<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DYAX CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 8731 04-3053198
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>
ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139, (617) 225-2500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HENRY E. BLAIR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
DYAX CORP., ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139, (617) 225-2500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
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<S> <C>
NATHANIEL S. GARDINER, ESQ. STEVEN D. SINGER, ESQ.
PALMER & DODGE LLP HALE AND DORR LLP
ONE BEACON STREET 60 STATE STREET
BOSTON, MASSACHUSETTS 02108 BOSTON, MASSACHUSETTS 02109
(617) 573-0100 (617) 526-6000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration 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, check
the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(1)(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share... 2,875,000 $12.00 $34,500,000 $10,177.50
=======================================================================================================================
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(1) Includes shares which the Underwriters may purchase to cover
over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 23, 1998
PROSPECTUS
2,500,000 SHARES
DYAX CORP.
COMMON STOCK
------------------
All of the 2,500,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), being offered hereby (the "Offering") are being sold by Dyax
Corp. ("Dyax" or the "Company"). Prior to this Offering, there has not been a
public market for the Common Stock of the Company. It is currently estimated
that the initial public offering price will be between $ and
$ per share. See "Underwriting" for information relating to the factors
considered in determining the initial public offering price.
Application has been made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "DYAX."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $ $ $
- -------------------------------------------------------------------------------------------------------------
Total(3) $ $ $
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</TABLE>
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses payable by the Company estimated at $900,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase
up to an additional 375,000 shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised
in full, the total Price to Public, Underwriting Discounts and
Commissions, and Proceeds to Company will be $ , $ and
$ , respectively.
------------------
The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or
, 1998 at the office of Smith Barney Inc., 333 West 34th Street, New
York, New York 10001.
------------------
SALOMON SMITH BARNEY
CIBC OPPENHEIMER
PACIFIC GROWTH EQUITIES, INC.
, 1998.
<PAGE> 3
[IMAGE]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements, including the Notes
thereto, contained elsewhere in this Prospectus. Investors should carefully
consider the information set forth under the heading "Risk Factors." Unless
otherwise indicated the information in this Prospectus: (i) assumes the
conversion of all series of outstanding shares of the Company's Class A
Convertible Preferred Stock (the "Convertible Preferred Stock") into Common
Stock upon consummation of this Offering; (ii) assumes no exercise of the
Underwriters' over-allotment option; (iii) reflects a 0.652-for-1 reverse stock
split of the Common Stock; and (iv) reflects an amendment to the Company's
Restated Certificate of Incorporation to be filed upon closing of this Offering
to create a class of authorized but undesignated Preferred Stock.
THE COMPANY
Dyax's phage display technology has broad potential commercial applications
in the fields of therapeutic, diagnostic and separations products. The Company's
patented and proprietary phage display technology ("Phage Display") is a
versatile, high throughput technology platform which the Company believes can
reduce costs, shorten development times and lead to the commercialization of
more effective products in these fields. The Company also develops, manufactures
and sells fully-integrated chromatography separations systems under the Biotage
trade name. Dyax is using Phage Display and its expertise in separations
technology to pursue a diversified business strategy of non-exclusive patent
licensing, discovery and development of therapeutic and diagnostic products and
the development of innovative chromatography and affinity separations products.
Dyax currently has licensed its Phage Display patents to more than 25 companies,
is engaged in four corporate collaborative partnerships and is performing or has
completed eight funded discovery projects. In addition, the Company has sold its
Biotage products to over 50 pharmaceutical and biotechnology companies. Dyax is
generating near-term revenues from sales of its separations products, funding
from sponsored research and fees from patent licenses, while maintaining a
long-term focus on its therapeutic and diagnostic product development programs,
the expansion of existing separations product lines and the development of
affinity separations products.
Phage Display is used to discover and develop compounds that bind (binding
compounds) to a molecule of interest (target). Molecular binding is the key to
the function of most therapeutic, diagnostic and separations products.
Therapeutic and diagnostic products bind to target molecules to achieve a
desired effect and are generally selected for their ability to distinguish
between the correct target and other closely related molecules (specificity) and
to bind tightly to a target (affinity) under appropriate physiological
conditions. Binding also plays a significant role in the separations products
used to purify material for the development and manufacture of a therapeutic
product. The failure to achieve high specificity and high affinity in binding
can result in low levels of efficacy, side effects and toxicities for
therapeutic products, inaccurate results for diagnostic products and reduced
yield and purity achieved with separations products.
Using the speed and diversity of a self-replicating biological system,
Dyax's Phage Display allows scientists to select proteins that bind to a target.
The selection is made from a diverse set of up to hundreds of millions of
proteins displayed on the surface of a bacterial virus, bacteriophage, known
commonly as "phage." The Phage Display process generally consists of: (i)
generating a large collection of phage, known as a "library," that contains
genes encoding up to hundreds of millions of related proteins, or potential
binding compounds; (ii) screening the library by exposing it to a specified
target and isolating those phage whose displayed proteins bind to the target;
and (iii) analyzing the selected binding compounds for relative specificity and
affinity to the target.
Compared to conventional or combinatorial chemistry approaches used for the
identification of binding compounds, the Company believes that Phage Display has
several advantages, including greater diversity and speed, ease of amplification
and rapid optimization. In the discovery of therapeutic and diagnostic products,
scientists can use Phage Display to identify binding compounds with high
specificity and affinity more rapidly than by using other existing methods. In
the development of separations processes, the Company believes that Phage
Display can be used to identify binding compounds that enable the purification
of therapeutic products more cost effectively and efficiently, thereby
shortening the development and manufacturing processes for such products.
3
<PAGE> 5
The Company has established a broad licensing program of its Phage Display
patents for use in the fields of therapeutics, antibody-based in vitro
diagnostics and Phage Display research kits. Since 1996, the Company has granted
non-exclusive licenses to more than 25 companies, including Affymax
Technologies, N.V. (and its parent, Glaxo Wellcome PLC), Bristol-Myers Squibb,
Chiron Corporation, Genzyme Corporation, Merck & Co., Inc., Monsanto Company and
Pharmacia & Upjohn, Co. Dyax believes that the success of its patent licensing
program provides support for its patent position in Phage Display and the
utility of Phage Display as an enabling discovery technology. Under these
licenses, Dyax has retained all rights to practice Phage Display in the fields
of separations and in vivo imaging.
Dyax is leveraging its Phage Display in therapeutics and diagnostics
through collaborative arrangements as well as through internal discovery and
development programs. Dyax has used Phage Display to identify three proprietary
lead therapeutic compounds with potential applications in inflammatory diseases
and certain cancers and one lead diagnostic compound for in vivo imaging of
inflammation. One of these proprietary lead compounds, EPI-HNE4, is currently in
preclinical development for the treatment of pulmonary inflammation resulting
from cystic fibrosis in collaboration with Debiopharm S.A. A modified form of
EPI-HNE4 is in preclinical development as a diagnostic imaging agent for sites
of inflammation (including infection) in collaboration with the University of
Massachusetts Medical Center. Additionally, the Company is collaborating with
EPIX Medical Inc. in the field of cardiovascular imaging to identify binding
compounds to be used in an imaging agent to detect deep vein thrombosis and
pulmonary embolism. The Company is also collaborating with Novo Nordisk A/S to
develop new tools for the rapid evaluation of certain of Novo Nordisk's
therapeutic candidates. In addition, the Company has funded discovery projects
with SangStat Medical Corporation, Tularik, Inc. and Athena Neurosciences, Inc.
Dyax is a leader in the development, manufacture and sale of cartridge
chromatography products and systems. Chromatography is used to purify a desired
product or to remove impurities from a mixture during the discovery, development
and manufacturing of a therapeutic product. The Company believes that its
cartridge-based systems provide advantages to its customers compared to
manually-packed and pre-packed columns, including greater speed and convenience,
lower cost, improved safety and reproducible performance. The Company has sold
its current line of Biotage chromatography products and systems to over 50
leading pharmaceutical and biotechnology companies worldwide, including Bachem
AG, Bayer Corporation, Genentech, Inc., F. Hoffmann-La Roche, Ltd., Merck & Co.,
Inc., Novartis, Pfizer, Inc. and Pharmacia & Upjohn, Co.
The Company believes that Phage Display is a powerful tool for developing
new affinity separations media that can cost effectively and efficiently purify
complex therapeutic products, such as proteins and vaccines. Dyax is using Phage
Display to identify binding compounds known as affinity ligands that can be used
to purify therapeutic products in commercial quantities. The Company believes
that these new affinity separations products can reduce the time, cost and risk
associated with the purification process. Dyax plans to combine its Biotage
chromatography systems with any affinity separations media that may be developed
using Phage Display to provide fully-integrated systems for the purification of
natural products, peptides, proteins, organic compounds and other molecules.
Dyax has a collaborative arrangement with CropTech Development Corporation to
develop novel affinity separations technologies. Dyax also has funded discovery
projects with several different companies, including Argonex, Inc., Genetics
Institute, Inc., Genzyme Transgenics Corporation, Merck & Co., Inc. and Pall
Corporation.
The Company was incorporated in Delaware in 1989 under the name Biotage,
Inc. and merged with Protein Engineering Corporation ("PEC") in August 1995. The
Company's principal executive offices are located at One Kendall Square,
Building 600, Cambridge, Massachusetts 02139, and its telephone number is (617)
225-2500.
4
<PAGE> 6
THE OFFERING
Common Stock offered................ 2,500,000 shares
Common Stock outstanding after the
Offering............................ 9,761,353 shares(1)
Use of Proceeds..................... To fund research and development,
repayment of $763,000 of indebtedness,
working capital and other general
corporate purposes, including possible
technology in-licensing and
acquisitions. See "Use of Proceeds."
Proposed Nasdaq National Market
Symbol.............................. DYAX
RISK FACTORS
See "Risk Factors" commencing on page 6 for a discussion of certain factors
that should be considered by prospective purchasers of the Common Stock offered
hereby.
SUMMARY FINANCIAL DATA
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<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues......................... $ 4,099 $ 2,713 $ 4,020 $ 7,037 $ 9,776
------- ------- ------- ------- -------
Operating expenses:
Cost of products sold............... 2,792 1,794 1,952 2,046 3,174
Research and development............ 894 894 1,343 3,140 5,575
Selling, general and
administrative.................... 3,054 2,604 2,710 4,170 6,827
Other expenses(2)................... -- -- 4,554 -- --
------- ------- ------- ------- -------
Total operating expenses....... 6,740 5,292 10,559 9,356 15,576
------- ------- ------- ------- -------
Loss from operations................... (2,641) (2,579) (6,539) (2,319) (5,800)
Interest income (expense), net......... (97) (89) (46) (78) 265
------- ------- ------- ------- -------
Net loss............................... $(2,738) $(2,668) $(6,585) $(2,397) $(5,535)
======= ======= ======= ======= =======
Pro forma net loss per share -- basic
and diluted(3)...................... $ (0.83)
=======
Weighted average number of shares used
in computing pro forma net loss per
share -- basic and diluted.......... 6,706,680
==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------
ACTUAL AS ADJUSTED(4)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 4,664 $
Working capital........................................... 5,905
Total assets.............................................. 10,532
Long-term debt and capital lease obligations, less current
portion................................................ 1,078 383
Accumulated deficit....................................... (30,704) (30,704)
Total stockholders' equity................................ 6,263
</TABLE>
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(1) Excludes (i) 1,111,217 shares of Common Stock issuable upon the exercise of
outstanding stock options at a weighted average exercise price of $1.63 per
share, of which options to purchase 271,691 shares of Common Stock were
exercisable as of March 17, 1998, and (ii) 27,022 shares of Common Stock
issuable upon the exercise of outstanding warrants at an exercise price of
$3.97 per share. See "Description of Capital Stock" and See
"Management -- Stock Plans."
(2) Includes write-offs of an intangible asset in the amount of $456,000 and
incomplete technology in the amount of $4,098,000 in the year ended December
31, 1995.
(3) See Note 2 to Notes to Consolidated Financial Statements for a description
of the calculation of pro forma net loss per share.
(4) As adjusted to reflect the sale of 2,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $ per share (the
mid-point of the range set forth on the front cover) less estimated
underwriting discounts and commissions and offering expenses payable by the
Company and the use of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
5
<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby. The
Prospectus may contain forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus.
DEPENDENCE ON PHAGE DISPLAY; NEW AND UNCERTAIN TECHNOLOGY; NO CLINICAL TRIALS OR
SALES OF PHAGE DISPLAY-DERIVED PRODUCTS TO DATE
The Company has invested substantial resources in its Phage Display and
believes that the identification, development and commercialization of lead
binding compounds derived using this technology are critical to the Company's
success. All of the Company's Phage Display-derived product candidates are in
research or development, and neither the Company nor, to its knowledge, any of
its collaborative partners or licensees, has commenced clinical trials or
commercialized any products developed using Phage Display. The discovery and
development of therapeutic, diagnostic and affinity separations products derived
from Phage Display will be subject to risks of failure inherent in the product
development process. These risks include, among others, the possibilities that
(i) any therapeutic or diagnostic product candidates will be found to be
ineffective or toxic, or otherwise fail to receive necessary regulatory
approvals; (ii) any therapeutic or diagnostic product candidates, if safe and
effective, will prove difficult or impossible to manufacture on a large scale,
will be uneconomical to market, or will not achieve market acceptance; (iii)
proprietary rights of third parties will preclude the Company or its
collaborative partners or licensees from marketing any such products; and (iv)
third parties will market equivalent or superior products. In addition, there
can be no assurance that affinity separations products developed using Phage
Display will become accepted as effective technology for use in the development
and implementation of purification processes for pharmaceutical manufacture. As
a result, there can be no assurance that the Company will ever have marketable
products developed using Phage Display or that it will ever generate revenues
from any such products developed and marketed by its collaborative partners or
licensees or develop a sustainable, profitable business. In any event, the
Company does not expect to receive revenues from the sale of any of such
products for the next several years, if ever. The failure to identify, develop
and commercialize lead binding compounds derived using Phage Display by the
Company and/or by its collaborative partners and licensees would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's success will depend upon the acceptance of Phage Display as
an effective discovery process for therapeutic and diagnostic products by its
current and prospective collaborative partners and licensees. There can be no
assurance that the Company's current and prospective collaborative partners and
licensees will continue to use or adopt Phage Display or other technologies
developed by the Company rather than alternative technologies, or that the
Company will be able to attract future collaborative partners or licensees on
acceptable terms. See "Business."
LIMITED REVENUES TO DATE FROM SEPARATIONS PRODUCTS; NEED TO DEVELOP NEW
SEPARATIONS PRODUCTS
The Company has received only limited revenues to date from the sale of
chromatography separations products. Many of the Company's existing separations
products are in highly competitive, mature markets. The Company's ability to
compete successfully in the market for chromatography separations products will
depend upon its ability to develop, introduce and market new
chromatography-based products and new products based upon the application of
Phage Display to the processes used in the manufacture of biopharmaceuticals.
The Company is seeking to develop or acquire new separations products. There can
be no assurance that the Company's BioFLASH product line under development will
be successfully introduced or that the Company will be successful in developing,
acquiring or selling any new products. To date, the Company's high pressure
liquid chromatography ("HPLC") separations products have had the protection of
certain patent rights licensed exclusively to the Company. The Company cannot
predict what impact, if any, the recent expiration of the underlying patent will
have on its separations business.
6
<PAGE> 8
The Company is in the early stages of developing Phage Display-derived
affinity separations products. There can be no assurance that the Company's
affinity separations technology will result in commercialized products or that
such products will achieve market acceptance, which will depend in large part on
the Company's ability to develop and demonstrate the relative effectiveness,
efficiency, ease of use and safety of any such products compared to existing or
new separations technologies. If the Company's new chromatography products or
Phage Display-derived affinity separations products fail to achieve market
acceptance, it would have a material adverse effect on the Company's existing
separations business and on the Company's business, financial condition and
results of operations. See "Business -- Dyax Programs and Products -- Biotage
Separations Products and Research and Affinity Separations Development
Programs."
SIGNIFICANT FLUCTUATIONS IN REVENUES AND OPERATING RESULTS
The Company has experienced significant fluctuations in its revenues and
operating results from quarter to quarter and year to year, and it expects these
fluctuations to continue in the future. The Company also expects that an
increasingly significant portion of its anticipated revenues for the foreseeable
future will be comprised of up-front fees and research and development funding
paid pursuant to collaborative and licensing arrangements. The Company believes
that future fluctuations in revenues and operating results may depend on various
factors, such as the timing of the Company's increased research and development
expenses, the establishment of new collaborative arrangements, the development
and commercialization programs of current and prospective collaborative
partners, the completion of certain milestones and the timing of customer
purchases of larger separations equipment systems.
The Company's current and planned expense levels are, to a large extent,
fixed in the short term, and are based in part on its expectations as to future
revenues. The Company may be unable to adjust spending in a timely manner to
compensate for any revenue shortfall. In addition, in any fiscal quarter the
Company may receive no payments from its collaborative partners. Consequently,
revenues are difficult to forecast and may vary significantly from quarter to
quarter or year to year and revenues or results of operations in any period will
not necessarily be indicative of revenues or operating results in subsequent
periods and should not be relied upon as any indication of future performance.
Due to the foregoing or other factors, it is likely that such quarterly
fluctuations in revenue or operating results will from time to time not meet the
expectations of securities analysts or investors, which may have a material
adverse effect on the price of the Company's Common Stock. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"-- No Prior Public Market for Common Stock; Volatility of Stock Price."
DEPENDENCE ON COLLABORATIONS AND LICENSING
The Company's success will depend upon the formation of multiple
collaborative arrangements with third parties on a regular basis and the
continued licensing and broad practice of Phage Display by licensed third
parties. There can be no assurance that the Company will be able to establish
additional collaborative arrangements on acceptable terms, or that current or
any prospective collaborative arrangements, or development programs of Phage
Display licensees, will ultimately be successful. The Company's receipt of
revenues, if any, from any current and prospective collaborative and licensing
arrangements will be affected by the timing and efforts expended by the Company
and its existing collaborative partners and licensees, as well as the
proprietary position of the technology and products resulting from such
collaborative arrangements. The failure to enter into additional collaborative
or licensing arrangements would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's collaborative arrangements do not obligate the collaborative
partners to develop or commercialize lead compounds discovered by the Company.
Collaborative partners may independently develop a competing lead compound
identified either on their own or in collaboration with others, including the
Company's competitors. In addition, there can be no assurance that current or
prospective collaborative partners will not pursue alternative technologies or
develop alternative products. A collaborative partner's performance under its
agreement with the Company could be materially adversely affected if such
collabora-
7
<PAGE> 9
tive partner were involved in a business combination or in the event that the
collaborative partner had a significant strategic shift in its business focus.
The Company is also dependent upon the expertise and dedication of sufficient
resources by its collaborative partners to develop and commercialize any
products developed using Phage Display. The amount and timing of resources that
current and future collaborative partners, if any, devote to collaborative
arrangements with the Company are not within the control of the Company. See
"-- Dependence on Phage Display; New and Uncertain Technology; No Clinical
Trials or Sales of Phage Display-Derived Products to Date."
The Company is dependent upon its collaborative partners and licensees to
inform Dyax of products developed using Phage Display-derived binding compounds.
Conflicts may arise between the Company and any of its collaborative partners
and licensees as to whether a potential product developed by the collaborative
partner or licensee is a Phage Display-derived product subject to milestone and
royalty payments to the Company. A product developed by a collaborative partner
or licensee may also be a derivative of one or more lead compounds provided to
the collaborative partner by the Company. While the Company's existing
collaborative arrangements and licenses provide that the Company retains
milestone and royalty payment rights with respect to potential products
developed from Phage Display-derived binding compounds, there can be no
assurance that any of the Company's collaborative partners and licensees will
not dispute their obligation to make payments with respect to any such products.
Further, the Company's collaborative partners and licensees generally may
terminate their agreements with the Company upon short notice. One collaborative
arrangement with the Company was recently terminated. The termination of a
significant number of the Company's existing or prospective collaborative
arrangements or licenses would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business -- Collaborations" and "-- Uncertainties Related to Patents and
Proprietary Rights."
UNCERTAINTIES RELATED TO PATENTS AND PROPRIETARY RIGHTS
The Company's success will significantly depend upon its ability to obtain
patent protection for its products and technologies under development, to defend
its issued patents, including patents and patent applications related to phage
display, biotechnology and separations, and to avoid the infringement of patents
issued to others. The Company is aware of certain patents for which it will
likely need to obtain licenses to commercialize its products and technologies.
While the Company believes that it will be able to obtain such licenses, there
can be no assurance that such licenses, or licenses to other patent rights, will
be available on reasonable terms, if at all. Further, if such licenses are not
available, the Company may need to halt or modify the activities which are
covered by the other patent rights, which could have a material adverse effect
on the Company's business, financial condition and results of operations.
Patent positions are complex in the fields of biotechnology, therapeutic
and diagnostic products and separations processes and products and the validity
or infringement of any given patent may be uncertain. In order for the Company
to commercialize a process or product, many patent rights of other parties may
need to be analyzed and often several licenses may be required. There can be no
assurance that any patents issued to the Company or its collaborative partners,
or for which the Company has licensed rights, will not be challenged, narrowed,
invalidated or circumvented, or that the rights granted thereunder will provide
competitive advantages to the Company. In addition, there can be no assurance
that (i) the Company will be able to obtain patent protection for any
therapeutic, diagnostic or separations products it may develop; (ii) others will
not obtain patents covering the manufacture, use or sale of such products; (iii)
the Company's patents or any future patents will prevent other companies from
designing their products or conducting their activities so as to avoid the
coverage of the claims of the Company's patents; or (iv) others will not be able
to develop other competing technologies to supplement or replace the Company's
processes or products.
There exists substantial patent litigation in the pharmaceutical,
biomedical and biotechnology industries. Patent litigation is generally
time-consuming, costly and involves complex legal and factual questions, and the
outcome is frequently difficult to predict. Litigation may be necessary to
enforce the Company's patent and license rights, to enforce or defend an
infringement claim, or to determine the scope and validity of others'
proprietary rights. Many of the Company's competitors have substantially greater
resources than the Company, and such competitors may be able to sustain the
costs of complex patent litigation to a greater
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degree and for a longer period of time than the Company. In addition, such
proceedings or litigation, or any other proceedings or litigation to protect the
Company's intellectual property rights or defend against infringement claims by
others, could result in substantial costs and a diversion of management's time
and attention, subject the Company to significant liabilities to third parties,
and require the Company to cease using the technology or to license disputed
rights from third parties (which licenses may not be available at a reasonable
cost, if at all), any of which events could have a material adverse effect on
the business, financial condition and results of operations of the Company.
The Company is particularly dependent on its U.S. and foreign patents and
patent applications relating to its Phage Display technology (the "Phage Display
Patent Rights"). Although the Company is not aware of any challenges to the
Phage Display Patent Rights to date in the United States, there can be no
assurance that a challenge will not be brought in the future. The Company plans
to protect its patent rights, including the Phage Display Patent Rights, to the
maximum practical extent. There can be no assurance that the Company will have
sufficient resources necessary to defend its patent rights against all such
challenges. However, if the Company commences legal action against an alleged
infringer of any of the Company's patent rights, the alleged infringer can be
expected to claim that the Company's patent rights are invalid for one or more
alleged reasons, thus subjecting the Company's patent rights in question to a
judicial determination of validity with the attendant risk that an adverse
determination could result in a loss of patent rights. In addition, in certain
situations, an alleged infringer could seek a declaratory judgment of invalidity
of the Company's patents. Uncertainties resulting from the initiation and
continuation of any patent or related litigation, including those involving the
Phage Display Patent Rights, could have a material adverse effect on the
Company's ability to maintain and expand its licensing program and collaborative
arrangements and to compete in the marketplace pending resolution of the
disputed matter.
Two European patent oppositions were filed in late 1997 against the
Company's Phage Display patent issued by the European Patent Office ("EPO"), and
the Company expects that these oppositions will not be resolved for several
years. The oppositions are currently being reviewed by the Company's patent
counsel, and Dyax intends to vigorously defend its European patent. However,
there can be no assurance that the Company will prevail in the opposition
proceedings or any litigation contesting the validity or scope of this EPO
patent or other foreign patents, if any.
The Phage Display Patent Rights are central to the Company's non-exclusive
patent licensing program. In connection with the licensing program, the Company
regularly monitors publications and other sources for information regarding the
practice by others of technology covered by the Phage Display Patent Rights, and
there are unlicensed parties whose activities the Company believes may be
covered by its issued patents. In such circumstances, the Company generally
seeks to negotiate a Phage Display license agreement. There can be no assurance,
however, that the Company will be able to identify all parties practicing the
Phage Display Patent Rights, all products derived by such parties, including its
licensees, or that the Company will be successful in entering into license
agreements with parties that the Company believes require such a license. In
jurisdictions where the Company has not applied for or obtained patent rights,
the Company will be unable to prevent others from developing or selling products
or technologies derived using Phage Display. In addition, even in jurisdictions
where the Company has Phage Display Patent Rights, there can be no assurance
that the Company will be able to prevent others from selling or importing
products or technologies derived elsewhere using Phage Display. The inability of
the Company to protect and enforce its patent rights, whether by licensing or
otherwise, could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company is aware that other parties have patents and pending
applications to various phage display inventions. The Company has filed, and in
the future may file, oppositions to European and other patents issued to others.
To date, the Company has filed oppositions against two European patents in the
general field of phage display. The Company does not believe these European
patents cover any of its present activities, but the Company cannot predict
whether the claims in these patents may, in their current or future form, cover
the Company's activities or the activities of its collaborative partners and
licensees. In addition, through its patent licensing program, the Company has
secured a limited freedom to practice some of these patent rights pursuant to
its standard license agreement, which contains a covenant by the licensee that
it will not sue the
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Company under certain of the licensee's phage display improvement patents. The
Company may from time to time seek affirmative rights of license or ownership
under existing patent rights relating to phage display technology of others.
There can be no assurance, however, that the Company will be successful in
maintaining any covenants of nonsuit from its licensees, or in acquiring similar
covenants in the future, or that the Company will be able to obtain satisfactory
licenses. The inability of the Company to obtain and maintain such licenses and
covenants could have a material adverse effect on the Company's business,
financial condition and results of operations.
To protect its existing and future chromatography separations products, the
Company relies primarily upon trade secrets and know-how, as well as the
experience and skill of its technical personnel. The Company also has several
patents and patent applications on its proprietary chromatography technology
which are not based on Phage Display, but it cannot predict the extent to which
any such patents or future patents will provide protection for its existing or
any new separations products.
In all of its activities, the Company relies substantially upon proprietary
materials and information, trade secrets and know-how to conduct its research
and development activities and to attract and retain collaborative partners,
licensees and customers. Although the Company takes steps to protect these
materials and information, including through the use of confidentiality and
other agreements with its employees, consultants and academic and commercial
relationships, there can be no assurance that these steps will be adequate, that
these agreements will not be violated, that there will be an available or
sufficient remedy for any such violation or that others will not also develop
similar proprietary information. See "Business -- Patents and Proprietary
Rights."
HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY
The Company has a history of operating losses. For the years ended December
31, 1995, 1996 and 1997, the Company had net losses of approximately $6.6
million, $2.4 million, and $5.5 million, respectively. As of December 31, 1997,
the Company had an accumulated deficit of approximately $30.7 million. The
Company anticipates that its research and development efforts will increase
significantly in the future and it expects to incur significant operating losses
over the next several years. There can be no assurance that the Company will
ever be able to generate sufficient revenues from the sale of products to offset
the expenses of these efforts. The Company has not realized any significant
revenues from the achievement of milestones or royalties from the discovery,
development or sale of a commercial product by a collaborative partner or
licensee and no such revenue from these sources is expected for at least several
years, if ever. To date, all revenues have been generated from: (i) sales of
chromatography separations systems and products; (ii) signing and maintenance
fees paid for licenses of Phage Display patents; and (iii) research and
development funding paid by the Company's collaborative partners. The Company's
ability to achieve profitability will depend upon its ability, alone or with
others, to introduce new chromatography separations products, to develop
affinity separations products derived from Phage Display, to complete discovery
and development of therapeutic and diagnostic lead compounds and to establish
additional collaborative arrangements. There can be no assurance that the
Company will ever be able to achieve or sustain profitability. See "Selected
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company anticipates that its existing capital resources, including
anticipated revenues and the net proceeds from this Offering, will be adequate
to fund the Company's operations into the first half of 2000, although there can
be no assurance that the Company will not require additional funds prior to such
date. The Company will need additional debt or equity financing before that date
if the Company's cash requirements exceed its current expectations, if the
Company generates less revenue than currently projected or if the Company is
unable to raise all of the funding contemplated by this Offering. The Company's
capital requirements depend on numerous factors, including sales of existing and
new Biotage separations products, the ability of the Company to enter into
additional collaborative arrangements, competing technological and market
developments, changes in the Company's collaborative arrangements and licenses,
the cost of preparing, filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights, the
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purchase of additional capital equipment, the progress of the Company's drug
discovery and separations technology programs and the progress of the
development and commercialization of milestone and royalty-bearing compounds by
the Company's collaborative partners and licensees. There can be no assurance
that the Company's existing separations business, collaborative arrangements and
licensing program will produce revenues adequate to fund the Company's operating
expenses. The Company anticipates that it will be required to raise additional
capital in order to continue its operations. Such capital may be raised through
additional public or private financings, as well as collaborative arrangements,
borrowings and other sources. To the extent that additional capital is needed,
it may be raised through the issuance of debt or the sale of equity or
convertible debt securities, and the issuance of such securities could result in
dilution to the Company's existing stockholders. There can be no assurance that
additional funding, if necessary, will be available on acceptable terms, if at
all. If adequate funds are not available, the Company may be required to curtail
operations significantly or relinquish rights to its technologies, product
candidates, products or potential markets that the Company would not otherwise
relinquish. The failure to receive additional funding would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
INTENSE COMPETITION; TECHNOLOGICAL OBSOLESCENCE
The industries in which the Company competes is characterized by intense
competition and rapid technological change. Competitors of the Company may
discover or develop important discovery technologies, targets or lead compounds
or therapeutic or diagnostic products in advance of Dyax or which are superior
to those developed by the Company or its collaborative partners, or may obtain
regulatory approvals of their products more rapidly than the Company and its
collaborative partners, any of which circumstances could have a material adverse
effect on the Company's business, financial condition and results of operations.
Competition is intense among organizations attempting to identify, optimize and
generate lead compounds for the development of therapeutic and diagnostic
products and technologies to improve purification in the manufacturing processes
for therapeutics. There are other advanced technologies and approaches for
generating and developing lead compounds for therapeutic, diagnostic and
separations products, including combinatorial chemistry, rational drug design,
molecular modeling and applications of phage display other than those that are
pursued by the Company. Many large pharmaceutical companies, which represent one
of the largest potential markets for the Company's products and services, are
developing these and other methodologies to improve the speed with which targets
and binding compounds can be identified. These other approaches include high
throughput robotics technology and automated parallel synthesis of new compounds
against which new targets may be screened, as well as large collections of
compounds already synthesized by competitors and other compounds available from
chemical supply catalogues. The Company also competes with research departments
of biotechnology companies, combinatorial chemistry companies, governmental
agencies and research and academic institutions, both in the United States and
abroad. Many of these competitors have substantially greater capital resources,
research and development staffs, facilities, manufacturing and marketing
experience, distribution channels and human resources than the Company. The
Company anticipates that it will also face increased competition in the future
as new companies enter the market and advanced technologies are developed.
The Company's chromatography separations business competes with several
companies that manufacture, market and sell chromatography separations and
purification systems. Many of these competitors have substantially greater
financial, technical and management resources and experience in marketing and
distribution of chromatography systems than the Company, and in some cases have
had long-term relationships with the Company's existing customers. In addition,
many therapeutic and diagnostic product manufacturers have traditionally
assembled their own chromatography systems. Furthermore, there can be no
assurance that any future affinity separations products developed using Phage
Display will become accepted as effective technology for use in purification
processes for the manufacture of pharmaceutical and other products. See
"-- Dependence on Collaborations and Licensing," "-- Limited Revenues to Date
from Separations Products; Need to Develop New Separations Products" and
"Business -- Competition."
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RELIANCE ON THIRD PARTIES FOR CONDUCT OF CLINICAL TRIALS AND MANUFACTURING
The Company has no preclinical or clinical development expertise and
intends to rely on third parties to design and conduct most of these activities,
if required. In addition, the Company has no manufacturing facilities for
therapeutics and diagnostics and intends to rely on third parties to produce the
materials for preclinical and clinical development purposes and commercial
manufacture. If any of these third parties are unable to perform these functions
or if the Company should encounter delays or difficulties with any such
providers, the development of one or more products could be delayed, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "-- Extensive Government Regulations; No
Assurance of Regulatory Approval; Hazardous Materials" and
"Business -- Government Regulation."
EXTENSIVE GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL; HAZARDOUS
MATERIALS
The Company is subject to extensive governmental regulatory requirements
and a lengthy approval process for any therapeutic and diagnostic product
candidates it may develop. The development and commercial use of any therapeutic
or diagnostic products that may be developed by the Company will be regulated by
numerous federal, state and local governmental authorities in the United States,
including the U.S. Food and Drug Administration (the "FDA"), and comparable
foreign regulatory authorities. Such regulations govern or influence, among
other things, the testing, manufacture, safety, efficacy, labeling, storage,
record keeping, reporting, approval and advertising and promotion of such
products. The regulations are a significant factor in the production and
marketing of any therapeutic or diagnostic product that may be developed by any
of the Company's collaborative partners or licensees, or if the Company
discovers such a product candidate and decides to develop it beyond the
preclinical phase. The nature and the extent to which such regulation may apply
will vary depending on the product. Virtually all products developed by or on
behalf of the Company or its collaborative partners or licensees will require
regulatory approval by such authorities prior to commercialization. In
particular, therapeutic products are subject to rigorous preclinical and
clinical testing and other approval procedures established by the FDA and
foreign regulatory authorities. Non-compliance with applicable regulations can
result in clinical study holds or delays, total or partial suspension of
production, governmental refusal to grant approvals, warning letters, fines,
withdrawal, recall or seizure of products, and civil and criminal penalties. The
process of obtaining regulatory approvals and the subsequent compliance with
appropriate federal and foreign regulations and statutes is time-consuming
(usually requiring five to more than ten years) and requires the expenditure of
substantial resources. Even if FDA regulatory approvals are obtained, a marketed
product is still subject to continuing review, and any later discovery of
previously unknown problems or the failure to comply with the applicable
regulatory requirements may result in product marketing restrictions or product
withdrawal or recall as well as possible civil or criminal sanctions. In
addition, manufacturing facilities for therapeutic and diagnostic products are
subject to inspection by the FDA and must comply with Good Manufacturing
Practice ("GMP") regulations. To ensure full technical compliance with such
regulations, a manufacturer must spend funds, time and effort in the areas of
production and quality control.
FDA regulations also apply to the production facilities and processes used
to manufacture therapeutic and diagnostic products, including the Company's
separations products and technology used in such processes. The Company believes
that the manufacturing procedures for its separations products and the
manufacturing procedures of its media suppliers comply with FDA regulations, but
any determination to the contrary that has substantial potential to adversely
affect the safety or effectiveness of the product could have a material adverse
affect on the Company's separations business. In addition, any change by a
biopharmaceutical company in its manufacturing process or equipment could
necessitate additional FDA review and approval. Such requirements will make it
more difficult for the Company to sell separations products and processes to
customers that have already applied for or obtained FDA approval for production
processes using different chromatography equipment or separations media.
Post-approval changes in labeling or promotion may also necessitate further FDA
review and approval.
The research and development processes of the Company involve the
controlled use of hazardous materials. The Company is subject to federal, state
and local laws and regulations governing the use,
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manufacture, storage, handling and disposal of such materials and certain waste
products. Although the Company believes that its activities currently comply
with the standards prescribed by such laws and regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that may result, and any such liability could exceed the
Company's insurance coverage, if applicable, and other resources of the Company.
In addition, there can be no assurance that the Company will not be required to
incur significant costs to comply with environmental laws and regulations in the
future. The occurrence of any such event or the incurrence of any such cost
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Government Regulation."
NEED TO ATTRACT AND RETAIN KEY EMPLOYEES
The Company is highly dependent on the principal members of its management,
scientific and product development staff. The loss of one or more key members of
its staff could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company does not maintain
key-man life insurance with respect to any of its employees and does not
currently intend to obtain such insurance. The Company's future success will
depend upon its ability to identify, hire, motivate and retain additional
qualified personnel. There is intense competition for such personnel and there
can be no assurance that the Company will be able to continue to attract and
retain such personnel. The failure to attract and retain key personnel would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Employees" and "Management."
DEPENDENCE ON EXPANSION OF OPERATIONS AND MANAGEMENT OF GROWTH
The Company's success will depend upon the continued expansion of its
research and development and manufacturing operations, and its ability to enter
into additional collaborative and licensing arrangements. The Company's growth
has placed significant demands on the Company's management as well as its
administrative, technical, operational and financial resources. The Company's
ability to manage its growth will require it to improve and implement new
operational, financial and management information systems and to expand,
motivate and manage its workforce. No assurance can be given that the Company
will be successful in adding management and technical personnel as needed to
meet the staffing requirements for any additional collaborative relationships or
for any development, sales and/or marketing efforts. The failure to successfully
manage its expansion could have a material adverse effect on the Company's
business, financial condition and results of operations. See "-- Need to Attract
and Retain Key Employees," "Business -- Collaborations" and
"Business -- Employees."
UNCERTAINTIES RELATED TO PRICING OF PRODUCTS AND THIRD PARTY REIMBURSEMENT
The Company's realization of revenues with respect to therapeutic and
diagnostic products developed through Phage Display, if any, will depend in part
upon the extent to which reimbursement for the cost of such therapeutic and
diagnostic products will be available from third party payors, such as
government health administration authorities, private health care insurers,
health maintenance organizations and pharmacy benefits management companies.
Third party payors are increasingly challenging the prices charged for such
products. Significant uncertainty exists as to the reimbursement status of newly
approved pharmaceutical products. There can be no assurance that third party
reimbursement will be available or sufficient for any products developed through
Phage Display. The inability to maintain price levels for such products could
adversely affect the Company's business, financial condition and results of
operations. In the United States there have been, and the Company expects that
there will continue to be, a number of federal and state proposals to implement
governmental pricing control. Furthermore, in certain foreign markets, pricing
or profitability of prescription pharmaceuticals is subject to governmental
control.
POTENTIAL PRODUCT LIABILITY EXPOSURE AND INSURANCE
The preclinical study, clinical development, manufacturing and marketing of
therapeutic and diagnostic products, as well as the testing, marketing and sale
of chromatography and other separations products exposes
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the Company to the risk of substantial product liability claims. There can be no
assurance that product liability claims will not be asserted against the Company
or that the Company will not experience material product liability losses in the
future. The Company currently maintains product liability insurance coverage for
its separations products, but there can be no assurance that the current
insurance will continue to be available on acceptable terms or that such
coverage will be adequate for liabilities actually incurred, if any. The Company
does not currently maintain product liability insurance for therapeutic or
diagnostic products and there can be no assurance that any such insurance
coverage will be available on acceptable terms, if and when the Company enters
clinical trials and commercializes any such product, or that such coverage will
be adequate for liabilities actually incurred. A successful claim brought
against the Company in excess of its insurance coverage would have a material
adverse effect on the Company's business, financial condition and results of
operations.
NO PRIOR PUBLIC MARKET FOR COMMON STOCK; VOLATILITY OF STOCK PRICE
Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after this Offering. The initial offering
price will be determined by negotiations between the Company and the
Representatives of the Underwriters and is not necessarily indicative of the
market price at which the Common Stock will trade after this Offering. The
market prices for securities of biotechnology and similarly capitalized
companies have been highly volatile, often for reasons that are unrelated to the
operating results of such companies. Announcements of technological innovations
or new commercial products by the Company or its competitors, developments
concerning proprietary rights, including patents and litigation matters,
publicity regarding actual or potential results with respect to products or
compounds under development by the Company or its collaborative partners,
regulatory developments in both the United States and abroad, public concern as
to the efficacy of new technologies, general market conditions and comments by
securities analysts, as well as quarterly fluctuations in the Company's revenues
and financial results among other factors, may have a significant impact on the
market price of the Common Stock. In particular, the realization of any of the
risks described in these "Risk Factors" could have a dramatic and adverse impact
on such market price. See "Underwriting."
CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS
Upon completion of this Offering, the Company's executive officers,
directors and affiliates will beneficially own approximately 34.6% of the
outstanding shares of Common Stock (33.4% if the Underwriters' over-allotment
option is exercised in full). As a result, these stockholders will be able to
exercise effective control over all matters requiring stockholder approval,
including the election of directors, mergers and the sale of all or
substantially all of the assets of the Company. This may prevent or discourage
unsolicited acquisition proposals or offers for the Company's Common Stock. See
"Principal Stockholders" and "Description of Capital Stock -- Anti-Takeover
Measures."
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS; DELAWARE LAW
The Company's form of Amended and Restated Certificate of Incorporation to
be filed upon or after the closing of this Offering (the "Restated Certificate
of Incorporation") authorizes the Company's Board of Directors to issue, without
stockholder approval, up to 1,000,000 shares of Preferred Stock with voting,
conversion and other rights and preferences that could adversely affect the
voting power or other rights of the holders of Common Stock. Although the
Company has 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 the Company's Common Stock
or limit the price that investors might be willing to pay in the future for
shares of the Company's Common Stock. The Restated Certificate of Incorporation
provides for staggered terms for the members of the Company's Board of Directors
which, together with certain provisions of the Company's Amended and Restated
By-laws and the Delaware General Corporation Law applicable to the Company,
could delay or make more difficult a merger,
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tender offer or proxy contest involving the Company. Further, the Company's
equity incentive plans generally permit the Board of Directors to provide for
acceleration of vesting of options granted under such plans in the event of
certain transactions which result in a change of control of the Company. In
addition, the Amended and Restated By-laws that will become effective upon the
closing of this Offering provide that the Company will be subject to Section 203
of the Delaware General Corporation Law 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 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
the Company's Common Stock. See "Management," "Description of Capital
Stock -- Preferred Stock" and "Description of Capital Stock -- Anti-Takeover
Measures."
BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS
A substantial portion of the net proceeds to be received by the Company in
connection with this Offering will be allocated to working capital and general
corporate purposes. The Company is not yet able to estimate with any precision
the allocation of the majority of the proceeds from this Offering among the uses
of proceeds identified in this Prospectus, and the timing and amount of
expenditures will vary depending upon numerous factors. Purchasers of the Common
Stock offered hereby will be entrusting their funds to the Company's Board of
Directors and management, who will have broad discretion to allocate proceeds of
this Offering to uses that they believe are appropriate. There can be no
assurance that the proceeds of this Offering can or will be invested to yield a
positive return. See "Use of Proceeds."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Future sales of Common Stock in the public market following this Offering
could adversely affect the market price of the Common Stock. Upon completion of
this Offering, the Company will have 9,761,353 shares of Common Stock
outstanding, assuming no exercise of currently outstanding options or warrants.
Of these shares, the 2,500,000 shares sold in this Offering (plus any additional
shares sold upon exercise of the Underwriters' over-allotment option) will be
freely transferable without restriction under the Securities Act of 1933, as
amended (the "Securities Act"), unless they are held by "affiliates" of the
Company as that term is used under the Securities Act and the regulations
promulgated thereunder. Each holder who signed a lock-up agreement has agreed,
subject to certain limited exceptions, not to sell or otherwise dispose of any
of the shares held by them as of the date of this Prospectus for a period of 180
days after the date of this Prospectus without the prior written consent of
Smith Barney Inc. At the end of such 180-day period, approximately 7,652,090
shares of Common Stock (including approximately 457,296 shares issuable upon
exercise of vested options) will be eligible for immediate resale, subject to
compliance with Rule 144 and Rule 701. The remainder of the approximately 66,559
shares of Common Stock outstanding or issuable upon exercise of options or
warrants held by existing stockholders or option holders will become eligible
for sale at various times over a period of approximately two years, and could be
sold earlier if the holders exercise any available registration rights or upon
vesting pursuant to the Company's standard four year vesting schedule. The
holders of 5,831,516 shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock will have the right in certain circumstances to
require the Company to register their shares under the Securities Act for resale
to the public. If such holders, by exercising their demand registration rights,
cause a large number of shares to be registered and sold in the public market,
such sales could have an adverse effect on the market price for the Company's
Common Stock. If the Company were required to include in a Company-initiated
registration shares held by such holders pursuant to the exercise of their
registration rights, such sales may have an adverse effect on the Company's
ability to raise needed capital. In addition, the Company expects to file within
90 days after the date of this Prospectus registration statements on Form S-8
registering a total of approximately 2,282,000 shares of Common Stock, including
those outstanding shares which may be repurchased by the Company and shares
issuable upon exercise of outstanding stock options or reserved for issuance
under the Company's equity incentive plan and employee stock purchase plan. See
"Management -- Stock Plans," "Description of Capital Stock -- Registration
Rights," "Shares Eligible for Future Sale" and "Underwriting."
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IMMEDIATE AND SUBSTANTIAL DILUTION; ABSENCE OF DIVIDENDS
Purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution estimated to be $ per share in the net
tangible book value of their investment from the initial offering price.
Additional dilution will occur upon the exercise of outstanding options. See
"Dilution" and "Shares Eligible for Future Sale." The Company has never paid
dividends on its Common Stock and does not anticipate paying any cash dividends
in the foreseeable future. The Company currently intends to retain its earnings,
if any, for the development of its business. See "Dividend Policy."
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$ ($ if the Underwriters' over-allotment option is exercised
in full) based on an assumed initial public offering price of $ per
share and after deducting the underwriting discounts and commissions and other
estimated offering expenses payable by the Company.
The Company expects to use the net proceeds of this Offering primarily to
fund research and development, the retirement of $763,000 of outstanding debt
due upon completion of this Offering, and for working capital and general
corporate purposes, including possible technology in-licensing and acquisitions.
The Company is not yet able to estimate precisely the allocation of the proceeds
among such uses, and the timing and amount of expenditures will vary depending
upon numerous factors. The Company's Board of Directors and management retain
complete discretion with respect to the allocation of such proceeds and the
timing of expenditures. Although the Company may use a portion of the net
proceeds for possible in-licensing or acquisition of products and technologies
that are complementary to those of the Company, or acquisitions of complementary
businesses, there are currently no commitments in this regard. Pending such
uses, the Company plans to invest the net proceeds in investment grade,
interest-bearing securities. The Company intends to invest and use the proceeds
so as not to be considered an "investment company" under the Investment Company
Act of 1940, as amended.
The Company believes that the net proceeds from this Offering and its
existing cash and cash equivalents will be sufficient to fund its operations
into the first half of 2000, although there can be no assurance that the Company
will not require additional funds prior to such date. Thereafter, the Company
may require additional funds to support its operating requirements or for other
purposes and may seek to raise such additional funds through public or private
equity financing or from other sources. There can be no assurance that
additional financing will be available at all or that, if available, such
financing would be obtainable on acceptable terms to the Company or would not be
dilutive. See "Risk Factors -- Future Capital Needs; Uncertainty of Additional
Funding," "-- Broad Management Discretion in Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital stock
and does not anticipate paying cash dividends on the Common Stock in the
foreseeable future. Payment of future dividends, if any, will be at the
discretion of the Company's Board of Directors after taking into account various
factors, including the Company's financial condition, operating results,
restrictions imposed by financing arrangements, if any, legal and regulatory
restrictions on the payment of dividends, current and anticipated cash needs and
other factors that the Board of Directors deems relevant. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the actual and as adjusted capitalization of
the Company as of December 31, 1997. The as adjusted capitalization gives effect
to the conversion upon the closing of this Offering of shares of Convertible
Preferred Stock into shares of Common Stock and the issuance and sale by the
Company of 2,500,000 shares of Common Stock at an assumed initial public
offering price of $ per share (after deducting underwriting discounts
and commissions and estimated offering expenses payable by the Company) and the
application of the net proceeds therefrom. This table should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto, "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the other financial information
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt and capital lease
obligations............................................... $ 155 $ 87
======== ========
Long-term debt and capital lease obligations, less current
portion................................................... 1,078 383
-------- --------
Stockholders' equity (1):
Class A Convertible Preferred Stock, $.01 par value;
9,440,832 shares authorized in series; 8,944,043 shares
issued and outstanding actual; $25,947,000 liquidation
preference; none issued and outstanding as adjusted.... 27,258 --
Common Stock, $.01 par value; 20,000,000 shares
authorized; 1,278,114 shares issued and outstanding
actual; 30,000,000 shares authorized as adjusted;
9,609,630 shares issued and outstanding as
adjusted(2)............................................ 13 96
Additional paid-in capital................................ 11,519
Accumulated deficit....................................... (30,704) (30,704)
Deferred compensation..................................... (1,682) (1,682)
Accumulated foreign currency translation adjustment....... (141) (141)
-------- --------
Total stockholders' equity........................ $ 6,263 $
-------- --------
Total capitalization......................... $ 7,341 $
======== ========
</TABLE>
- ---------------
(1) Effective upon the closing of this Offering, the Company's Restated
Certificate of Incorporation will be further amended and restated to, among
other matters, reduce the number of authorized shares of Preferred Stock
from 9,440,832 to 1,000,000. See "Description of Capital Stock -- Preferred
Stock."
(2) Excludes (i) 970,739 shares of Common Stock issuable upon the exercise of
options outstanding at December 31, 1997 at a weighted average exercise
price of $0.94 per share, of which options to purchase 233,165 shares of
Common Stock were exercisable, and (ii) 27,022 shares of Common Stock
issuable upon the exercise of warrants outstanding at December 31, 1997 at
an exercise price of $3.97 per share. Reflects the conversion of 8,944,043
shares of Convertible Preferred Stock into 5,831,516 shares of Common Stock
upon the completion of this Offering. See "Management -- Stock Plans,"
"Description of Capital Stock," "Use of Proceeds," "Selected Consolidated
Financial Data" and Note 9 to Notes to Consolidated Financial Statements.
18
<PAGE> 20
DILUTION
The net tangible book value of the Company as of December 31, 1997 was
$6,047,000, or $0.85 per share of outstanding Common Stock. Net tangible book
value per share is determined by dividing the amount of the Company's total
tangible assets less total liabilities by the number of outstanding shares of
Common Stock, which includes the conversion of all outstanding Convertible
Preferred Stock at the closing of this Offering. After giving effect to the sale
by the Company of 2,500,000 shares offered hereby (at an assumed initial public
offering price of $ per share and after deducting the underwriting
discounts and commissions and other estimated offering expenses), and the
application of the net proceeds therefrom, the net tangible book value of the
Company at December 31, 1997 would have been $ million, or $ per
share. This represents an immediate increase in such net tangible book value of
$ per share to existing stockholders and an immediate dilution of
$ per share to new stockholders purchasing shares in this Offering. The
following table illustrates this dilution per share:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
-----
Net tangible book value per share before Offering......... $0.85
Increase per share attributable to new investors..........
-----
Net tangible book value per share after Offering............
-----
Dilution per share to new investors(1)...................... $
=====
</TABLE>
- ---------------
(1) If the Underwriters' over-allotment option is exercised in full, dilution
per share to new investors would be $ .
The following table summarizes, on a pro forma basis as of December 31,
1997, the differences between the existing stockholders and the new investors
with respect to the number of shares purchased from the Company, the total
consideration paid and the average price per share paid.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................. 7,109,630 74% $37,207,000 % $5.23
New investors......................... 2,500,000 26
--------- --- ----------- ---
Total....................... 9,609,630 100% 100%
========= === =========== ===
</TABLE>
The foregoing tables and calculations assume no exercise of warrants or
stock options outstanding at December 31, 1997, at which date there were 970,739
shares of Common Stock issuable upon exercise of outstanding options at a
weighted average exercise price of $0.94 per share, of which options to purchase
233,165 shares of Common Stock were exercisable, and 27,022 shares of Common
Stock issuable upon exercise of outstanding warrants at an exercise price of
$3.97 per share. See "Management -- Stock Plans" and "Description of Capital
Stock." To the extent that such options become vested and are exercised, or the
warrants are exercised, there will be further dilution to new investors. See
"Risk Factors -- Immediate and Substantial Dilution; Absence of Dividends."
19
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data with respect to the
Company's statement of operations data for each of the three years in the period
ended December 31, 1997 and with respect to the Company's balance sheet data at
December 31, 1996 and 1997 are derived from consolidated financial statements of
the Company which have been audited by Coopers & Lybrand L.L.P., independent
accountants, and are included elsewhere herein. The statement of operations data
for the years ended December 31, 1993 and 1994 and the balance sheet data for
December 31, 1993, 1994 and 1995 are also derived from audited consolidated
financial statements not included herein. The selected consolidated financial
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Consolidated Financial
Statements and Notes thereto and other financial information included herein.
The historical results are not necessarily indicative of the results to be
expected in the future.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Product sales.......................... $ 4,099 $ 2,713 $ 3,592 $ 4,478 $ 7,625
Product development.................... -- -- 428 1,060 1,440
License fees........................... -- -- -- 1,499 711
-------- -------- -------- -------- --------
Total revenues.................... $ 4,099 $ 2,713 $ 4,020 $ 7,037 $ 9,776
-------- -------- -------- -------- --------
Operating expenses:
Cost of products sold.................. 2,792 1,794 1,952 2,046 3,174
Research and development............... 894 894 1,343 3,140 5,575
Selling, general and administrative.... 3,054 2,604 2,710 4,170 6,827
Other expenses(1)...................... -- -- 4,554 -- --
-------- -------- -------- -------- --------
Total operating expenses.......... 6,740 5,292 10,559 9,356 15,576
-------- -------- -------- -------- --------
Loss from operations...................... (2,641) (2,579) (6,539) (2,319) (5,800)
Interest income (expense), net............ (97) (89) (46) (78) 265
-------- -------- -------- -------- --------
Net loss.................................. $ (2,738) $ (2,668) $ (6,585) $ (2,397) $ (5,535)
======== ======== ======== ======== ========
Net loss per common share:
Historical(2):
Basic and diluted.................... $ (30.88) $ (28.16) $ (27.53) $ (2.38) $ (5.14)
======== ======== ======== ======== ========
Weighted average number of
shares -- basic and diluted....... 88,667 94,755 239,212 1,006,730 1,076,469
======== ======== ======== ======== ========
Pro forma (unaudited)(3):
Basic and diluted.................... $ (0.83)
========
Weighted average number of
shares -- basic and diluted....... 6,706,680
========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 1,951 $ 227 $ 1,959 $ 8,591 $ 4,664
Working capital........................... 2,657 36 1,870 9,241 5,905
Total assets.............................. 6,296 3,300 4,692 12,236 10,532
Long-term debt and capital lease
obligations, less current portion...... 43 -- 2,097 770 1,078
Accumulated deficit....................... (13,519) (16,187) (22,772) (25,169) (30,704)
Total stockholders' equity................ 4,414 1,666 705 9,321 6,263
</TABLE>
- ---------------
(1) Includes write-offs of an intangible asset in the amount of $456,000 and
incomplete technology in the amount of $4,098,000 in the year ended December
31, 1995. Also excludes the results of operations of PEC for periods before
its acquisition by the Company on August 11, 1995.
(2) Reflects a 0.1352-for-1 reverse stock split effected on March 23, 1998, each
of which is applied retroactively for all years presented. Weighted average
number of shares for the years ended December 31, 1993 and 1994 and the
period from January 1, 1995 to August 10, 1995 reflects shares of Biotage,
Inc. prior to the acquisition of PEC.
(3) See Note 2 of Notes to Consolidated Financial Statements for a description
of the computation of pro forma net income (loss) per share. Based on the
number of shares outstanding as of December 31, 1997, after giving effect to
the conversion of all of the outstanding shares of Preferred Stock into
Common Stock. Excludes 970,739 shares of Common Stock issuable upon the
exercise of outstanding stock options, 940,717 shares of Common Stock
reserved for future issuance under the Company's 1995 Equity Incentive Plan
and 27,022 shares of Common Stock issuable upon the exercise of outstanding
warrants, as of such date. See "Management -- Stock Plans," "Description of
Capital Stock" and "Shares Eligible for Future Sale."
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. Except for
the historical information contained herein, the discussion in this Prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere in this Prospectus.
OVERVIEW
Dyax's Phage Display has broad potential commercial applications in the
fields of therapeutic, diagnostic and separations products. Phage Display is a
versatile, high throughput technology platform which the Company believes can
reduce costs, shorten development times and lead to the commercialization of
more effective products in these fields. The Company also develops, manufactures
and sells fully-integrated chromatography separations systems under the Biotage
trade name.
The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, dependence on collaborative
arrangements, development by the Company or its competitors of new technological
innovations, dependence on key personnel, protection of proprietary technology,
and compliance with FDA government regulations and approval requirements.
The Company has a history of operating losses. For the years ended December
31, 1995, 1996 and 1997, the Company had net losses of approximately $6.6
million, $2.4 million, and $5.5 million, respectively. As of December 31, 1997,
the Company had an accumulated deficit of approximately $30.7 million. The
Company anticipates that its research and development efforts will increase
significantly in the future and it expects to incur significant operating losses
over the next several years. There can be no assurance that the Company will
ever be able to generate sufficient revenues from the sale of products to offset
the expenses of these efforts. The Company has not realized any significant
revenues from the achievement of milestones or royalties from the discovery,
development or sale of a commercial product by a collaborative partner or
licensee and no significant revenue from these sources is expected for at least
several years, if ever. To date, all revenues have been generated from: (i)
sales of chromatography separations systems and products; (ii) signing and
maintenance fees paid for licenses of Phage Display patents; and (iii) research
and development funding paid by the Company's collaborative partners. The
Company's ability to achieve profitability will depend upon its ability, alone
or with others, to introduce new chromatographic separations products, to
develop affinity separations products derived from Phage Display, to complete
discovery and development of therapeutic and diagnostic lead compounds and to
establish additional collaborative arrangements. There can be no assurance that
the Company will ever be able to achieve or sustain profitability. See "Risk
Factors -- History of Operating Losses and Accumulated Deficit; Uncertainty of
Future Profitability."
