issued, fully paid and non-assessable.
3. The issuance of the Shares, when issued pursuant to the terms of the
Agreement, will be exempt from the qualification requirements of Section 25110
of the California Corporate Securities Law of 1968, as amended (the "CSL")
pursuant to the exemption afforded by Section 25100(o) of the CSL and pursuant
to Section 18 of the Securities Act of 1933, as amended (the "1933 Act").
4. Based in part on the representations of the Purchasers and assuming
that the manner in which the offering of such Shares was conducted was in all
respects in compliance with the requirements of Regulation D promulgated under
the 1933 Act, the issuance of the Shares, when issued pursuant to the terms of
the Agreement, will be exempt from the registration requirements of the 1933
Act.
5. The issuance of the Shares will not materially conflict with,
violate or result in a material breach of, the terms, conditions or provisions
of, or constitute a material default under the Restated Certificate of
Incorporation or Bylaws of the Company.
We express no opinion as to compliance with applicable anti-trust or
anti-fraud statutes or rules or regulations of any applicable law governing the
issue of securities.
For purposes of rendering the opinion in paragraph 3 above, we assume
that (i) the Company's Common Stock continues to be designated as a Nasdaq
National Market security and (ii) the exemption afforded by Section 25100(o) of
the CSL continues to be available to securities designated as Nasdaq National
Market securities.
This opinion is rendered solely for your information in connection with
the appointment described above and may not be relied upon by any other person
for any purpose without our prior written consent.
Very truly yours
<PAGE>
VOID AFTER 5:00 P.M., CALIFORNIA TIME,
ON APRIL 11, 2005
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Date: April 11, 2000
TREGA BIOSCIENCES, INC.
STOCK PURCHASE WARRANT
THIS WARRANT CERTIFIES THAT, for value received, FIRST SECURITY VAN
KASPER or its registered assigns (the "Holder") is entitled to purchase from
TREGA BIOSCIENCES, INC., a corporation organized under the laws of the State of
Delaware (the "Company"), at any time or from time to time during the period
specified in Section 2 hereof, 220,000 fully paid and nonassessable shares of
the Company's common stock, $.001 par value (the "Common Stock"), at an exercise
price of $5.375 per share (the "Exercise Price"). The number of shares of Common
Stock purchasable hereunder (the "Warrant Shares") and the Exercise Price are
subject to adjustment as provided in Section 5 hereof.
This Warrant is subject to the following terms, provisions and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 8 hereof, this Warrant may be exercised at any time during
the Exercise Period (as defined below) by the Holder hereof, in whole or in
part, by the surrender of this Warrant, together with a completed exercise
agreement in the form attached hereto (the "Exercise Agreement"), to the Company
by 5 p.m. California time
-1-
<PAGE>
on any Business Day (as defined below) at the Company's principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the Holder hereof) and upon: (i) payment to the Company in cash, by
certified or official bank check or by wire transfer for the account of the
Company, of the applicable Exercise Price for the Warrant Shares specified in
the Exercise Agreement; or (ii) delivery to the Company of written notice of an
election to effect a Cashless Exercise (as defined in Section 11(c) hereof) for
the Warrant Shares specified in the Exercise Agreement. The Warrant Shares so
purchased shall be deemed to be issued to the Holder hereof or such Holder's
designee, as the record owner of such shares, as of the close of business on the
date on which this Warrant shall have been surrendered and the completed
Exercise Agreement shall have been delivered and payment shall have been made
for such shares as set forth above or, if such day is not a Business Day, on the
next succeeding Business Day. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the Holder hereof within a reasonable time, not exceeding five
Business Days, after this Warrant shall have been so exercised (the "Delivery
Period").