The Company has experienced significant fluctuations in its revenues and
operating results from quarter to quarter and year to year, and it expects these
fluctuations to continue in the future. The Company also expects that an
increasingly significant portion of its anticipated revenues for the foreseeable
future will be comprised of up-front fees and research and development funding
paid pursuant to collaborative and licensing arrangements. The Company believes
that future fluctuations in revenues and results may depend on various factors,
such as the timing of the Company's increased research and development expenses,
the establishment of new collaborations, the development and commercialization
programs of current and prospective collaborative partners, the completion of
certain milestones and the purchases of larger separations equipment systems by
customers. The Company's current and planned expense levels are, to a large
extent, fixed in the short term, and are based in part on its expectations as to
future revenues. Substantially all of the Company's product development revenue
in 1995 and 1996, and less than 10% of product development revenue in 1997,
21
<PAGE> 23
was generated by one such collaborative arrangement, which was terminated in
1998. In the first quarter of 1998, the Company is receiving research funding
under eleven collaborative arrangements and anticipates that in 1998 no single
collaborative arrangement will contribute a majority of the Company's research
revenue. In any one fiscal quarter, however, the Company may receive no payments
from its collaborative partners. Consequently, results of operations are
difficult to forecast and may vary significantly from quarter to quarter or year
to year and revenue or results in any period will not necessarily be indicative
of results in subsequent periods and should not be relied upon as any indication
of future performance. Such quarterly fluctuations in revenue or financial
results will from time to time not meet the expectations of market analysts or
investors, which may have a material adverse effect on the price of the
Company's Common Stock. See "Risk Factors -- Significant Fluctuations in
Revenues and Operating Results."
The Company's product sales are derived from sales of Biotage
chromatography separations systems and products. The Company's product
development revenues are derived from collaborative product development
agreements and may include signing fees, funding for research and development,
payments based on the achievement of certain future milestones and future
royalties on any product sales derived from the collaboration. The Company's
license fees are generated from non-exclusive licenses the Company grants to
third parties to use the Company's patent rights. Standard terms of the license
agreements generally include non-refundable signing fees, non-refundable annual
maintenance fees, milestone payments and royalties on product sales.
RESULTS OF OPERATIONS
Years Ended December 31, 1997 and 1996
Total revenue increased 39% to $9,776,000 for the year ended December 31,
1997 from $7,037,000 for the year ended December 31, 1996. For 1997, product
sales increased 70% to $7,625,000 from $4,478,000 for 1996, as the Company added
to its separations sales and marketing personnel and introduced new separations
products. The 36% increase in product development revenue to $1,440,000 in 1997
from $1,060,000 in 1996 resulted from new research discovery collaborative
arrangements established during 1997, principally to fund research using Phage
Display in the field of separations. The 53% decrease in license revenue to
$711,000 for 1997 from $1,499,000 for 1996, was due to a single $1,000,000
paid-up license fee from a single customer received and recorded in 1996.
The cost of products sold increased to $3,174,000 for the year ended
December 31, 1997 from $2,046,000 for the year ended December 31, 1996 following
increases in product sales from year to year. The cost of products sold as a
percentage of product sales in 1997 was 42% compared with 46% in 1996. The
decrease in cost of products sold as a percentage of product sales was
principally the result of changes in product mix and, to a lesser extent,
increased manufacturing efficiencies resulting from higher unit volumes.
Research and development expense increased 78% to $5,575,000 for the year
ended December 31, 1997 from $3,140,000 for the year ended December 31, 1996.
The increase is accounted for by funded research for the new research discovery
collaborative arrangements in the field of separations entered into during 1997
together with increases in the Company's ongoing internal efforts to develop
products in therapeutics, diagnostics and separations. In addition to the direct
costs associated with the increase in scientific personnel, 1997 included twelve
months of expenses associated with expanded laboratory facilities occupied at
the end of September 1996.
Selling, general and administrative expenses increased 64% to $6,827,000
for the year ended December 31, 1997 from $4,170,000 for the year ended December
31, 1996 as the Company invested in increasing its separations sales and
marketing forces both domestically and in Europe to support current and planned
increases in product sales and in support of expanded revenues, research and
general operations.
Interest income for the year ended December 31, 1997 and the year ended
December 31, 1996 was derived from investment of excess cash reserves in money
market funds, with a higher average invested balance accounting for the increase
in 1997 over 1996. Interest expense is related to long-term debt outstanding in
both 1997 and 1996.
The net loss for the year ended December 31, 1997 was $5,535,000 compared
to $2,397,000 for the year ended December 31, 1996.
22
<PAGE> 24
Years Ended December 31, 1996 and 1995
Total revenue increased 75% to $7,037,000 for the year ended December 31,
1996 from $4,020,000 for the year ended December 31, 1995. For 1996, product
sales increased 25% to $4,478,000 from $3,592,000 for 1995. The 148% increase in
product development revenue to $1,060,000 in 1996 from $428,000 in 1995 resulted
principally from increased activity during 1996 in a research discovery
collaborative arrangement established during 1995 with one customer. The
Company's technology license program began in 1996 and included a single
$1,000,000 paid-up license fee from one customer.
The cost of products sold increased to $2,046,000 for the year ended
December 31, 1996 from $1,952,000 for the year ended December 31, 1995 following
increases in product sales from year to year. The cost of products sold as a
percentage of products sales in 1996 was 46% compared with 54% in 1995. The
decrease in cost of products sold as a percentage of product sales was
principally the result of changes in product mix and, to a lesser extent,
increased manufacturing efficiencies resulting from higher unit volumes.
Research and development expenses increased 134% to $3,140,000 for the year
ended December 31, 1996 from $1,343,000 for the year ended December 31, 1995.
The increase was principally accounted for by the increase in funded research
for the new research discovery collaborative arrangement entered into during
1995, increases in the Company's ongoing internal efforts developing products in
therapeutics, imaging and separations and the effects of the merged operations
of PEC included for a full year in 1996 as compared to approximately four and
one-half months during 1995. In addition to the direct costs associated with the
increase in scientific personnel, 1996 included three months of expenses
associated with expanded laboratory facilities occupied at the end of September
1996.
Selling, general and administrative expenses increased 54% to $4,170,000
for the year ended December 31, 1996 from $2,710,000 for the year ended December
31, 1995 principally as a result of increased expenditures for research and
general operations to support increased revenue levels. In addition, this
increase was due in part to additions to a core management team to support its
expanding business activities.
During the year ended December 31, 1995, the Company wrote off $456,000 of
intangible assets acquired in a previous period and $4,098,000 of incomplete
technology in connection with its acquisition of PEC. There were no comparable
transactions during the year ended December 31, 1996.
Interest income for the year ended December 31, 1996 and the year ended
December 31, 1995 was derived from investment of excess cash reserves in money
market funds. Interest expense is related to long-term debt outstanding in both
1996 and 1995.
The net loss for the year ended December 31, 1996 was $2,397,000 compared
to $6,585,000 for the year ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations since its merger with PEC in 1995
principally through product sales, funding received from product development
collaborative arrangements, license fees, interest income on excess cash
reserves, sales of equity securities (which provided aggregate net cash proceeds
during this period of approximately $15,639,000) and capital leases.
At December 31, 1997, the Company had cash and cash equivalents totaling
$4,664,000. Cash in the amount of $5,720,000 was used by operating activities
during the year ended December 31, 1997. The Company purchased $961,000 of fixed
assets and repaid $121,000 of long-term debt during 1997. The Company received
$2,573,000 of net proceeds from the sale of Convertible Preferred Stock and the
exercise of stock options and $445,000 of net proceeds from a sale-leaseback of
fixed assets in 1997.
The Company anticipates that its existing capital resources, including the
net proceeds from this Offering, will be adequate to fund the Company's
operations at least into the first half of 2000. The Company will need
additional debt or equity financing before that date if the Company's cash
requirements exceed its current expectations, if the Company generates less
revenue than currently projected, or if the Company is unable to raise all of
the funding contemplated by this Offering. The Company's capital requirements
depend on
23
<PAGE> 25
numerous factors, including the ability of the Company to enter into additional
collaborative arrangements, competing technological and market developments,
changes in the Company's existing collaborative relationships, the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the purchase of additional capital equipment, the
progress of the Company's drug discovery and separations technology programs and
the progress of the commercialization of milestone and royalty-bearing compounds
by the Company's collaborative partners. The Company anticipates that it will be
required to raise additional capital in order to continue to conduct its
operations. Such capital may be raised through additional public or private
financings, as well as collaborative arrangements, borrowings and other
available sources. To the extent that additional capital is needed, it may be
raised through the sale of equity or convertible debt securities, and the
issuance of such securities could result in dilution to the Company's existing
stockholders. There can be no assurance that additional funding, if necessary,
will be available on acceptable terms, if at all. If adequate funds are not
available, the Company may be required to curtail operations significantly or to
obtain funds through entering into arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates, products or potential markets that the Company
would not otherwise relinquish. The failure to receive additional funding would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Risk Factors -- Future Capital Needs;
Uncertainty of Additional Funding." There can be no assurance that the Company's
existing separations business, collaborative arrangements and non-exclusive
licensing program will produce revenue adequate to fund the Company's operating
expenses. See "Risk Factors."
The Company believes that inflation has had no significant impact on the
Company's business to date.
RECENTLY ISSUED FINANCIAL AND ACCOUNTING STANDARDS
In September 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company will implement SFAS No. 130 and SFAS No. 131,
which require the Company to report and display certain information related to
comprehensive income and operating segments, respectively, as required in the
year ending December 31, 1998. The Company believes that the adoption of SFAS
No. 130 and SFAS No. 131 will not adversely impact the Company's business,
financial condition or results of operations.
YEAR 2000
The Company is aware of the issues that many computer systems will face as
the millennium ("Year 2000") approaches. The Company already has installed Year
2000 compliant software in many of its major systems. The cost of the effort to
complete this activity for the balance of the Company's systems is not expected
to be material. The Company believes that the Year 2000 issue will not pose
significant operational problems. However, Year 2000 issues could have a
significant impact on the Company's business, financial condition and results of
operations if modifications cannot be completed on a timely basis, unforeseen
needs or problems arise, or if the systems operated by suppliers, collaborative
partners or licensees are not Year 2000 compliant.
24
<PAGE> 26
BUSINESS
OVERVIEW
Dyax's Phage Display has broad potential commercial applications in the
fields of therapeutic, diagnostic and separations products. Phage Display is a
versatile, high throughput technology platform which the Company believes can
reduce costs, shorten development times and lead to the commercialization of
more effective products in these fields. The Company also develops, manufactures
and sells fully-integrated chromatography separations systems under the Biotage
trade name. Dyax is using Phage Display and its expertise in separations
technology to pursue a diversified business strategy of non-exclusive patent
licensing, discovery and development of therapeutic and diagnostic products and
the development of innovative chromatography and affinity separations products.
Dyax currently has licensed its Phage Display patents to more than 25 companies,
is engaged in four corporate collaborative partnerships and is performing or has
completed eight funded discovery projects. In addition, the Company has sold its
current line of Biotage chromatography separations products to over 50
pharmaceutical and biotechnology companies. Dyax is generating near-term
revenues from sales of its separations products, funding from sponsored research
and fees from patent licenses, while maintaining a long-term focus on its
therapeutic and diagnostic product development programs, the expansion of
existing separations product lines and the development of affinity separations
products.
BACKGROUND
Molecular binding is the key to the function of most therapeutic,
diagnostic and separations products. The binding of a molecule to another
molecule (target) is the mechanism nature uses to modulate biochemical and
physiological processes such as cellular growth, differentiation, metabolism and
death. To effect these processes, naturally occurring binding molecules
typically distinguish between the correct target and other closely related
molecules (specificity) and bind tightly to the target (affinity) under
appropriate physiological conditions. Therapeutic and diagnostic products bind
to targets, including cellular receptors, ion channels or enzymes, to achieve a
desired effect, and are generally selected for their binding specificity and
affinity for the target. Binding also plays a significant role in the
separations products used to purify material for the development and manufacture
of a therapeutic product.
The discovery, development and commercialization of effective therapeutic,
diagnostic and separations products is a time consuming, risky and expensive
process. For therapeutic products, the process starts with the identification of
a target that is involved in a disease. The safety and efficacy of a therapeutic
product is dependent on its specificity and affinity for the target. Scientists
typically screen libraries containing tens to hundreds of thousands of naturally
occurring or synthesized chemical compounds to identify those that bind to the
target. These binding compounds are then optimized one at a time via iterative
design, synthesis and testing to achieve desired binding specificity and
affinity for the target. Although combinatorial chemistry, computer modeling and
automated laboratory equipment have increased the throughput of the screening
and optimization process, the number of compounds that can be evaluated is still
limited by the time and cost required for chemical synthesis of each selected
compound. The accuracy of in vitro and in vivo diagnostic products also is
dependent on high specificity and high affinity binding to the target. Mouse
monoclonal antibodies continue to be the dominant type of binding compound used
for the development of diagnostic products. However, the generation of antibody
products using an animal system is a time-consuming, costly process and cannot
be used for targets that are toxic or nonimmunogenic to the animal. Products
used in traditional separations processes to purify therapeutic compounds also
rely on binding. These multi-step processes generally involve chromatography,
the separation of different molecules through media in a column. Separations
processes are typically developed through time-consuming trial and error and can
constitute over 50% of the cost to manufacture a therapeutic product for
commercialization. The failure to achieve high specificity and high affinity
binding can result in side effects, toxicities and low levels of efficacy for
therapeutic products, inaccurate results for diagnostic products and reduced
yield and purity achieved with separations products.
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THE DYAX SOLUTION
The Company believes that Phage Display can reduce costs, shorten
development times and lead to the commercialization of more effective
therapeutic, diagnostic and separations products. Phage Display is a versatile,
high throughput technology platform that is used for the discovery and
development of binding compounds. Using the speed and diversity of a
self-replicating biological system, Phage Display allows scientists to generate
and screen quickly up to hundreds of millions of potential binding compounds to
identify more rapidly those compounds that bind with the desired specificity and
affinity to a target of interest under predetermined conditions. In the
discovery of therapeutic products, scientists can use Phage Display to identify
high specificity and high affinity binding compounds more rapidly than by other
existing methods. In the discovery of diagnostic products, Phage Display can be
used to identify and isolate specific binding compounds, including antibodies,
more reliably and efficiently than by using an animal system. For separations
processes, the Company believes that Phage Display can provide a powerful tool
to develop products to purify therapeutic products more cost effectively and
efficiently, thereby streamlining the development of manufacturing processes for
these products.
Living organisms, such as viruses, have the ability to present (display) a
foreign gene product (protein) on their surfaces. Beginning in the late 1980's,
scientists began exploring the use of such organisms as a means for the display
and identification of proteins of interest. Dyax scientists developed Phage
Display, a patented technology for displaying large collections of proteins on
filamentous "phage," a virus which infects laboratory bacteria. Dyax's Phage
Display has become the preferred method to display and select proteins with
desired binding properties.
Features and Advantages of Phage Display
The Company's Phage Display process generally consists of: (i) generating a
Phage Display library; (ii) screening the library and isolating phage that
display proteins (including structured peptides) that bind to the target of
interest; and (iii) producing and characterizing the selected binding compounds.
To start the Phage Display process, genes containing the instructions to produce
and display a wide variety of new proteins are inserted into phage genomes. Each
phage receives one distinct gene variant and, therefore, displays only one new
protein on its surface. The collection of phage produced in this manner is known
as a Phage Display "library." A Phage Display library can be generated in a few
weeks and can contain up to hundreds of millions of proteins that are potential
binding compounds. Scientists can screen Phage Display libraries to select
rapidly those proteins or peptides that bind to a target of interest. Screening
a Phage Display library involves exposing a Phage Display library to the target
under conditions in which binding is desired, removing phage that do not bind to
the target, dissociating bound phage from the target and amplifying the bound
phage by infecting laboratory bacteria. Screening is performed in small volumes,
usually less than one milliliter, in standard 96-well plates, and can generally
be done in a single day. Phage selected in the first round of screening are
generally amplified through growth in the host bacteria and rescreened to narrow
down the collection of phage to those that display binding compounds with
desired binding properties. The selected phage can then be amplified to produce
sufficient quantities for initial evaluation and identification of lead
compounds. See "-- Dyax Technology."
The Company believes that Phage Display has the following advantages for
the identification of binding compounds:
Diversity: Phage Display libraries can contain up to hundreds of millions
of potential binding compounds that are variations based on a single protein or
peptide framework. The size of the library (diversity) significantly improves
the likelihood of identifying binding compounds with high specificity and high
affinity for the target. This diversity is far greater than that achievable with
current combinatorial chemistry approaches.
Speed: Phage Display libraries usually can be generated in a few weeks and
screened several times in a few days to identify a group of related binding
compounds. Using conventional or combinatorial chemistry approaches, this
process would generally require between several months and several years to
complete. The
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Company believes that Phage Display can therefore reduce significantly the time
and expense required to identify compounds with desired binding characteristics.
Amplification: Phage Display is based on a self-replicating biological
system. Accordingly, the phage displaying a selected binding compound will
replicate into millions of identical copies in its bacterial host in less than
one day. This provides sufficient phage for initial characterization of the
displayed binding compound. Once generated, an entire Phage Display library can
be amplified and stored and subsequently used for a potentially unlimited number
of screenings. By comparison, amplification of compounds and libraries developed
using combinatorial chemistry approaches requires significant additional time
and resources for chemical synthesis.
Rapid Optimization: Screening of Phage Display libraries results in the
identification of groups of related binding compounds with high specificity and
high affinity for the desired target. These compounds can then be used as the
basis for successive generations of Phage Display libraries. Due to the relative
ease of library generation, Phage Display enables the rapid optimization of
compounds for the desired binding specificity and affinity.
Controlled Binding and Release: Phage Display can also be used to select
compounds which alternately bind to and release from a target under specific
conditions (e.g., changes in acidity or salt concentration or the presence of
contaminants) that simulate those encountered in a separations process used in
the manufacture of a therapeutic product. The Company believes that this ability
to control or predetermine the conditions under which selected compounds bind
and release will result in the development of more efficient and cost effective
separations products.
Focused Design: Each Phage Display library is generated based on a single
protein or peptide framework that allows scientists to select the desired
product properties such as structure, size, stability and lack of
immunogenicity. During library design, the exact degree and location of the
variability is controlled allowing for the conservation of certain of the
original framework characteristics.
Small Molecule Design and Discovery: The structural information of binding
compounds identified using Phage Display can be used to design small molecule
(nonpeptidic) compounds with comparable binding activity. Alternatively, Phage
Display-derived binding compounds can be used both for target validation and in
high throughput competitive binding assays to screen panels of small molecules
for those that interact at the same binding sites on the therapeutic targets.
BUSINESS STRATEGY
Dyax is using Phage Display and its expertise in separations technology to
pursue a diversified business strategy of non-exclusive patent licensing,
discovery and development of therapeutic and diagnostic products, and
development of innovative chromatography and affinity separations products. Dyax
is generating near-term revenues from sales of its separations products, funding
from sponsored research and fees from patent licenses, while maintaining a
long-term focus on its therapeutic and diagnostic product development programs,
the expansion of existing separations product lines and the development of
affinity separations products. The following are the principal elements of the
Company's strategy:
License Phage Display: Dyax intends to continue to license its Phage
Display patents widely to permit and encourage the broad application of Phage
Display, and to obtain revenues from license fees, potential milestone payments
and royalties on Phage Display-derived products. Dyax offers non-exclusive
licenses in the fields of therapeutics, antibody-based in vitro diagnostics and
Phage Display research kits. Under these licenses, Dyax has retained all rights
to practice Phage Display in the fields of separations and in vivo imaging. To
date, more than 25 companies are licensed under Dyax's Phage Display patents.
Discover and Internally Develop Therapeutic and Diagnostic Leads: To date,
Dyax has used Phage Display to identify three proprietary lead therapeutic
compounds with potential applications that include inflammatory diseases and
certain cancers and one lead diagnostic compound for in vivo imaging of
inflammation. Dyax intends to discover and develop additional leads and
anticipates that initial leads arising from internally funded programs will be
selected for therapeutic and diagnostic targets that are readily available
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in the public domain; however, the Company intends to identify new leads for
therapeutic and diagnostic targets that it discovers or licenses from others.
Dyax also plans to pursue an internally funded program to use Phage Display to
identify and develop new targeting agents for in vivo imaging using nuclear
medicine.
Leverage Phage Display Through Collaborations: Dyax is leveraging its
proprietary technology in the fields of therapeutics, diagnostics and
separations by entering into discovery and development collaborative
arrangements with biotechnology, pharmaceutical and diagnostics companies. The
Company currently is engaged in four collaborative arrangements and to date is
performing or has completed more than eight funded lead discovery projects.
Under these arrangements, Dyax is generally entitled to receive research funding
and potential long-term revenue upon commercialization of any resulting
products. The Company intends to enter into additional collaborative
arrangements for new lead discovery and preclinical and clinical evaluation of
its current and future lead therapeutic and diagnostic compounds, while
potentially retaining product rights by field or geographic area.
Continue to Develop and Market Innovative Separations Products: Dyax
believes that it is well positioned to meet the purification challenges of
complex therapeutic products such as proteins and vaccines. The Company intends
to leverage its existing Biotage chromatography product line through the
introduction of innovative separations products designed to meet the emerging
needs of the combinatorial chemistry and genomics markets and the continued
development of affinity separations products using Phage Display. Through
collaborative arrangements with pharmaceutical and biotechnology companies, Dyax
is using Phage Display to identify binding compounds, known as "affinity
ligands," that can potentially be used in products designed to purify quickly
and inexpensively therapeutics in commercial quantities. Dyax plans to develop
proprietary affinity separations products for purifying a customer's specific
compound and for separating classes of molecules that may be used by a number of
customers.
DYAX PROGRAMS AND PRODUCTS
Dyax's business activities consist of: (i) a patent licensing program; (ii)
discovery and development programs in therapeutics, in vivo imaging and other
diagnostics; and (iii) the manufacture and sale of its Biotage chromatography
products and systems and research and development of innovative separations
products. See "Risk Factors -- Dependence on Phage Display; New and Uncertain
Technology; No Clinical Trials or Sales of Phage Display-Derived Products to
Date."
Patent Licensing Program
The Company has established a broad licensing program of its Phage Display
patents for use in the fields of therapeutics, antibody-based in vitro
diagnostics and Phage Display research kits. Through this program, Dyax grants
companies and research institutes non-exclusive licenses to practice Dyax's
Phage Display patents in their discovery and development efforts in the licensed
fields. Since the inception of this licensing program in 1996, the Company has
licensed more than 25 companies. Dyax believes that the success of its patent
licensing program provides support for its patent position in Phage Display and
the utility of Phage Display as an enabling discovery technology. Under these
licenses, Dyax has retained all rights to practice Phage Display in the fields
of separations and in vivo imaging.
The Company's license agreements generally provide for a signing fee,
annual maintenance fees, milestone payments based on successful product
development and royalties based on any future product sales. In addition, under
the terms of the standard license, the licensee covenants not to sue the Company
under certain of the licensee's Phage Display improvement patents, which the
Company believes gives it greater freedom to practice enhancements of Phage
Display. To date, licensees have been offered standardized payment terms or, for
certain fields, the ability to choose from a matrix of fees and royalties. The
matrix generally ranges from lower signing and maintenance fees with higher
milestone payments and royalties to higher signing and maintenance fees with
lower milestone payments and royalties. The fees and royalty rates under this
program are subject to change from time to time. In the case of Affymax
Technologies, N.V. (and its parent, Glaxo Wellcome PLC), Dyax negotiated a fully
paid-up license. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
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The Company's licensees include Affymax Technologies, N.V. (and its parent,
Glaxo Wellcome PLC), Bristol-Myers Squibb Company, Cambridge Antibody Technology
Limited, Chiron Corporation, Chugai Biopharmaceuticals, Inc., Corvas
International, Inc., Cytogen Corporation, DuPont Merck Pharmaceutical Company,
Genzyme Corporation, IGEN International, Inc., Invitrogen Corp., Merck & Co.,
Inc., Millennium BioTherapeutics, Inc., Monsanto Company, MorphoSys GmbH, New
England BioLabs, Inc., Novagen, Inc., Pharmacia Biotech Inc., Pharmacia &
Upjohn, Co., Praecis Pharmaceuticals Inc., Prizm Pharmaceuticals, Inc., R.W.
Johnson Pharmaceutical Research Institute, Scios, Inc., Tera Biotechnology
Corporation, The Burnham Institute and Utrecht Biotechnology Systems B.V. The
Company expects that the number of its licensees will change from time to time.
Therapeutic and Diagnostic Discovery and Development Programs
Dyax is using Phage Display independently and through collaborative
arrangements to discover and develop therapeutic and diagnostic product
candidates. The following table summarizes the Company's therapeutic and
diagnostic discovery and development programs. This table is qualified in its
entirety by reference to the more detailed descriptions appearing elsewhere in
this Prospectus.
DYAX THERAPEUTIC AND DIAGNOSTIC PROGRAMS
<TABLE>
<CAPTION>
LEAD
DISEASE AREA/INDICATION COMPOUND STATUS COLLABORATOR
----------------------- -------- ------ ------------
<S> <C> <C> <C>
THERAPEUTICS:
Pulmonary Inflammation/Cystic Fibrosis EPI-HNE4 Preclinical(1) Debiopharm S.A.
Chronic Inflammation/Rheumatoid EPI-KAL2 Lead --
Arthritis and Inflammatory Bowel Identified(2)
Disease
Cancer/Prostate Cancer EPI-PLA2 Lead --
Identified(2)
DIAGNOSTICS:
Inflammation/Infection EPI-HNE4 Preclinical(1) University of
Massachusetts
Medical Center
Pulmonary Disease/Deep Vein Thrombosis -- Discovery(3) EPIX Medical Inc.
and Pulmonary Embolism
</TABLE>
- ---------------
(1) "Preclinical" indicates efficacy and toxicology testing in vitro and in
animals and may include process development and manufacturing scale-up for
initial trials.
(2) "Lead Identified" indicates that a lead compound has been identified that
meets certain criteria, but which may need to be further evaluated or
modified before preclinical development, if any.
(3) "Discovery" indicates initial Phage Display screening or molecular design of
a group of compounds before a lead compound is identified.
Therapeutics
The first step in the discovery and development of a therapeutic product is
generally the identification of a molecular target that is involved in a
disease. Once a target has been identified, the next step is typically a search
for a compound that will bind to this target to achieve a desired effect. This
time-consuming and costly step includes the screening of conventional libraries
of chemical compounds which can contain tens to hundreds of thousands of
independent potential binding compounds and the development of biological assays
for evaluation of selected compounds. The cost and time associated with
traditional drug development limits the number of potential drug candidates that
can be evaluated. In addition, scientific advances, such as genomics and related
target discovery technologies, are resulting in the identification of thousands
of new therapeutic target candidates. To take advantage of this increasing
number of target candidates, pharmaceutical and biotechnology companies are
seeking more efficient methods for target validation and identification of
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binding compounds that can lead to new therapeutic products. Advances in
combinatorial chemistry have increased throughput of binding compound discovery
compared to traditional discovery methods, but the chemical synthesis of
selected compounds still requires months to years of expensive research.
Using Phage Display, the Company believes scientists can discover binding
compounds with high specificity and high affinity more rapidly than by
conventional and combinatorial chemistry approaches. Phage Display libraries of
up to hundreds of millions of potential binding compounds can be generated in a
few weeks. These libraries are thousands of times greater in size than those
that can be generated using, for example, combinatorial chemistry. Furthermore,
the protein framework of the Phage Display library can be selected or designed
to ensure that all compounds in a library have predetermined properties, such as
structure, size, stability and lack of immunogenicity. Scientists can then use
Phage Display to rapidly select groups of related proteins that bind to a
therapeutic target with high specificity and high affinity. The Company believes
that by analyzing binding compounds identified through Phage Display with the
Company's proprietary structure activity relationship ("SAR") technology, it
will be possible to accelerate the process of small molecule drug design. In
addition, Phage Display can be used in conjunction with genomics technologies to
provide high-throughput analysis and purification of new gene products for
validating novel therapeutic targets. See "-- Dyax Technology."
Dyax's current programs in therapeutic discovery and development are:
Inflammation. Inflammatory disorders occur when the immune system
overreacts to a perceived foreign substance. One aspect of this overreaction is
the activation of neutrophils and the release of neutrophil elastase, an enzyme
that digests proteins including bacterial and cellular debris. The unregulated
production of neutrophil elastase is thought to be the primary cause of tissue
damage and abnormal inflammatory response in disorders such as pulmonary
inflammation (cystic fibrosis, chronic bronchitis and emphysema), chronic
inflammation and acute inflammatory disorders (appendicitis and acute
respiratory distress syndrome). Another protease, plasma kallikrein, is elevated
at the inflammatory sites of rheumatoid arthritis and inflammatory bowel
disease. Plasma kallikrein is thought to contribute to the pathology of
rheumatoid arthritis both by activating an enzyme that degrades the collagen
matrix and by causing release of molecules that activate other inflammatory
cells. Similarly, activation of a localized inflammatory response by kallikrein
may contribute to the pathology of inflammatory bowel disease.
Using Phage Display, Dyax has discovered a proprietary lead compound,
EPI-HNE4, that binds to and inhibits human neutrophil elastase. EPI-HNE4 is
currently in preclinical development for the treatment of inflammation resulting
from cystic fibrosis, an inherited disorder characterized by pulmonary
inflammation that leads to abnormally thick mucus secretions which impair
pulmonary function and can result in fatal infections. Because EPI-HNE4 binds to
its target protease with high specificity and high affinity, the Company
believes that it will reduce the inflammatory response while not interfering
with other physiological processes. Additional indications for EPI-HNE4 may
include other causes of pulmonary inflammation and acute inflammatory disorders.
Dyax has entered into an agreement to develop EPI-HNE4 with Debiopharm S.A., a
Swiss pharmaceutical company ("Debiopharm"). See "-- Collaborations."
Using Phage Display, Dyax has also discovered EPI-KAL2, a proprietary lead
compound which binds to and inhibits plasma kallikrein. Like EPI-HNE4, EPI-KAL2
is a small, stable protein that can be delivered by injection. The Company
intends to work with academic investigators to test EPI-KAL2 in animal models of
chronic inflammatory disease including rheumatoid arthritis and inflammatory
bowel disease.
Dyax is using its SAR technology to design and synthesize an orally
available small molecule with the inhibitory activity of EPI-HNE4 and intends to
similarly design and synthesize a small molecule for EPI-KAL2. Orally available
drugs are generally preferred for use in patients with chronic inflammatory
conditions compared to drugs delivered by inhalation or injection. Dyax
scientists have used the SAR data generated from EPI-HNE4 and related binding
compounds selected through Phage Display to design and synthesize small molecule
compounds that retain the neutrophil elastase inhibitory activity of EPI-HNE4
and have affinities in the range of existing therapeutic products. Dyax is
continuing to design additional small molecule compounds with the same
inhibitory profile, aiming to achieve higher specificity, higher affinity and
potentially greater efficacy with fewer side effects than existing treatments
for inflammation.
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Cancer. Cancer is characterized by uncontrolled cellular growth, which can
lead to death. Growth and metastasis of some cancers has been shown to be
dependent on the activity of the protease, plasmin. Using Phage Display, Dyax
has discovered EPI-PLA2, a potent and specific inhibitor of plasmin. Dyax plans
to evaluate EPI-PLA2 in cell-based models of prostate cancer metastasis in
collaboration with the M.D. Anderson Cancer Center at the University of Texas.
The Company also intends to evaluate EPI-PLA2 for treatment of other metastatic
cancers.
Other Therapeutic Discovery Programs. The Company is also planning to
pursue other therapeutic discovery programs. One such indication is multiple
sclerosis ("MS"), the primary neurodegenerative disease of young adults, which
is caused when the patient's immune system attacks the protective protein layer
that insulates neurons of the central nervous system. The research group of Dr.
Stephen Hauser, a leading investigator in MS at the University of California,
San Francisco, has identified a protease involved in the entry of immune system
components into the central nervous system, where they attack the neurons and
initiate an MS episode. Dyax recently entered into a consulting agreement with
Dr. Hauser to assist the Company in developing a program to use Phage Display to
discover and develop a potential treatment for MS. The Company intends to
identify other opportunities for therapeutic product discovery and development
using Phage Display.
Therapeutic Discovery Collaborations. The Company has established a
collaborative arrangement with Novo Nordisk to use Phage Display to develop new
tools for the rapid evaluation of certain of Novo Nordisk's therapeutic
candidates. In addition, the Company has also entered into funded discovery
collaborative arrangements with SangStat Medical Corporation, Tularik Inc. and
Athena Neurosciences, Inc. Generally, in these collaborative arrangements, the
Company screens its Phage Display libraries to identify compounds that bind to a
collaborative partner's therapeutic or diagnostic targets of interest. If the
collaborative partner chooses to continue to develop the binding compound into
therapeutic lead candidates, the Company will be entitled to receive milestone
payments and/or royalties on product sales based on the collaborative partner's
successful development and marketing of such leads as products.
Diagnostics
An in vitro and in vivo diagnostic product generally consists of a
detectable marker linked to a binding compound with specificity and affinity for
a molecular target, thereby indicating the presence or absence of that target.
The higher the specificity and affinity of the binding compound used in a
diagnostic product, the more accurate and sensitive the test. In the case of in
vivo diagnostic imaging to detect certain disease conditions, it is also
necessary to have a targeting agent that will localize rapidly to the target
tissue or organ after it is administered to the patient.
For the past twenty years, the method of producing monoclonal antibodies
using the natural immune system of the mouse (hybridoma technology) has been the
best available means of supplying binding compounds for in vitro and in vivo
diagnostics. In this method, a desired target is selected and injected into a
mouse, which produces antibodies. The mouse antibody-producing cells are then
isolated and propagated outside the animal. However, using hybridoma technology
for the discovery and development of antibody products has inherent limitations,
such as time, the inability to utilize certain types of targets (including those
which are toxic or nonimmunogenic to the animal) and the inability to control
specificity of antibodies produced in the mouse. As targeting agents for in vivo
imaging, mouse antibodies have additional limitations, including long clearance
times and slow penetration to the disease foci requiring 24 to 48 hours of
hospitalization after injection before a useful image can be obtained and
immunogenicity that limits the number of times a patient can be safely imaged
with any mouse antibodies.
For in vivo diagnostic imaging products, Dyax believes that Phage Display
will enable the identification of binding compounds that are smaller in size and
have higher specificity and affinity and greater bioavailability than mouse
monoclonal antibodies, and that these compounds will be more effective
diagnostic imaging agents that will permit more accurate and, in some cases,
earlier diagnosis of disease. For in vitro diagnostic applications, the most
immediate opportunity is the use of Phage Display as a source of monoclonal
antibody reagents. Phage Display can be used to display large collections of
human antibodies. The Company believes that Phage Display allows more rapid
identification of antibodies and other binding compounds than hybridoma
technology and could potentially replace animals as a source of antibodies for
diagnostic and
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research applications. Phage Display libraries can be screened in high
throughput formats so that antibodies that bind to any diagnostic target can be
isolated cost-effectively in a few weeks, compared to the six to nine months
required to immunize, isolate and propagate antibody-producing cells from mice.
Dyax's current programs for the discovery and development of in vivo
diagnostics are:
Inflammation/Infection Imaging. Disease indications that are likely
candidates for inflammation-infection imaging include inflammatory bowel
disease, fever of unknown origin, arthritis, certain autoimmune disorders and
pulmonary diseases. The Company believes that there is a need for an imaging
agent that can provide early and accurate identification of both sterile and
infectious inflammatory sites in vivo and that there are no sensitive, specific
products for rapid diagnosis of these disorders currently available. The most
common tools currently available for locating inflammation are time-consuming,
inaccurate and/or expensive. Dyax is evaluating a modified form of EPI-HNE4 in
preclinical studies as a diagnostic imaging agent for sites of inflammation
(including infection) in collaboration with scientists at the University of
Massachusetts Medical Center. Preclinical development of EPI-HNE4 as an agent
for imaging inflammation has been supported by a Phase I Small Business
Innovation Research grant from the National Institutes of Health. The imaging
agent being developed by Dyax consists of EPI-HNE4 as the targeting portion with
technetium-99 as the detectable marker.
Cardiovascular Imaging. Disease indications that are likely candidates for
cardiovascular imaging include deep vein thrombosis ("DVT") and pulmonary
embolism ("PE"). DVT is caused by the formation of a fibrous blood clot in the
veins of the lower limbs. PE results when a DVT clot breaks loose and travels to
the lungs, where it can block blood flow. The Company believes that there is a
need for a safer and more accurate imaging product for DVT and PE. Dyax is
collaborating with EPIX Medical Inc. ("EPIX") using Phage Display to identify
binding compounds for a molecular component of fibrous blood clots which could
be used in an imaging agent for DVT and PE. Under the collaborative arrangement,
Dyax has identified a group of potential lead binding compounds. The product
under development with EPIX will be based on a novel labeling chemistry that
increases the sensitivity of an image generated using magnetic resonance imaging
("MRI"). EPIX plans to develop the identified binding compounds for use in MRI,
while Dyax has retained the right to develop these compounds for use in nuclear
medicine imaging. See "-- Collaborations."
Biotage Separations Products and Research and Affinity Separations Development
Programs
Purification of a therapeutic product is a complex, multi-step process,
which can account for over 50% of a product's manufacturing costs. A widely used
separations technology, chromatography, is used to purify the desired product or
to remove impurities from the production mixture during the discovery,
development and manufacturing of a therapeutic product. Chromatography is a
technology that separates molecules in a liquid mixture using differential
adsorption of molecules. In this technology, molecules pass through a chamber,
or column, packed with separations media. The migration rates of different
molecules through the column vary due to differences in the strength of binding
interactions with the media in the column. In conventional chromatography,
separations are based on broad physical properties such as size, charge or
hydrophobicity, and the types of available, standard chromatography media has
changed little in recent years. Chromatographic separations are achieved by
selection of the surface chemistry of the media and the solvent composition such
that different molecules exit the column at different times and therefore can be
collected and/or detected in purified form. For a given separation, the
available media generally has unpredictable specificity and there has been no
practical way to modify the existing materials to create specific binding to a
particular target. Thus, the development of useful separation processes relies
on trial and error and is time consuming and labor intensive.
The Company believes that Phage Display is a powerful tool for developing
new affinity separations media that can cost effectively and efficiently purify
increasingly complex therapeutic products. In affinity chromatography, a ligand
that binds with high specificity and high affinity to either the desired
compound or a specific class of impurities to be removed is attached to the
media. When the desired compound is captured on the affinity media, impurities
are washed away. By changing the solvent conditions, the desired compound can be
released from the media resulting in a product that is (in most cases) at higher
concentration than in the
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original mixture. Alternatively, a specific class of impurities is captured on
the media to allow the desired product to flow through in a purified form. Phage
Display can be used to generate small, stable ligands that have high specificity
and high affinity for the desired compound or impurity. Since affinity
chromatography can purify the desired compound in one column, one such affinity
chromatography column can replace multiple conventional chromatography columns
which otherwise would be required. Dyax has developed compounds that bind and
release in predetermined conditions, such as those conditions that can be used
for process-scale separations. The Company believes that these new affinity
separations products can reduce the time, cost and risk associated with
pharmaceutical purification at the discovery, development and production scale.
Dyax plans to combine its Biotage chromatography systems with any affinity
chromatography media that may be derived through Phage Display to provide system
solutions for the purification of natural products, peptides, proteins, organic
compounds and other molecules. See "Risk Factors -- Limited Revenues to Date
from Separations Products; Need to Develop New Separations Products."
Biotage Separations Products
Dyax develops, manufactures and sells chromatography separations systems
and is a leader in the development, manufacture and sale of cartridge
chromatography products and systems, which it sells under the Biotage trade
name. The Company's prepacked, disposable cartridges can be packed with a wide
range of media from a variety of sources. The Company believes that its
cartridge-based systems provide competitive advantages to its customers compared
to manually packed systems, including greater speed and convenience, lower cost,
improved safety (no exposure of production personnel to media) and reproducible
performance leading to significant cost savings due to reduction of labor and
decreased solvent usage. The Company has sold its current line of Biotage
chromatography products and systems to over 50 leading pharmaceutical and
biotechnology companies worldwide, including Bachem AG, Bayer Corporation,
Genentech, Inc., F. Hoffmann-La Roche, Ltd., Merck & Co., Inc., Novartis,
Pfizer, Inc., Pharmacia & Upjohn Co. and Wyeth-Ayerst Laboratories, Inc. (a
subsidiary of American Home Products Corporation).
The following are the Company's principal chromatography products:
FLASH Chromatography Systems and Cartridges: FLASH systems are
designed to efficiently and cost effectively purify a single chemical
compound from a complex synthetic mixture. The FLASH systems range in price
from $2,500 for discovery and development scale systems to over $100,000
for production scale systems. The manufacturing scale systems can replace
other processes, including chromatography using large glass or steel
columns or batch adsorption and filtration using larger tanks and filters.
The FLASH systems include radial compression modules that are designed to
enhance performance by stabilizing the media and increasing flow rates. The
Company believes that the FLASH product line, which was introduced by the
Company in 1994, is the only commercially available line of prepacked
disposable cartridges for separations from the discovery scale to the
manufacturing scale.
Parallex Parallel Purification System: Dyax's automated Parallex
system is a high throughput, high-resolution chromatography workstation
designed for the combinatorial chemistry market. The integrated system
includes four independent high pressure liquid chromatography ("HPLC")
columns, bar-coded sample input and intelligent fraction collection based
on analysis of the compounds as they emerge from the columns using a
proprietary four-channel, dual wavelength UV detector. HPLC technology is
widely used in the pharmaceutical industry, particularly for purification
of synthetic organic molecules, synthetic peptides, oligonucleotides and
natural products. Information is tracked and stored using the Company's
proprietary software that can interface with commercially available central
data management systems. Up to 900 samples can be run and purified
automatically in a 24-hour period. To the Company's knowledge, there is
currently no similar product available for this emerging market that can
integrate the data from several hundred samples per day at comparable
efficiency. The list prices for the Parallex systems, which were introduced
by the Company in 1997, range from $190,000 to over $240,000.
Kiloprep Systems and Cartridges: The Company's Kiloprep systems are
high resolution chromatography systems that use prepacked HPLC cartridges
and radial compression technology for discovery,
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development and manufacturing scale purifications. Kiloprep HPLC systems
work with a variety of solvents, include advanced automation features and
provide documentation and validation for current GMP regulatory
environments. Manufacturing scale Kiloprep systems are built to individual
customer specifications. By contrast, competing process-scale HPLC systems
rely on prepacked stainless steel columns or user-packed HPLC columns.
Kiloprep cartridges are used exclusively in the Kiloprep system for
purifications from the milligram to the kilogram scale. The list prices for
the Kiloprep systems, which were introduced by the Company in 1990, range
from $50,000 for laboratory systems to over $300,000 for custom ordered
manufacturing scale systems.
ProPrep Chromatography Systems: The Company's ProPrep systems are
customized to meet the requirements of development and manufacturing scale
chromatography applications for cGMP production of biologics. The Company
believes that, compared to other commercially available systems, the
ProPrep line provides a superior turn-key, highly engineered system with
superior gradient performance and an "explosion proof" design that allows
the system to be used in a hazardous manufacturing plant environment. These
systems will be used to support the new BioFLASH prepacked chromatography
cartridges described below. The Company also plans to improve overall
purification performance of any new affinity separations media that
incorporate binding compounds discovered through Phage Display by using the
ProPrep hardware and software technology platforms. The prices for ProPrep
systems, which were introduced by the Company in 1993, range from $150,000
to over $500,000.
BioFLASH Prepacked Cartridges and Systems: The Company's BioFLASH
cartridges, which are expected to be introduced in the second half of 1998,
will consist of prepacked, disposable cartridges containing media
specifically designed for separations of biological materials. Virtually
any chromatography media for separating biological material can be packed
in these cartridges. This product line, which is derived from the Company's
FLASH chromatography systems for traditional chemical separations, is
designed to allow operation of the BioFLASH cartridges in a stand alone or
radially compressed format. The Company believes that BioFLASH cartridges
and systems will have competitive advantages over existing products for
development and manufacturing scale because they provide reproducible
performance, higher pressure ratings (i.e., faster, higher resolution
separations) and reduced cross-contamination and sterilization capability
for virtually any bioseparation that is currently carried out in a glass or
stainless steel column. The Company plans to use the BioFLASH product line
as the platform for its Phage Display-derived affinity separations products
under development.
Affinity Separations Development Programs
Dyax is using Phage Display to develop new affinity separations products
which it believes will be more effective than conventional separations
technologies. Dyax has several funded discovery projects with different
companies, including Argonex, Inc., Genetics Institute, Inc., Genzyme
Transgenics Corporation, Merck & Co., Inc. and Pall Corporation. These projects
seek to identify one or more potential binding compounds that can be attached to
media for development into affinity separations products for purification of the
collaborative partner's designated therapeutic product. To date, Dyax has
discovered affinity ligands for such products as a viral vaccine, tissue
plasminogen activator, a recombinant blood product and transgenic animal and
plant products. Under certain of these programs, the Company has delivered
affinity separations products containing Phage Display-derived affinity ligands
for testing and evaluation. The Company is continuing to seek collaborative
partners in the discovery and development of affinity separations products.
In addition to its custom-designed affinity separations products program,
Dyax is developing proprietary affinity separations products, including products
under development in a collaborative arrangement with CropTech for broad
commercial applications. The Company believes that these products will have
applications in research as well as in the process and manufacturing markets. To
date, none of the Company's affinity separations products have been used for
commercial scale manufacturing and there can be no assurance that such products
or other products developed in the future, if any, will be used for commercial
scale manufacturing. See "-- Collaborations."
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DYAX TECHNOLOGY
Phage Display
Phage Display is used to select proteins that bind to a target of interest.
The selection is made from a diverse set of up to hundreds of millions of
proteins displayed on the surface of a bacterial virus, bacteriophage, known
commonly as "phage." The Company's Phage Display process generally consists of:
(i) generating a large collection of phage, known as a "library," that contains
genes encoding up to hundreds of millions of related proteins, or potential
binding compounds, (ii) screening the library by exposing it to a specified
target and isolating those phage whose displayed proteins bind to the target;
and (iii) analyzing the selected binding compounds by sequencing their genes and
by producing and characterizing small quantities for relative specificity and
affinity to the target.
Generating a Phage Display Library. The generation of a Phage Display
library is based upon a single protein framework and contains up to hundreds of
millions of variations of this protein. The first step in generating a library
is the selection of the protein framework upon which the library will be
created. This selection is based on desired product properties, such as
structure, size, stability, or lack of immunogenicity. Scientists then determine
which amino acids in the framework will be varied. Amino acids that contribute
to the chosen framework properties are not varied. The exact number and type of
different amino acids that are varied is also controlled, so that the resulting
Phage Display library consists of a diverse set of chemical entities, each of
which retains the desired physical and chemical properties of the original
framework.
GENERATING A PHAGE DISPLAY LIBRARY
[GENERATION OF A PHAGE DISPLAY LIBRARY]
The next step is the creation of a collection of genes encoding the
designed variations of the framework protein. Scientists can easily generate
diverse collections of up to hundreds of millions of different synthetic DNA
sequences. Each new DNA sequence, or gene, encodes a single protein sequence
that will be displayed on the surface of the individual phage that contain this
gene. The new DNA sequences are combined with phage genome DNA and certain
enzymes so that the new DNA is inserted into a specific location of the phage
genome, such that the encoded protein will be displayed on the phage surface as
a fusion to one of the existing (naturally occurring) phage proteins. The phage
is a physical link between the displayed protein and its gene.
The new phage genomes are then transferred into laboratory bacteria, where
the phage genome directs the bacterial cells to produce thousands of copies of
each new phage. The resulting collection of phage is the Phage Display library.
Because the Phage Display library can be reproduced by infecting a new culture
of
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laboratory bacteria to produce thousands more copies of each phage, libraries
can be maintained for a potentially unlimited number of screenings.
In addition to the creation of synthetic DNA sequences for a Phage Display
library, scientists can also use naturally occurring genes, such as genomic DNA
(all genes in an organism) or cDNA (sequences that represent all the expressed
genes in a cell or organism) as sources of the genes for a library. For example,
Phage Display libraries of human antibodies can be used to isolate monoclonal
antibodies in a significantly shorter period of time than required for existing
hybridoma technology.
Screening Phage Display Libraries. Once a Phage Display library is
generated, scientists can select binding compounds with high specificity and
high affinity by exposing the library to specified targets of interest and
isolating the phage that display compounds that bind to the target. For certain
applications of Phage Display, such as separations, scientists can design the
binding and release conditions into the selection. Each individual phage
contains the gene encoding one potential binding compound, and when its
displayed protein is selected in the screening procedure, it can be retrieved
and amplified by growth in laboratory bacteria.
To screen a Phage Display library, the library is exposed to the target
under desired binding conditions. The target is normally attached to a fixed
surface, such as the bottom of a tube, or a bead, allowing phage whose potential
binding compounds do not bind to the target to be removed. Once these unbound
phage are washed away, the phage containing the selected binding compounds can
be released from the target. Since the phage are still viable, they can be
amplified rapidly by again infecting bacteria. This property of ready
amplification is unique to biological systems. Binding compounds identified
during the first round of selection generally include some that bind to the
target molecule with varying degrees of specificity and affinity. Therefore, the
amplified phage are again exposed to the target molecule in another round of
screening, to enrich for those phage whose displayed binding compounds have the
desired specificity and affinity. The procedure is repeated several times until
a group of related binding compounds with the desired characteristics can be
identified.
SCREENING A PHAGE DISPLAY LIBRARY
[SCREENING OF A PHAGE DISPLAY LIBRARY]
Evaluation of Selected Binding Compounds. Screening Phage Display
libraries generally results in the identification of one or more groups of
related binding compounds. These groups of compounds are valuable in providing
information about which chemical features are necessary for binding to the
target with specificity and affinity, as well as which features can be altered
without affecting binding. Using DNA sequencing, scientists can determine the
amino acid sequences of the binding compounds and identify the essential
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components of desired binding properties by comparing similarities and
differences in such sequences. If desired, the binding compounds can be further
optimized by building additional Phage Display libraries based on these key
components and repeating this process. Small amounts of the binding compound can
be produced by growing and purifying the phage. For production of larger
amounts, the gene can be removed from the phage DNA and placed into a standard
recombinant protein expression system. Alternatively, if the identified binding
compound is sufficiently small, it can be chemically synthesized. These binding
compounds can be evaluated for desired properties including affinity,
specificity and stability under conditions that will be encountered in its
intended use. From each group of compounds, a lead compound with the best
properties can be identified and developed and tested as a therapeutic,
diagnostic or affinity separations product.
Other Technologies
Structure Activity Relationship Technology. The SAR information obtained
from the group of Phage Display-derived binding compounds can be used to
initiate small molecule drug design. The framework selected or designed to
generate a Phage Display library can be structured so that the amino acids that
interact with the target during binding are from a small, structurally
constrained region of the protein framework. Selection of binding compounds from
such Phage Display libraries does not yield a single result, but rather a group
of closely related variants of the framework protein that bind to the target.
Dyax believes that its proprietary SAR technology, including molecular modeling
and computational chemistry capabilities, can be used for the discovery of small
molecules that are potentially orally available drug candidates. Traditionally,
structure-based rational drug design has relied on determination of the three
dimensional structure of the therapeutic target, which requires large quantities
of purified material. In contrast, Dyax's SAR approach does not require
structural information regarding the target molecule. Small molecule drug
candidates are instead designed using information derived from the group of
binding compounds selected through Phage Display, and can be performed with a
part of the target or with impure preparations of the whole target. The
structured peptide and small protein binding compounds discovered through Phage
Display are less complex and substantially more accessible to three-dimensional
structural determination through nuclear magnetic resonance and X-ray
crystallography methods than most therapeutic targets. Dyax has used this
strategy to design small molecule neutrophil elastase binding compounds that
have demonstrated the desired inhibitory activity in in vitro assays. See
"-- Dyax Programs and Products -- Therapeutic and Diagnostic Discovery and
Development Programs -- Therapeutics."
Subtractive Antibody Screening. Subtractive antibody screening ("SAS") is
a differential screening technology that identifies genes encoding cell surface
or secreted proteins that are expressed in one cell type (target cell type),
such as a diseased tissue type and not in another cell type (subtractive cell
type). Most therapeutic targets for which drugs exist today are either cell
surface or secreted proteins, which are more accessible to drugs. Dyax has
licensed exclusive rights to SAS technology developed by the Whitehead Institute
for Biomedical Research at the Massachusetts Institute of Technology and
Massachusetts General Hospital. Scientists using the SAS technology first
isolate the cell surface or secreted proteins from the target cell type. These
proteins are injected into an animal to generate antibodies. The antibodies that
recognize proteins from a subtractive cell type, such as a normal tissue type,
are removed. The remaining antibodies will bind to proteins that are unique to
the target cell or tissue type. The genes encoding protein products which react
with the remaining antibodies can be cloned using existing cDNA expression
cloning techniques. Dyax scientists plan to use SAS to identify novel accessible
target proteins. Dyax intends to use targets identified through SAS to screen
its Phage Display libraries to discover binding compounds that could be leads
for therapeutic and diagnostic products.
COLLABORATIONS
To date, the Company has received a significant portion of its revenue from
its corporate collaborative partnerships and funded discovery projects and the
Company expects that it will continue to rely on several collaborative partners
to fund different product development efforts and new research and development
efforts for the foreseeable future.
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Therapeutics and Diagnostics
Dyax is leveraging its Phage Display in therapeutics and diagnostics
through discovery and development collaborative arrangements with biotechnology,
pharmaceutical and diagnostics companies. Currently, the Company has three
corporate collaborative partnerships and three funded discovery projects for
applications of its Phage Display technology. The Company's principal ongoing
therapeutic and diagnostic corporate collaborative partnerships are:
Debiopharm. In March 1997, Dyax entered into a Research and Development
Agreement with Debiopharm for the clinical development of the Company's
neutrophil elastase inhibitors, including EPI-HNE4. Under the terms of the
agreement, Debiopharm will undertake at its own expense the development and
production of EPI-HNE4 for the treatment of inflammation resulting from cystic
fibrosis and other chronic pulmonary inflammatory disorders, in exchange for an
option to obtain an exclusive commercial license for therapeutic uses of
EPI-HNE4 in the European market. This option is exercisable by Debiopharm until
March 2000, subject to extension. Dyax has the right to use the regulatory
information, including preclinical, clinical and manufacturing data, generated
by Debiopharm and retained all rights to develop and produce EPI-HNE4 in all
other fields and territories. If Debiopharm exercises the option, the Company is
entitled to receive a royalty on revenues received by Debiopharm from the use or
sale in the European market of therapeutic products developed using such
information. In the event the Company chooses to use information owned solely by
Debiopharm for therapeutic uses of EPI-HNE4, the Company will be obligated to
pay to Debiopharm a royalty on revenues received by the Company from the use or
sale of products outside Europe.
EPIX. In June 1997, Dyax entered into a Collaboration Agreement with EPIX
pursuant to which EPIX agreed to fund a research program in which the Company
will use Phage Display to identify peptides for use in thrombi imaging
applications. EPIX and Dyax agreed, following the completion of the research
program, to jointly identify and develop compounds that specifically target
pulmonary embolism and deep vein thrombosis for use in MRI and nuclear medicine
in vivo imaging agents used to diagnose these disorders. EPIX will be
responsible for the development of, and will have exclusive commercial rights
to, imaging agents developed for the MRI field and the Company will be
responsible for the development of, and will have the exclusive commercial
rights to, imaging agents for the nuclear medicine field. If any products are
successfully developed under the agreement, the Company is entitled to receive
royalties from sales of MRI products and EPIX is entitled to receive royalties
from any sales of nuclear medicine products.
Novo Nordisk. Also in March 1997, the Company and Novo Nordisk A/S
established a two-year collaboration to use the Company's Phage Display
technology to develop new tools for the rapid evaluation of certain of Novo
Nordisk's therapeutic candidates. The Company expects to receive research
funding for two years and, in the event Novo Nordisk utilizes the new
purification tools in its therapeutic development programs, the Company will be
entitled to receive license and product-development milestones in the future.
Discovery Collaborations. In addition to the three corporate collaborative
partnerships described above, the Company has also entered into funded discovery
projects with SangStat Medical Corporation, Tularik Inc. and Athena
Neurosciences, Inc. Generally, the Company screens its Phage Display libraries
to identify compounds which bind to a collaborative partner's therapeutic or
diagnostic targets of interest. In addition, if the collaborative partner
chooses to continue to develop the binding compound into therapeutic leads, then
the Company will be entitled to receive milestone payments and/or royalties on
product sales based on the collaborative partner's successful development and
marketing of leads as products.
Separations
Dyax is also leveraging its Phage Display in the field of separations to
develop novel affinity separations technologies and products. In this field, the
Company has one corporate collaborative partnership and several funded discovery
projects.
CropTech. In October 1997, in connection with a $4.3 million Advanced
Technology Program grant from the National Institute of Standards and
Technology, CropTech Development Corporation
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("CropTech") and Dyax entered into a four-year Joint Collaboration Agreement to
develop novel technologies for the production and separation of large volume
protein products, therapeutic glycoproteins and bioactive peptides. Under the
agreement, CropTech agreed to use its transgenic plant technology to develop
novel expression systems for these therapeutic products and Dyax agreed to use
Phage Display to develop affinity separations systems for use in purifying the
protein and peptide products.
Discovery Projects. Typically, in the funded discovery projects, the
corporate sponsors have agreed to fund the Company to use Phage Display to
discover affinity ligands for evaluation in the purification and separations
processes of the sponsor's pharmaceutical product candidates. These sponsors,
which include Argonex, Genetics Institute, Genzyme Transgenics, Merck and Pall,
generally fund the Company's costs of identifying and testing a custom affinity
ligand and are obligated to make a milestone payment upon the successful
evaluation of the ligand. Upon completion of the discovery phase, the sponsor
generally has the option to expand the project to a development phase and/or to
negotiate a license agreement for the commercial use of the affinity ligand in
conjunction with a media to purify the sponsor's product, although no product
has yet reached this stage. The Company's discovery phase projects to date have
included discovery of affinity ligands for such products as a viral vaccine,
tissue plasminogen activator, a recombinant blood product and transgenic animal
and plant products.
The Company's collaborative arrangements are generally subject to
termination on prior written notice from the collaborative partner. One
collaborative arrangement was terminated in 1998. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." In addition,
there can be no assurance that the Company will be able to negotiate
collaborative arrangements on acceptable terms in the future, if at all, or that
the Company's current or future collaborative arrangements will be successful
and provide the Company with the anticipated benefits, or that current or future
collaborative partners will not pursue or develop alternative technologies or
products. See "Risk Factors -- Dependence on Collaborations and Licensing."
COMPETITION
The industries in which the Company competes are characterized by intense
competition and rapid technological change. New developments occur and are
expected to continue to occur at a rapid pace, and there can be no assurance
that discoveries or commercial developments by the Company's competitors will
not render some or all of the Company's technologies or potential products
obsolete or non-competitive, which would have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company's Phage Display technology is one of several technologies
available to generate libraries of compounds which can be used to discover and
develop new products. Other technologies used by the pharmaceutical, diagnostics
and biotechnology industries to identify molecules which bind to a desired
target include high throughput screening of chemical and natural products and
combinatorial chemistry. Further, the Company licenses other parties in the
fields of therapeutic and antibody-based in vitro diagnostic products on a
non-exclusive basis under its Phage Display patent portfolio, and, therefore,
its licensees may compete with the Company in the development of specific
therapeutic and diagnostic products.
The Company's therapeutic and in vivo diagnostic compounds under
development are expected to address one or more indications in the therapeutic
or diagnostic markets. The Company will face significant competition in these
markets. Also, several companies are using conventional antibody technology and
other means to identify products for use as imaging agents, which may compete
with any future imaging products of the Company. Although Dyax's goal is to
focus its development efforts on selected disease markets in which it believes
there is an unmet need, there can be no assurance that others will not have
competing products in development or on the market or that the Company will be
able to successfully develop such products.
Chromatography is only one of several types (e.g.,centrifugation,
filtration, etc.) of separations processes used in the manufacture of
therapeutic products. Dyax will continue to face intense competition from other
suppliers of separations products. The principal competitors in the Company's
target markets include Amersham Pharmacia Biotech, Millipore Corporation, E.
Merck AG, Bio-Rad Laboratories Inc., BioSepra, Inc. and Waters Corporation. In
addition, many pharmaceutical companies have historically
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assembled their own chromatography systems. The Company is not aware of any
major competitor in the prepacked disposable cartridge market where its FLASH
cartridges are marketed and for which BioFLASH is targeted. Three former
employees of the Company's Biotage label products group have established their
own chromatography business, which is the subject of a lawsuit initiated by the
Company alleging misappropriation of trade secrets. Although the Company has
been able to launch and sell chromatography products in desired niche markets to
date, the continued success of these products will depend upon customer
acceptance, price and proprietary position, as well as the successful
introduction of new products. The Company's strategy for its custom affinity
separations products is to retain all proprietary rights to its Phage Display
intellectual property for the separations field and to retain all rights to any
affinity ligands it develops. There can be no assurance that others will not be
able to use conventional or combinatorial chemistry approaches, or develop new
technology, to identify binding molecules for use in separating and purifying
products, including molecules which may compete with the Company's affinity
ligands. See "Risk Factors -- Intense Competition; Technological Obsolescence."
PATENTS AND PROPRIETARY RIGHTS
The Company's success will be significantly dependent upon its ability to
obtain patent protection for its products and technologies under development, to
defend its issued patents, including patents related to phage display
biotechnology and separations, and to avoid the infringement of patents issued
to others. The Company is aware of certain patents and patent applications for
which it will likely need to obtain licenses to commercialize its products and
technologies. While the Company believes that it will be able to obtain such
licenses, there can be no assurance that such licenses, or licenses to other
patent rights, will be available on reasonable terms, if at all. Further, if
such licenses are not available, the Company may need to halt or modify the
activities which are covered by the other patent rights, which could have a
material adverse effect on the Company's business financial conditions and
result of operations. The Company's policy generally is to file for patent
protection on new methods and technology useful for the display of binding
molecules, new therapeutic, diagnostic and separation product candidates
identified through Phage Display, and new chromatography separation methods and
products.
Dyax's proprietary position in the field of phage display is based upon its
patent rights, technology, proprietary information, trade secrets and know-how.
Dyax's patents and patent applications for its Phage Display include U.S. Patent
Nos. 5,571,698, 5,403,484 and 5,223,409, EPO Patent No. 436,597, two allowed or
pending U.S. patent applications, and 15 allowed or pending foreign patent
applications (the "Phage Display Patent Rights"). These Phage Display Patent
Rights contain claims covering inventions in the field of the surface display of
proteins and certain other peptides, including surface display on bacteriophage.
In addition to the Phage Display Patent Rights, Dyax has filed for patent
protection on certain of the proteins and peptides it has identified using Phage
Display. Dyax recently was issued U.S. Patent No. 5,666,143 covering sequences
of peptides which have neutrophil elastase inhibitory activity, including the
sequence for EPI-HNE4, which is in preclinical testing as a therapeutic and
imaging agent. The Company also has pending applications covering plasmin
kallikrein and plasmin peptide inhibitors, as well as peptide compounds which
can be used in the separation and purification of specific biopharmaceuticals.
Although the Company is not aware of any legal challenges to the Phage
Display Patent Rights to date in the United States, there can be no assurance
that a challenge will not be brought in the future. The Company plans to protect
its patent rights, including the Phage Display Patent Rights, to the maximum
practical extent. There can be no assurance that the Company will have
sufficient resources necessary to defend its patent rights against any such
challenges. However, if the Company commences legal action against an alleged
infringer of any of the Company's patent rights, the alleged infringer can be
expected to claim that the Company's patent rights are invalid for one or more
reasons, thus subjecting the Company's patent rights to a judicial determination
of validity with the attendant risk that an adverse determination could result
in the loss of the patent rights. In addition, in certain situations, an alleged
infringer could seek a declaratory judgment of invalidity of the Company's
patents. Uncertainties resulting from the initiation and continuation of any
patent or related litigation, including those involving the Company's Phage
Display patents, could have a material adverse effect on the Company's ability
to maintain and expand its licensing program and collaborative
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arrangements and to compete in the marketplace pending resolution of the
disputed matter. See "Risk Factors -- Uncertainties Related to Patents and
Proprietary Rights."
Two European patent oppositions were filed in late 1997 against the
Company's Phage Display patent issued by the EPO and the Company expects that
these oppositions will not be resolved for several years. The oppositions are
currently being reviewed by the Company's patent counsel, and Dyax intends to
vigorously defend its European patent. However, there can be no assurance that
the Company will prevail in the opposition proceedings or any litigation
contesting the validity or scope of this EPO patent or other foreign patents.
The Phage Display Patent Rights are central to the Company's non-exclusive
patent licensing program. The Company offers non-exclusive licenses under the
Phage Display Patent Rights to companies and non-profit institutes in the field
of therapeutics, antibody-based in vitro diagnostics and Phage Display research
products. To date, Dyax has licensed its Phage Display Patent Rights to more
than 25 companies. Dyax has retained the exclusive rights, and does not intend
to broadly license others, in the fields of in vivo diagnostic products and
separations. In connection with the licensing program, the Company regularly
monitors publications and other sources for information regarding the practice
by others of technology covered by the Phage Display Patent Rights. The Company
believes that there are unlicensed parties whose activities may be covered by
its issued patents. In such circumstances, the Company generally seeks to
negotiate a Phage Display license agreement. There can be no assurance, however,
that the Company will be able to identify all parties practicing the Phage
Display Patent Rights, all products derived by such parties, including its
licensees, or that the Company will be successful in entering into license
agreements with parties that the Company believes require such a license. In
jurisdictions where the Company has not applied for or obtained patent rights,
the Company will be unable to prevent others from developing or selling products
or technologies derived using Phage Display. In addition, in jurisdictions where
the Company has Phage Display Patent Rights, there can be no assurance that the
Company will be able to prevent others from selling or importing products or
technologies derived using Phage Display. The inability of the Company to
protect and enforce its patent rights, whether by licensing or otherwise, could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company is aware that other parties have patents and pending
applications to various phage display inventions. The Company has filed, and in
the future may file, oppositions to European and other patents issued to others.
To date, the Company has filed oppositions against two European patents in the
general field of phage display. The Company does not believe these European
patents cover any of its present activities, but the Company cannot predict
whether the claims in these patents may, in their current or future form, cover
the Company's activities or the activities of its collaborative partners and
licensees. In addition, through its patent licensing program, the Company has
secured a limited freedom to practice some of these patent rights pursuant to
its standard license agreement, which contains a covenant by the licensee that
it will not sue the Company under certain of the licensee's phage display
improvement patents. The Company may from time to time seek affirmative rights
of license or ownership under existing patent rights relating to phage display
technology of others. There can be no assurance, however, that the Company will
be successful in maintaining the existing covenants of nonsuit from its
licensees, or in acquiring similar covenants in the future, or that the Company
will be able to obtain satisfactory licenses. The inability of the Company to
obtain and maintain such licenses and covenants could have a material adverse
effect on the Company's business, financial condition and results of operations.
To protect its existing and future chromatography separations products, the
Company relies primarily upon trade secrets and know-how, as well as the
experience and skill of its technical personnel. The Company also has several
patents and patent applications on its proprietary chromatography technology
which are not based on Phage Display, but it cannot predict the extent to which
any such patents or future patents will provide protection for its existing and
new separations products. See "Risk Factors -- Limited Revenues to Data from
Separations Products; Need to Develop New Separations Products."
In all of its activities, the Company places substantial reliance on
proprietary materials and information, trade secrets and know-how to conduct its
research and development activities and to attract and retain
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collaborative partners, licensees and customers. Although the Company takes
steps to protect these materials and information, including through the use of
confidentiality and other agreements with its employees, consultants and
academic and commercial relationships, there can be no assurance that these
steps will be adequate, that these agreements will not be violated, that there
will be an available or sufficient remedy for any such violation or that others
will not also develop similar proprietary information. See "Risk Factors --
Uncertainties Related to Patents and Proprietary Rights."
GOVERNMENT REGULATION
The production and marketing of any of the Company's future therapeutic or
diagnostic products will be subject to numerous governmental laws and
regulations on safety, effectiveness and quality, both in the United States and
in other countries where the products are intended to be sold. In addition, the
Company's research and development activities in the United States are subject
to various health and safety, employment and other laws and regulations.
Although the Company believes that it is in substantial compliance with all
applicable federal, state, local and foreign legal requirements, there can be no
assurance that government authorities will agree that the Company is in
compliance with all laws, that such requirements will not be changed or that new
requirements will not be adopted, any one of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
United States FDA Approval
In the United States, products intended for in vitro diagnostic use and in
vivo diagnostic and therapeutic use in humans are subject to rigorous FDA
regulation. In addition, products intended for use in the manufacture of these
products, such as separations equipment, are subject to certain FDA manufacture
and quality standards.
The steps required before a new pharmaceutical or in vivo diagnostic
product can be sold in the United States include: (i) preclinical tests; (ii)
submission of an Investigative New Drug Application to the FDA which must become
effective before initial human clinical testing can begin; (iii) human clinical
trials to establish safety and effectiveness of the product, which normally
occurs in three Phases monitored by the FDA; (iv) submission and approval by the
FDA of a New Drug or Biologics License Application; and (v) compliance with the
FDA's GMP regulations and facility and equipment validation and inspection. The
requirements for testing and approval for in vitro diagnostic products may be
somewhat less onerous than for pharmaceutical products, but similar steps are
required. The Company cannot make any assurances that its therapeutic or
diagnostic product candidates, such as its neutrophil elastase inhibitor
EPI-HNE4, or the products of its partners and licensees, will be able to
successfully complete the FDA-required testing and approvals.
Certain of the Company's separations products are intended for use in the
manufacturing processes of clinical grade and commercial grade therapeutic and
diagnostic products. These separations products, therefore, are required to be
manufactured and delivered in accordance with certain GMP requirements, and
other applicable rules and regulations, and further may require the customer to
comply with certain quality and inspection regulations prior to use. The Company
has not yet produced any separations products under GMP conditions. There can be
no assurance that the Company or its customers will be successful in complying
with FDA and other regulations to permit the full clinical and commercial use of
the Company's separations products.
Foreign Regulatory Approval
Many countries outside the United States require the testing and marketing
of pharmaceutical and diagnostic products to be approved by governmental
authorities similar to the FDA. The approval procedures vary from country to
country. In the European Community (the "EC") for example, two different
approval procedures may apply to the products of the Company and its partners
and licensees: a centralized procedure which is mandatory for certain
biotechnology products and available as an approval option for certain other
products; and a decentralized procedure which requires approval by a regulatory
agency in each EC member state. Additionally, national laws of EC member states
govern clinical trials, manufacturing procedures, advertising and promotion and
pricing and reimbursement. Exporting of unapproved products to foreign
42
<PAGE> 44
countries for testing, approval, or marketing is subject to United States law
and that of the importing country, and may require FDA approval.
Other Regulation
In addition to the laws and regulations which apply to the development,
manufacture and sale of the Company's products, the Company's operations are
subject to numerous federal, state and local laws and regulations. The research
and development activities of the Company involve the controlled use, storage,
handling and disposal of hazardous materials, chemicals and radioactive
compounds and, as a result, the Company is required to comply with regulations
and standards of the Occupational Safety and Health Act, Nuclear Regulatory
Commission, and other safety and environmental laws. Although the Company
believes that its activities currently comply with all applicable laws and
regulations, the risk of accidental contamination or injury cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result, which could have a material adverse affect on the
Company's business, financial condition and results of operations.
MANUFACTURING
The Company manufactures and sells chromatography systems and cartridges.
Components for chromatography systems are manufactured to the Company's
specifications by subcontractors. For certain prepacked cartridges, the Company
purchases commercial media which it repacks and sells in disposable cartridges.
A small number of components of the Company's chromatography systems are
currently purchased from single sources. However, the Company believes that
alternative sources for these components are readily available, if necessary,
and that it will be able to enter into acceptable agreements to obtain these
components from such alternate sources at similar costs with only a temporary
disruption or delay in production.
For its new affinity separations products, the Company plans to supply
separations media containing Phage Display-derived affinity ligands directly to
customers and collaborative partners, and may from time to time license a third
party to supply its own requirements. For those affinity separations products
which are sold by the Company for use in a customer's or collaborative partner's
clinical or commercial manufacturing processes, the products will need to be
manufactured under GMP conditions. The Company has not yet established a
facility to manufacture affinity separations products under GMP conditions, and
there can be no assurance that the Company will be able to do so by the time
such facility is needed. The Company is currently contracting the production of
affinity ligands from manufacturers who have GMP facilities; however, should
this situation change, the Company's inability to obtain these components could
have a material adverse effect on its business, financial condition or results
of operations.
In addition, the Company currently plans to rely on third party
manufacturers for production of its therapeutic lead candidates under
development. There can be no assurance that such third parties will be able to
successfully complete on behalf of the Company the required preclinical studies,
clinical development, regulatory approval, manufacturing and marketing of any
such therapeutic products. See "-- Government Regulation."
SALES AND MARKETING
For the therapeutic, in vivo diagnostic and in vitro diagnostic products
which result from its research and development efforts, Dyax primarily plans to
commercialize such products through licensing, marketing, distribution and other
arrangements with pharmaceutical and diagnostic companies. If the Company
decides to market and sell any such product directly, Dyax does not expect to
establish direct sales capability until such time as one or more therapeutic or
diagnostic products in development obtain regulatory approval and are ready to
be commercialized.
The Biotage separations business has a sales and marketing group of sixteen
people in the United States and Europe. Outside of the United States and certain
European countries, the Company sells these products through distributors. As
new products are introduced and the market for the Biotage label products grows,
the Company anticipates increasing its direct marketing and sales capacity.
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<PAGE> 45
For the custom affinity separations products business, Dyax has ongoing
marketing efforts to develop new collaborative arrangements. For other affinity
ligand products that the Company may develop outside of a collaborative
arrangement, the Company plans to market and sell the ligands, either as
stand-alone products or integrated with separations media and equipment, through
a combination of direct sales, distributors and other marketing arrangements.
To the extent that the Company establishes a direct sales capability for
therapeutic or diagnostic products, or undertakes to expand its marketing and
sales capabilities for the separations business, there can be no assurance that
such efforts will be successful. Further, the Company's ability to sustain and
grow the sales of separation products under the Biotage label is dependent upon
its ability to retain and attract qualified marketing and sales staff, which
cannot be assured. See "Risk Factors -- Dependence on Expansion of Operations
and Management of Growth."
FACILITIES
The Company currently leases and occupies 22,500 square feet of laboratory
and office space in Cambridge, Massachusetts, as well as 20,000 square feet of
manufacturing and office space in Charlottesville, Virginia. The leases for the
Cambridge facilities expire in December 1999 and the lease for the
Charlottesville facility expires in April 2002. Dyax also leases approximately
4,000 square feet of office space in the United Kingdom to support marketing
efforts for its Biotage label products. The Company believes that its current
space is adequate for its needs through 1999 and that it will be able to obtain
additional space, as needed, on commercially reasonable terms.
EMPLOYEES
Dyax had 84 employees on March 1, 1998, including 25 employees with Ph.D's.
Of the Company's employees, 26 were employed in research and development in
Cambridge, Massachusetts and 23 were employed in development and manufacture of
chromatography separations products and systems in Charlottesville, Virginia.
None of the Company's employees is represented by a collective bargaining
agreement and the Company believes that its relations with its employees are
good.
LEGAL PROCEEDINGS
The Company is a party to patent oppositions in the European Patent Office.
The Company is not a party in any other material legal proceedings. See
"-- Patents and Proprietary Rights" and "-- Competition."
YEAR 2000
The Company is aware of the issues that many computer systems will face as
the millennium ("Year 2000") approaches. The Company has installed Year 2000
compliant software in many of its major systems. The cost of the effort to
complete this activity for the balance of the Company's systems is not expected
to be material. The Company believes that the Year 2000 issue will not pose
significant operational problems. However, Year 2000 issues could have a
significant impact on the Company's business, financial condition and results of
operations if modifications cannot be completed on a timely basis, unforeseen
needs or problems arise, or if the systems operated by suppliers, collaborative
partners or licensees are not Year 2000 compliant.
44
<PAGE> 46
STRATEGIC AND SCIENTIFIC ADVISORS
Dyax has a Strategic Advisory Committee as well as scientific advisory
boards for the therapeutics, diagnostics and separations research programs.
Members of the Strategic Advisory Committee meet with the Company's management
on a quarterly basis and, like the members of the scientific advisory boards,
are available to the Company's management and scientific staff on an as-needed
basis for consultation in their respective areas of expertise. All of the
advisors are employed by and/or have consulting arrangements with other entities
and are expected to devote only a small portion of their time to the Company. No
advisor is employed by the Company. Advisors' other commitments to or consulting
or advisory contracts with their employers or other entities may conflict or
compete with their obligations to the Company.
The Company's advisors are paid an annual retainer for attending meetings,
reimbursed for their expenses and have been granted options to purchase Common
Stock under the Company's Amended and Restated 1995 Equity Incentive Plan. The
Company has entered into consulting agreements with a number of the Scientific
Advisory Board members. The agreements generally are subject to termination by
either party with advance notice.
<TABLE>
<CAPTION>
NAME PROFESSIONAL AFFILIATION
---- ------------------------
<S> <C>
STRATEGIC ADVISORS
Charles L. Cooney, Ph.D......... Professor, Department of Chemical and Biochemical
Engineering and Executive Officer, Department of Chemical
Engineering, Massachusetts Institute of Technology.
Peter Feinstein................. Chairman, Feinstein Kean Partners Inc. and Kendall
Strategies Inc.
James W. Fordyce................ General Partner, Prince Ventures LP, and President,
Albert and Mary Lasker Foundation.
Harvey F. Lodish, Ph.D.......... Professor of Biology, Massachusetts Institute of
Technology and Member, Whitehead Institute for Biomedical
Research.
William A. Scott, Ph.D.......... President and Chief Executive Officer, Physiome Sciences,
Inc., and previously Senior Vice President of Exploratory
and Drug Discovery Research, Bristol-Myers Squibb
Pharmaceutical Research Institute.
Thomas P. Stossel, M.D.......... American Cancer Society Professor of Medicine, Harvard
Medical School, and Senior Physician, Hematology-Oncology
Division, Brigham and Women's Hospital.
Henri A. Termeer................ Chairman, President and Chief Executive Officer, Genzyme
Corporation.
Christopher T. Walsh, Ph.D...... Hamilton Kuhn Professor, Department of Biological
Chemistry and Molecular Pharmacology, Harvard Medical
School.
George M. Whitesides, Ph.D...... Mallinckrodt Professor of Chemistry, Harvard University.
Peter Wirth, Esq................ Executive Vice President and Chief Legal Officer, Genzyme
Corporation.
</TABLE>
45
<PAGE> 47
<TABLE>
<CAPTION>
NAME PROFESSIONAL AFFILIATION
---- ------------------------
<S> <C>
SCIENTIFIC ADVISORS -- THERAPEUTICS AND DIAGNOSTICS
Thomas J. Brady, M.D............ Director, Nuclear MRI Center, Massachusetts General
Hospital; Professor of Radiology, Harvard Medical School.
Leonard Guarente, Ph.D.......... Professor of Biology, Massachusetts Institute of
Technology.
Jordan Gutterman, M.D........... Virginia Cockrell Professor of Medicine, University of
Texas, M.D. Anderson Cancer Center.
Phillip W. Robbins, Ph.D........ Professor of Biochemistry, Massachusetts Institute of
Technology.
Thomas M. Roberts, Ph.D......... Chair, Department of Cancer Biology at Dana Farber Cancer
Institute; Chair, Division of Medical Sciences and
Professor of Pathology, Harvard Medical School.
H. William Strauss, M.D......... Chief, Division of Nuclear Medicine, Stanford University.
Andrew Wright, Ph.D............. Professor of Microbiology, Tufts University Medical
School.
SCIENTIFIC ADVISORS -- SEPARATIONS
Stuart E. Builder, Ph.D......... Consultant, and formerly Staff Scientist, Strategic
Development, Genentech Inc.
Hubert Koster, Ph.D............. Professor of Chemistry and Biochemistry, University of
Hamburg; President and Chief Executive Officer, Sequenom,
Inc.
Jack Johanssen, Ph.D............ President and CEO, Boston Probes, Inc.
Irving W. Wainer, Ph.D.......... Professor of Pharmacology, Georgetown University Medical
Center; Director, Georgetown University Bioanalytical
Center.
</TABLE>
46
<PAGE> 48
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company, as of March 1, 1998,
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Henry E. Blair.................................. 54 Chairman of the Board, President and Chief
Executive Officer
L. Edward Cannon, Ph.D.......................... 51 Executive Vice President, President,
Therapeutic and Diagnostic Division and
Director
Robert A. Dishman, Ph.D......................... 53 Executive Vice President, President,
Separations Division and Director
Keith S. Ehrlich................................ 47 Senior Vice President, Finance and
Administration, and Chief Financial Officer
Robert Charles Ladner, Ph.D..................... 53 Senior Vice President and Chief Science
Officer
Constantine E. Anagnostopoulos, Ph.D.(1)........ 75 Director
James W. Fordyce(1)(2).......................... 55 Director
Thomas L. Kempner(2)............................ 70 Director
Henry R. Lewis, Ph.D.(1)(2)..................... 72 Director
</TABLE>
- ---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
HENRY E. BLAIR. Mr. Blair has served as the Chairman of the Board and
President of the Company since the merger of PEC with the Company in August 1995
and as acting Chief Executive Officer from August 1995 until his appointment as
Chief Executive Officer in April 1997. He also served as a director and officer
of the Company since its formation in 1989. Mr. Blair is also a director of and
consultant to Genzyme Corporation, a company he co-founded in 1981. Mr. Blair
also co-founded Biocode, Inc. and GelTex Pharmaceuticals, Inc. In addition, he
is a director of Celtrix Pharmaceuticals, Inc. and Genzyme Transgenics
Corporation and a member of the Board of Overseers at each of the Tufts
University School of Medicine and the Lahey Hitchcock Clinic.
L. EDWARD CANNON, PH.D. Dr. Cannon has served as Executive Vice President
of the Company and President of the Therapeutics and Diagnostics Division. He
was Chief Executive Officer and held other senior management roles at PEC from
October 1992 to August 1995 and has been a director of the Company since the
merger of PEC with the Company. Dr. Cannon founded Hygeia Sciences, Inc. in 1980
and served as Chief Scientific Officer and Senior Vice President from 1986 to
1991.
ROBERT A. DISHMAN, PH.D. Dr. Dishman has served as Executive Vice
President of the Company and President of the Separations Division since the
merger of PEC with the Company and as a director since April 1994. He was
President and Chief Executive Officer of the Company from April 1994 until
August 1995. Prior to April 1994, Dr. Dishman co-founded and served as Chief
Executive Officer of the predecessor of ArQule Inc. and served as Executive Vice
President and Chief Operating Officer of Sepracor, Inc. Dr. Dishman also served
as President of Millipore's MilliGen (BioScience) Division, which he founded,
and Vice President, Business, Development and Marketing, of Millipore's Waters
Chromatography Division.
KEITH S. EHRLICH. Mr. Ehrlich joined the Company in January 1998 as Senior
Vice President, Finance and Administration, Chief Financial Officer and
Treasurer. From October 1993 to January 1998, he served as Vice President,
Finance and Administration, and Chief Financial Officer of Oravax, Inc. From May
1991 to October 1993, he served as Treasurer and Director of Finance of Vertex
Pharmaceutics, Inc. Previously, Mr. Ehrlich was a senior audit manager of
Coopers & Lybrand L.L.P.
ROBERT CHARLES LADNER, PH.D. Dr. Ladner joined the Company as Senior Vice
President and Chief Science Officer in August 1995. He was a co-founder of PEC
where he served as Senior Vice President and
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<PAGE> 49
Scientific Director from 1987 until its merger with the Company. Previously, Dr.
Ladner served as Senior Scientist of Genex Corp., where he was an inventor of
single chain antibodies.
CONSTANTINE E. ANAGNOSTOPOULOS, PH.D. Dr. Anagnostopoulos has been a
director of the Company since 1991. He is a Managing General Partner of Gateway
Associates L.P., a venture capital management firm which is the general partner
of Gateway Venture Partners II and Gateway Venture Partners III. Dr.
Anagnostopoulos has been a corporate officer of Monsanto Company. He is a
director of Genzyme Corporation.
JAMES W. FORDYCE. Mr. Fordyce has been a director of the Company since
August 1995. Since 1981, he has served as a general partner of Prince Ventures
Partners LP, a venture capital management firm, and its affiliated partnerships.
Prince Venture Partners IV is a venture capital limited partnership, managed by
Prince Ventures LP, which specializes in early stage investments in companies
involved in the medical and life science areas. He is also President of the
Albert and Mary Lasker Foundation.
THOMAS L. KEMPNER. Mr. Kempner has been a director of the Company since
August 1995 and previously was a director of PEC. Mr. Kempner is the Chairman
and Chief Executive Officer of Loeb Partners Corporation, an investment banking,
registered broker/dealer and registered investment advisory firm. He is also
President of Pinpoint Partners Corporation, the general partner of the Loeb
Investment Partnerships. Mr. Kempner is also a director of Alcide Corporation,
CCC Information Services Group, Inc., Energy Research Corporation, IGENE
BioTechnology, Inc., Intermagnetics General Corporation, Northwest Airlines,
Inc. and Roper Starch Worldwide, Inc.
HENRY R. LEWIS, PH.D. Dr. Lewis has been a director of the Company since
August 1995 and previously was a director of PEC. Mr. Lewis is a consultant to
several companies. From 1986 to February 1991, Mr. Lewis was the Vice Chairman
of the Board of Directors of Dennison Manufacturing Company, a manufacturer and
distributor of products for the stationery, technical paper and industrial and
retail systems markets. From 1982 to 1986, Mr. Lewis was a Senior Vice President
of Dennison Manufacturing Company. Mr. Lewis is a director of Genzyme
Corporation.
BOARD OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a
classified board of directors consisting of three classes, with each class being
as nearly equal in number as possible. The term of one class expires and their
successors are elected for a term of three years at each annual meeting of the
Company's stockholders. The Company has designated three Class I directors (Mr.
Blair and Drs. Cannon and Dishman), two Class II directors (Messrs. Fordyce and
Kempner) and two Class III directors (Drs. Anagnostopoulos and Lewis). These
Class I, Class II and Class III directors will serve until the annual meeting of
stockholders to be held in 1999, 2000 and 2001, respectively, and until their
respective successors are duly elected and qualified, or until their earlier
resignation or removal. The Certificate provides that directors may be removed
only for cause by a majority of stockholders. See "Description of Capital
Stock -- Anti-Takeover Measures." There are no family relationships among any of
the directors or executive officers.
BOARD COMMITTEES
The Company has standing Audit and Compensation Committees of the Board of
Directors. The Audit Committee consists of Messrs. Fordyce and Kempner and Dr.
Lewis. The primary function of the Audit Committee is to assist the Board of
Directors in the discharge of its duties and responsibilities by providing the
Board with an independent review of the financial health of the Company and of
the reliability of the Company's financial controls and financial reporting
systems. The Audit Committee reviews the general scope of the Company's annual
audit, the fee charged by the Company's independent accountants and other
matters relating to internal control systems.
The Compensation Committee of the Board of Directors determines the
compensation to be paid to all executive officers of the Company, including the
Chief Executive Officer. The primary function of the
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<PAGE> 50
Compensation Committee is to administer the Company's Amended and Restated 1995
Equity Incentive Plan. The Compensation Committee consists of Mr. Fordyce and
Drs. Anagnostopoulos and Lewis.
DIRECTOR COMPENSATION
Directors who are also employees of the Company do not receive additional
compensation for their services as directors. After the completion of this
Offering, each non-employee director will be paid $12,000 per year as
compensation for services as a director. Non-employee directors who serve as a
chairman of a committee of the Board of Directors will be paid an additional
$3,000 per year.
Any non-employee director is also eligible to receive stock options granted
under the Company's Amended and Restated 1995 Equity Incentive Plan. In January
1998, each non-employee director of the Company was granted an option to
purchase 19,560 shares of Common Stock at an exercise price of $4.60 per share.
Such options vest and become exercisable with respect to 10,000 shares on each
of (i) the date of grant; (ii) the earlier of the next annual meeting of
stockholders or the one-year anniversary of the date of grant; and (iii) the
date one year after the last vesting date.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
compensation information for the Chief Executive Officer of the Company and the
three other executive officers of the Company whose salary and bonus for the
fiscal year ended December 31, 1997 exceeded $100,000 (together, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
------------------------------------------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(1) OPTIONS COMPENSATION(2)
--------------------------- --------------- ---------- ---------------
<S> <C> <C> <C>
Henry E. Blair(3).................................. $202,500 48,900 $668
President and Chief Executive Officer
Robert A. Dishman, Ph.D. .......................... 200,000 39,120 668
Executive Vice President
L. Edward Cannon, Ph.D. ........................... 160,000 39,120 668
Executive Vice President
Robert Charles Ladner, Ph.D. ...................... 160,000 39,120 668
Senior Vice President and Chief Science Officer
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), other compensation in the form of perquisites and other
personal benefits has been omitted in those instances where the aggregate
amount of such perquisites and other personal benefits constituted less than
the lesser of $50,000 or 10% of the total amount of annual salary and bonus
for the executive officer for the year ended December 31, 1997. No bonuses
were paid for services rendered during the year ended December 31, 1997.
(2) Represents the group term life insurance premiums paid by the Company for
each of the Named Executive Officers.
(3) On March 30, 1997, Mr. Blair was granted a restricted stock award pursuant
to which he purchased 114,000 shares of Common Stock at a purchase price of
$0.77 per share. These shares vest over 48 substantially equal monthly
installments commencing on the first day of the month following the purchase
date. The value of the restricted stock award is based on the fair market
value of the Common Stock on the date of grant as determined by the Board of
Directors ($0.77 per share) less the purchase price paid by Mr. Blair ($0.77
per share). As of December 31, 1997, Mr. Blair held an aggregate of 95,083
shares of unvested restricted stock, then valued at $72,917. There was no
public trading market for the Common Stock as of December 31, 1997. This
value was determined by multiplying the fair market value of the Common
Stock most recently determined by the Board of Directors ($1.53 per share)
before that date by the number of unvested shares held and subtracting the
aggregate purchase price paid for such shares. No dividends were paid in
1997 on the outstanding shares of restricted stock.
In January 1998, Mr. Ehrlich joined the Company as Senior Vice President,
Finance and Administration, Chief Financial Officer and Treasurer. Pursuant to
his employment agreement with the Company, Mr. Ehrlich receives an annual salary
of $165,000 and is eligible to receive a bonus of $50,000. Mr. Ehrlich was
granted an
49
<PAGE> 51
option to purchase 91,280 shares of Common Stock, 22,820 of which vest in full
six months after the date of commencement of his employment and 68,460 of which
vest in 48 substantially equal monthly installments commencing on the date of
his employment.
For additional information regarding compensation, see "-- Employment
Agreements."
Option Grants. The following table sets forth certain information
regarding options granted by the Company to the Named Executive Officers during
the fiscal year ended December 31, 1997:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE(3) DATE 5% 10%
---- ------------- ---------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Henry E. Blair............... 48,900 9.9% $1.53 10/30/07 $ $
Robert A. Dishman, Ph.D...... 39,120 8.0 1.53 10/30/07
L. Edward Cannon, Ph.D ...... 39,120 8.0 1.53 10/30/07
Robert Charles Ladner,
Ph.D....................... 39,120 8.0 1.53 10/30/07
</TABLE>
- ---------------
(1) Options were granted under the Amended and Restated 1995 Equity Incentive
Plan and become exercisable generally in 48 equal monthly installments
commencing on the first day of each calendar month following the date of
grant, subject to continued employment with the Company.
(2) Based on an aggregate of options granted by the Company in the year
ended December 31, 1997 to employees of and consultants to the Company,
including the Named Executive Officers.
(3) The exercise price is equal to the fair market value of the Common Stock on
the date of grant as determined by the Board of Directors.
(4) Amounts represent hypothetical gains for the respective options if exercised
at the end of the option term. There was no public trading market for the
Common Stock as of December 31, 1997. Accordingly, these values have been
calculated based on the assumed initial public offering price of $
per share. These gains are based on assumed rates of stock price
appreciation of 5% and 10% compounded annually from the date that the
respective options were granted until their expiration date. These
assumptions are not intended to forecast future appreciation of the
Company's stock price. The potential realizable value computation does not
take into account federal or state income tax consequences or option
exercises of appreciated stock.
Option Exercises and Year-End Values. The following table sets forth
certain information concerning exercisable and unexercisable stock options held
by the Named Executive Officers as of December 31, 1997:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henry E. Blair.............. 9,253 $ 6,386 2,038 / 48,863 $ / $
Robert A. Dishman, Ph.D. ... 64,056 76,596 397 / 56,167 /
L. Edward Cannon, Ph.D. .... -- -- 64,453 / 56,167 /
Robert Charles Ladner,
Ph.D. .................... 18,677 22,917 9,207 / 45,707 /
</TABLE>
- ---------------
(1) There was no public trading market for the Common Stock as of December 31,
1997. Accordingly, pursuant to the rules of the Securities and Exchange
Commission, these values have been calculated based on an assumed initial
public offering price of $ per share less the aggregate exercise
price.
50
<PAGE> 52
EMPLOYMENT AGREEMENTS
The only executive officers of Dyax with employment agreements are Dr.
Dishman, Dr. Ladner and Mr. Ehrlich.
Under the terms of Dr. Dishman's employment agreement dated February 18,
1998, he is entitled to an annual base salary of not less than $200,000. If Dr.
Dishman's employment is terminated without cause, the Company is required to pay
to Dr. Dishman severance payments at his annual base salary rate for six months,
which shall be extended for up to an additional six months if he does not obtain
comparable employment (subject to reduction for any amounts earned during such
period), and all unvested stock options held by Dr. Dishman shall be
accelerated. In addition, the Company granted Dr. Dishman a restricted stock
award to purchase 78,240 shares of Common Stock at a price of $4.60 per share
(the "Restricted Stock Award"). Upon the purchase of the entire Restricted Stock
Award and the exercise in full of an accelerated option granted in 1997 to
purchase 39,120 shares of Common Stock (the "1997 Option"), the Company agreed
to loan to Dr. Dishman an aggregate of $453,600 pursuant to two promissory notes
in the amounts of $360,000 and $93,600 (the "Notes"), respectively. The Notes,
which are each secured by a corresponding pledge of the shares of Common Stock
purchased under the Restricted Stock Award and received upon exercise of the
1997 Option, respectively, are payable in four years, subject to acceleration
and become due (i) immediately if Dr. Dishman's employment is terminated other
than by the Company without cause or (ii) on the second anniversary of the date
of issuance if the Company completes an initial public offering or is sold. As
long as Dr. Dishman remains employed by the Company, the Company shall forgive
all interest accrued on the notes annually or through the date of any earlier
termination of employment.
Under the terms of Dr. Ladner's employment agreement, Dr. Ladner is
entitled to an annual base salary of not less than $125,000. If Dr. Ladner's
employment is terminated without cause, the Company is required to pay to Dr.
Ladner severance payments at his annual base salary rate for 12 months and 50%
of his unvested stock options shall be accelerated. This employment agreement
terminates in August 1998.
Under the terms of Mr. Ehrlich's employment agreement, if Mr. Ehrlich's
employment is terminated without cause or if his position and responsibilities
are adversely affected as a result of a change in control (as defined in the
employment agreement), the Company is required to pay to Mr. Ehrlich six months
severance, all of his unvested stock options shall be accelerated and the
exercise period for all vested options shall be extended for an additional three
years after termination.
STOCK PLANS
Amended and Restated 1995 Equity Incentive Plan. The Company's 1995 Equity
Incentive Plan was adopted in August 1995 and amended and restated in January
1998 (as amended and restated, the "Equity Plan"). The Equity Plan is designed
to provide the Company flexibility in awarding equity incentives by providing
for multiple types of incentives that may be awarded. The purpose of the Equity
Plan is to attract and retain key employees of and consultants to the Company
and to enable them to participate in the long-term growth of the Company. The
Equity Plan provides for the grant of stock options (incentive and
nonstatutory), stock appreciation rights, performance shares, restricted stock
or stock units for the purchase of an aggregate of 2,184,200 shares of Common
Stock, subject to adjustment for stock splits and similar capital changes.
Awards under the Equity Plan can be granted to officers, employees and other
individuals as determined by the Compensation Committee of the Board of
Directors, each of whose members is a "non-employee director" within the meaning
of Rule 16b-3 under the Securities Act. The Compensation Committee selects the
participants and establishes the terms and conditions of each option or other
equity right granted under the Equity Plan, including the exercise price, the
number of shares subject to options or other equity rights and the time at which
such options become exercisable. The exercise price of all "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), granted under the Equity Plan must be at least equal to
100% of the fair market value of the option shares on the date of grant. The
term of any incentive stock option granted under the Equity Plan may not exceed
ten years.
51
<PAGE> 53
As of December 31, 1997, options to purchase an aggregate of 1,160,768
shares of Common Stock had been granted under the Equity Plan. Options to
purchase 158,644 shares were exercised as of such date and options to purchase
31,385 shares had been cancelled. Of the options to purchase an aggregate of
970,739 shares of Common Stock that were outstanding as of such date, options to
purchase 233,165 shares were exercisable. As of December 31, 1997, one award to
purchase 114,100 shares of Restricted Common Stock had been granted under the
Equity Plan. As of March 17, 1998, one additional award to purchase 78,240
shares of Restricted Common Stock had been granted under the Equity Plan. See
"-- Executive Compensation." Except as set forth above, no other awards have
been granted under the Equity Plan.
1998 Employee Stock Purchase Plan. In January 1998, the Company adopted
the Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") under
which employees may purchase shares of Common Stock at a discount from fair
market value. There are 97,800 shares of Common Stock reserved for issuance
under the Purchase Plan. To date, no shares of Common Stock have been issued
under the Purchase Plan. The Purchase Plan is intended to qualify as an employee
stock purchase plan within the meaning of Section 423 of the Code. Rights to
purchase Common Stock under the Purchase Plan are granted at the discretion of
the Compensation Committee, which determines the frequency and duration of
individual offerings under the Purchase Plan and the dates when stock may be
purchased. Eligible employees participate voluntarily and may withdraw from any
offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment. The purchase price per share of
Common Stock in an offering is 85% of the lesser of its fair market value at the
beginning of the offering period or on the applicable exercise date and may be
paid through payroll deductions, periodic lump sum payments or a combination of
both. The Purchase Plan terminates on January 30, 2008.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers various
incentive compensation and benefit plans. See "Management -- Stock Plans." The
Compensation Committee currently consists of Drs. Anagnostopoulos and Lewis and
Mr. Fordyce. See "Principal Stockholders" and "Certain Transactions."
52
<PAGE> 54
CERTAIN TRANSACTIONS
Pursuant to the voting rights of the holders of the Company's Class A
Convertible Preferred Stock contained in the Company's Restated Certificate of
Incorporation, Mr. Fordyce was elected to the Company's Board of Directors in
August 1995. These voting rights will terminate upon the completion of this
Offering following the automatic conversion of all outstanding shares of Class A
Convertible Preferred Stock into shares of Common Stock.
Since August 1995, the Company has issued and sold 8,944,043 shares of
Class A Convertible Preferred Stock convertible into an aggregate of 5,831,516
shares of Common Stock.
Dr. Anagnostopoulos, a director of the Company, is a general partner of
Gateway Associates, L.P., the general partner of Gateway Venture Partners, a
stockholder of the Company. In August 1995, the Company issued to Gateway
Venture Partners III, L.P. an aggregate of 191,409 shares of Class A Series 1
Convertible Preferred Stock pursuant to a recapitalization of the Company. Also
in August 1995, the Company issued and sold to Gateway Venture Partners III,
L.P. an aggregate of 150,000 shares of Class A Series 3 Convertible Preferred
Stock at a purchase price of $2.00 per share. In October 1996, the Company
issued and sold to Gateway Venture Partners III, L.P. an aggregate of 75,000
shares of Class A Series 4 Convertible Preferred Stock at a purchase price of
$3.13 per share. Pursuant to the Company's Restated Certificate of
Incorporation, all of such shares of Class A Convertible Preferred Stock will
automatically convert into 271,498 shares of Common Stock upon the closing of
this Offering.
Mr. Fordyce, a director of the Company, is a general partner of Prince
Ventures Partners LP, the general partner of Prince Venture Partners IV, a
stockholder of the Company. In August 1995, the Company issued and sold to
Prince Venture Partners IV an aggregate of 375,000 shares of Class A Series 3
Convertible Preferred Stock at a purchase price of $2.00 per share. In October
1996, the Company issued and sold to Prince Venture Partners IV an aggregate of
478,556 shares of Class A Series 4 Convertible Preferred Stock at a purchase
price of $3.13 per share. In September 1997, in an arm's length transaction,
Prince Venture Partners IV purchased from a group of related stockholder of the
Company an aggregate of (i) 119,946 shares of Class A Series 1 Convertible
Preferred Stock at a purchase price of $1.73 per share and (ii) 20,413 shares of
Common Stock at a purchase price of $0.50 per share. Pursuant to the Company's
Restated Certificate of Incorporation, all of such shares of Class A Convertible
Preferred Stock will automatically convert into 634,723 shares of Common Stock
upon the closing of this Offering.
Mr. Kempner, a director of the Company, is the President of Pinpoint
Partners Corporation, the general partner of each of Loeb Investment Co. 106,
Loeb Investment Co. 106A, Loeb Investment Co. 106B and Loeb Investment Co. 106C
(collectively, "Loeb Investment Partnerships"), each of which is a stockholder
of the Company. In August 1995, the Company issued to the Loeb Investment
Partnerships an aggregate of 279,990 shares of Class A Series 2 Convertible
Preferred Stock pursuant to the merger with PEC. Also in August 1995, the
Company issued and sold to certain of the Loeb Investment Partnerships an
aggregate of 150,000 shares of Class A Series 3 Convertible Preferred Stock at a
purchase price of $2.00 per share. In October 1996, the Company issued and sold
to certain of the Loeb Investment Partnerships an aggregate of 286,845 shares of
Class A Series 4 Convertible Preferred Stock at a purchase price of $3.13 per
share. In March 1997, the Company issued and sold to certain of the Loeb
Investment Partnerships an aggregate of 32,644 shares of Class A Series 4
Convertible Preferred Stock at a purchase price of $3.13 per share. Pursuant to
the Company's Restated Certificate of Incorporation, all of such shares of Class
A Convertible Preferred Stock will automatically convert into 488,660 shares of
Common Stock upon the closing of this Offering.
In March 1997, the Company awarded Henry E. Blair a right to purchase
114,100 shares of Restricted Common Stock pursuant to the Equity Plan at a
purchase price of $0.77 per share in connection with becoming the full-time
Chief Executive Officer of the Company. The unvested Restricted Common Stock,
which vests over 48 substantially equal monthly installments, is subject to
repurchase by the Company at the original purchase price if Mr. Blair ceases to
be employed by the Company.
The Company is a party to employment agreements with certain of its
executive officers. For information regarding these agreements and a grant of
restricted stock to Dr. Dishman, see "Management -- Employment Agreements." See
also Note 12 to Notes to Consolidated Financial Statements, which are
incorporated herein by reference.
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<PAGE> 55
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 17, 1998, and as adjusted to reflect
the sale of the shares of the Common Stock offered hereby by the Company, by (i)
all those known by the Company to be beneficial owners of more than 5% of its
outstanding Common Stock, (ii) each director of the Company, (iii) each of the
Named Executive Officers of the Company and (iv) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED
NUMBER OF SHARES BEFORE AFTER
BENEFICIAL OWNERS BENEFICIALLY OWNED(1) OFFERING OFFERING(2)
----------------- ---------------------- ------------ -----------
<S> <C> <C> <C>
PRINCIPAL STOCKHOLDERS:
New York Life Insurance Company(3)............. 681,037 9.4% 7.0%
Loeb Investment Partnerships(4)................ 650,907 9.0% 6.7%
Prince Venture Partners IV(5).................. 648,033 8.9% 6.6%
Oak Investment Partnerships(6)................. 461,223 6.4% 4.7%
GMMI SBIC, L.P.(7)............................. 458,275 6.3% 4.7%
BancBoston Ventures, Inc.(8)................... 416,614 5.7% 4.3%
Gateway Venture Partnerships(9)................ 285,811 3.9% 2.9%
DIRECTORS AND EXECUTIVE OFFICERS**
Henry E. Blair(10)............................. 657,184 9.0% 6.8%
L. Edward Cannon, Ph.D.(11).................... 71,108 1.0% *
Robert A. Dishman, Ph.D.(12)................... 186,838 2.6% 1.9%
Robert Charles Ladner, Ph.D.(13)............... 163,223 2.2% 1.7%
Keith S. Ehrlich(14)........................... 5,705 * *
Constantine E. Anagnostopoulos, Ph.D.(15)...... 293,213 4.0% 3.0%
James W. Fordyce(16)........................... 655,775 9.0% 6.7%
Thomas L. Kempner(17).......................... 657,931 9.1% 6.7%
Henry R. Lewis, Ph.D.(18)...................... 47,423 * *
All current executive officers and directors as
a group (9 persons)(19)...................... 2,738,400 37.1% 27.7%
</TABLE>
- ---------------
* Indicates beneficial ownership of less than one percent.
** The address of the directors and executive officers is One Kendall Square,
Cambridge, MA 02139
(1) Reflects the conversion, prior to or contemporaneously with the closing of
this Offering, of all outstanding shares of Preferred Stock of the Company
into an aggregate of 5,831,516 shares of Common Stock. The number of shares
of Common Stock deemed outstanding after this Offering includes the
2,500,000 shares of Common Stock of the Company being offered for sale in
this Offering. The persons and entities named in the table have sole voting
and investment power with respect to the shares beneficially owned by them,
except as noted below. Share numbers include shares of Common Stock
issuable pursuant to the outstanding options and warrants that may be
exercised within the 60-day period following March 17, 1998.
(2) The shares of the named holder which are beneficially owned but are not
outstanding are the only such beneficially owned shares that are treated as
outstanding for purposes of computing the percentage ownership of the named
holder.
(3) The stockholder's address is 51 Madison Avenue, New York, NY 10010.
(4) Includes: (i) 125,813 shares owned by Loeb Investment Co. 106, (ii) 218,988
shares owned by Loeb Investment Co. 106A, (iii) 97,800 shares owned by Loeb
Investment Co. 106B, and (iv) 208,307 shares owned by Loeb Investment Co.
106C (collectively, "Loeb Investment Partnerships"). Pinpoint Partners
Corporation, the general partner of each of the Loeb Investment
Partnerships, exercises sole voting and investment control with respect to
all shares held by each of the Loeb Investment Partnerships. The
stockholder's address is c/o Irwin Rowe, 61 Broadway, 24th Floor, New York,
NY 10006.
(5) Prince Ventures Limited Partnership, the general partner of Prince Venture
Partners IV, exercises sole voting and investment control with respect to
all shares held by Prince Venture Partners IV. The stockholder's address is
10 South Wacker Drive, Suite 2575, Chicago, IL 60606.
(6) Includes 442,064 shares held by Oak Investment Partners IV Limited Partners
and 19,159 shares held by Oak IV Affiliates Fund Limited Partnership
(collectively, "Oak Investment Partnerships"). Oak Investment Partners IV
Limited Partners, the general
54
<PAGE> 56
partner of each of the Oak Investment Partnerships, exercises sole voting
and investment control with respect to all shares held by each of the Oak
Investment Partnerships. The stockholder's address is One Gorham Island,
Westport, CT 06880.
(7) GMM Investors Corp., the general partner of GMMI SBIC, L.P., exercises sole
voting and investment control with respect to all shares held by GMMI SBIC,
L.P. The stockholder's address is 70 Walnut Street, Wellesley, MA 02181.
(8) The stockholder's address is 100 Federal Street, Boston, MA 02110.
(9) Includes 226 shares held by Gateway Venture Partners II, L.P. and 285,586
shares held by Gateway Venture Partners III, L.P. (collectively, "Gateway
Venture Partnerships"). Gateway Associates, L.P., the general partner of
each of the Gateway Venture Partnerships, exercises sole voting and
investment control with respect to all shares held by each of the Gateway
Venture Partnerships. The stockholder's address is 8000 Maryland Avenue,
Suite 1190, St. Louis, MO 63150.
(10) Includes 6,113 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following March 17, 1998.
(11) Includes 60,676 shares of Common Stock issuable upon exercise of
outstanding options exercisable within the 60-day period following March
17, 1998.
(12) Includes 3,793 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following March 17, 1998.
(13) Includes: (i) 81,021 shares of Common Stock held jointly with Dr. Ladner's
spouse; (ii) 9,058 shares of Common Stock held by Dr. Ladner's spouse;
(iii) 27,589 shares of Common Stock held by Dr. Ladner's children as to
which Dr. Ladner disclaims beneficial ownership; (iv) an aggregate of
16,630 shares of Common Stock held in trust by Dr. Cannon for Dr. Ladner's
minor child; and (v) 11,274 shares of Common Stock issuable upon exercise
of outstanding options exercisable within the 60-day period following March
17, 1998.
(14) Consists of 5,705 shares of Common Stock issuable upon exercise of
outstanding options exercisable within the 60-day period following March
17, 1998.
(15) Includes 285,811 shares held by Gateway Venture Partners. Dr.
Anagnostopoulos, a director of the Company, is a general partner of Gateway
Associates, L.P., the general partner of Gateway Venture Partners. Also
includes 6,520 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following March 17, 1998.
(16) Includes 648,033 shares held by Prince Venture Partners IV. Mr. Fordyce, a
director of the Company, is a general partner of Prince Ventures Limited
Partnership, the general partner of Prince Venture Partners IV. Also
includes 7,743 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following March 17, 1998.
(17) Includes 650,907 shares of Common Stock held by Loeb Investment
Partnerships. Mr. Kempner, a director of the Company, is the President of
Pinpoint Partners Corporation, the general partner of each of the Loeb
Investment Partnerships. Also includes 7,023 shares of Common Stock
issuable upon exercise of outstanding options exercisable within the 60-day
period following March 17, 1998.
(18) Includes 7,062 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following March 17, 1998.
(19) Includes 115,908 shares of Common Stock issuable upon exercise of
outstanding options exercisable within the 60-day period following March
17, 1998.
55
<PAGE> 57
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company currently consists of
20,000,000 shares of Common Stock, $0.01 par value per share, and 9,440,832
shares of Preferred Stock, $0.01 par value per share. Upon the completion of
this Offering, the authorized capital stock of the Company will consist of
30,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock after
giving effect to the amendment and restatement of the Company's Restated
Certificate of Incorporation to delete references to the Class A Series 1,
Series 2, Series 3 and Series 4 Convertible Preferred Stock (collectively the
"Class A Preferred Stock"). On March 17, 1998 there were outstanding an
aggregate of (i) 1,429,837 shares of Common Stock and (ii) 8,944,043 shares of
Preferred Stock, consisting of 1,942,936 shares of Class A Series 1 Convertible
Preferred Stock, 703,970 shares of Class A Series 2 Convertible Preferred Stock,
2,000,000 shares of Class A Series 3 Convertible Preferred Stock, and 4,297,137
shares of Class A Series 4 Convertible Preferred Stock, all of which shares will
automatically convert into an aggregate of 5,831,516 shares of Common Stock upon
the completion of this Offering. As of the date of this Prospectus, the Company
had approximately 260 stockholders. Upon the closing of this Offering, the
Company will have 9,761,353 shares of Common Stock outstanding.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by (i) the provisions of the Company's Restated Certificate of
Incorporation and By-laws (each as filed and in effect, respectively, upon or
after the closing of this Offering and included as exhibits to the Registration
Statement) and (ii) the provisions of applicable law.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. There are no cumulative voting rights. Holders
of Common Stock are entitled to receive dividends, if declared by the Board of
Directors, out of funds legally available therefor. See "Dividend Policy." Upon
the liquidation, dissolution or winding up of the Company, holders of Common
Stock are entitled to share ratably in the assets of the Company available for
distribution to its stockholders, subject to the preferential rights of any then
outstanding shares of Preferred Stock. No shares of Preferred Stock will be
outstanding immediately following the closing of this Offering. The Common Stock
outstanding upon the effective date of the Registration Statement, and the
shares offered by the Company hereby, upon issuance and sale, will be fully paid
and nonassessable.
PREFERRED STOCK
The Company is currently authorized to issue 9,440,832 shares of Preferred
Stock. Upon the completion of this Offering, all of the issued and outstanding
shares of Preferred Stock will be converted into an aggregate of 5,831,516
shares of Common Stock. Immediately following such conversion, such shares of
Preferred Stock will be cancelled, retired and eliminated from the Company's
authorized shares of capital stock and the number of authorized shares of
Preferred Stock will be decreased to 1,000,000 shares.
Upon completion of this Offering, the Company's Board of Directors will
have the authority to issue up to 1,000,000 shares of Preferred Stock in one or
more series and to fix the relative rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences, sinking fund terms and the number of
shares constituting any series or the designation of such series, without
further vote or action by the stockholders. The Company believes that the power
to issue Preferred Stock will provide flexibility in connection with possible
certain corporate transactions. The issuance of Preferred Stock could adversely
affect the voting power of the holders of Common Stock, restrict their rights to
receive payment upon liquidation and have the effect of delaying, deferring or
preventing a change-in-control of the Company. See "Description of Capital
Stock -- Anti-Takeover Provisions." The Company has no present plans to issue
any shares of Preferred Stock.
56
<PAGE> 58
WARRANTS
In connection with the merger of the Company with PEC, the Company issued
warrants to purchase an aggregate of 27,022 shares of Common Stock at an
exercise price of $3.97 per share in substitution for warrants previously issued
by PEC. The warrants will expire on August 10, 2000. The exercise price of each
warrant is subject to adjustment in the event of a stock split, combination or
dividend by the Company.
ANTI-TAKEOVER MEASURES
In addition to the Board of Directors' ability to issue shares of Preferred
Stock, the Restated Certificate of Incorporation and the By-laws contain several
other provisions that are commonly considered to discourage unsolicited
acquisition proposals. The Restated Certificate of Incorporation includes a
provision classifying the Board of Directors into three classes with staggered
three-year terms, and the By-laws include a provision prohibiting stockholder
action by written consent except as otherwise provided by law. Under the
Restated Certificate of Incorporation and By-laws, the Board of Directors may
enlarge the size of the Board of Directors and fill any vacancies. The Restated
Certificate of Incorporation requires the approval of the holders of at least
66 2/3% of the outstanding capital stock of the Company prior to (i) the merger
of the Company into another entity, (ii) the sale or disposition of all or
substantially all of the Company's assets and (iii) engaging in any other
business combination transaction, unless such transaction has been approved by a
majority of the Board of Directors. Further, provisions of the Restated
Certificate of Incorporation and the By-laws provide that the stockholders may
amend certain provisions of the Restated Certificate of Incorporation or the
By-laws only with the affirmative vote of the holders of 66 2/3% of the
Company's outstanding capital stock. The By-laws provide that nominations for
directors may not be made by stockholders at any annual or special meeting
unless the stockholder intending to make such a nomination notifies the Company
of its intention a specified period in advance and furnishes certain
information. The By-laws also provide that special meetings of the Company's
stockholders may be called only by the President or the Board of Directors and
require advance notice of business to be brought by a stockholder before the
annual meeting.
Upon the consummation of the offering made hereby, the Company will be
subject to the provisions of Section 203 of the Delaware General Corporation
Law, a law regulating corporate takeovers (the "Anti-Takeover Law"). In certain
circumstances, the Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the Nasdaq National Market, from
engaging in a "business combination" (which includes a merger or sale of more
than ten percent of the corporation's assets) with an "interested stockholder"
(a stockholder who owns 15% or more of the corporation's outstanding voting
stock) for three years following the date on which such stockholder became an
"interested stockholder" subject to certain exceptions, unless the transaction
is approved by the Board of Directors and the holders of at least 66 2/3% of the
outstanding voting stock of the corporation (excluding shares held by the
interested stockholder). The statutory ban does not apply if, upon consummation
of the transaction in which any person becomes an interested stockholder, the
interested stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain employee stock plans). A Delaware corporation subject to
the Anti-Takeover Law may "opt out" of the Anti-Takeover Law with an express
provision either in its certificate of incorporation or By-laws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares; such an amendment is effective twelve months from adoption. The
Company has not "opted out" of the Anti-Takeover Law.
The foregoing provisions of the Restated Certificate of Incorporation and
By-laws and Delaware law could have the effect of discouraging others from
attempting hostile takeovers of the Company and, as a consequence, they may also
inhibit temporary fluctuations in the market price of the Common Stock that
might result from actual or rumored hostile takeover attempts. Such provisions
may also have the effect of preventing changes in the management of the Company.
It is possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Boston EquiServe
LP.
57
<PAGE> 59
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have 9,761,353 shares of
Common Stock outstanding, assuming no exercise of the Underwriters'
over-allotment option or of any other outstanding options or warrants. Of these
shares, the 2,500,000 shares sold in this Offering will be freely tradable,
without restriction or further registration under the Securities Act, except for
shares purchased by "affiliates" of the Company as that term is defined in Rule
144 under the Securities Act.
The remaining 7,261,353 outstanding shares of Common Stock are owned by
existing stockholders and are deemed "Restricted Shares" under Rule 144. These
may not be resold, except pursuant to an effective registration statement or an
applicable exemption from registration. Of these remaining shares, approximately
1,266,262 shares of Common Stock will be eligible for sale under Rules 144 and
701 on the ninety-first day after the effectiveness of this Offering.