If the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as
the certificate(s) does not bear a legend and the Holder is not obligated to
return such certificate for the placement of a legend thereon, the Company shall
cause its transfer agent to electronically transmit the Warrant Shares so
purchased to the Holder by crediting the account of the Holder or its nominee
with DTC through its Deposit Withdrawal Agent Commission system ("DTC
Transfer"). If the aforementioned conditions to a DTC Transfer are not
satisfied, the Company shall deliver to the Holder physical certificate(s)
representing the Warrant Shares so purchased. Further, the Holder may instruct
the Company to deliver to the Holder the physical certificate(s) representing
the Warrant Shares so purchased in lieu of delivering such shares by way of DTC
Transfer. Any certificate(s) so delivered shall be in such denomination(s) as
may be requested by the Holder hereof, shall be registered in the name of such
Holder or such other name as shall be designated by such Holder and, following
the date on which the Warrant Shares may be sold by the Holder pursuant to Rule
144(k) promulgated under the Securities Act (or a successor rule), shall not
bear any restrictive legend. Upon a sale of any Warrant Shares pursuant to an
effective registration statement, any restrictive legend on the certificate(s)
representing such Warrant Shares shall be removed. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the Holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
2. PERIOD OF EXERCISE. This Warrant may be exercised at any time or
from time to time (an "Exercise Date") during the period (the "Exercise Period")
-2-
<PAGE>
beginning on the date hereof and ending at 5:00 p.m., California time, on the
fifth annual anniversary of the date of original issuance hereof.
3. REGISTRATION RIGHTS.
(a) DEFINITIONS. For purposes of this Section 3:
(i) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
(ii) "Registrable Securities" means the Warrant Shares of the
Company issued or issuable upon the exercise of this Warrant.
(iii) "Holder" means First Security Van Kasper or any assignee
of record of such Registrable Securities to whom rights under this Section 3
have been assigned in accordance with the provisions of this Warrant.
(b) SHELF REGISTRATION.
(i) The Company will file as soon as practicable, and in no
event later than 30 days after the final closing (the "Closing Date") of that
financing described in the Company's Confidential Offering Memorandum dated
March 13, 2000 and the Supplement dated March 29, 2000 and Supplement #2 dated
March 30, 2000 to such Confidential Offering Memorandum, a registration
statement with the Securities and Exchange Commission ("SEC") under the
Securities Act for the sale and distribution of all of the Holder's Registrable
Securities, and shall thereafter use its best efforts to secure the
effectiveness of such registration statement as soon as practicable.
(ii) The Company will pay all expenses incurred in connection
with any registration, qualification and compliance requested hereunder
(excluding underwriters' or brokers' discounts and commissions and the fees and
disbursements of counsel for Holder or any selling stockholder), including
without limitation all filing, registration and qualification, printers' and
accounting fees and the fees and disbursements of counsel for the Company.
(iii) The Company will use its best efforts to cause the
registration statement to remain effective until the earliest of (A) the date
ending two years after the Closing Date, (B) the date on which all the
Registrable Securities have been resold, or (C) the date on which each Holder of
Registrable Securities is able to sell all of such Holder's Registrable
Securities in a single three (3) month period without registration under the
Securities Act pursuant to Rule 144.
-3-
<PAGE>
(c) OBLIGATIONS OF THE COMPANY. In order to effect the
registration of any Registrable Securities under Section 3(b) of this Agreement,
the Company will, as expeditiously as reasonably possible:
(i) 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 deliver such registration
statement, at the time of such filing, to the Holder.
(ii) 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 Securities Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to Holder such number of copies of a prospectus
in conformity with the requirements of the Securities Act, and such other
documents as the Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by the Holder that are included
in such registration.
(iv) 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 will be reasonably requested by the
Holder, provided that the Company will 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.
(v) Notify the Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and upon such notice the Company shall use its best efforts to
promptly correct such misstatement or omission and deliver to the Holder copies
of such corrected prospectuses included in such registration statement form the
date of notice until the date of such correction. The period during which the
Company is required to keep any registration statement filed pursuant to Section
3(b) effective shall be extended for the amount of time required to amend such
registration statement and deliver such prospectus relating thereto.
(d) FURNISH INFORMATION. It will be a condition precedent to the
obligations of the Company to take any action pursuant to Section 3(b) hereof
that the
-4-
<PAGE>
Holder will furnish to the Company such information regarding the Registrable
Securities and the intended method of disposition of such securities as will be
required to effect the registration of their Registrable Securities.