Stockholders of the Company, holding in the aggregate 5,995,091 shares of Common
Stock, have agreed to enter into the 180-day lock-up agreements described below.
At the end of such 180-day period, an additional 5,928,532 shares of Common
Stock will be eligible for sale under Rules 144 and 701. The remaining
Restricted Shares will become eligible from time to time thereafter upon the
expiration of the minimum one-year holding period prescribed by Rule 144.
In general, under Rule 144, as recently amended, a person (or persons whose
shares are aggregated), including an affiliate, who has beneficially owned
Restricted Shares for at least one year from the later of the date such
Restricted Shares were acquired from the Company and (if applicable) the date
they were acquired from an affiliate, is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of Common Stock (approximately 97,614 shares
immediately after the offering) or the average weekly trading volume in the
public market during the four calendar weeks preceding such sale. Sales under
Rule 144 are also subject to certain requirements as to the manner and notice of
sale and the availability of public information concerning the Company. All
sales of shares of the Company's Common Stock, including Restricted Shares, held
by affiliates of the Company must be sold under Rule 144, subject to the
foregoing volume limitations and other restrictions. In addition, under Rule
144(k), if a period of at least two years has elapsed between the later of the
date restricted securities were acquired from the Company or (if applicable) the
date they were acquired from an Affiliate of the Company, a stockholder who is
not an Affiliate of the Company at the time of sale and has not been an
Affiliate of the Company for at least three months prior to the sale is entitled
to sell the shares immediately without compliance with the foregoing
requirements under Rule 144.
The Company's directors and executive officers and certain of its
stockholders have agreed that they will not, without the prior written consent
of the representatives of the Underwriters, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of or require the Company to
file with the Commission a registration statement under the Securities Act to
register any shares of Common Stock or securities convertible or exchangeable
for shares of Common Stock or warrants or other rights to acquire shares of
Common Stock during the 180-day period following the effective date of the
Registration Statement.
The Company plans to file registration statements under the Securities Act
to register approximately 2,184,200 and 97,800 shares of Common Stock issuable
under the Equity Plan and the Purchase Plan, respectively, 90 days after the
date of this Prospectus. Upon registration, such shares will be eligible for
immediate resale upon exercise, subject, in the case of affiliates, to the
volume, manner of sale and notice requirements of Rule 144.
No prediction can be made as to the effect, if any, that market sales of
additional shares or the availability of such additional shares for sale will
have on the market price of the Common Stock. Nevertheless, sales of substantial
amounts of Common Stock in the public market may have an adverse impact on the
market price for the Common Stock. See "Risk Factors -- Dilution."
58
<PAGE> 60
REGISTRATION RIGHTS
The holders of the 5,831,516 shares of Common Stock to be issued upon
conversion of the Class A Preferred Stock (the "Registrable Shares") are
entitled to certain rights with respect to registration of the Registrable
Shares under the Securities Act commencing on October 31, 1998. If the Company
proposes to register any of its securities under the Securities Act, either for
its own account or for the account of other security holders, such holders are
entitled to notice of such registration and are entitled to include such
Registrable Shares in the registration. The rights are subject to certain
conditions and limitations, among them, the right of the underwriters of a
registered offering to limit the number of shares included in such registration.
Holders of Registrable Shares benefiting from these rights may also require the
Company to file at its expense a registration statement under the Securities Act
with respect to their shares of Common Stock and, subject to certain conditions
and limitations, the Company is required to use its best efforts to effect such
registration. Furthermore, such holders may, subject to certain conditions and
limitations, require the Company to file additional registration statements on
Form S-3 with respect to such Registrable Shares. Such holders did not have the
right to have shares of Common Stock registered under the Securities Act as part
of this Offering.
59
<PAGE> 61
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, each Underwriter named below has severally
agreed to purchase and the Company has agreed to sell to such Underwriter, the
number of shares of Common Stock set forth opposite the name of such
Underwriter.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
Smith Barney Inc. ..........................................
CIBC Oppenheimer Corp. .....................................
Pacific Growth Equities, Inc. ..............................
---------
Total........................................ 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are taken.
The Underwriters, for whom Smith Barney Inc., CIBC Oppenheimer Corp. and
Pacific Growth Equities, Inc., are acting as the Representatives, propose to
offer part of the shares directly to the public at the public offering price set
forth on the cover page of this Prospectus and part of the shares to certain
dealers at a price which represents a concession not in excess of $ per
share under the public offering price. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to
certain other dealers. After the initial offering of the shares to the public,
the public offering price and such concessions may be changed by the
Representatives. The Representatives of the Underwriters have advised the
Company that the Underwriters do not intend to confirm any shares to any
accounts over which they exercise discretionary authority.
The Company has granted to the Underwriters an option, exercisable for
thirty days from the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the public offering price set forth on the
cover page of this Prospectus minus the underwriting discounts and commissions.
The Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, in connection with the Offering of the shares offered
hereby. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
each Underwriter's name in the preceding table bears to the total number of
shares listed in such table.
The Company and each of its officers and directors have agreed that, for a
period of 180 days from the date of this Prospectus, they will not, without the
prior written consent of Smith Barney Inc., offer, sell, contract to sell, or
otherwise dispose of, any shares of Common Stock of the Company or any
securities convertible into, or exercisable or exchangeable for, Common Stock of
the Company.
At the request of the Company, the Underwriters have reserved up to 125,000
shares of Common Stock for sale at the public offering price to directors,
officers and employees of the Company. The number of shares of Common Stock
available for sale to the general public will be reduced to the extent such
persons purchase the reserved shares. Any reserved shares not so purchased will
be offered by the Underwriters on the same basis as all other shares offered
hereby.
In connection with this Offering and in compliance with applicable law, the
Underwriters may overallot (i.e., sell more Common Stock than the total amount
shown on the list of Underwriters and participations which appears above) and
may effect transactions which stabilize, maintain or otherwise affect the market
price of the Common Stock at levels above those which might otherwise prevail in
the open market. Such transactions may include placing bids for the Common Stock
or effecting purchases of the Common Stock for the purpose of pegging, fixing or
maintaining the price of the Common Stock or for the purpose of reducing a
60
<PAGE> 62
syndicate short position created in connection with the Offering. A syndicate
short position may be covered by exercise of the option described above in lieu
of or in addition to open market purchases. In addition, the contractual
arrangements among the Underwriters include a provision whereby if the
Representatives purchase Common Stock in the open market for the account of the
underwriting syndicate and the securities purchased can be traced to a
particular Underwriter or member of the selling group, the underwriting
syndicate may require the Underwriter or selling group member in question to
purchase the Common Stock in question at the cost price to the syndicate or may
receive from (or decline to pay to) the Underwriter or selling group member in
question the selling concession applicable to the securities in question. The
Underwriters are not required to engage in any of these activities and any such
activities, if commenced, may be discontinued at any time.
Prior to this Offering, there has not been any public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
shares of Common Stock included in this Offering will be determined by
negotiations between the Company and the Representatives. Among the factors to
be considered in determining such price are the history of and prospects for the
Company's business and the industry in which it competes, an assessment of the
Company's management, the present state of the Company's development, past and
present revenues and earnings, the current states of the economy in the United
States and the current level of economic activity in the industry in which the
Company competes and in related or comparable industries, and currently
prevailing conditions in the securities markets, including current market
valuations of publicly traded companies which are comparable to the Company.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts. Nathaniel S.
Gardiner, a partner of Palmer & Dodge LLP, is the Secretary of the Company.
Certain legal matters are being passed upon for the Underwriters by Hale and
Dorr LLP, Boston, Massachusetts.
EXPERTS
Statements relating to United States patent matters involving the Company's
Phage Display patents in the portions of this Prospectus entitled "Risk
Factors -- Uncertainties Related to Patents and Proprietary Rights" (except for
the last paragraph relating to employee confidentiality) and
"Business -- Patents and Proprietary Rights" (except for the last two
paragraphs), insofar as they constitute summaries of matters of United States
patent law, have been reviewed and approved by special patent counsel to the
Company, Yankwich & Associates, as experts in patent law.
The consolidated balance sheets of the Company at December 31, 1997 and
1996 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997 appearing in this Prospectus and Registration Statement
have been audited by Coopers & Lybrand L.L.P., independent accountants, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated statements of operations and accumulated deficit and cash
flows of PEC for the period from January 1, 1995 to August 11, 1995 appearing in
this Prospectus and Registration Statement have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
61
<PAGE> 63
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act, with respect to the
shares of Common Stock offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement and
the exhibits and schedules thereto. All statements made in this Prospectus
regarding the contents of any contract, agreement or other document filed as an
exhibit to the Registration Statement are qualified by reference to the copy of
such document filed as an exhibit to the Registration Statement. A copy of the
Registration Statement may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the Commission's regional offices at 500 West Madison Street,
Chicago, Illinois 60661; and 7 World Trade Center, New York, New York 10048.
Copies of all or any part thereof may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Such reports and other information can also be reviewed
through the Commission's web site (http://www.sec.gov).
Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
The Company intends to furnish to its stockholders annual reports
containing audited consolidated financial statements certified by an independent
public accounting firm and quarterly reports containing unaudited interim
financial information for the first three fiscal quarters of each fiscal year of
the Company.
The Company has filed for trademark protection for the Dyax mark and the
Dyax logo. The Company has registered the Kiloprep mark in the United States,
Japan, Germany and the United Kingdom. In addition, the Company considers
"Biotage" as a trade name and considers Parallex, ProPrep and BioFLASH to be
trademarks. All other trademarks or service marks appearing in this Prospectus
are the property of their respective holders.
62
<PAGE> 64
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DYAX CORP.
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1995, 1996 and 1997.......................... F-4
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1995, 1996 and 1997...... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
PROTEIN ENGINEERING CORPORATION
Report of Independent Accountants........................... F-19
Consolidated Statement of Operations and Accumulated Deficit
for the period from January 1, 1995 to August 11, 1995.... F-20
Consolidated Statement of Cash Flows for the period from
January 1, 1995 to August 11, 1995........................ F-21
Notes to Consolidated Financial Statements.................. F-22
</TABLE>
F-1
<PAGE> 65
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Dyax Corp.:
We have audited the accompanying consolidated balance sheets of Dyax Corp.
as of December 31, 1996 and 1997, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for each of three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dyax Corp. as
of December 31, 1996 and 1997, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 20, 1998
F-2
<PAGE> 66
DYAX CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 8,591,000 $ 4,664,000
Accounts receivable, (net of allowances for doubtful
accounts of $41,000 and $81,000 at December 31, 1996
and 1997, respectively)................................ 1,363,000 2,273,000
Inventories............................................... 1,282,000 1,873,000
Other current assets...................................... 150,000 286,000
------------ ------------
Total current assets.............................. 11,386,000 9,096,000
Fixed assets, net........................................... 505,000 1,151,000
Other assets, net........................................... 345,000 285,000
------------ ------------
Total assets...................................... 12,236,000 10,532,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... 1,633,000 2,145,000
Deferred revenue.......................................... 384,000 891,000
Current portion of long term debt......................... 121,000 68,000
Current portion of capital leases......................... 7,000 87,000
------------ ------------
Total current liabilities......................... 2,145,000 3,191,000
Long term debt.............................................. 763,000 695,000
Capital leases.............................................. 7,000 383,000
------------ ------------
Total liabilities................................. 2,915,000 4,269,000
Commitments
Stockholders' equity:
Class A convertible preferred stock; 9,440,832 shares
authorized in series; 8,161,283 and 8,944,043 issued
and outstanding at December 31, 1996 and 1997,
respectively; $25,947,000 liquidation preference at
December 31, 1997...................................... 24,821,000 27,258,000
Common stock, $.01 par value, 20,000,000 shares
authorized, 1,021,455 and 1,278,114 issued at December
31, 1996 and 1997, respectively........................ 10,000 13,000
Additional paid-in capital.................................. 9,629,000 11,519,000
Accumulated deficit......................................... (25,169,000) (30,704,000)
Treasury stock (1,378 common shares at cost)................ -- --
Deferred compensation....................................... -- (1,682,000)
Accumulated foreign currency translation adjustment......... 30,000 (141,000)
------------ ------------
Total stockholders' equity........................ 9,321,000 6,263,000
------------ ------------
Total liabilities and stockholders' equity........ $ 12,236,000 $ 10,532,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 67
DYAX CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997
------------ ----------- ------------
<S> <C> <C> <C>
Revenues:
Product sales................................... $ 3,592,000 $ 4,478,000 $ 7,625,000
Product development............................. 428,000 1,060,000 1,440,000
License fees.................................... -- 1,499,000 711,000
------------ ----------- ------------
Total revenues.................................... 4,020,000 7,037,000 9,776,000
Operating expenses:
Cost of products sold........................... 1,952,000 2,046,000 3,174,000
Research and development........................ 1,343,000 3,140,000 5,575,000
Selling, general and administrative............. 2,710,000 4,170,000 6,827,000
Write-off of intangible asset................... 456,000 -- --
Write-off of incomplete technology.............. 4,098,000 -- --
------------ ----------- ------------
Total operating expenses.......................... 10,559,000 9,356,000 15,576,000
------------ ----------- ------------
Loss from operations.............................. (6,539,000) (2,319,000) (5,800,000)
------------ ----------- ------------
Interest income................................. 123,000 108,000 339,000
Interest expense................................ (169,000) (186,000) (74,000)
------------ ----------- ------------
Net loss.......................................... $ (6,585,000) $(2,397,000) $ (5,535,000)
============ =========== ============
Net loss per common share -- Note 2:
Historical:
Basic and diluted............................ $ (27.53) $ (2.38) $ (5.14)
Weighted average number of shares -- basic
and diluted................................ 239,212 1,006,730 1,076,469
Pro forma (unaudited):
Basic and diluted............................ $ (0.83)
Weighted average number of shares -- basic
and diluted................................ 6,706,680
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 68
DYAX CORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK
------------------------------------------------------------------------
CLASS A CLASS C
--------------------------------------------- ----------
SERIES 1 SERIES 2 SERIES 3 SERIES 4
SHARES SHARES SHARES SHARES SHARES AMOUNT
--------- -------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994........ -- -- -- 5,530,569 $ 8,574,000
Conversion of Common Stock per 1995
Plan of Recapitalization...........
Conversion of Preferred Stock per
1995 Plan of Recapitalization...... 1,942,936 (5,530,569)
Issuance of Common Stock in exchange
for Protein Engineering Corporation
Common Stock.......................
Issuance of Preferred Stock in
exchange for Protein Engineering
Corporation Preferred Stock........ 703,970 1,408,000
Issuance of Preferred Stock......... 2,000,000 3,900,000
Purchase of 209 Shares of Treasury
Stock at Cost......................
Foreign Currency Translation
Adjustment.........................
Net Loss............................
--------- ------- --------- ---------- ---------- -----------
Balance at December 31, 1995........ 1,942,936 703,970... 2,000,000 -- -- $13,882,000
========= ======= ========= ========== ========== ===========
Issuance of Preferred Stock......... 3,514,377 10,939,000
Exercise of Stock Options under the
1989 plan..........................
Exercise of Stock Options under the
1995 plan..........................
Purchase of 1,169 Shares of Treasury
Stock at Cost......................
Foreign currency translation
adjustment.........................
Net Loss............................
--------- ------- --------- ---------- ---------- -----------
Balance at December 31, 1996........ 1,942,936 703,970 2,000,000 3,514,377 -- $24,821,000
========= ======= ========= ========== ========== ===========
Issuance of Preferred Stock......... 782,760 2,437,000
Exercise of Stock Options under the
1989 plan..........................
Exercise of Stock Options under the
1995 plan..........................
Issuance of Restricted Stock under
the 1995 plan......................
Deferred compensation...............
Compensation expense associated with
stock options......................
Foreign currency translation
adjustment.........................
Net Loss............................
--------- ------- --------- ---------- ---------- -----------
Balance at December 31, 1997........ 1,942,936 703,970 2,000,000 4,297,137 -- $27,258,000
========= ======= ========= ========== ========== ===========
<CAPTION>
COMMON STOCK
---------------------- ACCUMULATED
FOREIGN
ADDITIONAL CURRENCY
TREASURY PAID-IN ACCUMULATED TRANSLATION DEFERRED
SHARES PAR VALUE STOCK CAPITAL DEFICIT ADJUSTMENT COMPENSATION
---------- --------- ---------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994........ 742,543 7,000 $ -- $ 9,336,000 $(16,187,000) $ (65,000)
Conversion of Common Stock per 1995
Plan of Recapitalization........... (641,973) (6,000) 6,000
Conversion of Preferred Stock per
1995 Plan of Recapitalization......
Issuance of Common Stock in exchange
for Protein Engineering Corporation
Common Stock....................... 899,443 9,000 275,000
Issuance of Preferred Stock in
exchange for Protein Engineering
Corporation Preferred Stock........
Issuance of Preferred Stock.........
Purchase of 209 Shares of Treasury
Stock at Cost...................... --
Foreign Currency Translation
Adjustment......................... 31,000
Net Loss............................ (6,585,000)
---------- ------- ---------- ----------- ------------ --------- ------------
Balance at December 31, 1995........ 1,000,013 10,000 -- $ 9,617,000 $(22,772,000) $ (34,000) $ --
========== ======= ========== =========== ============ ========= ============
Issuance of Preferred Stock.........
Exercise of Stock Options under the
1989 plan.......................... 5,264 -- 6,000
Exercise of Stock Options under the
1995 plan.......................... 16,178 -- 6,000
Purchase of 1,169 Shares of Treasury
Stock at Cost...................... --
Foreign currency translation
adjustment......................... 64,000
Net Loss............................ (2,397,000)
---------- ------- ---------- ----------- ------------ --------- ------------
Balance at December 31, 1996........ 1,021,455 $10,000 -- $ 9,629,000 $(25,169,000) $ 30,000 $ --
========== ======= ========== =========== ============ ========= ============
Issuance of Preferred Stock.........
Exercise of Stock Options under the
1989 plan.......................... 93 -- --
Exercise of Stock Options under the
1995 plan.......................... 142,466 2,000 46,000
Issuance of Restricted Stock under
the 1995 plan...................... 114,100 1,000 87,000
Deferred compensation............... 1,750,000 (1,750,000)
Compensation expense associated with
stock options...................... 7,000 68,000
Foreign currency translation
adjustment......................... (171,000)
Net Loss............................ (5,535,000)
---------- ------- ---------- ----------- ------------ --------- ------------
Balance at December 31, 1997........ 1,278,114 $13,000 $ -- $11,519,000 $(30,704,000) $(141,000) $ (1,682,000)
========== ======= ========== =========== ============ ========= ============
<CAPTION>
TOTAL
-----------
<S> <C>
Balance at December 31, 1994........ $ 1,665,000
Conversion of Common Stock per 1995
Plan of Recapitalization........... --
Conversion of Preferred Stock per
1995 Plan of Recapitalization...... --
Issuance of Common Stock in exchange
for Protein Engineering Corporation
Common Stock....................... 284,000
Issuance of Preferred Stock in
exchange for Protein Engineering
Corporation Preferred Stock........ 1,408,000
Issuance of Preferred Stock......... 3,900,000
Purchase of 209 Shares of Treasury
Stock at Cost...................... --
Foreign Currency Translation
Adjustment......................... 31,000
Net Loss............................ (6,585,000)
-----------
Balance at December 31, 1995........ $ 703,000
===========
Issuance of Preferred Stock......... 10,939,000
Exercise of Stock Options under the
1989 plan.......................... 6,000
Exercise of Stock Options under the
1995 plan.......................... 6,000
Purchase of 1,169 Shares of Treasury
Stock at Cost...................... --
Foreign currency translation
adjustment......................... 64,000
Net Loss............................ (2,397,000)
-----------
Balance at December 31, 1996........ $ 9,321,000
===========
Issuance of Preferred Stock......... 2,437,000
Exercise of Stock Options under the
1989 plan.......................... --
Exercise of Stock Options under the
1995 plan.......................... 48,000
Issuance of Restricted Stock under
the 1995 plan...................... 88,000
Deferred compensation...............
Compensation expense associated with
stock options...................... 75,000
Foreign currency translation
adjustment......................... (171,000)
Net Loss............................ (5,535,000)
-----------
Balance at December 31, 1997........ $ 6,263,000
===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 69
DYAX CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.......................................... $(6,585,000) $(2,397,000) $(5,535,000)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization.................. 411,000 310,000 333,000
Loss on disposal of fixed assets............... -- 17,000 39,000
Compensation expense associated with stock
options...................................... -- -- 75,000
Write-off of intangible asset.................. 456,000 -- --
Purchase of incomplete technology.............. 3,942,000 -- --
Changes in operating assets and liabilities:
Accounts receivable, net....................... (426,000) (183,000) (939,000)
Inventories.................................... 82,000 (708,000) (591,000)
Other assets................................... 1,000 (95,000) (128,000)
Accounts payable and accrued expenses.......... 123,000 571,000 518,000
Deferred revenue............................... (295,000) (402,000) 508,000
----------- ----------- -----------
Net cash used in operating activities............... (2,291,000) (2,887,000) (5,720,000)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of fixed assets.......................... (116,000) (220,000) (961,000)
----------- ----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of preferred stock..... 2,712,000 10,343,000 2,437,000
Cash acquired with PEC acquisition................ 928,000 -- --
Proceeds from the exercise of stock options....... -- 11,000 136,000
Proceeds from sale-leaseback of equipment......... -- -- 445,000
Purchase of treasury stock........................ -- -- --
Increase in debt.................................. 470,000 103,000 --
Repayment of debt................................. -- (759,000) (121,000)
----------- ----------- -----------
Net cash provided by financing activities........... 4,110,000 9,698,000 2,897,000
Effect of foreign currency translation on cash
balances.......................................... 29,000 41,000 (143,000)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents....................................... 1,732,000 6,632,000 (3,927,000)
Cash and cash equivalents at beginning of the
year.............................................. 227,000 1,959,000 8,591,000
----------- ----------- -----------
Cash and cash equivalents at end of the year........ $ 1,959,000 $ 8,591,000 $ 4,664,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 70
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS:
Dyax's phage display technology has broad potential commercial applications
in the fields of therapeutic, diagnostic and separations products. Dyax's
patented and proprietary phage display technology is a versatile, high
throughput technology platform which the Company believes can reduce costs,
shorten development times and lead to the commercialization of more effective
products in these fields. The Company also develops, manufactures and sells
fully-integrated chromatography separations systems under the Biotage trade
name.
The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, dependence on collaborative
arrangements, development by the Company or its competitors of new technological
innovations, dependence on key personnel, protection of proprietary technology,
and compliance with FDA government regulations and approval requirements.
2. ACCOUNTING POLICIES:
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Protein Engineering Corporation,
P.E.C. Technology Corp. and Biotage, Ltd., a United Kingdom sales subsidiary.
All intercompany accounts and transactions have been eliminated. Protein
Engineering Corporation was not active during 1997 and was merged into the
Company on December 31, 1997. P.E.C. Technology was not active during 1995 or
1996 and was merged into Protein Engineering Corporation in May 1996.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts of assets and liabilities reported and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. The significant estimates and assumptions in these financial statements
include contract revenue recognition, receivable collectibility, inventory
valuation and tax valuation reserves. Actual results could differ from those
estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash, cash equivalents and
trade accounts receivable. At December 31, 1997, approximately 71% of the
Company's cash and cash equivalents were invested in a single money market
account held by one financial institution.
The Company provides most of its products and services to pharmaceutical
and biomedical companies worldwide. Concentrations of credit risk with respect
to trade receivable balances are limited due to the diverse number of customers
comprising the Company's customer base. The Company performs ongoing credit
evaluations of its customers' financial conditions and maintains reserves for
potential credit loss. Activity for fiscal 1995, 1996 and 1997 included
provisions of $90,000, $9,000 and $40,000, respectively.
Cash and Cash Equivalents
Cash and cash equivalents consist principally of cash and a money market
account. The Company currently invests its excess cash in a single money market
account held by a financial institution.
F-7
<PAGE> 71
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.
Fixed Assets
Property and equipment are recorded at cost and depreciated over the
estimated useful lives of the related assets using the straight-line method.
Laboratory and production equipment and furniture and office equipment are
depreciated over a three to seven year period. Leasehold improvements are stated
at cost and are amortized over the lesser of the noncancelable term of the
related lease or their estimated useful lives. Leased equipment is depreciated
over the life of the lease. Maintenance and repairs are charged to expense as
incurred. When assets are retired or otherwise disposed of, the assets and
related accumulated depreciation and amortization are eliminated from the
accounts and any resulting gains and losses are included in operations in the
period of disposal.
Long-Lived Assets
The Company regularly reviews long-lived assets for impairment by comparing
the cumulative undiscounted cash flow from the assets with their carrying
amount. Any write-downs are treated as permanent reductions in the carrying
amount of the assets. Management's policy regarding long-lived assets is to
evaluate the recoverability of its assets when the facts and circumstances
suggest that these assets may be impaired. This analysis relies on a number of
factors, including operating results, business plans, budgets, economic
projections and changes in management's strategic direction or market emphasis.
The test of recoverability is a comparison of the asset value to its expected
cumulative net operating cash flow over the remaining life of the asset. During
1995, the Company determined certain acquired technology had no future value to
the Company and, accordingly, recorded a charge to operations of $456,000 to
write off these intangible assets.
Revenue Recognition
Product revenue, which is derived from sales of Biotage chromatography
separations systems and products, is recognized upon shipment to the customer.
Significant future obligations such as satisfaction of more than perfunctory
customer-mandated performance criteria may defer revenue recognition until the
obligation is satisfied. Costs of insignificant obligations are accrued when
revenue is recognized. One customer accounted for approximately 13%, 5% and 12%
of product revenue in 1995, 1996 and 1997, respectively, although the largest
customer was different in each of the three years.
The Company enters into product development agreements with collaborative
partners for the development of therapeutic, diagnostic and separations
products. The terms of the agreements may include non-refundable signing fees
and may provide funding for research and development, payments based on the
achievement of certain milestones and royalties on any product sales derived
from the collaboration. Signing fees are recognized at the inception of the
agreements and collaborative research, product development and government grant
revenues are recorded as the related expenses are incurred. Milestones are
recognized when achieved and sales royalties will be recognized when earned.
Substantially all of the product development revenues during 1995 and 1996 were
earned under an agreement with one collaborator.
The Company licenses its patent rights covering Phage Display on a
non-exclusive basis in the fields of therapeutics, antibody-based in vitro
diagnostics and research products. Standard terms of the license agreements,
which require no further active performance by the Company, generally include
non-refundable signing fees, non-refundable annual maintenance fees, milestone
payments and royalties on product sales. Signing fees are recorded as revenue at
the signing date, annual maintenance fees are recorded at the due date and
milestones payments are recognized at the time the milestone is achieved. Sales
royalties will be
F-8
<PAGE> 72
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
recognized when earned. Under one license agreement, a licensee received a
license to the Company's phage display patent rights in a defined field of use,
for a one time non-refundable payment of $1,000,000, which is included in
license revenue for the year ended December 31, 1996.
Payments received which have not met the appropriate criteria for revenue
recognition are recorded as deferred revenue.
Product Warranty
The Company provides customers with up to a twelve-month warranty on its
chromatography products from the date of customer startup or up to a fourteen
month warranty from the date of shipment, whichever is less. Estimated warranty
obligations, which are included in the results of operations, are evaluated and
provided for at the time of sale. Product warranty costs were not significant in
1995, 1996 or 1997.
Research and Development
Research and development costs are expensed as incurred.
Patents
The Company owns or is in the process of applying for patents in the United
States and other countries. All costs associated with these filings are expensed
as incurred.
Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes as set forth in Statement of Financial Accounting Standards No.
109, ("SFAS 109"), "Accounting for Income Taxes". Under this method, deferred
tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities using the current statutory tax rates.
Translation of Foreign Currencies
Assets and liabilities of the Company's foreign subsidiary are translated
at year end exchange rates. Amounts included in the statements of operations are
translated at the average exchange rate for the year. The resulting currency
translation adjustments are made directly to a separate component of
stockholders' equity. Gains and losses that result from transactions in foreign
currencies, which are included in the statement of operations, have not been
material.
Reclassifications
Certain reclassifications have been made to the 1995 and 1996 financial
statements to conform with 1997 presentation.
New Accounting Standards
In September 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company will implement SFAS No. 130 and SFAS No. 131,
which require the Company to report and display certain information related to
comprehensive income and operating segments, respectively, as required in fiscal
year 1998. Adoption of SFAS No. 130 and SFAS No. 131 will not impact the
Company's financial position or results of operations.
F-9
<PAGE> 73
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Historical Net Loss per Share
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting No. 128 (SFAS 128) "Earnings per Share". This statement specifies the
computation, presentation and disclosure requirements for earnings per share
("EPS") to simplify the existing computational guidelines and increase
comparability on an international basis. This statement replaces primary EPS
with basic EPS, the principal difference being the exclusion of common stock
equivalents in the computation of basic EPS. In addition, this statement
requires the dual presentation of basic and diluted EPS on the face of statement
of operations.
Under SFAS 128, the Company is required to present two EPS amounts, basic
and diluted. Basic EPS is calculated based on income available to common
stockholders and the weighted-average number of shares outstanding during the
reporting period. Diluted EPS may include additional dilution from potential
common stock, such as stock issuable pursuant to the exercise of stock options
and warrants outstanding, the conversion of preferred stock and conversion of
debt.
For the years ended December 31, 1995, 1996 and 1997 the Company had
convertible preferred stock, convertible debt, stock options and stock warrants
outstanding (see note 9). These securities could potentially dilute basic EPS in
the future and were not included in the computation of diluted EPS because to do
so would have been anti-dilutive for the periods presented. Consequently there
were no differences between basic and diluted EPS for these periods.
Basic and diluted net loss per common share on a historical basis is
computed in the same manner as pro forma basic and diluted net loss per common
share, except that preferred stock is not assumed to be converted.
Pro Forma Net Loss per Share (unaudited)
The pro forma basic and diluted net loss per common share is computed based
upon the weighted average number of common shares outstanding in accordance with
SFAS 128. In addition, all outstanding shares of convertible preferred stock,
which convert to common stock upon the closing of an initial public offering on
or before August 31, 1998 where the price per share is at least $8.00 and net
proceeds are at least $10,000,000, are treated as if converted to common stock.
3. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Raw materials....................................... 707,000 1,162,000
Work in process..................................... 518,000 281,000
Finished products................................... 57,000 430,000
---------- ----------
$1,282,000 $1,873,000
========== ==========
</TABLE>
F-10
<PAGE> 74
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. FIXED ASSETS:
Fixed assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Laboratory and production equipment............... $ 1,048,000 $ 1,470,000
Furniture and office equipment.................... 705,000 873,000
Leasehold improvements............................ 334,000 664,000
----------- -----------
Total............................................. 2,087,000 3,007,000
Less: accumulated depreciation.................... (1,582,000) (1,856,000)
----------- -----------
$ 505,000 $ 1,151,000
=========== ===========
</TABLE>
Depreciation expense and amortization of leasehold improvements was
$279,000, $260,000 and $283,000 for the years ended December 31, 1995, 1996 and
1997, respectively. Assets held under capital leases at December 31, 1997
consisted of $304,000 of laboratory and production equipment and $141,000 of
furniture and office equipment. The net book value of leased equipment was
$445,000 at December 31,1997. There was no accumulated amortization of leased
assets at December 31, 1997.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Accounts payable.................................... $ 929,000 $1,193,000
Accrued wages and related taxes..................... 310,000 372,000
Accrued warranty and installation costs............. 67,000 234,000
Other accrued liabilities........................... 327,000 346,000
---------- ----------
Total............................................... $1,633,000 $2,145,000
========== ==========
</TABLE>
6. LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
--------- --------
<S> <C> <C>
Shareholder collateralized convertible term note...... $ 500,000 $500,000
Shareholder convertible term note..................... 195,000 195,000
Shareholder installment note.......................... 189,000 68,000
--------- --------
884,000 763,000
Less current portion of long-term obligations......... (121,000) (68,000)
--------- --------
$ 763,000 $695,000
========= ========
</TABLE>
On August 11, 1995, in exchange for extinguishing an equal amount of its
bank debt, for which there was no gain or loss, the Company issued an interest
bearing collateralized convertible term note to a shareholder, in a non-cash
transaction, in the amount of $500,000, payable at the earlier of five years or
upon the Company's closing of an initial public offering resulting in net
proceeds of not less than $10,000,000 and a per share of common stock sales
price of not less than $9.20 per share or an event of default. The note is
collateralized with certain assets of the Company, including certain
intellectual property and is convertible in
F-11
<PAGE> 75
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
whole or in part into equity, during any Company financing. Since August 1995,
the Company has paid the interest on the note monthly at a rate equal to prime
plus one percent, as established by the lending institution (approximately 8% at
December 31, 1997). The principal balance of $500,000 was outstanding at
December 31, 1996 and 1997.
On August 11, 1995 the Company issued a convertible term note to the same
shareholder, in the amount of $195,000, in exchange for a previously issued note
and other amounts owed to the shareholder, in a non-cash transaction. The
convertible term note is payable and convertible under the same conditions as is
the collateralized convertible term note described above. The annual interest
rate of 8% has been paid quarterly since August 1995. The principal balance of
$195,000 was outstanding at December 31, 1996 and 1997.
On August 11, 1995, the Company issued an installment note to a shareholder
and previous officer of Protein Engineering Corporation in the amount of
$170,000 at 8% per annum, payable monthly for twenty months, commencing January
1, 1997. Principal and accrued interest of $189,000 was outstanding at December
31, 1996. The principal balance outstanding at December 31, 1997 was $68,000.
Interest paid on long-term debt was $223,000, $115,000 and $93,000 in 1995,
1996 and 1997, respectively.
7. CAPITAL LEASES:
During 1997, the Company entered into a capital lease agreement providing
the Company with a $3,000,000 lease facility for furniture and equipment. In
1997, the Company sold to the lessor $445,000 of laboratory and production
equipment and furniture and office equipment under this lease facility and
leased $456,000 of laboratory and production equipment and furniture and office
equipment under this and other lease agreements, in non-cash transactions. At
December 31, 1997, $2,555,000 of the lease facility remained available.
Minimum future payments under the Company's capital leases as of December
31,1997 were as follows:
<TABLE>
<S> <C>
1998........................................................ $ 129,000
1999........................................................ 121,000
2000........................................................ 121,000
2001........................................................ 112,000
2002........................................................ 111,000
---------
Total future minimum lease payments......................... 594,000
Less: amount representing interest.......................... (124,000)
---------
Present value of future minimum lease payments.............. 470,000
Less: current portion....................................... (87,000)
---------
Capital leases-long term.................................... $ 383,000
=========
</TABLE>
8. COMMITMENTS:
The Company has an operating lease for laboratory and office facilities in
Cambridge, Massachusetts through December 1999 and an operating lease for
production, laboratory and office facilities in Charlottesville, Virginia
through April 2002. The Charlottesville lease has a renewal option with an
escalation clause. The Company also leases office space in the United Kingdom
under an operating lease which permits the Company to renew after each five-year
period; however, should the Company elect not to renew, there is a termination
fee equal to one year's rent, which has been included in the following
commitment schedule. In addition, the Company leases various laboratory and
office equipment under operating leases with one to five year terms.
F-12
<PAGE> 76
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The future minimum lease payments under non-cancelable operating leases as
of December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998...................................... $1,089,000
1999...................................... $1,054,000
2000...................................... $396,000
2001...................................... $199,000
2002...................................... $56,000
</TABLE>
Rent expense for the years ended December 31, 1995, 1996 and 1997 was
approximately $290,000, $588,000 and $925,000, respectively.
9. STOCKHOLDERS' EQUITY:
Common Stock
Effective as of March 23, 1998, the Company implemented a reverse stock
split for all common stock outstanding whereby each stockholder received 0.652
share for each share of common stock, $0.01 par value. All periods presented
have been retroactively restated to reflect the reverse stock split.
On August 11, 1995, subsequent to the effect of the Company's 1995 Plan of
Recapitalization (which included a 0.1352-for-1 reverse stock split), the
Company issued 899,443 shares, valued at $284,000 in a non-cash transaction, and
reserved for issuance upon exercise of certain warrants 27,022 shares of common
stock, $0.01 par value, in exchange for 100% of the common shares outstanding of
Protein Engineering Corporation.
Preferred Stock
On August 11, 1995, the Company implemented the 1995 Plan of
Recapitalization which included a reverse stock split for all Class C Preferred
Stock outstanding where each of the outstanding shares of Class C Series 1
Preferred Stock, par value $0.01 per share, of the company was converted into
0.216064 of a share of Class A Series 1 Preferred Stock; $0.01 par value per
share, of the Company; each of the outstanding shares of Class C Series 2
Preferred Stock, par value $0.01 per share, of the Company was converted into
0.549613 of a share of Class A Series 1 Preferred Stock; and each of the
outstanding shares of Class C Series 3 Preferred Stock, par value $0.01 per
share, of the Company was converted into 0.356744 of a share of Class A Series 1
Preferred Stock of the Company. There were 1,944,500 shares of Class A Series 1
Preferred Stock authorized as of December 31, 1996 and 1997.
On August 11, 1995, subsequent to the effect of the Company's 1995 Plan of
Recapitalization, the Company authorized 704,000 shares and issued 703,970
shares of Class A, Series 2 Preferred Stock, $0.01 par value per share, valued
at $1,408,000, in exchange for 100% of the preferred stock outstanding of
Protein Engineering Corporation in a non-cash transaction. (see note 13)
On August 11, 1995, subsequent to the 1995 Plan of Recapitalization and the
merger with Protein Engineering Corporation, the Company issued 992,132 shares
of Class A Series 3 Preferred Stock and on October 27, 1995 the Company issued
1,007,868 shares of Class A Series 3 Preferred Stock, $0.01 par value per share,
at $2.00 per share. Net proceeds from the sale of Class A Series 3 Preferred
Stock were $3,900,000 after deducting related expenses of $100,000 and including
$1,188,000 of non-cash debt conversion. There were 2,000,000 shares of Class A
Series 3 Preferred Stock authorized at December 31, 1996 and 1997.
On October 30, 1996, the Company issued 3,514,377 shares of Class A Series
4 Preferred Stock, $0.01 par value per share, at $3.13 per share. Net proceeds
were $10,939,000 after deducting associated expenses of $61,000 and including
$596,000 of non-cash debt conversion.
On March 20, 1997 and March 27, 1997, the Company issued 472,825 and
309,935 shares, respectively, of Class A Series 4 Preferred Stock, $0.01 par
value per share, at $3.13 per share. Net proceeds were approximately $2,437,000
after deducting related expenses of $13,000. There were 4,792,332 shares of
Class A Series 4 Preferred Stock authorized at December 31, 1996 and 1997.
F-13
<PAGE> 77
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
All Class A preferred shares are convertible at the option of the holder,
at any time, into an equal number of common shares. The conversion ratio may be
adjusted to provide protection against future dilution. Also, Class A preferred
shares are automatically convertible into common shares, on a 0.652 share of
common stock for one share basis of Preferred Stock, upon the closing of a
public offering of common stock by the Company on or before August 31, 1998,
where the price per share is at least $8.00 with net proceeds to the Company of
at least $10,000,000. Holders of Class A Preferred Stock are entitled to receive
non-cumulative dividends at the same rate as common stock holders. Holders of
Class A Preferred Stock are entitled to one vote per share and, for certain
events such as certain preferred stock transactions, modifying rights,
preferences, privileges or limitations of Class A Preferred Stock, amending the
Certificate of Incorporation or certain significant corporate transactions, a
majority vote of Class A Preferred Stock holders is required. In addition, Class
A Series 3 and Series 4 Preferred Stock holders are each entitled to vote as a
separate class for the election of one Director by Series 3 and one Director by
Series 4. Holders of Class A Series 1, Series 2, Series 3 and Series 4 Preferred
Stock have liquidation preferences in the aggregate amounts of $4,247,000,
$4,250,000, $4,000,000 and $13,450,000, respectively. At December 31, 1997 the
Company had reserved 5,831,516 shares of common stock for conversion of
outstanding shares of all series of Class A Preferred Stock.
Stock Options
The Company's 1995 Equity Incentive Plan (the "Plan") is an equity plan
under which equity awards, including awards of incentive and nonqualified stock
options to purchase shares of common stock and restricted shares to employees
and consultants of the Company may be granted by action of the Board of
Directors. Options are granted at fair market value on the date of grant,
generally vest ratably over a 48 month period, and expire within ten years from
date of grant. During 1997, the Board increased the common stock options
available for grant under the Plan to 2,184,200. At December 31, 1997, there
were 1,911,456 shares of common stock reserved for issuance under outstanding
and future grants under the Plan of which 940,717 shares remained available for
future grant. In 1996 and 1995, the Company granted options for 32,600 and
89,368 shares respectively, (net of cancellations) to consultants; no
compensation charge for these options was recorded since management deemed their
value to be immaterial to the financial statements.
All employees, directors, officers and consultants of the Company with
outstanding options granted under the Biotage, Inc. 1989 Stock Option Plan or
the Protein Engineering Corporation Stock Option Plan, were granted options
under the 1995 Equity Incentive Plan subject to the surrender of all options
granted prior to August 11, 1995, under the predecessor plan.
F-14
<PAGE> 78
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock option activity for the 1995 Equity Incentive Plan is summarized as
follows:
<TABLE>
<CAPTION>
WEIGHTED
AVG. EXERCISE
OPTION SHARES PRICE
-------------- -------------
<S> <C> <C>
Granted during 1995....................................... 395,531 $0.31
Canceled during 1995...................................... (9,780) 0.31
--------
Outstanding at December 31, 1995.......................... 385,751 0.31
Granted during 1996....................................... 136,170 0.31
Exercised during 1996..................................... (16,178) 0.31
Canceled during 1996...................................... (4,981) 0.31
--------
Outstanding at December 31, 1996.......................... 500,762 0.31
Granted during 1997....................................... 629,067 1.29
Exercised during 1997..................................... (142,466) 0.34
Canceled during 1997...................................... (16,624) 0.35
--------
Outstanding at December 31, 1997.......................... 970,739 0.94
========
</TABLE>
Summarized information about stock options outstanding at December 31, 1997
is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------- -----------------------
WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
------------------------ ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$.31 to $.49............................... 394,525 8.1 $ .32 194,561 $ .31
.77 to 1.00................................ 143,106 9.4 $ .81 23,582 $ .80
1.53....................................... 433,108 9.8 $1.53 15,022 $1.53
</TABLE>
The weighted average fair value of options granted under the Plan during
1995, 1996 and 1997, as determined under the minimum value method, was $0.09,
$0.09 and $0.40. Total options exercisable at December 31, 1995, 1996 and 1997
were 185,585, 250,347 and 233,165, respectively.
During 1996 and 1997, the Company issued 5,264 and 93 shares, respectively,
of $.01 par value common stock upon the exercise of employee stock options
granted under the Biotage, Inc. 1989 Stock Option Plan as extended by the Board
of Directors during 1995. The shares were purchased at $1.13 and $2.84 per share
in 1996 and 1997, respectively.
SFAS 123, "Accounting for Stock-Based Compensation" requires that companies
either recognize compensation expense for grants of stock, stock options, and
other equity instruments based on fair value, or provide pro forma disclosure of
net income in the notes to the financial statements. The Company adopted the
disclosure provisions of SFAS 123 in 1996 and applied APB Opinion 25 and related
interpretations in accounting for its plan. Had compensation costs for the
Company's employee and director stock-based compensation plan been determined
based on the fair value at the grant dates as calculated in accordance with SFAS
123, the Company's net loss for the years ended December 31, 1995, 1996 and 1997
the Company's net loss and net loss per share would have increased to the pro
forma amounts shown below.
F-15
<PAGE> 79
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net loss as reported........................ $(6,585,000) $(2,397,000) $(5,535,000)
Pro forma................................... $(6,601,000) $(2,403,000) $(5,555,000)
Historical net loss per share -- basic and
diluted as reported....................... $ (27.53) $ (2.38) $ (5.14)
Pro forma................................... $ (27.59) $ (2.39) $ (5.16)
</TABLE>
The fair value of each stock option granted is estimated on the grant date
using the minimum value method with the following weighted average assumptions
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Expected option term.................................. 6.0 6.0 6.0
Risk-free interest rate............................... 5.72% 6.55% 6.31%
Expected dividend yield............................... none none none
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
likely to be representative of the effects on reported net income for future
years.
In connection with certain stock option grants in 1997, the Company
recorded $1,750,000 of deferred compensation expense which is being amortized
and charged to operations over the 48-month vesting period of the related
options. Total option-related compensation expense for 1997 was $75,000.
Restricted Stock Purchase Agreement
In March 1997, the Company granted a right to purchase 114,100 shares of
common stock at a purchase price of $0.77 per share to an officer under its 1995
Equity Incentive Plan, subject to a stock restriction agreement whereby the
Company has the right, but not the obligation, to repurchase the unvested
portion of the shares of common stock at the original purchase price per share
in the event of termination of the officer's employment with the Company. Shares
subject to this agreement vest monthly over a 48 month period. At December 31,
1997, there were 92,706 unvested common shares at a weighted average fair value,
as determined under the minimum value method, of $0.24 per share. The
restriction agreement may be terminated at any time at the Company's election.
Warrants
At December 31, 1995, 1996 and 1997, the Company had outstanding warrants
for the purchase of 45,932, 45,932 and 27,022 shares of common stock at prices
ranging from $3.97 to $165.58 per share for warrants in 1995 and 1996 and at
$3.97 per share in 1997. In 1997, warrants for 18,910 shares expired and the
remaining warrants expire on August 10, 2000. An equal number of shares of
common stock have been reserved for the exercise of outstanding warrants at
December 31, 1997.
1998 Employee Stock Purchase Plan. In January 1998, the Company adopted
the Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") under
which employees may purchase shares of Common Stock at a discount from fair
market value. There are 97,800 shares of Common Stock reserved for issuance
under the Purchase Plan. To date, no shares of Common Stock have been issued
under the Purchase Plan. Rights to purchase Common Stock under the Purchase Plan
are granted at the discretion of the Compensation Committee, which determines
the frequency and duration of individual offerings under the Purchase Plan and
the dates when stock may be purchased. Eligible employees participate
voluntarily and may withdraw from any offering at any time before stock is
purchased. The purchase price per share of Common Stock in an offering is 85% of
the lesser of its fair market value at the beginning of the offering period or
on the applicable exercise date and may be paid through payroll deductions,
periodic lump sum payments or a combination of both.
F-16
<PAGE> 80
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. EMPLOYEE SAVINGS AND RETIREMENT PLAN:
The Company has an employee savings and retirement plan (the "Plan"),
qualified under section 401(k) of the Internal Revenue Code, covering
substantially all of the Company's employees. Employees may elect to contribute
a portion of their pretax compensation to the Plan up to the annual maximum
allowed under the Plan. The Plan does not provide for a fixed matching
contribution by the Company, however, for each plan year the Company may
contribute to the Plan at its discretion. No contributions to the Plan were made
by the Company in 1995, 1996 or 1997.
11. INCOME TAXES:
For the years ended December 31, 1995, 1996 and 1997, the Company had no
income tax provisions.
Temporary differences that give rise to significant deferred tax assets as
of December 31, 1995, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Deferred Tax asset:
Inventory costs.......................... $ 84,000 $ 126,000 $ 86,000
Accelerated book depreciation............ 124,000 126,000 84,000
Accelerated book amortization............ 14,000 16,000 13,000
Allowance for doubtful accounts.......... 16,000 18,000 32,000
Accrued expenses......................... 48,000 60,000 116,000
Net operating loss carryforwards......... 10,902,000 9,722,000 12,890,000
Research credit carryforwards............ 665,000 635,000 742,000
Valuation allowance...................... (11,853,000) (10,703,000) (13,963,000)
------------ ------------ ------------
Net deferred tax asset................... -- -- --
============ ============ ============
</TABLE>
The Company has net operating loss carryforwards available to offset future
federal and state taxable income of approximately $31,376,000 as of December 31,
1997 and research credits of approximately $740,000, available to offset future
federal tax. These net operating loss and credit carryforwards expire in years
2005 through 2012. As a result of the acquisition of PEC and P.E.C. Technologies
Corp. (Note 13) and stock issued over the past five years, utilization of the
net operating loss and credit carryforwards will be subject to limitation under
section 382 of the Internal Revenue Code. In addition, at December 31, 1997, the
Company also had United Kingdom operating loss carryforwards for income tax
purposes of approximately $1,306,000 which are indefinitely available to offset
future taxable income in the United Kingdom.
12. RELATED PARTY TRANSACTIONS:
The President, Chief Executive Officer and Chairman of the Board of the
Company also serves as an outside director of and consultant to Genzyme
Corporation ("Genzyme") and outside director of Genzyme Transgenics Corporation.
In 1996, the Company entered into a sublease agreement with Genzyme for
laboratory and office facilities in Cambridge, Massachusetts which extends to
December 1999. The total commitment for the sublease is $1,230,000 at December
31, 1997 and $143,000 and $590,000 and was recorded as rent expense during 1996
and 1997, respectively. During 1996, the Company signed two patent license
agreements with Genzyme under the Company's standard license terms. The Company
recorded license revenues of $54,000 and $50,000 in 1996 and 1997, respectively,
in connection with the signing and maintenance fees on these two agreements. The
Company has entered into two funded discovery projects with Genzyme Transgenic
Corporation resulting in recorded revenues of $45,000 and $145,000 in 1996 and
1997.
F-17
<PAGE> 81
DYAX CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. MERGER WITH PROTEIN ENGINEERING CORPORATION:
On August 11, 1995, the Company completed a reverse merger of its newly
created wholly-owned subsidiary, Rational Separations, Inc., with Protein
Engineering Corporation ("PEC")(see Note 9). PEC was formed in 1987 with an
emphasis in the field of phage display technology. The financial results of PEC
are included in the Company's consolidated financial results of operations with
effect from the date of the merger. Each outstanding common share of PEC stock
was converted into 25.16 shares of the Company's common stock and each preferred
share of PEC stock was converted into 48.24 shares of the Company's Class A
Series 2 Preferred Stock. The merger was accounted for using the purchase method
of accounting. The excess of the purchase price over the fair value of the net
assets acquired was written off and recorded as a purchase of incomplete
technology, resulting in a non-cash charge to results of operations of
$3,942,000, which represents the value of acquired technologies which had not
reached commercialization at the time of acquisition.
<TABLE>
<S> <C>
Details of the merger are as follows:
Total non-cash consideration:
Common stock........................................... $ 284,000
Preferred stock........................................ 1,408,000
Convertible term notes assumed......................... 1,764,000
Installment notes assumed.............................. 170,000
Liabilities assumed.................................... 1,309,000
----------
4,935,000
Less: Fair value of assets acquired including cash..... 993,000
----------
Write off of incomplete technology before acquisition
costs................................................. 3,942,000
Costs directly associated with the merger
transaction........................................... 156,000
----------
Write off of incomplete technology.......................... $4,098,000
==========
</TABLE>
The following unaudited pro forma data reflects the Company's results of
operations as if the Protein Engineering acquisition occurred on January 1,
1995.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Revenues............................................. $ 4,280,000
Net loss............................................. (6,924,000)
</TABLE>
During the period ended August 11, 1995, Protein Engineering Corporation
earned approximately $210,000 of product development revenues under its
agreement with Dyax Corp. Intercompany revenue and related expenses have been
eliminated in the above pro forma data.
14. FINANCIAL INFORMATION BY GEOGRAPHIC AREA
The Company operates in one business segment and in the geographic segments
of the United States ("U.S.") and the United Kingdom ("U.K.") as indicated in
the table below.
<TABLE>
<CAPTION>
1995 1996 1997
--------------- ----------------- -----------------
U.S. U.K. U.S. U.K. U.S. U.K.
------- ---- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 3,026 $994 $ 5,914 $1,123 $ 7,610 $2,166
Net income (loss).................. (6,705) 120 (2,656) 259 (5,620) 85
Total assets....................... 4,288 404 11,612 624 9,136 1,396
</TABLE>
F-18
<PAGE> 82
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Dyax Corp.:
We have audited the accompanying consolidated statements of operations and
accumulated deficit and cash flows of Protein Engineering Corporation for the
period from January 1, 1995 to August 11, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
for Protein Engineering Corporation for the period from January 1, 1995 to
August 11, 1995 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 17, 1998
F-19
<PAGE> 83
PROTEIN ENGINEERING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD FROM JANUARY 1, 1995 TO AUGUST 11, 1995
<TABLE>
<CAPTION>
1995
------------
<S> <C>
Revenues:
Product development....................................... $ 470,000
------------
Operating expenses:
Research and development.................................. 395,000
General and administrative................................ 338,000
------------
Total operating expenses.................................... 733,000
------------
Loss from operations........................................ (263,000)
------------
Interest income........................................... 3,000
Interest expense.......................................... (79,000)
------------
Net loss.................................................... $ (339,000)
Accumulated deficit at January 1, 1995...................... (10,157,000)
------------
Accumulated deficit at August 11, 1995...................... (10,496,000)
============
Basic and diluted net loss per common share................. $ (24.70)
Weighted average number of basic and diluted common
shares.................................................... 13,722
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-20
<PAGE> 84
PROTEIN ENGINEERING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1995 TO AUGUST 11, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.................................................. $ (339,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 10,000
Changes in operating assets and liabilities:
Other current assets................................... (5,000)
Accounts payable and accrued expenses.................. 111,000
Deferred revenue....................................... 1,043,000
----------
Net cash provided by operating activities................... 820,000
----------
Cash flows from financing activities:
Proceeds from convertible notes........................... 78,000
Repayment of capital leases............................... (3,000)
----------
Net cash provided by financing activities................... 75,000
----------
Net increase in cash and cash equivalents................... 895,000
Cash and cash equivalents at December 31, 1994.............. 33,000
----------
Cash and cash equivalents at August 11, 1995................ $ 928,000
==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-21
<PAGE> 85
PROTEIN ENGINEERING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS:
Protein Engineering Corporation, (the "Company") commenced operations in
March 1987 to perform scientific research in Phage Display for human therapeutic
applications. Since its formation, it devoted substantially all of its efforts
to establishing the business, conducting research and development and obtaining
financing. The Company was acquired by Dyax Corp. on August 11, 1995. See Note
6.
The Company was subject to risks common to companies in the biotechnology
industry including, but not limited to, development by the Company or its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology and compliance with FDA government
regulations and approval requirements.
2. ACCOUNTING POLICIES:
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, P.E.C. Technology Corp. All
intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that effect the reported amounts of revenue and expenses during the
reporting period. The significant estimates and assumptions in these financial
statements include contract revenue recognition. Actual results could differ
from those estimates.
Cash and cash equivalents
Cash and cash equivalents consist principally of cash and money market
accounts. The Company invests its excess cash in U.S. treasury funds and a money
market account held by a financial institution.
Fixed Assets
Property and equipment are depreciated over the estimated useful lives of
the related assets using the straight-line method. Laboratory equipment and
office equipment are depreciated over five-to-seven year periods. Leasehold
improvements are amortized over the lesser of the noncancelable term of the
related lease or their estimated useful lives. Maintenance and repairs are
charged to expense as incurred.
Revenue Recognition
The Company entered into research agreements with various biotechnology
companies. During the period from January 1, 1995 to August 11, 1995, the terms
of these agreements included non-refundable fees, which were recognized when the
agreement was signed, and research revenues, which were deferred and recognized
as expenses were incurred. During the period from January 1, 1995 to August 11,
1995, three customers accounted for substantially all of the revenues.
Research and Development
Research and development costs are expensed as incurred.
F-22
<PAGE> 86
PROTEIN ENGINEERING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Patents
The Company owns or was in the process of applying for patents in the
United States and other countries. All costs associated with these filings are
expensed as incurred
Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes as set forth in Statement of Financial Accounting Standards No.
109, ("SFAS 109"), Accounting for Income Taxes. For the period from January 1,
1995 to August 11, 1995, the Company had no income tax provision.
Earnings per share
The Company adopted Statement of Financial Accounting No. 128 (SFAS 128)
"Earnings per Share" retroactive to the period from January 1, 1995 to August
11, 1995. This statement specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS") to simplify the existing
computational guidelines and increase comparability on an international basis.
This statement replaces primary EPS with basic EPS, the principal difference
being the exclusion of common stock equivalents in the computation of basic EPS.
In addition, this statement requires the dual presentation of basic and diluted
EPS on the face of statement of operations.
Under SFAS 128, the Company is required to present two EPS amounts, basic
and diluted. Basic EPS is calculated based on income available to common
stockholders and the weighted-average number of shares outstanding during the
reported period. Diluted EPS may include additional dilution from potential
common stock, such as stock issuable pursuant to the exercise of stock options
and warrants outstanding, the conversion of preferred stock and conversion of
debt.
For the period from January 1, 1995 to August 11, 1995 the Company had
convertible preferred stock, convertible debt, stock options and stock warrants
outstanding. These securities were not included in the computation of diluted
EPS because to do so would have been anti-dilutive for the periods presented.
Consequently there were no differences between basic and diluted EPS.
3. FIXED ASSETS:
Depreciation expense and amortization of leasehold improvements was $10,000
for the period from January 1, 1995 to August 11, 1995.
4. LONG-TERM DEBT:
At August 11, 1995, the Company had convertible term notes in the amount of
$1,764,000, with interest at 8% payable to stockholders and their affiliates.
At August 11, 1995, the Company had an installment note outstanding in the
amount of $170,000, with interest at 8%, payable to an officer who is a
stockholder, which was issued in a non-cash transaction in exchange for $94,000
of accrued compensation and $76,000 of accrued lease payments, of which $44,000
and $22,000, respectively, related to the period from January 1, 1995 to August
11, 1995.
There was no interest paid on long-term debt in the period from January 1,
1995 to August 11, 1995.
5. COMMITMENTS:
The Company rented its facilities in Cambridge, Massachusetts under a
tenant-at-will arrangement. In addition, the Company leased certain laboratory
and office equipment under operating leases. Rent expense for the period from
January 1, 1995 to August 11, 1995 was $80,000.
F-23
<PAGE> 87
PROTEIN ENGINEERING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. MERGER WITH DYAX CORP.:
On August 11, 1995, the Company completed a reverse merger with Dyax Corp.
Each outstanding common share of Protein Engineering Corporation stock was
converted into 25.16 shares of Dyax Corp. common stock and each preferred share
of Protein Engineering Corporation stock was converted into 48.24 shares of Dyax
Corp. Class A, Series 2 preferred stock. All assets and liabilities of Protein
Engineering Corporation were assumed by Dyax Corp. upon the acquisition.
Details of the merger are as follows:
<TABLE>
<S> <C>
Total consideration:
Common stock........................................... 284,000
Preferred stock........................................ 1,408,000
Convertible term notes assumed......................... 1,764,000
Installment note assumed............................... 170,000
Liabilities assumed.................................... 1,309,000
----------
$4,935,000
==========
</TABLE>
During the period from January 1, 1995 to August 11, 1995, Protein
Engineering Corporation earned approximately $210,000 of product development
revenues under its agreement with Dyax Corp.
F-24
<PAGE> 88
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER
IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 17
Dividend Policy....................... 17
Capitalization........................ 18
Dilution.............................. 19
Selected Consolidated Financial
Data................................ 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 25
Management............................ 47
Certain Transactions.................. 53
Principal Stockholders................ 54
Description of Capital Stock.......... 56
Shares Eligible for Future Sale....... 58
Underwriting.......................... 60
Legal Matters......................... 61
Experts............................... 61
Additional Information................ 62
Index to Financial Statements......... F-1
</TABLE>
Until , 1998 (25 days after the commencement of the Offering), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This is in
addition to the obligations of dealers to deliver a Prospectus when acting as
Underwriters and with respect to their unsold allotments or subscriptions.
======================================================
======================================================
2,500,000 SHARES
DYAX CORP.
COMMON STOCK
[ Logo ]
------------
PROSPECTUS
, 1998
------------
SALOMON SMITH BARNEY
CIBC OPPENHEIMER
PACIFIC GROWTH EQUITIES, INC.
======================================================
<PAGE> 89
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses to be paid by the Registrant in connection with this
Offering are as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 10,178
Nasdaq National Market fee.................................. 48,614
NASD filing fee and expenses................................ 3,950
Blue Sky fees and expenses.................................. 15,000
Printing and engraving expenses............................. 100,000
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 300,000
Transfer Agent and Registrar fees........................... 10,000
Miscellaneous expenses...................................... 162,258
--------
Total....................................................... $900,000
========
</TABLE>
All of the above figures, except the SEC registration fee and NASD filing
fee, are estimates.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits the Registrant
to indemnify directors, officers, employees and agents of the Registrant against
actual and reasonable expenses (including attorneys' fees) incurred by them in
connection with any action, suit or proceeding brought against them by reason of
their status or service as a director, officer, employee or agent by or on
behalf of the Registrant, and against expenses (including attorneys' fees),
judgments, fines and settlements actually and reasonably incurred by him in
connection with any such action, suit or proceeding, if (i) he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Registrant, and (ii) in the case of a criminal proceeding, he
had no reasonable cause to believe his conduct was unlawful. Except as ordered
by a court, no indemnification shall be made in connection with any proceeding
brought by or in the right of the corporation where the person involved is
adjudged to be liable to the Registrant.
Article Eighth of the Registrant's Restated Certificate of Incorporation
provides that the Registrant shall, to the fullest extent permitted by Section
145 of the Delaware General Corporation Law, as that section may be amended and
supplemented from time to time, indemnify any and all persons whom it shall have
power under that section to indemnify against any expenses, liabilities or other
matters referred to in or covered by that section. The indemnification proved
for in Article Eighth is expressly not exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
their official capacities and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of heirs, executors
and administrators of such a person.
Article Ninth of the Registrant's Restated Certificate of Incorporation
provides that no director shall be personally liable to the Registrant or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding that provision, Article Ninth provides
that a director shall be liable to the extent provided by applicable law (i) for
breach of the director's duty of loyalty to the Registrant or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived improper personal benefit. Article Ninth further states that if
the Delaware General Corporation Law is hereafter amended to authorize a further
limitation or elimination of the liability of directors or officers, then the
liability of a director or officer of the Registrant shall, in addition to the
limitation on personal liability provided in Article Ninth, be limited or
eliminated to the fullest extent permitted by the Delaware General Corporation
Law, as from time to time amended. Article Ninth
II-1
<PAGE> 90
also stipulates that no amendment to or repeal of Article Ninth shall apply to
or have any effect on the liability or alleged liability of any director or
officer of the Registrant for or with respect to any acts or omissions of such
director or officer occurring prior to such amendment or repeal.
The Registrant expects to obtain Directors' and Officers' insurance to
cover its directors and officers against certain liabilities they may incur when
acting in their capacity as directors or officers of the Registrant.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since March 1, 1995, the Registrant has issued and sold the following
unregistered securities:
(a) Issuances of Stock
On August 11, 1995 the Registrant issued an aggregate of 703,970 shares of
Class A Series 2 Preferred Stock and 899,443 shares of Common Stock (after
giving effect to the 0.652-for-1 reverse stock split) to certain former
stockholders of Protein Engineering Corporation in exchange for their
outstanding shares of Protein Engineering Corporation stock in connection with
the Registrant's acquisition of Protein Engineering Corporation.
On August 11, 1995 the Registrant issued an aggregate of (i) 1,847,936
shares of Class A Series 1 Preferred Stock and 100,778 shares of Common Stock
(after giving effect to the 0.652-for-1 reverse stock split) to existing
stockholders of the Registrant in exchange for 5,381,383 shares of all series of
Class C Preferred Stock and 1,141,120 shares of Common Stock then outstanding in
a recapitalization; and (ii) 95,000 shares of Class A Series 1 Preferred Stock
in exchange for the release of a lien on the Registrant's license of Protein
Engineering Corporation technology in the field of separations.
On August 11 and October 27, 1995 the Registrant sold an aggregate of
2,000,000 shares of Class A Series 3 Preferred Stock to certain stockholders at
a purchase price of $2.00 per share for an aggregate purchase price of
$4,000,000.
On October 30, 1996, March 20, 1997 and March 27, 1997, the Registrant sold
an aggregate of 4,297,137 shares of Class A Series 4 Preferred Stock to certain
stockholders at a purchase price of $3.13 per share for an aggregate purchase
price of $13,450,038.
From August 11, 1995 to March 17, 1998, the Registrant sold an aggregate of
192,340 shares of Common Stock to certain of the Registrant's employees at
prices ranging from $0.77 to $4.60 per share for an aggregate purchase price of
$447,500. These shares were issued pursuant to Awards of Restricted Stock under
the 1995 Equity Plan.
(b) Grants and Exercises of Stock Options and Warrants.
As of March 17, 1998, 1,378,645 options to purchase shares of the
Registrant's Common Stock had been granted under the Registrant's 1995 Equity
Plan, 1,111,217 of which are outstanding, 232,281 of which have been exercised
and 35,147 of which have been cancelled, and options to purchase 648,361 shares
of Common Stock remain available for future grant under the 1995 Equity Plan.
On August 11, 1995, the Company issued warrants to purchase an aggregate of
27,022 shares of Common Stock at a purchase price of $3.97 per share to a former
stockholder at Protein Engineering Corporation. The warrants expire on August
10, 2000.
No underwriter was engaged in connection with the foregoing sales of
securities. Sales of Common Stock to employees have been made in reliance upon
the exemption for the registration requirements afforded by Section 4(2) of the
Securities Act and Rule 701 thereunder as sales of an issuer's securities
pursuant to a written contract relating to the compensation of such individuals.
The Registrant has reason to believe that all of the foregoing purchasers were
familiar with or had access to information concerning the operations and
financial condition of the Registrant, and all of those individuals acquired
shares for investment and not with a view to the distribution thereof. At the
time of issuance, all of the foregoing shares of Common Stock were deemed to be
restricted securities for the purposes of the Securities Act, and the
certificates representing such securities bore legends to that effect.
II-2
<PAGE> 91
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) List of Exhibits
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant as amended
and reinstated through March 23, 1998.
3.2 Form of Restated Certificate of Incorporation of Registrant,
as proposed to be amended and restated.
3.3 By-laws of the Registrant.
3.4 Form of Restated By-laws of Registrant, as proposed to be
amended and restated.
4.1* Specimen Common Stock Certificate.
5.1 Opinion of Palmer & Dodge LLP with respect to the legality
of the securities being registered.
10.1 Amended and Restated 1995 Equity Incentive Plan.
10.2 1998 Employee Stock Purchase Plan.
10.3 Executive Employment Agreement, dated February 18, 1998,
between Robert Dishman and the Registrant.
10.4 Executive Employment, Non-Compete and Confidentiality
Agreement, dated August 1995, between Robert Ladner and the
Registrant.
10.5 Consulting Agreement, dated October 15, 1997, between James
W. Fordyce and the Registrant.
10.6 Employment Letter and Employee Confidentiality Agreement,
dated January 6, 1998, between Keith S. Ehrlich and the
Registrant.
10.7 Restricted Stockholder Agreement, dated March 30, 1997,
between Henry E. Blair and the Registrant.
10.8 Secured Convertible Term Note, dated August 11, 1995,
between Sheridan G. Snyder and the Registrant; Security
Agreement, dated May 11, 1993, between Sheridan G. Snyder
and the Registrant; and Assignment Agreement, dated May 11,
1993, between Sheridan G. Snyder and Crestar Bank, N.A. as
amended by the Amendment to Security Agreement and to
Assignment Agreement, dated August 10, 1995, between
Sheridan G. Snyder, Crestar Bank, N.A. and the Registrant.
10.9 Sublease Agreement, dated September 21, 1996, as amended on
December 31, 1997 between Genzyme Corporation and the
Registrant.
10.10 Lease Agreement, dated as of February 12, 1998, between
AStec Partnership and the Registrant.
10.11 Lease Agreement, dated as of February 11, 1997, between
AStec Partnership and the Registrant.
10.12 Lease Agreement, dated April 8, 1991, between Bridge Gate
Real Estates Limited, Harforde Court Management Limited and
the Registrant.
10.13 Lease Agreement, dated February 20, 1998, between Old
Kendall Property LLC and the Registrant.
10.14 Master Lease Agreement, dated December 30, 1997, between
Transamerica Business Credit Corporation and the Registrant.
10.15 Form of Sale and Leaseback Agreement, dated December 30,
1997, between Transamerica Business Credit Corporation and
the Registrant.
10.16 Form of License Agreement (Therapeutic Field) between the
Licensee and the Registrant.
10.17 Form of License Agreement (Antibody Diagnostic Field)
between the Licensee and the Registrant.
10.18 Collaboration Agreement, dated June 20, 1997, between EPIX
Medical, Inc. and the Registrant.
10.19 + Patent License Agreement, dated June 19, 1997, between
Massachusetts Institute of Technology ("M.I.T."), Whitehead
Institute for Biomedical Research ("Whitehead") and the
Registrant as amended by the First Amendment thereto dated
November 10, 1997, by and among M.I.T., Whitehead, The
Massachusetts General Hospital and the Registrant.
</TABLE>
II-3
<PAGE> 92
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
10.20 + Research and Development Agreement, dated March 10, 1997,
between Debiopharm S.A. and the Registrant.
10.21 + Joint Collaboration Agreement, dated October 1, 1997,
between CropTech Development Corporation and the Registrant.
10.22 + Cooperation Agreement, dated January 16, 1997, between Novo
Nordisk A/S and the Registrant.
10.23 Form of Indemnification Agreement by and between certain
directors and executive officers of the Registrant and the
Registrant.
23.1 Consent of Coopers & Lybrand L.L.P., independent auditors.
23.2 Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
23.3 Consent of Yankwich & Associates, special patent counsel to
the Company.
24.1 Powers of Attorney (included on the signature pages attached
hereto).
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
+ Certain confidential material contained in the document has been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 406 of the Securities Act of 1933, as amended.
(b) Financial Statement Schedules
None.
ITEM 17. UNDERTAKINGS
(a) 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 provisions described under "Item
14 -- Indemnification of Directors and Officers" above, 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 person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) to provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriter to permit prompt delivery to
each purchaser;
(2) that, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective; and
(3) that, for purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the city of Cambridge,
Commonwealth of Massachusetts, on the 23rd day of March, 1998.
DYAX CORP.
By: /s/ HENRY E. BLAIR
------------------------------------
Henry E. Blair
Chief Executive Officer
POWER OF ATTORNEY
Each undersigned person hereby constitutes and appoints Henry E. Blair,
Pamela Hay and Nathaniel S. Gardiner and each of them with full power of
substitution and full power to act without the other, as his true and lawful
attorney-in-fact and agent, with full power to sign any and all amendments to
this Registration Statement on Form S-1 of Dyax Corp., and to file the same with
the Securities and Exchange Commission, including any and all post-effective
amendments and any subsequent Registration Statement for the same offering which
may be filed under Rule 462(b) and to execute all other documents and take all
other actions on behalf of such undersigned person as may be necessary or
advisable in connection with the registration of the shares covered by this
Registration Statement under the Securities Act of 1933, as amended, hereby
ratifying and confirming all that said attorneys-in-fact 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 by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ HENRY E. BLAIR President, Chief Executive March 23, 1998
- --------------------------------------------------- Officer and Chairman of the
Henry E. Blair Board of Directors (Principal
Executive Officer)
/s/ KEITH S. EHRLICH Vice President, Finance and March 23, 1998
- --------------------------------------------------- Administration and Chief
Keith S. Ehrlich Financial Officer (Principal
Financial and Accounting
Officer)
/s/ L. EDWARD CANNON Executive Vice President, March 23, 1998
- --------------------------------------------------- President, Therapeutic and
L. Edward Cannon Diagnostic Division, and
Director
/s/ ROBERT A. DISHMAN Executive Vice President, March 23, 1998
- --------------------------------------------------- President, Separations
Robert A. Dishman Division, and Director
/s/ CONSTANTINE E. ANAGNOSTOPOULOS Director March 23, 1998
- ---------------------------------------------------
Constantine E. Anagnostopoulos
/s/ JAMES W. FORDYCE Director March 23, 1998
- ---------------------------------------------------
James W. Fordyce
/s/ THOMAS L. KEMPNER Director March 23, 1998
- ---------------------------------------------------
Thomas L. Kempner
/s/ HENRY R. LEWIS Director March 23, 1998
- ---------------------------------------------------
Henry R. Lewis
</TABLE>
II-5
<PAGE> 1
EXHIBIT 1.1
DYAX CORP.
_____________ Shares'
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
New York, New York
, 1998
Salomon Smith Barney
CIBC Oppenheimer Corp.
Pacific Growth Equities
As Representatives of the several Underwriters,
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Dyax Corp., a Delaware corporation (the "Company"), proposes to sell to the
several underwriters named in Schedule I hereto (the "Underwriters"), for whom
you (the "Representatives") are acting as representatives, __________ shares of
Common Stock, $.01 par value per share (the "Common Stock"), of the Company
(said shares to be issued and sold by the Company being hereinafter called the
"Underwritten Securities"). The Company also proposes to grant to the
Underwriters an option to purchase up to __________ additional shares of Common
Stock to cover over-allotments, if any (the "Option Securities" and, together
with the Underwritten Securities, the "Securities"). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Certain terms used herein are defined in Section 17 hereof.
- ----------
(1) Plus an option to purchase from the Company up to ________ additional
Securities to cover over-allotments, if any.
<PAGE> 2
EXHIBIT 1.1
1..1..1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
1..1..1.(1) The Company has prepared and filed with the Commission a
Registration Statement (file number 333-__________) on Form S-1, including
a related Preliminary Prospectus, for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one or more
amendments thereto, including a related Preliminary Prospectus, each of
which has previously been furnished to you. The Company will next file with
the Commission either (1) prior to the Effective Date of such Registration
Statement (including the form of final Prospectus) or (2) after the
Effective Date of such Registration Statement, a final Prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such Registration Statement, as amended at the
Effective Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in such Registration
Statement and the Prospectus. As filed, such amendment and form of final
Prospectus, or such final Prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except
to the extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the Execution Time, or to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company
has advised you, prior to the Execution Time, will be included or made
therein.
1..1..1.(2) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed in accordance with Rule 424(b)
and on the Closing Date and on any date on which Option Securities are
purchased, if such date is not the Closing Date and on any date on which
Option Securities are purchased (a "Settlement Date"), the Prospectus (and
any supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein
2
<PAGE> 3
EXHIBIT 1.1
not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any Settlement Date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement, or the
Prospectus (or any supplement thereto) in reliance upon and in conformity
with information furnished herein or in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
1..1..1.(3) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure so
to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results
of operations of the Company and the Subsidiaries (as hereinafter defined)
taken as a whole; no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
1..1..1.(4) All the Company's subsidiaries (each, a "Subsidiary" and
collectively, the "Subsidiaries") are listed in an exhibit to the
Registration Statement. Each Subsidiary is a corporation duly organized,
validly existing and in good standing in the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not
3
<PAGE> 4
EXHIBIT 1.1
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of such
Subsidiary; all the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity, or other encumbrance.
1..1..1.(5) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
the outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the Securities
have been duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities are duly listed, and admitted and
authorized for trading, subject to official notice of issuance, on the
Nasdaq National Market; the certificates for the Securities are in valid
and sufficient form; the holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe for
the Securities except for such rights of __________ as have been
effectively waived; and, except as set forth in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to
issue, or rights to convert any obligations into or exchange any securities
for, shares of capital stock of or ownership interests in the Company are
outstanding
1..1..1.(6) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described or
filed as required; and the statements in the Prospectus under the heading
"Business -- Government Regulation" fairly summarize the matters therein
described.
1..1..1.(7) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms. NO FURTHER APPROVAL
OR AUTHORIZATION OF ANY STOCKHOLDERS OF THE COMPANY, THE BOARD OF DIRECTORS
OF THE COMPANY OR OTHERS IS REQUIRED FOR THE ISSUANCE AND SALE OR TRANSFER
OF THE SECURITIES.
4
<PAGE> 5
EXHIBIT 1.1
1..1..1.(8) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will
not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
1..1..1.(9) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue-sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in the
Prospectus.
1..1..1.(10) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary pursuant to (i) the
charter or by-laws of the Company or any Subsidiary, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant, or
instrument to which the Company or any Subsidiary is a party or bound or to
which their respective properties is subject, or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Company or
any Subsidiary of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or any Subsidiary or any of their respective properties.
1..1..1.(11) No holders of securities of the Company have rights to
the registration of such securities under the Registration Statement except
for such rights of _______ which have been effectively waived.
1..1..1.(12) The historical financial statements and schedules of the
Company included in the Prospectus and the Registration Statement (the
"Financial Statements") present fairly in all material respects the
consolidated financial condition, results of operations and cash flows of
the
5
<PAGE> 6
EXHIBIT 1.1
Company and its Subsidiaries as of the dates and for the periods therein
indicated, comply as to form with the applicable accounting requirements of
the Act and have been prepared in conformity with U. S. generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as otherwise noted therein). With respect to
contracts and commitments for the sale of goods or the provision of
services by the Company or any Subsidiary, the Financial Statements contain
and reflect adequate reserves at December 31, 1997, which are consistent
with previous reserves taken, for all reasonably anticipated material
losses and costs and expenses. The amounts shown as accrued for current and
deferred income and other taxes at December 31, 1997 in the Financial
Statements are sufficient for the payment of all accrued and unpaid
federal, state and local income taxes, interest, penalties, assessments or
deficiencies applicable to the Company or any Subsidiary, whether disputed
or not, for the applicable period then ended and periods prior thereto. The
book value of inventory at December 31, 1997 reflected in the Financial
Statements, as computed on a last-in, first-out basis, is true and correct,
and the reserve set forth in the footnotes with respect thereto is true and
correct. Except as and to the extent (a) reflected and reserved against at
December 31, 1997 in the Financial Statements or (b) incurred in the
ordinary course of business after December 31, 1997 and not material in
amount, either individually or in the aggregate, the Company and its
Subsidiaries have no liability or obligation, secured or unsecured, whether
accrued, absolute, contingent, unasserted or otherwise, which is material
to Company and its Subsidiaries, taken as a whole. The selected financial
data set forth under the caption "Selected Financial Information" in the
Prospectus and Registration Statement fairly present, on the basis stated
in the Prospectus and the Registration Statement, the information included
therein.
1..1..1.(13) Subsequent to the respective dates as of which
information is given in the Prospectus and Registration Statement, there
has not been (i) any material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its Subsidiaries, taken as a whole, (ii) any transaction that is material
to the Company and its Subsidiaries, taken as a whole, (iii) any
obligation, direct or contingent, that is material to the Company and the
Subsidiaries, taken as a whole, incurred by the Company, (iv) any change in
the capital stock or outstanding indebtedness of the Company
6
<PAGE> 7
EXHIBIT 1.1
that is material to the Company and its Subsidiaries, taken as a whole, (v)
any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, or (vi) any loss or damage (whether or not
insured) to the property of the Company or any Subsidiary which has been
sustained or will have been sustained which has, or will result in, a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiaries, taken as a whole.
1..1..1.(14) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any Subsidiary or any of their respective properties is pending
or, to the best of the Company s knowledge, threatened that (i) could
reasonably be expected to have a material adverse effect on the performance
of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and the Subsidiaries, taken
as a whole.
1..1..1.(15) (1) The Company has good and marketable title to all
properties and assets described in the Prospectus and Registration
Statement as owned by it or any of its Subsidiaries, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest,
other than such as would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole, (2) the
agreements to which the Company or any Subsidiary is a party described in
the Prospectus and Registration Statement are valid agreements, enforceable
by the Company or its Subsidiary, as the case may be, and, to the best of
the Company's knowledge, the other contracting party or parties thereto are
not in breach or default under any of such agreements, and (3) the Company
or its Subsidiaries have valid and legally enforceable leases for all
properties described in the Prospectus and Registration Statement as leased
by it. The Company owns or leases all such properties as are necessary to
its operations as now conducted and as proposed to be conducted. The
description of the Company's properties contained in the Prospectus is true
and complete in all material respects. No officer, director, stockholder or
employee of the Company, nor any spouse, child or other relative or
7
<PAGE> 8
EXHIBIT 1.1
affiliate thereof, owns directly or indirectly, in whole or in part, any of
the properties or assets of the Company or any of its Subsidiaries. Each
item of property not owned by the Company or any Subsidiary is in such
condition that upon the return of such property to its owner in its present
condition at the end of the relevant lease term or as otherwise
contemplated by the applicable agreement between the Company or a
Subsidiary, as the case may be, and the owner or lessor thereof, the
obligations of the Company or its Subsidiary to such owner or lessor will
be discharged. All items of the Company s and its Subsidiaries personal
property are in good operating condition and repair, normal wear and tear
excepted, are currently used by the Company and its Subsidiaries in the
ordinary course of its business and normal maintenance has been
consistently performed with respect to such property.
1..1..1.(16) Neither the Company nor any of its Subsidiaries is in
violation or default of (i) any provision of its charter or by-laws, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
it or any of its properties, as applicable.
1..1..1.(17) Coopers & Lybrand L.L.P., who have certified certain
financial statements of the Company and delivered their report with respect
to the audited financial statements and schedules included in the
Prospectus, are independent public accountants with respect to the Company
within the meaning of the Act and the applicable published rules and
regulations thereunder.
1..1..1.(18) There are no transfer taxes or other similar fees or
charges under federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance by the Company or sale by
the Company of the Securities.
1..1..1.(19) Each of the Company and its Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed
or has requested extensions thereof on a timely basis and has paid all
taxes required to
8
<PAGE> 9
EXHIBIT 1.1
be paid by it and any other assessment, fine or penalty levied against it,
to the extent that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that is currently being contested in good
faith or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and the Subsidiaries, taken as a whole.
1..1..1.(20) The general ledgers and books of account of the Company
and its Subsidiaries, all federal, state and local income, franchise,
property and other tax returns filed by the Company and its Subsidiaries
are complete and correct and have been maintained in accordance with good
business practice and in accordance with all applicable procedures required
by laws and regulations.
1..1..1.(21) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or is threatened or imminent, and
the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or its Subsidiaries principal suppliers,
contractors or customers, that could have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole. No
collective bargaining agreement exists with any of the Company's employees
and, to the best of the Company's knowledge, no such agreement is
threatened or imminent.
1..1..1.(22) The Company and its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risk and in
such amounts as are prudent and customary in the businesses in which they
are engaged, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and its Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against; all policies of insurance and fidelity or
surety bonds insuring the Company, its Subsidiaries and their respective
businesses, assets, employees, officers and directors are in full force and
effect; the Company and its Subsidiaries are in compliance with the terms
of such policies and instruments in all material respects; and there are no
claims by the Company or any Subsidiary under any such policy or instrument
as to which any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any Subsidiary has
ever been refused any insurance coverage sought or applied for; and the
Company has no reason to believe that the Company and its Subsidiaries
9
<PAGE> 10
EXHIBIT 1.1
will not be able to renew their respective existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue their business at a cost that
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiaries, taken as a whole.
1..1..1.(23) Each of the Company and its Subsidiaries possesses all
licenses, certificates, permits and other authorizations issued by the
appropriate foreign, federal, state or local regulatory authorities
necessary to conduct its business, and neither the Company nor its
Subsidiaries has ever received any notice of proceedings related to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiaries, taken as a whole.
1..1..1.(24) Each of the Company and its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
1..1..1.(25) Neither the Company nor any of its officers or directors
has taken, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under
the Exchange Act or otherwise, in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities.
1..1..1.(26) Neither the Company nor any of its officers or directors
has distributed and no such party will not distribute prior to the later of
(i) the Closing Date, or any date on which Option Securities are to be
purchased,
10
<PAGE> 11
EXHIBIT 1.1
as the case may be, and (ii) completion of the distribution of the
Securities, any offering material in connection with the offering and sale
of the Securities other than any Preliminary Prospectuses, the Prospectus,
the Registration Statement and other materials, if any, permitted by the
Act.
1..1..1.(27) Each officer and director of the Company, each
stockholder of greater than 1% of the Common Stock (on an as-converted
basis) and each holder of an option to acquire greater than 1% of the
Common Stock (on an as-converted basis), has agreed in writing that such
holder of Unregistered Securities (as defined below) will not, directly or
indirectly, for a period of 180 days from the date that the Registration
Statement is declared effective by the Commission (the "Lock-up Period"),
offer, sell, contract to sell, grant any option to purchase, pledge or
otherwise dispose of or transfer (collectively, a "Disposition") any shares
of Common Stock or any securities convertible into or exchangeable for, or
any right to purchase or acquire, shares of Common Stock (collectively,
"Unregistered Securities") now owned or hereafter acquired directly by such
holder or with respect to which such holder has or hereafter acquires the
power of disposition, otherwise than (i) as a bona fide gift or gifts,
provided that each donee thereof agrees in writing to be bound by this
restriction or (ii) with the prior written consent of Salomon Smith Barney.
The foregoing restriction has been expressly agreed to preclude the holder
of the Unregistered Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Unregistered Securities during the Lock-up
Period, even if such Unregistered Securities would be disposed of by
someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or
not against the box) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any
Unregistered Securities 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 Unregistered Securities.
Furthermore, each holder of Unregistered Securities has also agreed and
consented to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Unregistered Securities held by
such holder except in compliance with this restriction. The Company has
provided to counsel for the Underwriters a complete and accurate list of
all security holders of the Company and the
11
<PAGE> 12
EXHIBIT 1.1
number and type of securities held by each security holder. The Company has
provided to counsel for the Underwriters true, accurate and complete copies
of all of the agreements pursuant to which its officers, directors and
stockholders have agreed to such or similar restrictions (the "Lock-up
Agreements") presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers,
directors or other stockholders from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of Salomon
Smith Barney.
1..1..1.(28) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company or any Subsidiary to or for the
benefit of any of the officers or directors of the Company or any
Subsidiary or any of the members of the families of any of them.
1..1..1.(29) Neither the Company nor any Subsidiary has at any time
during the last five (5) years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any contribution
in violation of applicable law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
1..1..1.(30) Each of the Company and its Subsidiaries is (i) in
compliance with any and all applicable foreign, federal, state and local
laws and regulations related to the protection of human health and safety,
the environment and hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received and is in compliance
with all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct its business and (iii) has not
received notice of any actual or potential liability for the investigation
or remediation of any disposal or release of hazardous or toxic substances
or wastes, pollutants or contaminants. Neither the Company nor any
Subsidiary has been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended.
1..1..1.(31) In the ordinary course of its business,
12
<PAGE> 13
EXHIBIT 1.1
the Company periodically reviews the effect of Environmental Laws on the
business, operations and properties of the Company and its Subsidiaries, in
the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded
that such associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiaries, taken as a whole.
1..1..1.(32) Each of the Company and its Subsidiaries has fulfilled
its respective obligations, if any, under the minimum funding standards of
Section 302 of the U.S. Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder with
respect to each "plan" as defined in Section 3(3) of ERISA and such
regulations and published interpretations in which its employees are
eligible to participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. Neither the Company nor any
Subsidiary has incurred any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA.
1..1..1.(33) Each of the Company and its Subsidiaries owns, possesses,
licenses or has legally enforceable rights to use, on reasonable terms, all
patents, patent applications, trade and service marks, trade and service
mark registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
its business as now conducted and as proposed to be conducted. Except as
set forth in the Prospectus under the caption "Business -- Patents and
Proprietary Rights," (a) there are no rights of third parties to any such
Intellectual Property; (b) there is no infringement by third parties of any
such Intellectual Property; (c) there is no pending or, to the Company's
best knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable basis
for any such claim; (d) there is no pending or threatened action, suit,
proceedings or claim by others challenging the validity or scope of any
such
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EXHIBIT 1.1
Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (e) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others,
and the Company is unaware of any other fact which would form a reasonable
basis for any such claim; (f) there is no U.S. or foreign patent or
published U.S. or foreign patent application which contains claims that
dominate or may dominate any Intellectual Property described in the
Prospectus as being owned by or licensed to the Company or that interferes
with the issue or pending claims of any such Intellectual Property; and (g)
there is no prior art of which the Company is aware that may render any
U.S. or foreign patent held by the Company invalid or any U.S. or foreign
patent application held by the Company unpatentable which has not been
disclosed to the U.S. Patent and Trademark Office or applicable foreign
regulatory body.
1..1..1.(34) The statements contained in the Prospectus under the
captions "Risk Factors -- Patents and Proprietary Information" and
"Business -- Patents and Proprietary Information," insofar as such
statements summarize legal matters, agreements, documents, or proceedings
discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby,
to each Underwriter.
1..1..2. PURCHASE AND SALE.
1..1..2.(1) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____ per
14
<PAGE> 15
EXHIBIT 1.1
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
1..1..2.(2) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby
grants an option to the several Underwriters to purchase, severally and not
jointly, up to __________ Option Securities at the same purchase price per
share as the Underwriters shall pay for the Underwritten Securities. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised
in whole or in part at any time and from time to time on or before the 30th
day after the date of the Prospectus upon written or telegraphic notice by
the Representatives to the Company setting forth the number of shares of
the Option Securities as to which the several Underwriters are exercising
the option and the settlement date. Delivery of certificates for the shares
of Option Securities by the Company, and payment therefor to the Company,
shall be made as provided in Section 3 hereof. The number of Option
Securities to be purchased by each Underwriter shall be the same percentage
of the total number of shares of the Option Securities to be purchased by
the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
1..1..3. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York
City time, on __________, 1998, or at such time on such later date not more
than three Business Days after the foregoing date as the Representatives
shall designate, which date and time may be postponed by agreement between
the Representatives and the Company or as provided in Section 9 hereof.
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the
several Underwriters through the Representatives of the purchase price
thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. Delivery of the
Underwritten Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives
15
<PAGE> 16
EXHIBIT 1.1
shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised at
any time after the third Business Day prior to the Closing Date, the
Company will deliver the Option Securities (at the expense of the Company)
to the Representatives on the date specified by the Representatives (which
shall be within three Business Days after exercise of said option) for the
respective accounts of the several Underwriters, against payment by the
several Underwriters through the Representatives of the purchase price
thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for
the Option Securities occurs after the Closing Date, the Company will
deliver to the Representatives on the settlement date for the Option
Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to Section
6 hereof.
1..1..4. OFFERING BY UNDERWRITERS. It is understood that the
several Underwriters propose to offer the Securities for sale to the public
as set forth in the Prospectus.
1..1..5. AGREEMENTS. The Company agrees with the several
Underwriters that:
1..1..5.(1) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective as soon as practicable. Prior to the
termination of the offering of the Securities, the Company will not file
any amendment of the Registration Statement or supplement to the Prospectus
or any Rule 462(b) Registration Statement unless the Company has furnished
to you a copy of your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will
16
<PAGE> 17
EXHIBIT 1.1
provide evidence satisfactory to the Representatives of such timely filing.
The Company will promptly advise the Representatives (1) when the
Registration Statement, if not effective at the Execution Time, shall have
become effective, (2) when the Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been filed
with the Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been
filed or become effective, (4) of any request by the Commission or its
staff for any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Prospectus or for any
additional information, (5) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
1..1..5.(2) If, at any time when a Prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend the Registration Statement or supplement the Prospectus to comply
with the Act or the rule thereunder, the Company will promptly (1) notify
the Representatives of any such event; (2) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this Section
5, an amendment or supplement which will correct such statement or omission
or effect such compliance; and (3) supply any supplemented Prospectus to
you in such quantities as you may reasonably request.
1..1..5.(3) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the
17
<PAGE> 18
EXHIBIT 1.1
Company which will satisfy the provisions of Section 11(a) of the Act and
Rule 158 under the Act.
1..1..5.(4) The Company will furnish to the Representatives and
counsel for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as delivery
of a Prospectus by an Underwriter or dealer may be required by the Act, as
many copies of each Preliminary Prospectus and the Prospectus and any
supplement thereto as the Representatives may reasonably request.
1..1..5.(5) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect so long as required for the distribution of the
Securities; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the Securities, in
any jurisdiction where it is not now so subject.
1..1..5.(6) The Company will not, without the prior written consent of
Salomon Smith Barney, for a period of 180 days following the Execution
Time, offer, sell or contract to sell, or otherwise dispose of (or enter
into any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company or
any affiliate of the Company or any person in privity with the Company or
any affiliate of the Company) directly or indirectly, or announce the
offering of, any other shares of Common Stock or any securities convertible
into, or exchangeable for, shares of Common Stock; PROVIDED, HOWEVER, that
the Company may issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the Execution Time and the Company may issue Common
Stock issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
1..1..5.(7) The Company will not, without the prior written consent of
Salomon Smith Barney, for a period of 180 days following the Execution
Time, file a Registration
18
<PAGE> 19
EXHIBIT 1.1
Statement on Form S-8 (or any successor form thereto) for the purpose of
registering with the Commission any employee stock option plan, stock
ownership plan or dividend reinvestment plan of the Company.
1..1..5.(8) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
1..1..5.(9) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary Prospectus,
the Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue-sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the Nasdaq National Market; (vi)
any registration or qualification of the Securities for offer and sale
under the securities or blue-sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii) any
filings required to be made with the National Association of Securities
Dealers, Inc. (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such filings); (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers
of the Securities; (ix) the fees and expenses of the Company's accountants
and the fees and expenses of counsel (including local and
19
<PAGE> 20
EXHIBIT 1.1
special counsel) for the Company; and (x) all other costs and expenses
incident to the performance by the Company of its obligations hereunder.
1..1..6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Underwritten Securities and
the Option Securities, as the case may be, shall be subject to the accuracy
of the representations and warranties on the part of the Company contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the
following additional conditions:
1..1..6.(1) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in writing to
a later time, the Registration Statement will become effective not later
than (i) 6:00 PM New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00
p.m. New York City time on such date or (ii) 9:30 a.m. on the Business Day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 PM New York City time on such date;
if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement will be
filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
1..1..6.(2) The Company shall have furnished to the Representatives
the opinion of Palmer & Dodge LLP, counsel for the Company, dated the
Closing Date and addressed to the Representatives, to the effect that:
1..1..6.(2)(1) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with full corporate power and authority to own
or lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation and is in good
standing under the
20
<PAGE> 21
EXHIBIT 1.1
laws of each jurisdiction which requires such qualification;
1..1..6.(2)(2) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the Company
conforms in all material respects to the description thereof contained
in the Prospectus; the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly authorized,
and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the
Securities are duly listed, and admitted and authorized for trading,
subject to official notice of issuance, on the Nasdaq National Market;
the certificates for the Securities are in valid and sufficient form;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the
Securities except for such rights of __________ as have been
effectively waived; and, except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding;
1..1..6.(2)(3) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or its property of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or
other document of a character required to be described in the
Prospectus or Registration Statement, or to be filed as an exhibit
thereto, which is not described or filed as required;
1..1..6.(2)(4) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued, no proceedings for that
purpose have been
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<PAGE> 22
EXHIBIT 1.1
instituted or threatened and the Prospectus and Registration Statement
(other than the financial statements and other financial information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the rules thereunder; and such counsel has
no reason to believe that on the Effective Date or at the Execution
Time the Registration Statement contains or contained any untrue
statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus as of its date and on
the Closing Date includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the financial
statements and other financial information contained therein, as to
which such counsel need express no opinion);
1..1..6.(2)(5) this Agreement has been duly authorized, executed
and delivered by the Company;
1..1..6.(2)(6) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as defined in the 1940 Act;
1..1..6.(2)(7) no consent, approval, authorization, filing with
or order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as
have been obtained under the Act and such as may be required under the
blue-sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and such other
approvals (specified in such opinion) as have been obtained;
1..1..6.(2)(8) neither the issuance and sale of the Securities,
nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will conflict
with, result in a breach or violation of or imposition of any
22
<PAGE> 23
EXHIBIT 1.1
lien, charge or encumbrance upon any property or assets of the Company
pursuant to, (i) the charter or by-laws of the Company, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company is a party or bound or to
which its property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company of any
court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or
any of its properties; and
1..1..6.(2)(9) no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement except for such rights of __________ which have been
effectively waived.
1..1..6.(2)(10) In rendering such opinion, such counsel may rely
(A) as to matters involving the application of laws of any
jurisdiction other than the Commonwealth of Massachusetts or the
federal laws of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of
the Company and public officials. References to the Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date. The
opinion of such counsel shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
1..1..6.(3) The Representatives shall have received from Hale and Dorr
LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Prospectus and the Registration
Statement (together with any supplement thereto) and other related matters
as the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. The opinion or
23
<PAGE> 24
EXHIBIT 1.1
opinions of such counsel shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
1..1..6.(4) [Patents language to follow]
1..1..6.(5) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the chief executive officer and the
principal financial officer of the Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Prospectus, any supplements to the Prospectus, Registration Statement, and
this Agreement and that:
1..1..6.(5)(1) the representations and warranties of the Company
in this Agreement are true and correct in all material respects on and
as of the Closing Date with the same effect as if made on the Closing
Date, except for (A) representations and warranties as of a certain
date, which shall be true and correct as of such date, and (B) such
representations and warranties which are by their terms qualified as
to materiality, which shall be true and correct, and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
1..1..6.(5)(2) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's best knowledge,
threatened; and
1..1..6.(5)(3) since the date of the most recent financial
statements included in the Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and the Subsidiaries, taken as a whole.
1..1..6.(6) At the Execution Time and at the Closing Date, Coopers &
Lybrand L.L.P. shall have furnished to the Representatives letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable
published rules and regulations
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EXHIBIT 1.1
thereunder and that they have performed a review of the unaudited interim
financial information of the Company for the three-month period ended March
31, 1998, and as at March 31, 1998, in accordance with Statement on
Auditing Standards No. 71 and stating in effect that:
1..1..6.(6)(1) in their opinion the audited financial statements
and financial statement schedules included in the Prospectus and the
Registration Statement and reported on by them comply as to form in
all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations;
1..1..6.(6)(2) on the basis of a reading of the latest unaudited
financial statements made available by the Company; their limited
review, in accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial
information for the three-month period ended March 31, 1998, and as at
March 31, 1998; carrying out certain specified procedures (but not an
examination in accordance with GAAP) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
stockholders, directors and audit committee of the Company; and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters of the Company as to transactions
and events subsequent to December 31, 1997, nothing came to their
attention which caused them to believe that:
1..1..6.(6)(2)(1) any unaudited financial statements
included in the Prospectus and the Registration Statement do not
comply as to form in all material respects with applicable
accounting requirements of the Act and with the published rules
and regulations of the Commission with respect to registration
statements on Form S-1; and said unaudited financial statements
are not in conformity with GAAP applied on a basis substantially
consistent with that of the audited financial statements included
in the Prospectus and the Registration Statement;
1..1..6.(6)(2)(2) with respect to the period subsequent to
March 31, 1998, there were
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EXHIBIT 1.1
any changes, at a specified date not more than five days prior to
the date of the letter, in the long-term debt of the Company or
capital stock of the Company or decreases in the stockholders'
equity of the Company or decreases in working capital of the
Company as compared with the amounts shown on the March 31, 1998
balance sheet included in the Prospectus and the Registration
Statement and, or for the period from April 1, 1998 to such
specified date there were any decreases, as compared with the
three-month period ended March 31, 1998 in net revenues or income
before income taxes or in total or per share amounts of net
income of the Company, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives; or
1..1..6.(6)(2)(3) the disclosure included in the Prospectus
and Registration Statement and in response to Regulation S-K,
Item 301 (Selected Financial Data), Item 302 (Supplementary
Financial Information) and Item 402 (Executive Compensation) is
not in conformity with the applicable disclosure requirements of
Regulation S-K; and
1..1..6.(6)(3) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company) set forth in the
Prospectus and the Registration Statement, including the information
set forth under the captions "Summary Financial" and "Selected
Financial Information" in the Prospectus, agrees with the accounting
records of the Company, excluding any questions of legal
interpretation.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
The Company shall have received from Coopers & Lybrand L.L.P.
(and furnished to the Representatives) a report with respect to a
review of unaudited interim
26
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EXHIBIT 1.1
financial information of the Company for the eight quarters ending
March 31, 1997, in accordance with Statement on Auditing Standards No.
71.
1..1..6.(7) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company, whether or not arising from transactions in the
ordinary course of business, the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, sufficiently material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto) and the Registration Statement (exclusive of any amendment
thereof) .
1..1..6.(8) The Securities shall have been listed and admitted and
authorized for trading on the Nasdaq National Market, subject to official
notice of issuance, and satisfactory evidence of such actions shall have
been provided to the Representatives.
1..1..6.(9) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A hereto
from [each officer and director of the Company] and [names of major
stockholders] addressed to the Representatives.
1..1..6.(10) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder
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<PAGE> 28
EXHIBIT 1.1
may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company
in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Hale and Dorr LLP, 60 State Street, Boston, MA,
counsel for the Underwriters, on the Closing Date.
1..1..7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of
the Securities provided herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than
by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Salomon Smith Barney on demand
for all out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
1..1..8. INDEMNIFICATION AND CONTRIBUTION.
1..1..8.(1) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning
of either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for
the registration of the Securities as originally filed or in any amendment
thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
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, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably
28
<PAGE> 29
EXHIBIT 1.1
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
1..1..8.(2) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity to each Underwriter, but only
with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the
cover page regarding delivery of the Securities, the legend in block
capital letters on the inside cover related to stabilization, syndicate
covering transactions and penalty bids and, under the heading
"Underwriting" (i) the sentences related to concessions and reallowances
and (ii) the paragraph related to stabilization, syndicate covering
transactions and penalty bids in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in any Preliminary
Prospectus or the Prospectus.
1..1..8.(3) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of
such action and such failure results in the forfeiture by the indemnifying
party
29
<PAGE> 30
EXHIBIT 1.1
of substantial rights and defenses and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b) above.
The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by
the indemnified party or parties except as set forth below); PROVIDED,
HOWEVER, that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
1..1..8.(4) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for
30
<PAGE> 31
EXHIBIT 1.1
any reason, the Company and the Underwriters severally agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal
or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or
more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and by the Underwriters on the other from the offering of the
Securities; PROVIDED, HOWEVER, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating to
the offering of the Securities) be responsible for any amount in excess of
the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company
and the Underwriters severally shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company on the one hand and of the Underwriters on
the other in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total
net proceeds from the offering (before deducting expenses) received by it,
and benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set forth
on the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one
hand or the Underwriters on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 8, each
person who controls an Underwriter within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of an
Underwriter
31
<PAGE> 32
EXHIBIT 1.1
shall have the same rights to contribution as such Underwriter, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
1..1..9. DEFAULT BY AN UNDERWRITER. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities
agreed to be purchased by such Underwriter or Underwriters hereunder and
such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of Securities set forth opposite their names
in Schedule I hereto bears to the aggregate amount of Securities set forth
opposite the names of all the remaining Underwriters) the Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase;
PROVIDED, HOWEVER, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule I hereto, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without
liability to any nondefaulting Underwriter or the Company. In the event of
a default by any Underwriter as set forth in this Section 9, the Closing
Date shall be postponed for such period, not exceeding five Business Days,
as the Representatives shall determine in order that the required changes
in the Prospectus and the Registration Statement or in any other documents
or arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company
and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
1..1..10. TERMINATION. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice
given to the Company prior to delivery of and payment for the Securities,
if at any time prior to such time (i) trading in the Company's Common Stock
shall have been suspended by the Commission or the Nasdaq
32
<PAGE> 33
EXHIBIT 1.1
National Market or trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market shall have been suspended or limited
or minimum prices shall have been established on either the New York Stock
Exchange or the Nasdaq National Market, (ii) a banking moratorium shall
have been declared either by Federal or New York State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Prospectus (exclusive of any amendment thereto).
1..1..11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
the Company or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment
for the Securities. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
1..1..12. NOTICES. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Representatives,
will be mailed, delivered or faxed (with a confirming copy in writing) to
the General Counsel of Salomon Smith Barney at 388 Greenwich Street, New
York, New York, 10013, Attention: General Counsel (fax: (212) 816-7912);
with a copy to Steven D. Singer, Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts, 02109-1803, (fax: (617) 526-5000); or, if sent to
the Company, will be mailed, delivered or faxed (with a confirming copy in
writing) to Dyax Corporation, One Kendall Square, Building 600, Fifth
Floor, Cambridge, Massachusetts, 02139, Attention: Legal Department (fax:
(617) 225-2501).
1..1..13. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
1..1..14. APPLICABLE LAW. This Agreement will be
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<PAGE> 34
EXHIBIT 1.1
governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of
New York.
.. ..1. COUNTERPARTS. This Agreement may be signed in one or
more counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same agreement.
1..1..15. HEADINGS. The section headings used herein are for
convenience only and shall not affect the construction hereof.
1..1..16. DEFINITIONS. The terms which follow, when used in
this Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Closing Date" shall mean the date and time of delivery and payment
for the Underwritten Securities.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus included
in the Registration Statement at the Effective Date that omits Rule 430A
34
<PAGE> 35
EXHIBIT 1.1
Information.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424," "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the initial registration statement.
"Salomon Smith Barney" shall mean Smith Barney Inc. or Salomon
Brothers Inc to the extent that either such party is a signatory to this
Agreement.
35
<PAGE> 36
EXHIBIT 1.1
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
DYAX CORP.
By:
--------------------------------------
Name:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney
CIBC Oppenheimer Corp.
Pacific Growth Equities
By: Salomon Smith Barney
By:
-----------------------------
Name:
Title:
For themselves and the other several
Underwriters named in Schedule I to the
foregoing Agreement.
36
<PAGE> 37
SCHEDULE I
NUMBER OF
UNDERWRITTEN SECURITIES
UNDERWRITERS TO BE PURCHASED
Salomon Smith Barney
CIBC Oppenheimer Corp.
Pacific Growth Equities
-----------
Total ===========
37
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
DYAX CORP.
The undersigned, for the purpose of amending and restating the Amended
and Restated Certificate of Incorporation of Dyax Corp. (the "Corporation")
under the laws of the State of Delaware, hereby certifies as follows:
A. The Corporation was incorporated under the name Biotage, Inc.
pursuant to an original Certificate of Incorporation filed with the Secretary of
State of the State of Delaware on May 26, 1989.
B. The amendments to and the restatement of the Amended and Restated
Certificate of Incorporation of the Corporation herein certified have been
approved by the Board of Directors of the Corporation and duly adopted by the
stockholders of the Corporation in accordance with the provisions of Sections
228, 242 and 245 of the General Corporation Law of the State of Delaware. Prompt
written notice of the adoption of the amendments herein certified has been given
to those stockholders who have not consented in writing thereto, as provided in
Section 228 of the General Corporation Law of the State of Delaware.
C. The Amended and Restated Certificate of Incorporation of the
Corporation, as previously amended and restated, is hereby restated and further
amended to read as follows:
FIRST: The name of the Corporation is DYAX CORP.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of Newcastle, State of
Delaware 19805. The name of its registered agent at such address is Service
Company Corporation.
THIRD: The nature of the business or purposes to be conducted or promoted
are:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The authorized capitalization of the Corporation is as follows:
Part 1: Authorized Shares
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is twenty-nine million four hundred
forty thousand eight hundred thirty-two (29,440,832) shares, of which twenty
million (20,000,000) shares, par value $0.01 per share, are to be of a class
designated "Common Stock", and nine million four hundred forty thousand eight
hundred thirty-two (9,440,832) shares, par value $0.01 per share, are to be of a
class designated "Class A Preferred Stock".
<PAGE> 2
Part 2: Issuance
Subject to the provisions of this Certificate of Incorporation and
except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
Part 3: Common Stock
Subject to the provisions of any applicable law or of the by-laws of
the Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided by law, by this Certificate of Incorporation or by the
resolution or resolutions providing for the issue of any series of the Class A
Preferred Stock, the holders of outstanding shares of Common Stock shall have
voting rights for the election of directors and for all other purposes, each
holder of record of shares of Common Stock being entitled to one vote for each
share of Common Stock standing in his name on the books of the Corporation.
Subject to the rights of any one or more series of the Class A
Preferred Stock, the holders of Common Stock shall be entitled to receive such
dividends as from time to time may be declared by the Board of Directors out of
any funds of the Corporation legally available for the payment of such
dividends.
In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Class A Preferred Stock of the full amount to which
they are entitled, the holders of Common Stock shall be entitled to share,
ratably according to the number of shares of Common Stock held by them, in all
remaining assets of the Corporation available for distribution to its
stockholders.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of all shares of capital stock of
the Corporation then outstanding and entitled to vote thereon, voting together
as a single class, irrespective of the provisions of Section 242 of the General
Corporation Law of the State of Delaware that would otherwise require a vote of
the holders of Common Stock as a separate class.
Part 4: Preferred Stock
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article Fourth, to provide by resolution for
the issuance of the shares of Class A Preferred Stock in one or more series, and
by filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
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<PAGE> 3
The authority of the Board with respect to each series of Class A
Preferred Stock shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate, if any, on the shares of that series,
whether dividends shall be cumulative, and if so, from which
date or dates, and the relative rights of priority, if any, of
payment of dividends on shares of the series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events
as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions
and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, and the relative rights of priority, if
any, of payment of shares of that series; and
(h) Any other relative rights, preferences and limitations of that
series.
Part 5: Class A Series 1, Class A Series 2, Class A Series 3 and Class
A Series 4 Preferred Stock
1. Designation of Class A Series 1 Preferred Stock, Class A Series 2
Preferred Stock, Class A Series 3 Preferred Stock and Class A Series 4 Preferred
Stock. One million nine hundred forty-four thousand five hundred (1,944,500)
shares of Class A Preferred Stock are hereby designated as "Class A Series 1
Preferred Stock", seven hundred four thousand (704,000) shares of Class A
Preferred Stock are hereby designated as "Class A Series 2 Preferred Stock", two
million (2,000,000) shares of Class A Preferred Stock are hereby designated as
"Class A Series 3 Preferred Stock" and four million seven hundred ninety-two
thousand three hundred thirty-two (4,792,332) shares of Class A Preferred Stock
are hereby designated "Class A Series 4 Preferred Stock". As used herein, the
term "Class A Preferred Stock", used without reference to Class A Series 1
Preferred Stock, Class A Series 2 Preferred Stock, Class A Series 3 Preferred
Stock or Class A Series 4 Preferred Stock, means the Class A Series 1 Preferred
Stock, the Class A Series 2 Preferred Stock, the
- 3 -
<PAGE> 4
Class A Series 3 Preferred Stock, the Class A Series 4 Preferred Stock and any
other series of Class A Preferred Stock that may be established from time to
time by the Board of Directors in accordance with this Article Fourth, share for
share alike and without distinction as to series, except as otherwise expressly
provided or as the context otherwise requires.
2. Dividends. When and as dividends are duly declared by the Board of
Directors of the Corporation, the holders of the Class A Preferred Stock shall
be entitled to receive, out of any funds legally available for that purpose,
dividends (other than dividends payable in shares of Common Stock) at the same
rate as dividends declared with respect to shares of Common Stock. In connection
with the determination of such dividends, each share of the Class A Preferred
Stock shall be deemed to represent that number of shares of Common Stock into
which it is convertible. Dividends declared on each series of the Class A
Preferred Stock shall be paid pari passu with dividends declared on any other
series of Class A Preferred Stock and with any dividends declared on the Common
Stock.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of the Class
A Preferred Stock then outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to its stockholders, before
any payment shall be made to the holders of any stock ranking on liquidation,
dissolution or winding up junior to the Class A Preferred Stock (including
holders of Common Stock) by reason of their ownership of such shares, an amount
equal to $2.186 per share for the Class A Series 1 Preferred Stock, $6.037 per
share for the Class A Series 2 Preferred Stock, $2.00 per share for the Class A
Series 3 Preferred Stock and $3.13 per share for the Class A Series 4 Preferred
Stock (subject in each case to equitable adjustment in the event of any stock
dividend, stock split, combination, reorganization, recapitalization,
reclassification or other similar event affecting such shares) plus all declared
but unpaid dividends. If upon any such liquidation, dissolution or winding up of
the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Class A Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Class A Preferred Stock and any class or
series of stock ranking on liquidation on a parity with the Series A Preferred
Stock shall share pari passu in any distribution of the remaining assets and
funds of the Corporation in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were paid
in full.
(b) After the payment of all preferential amounts required to be paid
to the holders of the Class A Preferred Stock upon the dissolution, liquidation
or winding up of the Corporation pursuant to the provisions of Section 3(a), the
remaining assets of the Corporation available for distribution, if any, to the
stockholders of the Corporation shall be allocated among the holders of shares
of Common Stock, pro rata based upon the number of shares of Common Stock then
held by each.
(c) The merger or consolidation of the Corporation into or with another
corporation with the result that the stockholders of the Corporation receive
distributions of
- 4 -
<PAGE> 5
cash, securities or other property in complete exchange for their shares of
capital stock of the Corporation, or the sale of all or substantially all the
assets of the Corporation, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation for purposes of this Section 3, unless (i) the
holders of at least 50.1% of the then outstanding shares of Class A Preferred
Stock elect to have such events not deemed to be a liquidation, dissolution or
winding up of the Corporation by giving written notice thereof to the
Corporation at least 15 days before the effective date of such event or (ii)
upon consummation of such event, the holders of voting securities of the
Corporation immediately prior to such transaction continue to own directly or
indirectly not less than a majority of the voting power of the surviving
corporation. If the notice specified in clause (i) above is given, the
provisions of Subsection 5(g) below shall apply. The amount distributed to the
holders of Class A Preferred Stock upon any such merger, consolidation or sale
shall, unless otherwise prohibited by law, be equal to that amount per share
that would be received by the holders of Class A Preferred Stock if all the
consideration paid in exchange for the assets or shares of capital stock, as the
case may be, of the Corporation were actually paid to the Corporation and the
Corporation were immediately thereafter liquidated and its assets distributed
pursuant to Sections 3(a) and (b) hereof. Such amount (the "Special Liquidation
Price") shall be the sum of any cash distributed plus the value (as determined
in good faith by the Board of Directors) of any property, rights or securities
distributed, and shall be paid by the Corporation to the holders of shares of
Class A Preferred Stock in complete redemption of such shares or, if less than
all of such shares may then be legally redeemed, pro rata in partial redemption
of such shares based upon the number of outstanding shares of Class A Preferred
Stock then held by each holder. Payment of the Special Liquidation Price will be
made upon actual delivery to the Corporation or its successor of the
certificates representing shares of Class A Preferred Stock. On and after the
date of the merger, consolidation or sale, all rights of the holders of shares
of Class A Preferred Stock to be redeemed shall terminate except the right to
receive the Special Liquidation Price, and such shares shall no longer be deemed
to be outstanding, provided, however, that if the Corporation defaults in the
payment of the Special Liquidation Price with respect to any share of Class A
Preferred Stock, the rights of the holders thereof shall continue until the
Corporation cures such default.
4. Voting.
(a) Except as otherwise expressly provided in this Section 4 or in
Section 7 hereof, or as required by law, each holder of outstanding shares of
the Class A Preferred Stock shall be entitled to the number of votes equal to
the number of whole shares of Common Stock into which the shares of the Class A
Preferred Stock held by such holder are convertible, at each meeting of
stockholders of the Corporation (and written actions of stockholders in lieu of
meetings) with respect to any and all matters presented to the stockholders of
the Corporation for their action or consideration. All voting for election of
Directors shall be non-cumulative. Except as otherwise expressly provided herein
or as required by law, holders of the Class A Preferred Stock shall vote
together with the holders of Common Stock as a single class.
(b) There shall be not more than eight directors of the Corporation
without the approval, by vote or written consent, of the holders of at least
50.1% of the then outstanding shares of Class A Preferred Stock.
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<PAGE> 6
(c) So long as shares of Class A Series 3 Preferred Stock are issued
and outstanding, one director of the Corporation (the "Series 3 Director") shall
be elected by the holders of Class A Series 3 Preferred Stock, voting as a
separate class. So long as shares of Class A Series 4 Preferred Stock are issued
and outstanding, one director of the Corporation (the "Series 4 Director") shall
be elected by the holders of Class A Series 4 Preferred Stock, voting as a
separate class. The remaining members of the Board of Directors shall be elected
by the affirmative vote of the holders of a majority of the outstanding shares
of all series of Class A Preferred Stock and Common Stock, voting together as a
class. All directors shall be elected at the annual meeting of stockholders and
shall serve until their respective successors are elected and qualified or until
their respective earlier resignation or removal. Any director who shall have
been elected by the holders of a class or series of stock may be removed during
his term of office, either for or without cause, by and only by, the affirmative
vote of the holders of a majority of the shares of the class or series of stock
who elected such director, given in writing or at a special meeting of such
stockholders duly called for that purpose. Any vacancy in the office of the
Series 3 Director or the Series 4 Director, as the case may be, may be filled
only by the holders of a majority of the outstanding shares of Class A Series 3
Preferred Stock or Class A Series 4 Preferred Stock, respectively. After the
close of business on the Conversion Date on which the last issued and
outstanding shares of Series 3 Preferred Stock or Series 4 Preferred Stock, as
the case may be, are converted pursuant to Section 5 or Section 6, the
respective director who had been elected by the Class A Series 3 Preferred Stock
or Class A Series 4 Preferred Stock shall be elected, and subject to removal, by
the then holders of Common Stock and Class A Preferred Stock, voting together as
a single class.