(e) INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 3(b) hereof:
(i) to the extent permitted by law, the Company will indemnify
and hold harmless the Holder, its partners, stockholders, officers and directors
and each person, if any, who controls such Holder within the meaning of the
Securities Act or the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages, or liabilities to which
they may become jointly or severally liable subject under the Securities Act,
the Exchange Act or other federal or state securities 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 (collectively, a "Violation"):
(A) 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;
(B) 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
(C) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse the Holder, each partner,
stockholder, officer or director, underwriter or controlling person of the
Holder for any legal or other expenses reasonably incurred by them, as incurred,
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 3(e)(i) will 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 will not be unreasonably withheld),
nor will 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
the Holder and each partner, stockholder, officer, director or controlling
person of such Holder.
-5-
<PAGE>
(ii) To the extent permitted by law, the Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any other
party selling securities under such registration statement or any of such other
party's partners, directors or officers or stockholders or any person who
controls such party within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such partner, director, officer, stockholder or
controlling person of such other party may become subject under the Securities
Act, the Exchange 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 that arises solely as a result of written
information furnished by the Holder expressly for use in connection with such
registration; and the Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any partner, officer, director,
stockholder or controlling person of such party in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 3(e)(ii) will
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 will not be unreasonably withheld; and provided further,
that the total amounts payable in indemnity by the Holder under this Section
3(e)(ii) in respect of any Violation will not exceed the aggregate proceeds (net
of discounts) received by the Holder upon the sale of the Warrant Shares.
(iii) Promptly after receipt by an indemnified party under
this Section 3(e) 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 3(e), deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party will 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 will
have the right to retain its own 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 by inappropriate due to actual
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 the indemnifying party is materially prejudiced thereby,
will relieve such indemnifying party of liability, but only to the extent that
such indemnifying party is prejudiced with respect to a specific claim.
-6-
<PAGE>
(iv) The foregoing indemnity agreement with respect to any
prospectus shall not inure to the benefit of the Holder, or any person
controlling such Holder, from whom the person asserting any losses, claims,
damages or liabilities purchased Registrable Securities, if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) provided by the Company was not sent or
given by or on behalf of such Holder to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of the
Registrable Securities to such person, and if the prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(v) If the indemnification provided for in Sections 3(e)(i) or
3(e)(ii) hereof shall be unavailable to hold harmless an indemnified party in
respect of any liability under the Securities Act, then, and in each such case,
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 statement or omissions that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable consideration. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided that in
no event shall any contribution under this subsection (v) by the Holder exceed
the gross proceeds from the offering received by such indemnifying party. No
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation.
(vi) The obligations of the Company and the Holder under this
Section 3(e) will survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
(f) RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Securities to the public without
registration, while a public market exists for the Common Stock of the Company,
the Company will:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
while the Company is reporting under the Exchange Act;
-7-
<PAGE>
(ii) Use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(iii) So long as Holder owns any Registrable Securities,
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act (at any time it is subject to the reporting
requirements of the Exchange Act), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing a Holder to sell any such securities without registration (at
any time the Company is subject to the reporting requirements of the Exchange
Act).
(g) If Holder shall propose to sell any Registrable Securities
pursuant to the registration statement, Holder shall notify the Company of its
intent to do so at least three (3) full Business Days prior to such sale. Such
notice shall be deemed to constitute a representation that any written
information previously supplied by Holder is accurate as of the date of such
notice. At any time within such three (3) Business Day period, the Company may
notify the Holder that the Company will refuse to permit the Holder to resell
any Registrable Securities pursuant to the registration statement for an initial
period not to exceed thirty (30) day; PROVIDED, HOWEVER, that in order to
exercise this right, the Company must deliver a certificate in writing to the
Holder to the effect that a delay in such sale is necessary because a sale
pursuant to such registration statement in its then-current form would not be in
the best interest of the Company and its stockholders due to disclosure
obligations of the Company. In such event, the Company shall use its best
efforts to amend the registration statement, if necessary, and to take all other
actions reasonably necessary to allow such sale, and shall notify the Holder
promptly after it has determined that such sale has become permissible.
Notwithstanding the foregoing, the Company shall not be entitled to exercise
its right to refuse to permit a sale by the Holder more than three (3) times in
any calendar year PROVIDED, HOWEVER, that the Holder will not be refused
permission to sell under this Section 3(g) at the same time that another party
is permitted to sell under the registration statement. The Holder hereby
covenants and agrees that it will not sell any Registrable Securities pursuant
to the registration statement during the periods the registration statement is
withdrawn as set forth in this Section 3(g).