5. Optional Conversion. The holders of the Class A Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each issued and outstanding share of Class A
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time and from time to time, into such number of fully paid and nonassessable
shares of Common Stock as is determined (i) with respect to the Class A Series 1
Preferred Stock, by dividing $2.00 by the Series 1 Conversion Price (as defined
below) in effect at the time of conversion, (ii) with respect to the Class A
Series 2 Preferred Stock, by dividing $2.00 by the Series 2 Conversion Price (as
defined below) in effect at the time of conversion, (iii) with respect to the
Class A Series 3 Preferred Stock, by dividing $2.00 by the Series 3 Conversion
Price (as defined below) in effect at the time of conversion, and (iv) with
respect to the Class A Series 4 Preferred Stock, by dividing $3.13 by the Series
4 Conversion Price (as defined below) in effect at the time of conversion. The
price at which shares of Common Stock shall be deliverable upon conversion of
Class A Preferred Stock without the payment of additional consideration by the
holder thereof (in each case, the "Conversion Price") shall, after giving effect
to the 0.652-for-1 reverse stock split effected by an amendment to the
Certificate of Incorporation filed on or before March 23, 1998, be (i) $3.067485
per share (the "Series 1 Conversion Price") for Class A Series 1 Preferred
Stock, (ii) $3.067485 per share (the "Series 2 Conversion Price") for the Class
A Series 2 Preferred Stock, (iii) $3.067485 per share (the "Series 3 Conversion
Price") for the Class A Series 3 Preferred Stock, (iv) $4.800613 per share (the
"Series 4 Conversion Price") for the Class A Series 4 Preferred Stock and in
each case shall be subject to adjustment as provided below.
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<PAGE> 7
In the event of a liquidation, dissolution or winding up of the
Corporation, the Conversion Rights shall terminate at the close of business on
the business day preceding the date fixed for the payment of any amounts
distributable on liquidation to the holders of the Class A Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Class A Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to the product of such fraction multiplied by the market price of
one share of the Corporation's Common Stock on the Conversion Date, as such term
is defined in subsection 5(c)(i) below.
(c) Mechanics of Conversion.
(i) In order for a holder of the Class A Preferred Stock to
convert shares of the Class A Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of the
Class A Preferred Stock, at the office of the transfer agent for the Class A
Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the Class A
Preferred Stock represented by such certificate or certificates. Such notice
shall state such holder's name or the names of the nominees in which such holder
wishes the certificate or certificates for shares of Common Stock to be issued
and the number of shares, class and series (if any) of the Class A Preferred
Stock to be converted. If required by the Corporation, certificates surrendered
for conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or his or its attorney duly authorized in writing. The
date of receipt of such certificates and notice by the transfer agent (or by the
Corporation if the Corporation serves as its own transfer agent) shall be the
conversion date (the "Conversion Date"), and the conversion shall be deemed
effective as of the close of business on the Conversion Date. The Corporation
shall, as soon as practicable after the Conversion Date, issue and deliver at
such office to such holder of the Class A Preferred Stock, or to his or its
nominees, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled, together with cash in lieu of any
fraction of a share.
(ii) The Corporation shall at all times when the Class A
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Class A Preferred Stock, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding Class A Preferred Stock. Before taking any action which would cause
an adjustment reducing the Conversion Price below the then par value of the
shares of Common Stock issuable upon conversion of the Class A Preferred Stock,
the Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such adjusted
Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any declared and unpaid dividends on the
Class A Preferred Stock
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<PAGE> 8
surrendered for conversion or on the Common Stock delivered upon conversion of
the Class A Preferred Stock.
(iv) All shares of the Class A Preferred Stock which shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall immediately cease and
terminate at the close of business on the Conversion Date, except only the right
of the holders thereof to receive shares of Common Stock in exchange therefor
and payment of all declared and unpaid dividends thereon. Any shares of the
Class A Preferred Stock so converted shall be retired and canceled and shall not
be reissued, and the Corporation may from time to time take such appropriate
action as may be necessary to reduce accordingly the authorized shares of Class
A Preferred Stock and the respective series of such shares.
(d) Adjustments to Conversion Price for Diluting Issues With Respect to
the Class A Preferred Stock:
(i) Special Definitions. For purposes of this Subsection 5(d),
the following definitions shall apply:
(A) "Option" shall mean any outstanding rights,
options or warrants to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities, excluding rights, warrants and options granted to
employees, consultants or scientific advisory board members of the Corporation
or any subsidiary thereof pursuant to an option plan or agreement adopted by the
Board of Directors with respect to up to 1,144,000 shares of Common Stock (after
giving effect to the 0.652-for-1 reverse stock split effected by an amendment to
the Certificate of Incorporation filed on or before March 23, 1998, and subject
to appropriate adjustment for any further stock dividend, stock split,
combination or other similar recapitalization affecting such shares), or such
higher number as may be designated from time to time by the Board of Directors
and approved by the holders of a majority of the outstanding shares of Class A
Series 3 Preferred Stock.
(B) "Original Issue Date" shall mean, as to a
series of Class A Preferred Stock, the date on which the first share of such
series was first issued.
(C) "Convertible Securities" shall mean any
evidences of indebtedness, shares (other than Class A Series 1 Preferred Stock,
Class A Series 2 Preferred Stock, Class A Series 3 Preferred Stock and Class A
Series 4 Preferred Stock) or other securities directly or indirectly convertible
into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" when used
with respect to a series of Class A Preferred Stock shall mean all shares of
Common Stock issued (or, pursuant to Subsection 5(d)(iii) below, deemed to be
issued) by the Corporation after the Original Issue Date of such series, other
than shares of Common Stock issued or issuable:
(I) upon conversion of shares of Class A Preferred
Stock;
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<PAGE> 9
(II) as a dividend or distribution on
Class A Preferred Stock;
(III) by reason of a dividend, stock
split, split-up or other
distribution on shares of Common
Stock;
(IV) upon the exercise of options
excluded from the definition of
"Option" in Subsection 5(d)(i)(A);
(V) in connection with the licensing or
acquisition by the Corporation of
technology or intellectual
property;
(VI) upon the exercise of options or
warrants with respect to up to
200,000 shares of Common Stock in
the aggregate issued or issuable in
exchange for options or warrants to
purchase shares of the common
stock, no par value per share, of
Protein Engineering Corporation
issued on or before the Original
Issue Date of the Class A Series 3
Preferred Stock; or
(VII) the conversion of certain demand
promissory notes of the Corporation
issued on or before the Original
Issue Date of the Class A Series 3
Preferred Stock which shares shall
not exceed 95,000 shares in the
aggregate.
(E) "Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock actually outstanding at such time,
plus the number of shares of Common Stock issuable at such time upon conversion
of the Class A Preferred Stock or other Convertible Securities then outstanding,
plus the number of shares of Common Stock issuable at any time upon the exercise
of all then outstanding options, warrants or other rights to purchase Common
Stock (whether or not excluded from the definition of the term "Option", in
Subsection 5(d)(i)(A)).
(ii) No Adjustment of Conversion Prices. No adjustment in the
number of shares of Common Stock into which the Class A Series 1 Preferred Stock
are convertible shall be made, by adjustment in the applicable Conversion Price
thereof or otherwise, if prior to such adjustment the Corporation receives
written notice from the holders of at least 50.1% of the outstanding shares of
Class A Series 1 Preferred Stock agreeing that no such adjustment shall be made.
No adjustment in the number of shares of Common Stock into which the Class A
Series 2 Preferred Stock are convertible shall be made, by adjustment in the
applicable Conversion Price thereof or otherwise, if prior to such adjustment
the Corporation receives written notice from the holders of at least 50.1% of
the outstanding shares of Class A Series 2 Preferred Stock agreeing that no such
adjustment shall be made. No adjustment in the number of shares of Common Stock
into which the Class A Series 3 Preferred Stock are convertible shall be made,
by adjustment in the applicable Conversion
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<PAGE> 10
Price or otherwise, if prior to such adjustment the Corporation receives written
notice from the holders of at least 50.1% of the outstanding shares of Class A
Series 3 Preferred Stock agreeing that no such adjustment shall be made. No
adjustment in the number of shares of Common Stock into which the Class A Series
4 Preferred Stock are convertible shall be made, by adjustment in the applicable
Conversion Price or otherwise, if prior to such adjustment the Corporation
receives written notice from the holders of at least 50.1% of the outstanding
shares of Class A Series 4 Preferred Stock agreeing that no such adjustment
shall be made. Notwithstanding the foregoing, no adjustment in the number of
shares of Common Stock into which the Class A Series 1 Preferred Stock, Class A
Series 2 Preferred Stock and the Class A Series 3 Preferred Stock are
convertible shall be made, by adjustment in the applicable Conversion Price
thereof or otherwise, if (i) such adjustment would be the same for all such
series of Class A Preferred Stock and (ii) prior to such adjustment, the
Corporation receives written notice from the holders of at least 50.1% of the
aggregate number of outstanding shares of all such series of Class A Preferred
Stock agreeing that no such adjustment shall be made. The Corporation shall
provide written notice of any such agreement with respect to the Class A
Preferred Stock or any series of the Class A Preferred Stock, as the case may
be, to all registered holders of such class or series. In addition, no
adjustment shall be made in the applicable Conversion Price as the result of the
issuance of Additional Shares of Common Stock or otherwise, unless the
consideration per share (determined pursuant to Subsection 5(d)(v)) for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the applicable Conversion Price in effect on the date
of, and immediately prior to, the issue of such Additional Shares of Common
Stock.
(iii) Issue of Options and Convertible Securities Deemed Issue
of Additional Shares of Common Stock. If the Corporation at any time or from
time to time after the Original Issue Date shall issue any Options or
Convertible Securities, then the maximum number of shares of Common Stock (as
set forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Subsection 5(d)(v) hereof) of such Additional Shares of
Common Stock would be less than the applicable Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, or decrease in the number of
shares of Common Stock issuable, upon the
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<PAGE> 11
exercise, conversion or exchange thereof, the Conversion Prices computed upon
the original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities;
(C) no recomputation pursuant to clause (B) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the applicable Conversion Price on the original
adjustment date, or (ii) the Conversion Price that would have resulted from any
issuance of Additional Shares of Common Stock between the original adjustment
date and such recomputation date; and
(D) upon the expiration or termination of any
unexercised Option, the Conversion Price shall be readjusted, and the Additional
Shares of Common Stock deemed issued as the result of the original issue of such
Option shall not be deemed issued for the purpose of such readjustment.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event the Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Subsection 5(d)(iii)), without consideration or
for a consideration per share (determined pursuant to Subsection 5(d)(v) hereof)
less than the applicable Conversion Price for any series of Class A Preferred
Stock in effect on the date of and immediately prior to such issue, then
forthwith upon such issue any such Conversion Price will be reduced to a
Conversion Price determined in accordance with the following formula:
New Conversion Price = P1Q1 + P2Q2
-----------
Ql + Q2
where:
Pl = Conversion Price in effect immediately prior to such issue;
Ql = Number of shares of Common Stock Deemed Outstanding (as
defined in Subsection 5(d)(i)(E)) immediately prior to such
issue;
P2 = Average price per share received by the Corporation upon such
issue; and
Q2 = Number of shares of Common Stock issued, or deemed to have
been issued, in the subject transaction;
provided that in computing each Conversion Price the result shall be rounded to
the nearest hundredth of a cent.
(v) Determination of Consideration. For purposes of this
Subsection 5(d), the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
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<PAGE> 12
(A) Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be
computed at the aggregate of cash received by the Corporation, excluding amounts
paid or payable for accrued interest or accrued dividends;
(II) insofar as it consists of property
other than cash, be computed at the fair market value thereof at the time of
such issue, as determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of
Common Stock are issued together with other shares or securities or other assets
of the Corporation for consideration which covers both, be the proportion of
such consideration so received, computed as provided in clauses (I) and (II)
above, as determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 5(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) Adjustment for Stock Splits, Stock Dividends, Subdivisions,
Combinations or Consolidation of Common Stock. In the event the outstanding
shares of Common Stock shall be split, subdivided, combined or consolidated, by
reclassification or otherwise, into a greater or lesser number of shares of
Common Stock, and in the event that the Corporation shall issue shares of Common
Stock by way of a stock dividend or other distribution to the holders of Common
Stock, the number of shares of Common Stock into which each issued and
outstanding share of each series of Class A Preferred Stock shall be convertible
immediately prior to such split, subdivision, stock dividend, combination or
consolidation shall, concurrently with the effectiveness of such split,
subdivision, stock dividend, combination or consolidation, be increased or
decreased proportionately.
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<PAGE> 13
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the applicable Conversion Price of shares of
Common Stock into which each issued and outstanding share of any series of Class
A Preferred Stock shall be convertible pursuant to this Section 5, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such series of Class A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of each series of Class A Preferred Stock,
furnish or cause to be furnished to such holder a similar certificate setting
forth (i) such adjustments and readjustments, (ii) the Conversion Price of
shares of Common Stock into which each issued and outstanding share of such
series of Class A Preferred Stock shall be convertible, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of any class or series of Class A
Preferred Stock of which such holder is the record owner.
(g) Merger or Sale of Assets. If at any time or from time to time there
shall be a merger or consolidation of the Corporation with or into another
corporation, or the sale of all or substantially all of the Corporation's assets
to any other person, then, as a part of such merger, consolidation or sale,
provision shall be made so that the holders of each series of Class A Preferred
Stock shall thereafter be entitled to receive upon conversion of such series of
Class A Preferred Stock the number of shares of stock or other securities or
property of the Corporation, or of the successor corporation resulting from such
merger, consolidation or sale, to which a holder of Common Stock issuable upon
conversion would have been entitled on such merger, consolidation, or sale.
(h) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Corporation into or with another corporation, or
of the sale of all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Class A Preferred Stock, and shall cause to
be mailed to the holders of the Class A Preferred Stock at their last addresses
as shown on the records of the
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<PAGE> 14
Corporation or such transfer agent, at least ten days prior to the record date
specified in (A) below or twenty days before the date specified in (B) below, a
notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding up.
6. Automatic Conversion.
(a) All outstanding shares of the Class A Preferred Stock shall be
deemed automatically converted into the number of shares of Common Stock into
which each issued and outstanding share of Class A Preferred Stock shall be
convertible pursuant to Section 5 of this Part 5 upon the closing of a fully
underwritten, firm commitment public offering pursuant to an effective
registration statement on Form S-1 or the then equivalent form covering the
offer and sale by the Corporation of its Common Stock under the Securities Act
of 1933, as amended ("Securities Act"), where the aggregate net proceeds to the
Corporation (after deduction of underwriting discounts and commissions) are not
less than $10,000,000 and the per share sales price of such securities equals or
exceeds (i) $8.00 per share (after giving effect to the 0.652-for-1 reverse
stock split, with such amount to be equitably adjusted upon the occurrence of
any stock split, stock dividend, combination, reclassification or other similar
event, if such automatic conversion occurs on or before August 31, 1998, and
(ii) $14.57 per share (after giving effect to the 0.652-for-1 reverse stock
split) on any date thereafter (an "Automatic Conversion Event")). On or after
the date of occurrence of an Automatic Conversion Event, the Corporation shall
promptly provide notice by mail, postage prepaid, of the occurrence of such
event to each holder of record of shares of the Class A Preferred Stock and
within 10 days after receipt of such notice, each holder of record of shares of
the Class A Preferred Stock shall surrender such holder's certificates
evidencing such shares at the principal office of the Corporation or at such
other place as the Corporation shall designate, and shall thereupon be entitled
to receive certificates evidencing the number of shares of Common Stock into
which such shares of the Class A Preferred Stock are converted and cash as
provided in subsection 5(b) in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion. On the date of the occurrence of
an Automatic Conversion Event, each holder of record of shares of the Class A
Preferred Stock shall be deemed to be the holder of record of the Common Stock
issuable upon such conversion, notwithstanding that the certificates
representing such shares of the Class A Preferred Stock shall not have been
surrendered at the office of the Corporation, that notice from the Corporation
shall not have been received by any holder of record of shares of the Class A
Preferred Stock, or that the certificates evidencing such shares of Common Stock
shall not then be actually delivered to such holder.
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<PAGE> 15
(b) All certificates evidencing shares of the Class A Preferred Stock
which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the date such certificates are so
required to be surrendered, be deemed to have been retired and canceled and the
shares of the Class A Preferred Stock represented thereby converted into Common
Stock for all purposes, notwithstanding the failure of the holder or holders
thereof to surrender such certificates on or prior to such date. The Corporation
may thereafter take such appropriate action as may be necessary to reduce the
authorized Class A Preferred Stock accordingly.
7. Restrictions and Limitations.
(a) Certain Required Approvals by Class A Preferred Stock. Except as
expressly provided herein or as required by law, so long as any shares of the
Class A Preferred Stock remain outstanding, the Corporation shall not, and shall
not permit any subsidiary (which shall mean any corporation or trust of which
the Corporation directly or indirectly owns at the time a majority of the
outstanding shares of such corporation or trust entitled to vote in the election
of directors) to, without the approval by vote or written consent by the holders
of at least 50.1% of the then outstanding shares of the Class A Preferred Stock,
each share of Class A Preferred Stock to be entitled to one vote in each
instance:
(i) Redeem, purchase or otherwise acquire for value any share
or shares of Class A Preferred Stock;
(ii) Authorize or issue, or obligate itself to authorize or
issue, any other equity security (or any debt security convertible into an
equity security) ranking on parity with or senior to the Class A Preferred Stock
as to dividends or liquidation preferences;
(iii) Increase or decrease (other than by conversion as
permitted hereby) the total number of authorized shares of Class A Preferred
Stock; or
(iv) Effect any sale, lease, assignment, transfer or other
conveyance of all or substantially all of the assets or capital stock of the
Corporation or any subsidiary thereof, or any consolidation or merger involving
the Corporation or any subsidiary thereof, or any reclassification or other
change of stock, or any recapitalization or any dissolution, liquidation or
winding up of the Corporation.
(b) Certain Amendments of Certificate of Incorporation Requiring
Approval by Class A Preferred Stock. The Corporation shall not amend its
Certificate of Incorporation without the approval, by vote or written consent,
by the holders of at least 50.1% of the then outstanding shares of Class A
Preferred Stock, each share of Class A Preferred Stock to be entitled to one
vote in each instance, if such amendment would adversely affect any of the
rights, preferences, privileges of or limitations provided for herein for the
benefit of any shares of Class A Preferred Stock. Without limiting the
generality of the next preceding sentence, the Corporation will not amend its
Certificate of Incorporation without the approval by the holders of at least
50.1% of the then outstanding shares of Class A Preferred Stock if such
amendment would:
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<PAGE> 16
(i) Change the dividend rights of the holders of Class A
Preferred Stock, or change the relative seniority of the dividend rights of the
holders of Class A Preferred Stock in relation to the holders of any other
capital stock of the Corporation;
(ii) Reduce the amount payable to the holders of Class A
Preferred Stock upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, or change the relative seniority of the
liquidation preferences of the holders of Class A Preferred Stock in relation to
the rights upon liquidation of the holders of any other capital stock of the
Corporation;
(iii) Change or modify the conversion rights of the holders of
Class A Preferred Stock provided for in Sections 5 and 6 of this Part 5;
(iv) Change or modify the rights, preferences, privileges or
limitations, if any, provided for herein relating to redemption of Class A
Preferred Stock; or
(v) Change any of the rights, preferences, privileges or
limitations provided for herein relating to the voting rights of the holders of
Class A Preferred Stock, other than the election of Class A directors by less
than all series of Class A Preferred Stock.
Notwithstanding the foregoing, the Corporation will not amend its
Certificate of Incorporation to change any of the rights, preferences,
privileges or limitations provided for herein relating to the election of the
Series 3 Director or Series 4 Director without the approval of the holders of at
least 50.1% of the then outstanding shares of the Class A Series 3 Preferred
Stock or Class A Series 4 Preferred Stock entitled to elect such director,
voting separately as a class.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The Board of Directors is expressly authorized to exercise all
powers granted to the directors by law except insofar as such powers are limited
or denied herein or in the by-laws of the Corporation. In furtherance of such
powers, the Board of Directors shall have the right to make, alter or repeal the
by-laws of the Corporation.
SEVENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the by-laws of the
Corporation. Elections of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
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<PAGE> 17
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as that
section may be amended and supplemented from time to time, indemnify any and all
persons whom it shall have power under that section to indemnify against any
expenses, liabilities or other matters referred to in or covered by that
section. The indemnification provided for herein shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
NINTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to authorize a further limitation or elimination of the liability of
directors or officers, then the liability of a director or officer of the
Corporation shall, in addition to the limitation on personal liability provided
herein, be limited or eliminated to the fullest extent permitted by the Delaware
General Corporation Law, as from time to time amended. No amendment to or repeal
of this Article Ninth shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior to
such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
accordance with the provisions and in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation."
Signed and attested this 23rd day of March, 1998.
/s/ Henry E. Blair
---------------------------
Henry E. Blair
President
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<PAGE> 1
EXHIBIT 3.2
FORM OF RESTATED
CERTIFICATE OF INCORPORATION
OF
DYAX CORP.
We, the undersigned, for the purpose of amending and restating the Amended
and Restated Certificate of Incorporation of Dyax Corp. (the "Corporation")
under the laws of the State of Delaware, hereby certify as follows:
A. The Corporation was incorporated under the name Biotage, Inc. pursuant
to an original Certificate of Incorporation filed with the Secretary of State of
the State of Delaware on May 26, 1989.
B. The amendments to and the restatement of the Amended and Restated
Certificate of Incorporation of the Corporation herein certified have been
approved by the Board of Directors of the Corporation and duly adopted by the
stockholders of the Corporation in accordance with the provisions of Sections
228, 242 and 245 of the General Corporation Law of the State of Delaware. Prompt
written notice of the adoption of the amendments herein certified has been given
to those stockholders who have not consented in writing thereto, as provided in
Section 228 of the General Corporation Law of the State of Delaware.
C. The Amended and Restated Certificate of Incorporation of the
Corporation, as previously amended and restated, is hereby restated and further
amended to read as follows:
FIRST: The name of the Corporation is DYAX CORP.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of Newcastle. The name
of its registered agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The Corporation shall be authorized to issue Thirty-One Million
(31,000,000) shares of capital stock, which shall be divided into Thirty Million
(30,000,000) shares of Common Stock, par value $0.01 per share, and One Million
(1,000,000) shares of Preferred Stock, par value $0.01 per share.
<PAGE> 2
The following is a statement of the designations, preferences, voting
powers, qualifications, special or relative rights and privileges in respect of
the authorized capital stock of the Corporation.
PREFERRED STOCK
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article FOURTH, to provide by resolution for the
issuance of the shares of Preferred Stock in one or more series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board with respect to each series shall include, but
shall not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;
(c) Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment of
the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that series.
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<PAGE> 3
COMMON STOCK
The Common Stock is subject to the rights and preferences of the Preferred
Stock as hereinbefore set forth or authorized.
Subject to the provisions of any applicable law or of the by-laws of the
Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided herein or by law or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall have exclusive voting rights for the
election of directors and for all other purposes, each holder of record of
shares of Common Stock being entitled to one vote for each share of Common Stock
standing in his name on the books of the Corporation.
Subject to the rights of any one or more series of Preferred Stock, the
holders of Common Stock shall be entitled to receive such dividends from time to
time as may be declared by the Board of Directors out of any funds of the
Corporation legally available for the payment of such dividends.
In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Preferred Stock of the full amount to which they are
entitled, the holders of Common Stock shall be entitled to share ratably
according to the number of shares of Common Stock held by them in all remaining
assets of the Corporation available for distribution to its stockholders.
ISSUANCE
Subject to the provisions of this Certificate of Incorporation and except
as otherwise provided by law, the shares of stock of the Corporation, regardless
of class, may be issued for such consideration and for such corporate purposes
as the Board of Directors may from time to time determine.
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation:
1. Any vote or votes authorizing liquidation of the Corporation or
proceedings for its dissolution may provide, subject to the rights of creditors
and the rights expressly provided for particular classes or series of stock, for
the distribution among the stockholders of the Corporation of the assets of the
Corporation as provided herein, wholly or in part or in kind, whether such
assets be in cash or other property, and may authorize the Board of Directors of
the Corporation to determine the valuation of the different assets of the
Corporation for the purpose of such liquidation and may divide or authorize the
Board of Directors to divide such assets or any part thereof among the
stockholders of the Corporation, in such manner that every stockholder will
receive a proportionate amount in value (determined as provided herein) of cash
or property of the Corporation upon such liquidation or dissolution even though
each stockholder may not receive a strictly proportionate part of each such
asset.
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<PAGE> 4
2. The directors shall be divided into three classes, as nearly equal in
number as the then total number of directors constituting the entire Board
permits, with the term of office of one class expiring each year. The initial
Class I directors elected by the stockholders of the Corporation shall hold
office for a term expiring at the 1999 annual meeting of stockholders; the
initial Class II directors elected by the stockholders of the Corporation shall
hold office for a term expiring at the 2000 annual meeting of stockholders; and
the initial Class III directors elected by the stockholders of the Corporation
shall hold office for a term expiring at the 2001 annual meeting of
stockholders. At each such annual meeting of stockholders and at each annual
meeting thereafter, successors to the class of directors whose term expires at
that meeting shall be elected for a term expiring at the third annual meeting
following their election and until their successors shall be elected and
qualified, subject to prior death, resignation, retirement or removal. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, but in no event will a decrease in the number of
directors shorten the term of any incumbent director. Notwithstanding the
foregoing, and except as otherwise required by law, whenever the holders of any
one or more series of Preferred Stock shall have the right, voting separately as
a class, to elect one or more directors of the Corporation, the election, terms
of office and other features of such directorships shall be governed by the
terms of the vote establishing such series, and such directors so elected shall
not be divided into classes pursuant to this Article FIFTH unless expressly
provided by such terms.
3. Each director chosen to fill a vacancy in the Board of Directors shall
be elected to complete the term of office of the director who is being
succeeded. In the case of any election of a new director to fill a directorship
created by an enlargement of the Board, the Board shall in such election assign
the class of directors to which such additional director is being elected, and
each director so elected shall hold office for the same term as the other
members of the class to which the director is assigned.
4. Except as otherwise determined by the Board of Directors in
establishing a series of Preferred Stock as to directors elected by holders of
such series, at any special meeting of the stockholders called at least in part
for the purpose, any director or directors may, by the affirmative vote of the
holders of at least a majority of the stock entitled to vote for the election of
directors, be removed from office for cause. The provisions of this subsection
shall be the exclusive method for the removal of directors.
5. Elections of directors need not be by ballot.
6. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the by-laws of the Corporation.
7. The Corporation shall, to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as amended from time to time,
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was, or has agreed to become, a director or officer of the Corporation, or
is or was serving, or has agreed to serve, at the request of the
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<PAGE> 5
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom.
Indemnification shall include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article, which undertaking shall be
accepted without reference to the financial ability of such person to make such
repayments.
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved or ratified by the Board
of Directors of the Corporation.
The indemnification rights provided in this Article (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article.
Any person seeking indemnification under this Article shall be deemed to
have met the standard of conduct required for such indemnification unless the
contrary shall be established.
Any amendment or repeal of the provisions of this Article shall not
adversely affect any right or protection of a director or officer of this
Corporation with respect to any act or omission of such director or officer
occurring before such amendment or repeal.
8. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article FIFTH to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended
from time to time.
Any repeal or modification of this Article FIFTH shall not increase the
personal liability of any director of this Corporation for any act or occurrence
taking place before
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<PAGE> 6
such repeal or modification, nor otherwise adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
9. Meetings of stockholders may be held anywhere within or without the
State of Delaware. The books of the Corporation may be kept outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation.
SIXTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of ss.291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provision of ss.279 of Title 8 of the Delaware Code, order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation, as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
SEVENTH: No action required to be taken or that may be taken at any annual
or special meeting of stockholders of the Corporation may be taken by written
consent without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
This Article Seventh may not be amended, revised or revoked, in whole or
in part, except by the affirmative vote of the holders of 66 2/3% of the shares
of all classes of stock of the Corporation entitled to vote for the election of
directors, considered for the purposes of this Article Seventh as one class of
stock.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Amended and Restated Certificate of
Incorporation in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders are granted subject to this reservation.
NINTH: 1. Except as set forth in Section 2 of this Article Ninth, the
affirmative vote of the holders of 66 2/3% of the shares of all classes of stock
of the Corporation entitled to vote for the election of directors, considered
for the purposes of this Article Ninth as one class, shall be required:
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<PAGE> 7
(a) for the adoption of any agreement for the merger or consolidation of
the Corporation or any Subsidiary (as hereinafter defined) with or into
any Other Corporation (as hereinafter defined);
(b) to authorize any sale, lease, exchange, mortgage, pledge or other
disposition of all or substantially all of the assets of the Corporation
or any Subsidiary to any Other Corporation;
(c) to authorize the issuance or transfer by the Corporation of any
Substantial Amount (as hereinafter defined) of securities of the
Corporation in exchange for the securities or assets of any Other
Corporation; or
(d) to engage in any other transaction the effect of which is to combine
the assets and business of the Corporation or any Subsidiary with any
Other Corporation.
Such affirmative vote shall be in addition to the vote of the holders of the
stock of the Corporation otherwise required by law, elsewhere in this Restated
Certificate of Incorporation or any agreement or contract to which the
Corporation is a party.
2. The provisions of Section 1 of this Article Ninth shall not be
applicable to any transaction described therein if such transaction is approved
by a resolution of the Board of Directors of the Corporation, provided that the
directors voting in favor of such resolution include a majority of the
Independent Board Members (as defined below). In considering such transaction,
the Board of Directors shall give due consideration to all relevant factors,
including without limitation the social and economic effects on the employees,
customers, suppliers and other constituents of the Corporation and it
Subsidiaries and on the communities in which the Corporation and its
Subsidiaries operate or are located.
3. The Board of Directors of the Corporation shall have the power and duty
to determine for the purposes of this Article Ninth, on the basis of information
known to such Board, if and when any person, firm, corporation or other entity,
other than a Subsidiary of the Corporation, is an Other Corporation (as defined
below). In determining whether a person, firm, corporation or other entity is an
Other Corporation, such person, firm, corporation or other entity shall be
deemed to be the "Beneficial Owner" of shares of stock of the Corporation
entitled to vote in the election of directors if he, she or it or any
"affiliate" or "associate" of such person, firm, corporation or other entity (as
those terms are defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended from time to time), directly or indirectly, controls the
voting of such stock or has any options, warrants, conversion or other rights to
acquire such stock. Any such determination, if made in good faith, shall be
conclusive and binding for all purposes under this Article Ninth, until the
ownership interest of such person, firm, corporation or other entity increases.
4. As used in this Article Ninth, the following terms shall have the
meanings indicated:
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<PAGE> 8
"Independent Board Members" shall be those persons then in office
(but not less than 1) who were duly elected and acting members of the Board of
Directors as of the last election of directors prior to the date on which the
Other Corporation involved in the proposed transaction first became an Other
Corporation, as determined by the Board of Directors in accordance with Section
3 above.
"Other Corporation" means any person, firm, corporation or other
entity, other than a Subsidiary of the Corporation, which is the Beneficial
Owner of 5% or more of the shares of stock of the Corporation entitled to vote
in the election of directors, as determined in accordance with Section 3 above.
"Subsidiary" means any corporation in which the Corporation owns,
directly or indirectly, more than 50% of the voting securities.
"Substantial Amount" means any securities of the Corporation having
a then fair market value of more than $500,000.
5. The Corporation elects, pursuant to paragraph (b)(3) of Section 203 of
the Delaware General Corporation Law (as such Section may be amended from time
to time), not to be governed by such Section 203.
6. This Article Ninth may not be amended, revised or revoked, in whole or
in part, except by the affirmative vote of the holders of 66 2/3% of the shares
of all classes of stock of the Corporation entitled to vote for the election of
directors, considered for the purposes of this Article Ninth as one class of
stock.
Signed and attested this __ day of ____________, 1998.
-----------------------------
Henry E. Blair, President
Attest:
- ---------------------------
Nathaniel S. Gardiner, Secretary
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<PAGE> 1
EXHIBIT 3.3
BY-LAWS (AS AMENDED 10/31/95)
BY-LAWS
OF
DYAX CORP.
----------
ARTICLE I
STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be
held at such place within or without the State of Delaware as may be designated
from time to time by the Board of Directors or, if not so designated, at the
principal office of the corporation.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and the transaction of such other business as may properly
come before the meeting shall be held at 10 a.m. on the first Friday in May of
each year or on such other date or at such hour as may be specified by
resolution of the Board of Directors. If the date of the annual meeting shall
fall upon a legal holiday at the place of the meeting, the meeting shall be held
at the same hour on the next succeeding business day. If the annual meeting is
not held on the date designated therefor, the directors shall cause the meeting
to be held as soon thereafter as convenient.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may
be called at any time by the President, the Chairman of the Board, if any, or
the Board of Directors, or by the Secretary or any other officer upon the
written request of one or more stockholders holding of record at least a
majority of the outstanding shares of stock of the corporation entitled to vote
at such meeting or at least a majority of the outstanding shares of any series
of the Company's Preferred Stock. Such written request shall state the purpose
or purposes of the proposed meeting. Business transacted at any special meeting
of stockholders shall be limited to matters relating to the purpose or purposes
stated in the notice of meeting.
SECTION 4. NOTICE OF MEETINGS. Except where some other notice is
required by law, written notice of each meeting of stockholders, stating the
place, date and hour thereof and the purposes for which the meeting is called,
shall be given by or under the direction of the Secretary, not less than ten nor
more than sixty days before the date fixed for such meeting, to each stockholder
entitled to vote at such meeting of record at the close of business on the day
fixed by the Board of Directors as a record date for the determination of
<PAGE> 2
the stockholders entitled to vote at such meeting or, if no such date has been
fixed, of record at the close of business on the day before the day on which
notice is given. Notice shall be given personally to each stockholder or left at
his or her residence or usual place of business or mailed postage prepaid and
addressed to the stockholder at his or her address as it appears upon the
records of the corporation. In case of the death, absence, incapacity or refusal
of the Secretary, such notice may be given by a person designated either by the
Secretary or by the person or persons calling the meeting or by the Board of
Directors. A waiver of such notice in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to such notice. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice. Except as required by statute, notice
of any adjourned meeting of the stockholders shall not be required.
SECTION 5. VOTING LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.
SECTION 6. QUORUM OF STOCKHOLDERS. At any meeting of the stockholders,
the holders of a majority in interest of all stock issued and outstanding and
entitled to vote upon a question to be considered at the meeting, present in
person or represented by proxy, shall constitute a quorum for the consideration
of such question, but a smaller group may adjourn any meeting from time to time.
When a quorum is present at any meeting, a majority of the stock represented
thereat and entitled to vote shall, except where a larger or other vote is
required by law, by the certificate of incorporation, or by these by-laws,
decide any question brought before such meeting. Any election by stockholders
shall be determined by a plurality of the vote cast by the stockholders entitled
to vote at the election.
SECTION 7. PROXIES AND VOTING. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock held of record by such stockholder, but no proxy shall be voted or
acted upon after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to
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<PAGE> 3
vote, unless in the transfer by the pledgor on the books of the corporation the
pledgee shall have been expressly empowered to vote thereon, in which case only
the pledgee or the pledgee's proxy may represent said stock and vote thereon.
Shares of the capital stock of the corporation belonging to the corporation or
to another corporation, a majority of whose shares entitled to vote in the
election of directors is owned by the corporation, shall neither be entitled to
vote nor be counted for quorum purposes.
SECTION 8. CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, a chairman to be chosen by the stockholders.
The Secretary of the corporation, if present, or an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman of the meeting shall appoint a secretary of
the meeting.
SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any annual or special meeting of stockholders of the corporation may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, is signed by the holders
or by proxy for the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote on such action were present
and voted. Prompt notice of the taking of corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of a Board of Directors, who may
exercise all of the powers of the corporation which are not by law required to
be exercised by the stockholders. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided by law, may
exercise the powers of the full Board until the vacancy is filled.
SECTION 2. NUMBER; ELECTION; TENURE AND QUALIFICATION. The initial
Board of Directors shall consist of two persons and shall be elected by the
incorporator. Thereafter, the number of directors which shall constitute the
whole Board shall be fixed by resolution of the Board of Directors, but in no
event shall be less than the number of directors provided in the certificate of
incorporation. Each director shall be elected by the stockholders at the annual
meeting and all directors shall hold office until the next annual meeting and
until their successors are elected and qualified, or until their earlier death,
resignation or removal. Except as may otherwise be provided in the certificate
of
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incorporation, the number of directors may be increased or decreased by action
of the Board of Directors. Directors need not be stockholders of the
corporation.
SECTION 3. ENLARGEMENT OF THE BOARD. The number of the Board of
Directors may be increased at any time, such increase to be effective
immediately, by vote of a majority of the directors then in office.
SECTION 4. VACANCIES. Except as may otherwise be provided in the
certificate of incorporation, unless and until filled by the stockholders, any
vacancy in the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board and an unfilled vacancy resulting
from the removal of any director for cause or without cause, may be filled by
vote of a majority of the directors then in office although less than a quorum,
or by the sole remaining director. A director elected to fill a vacancy shall
hold office until the next annual meeting of stockholders and until his or her
successor is elected and qualified or until his or her earlier death,
resignation, or removal. Except as may otherwise be provided in the certificate
of incorporation, when one or more directors shall resign from the Board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. If at any time there are no directors in
office, then an election of directors may be held in accordance with the General
Corporation Law of the State of Delaware.
SECTION 5. RESIGNATION. Any director may resign at any time upon
written notice to the corporation. Such resignation shall take effect at the
time specified therein, or if no time is specified, at the time of its receipt
by the President or Secretary.
SECTION 6. REMOVAL. Except as may otherwise be provided by the General
Corporation Law or the certificate of incorporation, any director or the entire
Board of Directors may be removed, with or without cause, at an annual meeting
or at a special meeting called for that purpose, by the holders of a majority of
the shares then entitled to vote at an election of directors. The vacancy or
vacancies thus created may be filled by the stockholders at the meeting held for
the purpose of removal or, if not so filled, by the directors in the manner
provided in Section 4 of this Article II.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
any member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of such absent or
disqualified member.
A majority of all the members of any such committee may fix its rules
of procedure, determine its action and fix the time and place, whether within or
without the State of
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Delaware, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board of Directors shall otherwise by resolution provide. The
Board of Directors shall have the power to change the members of any such
committee at any time, to fill vacancies therein and to discharge any such
committee, either with or without cause, at any time.
Any such committee, unless otherwise provided in the resolution of the
Board of Directors, or in these by-laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority denied it by Section 141 of the General Corporation Law
of the State of Delaware.
Each committee shall keep regular minutes of its meetings and make such
reports as the Board of Directors may from time to time request.
SECTION 8. MEETINGS OF THE BOARD OF DIRECTORS. Regular meetings of the
Board of Directors may be held without call or formal notice at such places
either within or without the State of Delaware and at such times as the Board
may by vote from time to time determine. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders, or any special meeting of
the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board of Directors, the President, Treasurer, Secretary, or any
director. Reasonable notice of the time and place of a special meeting shall be
given to each director unless such notice is waived by attendance or by written
waiver in the manner provided in these by-laws for waiver of notice by
stockholders. Notice may be given by, or by a person designated by, the
Secretary, the person or persons calling the meeting, or the Board of Directors.
No notice of any adjourned meeting of the Board of Directors shall be required.
In any case it shall be deemed sufficient notice to a director to send notice
(i) by mail at least three days before the meeting, (ii) by facsimile telecopier
with facsimile confirmation of transmission to the director, at least
forty-eight hours before the meeting, or (iii) by such other means or upon such
shorter notice as may hereafter expressly be provided by amendment to the
General Corporation Law of the State of Delaware, in each case addressed to such
director at his or her usual or last known business or home address.
Directors or members of any committee designated by the directors may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting.
SECTION 9. QUORUM AND VOTING. A majority of the total number of
directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present,
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whether or not a quorum is present, may adjourn any meeting from time to time.
The vote of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors, except where a different
vote is required or permitted by law, by the certificate of incorporation, or by
these by-laws.
SECTION 10. COMPENSATION. The Board of Directors may fix fees for their
services and for their membership on committees, and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, and without notice, if a written consent thereto
is signed by all members of the Board of Directors, or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE III
OFFICERS
SECTION 1. TITLES. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer, and such other officers with such other
titles as the Board of Directors shall determine, including without limitation a
Chairman of the Board, a Vice-Chairman of the Board, and one or more
Vice-Presidents, Assistant Treasurers, or Assistant Secretaries.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of the stockholders. Each officer shall hold office
until his or her successor is elected and qualified, unless a different term is
specified in the vote electing such officer, or until his or her earlier death,
resignation or removal.
SECTION 3. QUALIFICATION. Unless otherwise provided by resolution of
the Board of Directors, no officer, other than the Chairman or Vice-Chairman of
the Board, need be a director. No officer need be a stockholder. Any number of
offices may be held by the same person, as the directors shall determine.
SECTION 4. REMOVAL. Any officer may be removed, with or without cause,
at any time, by resolution adopted by the Board of Directors.
SECTION 5. RESIGNATION. Any officer may resign by delivering a written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt or at such later
time as may be specified therein.
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SECTION 6. VACANCIES. The Board of Directors may at any time fill any
vacancy occurring in any office for the unexpired portion of the term and may
leave unfilled for such period as it may determine any office other than those
of President, Treasurer and Secretary.
SECTION 7. POWERS AND DUTIES. The officers of the corporation shall
have such powers and perform such duties as are specified herein and as may be
conferred upon or assigned to them by the Board of Directors, and shall have
such additional powers and duties as are incident to their office except to the
extent that resolutions of the Board of Directors are inconsistent therewith.
SECTION 8. PRESIDENT AND VICE-PRESIDENTS. The President shall be the
chief executive officer of the corporation, shall preside at all meetings of the
stockholders and the Board of Directors unless a Chairman or Vice-Chairman of
the Board is elected by the Board, empowered to preside, and present at such
meeting, shall have general and active management of the business of the
corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
In the absence of the President or in the event of his or her inability or
refusal to act, the Vice-President if any (or in the event there be more than
one Vice-President, the Vice-Presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Board of Directors may assign to any Vice-President the title of
Executive Vice-President, Senior Vice-President or any other title selected by
the Board of Directors.
SECTION 9. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
attend all meetings of the Board of Directors and of the stockholders and record
all the proceedings of such meetings in a book to be kept for that purpose,
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, shall maintain a stock ledger and
prepare lists of stockholders and their addresses as required and shall have
custody of the corporate seal which the Secretary or any Assistant Secretary
shall have authority to affix to any instrument requiring it and attest by any
of their signatures. The Board of Directors may give general authority to any
other officer to affix and attest the seal of the corporation.
The Assistant Secretary if any (or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors of if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of the Secretary's inability or refusal to act,
perform the duties and exercise the powers of the Secretary.
SECTION 10. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such
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depositories as may be designated by the Board of Directors. The Treasurer shall
disburse the funds of the corporation as may be ordered by the Board of
Directors or the President, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors, at its regular
meetings, or whenever they may require it, an account of all transactions and of
the financial condition of the corporation.
The Assistant Treasurer if any (or if there be more than one, the Assistant
Treasurers in the order determined by the Board of Directors or if there be no
such determination, then in the order of their election) shall, in the absence
of the Treasurer or in the event of his or her inability or refusal to act,
perform the duties and exercise the powers of the Treasurer.
SECTION 11. BONDED OFFICERS. The Board of Directors may require any
officer to give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors upon such terms and
conditions as the Board of Directors may specify, including without limitation a
bond for the faithful performance of the duties of such officer and for the
restoration to the corporation of all property in his or her possession or
control belonging to the corporation.
SECTION 12. SALARIES. Officers of the corporation shall be entitled to
such salaries, compensation or reimbursement as shall be fixed or allowed from
time to time by the Board of Directors.
ARTICLE IV
STOCK
SECTION 1. CERTIFICATES OF STOCK. One or more certificates of stock,
signed by the Chairman or Vice-Chairman of the Board of Directors or by the
President or Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying, in the aggregate, the number of shares owned by the stockholder in
the corporation. Any or all signatures on any such certificate may be
facsimiles. In case any officer, transfer agent or registrar who shall have
signed or whose facsimile signature shall have been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
Each certificate for shares of stock which are subject to any restriction
on transfer pursuant to the certificate of incorporation, the by-laws,
applicable securities laws, or any agreement among any number of shareholders or
among such holders and the corporation shall have conspicuously noted on the
face or back of the certificate either the full text of the restriction or a
statement of the existence of such restriction.
SECTION 2. TRANSFERS OF SHARES OF STOCK. Subject to the restrictions,
if any, stated or noted on the stock certificates, shares of stock may be
transferred on the books of the corporation by the surrender to the corporation
or its transfer agent of the certificate
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representing such shares properly endorsed or accompanied by a written
assignment or power of attorney properly executed, and with such proof of
authority or the authenticity of signature as the corporation or its transfer
agent may reasonably require. The corporation shall be entitled to treat the
record holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to that stock, regardless of any transfer, pledge or other disposition of that
stock, until the shares have been transferred on the books of the corporation in
accordance with the requirements of these by-laws.
SECTION 3. LOST CERTIFICATES. A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation and
alleged to have been lost, stolen, destroyed, or mutilated, upon such terms in
conformity with law as the Board of Directors shall prescribe. The directors
may, in their discretion, require the owner of the lost, stolen, destroyed or
mutilated certificate, or the owner's legal representatives, to give the
corporation a bond, in such sum as they may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss,
theft, destruction or mutilation of any such certificate, or the issuance of any
such new certificate.
SECTION 4. RECORD DATE. The Board of Directors may fix in advance a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders or to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action. Such record date shall not be more than 60
nor less than 10 days before the date of such meeting, nor more than 60 days
prior to any other action to which such record date relates.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. Unless otherwise fixed by the Board of
Directors, the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be the day on which the first
written consent is expressed. The record date for determining stockholders for
any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. FRACTIONAL SHARE INTERESTS. The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered or bearer
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form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
SECTION 6. DIVIDENDS. Subject to the provisions of the certificate of
incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the common
stock of the corporation as and when they deem expedient.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. INDEMNIFICATION. The corporation shall, to the full extent
permitted by the General Corporation Law of the State of Delaware, as amended
from time to time, and the certificate of incorporation, indemnify each person
whom it may indemnify pursuant thereto.
SECTION 2. INSURANCE. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
provisions of the General Corporation Law of the State of Delaware.
SECTION 3. ADVANCEMENT OF EXPENSES. Expenses (including attorneys'
fees) incurred by a person entitled to indemnification pursuant to the General
Corporation Law of the State of Delaware and these by-laws, as each may be
amended from time to time, in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in these by-laws.
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ARTICLE VI
GENERAL PROVISIONS
SECTION 1. FISCAL YEAR. Except as otherwise designated from time to
time by the Board of Directors, the fiscal year of the corporation shall begin
on the first day of January and end on the last day of December.
SECTION 2. CORPORATE SEAL. The corporate seal shall be in such form as
shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal. The Board of Directors may authorize a duplicate seal to
be kept and used by any other officer.
SECTION 3. CERTIFICATE OF INCORPORATION. All references in these
by-laws to the certificate of incorporation shall be deemed to refer to the
certificate of incorporation of the corporation, as in effect from time to time.
SECTION 4. EXECUTION OF INSTRUMENTS. The Chairman and Vice-Chairman of
the Board of Directors, if any, the President, any Vice President, and the
Treasurer shall have power to execute and deliver on behalf and in the name of
the corporation any instrument requiring the signature of an officer of the
corporation, including deeds, contracts, mortgages, bonds, notes, debentures,
checks, drafts, and other orders for the payment of money. In addition, the
Board of Directors may expressly delegate such powers to any other officer or
agent of the corporation.
SECTION 5. VOTING OF SECURITIES. Except as the directors may otherwise
designate, the President or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of substitution) at any meeting of
stockholders or shareholders of any other corporation or organization the
securities of which may be held by this corporation.
SECTION 6. EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an
Assistant Secretary, or a temporary secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall, as to all persons who rely on the certificate in good faith,
be conclusive evidence of that action.
SECTION 7. TRANSACTIONS WITH INTERESTED PARTIES. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for that reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the
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Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or
(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SECTION 8. BOOKS AND RECORDS. The books and records of the corporation
shall be kept at such places within or without the State of Delaware as the
Board of Directors may from time to time determine.
SECTION 9. BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS. The
corporation elects, pursuant to paragraph (b)(3) of Section 203 of the Delaware
General Corporation Law (as such Section may be amended from time to time), not
to be governed by such Section 203. This Section 9 shall not be subject to any
amendment adopted by the Board of Directors.
ARTICLE VII
AMENDMENTS
SECTION 1. BY THE BOARD OF DIRECTORS. These by-laws may be altered,
amended or repealed or new by-laws may be adopted by the affirmative vote of a
majority of the directors present at any regular or special meeting of the Board
of Directors at which a quorum is present.
SECTION 2. BY THE STOCKHOLDERS. These by-laws may be altered, amended
or repealed or new by-laws may be adopted by the affirmative vote of the holders
of a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting.
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EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
DYAX CORP.
Adopted by the Stockholders on March __, 1998
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the corporation or at such other place as may be
named in the notice.
SECTION 2. Annual Meeting. The annual meeting of stockholders for
the election of directors and the transaction of such other business as may
properly come before the meeting shall be held on such date and at such hour and
place as the directors or an officer designated by the directors may determine.
If the annual meeting is not held on the date designated therefor, the directors
shall cause the meeting to be held as soon thereafter as convenient.
SECTION 3. Special Meetings. Special meetings of the stockholders
may be called at any time by the President, the Chairman of the Board, if any,
or the Board of Directors.
SECTION 4. Notice of Meetings. Except where some other notice is
required by law, written notice of each meeting of stockholders, stating the
place, date and hour thereof and the purposes for which the meeting is called,
shall be given by the Secretary under the direction of the Board of Directors,
the President or the Chairman of the Board, if any, not less than ten nor more
than sixty days before the date fixed for such meeting, to each stockholder of
record entitled to vote at such meeting. Notice shall be given personally to
each stockholder or left at his or her residence or usual place of business or
mailed postage prepaid and addressed to the stockholder at his or her address as
it appears upon the records of the corporation. In case of the death, absence,
incapacity or refusal of the Secretary, such notice may be given by a person
designated either by the Secretary or by the person or persons calling the
meeting or by the Board of Directors. A waiver of such notice in writing, signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent to such notice. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice. Except as
required by statute, notice of any adjourned meeting of the stockholders shall
not be required.
<PAGE> 2
SECTION 5. Record Date. The Board of Directors may fix in advance a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action. Such record date shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days before any other action to which such record date relates. If no
record date is fixed, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day before the day on which notice is given, or, if notice is
waived, at the close of business on the day before the day on which the meeting
is held, and the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating to such purpose. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 6. Nomination of Directors. Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors at any annual or special meeting of stockholders. Nominations of
persons for election as directors may be made only by or at the direction of the
Board of Directors, or by any stockholder entitled to vote for the election of
directors at the meeting in compliance with the notice procedures set forth in
this Section 6. Such nominations, other than those made by or at the direction
of the Board, shall be made pursuant to timely notice in writing to the Chairman
of the Board, if any, the President or the Secretary. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation not less than 45 days nor more
than 60 days before the meeting; provided, however, that if less than 60 days'
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 15th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the corporation that are beneficially owned by the
person and (iv) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as
to the stockholder giving the notice, (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation that are beneficially owned by such stockholder.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
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SECTION 7. Advance Notice of Business at Annual Meetings. At any
annual meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be brought properly
before an annual meeting, business must be either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the
President or the Board of Directors, (b) otherwise properly brought before the
meeting by or at the direction of the Board, or (c) properly brought before the
meeting by a stockholder. In addition to any other applicable requirements, for
business to be brought properly before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Chairman of
the Board, if any, the President or the Secretary. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 45 days nor more than 60 days before
the meeting; provided, however, that if less than 60 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 15th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice shall set forth as to each matter the stockholder proposes
to bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of the
corporation that are beneficially owned by the stockholder and (iv) any material
interest of the stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 7, provided, however, that nothing in this
Section 7 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 8. Voting List. The officer who has charge of the stock
ledger of the corporation shall make or have made, at least ten days before
every meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days before the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.
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SECTION 9. Quorum of Stockholders. At any meeting of the
stockholders, the holders of a majority in interest of all stock issued and
outstanding and entitled to vote upon a question to be considered at the
meeting, present in person or represented by proxy, shall constitute a quorum
for the consideration of such question, but in the absence of a quorum a smaller
group may adjourn any meeting from time to time. When a quorum is present at any
meeting, a majority of the stock represented thereat and entitled to vote shall,
except where a larger vote is required by law, by the certificate of
incorporation or by these by-laws, decide any question brought before such
meeting. Any election by stockholders shall be determined by a plurality of the
vote cast by the stockholders entitled to vote at the election.
SECTION 10. Proxies and Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock held of record by such stockholder, but no proxy shall be voted or
acted upon after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote unless in the transfer by the pledgor on the books of the corporation
the pledgee shall have been expressly empowered to vote thereon, in which case
only the pledgee or the pledgee's proxy may represent said stock and vote
thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall neither be
entitled to vote nor be counted for quorum purposes.
SECTION 11. Conduct of Meeting. Meetings of the stockholders shall
be presided over by one of the following officers in the order of seniority and
if present and acting: the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President, a Vice President, or, if none of the foregoing
is in office and present and acting, a chairman to be chosen by the
stockholders. The Secretary of the corporation, if present, or an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the chairman of the meeting shall appoint
a secretary of the meeting.
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ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of a Board of Directors,
who may exercise all of the powers of the corporation that are not by law
required to be exercised by the stockholders. In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.
SECTION 2. Number; Election; Tenure and Qualification. Subject to
any restrictions contained in the Certificate of Incorporation, the number of
directors that shall constitute the whole Board shall be fixed by resolution of
the Board of Directors but in no event shall be less than one. The directors
shall be elected in the manner provided in the Certificate of Incorporation, by
such stockholders as have the right to vote thereon. The number of directors may
be increased or decreased by action of the Board of Directors. Directors need
not be stockholders of the corporation.
SECTION 3. Enlargement of the Board. Subject to any restrictions
contained in the Certificate of Incorporation, the number of the Board of
Directors may be increased at any time, such increase to be effective
immediately unless otherwise specified in the resolution, by vote of a majority
of the directors then in office.
SECTION 4. Vacancies. Unless and until filled by the stockholders
and except as otherwise determined by the Board of Directors in establishing a
series of Preferred Stock as to directors elected by the holders of such series,
any vacancy in the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board and an unfilled vacancy resulting
from the removal of any director, may be filled by vote of a majority of the
directors then in office although less than a quorum, or by the sole remaining
director. Each director so chosen to fill a vacancy shall serve for a term
determined in the manner provided in the Certificate of Incorporation. When one
or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have the power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective. If at any
time there are no directors in office, then an election of directors may be held
in accordance with the General Corporation Law of the State of Delaware.
SECTION 5. Resignation. Any director may resign at any time upon
written notice to the corporation. Such resignation shall take effect at the
time specified therein, or if no time is specified, at the time of its receipt
by the President or Secretary.
SECTION 6. Removal. Directors may be removed from office only as
provided in the Certificate of Incorporation. The vacancy or vacancies created
by the removal of a director may be filled by the stockholders at the meeting
held for the purpose of removal or, if not so filled, by the directors in the
manner provided in Section 4 of this Article II.
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SECTION 7. Committees. The Board of Directors may designate one or
more committees, each committee to consist of one or more directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee to replace any absent or disqualified member
at any meeting of the committee. In the absence or disqualification of any
member of any such committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member. The Board of Directors shall have the power to change the members of any
such committee at any time, to fill vacancies therein and to discharge any such
committee, either with or without cause, at any time.
Any such committee, unless otherwise provided in the resolution of the
Board of Directors, or in these by-laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation in accordance with Section 141(c)(2) of the
General Corporation Law of the State of Delaware and may authorize the seal of
the corporation to be affixed to all papers that may require it; but no such
committee shall have the power or authority denied it by such Section 141.
A majority of all the members of any such committee may fix its rules of
procedure, determine its action and fix the time and place, whether within or
without the State of Delaware, of its meetings and specify what notice thereof,
if any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. Each committee shall keep regular minutes of its meetings
and make such reports as the Board of Directors may from time to time request.
SECTION 8. Meetings of the Board of Directors. Regular meetings of
the Board of Directors may be held without call or formal notice at such places
either within or without the State of Delaware and at such times as the Board
may by vote from time to time determine. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders, or any special meeting of
the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place either
within or without the State of Delaware at any time when called by the Chairman
of the Board of Directors, the President, Treasurer, Secretary, or two or more
directors. Reasonable notice of the time and place of a special meeting shall be
given to each director unless such notice is waived by attendance or by written
waiver in the manner provided in these by-laws for waiver of notice by
stockholders. Notice may be given by, or by a person designated by, the
Secretary, the person or persons calling the meeting, or the Board of Directors.
No notice of any adjourned meeting of the Board of Directors shall be required.
In any case it shall be deemed sufficient notice to a director to send notice by
mail at least seventy-two hours, or by electronic mail or telephonic facsimile
transmission at least forty-eight hours, before the meeting, addressed to such
director at his or her usual or last known business or home address.
Directors or members of any committee may participate in a meeting of the
Board of Directors or of such committee by means of conference telephone or
similar communications
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equipment by means of which all persons participating in the meeting can hear
each other, and participation by such means shall constitute presence in person
at such meeting.
SECTION 9. Quorum and Voting. A majority of the total number of
directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting from time to time. The vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except where a different vote is required or permitted by
law, by the Certificate of Incorporation or by these by-laws.
SECTION 10. Compensation. The Board of Directors may fix fees for
their services and for their membership on committees, and expenses of
attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity, as an officer, agent or otherwise, and
receiving compensation therefor.
SECTION 11. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting and without notice if a written consent thereto
is signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or of such committee.
ARTICLE III
OFFICERS
SECTION 1. Titles. The officers of the corporation shall consist of
a President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, who may include without
limitation a Chairman of the Board, a Vice Chairman of the Board and one or more
Vice Presidents, Assistant Treasurers or Assistant Secretaries.
SECTION 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of the stockholders. Each officer shall
hold office until his or her successor is elected and qualified, unless a
different term is specified in the vote electing such officer, or until his or
her earlier death, resignation or removal.
SECTION 3. Qualification. Unless otherwise provided by resolution of
the Board of Directors, no officer, other than the Chairman or Vice Chairman of
the Board, need be a director. No officer need be a stockholder. Any number of
offices may be held by the same person, as the directors shall determine.
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SECTION 4. Removal. Any officer may be removed, with or without
cause, at any time, by resolution adopted by the Board of Directors.
SECTION 5. Resignation. Any officer may resign by delivering a
written resignation to the corporation at its principal office or to the
Chairman of the Board, if any, the President, or the Secretary. Such resignation
shall be effective upon receipt or at such later time as may be specified
therein.
SECTION 6. Vacancies. The Board of Directors may at any time fill
any vacancy occurring in any office for the unexpired portion of the term and
may leave unfilled for such period as it may determine any office other than
those of President, Treasurer and Secretary.
SECTION 7. Powers and Duties. The officers of the corporation shall
have such powers and perform such duties as are specified herein and as may be
conferred upon or assigned to them by the Board of Directors and shall have such
additional powers and duties as are incident to their office except to the
extent that resolutions of the Board of Directors are inconsistent therewith.
SECTION 8. President and Vice Presidents. Except to the extent that
such duties are assigned by the Board of Directors to the Chairman of the Board,
or in the absence of the Chairman of the Board or in the event of his or her
inability or refusal to act, the President shall be the chief executive officer
of the corporation and shall have general and active management of the business
of the corporation and general supervision of its officers, agents and
employees, and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall preside at each meeting
of the stockholders and the Board of Directors unless a Chairman or Vice
Chairman of the Board is elected by the Board and is present at such meeting.
The Board of Directors may assign to any Vice President the title of
Executive Vice President, Senior Vice President or any other title selected by
the Board of Directors. In the absence of the President or in the event of his
or her inability or refusal to act, the duties of the President shall be
performed by the Executive Vice President, if any, Senior Vice President, if
any, or Vice President, if any, in that order (and, in the event there be more
than one person in any such office, in the order of their election), and when so
acting, such officer shall have all the powers of and be subject to all the
restrictions upon the President.
SECTION 9. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board of Directors and of the stockholders and record
all the proceedings of such meetings in a book to be kept for that purpose,
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, shall maintain a stock ledger and
prepare lists of stockholders and their addresses as required and shall have
custody of the corporate seal, which the Secretary or any Assistant Secretary
shall have authority to affix to any instrument requiring it and attest by any
of their signatures. The Board of Directors may give general authority to any
other officer to affix and attest the seal of the corporation.
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Any Assistant Secretary may, in the absence of the Secretary or in the
event of the Secretary's inability or refusal to act, perform the duties and
exercise the powers of the Secretary.
SECTION 10. Treasurer and Assistant Treasurers. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by or pursuant to resolution of the Board of Directors. The Treasurer shall
disburse the funds of the corporation as may be ordered by the Board of
Directors, the Chairman of the Board, if any, or the President, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
the President, and the Board of Directors, at its regular meetings or whenever
they may require it, an account of all transactions and of the financial
condition of the corporation.
Any Assistant Treasurer may, in the absence of the Treasurer or in the
event of his or her inability or refusal to act, perform the duties and exercise
the powers of the Treasurer.
SECTION 11. Bonded Officers. The Board of Directors may require any
officer to give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors upon such terms and
conditions as the Board of Directors may specify, including without limitation a
bond for the faithful performance of the duties of such officer and for the
restoration to the corporation of all property in his or her possession or
control belonging to the corporation.
SECTION 12. Salaries. Officers of the corporation shall be entitled
to such salaries, compensation or reimbursement as shall be fixed or allowed
from time to time by the Board of Directors or any committee thereof appointed
for the purpose.
ARTICLE IV
STOCK
SECTION 1. Certificates of Stock. One or more stock certificates,
signed by the Chairman or Vice Chairman of the Board of Directors or by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by the stockholder in the corporation. Any
or all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent or registrar who shall have signed or whose facsimile
signature shall have been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.
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Each certificate for shares of stock that are subject to any restriction
on transfer pursuant to the Certificate of Incorporation, the by-laws,
applicable securities laws, or any agreement among any number of stockholders or
among such holders and the corporation shall have conspicuously noted on the
face or back of the certificate either the full text of the restriction or a
statement of the existence of such restriction.
SECTION 2. Transfers of Shares of Stock. Subject to the
restrictions, if any, stated or noted on the stock certificates, shares of stock
may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require. The
corporation shall be entitled to treat the record holder of stock as shown on
its books as the owner of such stock for all purposes, including the payment of
dividends and the right to vote with respect to that stock, regardless of any
transfer, pledge or other disposition of that stock, until the shares have been
transferred on the books of the corporation in accordance with the requirements
of these by-laws.
SECTION 3. Lost Certificates. A new stock certificate may be issued
in the place of any certificate theretofore issued by the corporation and
alleged to have been lost, stolen, destroyed or mutilated, upon such terms in
conformity with law as the Board of Directors shall prescribe. The directors
may, in their discretion, require the owner of the lost, stolen, destroyed or
mutilated certificate, or the owner's legal representatives, to give the
corporation a bond, in such sum as they may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss,
theft, destruction or mutilation of any such certificate, or the issuance of any
such new certificate.
SECTION 4. Fractional Share Interests. The corporation may, but
shall not be required to, issue fractions of a share. If the corporation does
not issue fractions of a share, it shall (l) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered or bearer
form, which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions that the Board of Directors may impose.
SECTION 5. Dividends. Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally available
therefor, at any
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regular or special meeting, declare dividends upon the Common Stock of the
corporation as and when they deem expedient.
ARTICLE V
INSURANCE
SECTION 1. Insurance. The corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such liability
under the provisions of the General Corporation Law of the State of Delaware.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Fiscal Year. Except as otherwise designated from time to
time by the Board of Directors, the fiscal year of the corporation shall begin
on the first day of January and end on the last day of December.
SECTION 2. Corporate Seal. The corporate seal shall be in such form
as shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal, and a duplicate seal may be kept and used by each
Assistant Secretary and by any other officer the Board of Directors may
authorize.
SECTION 3. Certificate of Incorporation. All references in these
by-laws to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the corporation, as in effect from time to time.
SECTION 4. Execution of Instruments. The Chairman and Vice Chairman
of the Board of Directors, if any, the President, and the Treasurer shall have
power to execute and deliver on behalf and in the name of the corporation any
instrument requiring the signature of an officer of the corporation, including
deeds, contracts, mortgages, bonds, notes, debentures, checks, drafts and other
orders for the payment of money. In addition, the Board of Directors, the
Chairman and Vice Chairman of the Board of Directors, if any, the President, and
the Treasurer may expressly delegate such powers to any other officer or agent
of the corporation.
SECTION 5. Voting of Securities. The Chairman and Vice Chairman of
the Board of Directors, if any, the President, the Treasurer, and each other
person authorized by
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the directors, each acting singly, may waive notice of, and act as, or appoint
any person or persons to act as, proxy or attorney-in-fact for this corporation
(with or without power of substitution) at any meeting of stockholders or
shareholders of any other corporation or organization the securities of which
may be held by this corporation. In addition, the Board of Directors, the
Chairman and Vice Chairman of the Board of Directors, if any, the President, and
the Treasurer may expressly delegate such powers to any other officer or agent
of the corporation.
SECTION 6. Evidence of Authority. A certificate by the Secretary, an
Assistant Secretary or a temporary secretary as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall, as to all persons who rely on the certificate in good faith,
be conclusive evidence of that action.
SECTION 7. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association or other organization in which one or more of the directors or
officers are directors or officers or have a financial interest, shall be void
or voidable solely for that reason or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors that authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
such committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair to the corporation as of the time
it is authorized, approved or ratified by the Board of Directors, a committee of
the Board of Directors or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee that
authorizes the contract or transaction.
SECTION 8. Books and Records. The books and records of the
corporation shall be kept at such places within or without the State of Delaware
as the Board of Directors may from time to time determine.
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ARTICLE VII
AMENDMENTS
SECTION 1. By the Board of Directors. These bylaws may be altered,
amended or repealed or new bylaws may be adopted by the affirmative vote of a
majority of the directors present at any regular or special meeting of the Board
of Directors at which a quorum is present.
SECTION 2. By the Stockholders. These bylaws may be altered, amended
or repealed or new bylaws may be adopted by the affirmative vote of the holders
of a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders, provided notice of such alteration,
amendment, repeal or adoption of new bylaws shall have been stated in the notice
of such special meeting.
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Exhibit 5.1
PALMER & DODGE LLP
ONE BEACON STREET
BOSTON, MA 02108-3190
TELEPHONE: (617) 573-0100 FACSIMILE: (617) 277-4420
March 23, 1998
Dyax Corp.
One Kendall Square
Building 600
Cambridge, Massachusetts 02139
We are rendering this opinion in connection with the Registration
Statement on Form S-1 (the "Registration Statement") filed by Dyax Corp. (the
"Company") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, on or about the date hereof. The Registration Statement
relates to up to 2,500,000 shares (2,875,000 shares if the underwriters'
over-allotment option is exercised in full) of the Company's Common Stock,
$0.01 par value per share (the "Shares"). We understand that the Shares are to
be offered and sold in the manner described in the Registration Statement.
We have acted as your counsel in connection with the preparation of
the Registration Statement. We are familiar with the proceedings of the Board of
Directors on January 30, 1998 and March 14, 1998 in connection with the
authorization, issuance and sale of the Shares. We have examined such other
documents as we consider necessary to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and, when issued and delivered by the Company against
payment therefor at the price to be determined pursuant to the Resolutions,
will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus filed as part thereof.
Very truly yours,
/s/ PALMER & DODGE LLP
---------------------------
PALMER & DODGE LLP
<PAGE> 1
EXHIBIT 10.1
DYAX CORP.
AMENDED AND RESTATED 1995 EQUITY INCENTIVE PLAN
(AS AMENDED THROUGH FEBRUARY 1998)
Section 1. PURPOSE
The purpose of the Dyax Corp. 1995 Equity Incentive Plan (the "Plan") is to
attract and retain key employees and directors and consultants of the Company
and its Affiliates, to provide an incentive for them to assist the Company to
achieve long-range performance goals, and to enable them to participate in the
long-term growth of the Company.
Section 2. DEFINITIONS
"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock, Stock Unit or Other Stock-Based Award awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor to such Code.
"Committee" means the Compensation Committee of the Board or such other
committee of the Board appointed by the Board to administer the Plan or a
specified portion thereof; provided, however, that in any instance the Board of
Directors may take away any action delegated to the Committee hereunder. If a
Committee is authorized to grant Awards to a Reporting Person or a "covered
employee" within the meaning of Section 162(m) of the Code, each member shall be
a "Non-Employee Director" or the equivalent within the meaning of Rule 16b-3
under the Exchange Act or an "outside director" or the equivalent within the
meaning of Section 162(m) of the Code, respectively.
"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of the
Company.
"Company" means Dyax Corp. (formerly named Biotage, Inc.).
"Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the
<PAGE> 2
Participant in the event of the Participant's death. In the absence of an
effective designation by a Participant, "Designated Beneficiary" shall mean the
Participant's estate.
"Effective Date" means July 13, 1995.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 that is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 that is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Other Stock-Based Award" means an Award, other than an Option, Stock
Appreciation Right, Performance Share, Restricted Stock or Stock Unit, having a
Common Stock element and awarded to a Participant under Section 11.
"Participant" means a person selected by the Committee to receive an Award
under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock, which may be earned by
the achievement of performance goals, awarded to a Participant under Section 8.
"Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time selected by the Committee
during which an Award may be forfeited to the Company pursuant to the terms and
conditions of such Award.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.
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<PAGE> 3
"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
Section 3. ADMINISTRATION
The Plan shall be administered by the Committee; provided, however, that in
any instance the Board of Directors may take any action delegated hereunder to
the Committee. The Committee shall have authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the operation of
the Plan as it shall from time to time consider advisable, and to interpret the
provisions of the Plan. The Committee's decisions shall be final and binding. To
the extent permitted by applicable law, the Committee may delegate to one or
more executive officers of the Company the power to make Awards to Participants
who are not Reporting Persons or covered employees and all determinations under
the Plan with respect thereto, provided that the Committee shall fix the maximum
amount of such Awards for all such Participants and a maximum for any one
Participant.
Section 4. ELIGIBILITY
All employees and, in the case of Awards other than Incentive Stock
Options, directors and consultants of the Company or any Affiliate, capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan. Incentive Stock Options may be awarded only to persons
eligible to receive such Options under the Code.
Section 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to Three Million Three Hundred Fifty Thousand (3,350,000) shares
of Common Stock. In no event shall the number of shares of Common Stock that may
be subject to Awards for any individual exceed 750,000 shares of Common Stock in
the aggregate except to the extent of any adjustment under subsection (b). If
any Award in respect of shares of Common Stock expires or is terminated
unexercised or is forfeited, the shares subject to such Award, to the extent of
such expiration, termination or forfeiture, shall again be available for award
under the Plan. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for Awards under the Plan. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee (subject, in the case of Incentive
Stock Options,
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<PAGE> 4
to any limitation required under the Code) shall equitably adjust any or all of
(i) the number and kind of shares in respect of which Awards may be made under
the Plan, (ii) the number and kind of shares subject to outstanding Awards, and
(iii) the award, exercise or conversion price with respect to any of the
foregoing, and if considered appropriate, the Committee may make provision for a
cash payment with respect to an outstanding Award, provided that the number of
shares subject to any Award shall always be a whole number.
Section 6. STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code or any successor provision and any regulations
thereunder. See subsection (b) below. No Incentive Stock Option may be granted
hereunder more than ten years after the Effective Date.
(b) The Committee shall establish the option price at the time each Option
is awarded, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of award with respect to Incentive Stock Options.
Nonstatutory Stock Options may be granted at such prices as the Committee may
determine.
(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, or by
retaining shares otherwise issuable pursuant to the Option, in each case valued
at their Fair Market Value on the date of delivery or retention, or such other
lawful consideration as the Committee may determine.
(e) The Committee may provide that, subject to such conditions as it
considers appropriate, upon the delivery or retention of shares to the Company
in payment of an Option, the Participant automatically be awarded an Option for
up to the number of shares so delivered.
Section 7. STOCK APPRECIATION RIGHTS
(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are
4
<PAGE> 5
exercised. SARs granted in tandem with Options shall have an exercise price not
less than the exercise price of the related Option. SARs granted alone and
unrelated to an Option may be granted at such exercise prices as the Committee
may determine.
(b) An SAR related to an Option, which SAR can only be exercised upon or
during limited periods following a change in control of the Company, may entitle
the Participant to receive an amount based upon the highest price paid or
offered for Common Stock in any transaction relating to the change in control or
paid during the thirty-day period immediately preceding the occurrence of the
change in control in any transaction reported in any stock market in which the
Common Stock is usually traded.
Section 8. PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded for such
Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares that have been earned
on the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.
Section 9. RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock may be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
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<PAGE> 6
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant has died, to the Participant's
Designated Beneficiary.
Section 10. STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.
Section 11. OTHER STOCK-BASED AWARDS
(a) Subject to the provisions of the Plan, the Committee may make other
awards of Common Stock and other awards that are valued in whole or in part by
reference to, or are otherwise based on, Common Stock, including without
limitation convertible preferred stock, convertible debentures, exchangeable
securities and Common Stock awards or options. Other Stock-Based Awards may be
granted either alone or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan.
(b) The Committee may establish performance goals, which may be based on
performance goals related to book value, subsidiary performance or such other
criteria as the Committee may determine, Restricted Periods, Performance Cycles,
conversion prices, maturities and security, if any, for any Other Stock-Based
Award. Other Stock-Based Awards may be sold to Participants at the face value
thereof or any discount therefrom or awarded for no consideration or such
minimum consideration as may be required by applicable law.
Section 12. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable tax and regulatory
laws and accounting principles.
(b) Committee Discretion. Each type of Award may be made alone, in addition
to or in relation to any other type of Award. The terms of each type of Award
need not be identical, and the Committee need not treat Participants uniformly.
Except as otherwise
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<PAGE> 7
provided by the Plan or a particular Award, any determination with respect to an
Award may be made by the Committee at the time of award or at any time
thereafter.
(c) Settlement. The Committee shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the Company, Awards
or other property. The Committee may permit a Participant to defer all or any
portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
(e) Termination of Employment. The Committee shall determine the effect on
an Award of the disability, death, retirement or other termination of employment
of a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company (as defined by the
Committee), the Committee in its discretion may, at the time an Award is made or
at any time thereafter, take one or more of the following actions: (i) provide
for the acceleration of any time period relating to the exercise or realization
of the Award, (ii) provide for the purchase of the Award upon the Participant's
request for an amount of cash or other property that could have been received
upon the exercise or realization of the Award had the Award been currently
exercisable or payable, (iii) adjust the terms of the Award in a manner
determined by the Committee to reflect the change in control, (iv) cause the
Award to be assumed, or new rights substituted therefor, by another entity, or
(v) make such other provision as the Committee may consider equitable and in the
best interests of the Company.
(g) Loans. The Committee may authorize the making of loans or cash payments
to Participants in connection with any Award under the Plan, which loans may be
secured by any security, including Common Stock, underlying or related to such
Award (provided that such Loan shall not exceed the Fair Market Value of the
security subject to such Award), and which may be forgiven upon such terms and
conditions as the Committee may establish at the time of such loan or at any
time thereafter.
(h) Withholding Taxes. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.
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<PAGE> 8
(i) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or to comply with applicable
laws.
(j) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section 13. MISCELLANEOUS
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the stockholders of the
Company, the Plan shall be effective on the Effective Date. Before such
approval, Awards may be made under the Plan expressly subject to such approval.
(d) Amendment of Plan. The Committee may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any stockholder approval
that the Committee determines to be necessary or advisable.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
-----------------------------------------
This Plan was approved by the Board of Directors on July 13, 1995.
This Plan was approved by the stockholders on August 9, 1995.
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<PAGE> 9
This Plan was amended by the Board of Directors on October 17, 1996 to increase
the number of shares available for Awards hereunder, and such amendment was
approved by the stockholders effective as of October 23, 1996.
This Plan was further amended by the Board of Directors on May 14, 1997.
This Plan was further amended by the Board of Directors on January 30, 1998 to
make certain technical amendments, and such amendment was approved by the
stockholders effective as of March 23, 1998.
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<PAGE> 1
EXHIBIT 10.2
DYAX CORP.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The purpose of this 1998 Employee Stock Purchase Plan (the "Plan") is
to provide employees of Dyax Corp. (the "Company"), who wish to become
shareholders of the Company, an opportunity to purchase Common Stock of the
Company (the "Shares"). The Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").
2. ELIGIBLE EMPLOYEES.
Subject to the provisions of Sections 7, 8 and 9 below, any individual
who is a full-time employee (as defined below) of the Company, or any of its
subsidiaries (as defined in Section 424(f) of the Code) the employees of which
are designated by the Board of Directors as eligible to participate in the Plan,
is eligible to participate in any Offering of Shares (as defined in Section 3
below) made by the Company hereunder. Full-time employees shall include all
employees whose customary employment is:
(a) 20 hours or more per week and
(b) more than five months
in the calendar year during which said Offering Date occurs or in the calendar
year immediately preceding such year.
3. OFFERING DATES.
From time to time, the Company, by action of the Board of Directors,
will grant rights to purchase Shares to employees eligible to participate in the
Plan pursuant to one or more offerings (each of which is an "Offering" on a date
or series of dates (each of which is an "Offering Date") designated for this
purpose by the Board of Directors.
4. PRICES.
The price per share for each grant of rights hereunder shall be the
lesser of:
(a) eighty-five percent (85%) of the fair market value of a
Share on the Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a
Share on the date such right is exercised.
<PAGE> 2
At its discretion, the Board of Directors may determine a higher price for a
grant of rights.
5. EXERCISE OF RIGHTS AND METHOD OF PAYMENT.
(a) Rights granted under the Plan will be exercisable
periodically on specified dates as determined by the Board of Directors.
(b) The method of payment for Shares purchased upon exercise
of rights granted hereunder shall be through regular payroll deductions or by
lump sum cash payment or both, as determined by the Board of Directors. No
interest shall be paid upon payroll deductions unless specifically provided for
by the Board of Directors.
(c) Any payments received by the Company from a participating
employee and not utilized for the purchase of Shares upon exercise of a right
granted hereunder shall be promptly returned to such employee by the Company
after termination of the right to which the payment relates.
6. TERM OF RIGHTS.
The total period from an Offering Date to the last date on which rights
granted on that Offering Date are exercisable (the "Offering Period") shall in
no event be longer than twenty-seven (27) months. The Board of Directors when it
authorizes an Offering may designate one or more exercise periods during the
Offering Period. Rights granted on an Offering Date shall be exercisable in full
on the Offering Date or in such proportion on the last day of each exercise
period as the Board of Directors determines.
7. SHARES SUBJECT TO THE PLAN.
No more than 150,000 Shares may be sold pursuant to rights granted
under the Plan. Appropriate adjustments in the above figure, in the number of
Shares covered by outstanding rights granted hereunder, in the exercise price of
the rights and in the maximum number of Shares which an employee may purchase
(pursuant to Section 9 below) shall be made to give effect to any mergers,
consolidations, reorganizations, recapitalizations, stock splits, stock
dividends or other relevant changes in the capitalization of the Company
occurring after the effective date of the Plan, provided that no fractional
Shares shall be subject to a right and each right shall be adjusted downward to
the nearest full Share. Any agreement of merger or consolidation will include
provisions for protection of the then existing rights of participating employees
under the Plan. Either authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired by the Company may be made subject to rights
under the Plan. If for any reason any right under the Plan terminates in whole
or in part, Shares subject to such terminated right may again be subjected to a
right under the Plan.
8. LIMITATIONS ON GRANTS.
(a) No employee shall be granted a right hereunder if such
employee, immediately after the right is granted, would own stock or rights to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all
<PAGE> 3
classes of stock of the Company, or of any subsidiary, computed in accordance
with Section 423(b)(3) of the Code.
(b) No employee shall be granted a right which permits his
right to purchase shares under all employee stock purchase plans of the Company
and its subsidiaries to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) (or such other maximum as may be prescribed from time to time
by the Code) of the fair market value of such Shares (determined at the time
such right is granted) for each calendar year in which such right is outstanding
at any time in accordance with the provisions of Section 423(b)(8) of the Code.
(c) No right granted to any participating employee under an
Offering, when aggregated with rights granted under any other Offering still
exercisable by the participating employee, shall cover more shares than may be
purchased at an exercise price equal to fifteen percent (15%) of the employee's
annual rate of compensation on the date the employee elects to participate in
the Offering or such lesser percentage as the Board of Directors may determine.
9. LIMIT ON PARTICIPATION.
Participation in an Offering shall be limited to eligible employees who
elect to participate in such Offering in the manner, and within the time
limitations, established by the Board of Directors when it authorizes the
Offering.
10. CANCELLATION OF ELECTION TO PARTICIPATE.
An employee who has elected to participate in an Offering may cancel
such election as to all (but not part) of the unexercised rights granted under
such Offering by giving written notice of such cancellation to the Company
before the expiration of any exercise period. Any amounts paid by the employee
for the Shares or withheld for the purchase of Shares from the employee's
compensation through payroll deductions shall be paid to the employee, without
interest, unless otherwise determined by the Board of Directors, upon such
cancellation.
11. TERMINATION OF EMPLOYMENT.
Upon the termination of employment for any reason, including the death
of the employee, before the date on which any rights granted under the Plan are
exercisable, all such rights shall immediately terminate and amounts paid by the
employee for the Shares or withheld for the purchase of Shares from the
employee's compensation through payroll deductions shall be paid to the employee
or to the employee's estate, without interest unless otherwise determined by the
Board of Directors.
12. EMPLOYEES' RIGHTS AS SHAREHOLDERS.
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<PAGE> 4
No participating employee shall have any rights as a shareholder in the
Shares covered by a right granted hereunder until such right has been exercised,
full payment has been made for the corresponding Shares and the Share
certificate is actually issued.
13. RIGHTS NOT TRANSFERABLE.
Rights under the Plan are not assignable or transferable by a
participating employee and are exercisable only by the employee.
14. AMENDMENTS TO OR DISCONTINUATION OF THE PLAN.
The Board of Directors of the Company shall have the right to amend,
modify or terminate the Plan at any time without notice; provided, however, that
the then existing rights of all participating employees shall not be adversely
affected thereby, and provided further that, subject to the provisions of
Section 7 above, no such amendment to the Plan shall, without the approval of
the shareholders of the Company, increase the total number of Shares which may
be offered under the Plan.
15. EFFECTIVE DATE AND APPROVALS.
This Plan became effective on ______ ___, 1998, the date it was adopted
by the Board of Directors, provided that it is approved by the shareholders of
the Company within twelve (12) months before or after the date of adoption.
The Company's obligation to offer, sell and deliver its Shares under
the Plan is subject to (i) the approval of any governmental authority required
in connection with the authorized issuance or sale of such Shares, (ii)
satisfaction of the listing requirements of any national securities exchange on
which the Shares are then listed and (iii) compliance, in the opinion of the
Company's counsel with, all applicable federal and state securities and other
laws.
16. TERM OF PLAN.
No rights shall be granted under the Plan after _______ __, 2008.
17. ADMINISTRATION OF THE PLAN.
The Board of Directors or any committee or person(s) to whom it
delegates its authority (the "Administrator") shall administer, interpret and
apply all provisions of the Plan as it deems necessary to meet special
circumstances not anticipated or covered expressly by the Plan. Nothing
contained in this Section shall be deemed to authorize the Administrator to
alter or administer the provisions of the Plan in a manner inconsistent with the
provisions of Section 423 of the Code.
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<PAGE> 1
EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is entered into
effective as of February 18, 1998 (the "Effective Date") between Dyax Corp. (the
"Company"), a Delaware corporation with its principal executive offices at One
Kendall Square, Building 600, Cambridge, MA 02139, and Robert A. Dishman
("Executive") residing at 37 Garland Road, Concord, Massachusetts 01742.
ARTICLE 1.
EMPLOYMENT OF EXECUTIVE
1.1. EMPLOYMENT. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive in a full time capacity to
serve as Executive Vice President of the Company and to perform such specific
duties as may reasonably be assigned to Executive from time to time by the Board
of Directors of the Company for the period commencing on the Effective Date and
continuing until terminated as herein provided. Executive hereby accepts such
employment for the term hereof.
1.2. NO CONFLICTING COMMITMENTS. During the period of Executive's
full time employment with the Company, Executive will not undertake any
commitments which might impair Executive's performance of his duties as a full
time employee of the Company.
1.3. NO RELOCATION. Although Executive is not expected to relocate
to the Company's facilities in Charlottesville, Virginia in connection with his
employment, Executive will spend sufficient time at the Company's facilities in
Charlottesville to effectively manage that business.
ARTICLE 2.
COMPENSATION
For all services to be rendered by Executive to the Company pursuant to
this Agreement, the Company shall pay to Executive the compensation and provide
for Executive the benefits set forth below:
2.1. BASE SALARY. The Company shall pay to Executive a base salary at
the annual rate of Two Hundred Thousand Dollars ($200,000) during the first
twelve months of this Agreement, prorated during the period Executive is
employed hereunder and payable in substantially equal monthly installments.
Thereafter, Executive's salary will be reviewed and set annually by the Board of
Directors of the Company or a duly appointed committee thereof, provided,
however, that Executive's annual salary shall not be less than Two Hundred
Thousand Dollars ($200,000) as long as Executive is an Executive Vice President
of the Company.
<PAGE> 2
2.2. FRINGE BENEFITS. In addition to Executive's base salary, the
Company shall provide Executive and Executive's dependents medical insurance and
other such benefits as are generally made available by the Company to its other
full time executive employees.
2.3. STOCK OPTIONS. The vesting, exercise and other terms of any stock
options which have been previously granted to Executive by the Company, as well
as other stock options which may hereafter be granted to Executive at the
discretion of the Board of Directors of the Company or a duly appointed
committee thereof, shall continue in accordance with the terms of the respective
stock option grant, unless otherwise provided for herein. The Company agrees to
accelerate the vesting of the incentive stock option granted to Executive on
October 30, 1997 with respect to 60,000 shares of the Company's Common Stock
(the "1997 Option") so the option shall become fully exercisable with respect to
all of the shares as of the Effective Date.
2.4. RESTRICTED STOCK AWARD. The Company agrees to grant Executive a
Restricted Stock Award under its 1995 Equity Incentive Plan pursuant to which
Executive shall have the right to purchase 120,000 shares (the "Restricted
Shares") of the Company's Common Stock as Restricted Stock, at the price of
$3.00 per share, in accordance with the terms of the Restricted Stock Purchase
Agreement attached hereto as EXHIBIT A (the "Purchase Agreement").
2.5. LOANS TO EXECUTIVE. Subject to exercise in full by Executive of
the 1997 Option and Executive's purchase of the Restricted Stock, the Company
agrees to make two loans (the "Loans") to Executive, one in the amount of
$93,600 and the other in the amount of $360,000, on the following terms and
conditions:
2.5.1 The Loans shall be subject to Executive's delivery to the Company
of (i) duly executed promissory notes in substantially the forms
attached hereto as EXHIBITS B-1 AND B-2 in the respective amounts of
each of the Loans and (ii) duly executed pledge agreements (the "Pledge
Agreements") for each of the Loans in substantially the forms attached
hereto as EXHIBITS C-1 AND C-2, (iii) the stock certificates evidencing
the shares issued upon exercise of the 1997 Option and the Restricted
Shares, and (iv) stock powers duly executed in blank with respect to
such shares.
2.5.2 If Executive's employment with the Company is terminated and the
Loans are accelerated in accordance with their terms, the $360,000 Loan
shall be paid and discharged first by surrender of any shares of Common
Stock still constituting Unvested Shares (as defined in the Purchase
Agreement) as of the date of acceleration at a rate of $3.00 per share,
and all other amounts due under such Loan as of the date of
acceleration, as well as all amounts due with respect to the $93,600
Loan upon its acceleration, shall be paid and discharged, at
Executive's election, in cash or by surrender of shares of Common Stock
of the Company at the then fair market value thereof, or any
combination thereof. For purposes of this Agreement, the fair market
value of the Company's capital stock shall mean (i) with respect to
securities registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the average of the high and low sale
prices of such securities reported on the Nasdaq Stock Market, or if
such securities are not reported on such market, the average of the
high and
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<PAGE> 3
low bid quotations reported by the National Association of Securities
Dealers ("NASD"), which in each case shall be determined by Dyax in
good faith and may be based upon the reports published in the Eastern
Edition of The Wall Street Journal or any other reporting service
reasonably relied upon by Dyax; and (ii) with respect to securities not
registered under the Exchange Act, the fair market value as determined
in good faith by the Board of Directors of Dyax.
2.5.3 So long as Executive is employed by the Company, on each
anniversary of the Loans during the term thereof the Company shall
forgive the accrued interest due thereon through the date of such
anniversary. If Executive's employment is terminated before any such
anniversary, the Company shall forgive the accrued interest (i) on the
$360,000 Loan through the date of termination and (ii) on the $93,600
Loan through the date of termination or, in the case of a termination
pursuant to Sections 3.1.1, 3.1.2 or 3.1.4, through the second
anniversary of the date of issue of such Loan if such second
anniversary is later than the date of termination.
ARTICLE 3.
TERMINATION
3.1. TERMINATION. Executive's employment hereunder shall terminate
upon the occurrence of any of the following events:
3.1.1. Executive's death or legal incapacity; or
3.1.2. The termination of Executive's employment hereunder by
the Board of Directors of the Company, at its option, to be exercised
by written notice to Executive, upon Executive's other incapacity or
inability to further perform services as contemplated herein for a
period aggregating 90 days or more within any six-month period because
Executive's physical or mental health shall have become impaired so as
to make it impossible or impractical to perform the duties and
responsibilities contemplated hereunder; or
3.1.3. The termination of Executive's employment hereunder by
the Board of Directors of the Company, at its option, to be exercised
by written notice to Executive, in the event of Executive's gross
neglect of duties hereunder or commission of an act of dishonesty or
moral turpitude in connection with employment, as determined in good
faith by the Board of Directors; or
3.1.4. The termination of Executive's employment hereunder by
the Board of Directors of the Company, at its option which may be
exercised with or without cause, to be exercised by written notice to
Executive; or
3.1.5. The termination of Executive's employment hereunder by
Executive, to be exercised by delivery of thirty (30) days prior
written notice from Executive to the Company.
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<PAGE> 4
3.2. PAYMENTS UPON TERMINATION. Notwithstanding any other provisions
in this Agreement to the contrary:
3.2.1. If Executive's employment with the Company terminates
pursuant to Sections 3.1.1., 3.1.2., 3.1.3., or 3.1.5., all payments
and benefits provided to Executive under this Agreement shall cease as
of the date of termination of employment.
3.2.2. If Executive's employment with the Company terminates
pursuant to Section 3.1.4., (i) the payment of Executive's base salary
and all benefits provided to Executive under this Agreement shall
continue for an initial period of six (6) months after the date of
termination of employment; (ii) in the event that Executive has not
obtained alternative, comparable employment by the end of the initial
period of six months, the payment of Executive's base salary and all
benefits provided to Executive under this Agreement shall continue for
an additional period of six (6) months after the initial period
specified in clause (i) of this Section, provided, however, that the
amount of any compensation or benefits payable to Executive shall be
reduced by any compensation or consulting income earned by Executive
during such additional six month period; and (iii) all stock options
(as referenced in Section 2.3) held by Executive at his termination
date shall become immediately exercisable and shall remain exercisable
for a period of ninety (90) days following his termination date.
3.3. NO DUTY TO MITIGATE. Executive shall not be required to mitigate
the amount of any payment provided for in Section 3.2.2.(i) by seeking other
employment or otherwise, and the amount of any payment or benefit provided for
in Section 3.2.2.(i) shall not be reduced by any compensation earned by
Executive as the result of employment by another employer after the date of
termination.
ARTICLE 4.
COVENANTS AGAINST COMPETITION WITH THE COMPANY
4.1. NON-SOLICITATION OF EMPLOYEES. Executive agrees that during the
term of Executive's employment with the Company and for a period of twelve (12)
months after the later of (i) termination of Executive's employment with the
Company for any reason or (ii) cessation of payments to Executive pursuant to
Section 3.2.2., Executive shall not directly or indirectly recruit, solicit or
otherwise induce or attempt to induce any employees of the Company to leave the
employment of the Company.
4.2. NON-COMPETITION. In the event Executive's employment with the
Company is terminated by the Company for any reason other than a termination
without cause under Section 3.1.4., Executive agrees that during the term of
Executive's employment with the Company and for a period of twelve (12) months
after the effective date of his termination (the "Non- competition Period")
Executive shall not directly or indirectly, sell, attempt to sell or otherwise
market to customers of the Company products or services which are competitive
with those offered, sold or provided by the Company or any of its subsidiaries.
If Executive's employment
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<PAGE> 5
with the Company is terminated by the Company without cause under Section
3.1.4., the Non-competition Period shall be limited to the period during which
the Company is making payments to Executive pursuant to Section 3.2.2.,
provided, however, that the Company may at its option continue to make such
payments for a maximum of twelve (12) months following the effective date of
Executive's termination.
ARTICLE 5.
CONFIDENTIAL INFORMATION
5.1. MAINTENANCE OF CONFIDENTIALITY. Executive agrees that Executive
will not (except as required in the course of employment with the Company), both
during the term of Executive's employment with the Company and for a period of
five (5) years thereafter, communicate or divulge to, or use for Executive's own
benefit or the benefit of any other person, firm or organization, any
confidential and proprietary information of the Company and its subsidiaries.
5.2. OWNERSHIP OF CONFIDENTIAL INFORMATION. Records, files, memoranda,
reports, price lists, customer lists, drawings, plans, sketches and documents
and the like , relating to the business of the Company, which Executive shall
use or prepare or come into contact with in the course of, in connection with,
or as a result of employment with the Company, shall remain the Company's sole
and exclusive property.
ARTICLE 6.
OWNERSHIP OF INVENTIONS
6.1. "INVENTION" DEFINED. As used in this Agreement, "Invention" means
any invention, discovery or innovation with regard to chromatography, chemistry,
enzymology, biotechnology, genetic engineering or recombinant DNA technology,
whether or not patentable, made, conceived, or first actually reduced to
practice by Executive, alone or jointly with others, in the course of, in
connection with, or as a result of his service as an executive of the Company,
including any art, method, process, machine, manufacture, design or composition
of matter, or any improvement thereof, or any variety of plant or microorganism.
6.2. DISCLOSURE OF INVENTIONS. Each Invention made, conceived or first
actually reduced to practice by Executive, whether alone or jointly with others,
in the course of, in connection with, or as a result of his service as an
executive of the Company, shall be promptly disclosed in writing to the Company
(or such officer of the Company as the Board of Directors may designate). Such
report shall be sufficiently complete in technical detail and appropriately
illustrated by sketch or diagram to convey to one skilled in the art to which
the Invention pertains, a clear understanding of the nature, purpose,
operations, and to the extent known, the physical, chemical, biological or
electrical characteristics of the Invention.
6.3. OWNERSHIP OF INVENTIONS. Each Invention, as herein defined,
shall be the sole and exclusive property of the Company.
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<PAGE> 6
6.4. ASSIGNMENT OF TITLE. Executive agrees to execute an assignment to
the Company or its nominee of Executive's entire right, title and interest in
and to any Invention, without compensation beyond that provided in this
Agreement. Executive further agrees, upon the request of the Company and at its
expense, that Executive will execute any other instrument and document necessary
or desirable in applying for and obtaining patents in the United States and in
any foreign country with respect to any Invention. Executive further agrees,
whether or not Executive is then an employee of the Company, to cooperate to the
extent and in the manner reasonably requested by the Company in the prosecution
or defense of any claim involving a patent covering any Invention or any
litigation or other claim or proceeding involving any invention covered by this
Agreement, but all expenses thereof shall be paid by the Company.
ARTICLE 7.
MISCELLANEOUS
7.1. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
7.2. BINDING EFFECT. This Agreement shall inure to benefit of and be
binding upon the parties hereto and their respective lawful successors and
assigns and upon Executive's heirs and personal representatives.
7.3. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder shall be assignable by either party hereto without the prior written
consent of the other party.
7.4. NOTICES. All notices, requests, demands or other communications
to be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given if delivered by hand or mailed by registered or
certified mail, return receipt requested, postage prepaid, as follows.
If to the Company, to:
Dyax Corp.
One Kendall Square, Building 600
Cambridge, Massachusetts 02139
Attention: Chief Executive Officer
If to Executive, to:
37 Garland Road
Concord, Massachusetts 01742
with a copy to:
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<PAGE> 7
Joseph B. Darby III, Esq.
Sherburne, Powers & Needham, P.C.
One Beacon Street
Boston, Massachusetts 02108
or such other address as either party hereto shall have designated by notice in
writing to the other party.
7.5. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the attached
exhibits constitute the entire agreement and understanding between the parties
hereto with respect the subject matter hereof and supersedes all prior
agreements and understanding relating to such subject matter, including without
limitation the Executive Employment Agreement dated April 1, 1994 between the
parties. This Agreement may be amended, supplemented or otherwise modified at
any time, but only by an instrument in writing signed by the parties hereto.
7.6. GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts.
7.7. SEVERABILITY. In case any provision hereof shall, for any reason,
be held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed as if such invalid or unenforceable provision had not been
included herein. If any provision hereof shall, for any reason, be held by a
court to be excessively broad as to duration, geographical scope, activity or
subject matter, it shall be construed by limiting and reducing it to make it
enforceable to the extent compatible with applicable law as then in effect.
7.8. SURVIVAL. Section 2.5, 3.2.2 and Articles 4, 5 and 6 shall
survive the termination of this Agreement for the periods of time indicated
therein or indefinitely if no period of time is indicated.
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<PAGE> 8
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first above written.
DYAX CORP.
By: /s/ Henry E. Blair
---------------------------
Henry E. Blair
Chairman, President & CEO
/s/ Robert A. Dishman
- -------------------------------
Robert A. Dishman, individually
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<PAGE> 9
EXHIBIT A
DYAX CORP.
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement (this "Agreement") is dated as
of February __, 1998 (the "Effective Date"), by and between Dyax Corp., a
Delaware corporation (the "Company"), and Robert A. Dishman ("Purchaser").
RECITALS
A. The Company and Purchaser have entered into an Executive
Employment Agreement (the "Employment Agreement") of even date herewith which
provides in part that the Company shall issue and sell certain "Restricted
Stock" to Executive on the terms herinafter set forth.
B. The Company desires to issue and sell, and Purchaser desires to
purchase, shares of Common Stock of the Company, on the terms and conditions
hereinafter set forth, as "Restricted Stock" issued pursuant to the Company's
1995 Equity Incentive Plan (as amended to date, the "Plan"). Capitalized terms
not otherwise defined herein have the meanings given to them in the Plan.
Accordingly, it is agreed between the parties as follows:
1. Purchaser hereby agrees to purchase from the Company, and the
Company agrees to sell to Purchaser, 120,000 shares (hereinafter sometimes
collectively referred to as the "Stock") of the Company's Common Stock, par
value $0.01 per share, for a purchase price of $3.00 per share, payable at the
closing in cash or by delivery of a secured promissory note of Purchaser in form
and on terms satisfactory to the Company. The closing hereunder shall be deemed
to have occurred on the Effective Date or at such later date, not later than
fifteen days thereafter, as the Company receives payment of the purchase price.
2. For the purposes of this Section 2, the shares of Stock purchased
pursuant to this Agreement shall vest in twenty-four (24) substantially equal
monthly installments (any fractional shares to be cumulated and to become
exercisable at the end of the earliest succeeding monthly period in which a
whole share equivalent is accumulated) beginning on the twenty-fifth monthly
anniversary of the Effective Date, with all shares being fully vested on the
fourth anniversary of the Effective Date; provided, however, that such vesting
shall be accelerated and all of the Stock shall become fully vested on the
occurrence of a Vesting Event. "Vesting Event" shall mean (i) an underwritten
public offering of the Company's capital stock or (ii) any merger, consolidation
or other sale of the Company involving a transaction or series of simultaneous
transactions in which the stockholders of the Company immediately before the
transaction(s) own less than 50% of the capital stock of the resulting or
purchasing entity immediately after completion of the transaction(s).
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<PAGE> 10
(a) All of the shares of Stock being purchased by Purchaser
pursuant to this Agreement that are not vested (the "Unvested Shares") shall be
subject to the repurchase right ("Repurchase Right") set forth in this Section
2. If Purchaser shall cease to employed by the Company, then the Company may
exercise the Repurchase Right, as provided in Section 2(b) below, at the $3.00
purchase price per share set forth in Section 1 above (the "Repurchase Price")
with respect to all the Unvested Shares as of the date of such termination;
provided, however, that if Executive is terminated by the Company without cause
pursuant to Section 3.1.4 of the Employment Agreement, then (i) no repurchase
shall occur before 180 days after the date of such termination and (ii) the
Repurchase Right shall terminate if a Vesting Event occurs before 180 days after
such termination. Notwithstanding the foregoing, all shares of Stock shall be
subject to the First Refusal right set forth in Section 3 hereof.
(b) In the event Purchaser shall cease to be employed by the
Company (including a parent or subsidiary of the Company, if any), the Company
shall have the right, at any time within sixty (60) days after the date
Purchaser's employment ceases, to exercise the Repurchase Right, which consists
of the right to purchase from Purchaser (or his personal representative, as the
case may be) all Unvested Shares at the Repurchase Price; provided, however,
that if Purchaser's employment has been terminated without cause pursuant to
Section 3.1.4 of the Employment Agreement, then the Repurchase Right may only be
exercised by the Company after 180 days, and before 240 days, after the date of
such termination.
(c) If Purchaser is required to transfer his shares of Stock
by operation of law (other than death of Purchaser) or by order or decree of any
court, then the Company shall have the option, exercisable at any time during
the period of sixty (60) days after receiving notice thereof, to purchase all of
the Unvested Shares for the Repurchase Price and upon the terms as set forth in
Section 4. Failure of the Company to elect to purchase Purchaser's Unvested
Shares of Stock under this Section 2 shall not affect the right to purchase the
same shares under Section 3(a) in the event of a proposed sale, assignment,
transfer, exchange, pledge or other disposition by or to any receiver,
petitioner, assignee, transferee or other person obtaining an interest in said
shares.
(d) Nothing in this Agreement shall affect in any manner
whatsoever the right or power of the Company, or a parent or subsidiary of the
Company, to terminate Purchaser's provision of services to the Company, for any
reason, with or without cause.
3. (a) So long as the First Refusal Right has not terminated as
set forth in Section 3(f) below, Purchaser shall not sell or otherwise transfer
any shares of Stock unless prior to any sale or other transfer thereof,
Purchaser (or his personal representative, as the case may be) shall provide the
Company with written notice, in the manner provided in Section 14 hereof,
describing the number of shares of Stock intended to be sold or transferred, the
price and the general terms of the proposed sale or transfer.
(b) The Company shall have the right (the "First Refusal
Right") at any time within sixty (60) days after the notice required by Section
3(a) above to purchase from Purchaser (or his personal representative, as the
case may be) up to but not exceeding the number of shares
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<PAGE> 11
of the Stock specified in, and at the price (the "First Refusal Price") and upon
the general terms specified in such notice.
(c) If the First Refusal Right is not exercised with respect
to some or all the shares of the Stock specified in the notice required by
Section 3(a) hereof, then for a period of 120 days, Purchaser (or his personal
representative, as the case may be) shall be free to sell, or otherwise
transfer, up to but not exceeding the number of shares of the Stock specified in
the notice required by Section 3(a) hereof, minus the number of shares of the
Stock with respect to which the First Refusal Right was exercised, at a price
and upon general terms no more favorable to purchasers or transferees thereof
than specified in the notice required by Section 3(a) hereof.
(d) In the event that any shares of the Stock which are free
to be sold or otherwise transferred within said 120-day period are not so
transferred, such shares of the Stock shall again be subject to the First
Refusal Right and Purchaser (or his personal representative, as the case may be)
shall comply with all the provisions of this Section 3 prior to selling or
otherwise transferring any such shares of the Stock.
(e) Failure to exercise the First Refusal Right with respect
to any shares of the Stock shall not constitute a waiver of the First Refusal
Right with respect to any other shares of the Stock.
(f) The First Refusal Right shall continue after Purchaser's
death or the termination of Purchaser's employment with the Company for any
reason, or no reason, and shall terminate only upon the closing of an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
shares of Common Stock of the Company to the public at a public offering price
of not less than $4.50 per share (as adjusted for stock splits, stock dividends,
distributions or subdivisions) and resulting in gross proceeds to the Company of
not less than Ten Million Dollars ($10,000,000).
(g) Notwithstanding the foregoing, Purchaser may transfer any
vested shares of Stock (a "Permitted Transfer") to or for the benefit of any
Permitted Transferee (as defined below) without complying with the provisions of
Sections 3(a) and 3(b), provided that such shares shall remain subject to this
Agreement and such Permitted Transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferee
shall be bound by all of the terms and conditions of this Agreement. For the
purposes of this Agreement, a "Permitted Transferee" shall mean (i) any pledgee
pursuant to a pledge of the shares of Stock made pursuant to a bona fide loan
transaction that creates a security interest; or (b) any spouse, child or
grandchild, or to a trust for their benefit or for the benefit of Purchaser,
whether such transfer is made upon death or by intervivos transfer.
4. The Repurchase Right and the First Refusal Right shall be
exercised by written notice signed by an officer of the Company and delivered or
mailed as provided in Section 14 hereof. The Repurchase Price or the First
Refusal Price, as the case may be, shall be payable,
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<PAGE> 12
at the option of the Company, in cancellation of all or a portion of any
outstanding indebtedness of Purchaser to the Company or in cash (by check) or
both.
5. The Company may assign its rights under Sections 2 and 3 hereof.
6. If, from time to time during the term of the Repurchase Right or
the First Refusal Right:
(a) There is any stock dividend or liquidating dividend of
cash/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or
substantially all, of the assets of the Company unless such consolidation,
merger or sale is with a publicly-owned corporation and the aggregate market
value of the securities or other property the stockholders of the Company
receive is in excess of Ten Million Dollars ($10,000,000), then, in such event,
any and all new, substituted or additional securities or other property (other
than cash) to which Purchaser is entitled by reason of his ownership of Stock
shall be immediately subject to the Repurchase Right or the First Refusal Right,
as the case may be, and be included in the word "Stock" for all purposes of the
Repurchase Right and the First Refusal Right with the same force and effect as
the shares of Stock subject to the Repurchase Right and the First Refusal Right
under the terms of Section 2 and 3 hereof. While the total Repurchase Price
shall remain the same after each such event, the Repurchase Price per share of
Stock upon exercise of the Repurchase Right shall be appropriately adjusted.
Stock acquired as provided in clauses (a) or (b) above shall be deemed to have
been acquired at the time of acquisition of the Stock on which such Stock was
distributed.
7. All certificates representing any shares of Stock subject to
the provisions of this Agreement shall have endorsed thereon the following
legends:
(a) "Any disposition of any interest in the securities
represented by this certificate is subject to restrictions, and the securities
represented by this certificate are subject to a repurchase right and a first
refusal right contained in a certain agreement between the record holder hereof
and the corporation, a copy of which will be mailed to any holder of this
certificate without charge after receipt by the corporation of a written request
therefor."
(b) Any legend required to be placed thereon by federal or state
securities laws.
8. Purchaser acknowledges that he is aware that the Stock to be
issued to him by the Company pursuant to this Agreement has not been registered
under the Securities Act of 1933, as amended. In this connection, Purchaser
warrants and represents to the Company as follows:
(a) Purchaser is purchasing the Stock solely for its own account
for investment and not with a view to or for sale or distribution of the Stock
or any portion thereof and not with
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<PAGE> 13
any present intention of selling, offering to sell or otherwise disposing of or
distributing the Stock or any portion thereof. Purchaser also represents that
the entire legal and beneficial interest of the Stock which Purchaser is
purchasing is being purchased for, and will be held for the account of,
Purchaser only and neither in whole nor in part for any other person.
(b) Purchaser has heretofore discussed the Company and its
plans, operations and financial condition with its officers and Purchaser has
heretofore received all such information as Purchaser deems necessary and
appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Stock of the Company and Purchaser further
represents and warrants that Purchaser has received satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) Purchaser realizes that its purchase of the Stock will be
a highly speculative investment and that Purchaser is able, without impairing
its financial condition, to hold the Stock for an indefinite period of time and
to suffer a complete loss on his investment.
(d) The Company has disclosed (or hereby does disclose) to
Purchaser in writing:
(i) the sale of the Stock which it is purchasing has not
been registered under the Securities Act of 1933, as
amended (the "Act"), and the Securities must be held
indefinitely unless a transfer of them is subsequently
registered under the Act or an exemption from such
registration is available;
(ii) the share certificate representing the Stock will be
stamped with the legends restricting transfer specified
in this Agreement between the Company and Purchaser;
and
(iii) the Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.
(e) Purchaser understands that the shares of Stock are restricted
securities within the meaning of Rule 144 promulgated under the Act; that the
exemption from registration under Rule 144 will not be available in any event
for at least two years from the date of sale of the Stock to it, and even then
will not be available unless (i) a public trading market then exists for the
Stock of the Company, (ii) adequate current public information concerning the
Company is then available to the public, (iii) it has been the beneficial owner
and it has paid the full purchase price for the Stock at least two years prior
to the sale, and (iv) other terms and conditions of Rule 144 are complied with;
and that any sale of the Stock may be made by it only in limited amounts in
accordance with such terms and conditions, as amended from time to time.
(f) Without in any way limiting its representations set forth
above, Purchaser further agrees that it shall in no event make any disposition
of all or any portion of the Stock
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<PAGE> 14
which it is purchasing unless and until:
(i) There is then in effect a Registration Statement under
the Act covering such proposed disposition and such
disposition is made in accordance with said
Registration Statement: or
(ii) (A) It shall have notified the Company of the proposed
disposition and shall have furnished the Company with a
detailed statement of circumstances surrounding the
proposed disposition, (B) it shall have furnished the
Company with an opinion of its own counsel to the
effect that such disposition will not require
registration of such shares under the Act, and (C) such
opinion of its counsel shall have been concurred in by
counsel for the Company and the Company shall have
advised it of such concurrence.
9. The Company shall not be required (a) to transfer on its books any
shares of Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
In the event of a sale of Stock by Purchaser pursuant to Section 3(c) hereof,
Purchaser shall furnish to the Company proof that such sale was made in
compliance with the provisions of Section 3(c) hereof as to price and general
terms of such sale.
10. Subject to the provisions of this Agreement, Purchaser shall,
during the term of this Agreement, exercise all rights and privileges of a
shareholder of the Company with respect to the Stock.
11. If Purchaser makes an election under Section 83(b) of the Code, he
will provide a copy thereof to the Company within thirty days of the filing of
such election with the Internal Revenue Service.
12. Purchaser shall pay to the Company, or make provision satisfactory
to the Committee for payment of, any taxes required by law to be withheld in
respect of the Restricted Stock no later than the date of the event creating the
tax liability. In the Committee's discretion, such tax obligations may be paid
in whole or in part in shares of Common Stock, including the Restricted Stock,
valued at Fair Market Value on the date of delivery. The Company and its
Affiliates may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to Purchaser.
13. Any determination by the Committee under, or interpretation
of the terms of, this Agreement or the Plan will be final and binding on
Purchaser.
14. Any notice required or permitted hereunder by any party hereto
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the
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<PAGE> 15
United States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to the other party hereto at such other party's address
hereinafter shown below such other party's signature or at such other address as
such other party may have designated by ten days' advance written notice to such
party.
15. This Agreement shall inure to the benefit of the successors and
assigns of the Company and be binding upon Purchaser and his heirs, executors,
administrators, successors and assigns.
16. This Agreement shall be governed by and interpreted under the
laws of the State of Delaware.
17. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
DYAX CORP.
By:
------------------------------------
Henry E. Blair
President
Address: One Kendall Square
Building 600, 5th Floor
Cambridge, MA 02139
PURCHASER:
----------------------------------------
Robert A. Dishman, individually
Address: 37 Garland Road
Concord, MA 01742
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<PAGE> 17
EXHIBIT B-1
PROMISSORY NOTE
$93,600.00 Cambridge, Massachusetts
February 18, 1998
For value received, the undersigned Robert A. Dishman of Concord,
Massachusetts 01742 (the "Borrower") promises to pay to Dyax Corp. ("Dyax"), the
principal sum of Ninety-Three Thousand Six Hundred Dollars ($93,600.00), with
interest on the unpaid principal balance at a rate of five and
sixty-nine/hundredths percent (5.69%) per annum, or if higher, at such rate as
may be necessary from time to time to avoid the imputation of interest under
sections 1274 or 7872 of the Internal Revenue Code of 1986 (or corresponding
provisions of subsequent laws), as amended. Interest shall accrue from the date
hereof on the unpaid principal balance and shall be due and payable annually on
each February 18. The principal amount of this note and all accrued and unpaid
interest thereon shall be due and payable on February 18, 2002; provided,
however, that if a Vesting Event (as defined in the Restricted Stock Purchase
Agreement (the "Purchase Agreement") dated as of February 18, 1998 between the
Borrower and Dyax) has occurred, the foregoing shall be due and payable on the
later of (i) the Vesting Event and (ii) February 18, 2000. Except as otherwise
provided in Section 2.5.3 of the Executive Employment Agreement (the "Employment
Agreement") dated as of February 18, 1998 between the Borrower and Dyax,
payments of principal and interest shall be made in lawful money of the United
States of America at the principal office of Dyax in Massachusetts, or by check
mailed to such other place as the holder hereof shall designate.
At the option of the holder, this note shall immediately become due and
payable upon occurrence of any of the following events (each an "Event of
Default"): (i) default in the payment of any installment of principal or
interest due hereunder and not otherwise forgiven under the Employment
Agreement; (ii) termination of the Borrower's employment as an officer of Dyax
other than a termination pursuant to Sections 3.1.1 or 3.1.2 of the Employment
Agreement or a termination without cause pursuant to Section 3.1.4 of the
Employment Agreement.
The unpaid balance hereof may be paid in part or in full at any time
without penalty. All prepayments shall be applied first to the payment of
principal.
This note is secured pursuant to a certain Pledge Agreement (as the
same may be amended from time to time, hereinafter referred to as the "Pledge
Agreement"), dated as of February 18, 1998 granted by the Borrower in favor of
Dyax, and Dyax by its acceptance hereof, shall be entitled to the benefits, and
subject to the terms, of the Pledge Agreement.
The undersigned agrees to pay, upon maturity (by acceleration or
otherwise), costs of collection, including reasonable attorneys' fees.
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<PAGE> 18
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder; nor shall any delay, omission or waiver on any occasion be deemed a bar
to or waiver of the same or any other right on any future occasion. The
undersigned and every indorser or guarantor of this note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any one or more extensions or postponements of the
time of payment or any other indulgences, to any substitutions, exchanges or
releases of collateral if at any time there be available to the holder
collateral for this note, and to the additions or releases of any other parties
or persons primarily or secondarily liable.
All rights and obligations hereunder shall be governed by and construed
in accordance with the law of the Commonwealth of Massachusetts and this note
shall be deemed to be under seal.
-------------------------------
Robert A. Dishman, individually
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<PAGE> 19
EXHIBIT B-2
PROMISSORY NOTE
$360,000.00 Cambridge, Massachusetts
February 18, 1998
For value received, the undersigned Robert A. Dishman of Concord,
Massachusetts 01742 (the "Borrower") promises to pay to Dyax Corp. ("Dyax"), the
principal sum of Three Hundred Sixty Thousand Dollars ($360,000.00), with
interest on the unpaid principal balance at a rate of five and
sixty-nine/hundredths percent (5.69%) per annum, or if higher, at such rate as
may be necessary from time to time to avoid the imputation of interest under
sections 1274 or 7872 of the Internal Revenue Code of 1986 (or corresponding
provisions of subsequent laws), as amended. Interest shall accrue from the date
hereof on the unpaid principal balance and shall be due and payable annually on
each February 18. The principal amount of this note and all accrued and unpaid
interest thereon shall be due and payable on February 18, 2002; provided,
however, that if a Vesting Event (as defined in the Restricted Stock Purchase
Agreement (the "Purchase Agreement") dated as of February 18, 1998 between the
Borrower and Dyax) has occurred, the foregoing shall be due and payable on the
later of (i) the Vesting Event and (ii) February 18, 2000. Except as otherwise
provided in Section 2.5.3 of the Executive Employment Agreement (the "Employment
Agreement") dated as of February 18, 1998 between the Borrower and Dyax,
payments of principal and interest shall be made in lawful money of the United
States of America at the principal office of Dyax in Massachusetts, or by check
mailed to such other place as the holder hereof shall designate.
At the option of the holder, this note shall immediately become due and
payable upon occurrence of any of the following events (each an "Event of
Default"): (i) default in the payment of any installment of principal or
interest due hereunder and not otherwise forgiven under the Employment
Agreement; (ii) termination of the Borrower's employment as an officer of Dyax
other than a termination without cause pursuant to Section 3.1.4 of the
Employment Agreement; and (iii) in the case of any termination without cause
pursuant to Section 3.1.4 of the Employment Agreement, the earlier of (A) a
Vesting Event, and (B) the date of Dyax's repurchase of any of the Borrower's
Unvested Shares (as defined in the Purchase Agreement).