(h) FURTHER INFORMATION. The Holder covenants that it will
promptly notify the Company of any changes in the information set forth in the
registration statement regarding such Holder or the Holder's plan of
distribution.
-8-
<PAGE>
4. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants
and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid and nonassessable and free from all taxes, liens, claims and encumbrances.
(b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant.
(c) LISTING. The Company shall secure the listing of the shares of
Common Stock issuable upon exercise of or otherwise pursuant to this Warrant
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed or become listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of or
otherwise pursuant to this Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, as the case may be,
and shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of or otherwise pursuant to this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issuance 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 by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant. Without
limiting the generality of the foregoing, the Company: (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect; and (ii) will take all such
actions as the Company shall reasonably determine to be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
(f) BLUE SKY LAWS. The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably
-9-
<PAGE>
determine are necessary to qualify the Warrant Shares for, or obtain exemption
for the Warrant Shares for, sale to the Holder of this Warrant upon the exercise
hereof under applicable securities or "blue sky" laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Holder of this Warrant prior to such date; provided, however, that the Company
shall not be required to qualify as a foreign corporation or file a general
consent to service of process in any such jurisdiction; provided, further, that
Holder makes such representations and warranties as may be required to obtain
such qualification or exemption.
5. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares issuable upon the exercise of the
Warrants, shall be subject to adjustment from time to time as provided in this
Section 5.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
or down to the nearest cent; provided that, in no event shall the Exercise Price
per share be reduced below $.01.
(a) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at
any time during the Exercise Period, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company, at
any time during the Exercise Period, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, then, after the date of record for
effecting such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased.
(b) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 5, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be increased
or decreased to equal the quotient obtained by dividing (i) the product of (a)
the Exercise Price in effect immediately prior to such adjustment, multiplied by
(b) the number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment, by (ii) the adjusted Exercise Price.
(c) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of
the Company with, or merger of the Company into, any other entity, or in case of
any sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time during the Exercise Period, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the Holder
of this Warrant will have the right to acquire and receive upon exercise of this
Warrant in
-10-
<PAGE>
lieu of the shares of Common Stock immediately theretofore acquirable upon
the exercise of this Warrant, such shares of stock, securities, cash or assets
as may be issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore acquirable and receivable upon
exercise of this Warrant had such consolidation, merger or sale or conveyance
not taken place. In any such case, the Company will make appropriate provision
to insure that the provisions of this Section 5 will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor entity (if other than the Company) assumes by written
instrument the obligations under this Warrant and the obligations to deliver to
the Holder of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may be entitled to acquire.
(d) DISTRIBUTION OF ASSETS. In case the Company shall declare or
make any distribution of its assets (other than cash) (or rights to acquire its
assets (other than cash)) to holders of Common Stock as a partial liquidating
dividend, stock repurchase, by way of return of capital or otherwise (including
any dividend or distribution to the Company's shareholders of shares (or rights
to acquire shares) of capital stock of a subsidiary) (a "Distribution"), at any
time during the Exercise Period, then, upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, the Holder
of this Warrant shall be entitled to receive its pro-rata amount of such assets
(or such rights) as would have been payable to the holder had such holder been
the holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution.
(e) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the Holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares issuable upon exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(f) MINIMUM ADJUSTMENT OF THE EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than $.01 of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than $.01 of such
Exercise Price.
-11-
<PAGE>
(g) NO FRACTIONAL SHARES. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(h) CERTAIN DEFINITIONS.
(i) "BUSINESS DAY" means any day, other than a Saturday or
Sunday or a day on which banking institutions in the State of California are
authorized or obligated by law, regulation or executive order to close.
(ii) "CLOSING PRICE" shall mean for the Common Stock as of any
date, the last sale price of such security on the principal United States
securities exchange or trading market on which such security is listed or traded
as reported by the Research Service of Nasdaq Trading and Market Services (or a
comparable reporting service of national reputation selected by the Holder and
reasonably acceptable to the Company if the Research Service of Nasdaq Trading
and Market Services is not then reporting last sale prices of such security)
(collectively, "NTMS"), or if the foregoing does not apply, the last reported
sale price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by NTMS, or, if no sale price is
reported for such security by NTMS, the average of the bid prices of any market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a
Trading Day (as defined below) for such security, on the next preceding day
which was a Trading Day. If the Closing Price cannot be calculated for a share
of Common Stock as of either of such dates on any of the foregoing bases, the
Closing Price of such security on such date shall be the fair market value as
determined by an investment banking firm selected by mutual agreement of the
Holder and the Company, with the costs of such appraisal to be borne equally by
the Company and the Holder. The manner of determining the Closing Price of the
Common Stock set forth in the foregoing definition shall apply with respect to
any other security in respect of which a determination as to market value must
be made.
(iii) "COMMON STOCK," for purposes of this Section 5, includes
the Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 5(c) hereof, the stock or other securities or
property provided for in such Section.
-12-
<PAGE>
(iv) "MARKET PRICE" shall mean, with respect to any date of
determination, the average Closing Price during the ten (10) Trading Days ending
on the Trading Day immediately preceding such date of determination,
appropriately adjusted to reflect any stock dividend, stock split or similar
transaction during either such relevant period. The manner of determining the
Market Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination as
to market value must be made hereunder.
(v) "TRADING DAY" shall mean a Business Day on which at least
1,000 shares of Common Stock are traded on the principal United States
securities exchange or trading market on which such security is listed or traded
as reported by NTMS.
6. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the Holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided 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 the Holder of this Warrant.
7. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the Holder hereof to purchase Warrant Shares, 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 Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
8. TRANSFER; EXCHANGE; REDEMPTION AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted
to the Holder hereof are transferable up to ten of the Holder's employees in
whole or in part, at any one time, upon surrender of this Warrant, together with
a properly executed assignment in the form attached hereto, at the office or
agency of the Company referred to in Section 8(e) below, provided, however, that
any transfer or assignment shall be subject to the conditions set forth in
Section 8 hereof. Until due presentment for registration of transfer on the
books of the Company, the Company may treat the registered Holder hereof as the
owner and Holder hereof for all purposes, and the Company shall not be affected
by any notice to the contrary. Notwithstanding anything to the contrary
contained herein, the registration rights described in Section 3 hereof are
assignable only to up to ten of the Holder's employees in accordance with the
provisions of Section 3.
-13-
<PAGE>
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the Holder hereof at the office or
agency of the Company referred to in Section 8(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrant to represent the right to purchase such number of
shares as shall be designated by the Holder hereof at the time of such
surrender. No new Warrant shall be issued for a denomination that is less than
12,500 shares of Common Stock.
(c) REPLACEMENT OF WARRANT. 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
delivery of an indemnity agreement and/or bond reasonably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION: PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 8, this Warrant shall be promptly canceled by the Company. The
Holder shall pay all taxes and all other expenses and charges payable in
connection with the preparation, execution, and delivery of Warrants pursuant to
this Section 8.
(e) WARRANT REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, (i)
that the Holder of this Warrant furnish to the Company a written opinion of
counsel, reasonably satisfactory to the Company stating that such exercise,
transfer, or exchange may be made without registration under the Securities Act
and under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance reasonably acceptable to the Company and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act; provided that no such opinion, letter, or status
-14-
<PAGE>
as an "accredited investor" shall be required in connection with a transfer
pursuant to Rule 144 under the Securities Act.
9. NOTICES. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
<TABLE>
<S> <C>
If to the Company: TREGA BIOSCIENCES, INC.
9880 Campus Point Drive
San Diego, CA 92121
Telephone No.: 858-410-6500
Facsimile No.: 858-410-6501
Attention: Chief Executive Officer
With a copy to: Pillsbury Madison & Sutro LLP
50 Fremont Street
San Francisco, CA 94105
Telephone No.: 415-983-1000
Facsimile No.: 415-983-1200
Attention: Thomas E. Sparks
</TABLE>
If to the Holder, at such address as such Holder shall have provided in
writing to the Company, or at such other address as such holder furnishes by
notice given in accordance with this Section 9, and, for any notice under
Section 3, with a copy to:
First Security Van Kasper
Telephone No.: (310) 443-3403
Facsimile No.: (310) 443-3400
Attention: David H. Horwich
Senior Vice President
Corporate Finance
10. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts made and to be performed in the State of California. Each of the
Company and the Holder irrevocably consents to the jurisdiction of the United
States federal courts and state courts located in the State of California in any
suit or proceeding based on or arising under this Warrant and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in such
courts.
-15-
<PAGE>
11. MISCELLANEOUS.
(a) AMENDMENTS. Except as provided in Section 8(g) hereof, this
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the Holder hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. This Warrant may be exercised at any time
or from time to time during the Exercise Period, by presentation and surrender
of this Warrant to the Company at its principal executive offices with a written
notice of the Holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a "Cashless Exercise"). In the
event of a Cashless Exercise in lieu of paying the Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying (i) the number of Warrant Shares to which it would
otherwise be entitled by (ii) a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be the Market Price
per share of Common Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-16-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
TREGA BIOSCIENCES, INC.
By: /s/ Michael G. Grey
------------------------
Name: Michael G. Grey
----------------------
Title: President and CEO
---------------------
-17-
<PAGE>
FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To: TREGA BIOSCIENCES, INC.
Telephone No.: 858-410-6500
Facsimile No.: 858-410-6501
Attention: General Counsel
The undersigned hereby irrevocably exercises the right to purchase
______________ shares of the Common Stock of TREGA BIOSCIENCES, INC., a
corporation organized under the laws of the State of Delaware (the "Company"),
and either:
/ / tenders herewith payment of the Exercise Price in full, in the amount
of $_______________ in cash, by certified or official bank check or by
wire transfer for the account of the Company; or
/ / elects pursuant to Section 11(c) of the Warrant to convert such Warrant
into Common Stock on a cashless exercise basis.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
/ / The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this
Exercise Agreement to the account of the undersigned or its nominee (which
is) with DTC through its Deposit Withdrawal Agent Commission System ("DTC
Transfer").
/ / In lieu of receiving the shares of Common Stock issuable pursuant to this
Exercise Agreement by way of DTC Transfer, the undersigned hereby requests
that the Company cause its transfer agent to issue and deliver to the
undersigned physical certificates representing such shares of Common
Stock.
-18-
<PAGE>
The undersigned requests that a Warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant, in the name of
the Holder and delivered to the undersigned at the address set forth below:
Dated:
--------------------------- ------------------------------
Signature of Holder
------------------------------
Name of Holder (Print)
Address:
-------------------------------
-19-
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the attached Warrant, with
respect to the number of shares of Common Stock covered thereby issuable
pursuant to the attached Warrant set forth hereinbelow, to:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
and hereby irrevocably constitutes and appoints __________________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated:
-----------------------,
In the presence of Name:
--------------------------
Signature:
----------------------- -------------------
Title of Signing Officer or
Agent (if any):
Address:
------------------------
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
-20-
<PAGE>
EXHIBIT 5.1
LAW OFFICES OF
PILLSBURY MADISON & SUTRO LLP
LOS ANGELES POST OFFICE BOX 7880 PALO ALTO
NEW YORK SAN FRANCISCO, CALIFORNIA 94120 ORANGE COUNTY
SACRAMENTO TELEPHONE (415) 983-1000 SAN DIEGO
SAN FRANCISCO TELECOPIER (415) 983-1200 HONG KONG
WASHINGTON, D.C. TOKYO
May 8, 1999
Trega Biosciences, Inc.
9880 Campus Point Drive
San Diego, CA 92121
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel for Trega Biosciences, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of 3,886,668 shares of Common Stock, $.001
par value (the "Common Stock"), of the Company, to be offered and sold by
certain stockholders of the Company (the "Selling Stockholders"). In this regard
we have participated in the preparation of a Registration Statement on Form S-3
relating to such 3,886,668 shares of Common Stock. (Such Registration Statement,
as amended, is herein referred to as the "Registration Statement.")
We are of the opinion that the shares of Common Stock to be offered and
sold by the Selling Stockholders have been duly authorized and legally issued
and are fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
/s/ PILLSBURY MADISON & SUTRO LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3) and related Prospectus of Trega
Biosciences, Inc. for the registration of 3,886,668 shares of its common
stock and to the incorporation by reference therein of our report dated
January 27, 2000, with respect to the consolidated financial statements of
Trega Biosciences, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1999, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
San Diego, California
May 3, 2000