The unpaid balance hereof may be paid in part or in full at any time
without penalty. All prepayments shall be applied first to the payment of
principal.
This note is secured pursuant to a certain Pledge Agreement (as the
same may be amended from time to time, hereinafter referred to as the "Pledge
Agreement"), dated as of February 18, 1998 granted by the Borrower in favor of
Dyax, and Dyax by its acceptance hereof, shall be entitled to the benefits, and
subject to the terms, of the Pledge Agreement.
The undersigned agrees to pay, upon maturity (by acceleration or
otherwise), costs of
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<PAGE> 20
collection, including reasonable attorneys' fees.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder; nor shall any delay, omission or waiver on any occasion be deemed a bar
to or waiver of the same or any other right on any future occasion. The
undersigned and every indorser or guarantor of this note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any one or more extensions or postponements of the
time of payment or any other indulgences, to any substitutions, exchanges or
releases of collateral if at any time there be available to the holder
collateral for this note, and to the additions or releases of any other parties
or persons primarily or secondarily liable.
All rights and obligations hereunder shall be governed by and construed
in accordance with the law of the Commonwealth of Massachusetts and this note
shall be deemed to be under seal.
-------------------------------
Robert A. Dishman, individually
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<PAGE> 21
EXHIBIT C-1
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") dated as of February 18, 1998
is made by Robert A. Dishman (the "Borrower"), residing at 37 Garland Road,
Concord, Massachusetts 01742, in favor of Dyax Corp. ("Dyax"), a Delaware
corporation with its principal place of business at One Kendall Square, Building
600, Cambridge, Massachusetts 02139.
RECITALS
1. Dyax has agreed to make a $93,600 loan (the "Loan") to the
Borrower on or after the date hereof evidenced by a promissory note of the
Borrower in the original principal amount of $93,600 (the "Note").
2. Dyax is willing to make the Loan upon the condition, among others,
that the Borrower enter into this Agreement to secure the Liabilities (as
defined in Section 11 hereof).
NOW, THEREFORE, for and in consideration of the premises and the Loan
made by Dyax and other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the Borrower
represents, warrants, covenants and agrees as follows:
1. PLEDGE. To secure the prompt, punctual, and faithful performance
of all and each of the present and future Liabilities of the Borrower to Dyax,
the Borrower hereby grants to Dyax, a security interest in and to, and assigns,
pledges, and delivers to Dyax certificates representing certain shares of the
Common Stock of Dyax issued to the Borrower as of the date hereof or issuable to
the Borrower hereafter ("Pledged Securities"), together with appropriate undated
stock powers duly executed in blank, and all products, proceeds, substitutions,
additions, interest, dividends, and other distributions in respect thereto, as
described in Section 2 below (all of which are referred to hereinafter as the
"Collateral").
2. STOCK DIVIDENDS, DISTRIBUTIONS, ETC. If, while this Agreement is
in effect, the Borrower shall become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital, or issued in connection with any
reorganization), whether as an addition to, in substitution of or in exchange
for any shares of any Pledged Securities, or otherwise, the Borrower agrees to
accept the same as agent for Dyax and to hold the same in trust on behalf of and
for the benefit of Dyax and to deliver the same forthwith to Dyax in the exact
form received, with the indorsement of the Borrower when necessary and/or with
appropriate undated stock powers duly executed in blank, to be held by Dyax as
part of the Collateral. In case any distribution of capital shall be made on or
in respect of the Pledged Securities or any property shall be distributed upon
or with respect to the Pledged Securities pursuant to the recapitalization or
reclassification of the capital of Dyax or pursuant
- 21 -
<PAGE> 22
to the reorganization thereof, the property so distributed shall be delivered to
Dyax as Collateral. All sums of money and property so paid or distributed in
respect of the Pledged Securities which are received by the Borrower shall,
until paid or delivered to Dyax, be held by the Borrower in trust as Collateral.
3. CASH DIVIDENDS; VOTING RIGHTS. Unless a Default (as defined in
Section 6) has occurred and is continuing, the Borrower shall be entitled to
receive all cash dividends paid in respect of the Pledged Securities, to vote
the Pledged Securities and to give consents, waivers and ratifications, and to
take other action in respect of the Pledged Securities. After the occurrence and
during the continuance of any Default, Dyax shall have the right, upon notice to
the Borrower, to receive all cash dividends paid in respect of the Pledged
Securities and to exercise voting rights as specified in Section 7 below.
4. BORROWER'S REPRESENTATIONS. The Borrower hereby represents,
warrants and covenants as follows:
(a) The Borrower has the full power, authority and legal right
to enter into this Agreement to be bound hereby and to perform and observe the
terms and conditions hereof, and is in compliance with all applicable material
laws, rules and regulations.
(b) This Agreement has been duly executed and delivered by the
Borrower and constitutes the legal, valid and binding obligation of the Borrower
enforceable against him in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws affecting creditors' rights generally and to moratorium laws
from time to time in effect and to general principles of equity.
(c) The execution, delivery and performance by the Borrower of
this Agreement does not and will not (i) violate or constitute a default under
any provision of any agreement, note or instrument which is binding upon the
Borrower or by which his properties are bound or materially affected, or any
law, rule or regulation, order writ, injunction or decree of any court or
governmental instrumentality or any contractual restriction binding on the
Borrower, or (ii) require any filing with or consent or other act by or in
respect of any governmental authority or other person or entity (other than the
filing of the appropriate number of UCC-1 financing statements covering the
Pledged Securities, if necessary, and any consent obtained by the Borrower prior
to the date hereof) or (iii) constitute a default thereunder or result in the
imposition or require the creation of any lien or charge (other than those
created, continued or otherwise contemplated hereby) upon the assets of the
Borrower.
(d) The Pledged Securities consist of not fewer than 60,000
shares of Common Stock of Dyax and are held and owned by the Borrower free and
clear of all liens, encumbrances, attachments, security interests, pledges and
charges, other than those in favor of Dyax.
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<PAGE> 23
5. BORROWER'S COVENANTS. The Borrower shall
(a) if the Collateral is in the form of a certificated security,
within the meaning of the Uniform Commercial Code, as adopted in the
Commonwealth of Massachusetts (the "Code"), surrender possession of the
Collateral to Dyax;
(b) if the Collateral is in the form of an uncertificated
security, within the meaning of the Code, cause Dyax to record this pledge in
the records of Dyax relating to the Pledged Securities;
(c) execute all such instruments, documents, and papers, and
will do all such acts as Dyax may reasonably request now and from time to time
hereafter with respect to the perfection of the security interest granted herein
and the assignment effected hereby, including without limitation making payments
of the proceeds of the Loan and such additional amounts as are necessary to
cause the current pledgee of the certificates for the Pledged Securities to
deliver such certificates to Dyax;
(d) keep the Collateral free and clear of all liens,
encumbrances, attachments, security interests, pledges, and charges, except in
favor of Dyax or created by Dyax;
(e) deliver to Dyax, if and when received by the Borrower, any
item representing or constituting any of the Collateral or, except as otherwise
provided herein, proceeds of Collateral;
(f) not cause or permit any of the Collateral presently
evidenced by a written certificate to be converted to uncertificated securities,
except on request of Dyax; and
(g) not exercise any right with respect to the Collateral which
would dilute or otherwise adversely affect Dyax's rights to the Collateral.
6. DEFAULT. Upon the occurrence of a Default, any and all Liabilities
of the Borrower to Dyax shall become immediately due and payable at the option
of Dyax and without further notice or demand, in addition to which Dyax may
exercise Dyax's rights and remedies upon Default, as set forth hereinafter. For
purposes of this Agreement, a "Default" under this Agreement shall mean any of
the following events: (i) an Event of Default under any Note, (ii) any
representation or warranty made by the Borrower in this Agreement being untrue
in any material respect when made, or (iii) failure of the Borrower to observe
or perform any other covenant, agreement or other term of this Agreement and the
continuation of such failure without it having been duly cured for a period of
thirty (30) days after written notice thereof given by Dyax to the Borrower.
7. EFFECT OF DEFAULT. Upon the occurrence of any Default, and at
any time thereafter, unless and until the Default may be cured, Dyax shall have
the right to apply the Collateral toward the satisfaction of the Liabilities, to
sell or otherwise dispose of the Collateral and/or enforce and collect the
Collateral for application towards (but not necessarily in complete
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<PAGE> 24
satisfaction) of the Liabilities, in addition to all of the rights and remedies
of a secured party upon default under the Code. The Borrower shall remain liable
to Dyax for any deficiency remaining following such application to any
Liabilities. Any and all shares of the Pledged Securities may be registered in
the name of Dyax or its nominee, and Dyax or its nominee may thereafter without
further notice exercise all voting and corporate rights at any meeting of any
issuer and exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any shares of the Pledged
Securities as if it were the absolute owner thereof, including without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other readjustment of any issuer or upon the exercise by any issuer or Dyax or
such nominee of any right, privilege or option pertaining to any shares of the
Pledged Securities, and, in connection therewith, to deposit and deliver any and
all of the Pledged Securities with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine, all without liability except to account for property actually
received by it, but Dyax shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure to do
so or delay in so doing so long as it acts in good faith. The Borrower
acknowledges that any exercise by Dyax of Dyax's rights upon default may be
subject to compliance by Dyax with state and/or federal law governing the sale
of securities. Except as otherwise provided herein, the net proceeds which Dyax
shall receive from the sale of the Collateral, in accordance with the provisions
hereof, shall be applied in the following manner: First, to the payment of all
costs and expenses incurred by Dyax in connection with the administration and
enforcement of, or the preservation of any rights under, or otherwise in
connection with this Agreement (including, without limitation, the costs and
expenses of retaking, holding, preparing for sale or selling of any Collateral
and the reasonable fees and disbursements of its counsel and agents); Second, to
the payment of all other Liabilities in such order of priority as Dyax may
determine in its sole discretion; and Third, as otherwise provided by applicable
law.
8. PRIVATE PLACEMENTS.
(a) The Borrower recognizes that Dyax may be unable to effect a
public sale of any or all of the Pledged Securities by reason of certain
prohibitions contained in the federal securities laws and applicable state or
foreign securities law, but may resort to one or more private sales thereof to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for their own account for investment and not with a
view to the distribution or resale thereof. The Borrower acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Dyax shall be under no obligation to
delay a sale of any of the Pledged Securities for the period of time necessary
to permit the issuer of such securities to register such securities for public
sale under the federal securities law, or under applicable state securities law,
even if the issuer would agree to do so.
(b) The Borrower further agrees to use commercially reasonable
efforts to do or cause to be done all such other acts and things (other than
effect the registration of the Pledged
- 24 -
<PAGE> 25
Securities under applicable federal, state or foreign laws) as may be necessary
to make such sale or sales of any portion or all of the Pledged Securities valid
and binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all courts, arbitrators
or governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Borrower's expense. The Borrower further
agrees that a breach of any of the covenants contained in this Section 8 will
cause irreparable injury to Dyax, and that Dyax will have no adequate remedy at
law in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 8 shall be specifically enforceable against
the Borrower.
9. APPOINTMENT OF DYAX AS ATTORNEY-IN-FACT. In furtherance of the
remedies provided in Sections 7 and 8, the Borrower hereby designates Dyax as
and for the attorney-in-fact of the Borrower after the occurrence and during the
continuance of a Default to endorse in favor of Dyax any of the Collateral, to
cause the transfer of any of the Collateral in such name as Dyax may from time
to time determine, to cause the issuance of certificates for book entry and/or
uncertificated securities, and to make demand and to initiate actions to
accomplish the purposes of this Agreement. In connection with any action to
enforce any of the Collateral, Dyax may make such compromise or settlement with
respect to the Collateral as Dyax determines to be appropriate. After and during
the continuance of a Default, and in furtherance of the remedies provided in
Sections 7 and 8, Dyax shall also have and may exercise at any time all rights,
remedies, powers, and discretions of the Borrower with respect to and under the
Collateral. The within designation, being coupled with an interest, is
irrevocable until the within instrument is terminated by a written instrument
executed by a duly authorized officer of Dyax. Dyax shall not be liable for any
act or omission to act pursuant to this Paragraph except for any act or omission
to act which is in actual bad faith or which is grossly negligent.
10. CUMULATIVE REMEDIES. The rights, remedies, powers, privileges, and
discretions of Dyax hereunder (hereinafter, "Dyax's Rights And Remedies") shall
be cumulative and not exclusive of any rights or remedies which it otherwise may
have. No delay or omission by Dyax in exercising or enforcing any of Dyax's
Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver
by Dyax of any Default or of any default under any other agreement shall operate
as a waiver of any other default hereunder or under any other agreement. No
exercise of any of Dyax's Rights and Remedies and no other agreement or
transaction of whatever nature entered into between Dyax and the Borrower at any
time shall preclude any other exercise of Dyax's Rights and Remedies. No waiver
by Dyax of any of Dyax's Rights and Remedies on any one occasion shall be deemed
a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver.
All of Dyax's Rights and Remedies and all of Dyax's rights, remedies, powers,
privileges, and discretions under any other agreement or transaction are
cumulative and not alternative or exclusive and may be exercised by Dyax at such
time or times and in such order of preference as Dyax in its sole discretion may
determine.
11. DEFINITION OF LIABILITIES. "Liabilities" shall mean (i) all
indebtedness, obligations and liabilities of the Borrower, whether of principal,
interest, fees, expenses or otherwise, now existing or hereafter contracted or
incurred under or in connection with the Loan and any and all extensions,
renewals, refinancings and refunding of any such indebtedness in
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<PAGE> 26
whole or in part, (ii) all costs and expenses incurred by Dyax in the collection
of any of such Borrower indebtedness, including without limitation reasonable
attorneys' fees and legal expenses, and (iii) all future advances made by Dyax
for the protection or preservation of the Collateral or any portion thereof.
12. WAIVERS BY BORROWER. The Borrower
(a) waives presentment, demand, notice, and protest with respect
to the Liabilities and the Collateral; and
(b) waives any delay on the part of Dyax; and
(c) assents to any indulgence or waiver which Dyax may grant or
give to the Borrower or any other person liable or obliged to Dyax for or on the
Liabilities; and
(d) agrees that no release of any property securing the
Liabilities shall affect the rights of Dyax with respect to the Collateral
hereunder; and
(e) if entitled thereto, waives the right to notice and/or
hearing prior to Dyax's exercising of Dyax's rights and remedies hereunder upon
default.
13. PARTIAL RELEASE UPON PAY-DOWN OF THE NOTE. Upon written notice
from the Borrower that he wishes to sell some or all of the Pledged Securities
and apply the proceeds of such sale to amounts due under the Note, Dyax agrees
to deliver promptly to a broker designated by the Borrower and reasonably
satisfactory to Dyax certificates representing such Pledged Securities, provided
that such instructions include or are accompanied by irrevocable instruction
from the Borrower (with signature guarantee) to the broker requiring that the
net proceeds from the sale of such Pledged Securities be delivered by check
payable to Dyax and that a certificate for any shares of the Pledged Securities
remaining unsold be returned to Dyax.
14. DUTIES OF DYAX. Dyax shall have no duty as to the collection or
protection of the Collateral or any income or distribution thereon, beyond the
safe custody of such of the Collateral as may come into the possession of Dyax
and shall have no duty as to the preservation of rights against prior parties or
any other rights pertaining thereto. Dyax's Rights and Remedies may be exercised
without resort or regard to any other source of satisfaction of the Liabilities.
15. BINDING AGREEMENT. This Agreement shall be binding upon the
Borrower and upon the Borrower's representatives, successors, and assigns, and
shall enure to the benefit of Dyax and its successors and assigns.
16. COMPLETE AGREEMENT. This Agreement and all other instruments
executed in connection herewith incorporate all discussions and negotiations
among Dyax and the Borrower concerning the matters included herein and in such
other instruments. No such discussions or negotiations shall limit, modify, or
otherwise affect the provisions hereof. No modification,
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<PAGE> 27
amendment, or waiver of any provision of this Agreement shall be effective
unless executed in writing by the party to be charged with such modification,
amendment and waiver, and if such party be Dyax, then by a duly authorized
officer thereof other than the Borrower.
17. USE OF ORIGINALS. This Agreement and all other documents in Dyax's
possession which relate to the Liabilities may be reproduced by Dyax by any
photographic, photostatic, microfilm, micro-card, miniature photographic,
xerographic, or similar process, and, with the exception of instruments
constituting the Collateral, Dyax may destroy the original from which any
document was so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is an existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile, or further reproduction shall likewise be admissible in evidence.
18. NOTICES. All notices, requests, demands and other communications
to be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given if delivered by hand or overnight courier or mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the party to receive notice at its or his respective address set
forth in the first paragraph of this Agreement or such other address as such
party shall have designated by notice in writing to the other party in
accordance with this section.
19. GOVERNING LAW. This Agreement, and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of the Commonwealth of Massachusetts. The Borrower
submits to the jurisdiction of the courts of said Commonwealth for all purposes
with respect to this Agreement and the Borrower's relationships with Dyax.
20. SEALED INSTRUMENT. It is intended that this Agreement take effect
as a sealed instrument.
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<PAGE> 28
IN WITNESS WHEREOF, the undersigned has executed the foregoing Pledge
Agreement as of the date first above written.
-------------------------------
Robert A. Dishman, individually
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<PAGE> 29
EXHIBIT C-2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") dated as of February 18, 1998
is made by Robert A. Dishman (the "Borrower"), residing at 37 Garland Road,
Concord, Massachusetts 01742, in favor of Dyax Corp. ("Dyax"), a Delaware
corporation with its principal place of business at One Kendall Square, Building
600, Cambridge, Massachusetts 02139.
RECITALS
(a) Dyax has agreed to make a $360,000 loan (the "Loan") to the
Borrower on or after the date hereof evidenced by a promissory note of the
Borrower in the original principal amount of $360,000 (the "Note").
(b) Dyax is willing to make the Loan upon the condition, among
others, that the Borrower enter into this Agreement to secure the Liabilities
(as defined in Section 11 hereof).
NOW, THEREFORE, for and in consideration of the premises and the Loan
made by Dyax and other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the Borrower
represents, warrants, covenants and agrees as follows:
1. PLEDGE. To secure the prompt, punctual, and faithful performance
of all and each of the present and future Liabilities of the Borrower to Dyax,
the Borrower hereby grants to Dyax, a security interest in and to, and assigns,
pledges, and delivers to Dyax certificates representing certain shares of the
Common Stock of Dyax issued to the Borrower as of the date hereof or issuable to
the Borrower hereafter ("Pledged Securities"), together with appropriate undated
stock powers duly executed in blank, and all products, proceeds, substitutions,
additions, interest, dividends, and other distributions in respect thereto, as
described in Section 2 below (all of which are referred to hereinafter as the
"Collateral").
2. STOCK DIVIDENDS, DISTRIBUTIONS, ETC. If, while this Agreement is
in effect, the Borrower shall become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital, or issued in connection with any
reorganization), whether as an addition to, in substitution of or in exchange
for any shares of any Pledged Securities, or otherwise, the Borrower agrees to
accept the same as agent for Dyax and to hold the same in trust on behalf of and
for the benefit of Dyax and to deliver the same forthwith to Dyax in the exact
form received, with the indorsement of the Borrower when necessary and/or with
appropriate undated stock powers duly executed in blank, to be held by Dyax as
part of the Collateral. In case any distribution of capital shall be made on or
in respect of the Pledged Securities or any property shall be distributed upon
or with respect to the Pledged Securities pursuant to the recapitalization or
reclassification of the capital of Dyax or pursuant
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<PAGE> 30
to the reorganization thereof, the property so distributed shall be delivered to
Dyax as Collateral. All sums of money and property so paid or distributed in
respect of the Pledged Securities which are received by the Borrower shall,
until paid or delivered to Dyax, be held by the Borrower in trust as Collateral.
3. CASH DIVIDENDS; VOTING RIGHTS. Unless a Default (as defined in
Section 6) has occurred and is continuing, the Borrower shall be entitled to
receive all cash dividends paid in respect of the Pledged Securities, to vote
the Pledged Securities and to give consents, waivers and ratifications, and to
take other action in respect of the Pledged Securities. After the occurrence and
during the continuance of any Default, Dyax shall have the right, upon notice to
the Borrower, to receive all cash dividends paid in respect of the Pledged
Securities and to exercise voting rights as specified in Section 7 below.
4. BORROWER'S REPRESENTATIONS. The Borrower hereby represents,
warrants and covenants as follows:
(a) The Borrower has the full power, authority and legal right
to enter into this Agreement to be bound hereby and to perform and observe the
terms and conditions hereof, and is in compliance with all applicable material
laws, rules and regulations.
(b) This Agreement has been duly executed and delivered by the
Borrower and constitutes the legal, valid and binding obligation of the Borrower
enforceable against him in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws affecting creditors' rights generally and to moratorium laws
from time to time in effect and to general principles of equity.
(c) The execution, delivery and performance by the Borrower of
this Agreement does not and will not (i) violate or constitute a default under
any provision of any agreement, note or instrument which is binding upon the
Borrower or by which his properties are bound or materially affected, or any
law, rule or regulation, order writ, injunction or decree of any court or
governmental instrumentality or any contractual restriction binding on the
Borrower, or (ii) require any filing with or consent or other act by or in
respect of any governmental authority or other person or entity (other than the
filing of the appropriate number of UCC-1 financing statements covering the
Pledged Securities, if necessary, and any consent obtained by the Borrower prior
to the date hereof) or (iii) constitute a default thereunder or result in the
imposition or require the creation of any lien or charge (other than those
created, continued or otherwise contemplated hereby) upon the assets of the
Borrower.
(d) The Pledged Securities consist of not fewer than 120,000
shares of Common Stock of Dyax and are held and owned by the Borrower free and
clear of all liens, encumbrances, attachments, security interests, pledges and
charges, other than those in favor of Dyax.
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<PAGE> 31
5. BORROWER'S COVENANTS. The Borrower shall
(a) if the Collateral is in the form of a certificated security,
within the meaning of the Uniform Commercial Code, as adopted in the
Commonwealth of Massachusetts (the "Code"), surrender possession of the
Collateral to Dyax;
(b) if the Collateral is in the form of an uncertificated
security, within the meaning of the Code, cause Dyax to record this pledge in
the records of Dyax relating to the Pledged Securities;
(c) execute all such instruments, documents, and papers, and
will do all such acts as Dyax may reasonably request now and from time to time
hereafter with respect to the perfection of the security interest granted herein
and the assignment effected hereby, including without limitation making payments
of the proceeds of the Loan and such additional amounts as are necessary to
cause the current pledgee of the certificates for the Pledged Securities to
deliver such certificates to Dyax;
(d) keep the Collateral free and clear of all liens,
encumbrances, attachments, security interests, pledges, and charges, except in
favor of Dyax or created by Dyax;
(e) deliver to Dyax, if and when received by the Borrower, any
item representing or constituting any of the Collateral or, except as otherwise
provided herein, proceeds of Collateral;
(f) not cause or permit any of the Collateral presently
evidenced by a written certificate to be converted to uncertificated securities,
except on request of Dyax; and
(g) not exercise any right with respect to the Collateral which
would dilute or otherwise adversely affect Dyax's rights to the Collateral.
6. DEFAULT. Upon the occurrence of a Default, any and all Liabilities
of the Borrower to Dyax shall become immediately due and payable at the option
of Dyax and without further notice or demand, in addition to which Dyax may
exercise Dyax's rights and remedies upon Default, as set forth hereinafter. For
purposes of this Agreement, a "Default" under this Agreement shall mean any of
the following events: (i) an Event of Default under any Note, (ii) any
representation or warranty made by the Borrower in this Agreement being untrue
in any material respect when made, or (iii) failure of the Borrower to observe
or perform any other covenant, agreement or other term of this Agreement and the
continuation of such failure without it having been duly cured for a period of
thirty (30) days after written notice thereof given by Dyax to the Borrower.
7. EFFECT OF DEFAULT. Upon the occurrence of any Default, and at any
time thereafter, unless and until the Default may be cured, Dyax shall have the
right to apply the Collateral toward the satisfaction of the Liabilities, which
application shall be done in accordance
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<PAGE> 32
with Section 2.5.2 of the Executive Employment Agreement of even date between
the Borrower and Dyax with respect to any Unvested Shares (as defined in such
agreement), to sell or otherwise dispose of the Collateral and/or enforce and
collect the Collateral for application towards (but not necessarily in complete
satisfaction) of the Liabilities, in addition to all of the rights and remedies
of a secured party upon default under the Code. The Borrower shall remain liable
to Dyax for any deficiency remaining following such application to any
Liabilities. Any and all shares of the Pledged Securities may be registered in
the name of Dyax or its nominee, and Dyax or its nominee may thereafter without
further notice exercise all voting and corporate rights at any meeting of any
issuer and exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any shares of the Pledged
Securities as if it were the absolute owner thereof, including without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other readjustment of any issuer or upon the exercise by any issuer or Dyax or
such nominee of any right, privilege or option pertaining to any shares of the
Pledged Securities, and, in connection therewith, to deposit and deliver any and
all of the Pledged Securities with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine, all without liability except to account for property actually
received by it, but Dyax shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure to do
so or delay in so doing so long as it acts in good faith. The Borrower
acknowledges that any exercise by Dyax of Dyax's rights upon default may be
subject to compliance by Dyax with state and/or federal law governing the sale
of securities. Except as otherwise provided herein, the net proceeds which Dyax
shall receive from the sale of the Collateral, in accordance with the provisions
hereof, shall be applied in the following manner: First, to the payment of all
costs and expenses incurred by Dyax in connection with the administration and
enforcement of, or the preservation of any rights under, or otherwise in
connection with this Agreement (including, without limitation, the costs and
expenses of retaking, holding, preparing for sale or selling of any Collateral
and the reasonable fees and disbursements of its counsel and agents); Second, to
the payment of all other Liabilities in such order of priority as Dyax may
determine in its sole discretion; and Third, as otherwise provided by applicable
law.
8. PRIVATE PLACEMENTS.
(a) The Borrower recognizes that Dyax may be unable to effect a public
sale of any or all of the Pledged Securities by reason of certain prohibitions
contained in the federal securities laws and applicable state or foreign
securities law, but may resort to one or more private sales thereof to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for their own account for investment and not with a
view to the distribution or resale thereof. The Borrower acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Dyax shall be under no obligation to
delay a sale of any of the Pledged Securities for the period of time necessary
to permit the issuer of such securities to register such securities for public
sale under the federal securities law, or under applicable state securities law,
even if the issuer would agree to do so.
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<PAGE> 33
(b) The Borrower further agrees to use commercially reasonable efforts
to do or cause to be done all such other acts and things (other than effect the
registration of the Pledged Securities under applicable federal, state or
foreign laws) as may be necessary to make such sale or sales of any portion or
all of the Pledged Securities valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all at the
Borrower's expense. The Borrower further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to Dyax, and
that Dyax will have no adequate remedy at law in respect of such breach and, as
a consequence, agrees that each and every covenant contained in this Section 8
shall be specifically enforceable against the Borrower.
9. APPOINTMENT OF DYAX AS ATTORNEY-IN-FACT. In furtherance of the
remedies provided in Sections 7 and 8, the Borrower hereby designates Dyax as
and for the attorney-in-fact of the Borrower after the occurrence and during the
continuance of a Default to endorse in favor of Dyax any of the Collateral, to
cause the transfer of any of the Collateral in such name as Dyax may from time
to time determine, to cause the issuance of certificates for book entry and/or
uncertificated securities, and to make demand and to initiate actions to
accomplish the purposes of this Agreement. In connection with any action to
enforce any of the Collateral, Dyax may make such compromise or settlement with
respect to the Collateral as Dyax determines to be appropriate. After and during
the continuance of a Default, and in furtherance of the remedies provided in
Sections 7 and 8, Dyax shall also have and may exercise at any time all rights,
remedies, powers, and discretions of the Borrower with respect to and under the
Collateral. The within designation, being coupled with an interest, is
irrevocable until the within instrument is terminated by a written instrument
executed by a duly authorized officer of Dyax. Dyax shall not be liable for any
act or omission to act pursuant to this Paragraph except for any act or omission
to act which is in actual bad faith or which is grossly negligent.
10. CUMULATIVE REMEDIES. The rights, remedies, powers, privileges, and
discretions of Dyax hereunder (hereinafter, "Dyax's Rights And Remedies") shall
be cumulative and not exclusive of any rights or remedies which it otherwise may
have. No delay or omission by Dyax in exercising or enforcing any of Dyax's
Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver
by Dyax of any Default or of any default under any other agreement shall operate
as a waiver of any other default hereunder or under any other agreement. No
exercise of any of Dyax's Rights and Remedies and no other agreement or
transaction of whatever nature entered into between Dyax and the Borrower at any
time shall preclude any other exercise of Dyax's Rights and Remedies. No waiver
by Dyax of any of Dyax's Rights and Remedies on any one occasion shall be deemed
a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver.
All of Dyax's Rights and Remedies and all of Dyax's rights, remedies, powers,
privileges, and discretions under any other agreement or transaction are
cumulative and not alternative or exclusive and may be exercised by Dyax at such
time or times and in such order of preference as Dyax in its sole discretion may
determine.
11. DEFINITION OF LIABILITIES. "Liabilities" shall mean (i) all
indebtedness, obligations and liabilities of the Borrower, whether of principal,
interest, fees, expenses or
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<PAGE> 34
otherwise, now existing or hereafter contracted or incurred under or in
connection with the Loan and any and all extensions, renewals, refinancings and
refunding of any such indebtedness in whole or in part, (ii) all costs and
expenses incurred by Dyax in the collection of any of such Borrower
indebtedness, including without limitation reasonable attorneys' fees and legal
expenses, and (iii) all future advances made by Dyax for the protection or
preservation of the Collateral or any portion thereof.
12. WAIVERS BY BORROWER. The Borrower
(a) waives presentment, demand, notice, and protest with respect
to the Liabilities and the Collateral; and
(b) waives any delay on the part of Dyax; and
(c) assents to any indulgence or waiver which Dyax may grant or
give to the Borrower or any other person liable or obliged to Dyax for or on the
Liabilities; and
(d) agrees that no release of any property securing the
Liabilities shall affect the rights of Dyax with respect to the Collateral
hereunder; and
(e) if entitled thereto, waives the right to notice and/or
hearing prior to Dyax's exercising of Dyax's rights and remedies hereunder upon
default.
13. PARTIAL RELEASE UPON PAY-DOWN OF THE NOTE. Upon written notice
from the Borrower that he wishes to sell some or all of the Pledged Securities
and apply the proceeds of such sale to amounts due under the Note, Dyax agrees
to deliver promptly to a broker designated by the Borrower and reasonably
satisfactory to Dyax certificates representing such Pledged Securities, provided
that such instructions include or are accompanied by irrevocable instruction
from the Borrower (with signature guarantee) to the broker requiring that the
net proceeds from the sale of such Pledged Securities be delivered by check
payable to Dyax and that a certificate for any shares of the Pledged Securities
remaining unsold be returned to Dyax.
14. DUTIES OF DYAX. Dyax shall have no duty as to the collection or
protection of the Collateral or any income or distribution thereon, beyond the
safe custody of such of the Collateral as may come into the possession of Dyax
and shall have no duty as to the preservation of rights against prior parties or
any other rights pertaining thereto. Dyax's Rights and Remedies may be exercised
without resort or regard to any other source of satisfaction of the Liabilities.
15. BINDING AGREEMENT. This Agreement shall be binding upon the
Borrower and upon the Borrower's representatives, successors, and assigns, and
shall enure to the benefit of Dyax and its successors and assigns.
16. COMPLETE AGREEMENT. This Agreement and all other instruments
executed in connection herewith incorporate all discussions and negotiations
among Dyax and the Borrower
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<PAGE> 35
concerning the matters included herein and in such other instruments. No such
discussions or negotiations shall limit, modify, or otherwise affect the
provisions hereof. No modification, amendment, or waiver of any provision of
this Agreement shall be effective unless executed in writing by the party to be
charged with such modification, amendment and waiver, and if such party be Dyax,
then by a duly authorized officer thereof other than the Borrower.
17. USE OF ORIGINALS. This Agreement and all other documents in Dyax's
possession which relate to the Liabilities may be reproduced by Dyax by any
photographic, photostatic, microfilm, micro-card, miniature photographic,
xerographic, or similar process, and, with the exception of instruments
constituting the Collateral, Dyax may destroy the original from which any
document was so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is an existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile, or further reproduction shall likewise be admissible in evidence.
18. NOTICES. All notices, requests, demands and other communications
to be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given if delivered by hand or overnight courier or mailed by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the party to receive notice at its or his respective address set
forth in the first paragraph of this Agreement or such other address as such
party shall have designated by notice in writing to the other party in
accordance with this section.
19. GOVERNING LAW. This Agreement, and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of the Commonwealth of Massachusetts. The Borrower
submits to the jurisdiction of the courts of said Commonwealth for all purposes
with respect to this Agreement and the Borrower's relationships with Dyax.
20. SEALED INSTRUMENT. It is intended that this Agreement take effect
as a sealed instrument.
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<PAGE> 36
IN WITNESS WHEREOF, the undersigned has executed the foregoing Pledge
Agreement as of the date first above written.
-------------------------------
Robert A. Dishman, individually
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<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into effective
as of August ____, 1995 (the "Effective Date"), between Biotage, Inc.
("Biotage"), a Delaware corporation with its principal executive offices at 1500
Avon Street, Ext., Charlottesville, Virginia 22901, and Robert Ladner (the
"Executive"), residing, at 3827 Green Valley Road, Ijahmvalle, Maryland, 21754.
ARTICLE 1. RECITALS
1.1. BACKGROUND. Biotage desires to obtain the services of Executive
to serve as Senior Vice President and Senior Science Officer of Protein
Engineering Corporation, a Massachusetts corporation and the wholly-owned
subsidiary of Biotage ("PEC"). Executive is willing to devote his time and
render services to Biotage upon the terms and conditions set forth below.
ARTICLE 2. PROVISION OF SERVICES
2.1. RETENTION OF EXECUTIVE, TERM. Subject to the terms and conditions
hereof, Biotage agrees to retain Executive to perform the duties described in
Section 2.2 for the period commencing on the Effective Date and terminating on
the third anniversary of the Effective Date, unless earlier terminated as herein
provided.
2.2. DUTIES. During the term of this Agreement, Executive agrees to
devote his full time and efforts to his duties hereunder and to serve as Senior
Vice President and Senior Science Officer of PEC. Executive agrees to perform
the duties incident to the aforementioned office, including without limitation
(a) continuing to develop PEC's technology platform, (b) management of PEC's
patent activities and other proprietary property and rights, (c) establishing
and overseeing external collaborations and (d) preparing and submitting grant
applications to various governmental and private funding agencies. Executive
shall report to the President of PEC. The duties and title of Executive shall
not be reduced without the agreement of Executive.
ARTICLE 3. PAYMENTS
For all services to be rendered by Executive to Biotage pursuant to
this Agreement, Biotage shall pay to Executive the amounts and provide for
Executive the benefits set forth below:
3.1. BASE SALARY. Biotage shall pay to Executive a base salary (the
"Base Salary") of $125,000 per annum, payable in regular installments in
accordance with Biotage's usual payment practices. The Base Salary shall be
reviewed by the President of PEC at the end of
<PAGE> 2
each twelve (12) month period during the term of this Agreement; provided,
however, that notwithstanding the foregoing, under no circumstances shall the
Base Salary be reduced below the amount specified in the preceding sentence
during the term of this Agreement.
3.2. STOCK OPTIONS. Concurrently with the execution and delivery of
this Agreement, Biotage will grant to Executive an option to purchase 55,000
shares of the Common stock, $.01 par value per share (the "Common Stock"), of
Biotage at an option price equal to the current fair market value of such Common
Stock. The options shall become exercisable with respect to 13,750 shares on the
Effective Date and, with respect to the remaining 41,250 shares, 859 shares per
month for forty-seven months commencing on September 1, 1995 and 877 shares in
the forty-eighth month following the Effective Date. The options shall be
subject to the terns and conditions set forth in Biotage's 1995 Equity Incentive
Plan (the "Plan") and shall contain other terms and conditions as may be imposed
by the Compensation Committee of the Board of Directors of Biotage.
3.3. FRINGE BENEFITS. In addition to Executive's Base Salary, Biotage
shall provide Executive medical Insurance (single coverage) with the right to
purchase family coverage under the Biotage group insurance plan, together with
such other benefits, including life and disability insurance, profit sharing and
pension benefits, as are generally made available by Biotage to its full-time
executive employees. Upon Executive's written request, Biotage shall reimburse
Executive for that portion of the total cost of obtaining medical insurance from
the employer of Executive's spouse which is attributable to Executive.
3.4. VACATION. Executive shall be entitled to four (4) weeks of paid
vacation per year, plus at least ten (10) paid national holidays as may be
provided generally to Biotage's employees.
3.5. PARTICIPATION IN FUTURE EQUITY INCENTIVE PLANS. Executive shall
be entitled to participate, to the extent and in the manner determined by
Biotage's Board of Directors in its absolute discretion, in any stock option,
stock purchase or other equity incentive plans established by Biotage, it any,
it being the understanding of Biotage and Executive that such participation
would be for the purpose of providing Executive additional opportunities for
equity participation in Biotage.
ARTICLE 4. EARLY TERMINATION
4.1. EARLY TERMINATION. Executive's services hereunder shall
terminate prior to the expiration of the term of this Agreement upon the
occurrence of any of the following events:
4.1.1. Executive's death or legal incapacity; or
4.1.2. The termination of Executive's services hereunder by the
Board of Directors of Biotage, at its option, to be exercised by
written notice to Executive, upon Executive's other incapacity or
inability to further perform
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<PAGE> 3
services as contemplated herein for a period aggregating ninety
(90) days or more within any six (6) month period because
Executive's physical or mental health shall have become impaired
so as to make it impossible or impractical to perform the duties
and responsibilities contemplated hereunder, or
4.1.3. The termination of Executive's services hereunder by the
Board of Directors of Biotage, at its option, to be exercised by
written notice to Executive, in the event of Executive's gross
neglect of duties hereunder or commission of an act of dishonesty
or moral turpitude in connection with employment, as determined
by such Board of Directors; or
4.1.4. The termination of Executive's services hereunder by the
Board of Directors of Biotage, at its option, which may be
exercised with or without cause, to he exercised by delivery of
ninety (90) days prior written notice from Biotage to Executive;
or
4.1.5. The termination of Executive's services hereunder by
Executive to be exercised by delivery of ninety (90) days prior
written notice from Executive to Biotage.
4.2. PAYMENTS UPON EARLY TERMINATION. Notwithstanding any other
provisions in this Agreement or any stock option agreement or stock restriction
agreement between Executive and Biotage to the contrary:
4.2.1. If Executive's services to Biotage terminate pursuant to
Section 4.1.1. or 4.1.2., (a) all payments and benefits provided to
Executive under this Agreement shall cease as of the date of
termination and (b) all stock options and restricted stock in Biotage,
if any, held by Executive on that date shall become immediately
exercisable or vest, as the case may be, on that date.
4.2.2. If Executive's services to Biotage terminate pursuant to
Section 4.1.3. or 4.1.5, (a) all payments and benefits provided
Executive under this Agreement shall cease as of the date of
termination of employment and (b) all further vesting on all stock
options and restricted stock in Biotage, if any, held by Executive on
that date shall immediately cease as of the date of termination, and
thereafter, such stock options shall be exercisable and such restricted
stock shall be subject to repurchase by Biotage in accordance with
their respective terms.
4.2.3. If Executive's services to Biotage terminate pursuant to
Section 4.l.4., (a) all payments and benefits provided to Executive
under this Agreement shall continue until the date (the "Severance
Date") twelve (12) months after the date of termination, (b) fifty
percent (50%) of all unvested stock options and restricted stock in
Biotage, if any, held by Executive on that date shall become
immediately exercisable or vest, as the case may be, on that date and
(c) all further vesting on all
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<PAGE> 4
of the remaining stock options and restricted stock in Biotage, if any,
held by Executive on the date of termination of employment shall
immediately cease, and thereafter, such stock options shall be
exercisable and such restricted stock shall be subject to repurchase by
Biotage in accordance with their respective terms.
ARTICLE 5. COVENANTS AGAINST COMPETITION WITH BIOTAGE
5.1. NON-SOLICITATION COVENANT. During the term that Executive
provides services to Biotage under this Agreement and for a period of twelve
(12) months immediately following the termination of such services for any
reason, Executive shall not directly or indirectly induce or attempt to induce
any employees of Biotage to leave the employment of Biotage.
5.2. NON-COMPETITION COVENANT. Executive agrees that (i) during the
term that Executive provides services to Biotage under this Agreement and (ii)
for a period (the "Non- competition Period") of twelve (12) months following the
termination of such services pursuant to Section 4.1.3 or 4.1.5, Executive shall
not directly or indirectly, except as a passive investor in publicly held
companies, engage in competition with Biotage or any of its subsidiaries, or own
or control any interest in, or act as director, officer or employee of, or
consultant to, any firm, corporation or institution directly or indirectly
engaged in competition with Biotage or any of its subsidiaries (including,
without limitation, PEC).
ARTICLE 6. INVENTIONS AND CONFIDENTIAL INFORMATION
6.1. CONFIDENTIALITY AGREEMENT. Executive agrees to execute an
Employee Confidentiality and Invention Agreement with Biotage, a copy of which
is attached hereto as Exhibit A and incorporated herein by reference and made a
part of this Agreement.
ARTICLE 7. RIGHT TO INFORMATION
Executive is entitled to receive, upon the written request of
Executive, such notices and other information with respect to any meetings of
the Board of Directors of Biotage as are delivered to the Directors of Biotage;
provided, however, that it is acknowledged and agreed by the parties hereto that
Executive shall not by reason of this Agreement have access to any confidential
information concerning the individual employees of Biotage.
ARTICLE 8. MISCELLANEOUS
8.1. OBLIGATION OF SUCCESSORS. Any successor to substantially all of
Biotage's assets and business, whether by merger, consolidation, purchase of
assets or otherwise, shall succeed to the rights and obligations of Biotage
hereunder.
8.2. NOTICES. All notices, requests, demands and other communications
to be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given
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<PAGE> 5
to a party if delivered by hand or mailed by registered or certified mail,
return receipt requested, postage prepaid, to such party at its address set
forth above in the first paragraph or at such other address as either party
hereto shall have designated by notice in writing to the other party.
8.3. COMPLETE AGREEMENT; AMENDMENTS. This Agreement, including all
Exhibits referred to herein and attached hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof and may
not be modified or amended except in a writing signed by both parties.
8.4. APPLICABLE LAW. This Agreement shall be considered to have been
made in the United States, and shall be interpreted in accordance with the laws
of the Commonwealth of Virginia, United States of America, and the parties
hereby submit to the jurisdiction of the courts of that state.
8.5. SEVERABILITY. If any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, it shall not affect any other term or provision of this
Agreement. If any provision in this Agreement shall be held to be excessively
broad, it shall be construed by limiting it so as to be enforceable to the
extent compatible with applicable law.
8.6. BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, successors,
assigns and person representatives.
8.7. ASSIGNMENT. Except as otherwise provided in Section 8.1, neither
this Agreement nor any rights hereunder shall be assignable by any party hereto
without the prior written consent of the other party.
8.8. SURVIVAL. Articles 5 and 6 shall survive the termination of this
Agreement for the periods of time indicated therein.
8.9. CAPTIONS. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
8.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first above written.
BIOTAGE, INC.
By: /s/ Henry E. Blair
-----------------------
Title: Chairman
/s/ Robert Ladner
---------------------------
Robert Ladner
-6-
<PAGE> 1
EXHIBIT 10.5
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is entered into effective
as of October 15, 1997 (the "Effective Date") between DYAX CORP. ("Dyax"), a
Delaware corporation, with its principal executive offices at One Kendall
Square, Bldg. 600, 5th Fl., Cambridge, MA 02139, and JAMES W. FORDYCE
("Consultant"), of 370 Lake Ave., Greenwich, CT 06880.
ARTICLE 1. RECITALS
1.1. Dyax, on behalf of itself and its subsidiaries and successors,
whether now existing or hereafter acquired or established (severally and
collectively, the "Company") desires to obtain the services of Consultant, and
Consultant is willing to render his services in assisting the strategic
direction of the Company's technology and business (the "Field of Interest"),
upon the terms and conditions set forth below.
1.2. Consultant has executed a Consultant Confidentiality and
Inventions Agreement with the Company dated effective as of the Effective Date
(the "Confidentiality Agreement"), a copy of which is attached hereto as
EXHIBIT 1.
1.3. Capitalization terms used in this Agreement but not defined
herein shall have the meaning assigned in the Confidentiality Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and Consultant hereby agree as follows:
ARTICLE 2. ENGAGEMENT AND SCOPE OF WORK
2.1. ENGAGEMENT. Subject to the following terms and conditions,
the Company hereby retains the Consultant to serve as a member of the Company's
Strategic Advisory Board and to perform such consulting and advisory services in
the Field of Interest as the Company may from time to time reasonably request,
and Consultant accepts such engagement. such consulting and advisory services
are referred to herein as the "Services".
2.2. COMMITMENT. Consultant agrees to make himself available to render
the Services from time to time as requested by the Company at such times and
locations as may be mutually agreed, provided that the Consultant shall not be
required to devote time equivalent to more than one day per month to the
performance of the Services.
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<PAGE> 2
ARTICLE 3. PAYMENTS AND INVOICES
3.1. MONTHLY RETAINER RATE. For all services under this Agreement,
Dyax will pay consultant a fee at the rate of US$1,250 per month. Consultant
acknowledges and agrees that the foregoing schedule of fees shall be full
compensation for Consultant's services during the term of this Agreement. Fees
will be paid monthly in arrears.
3.2. STOCK OPTIONS. Subject to the approval of the Board of Directors,
the Company shall grant Consultant a nonstatutory stock option to purchase
15,000 shares of the Company's Common Stock pursuant to the Company's 1995
Equity Incentive Plan (the "Option") at the then fair market value of the
Company's Common Stock as determined in good faith by the Company's Board of
Directors. So long as Consultant is providing Services to the Company, the
Option shall become exercisable over a period of four years in accordance with
the Company's customary schedule for members of its other advisory boards.
Consultant's options shall be subject to the terms of the Company's standard
form of Nonstatutory Stock Option Certificate, and his acceptance thereof shall
evidence his acceptance of the terms and conditions of the Option set forth
therein.
3.3. EXPENSES. Travel and related expenses incurred by Consultant in
connection with the performance of Services under this Agreement will be
reimbursed at actual costs by the Company in accordance with general policies
and procedures established by the Company from time to time. No reimbursement
will be made for any expenses other than travel and related expenses incurred by
Consultant during the performance of services under this Agreement unless such
expenses are approved in advance by the Company. All approvals by the Company
must be given or confirmed in writing; expense approvals can be requested from
the President or any Executive Vice President of the Company.
ARTICLE 4. CONFIDENTIALITY AND INVENTIONS
4.1. CONFIDENTIALITY AND INVENTIONS. Consultant has executed, or in
connection with this Agreement is executing the "Confidentiality Agreement" with
the Company, and he agrees to be bound by the terms of the Confidentiality
Agreement.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF CONSULTANT
5.1. COMPLIANCE WITH EMPLOYER'S POLICIES. Consultant is responsible
for ensuring that any consulting agreement Consultant enters into is not in
conflict with the patent, consulting or other policies of his employer, and that
Consultant is responsible for disclosing the activities contemplated by any such
consulting agreement to the employer. Consultant represents and warrants (i)
that Consultant has determined that this Agreement complies with all such
policies of the employer and (ii) that Consultant has made such disclosure.
Consultant agrees to keep the employer informed of any changes in his activities
hereunder and to obtain any necessary formal approvals, consents, waivers and
other agreements or actions from or by the employer as may be required by the
employer in connection with this Agreement and the Confidentiality Agreement.
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<PAGE> 3
5.2. ABSENCE OF RESTRICTIONS. Except for the consultants existing and
future fiduciary and confidentiality obligations to others, Consultant is
presently under no contractual or other restrictions or obligation which is
inconsistent with Consultant's execution of this Agreement or the
Confidentiality Agreement or the performance of the Services, and during the
Term, Consultant will not enter into any agreement, either written or oral, in
conflict with this Agreement or the Confidentiality Agreement.
ARTICLE 6. TERM AND TERMINATION
6.1. TERM. This Agreement shall have an initial term of twelve (12)
months ending on the first anniversary of the Effective Date and may be extended
by mutual agreement for additional one year periods.
6.2. Termination. This Agreement may be terminated by either the
Company or Consultant upon not less than thirty (30) days prior written notice
to the other party. The provisions of the Confidentiality Agreement shall
survive for a period of 3 years following any termination of this Agreement.
ARTICLE 7. MISCELLANEOUS
7.1. INDEPENDENT CONTRACTOR. Consultant is an independent contractor
under this Agreement. He is not an employee or agent of the Company and as a
result will not be entitled to participate in, or receive any benefit or right
as an employee under any employee benefit or welfare plan of the Company nor
have authority to represent or bind the Company in any manner in dealings with
third parties. Consultant shall have sole responsibility for payment of all
federal, state and local taxes or contributions imposed or required under
unemployment insurance, social security and income tax laws and for filing all
required tax forms with respect to any amounts paid by the Company to Consultant
hereunder. Consultant shall indemnify and hold the Company harmless against any
claim or liability (including penalties) resulting from failure of Consultant to
pay such taxes or contributions or file any such tax forms.
7.2. NOTICES. All notices, requests, demands and other communications
to be given pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given to a party if delivered by hand or mailed by registered
or certified mail, return receipt requested, postage prepaid, to such party at
its address set forth in the first paragraph or at such other address as such
party shall have designated by notice in writing to the other party.
7.3. NO CONFLICTING AGREEMENTS. Consultant represents that his
performance of all the terms of this Agreement does not and will not breach any
agreement or obligation to keep in confidence proprietary information acquired
by him in confidence or in trust. Consultant has not entered into, and
Consultant agrees he will not enter into, any agreement either written or oral
in conflict herewith. Notwithstanding the foregoing, the Company acknowledges
that it is the nature of Consultant's business that at some time in the future,
Consultant may make an investment(s) in a company(ies) which is in a similar
and/or competing business as the Company. It is understood by the Company that
the general knowledge Consultant obtains from his consulting relationship with
the Company may
3
<PAGE> 4
influence his future investment decisions and that this does not constitute a
violation of this Agreement.
7.4. SEVERABILITY. If any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, it shall not affect any other term or provisions of this
Agreement. If any provision in this Agreement shall be held to be excessively
broad, it shall be construed by limiting it so as to be enforceable to the
extent with applicable law.
7.5. CAPTIONS. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
7.6. BINDING EFFECT. Consultant's obligations under this Agreement
shall be binding upon his heirs, executors and administrators and shall inure to
the benefit of the Company's successor's and assigns.
7.7. COMPLETE AGREEMENT; AMENDMENTS. This Agreement, together with the
Confidentiality Agreement, constitutes the entire agreement between the parties
with respect to the subject matter hereof and may not be modified or amended
except in a writing signed by both parties.
7.8. RIGHTS OF PUBLICITY. The Company shall have the right to use
Consultant's name and likeness in any publicity materials prepared by it and in
presentations to current or prospective clients, investors and others.
Consultant shall not have the right to use the Company's name in any
publications or publicity or materials prepared by him without obtaining the
prior written consent of the Company.
7.9. APPLICABLE LAW. This Agreement shall be considered to have been
made in the United States, and shall be interpreted in accordance with the laws
of the Commonwealth of Massachusetts, United States of America, and the parties
hereby submit to the jurisdiction of the courts of that state.
7.10. NONWAIVER PROVISION. The waiver by either party hereto of any
right hereunder or the failure to perform or of a breach by the other party
shall not be deemed a waiver of any other right hereunder or of any breach or
failure by said other party whether similar nature or otherwise.
7.11. ASSIGNMENT. Neither this Agreement nor any rights hereunder shall
be assignable by either party hereto without the prior written consent of the
other party.
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<PAGE> 5
7.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS HEREOF, the Company and the Consultant have duly executed
and delivered this Agreement as of the date first written above.
DYAX CORP. JAMES W. FORDYCE
By: /s/ Henry E. Blair By: /s/ James W. Fordyce
------------------ --------------------
5
<PAGE> 6
EXHIBIT 1
CONSULTANT CONFIDENTIALITY AND INVENTIONS AGREEMENT
In consideration of my engagement as a consultant to Dyax Corp. or any
of its predecessors, successors or subsidiaries (collectively, the "Company"),
and for other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, I agree as follows:
CONFIDENTIALITY
I understand that the Company continually obtains and develops valuable
proprietary and confidential information concerning it business, business
relationships and financial affairs (the "Confidential Information") and
valuable Biological Materials which may become known to me in connection with my
consulting arrangement with the Company. By way of illustration, but not
limitation, Confidential Information may include Inventions (as hereafter
defined), trade secrets, technical information, know-how, research and
development activities of the Company, product and marketing plans, customer and
supplier information and information disclosed to the Company or to me by third
parties of a proprietary or confidential nature or under an obligation of
confidence. Confidential Information is contained in various media, including
without limitation, patent applications, computer programs in object and/or
source code, flow charts and other program documentation, manuals, plans,
drawings, designs, technical specifications, laboratory notebooks, supplier and
customer lists, internal financial data and other documents and records of the
Company. "Biological Materials" may include, without limitation, any and all
reagents, substances, chemical compounds, subcellular constituents, cells or
cell lines, organisms and progeny, mutants, derivatives or replications thereof
or therefrom.
I acknowledge that all Biological Materials and all Confidential
Information, whether or not in writing and whether or not labeled or identified
as confidential or proprietary, is and shall remain the exclusive property of
the Company or the third party providing such information to me or the Company.
I agree that I shall not, during the term of my consulting arrangement with the
Company and thereafter, publish, disclose or otherwise make available to any
third party, other than employees of the Company, and Confidential Information
or Biological Materials except as expressly authorized in writing by the
Company. I agree that I shall use such Confidential Information and Biological
Materials only in the performance of my consulting arrangement with the Company,
and not for my own benefit or for the benefit of any other person or business
entity.
I agree to exercise all reasonable precautions to protect the
confidentiality of Confidential Information and Biological Materials in my
possession and not to remove any Biological Materials from the Company's
premises. Upon the termination of my consulting arrangement with the Company, or
at any time upon the Company's request, I shall return immediately to the
Company any and all materials containing any Confidential Information then in my
possession or under my control.
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<PAGE> 7
Confidential Information shall not include information which (a) is or
becomes generally known within the Company's industry through no fault of mine;
(b) was known to me at the time it was disclosed as evidenced by my written
records at the time of disclosure; (c) is lawfully and in good faith made
available to me by third party who did not derive it from the Company and who
imposes no obligation of confidence on me; or (d) is required to be disclosed by
a governmental authority or by order of a court of competent jurisdiction,
provided that such disclosure is subject to all applicable governmental or
judicial protection available for like material and reasonable advance notice is
given to the Company.
ASSIGNMENT OF INVENTIONS
I agree promptly to disclose to the Company any and all ideas,
concepts, discoveries, inventions, developments, original works of authorship,
software programs, software and systems documentation, trade secrets, technical
data, know-how and Biological Materials that are conceived, devised, invented,
developed or reduced to practice or tangible medium by me, under my direction or
jointly with others in the Field of Interest which may arise out of my
consulting relationship with the Company (collectively, "Inventions").
I hereby assign to the Company all of my right, title and interest to
the Inventions and any and all related patent rights, copyrights and
applications and registrations therefor. During and after my consulting
arrangement with the Company, I shall cooperate with the Company, at the
Company's expense, in obtaining proprietary protection for the Inventions and I
shall execute all documents which the Company shall reasonably request in order
to perfect the Company's rights in the Inventions. I hereby appoint the Company
my attorney to execute and deliver any such documents on my behalf in the event
I should fail or refuse to do so within a reasonable period following the
Company's request.
Notwithstanding the foregoing, any discoveries, improvements and
inventions, made or conceived by me prior to my consultancy with the Company, or
not otherwise covered by the foregoing, are expressly reserved and excepted from
the provisions of this agreement.
GENERAL
In the event that any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and all other provisions shall remain in
full force and effect. If any of the provisions of this Agreement is held to be
excessively broad, it shall be reformed and construed by limiting and reducing
it so as to be enforceable to the maximum extent permitted by law.
No delay or omission by the Company in exercising any right under this
Agreement will operate as a waiver of that or any other right. No waiver or
consent given by the Company on any occasion will be construed as a bar to or
continuing waiver of any right on any other occasion.
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<PAGE> 8
I acknowledge that the restrictions contained in this agreement are
necessary for the protection of the business and goodwill of the Company and are
reasonable for such purpose. I agree that any breach of this agreement by me
will cause irreparable damage to the Company and that in the event of such
breach, the Company will have, in addition to any and all remedies of law, the
right to an injunction, specific performance, or other equitable relief, to
prevent the violation of my obligations hereunder.
This Agreement shall be construed as a sealed instrument and shall in
all events and for all purposes by governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts without regard to any choice
of law principle that would dictate the application of the laws of another
jurisdiction. This Agreement supersedes all prior agreements, written or oral,
with respect to the subject matter of this Agreement.
AGREED:
Signature: /s/ James W. Fordyce
--------------------
8
<PAGE> 1
EXHIBIT 10.6
[LETTERHEAD OF DYAX CORP.]
January 6, 1998
Mr. Keith S. Ehrlich
58 Pine Hill Lane
Concord, MA 01742
Dear Keith:
This letter sets forth our understanding of your employment by Dyax Corp. in
the position of Senior Vice President, Finance and Administration and Chief
Financial Officer, reporting to the Chief Executive Officer. You will be
responsible for all finance and administration matters, including human
resources and employee benefits. In addition, you will share responsibility for
investor relations with me and participate in business development activities
with senior management. I understand that you will begin working with us
full-time by the end of this month.
Dyax will pay you a base salary of $165,000 per year ($13,750 per month), which
is subject to adjustment on an annual basis by the Compensation Committee of the
Board of Directors (the "Committee"). In addition, for the 1998 calendar year,
you will be eligible for a bonus of $50,000 based on specific individual and
corporate objectives set by me, with the Committee to determine achievement of
the bonus at the end of the year. All payments shall be made to you in
accordance with Dyax's standard payroll practices.
Subject to approval by the Committee, Dyax agree to grant you options to
purchase 35,000 shares of Dyax Common Stock vesting in full six months after the
date of your employment; and options to purchase 105,000 shares of Dyax Common
Stock vesting monthly in equal installments over 48 months beginning with the
date of your employment. Such options shall be granted at the fair market value
price on the date of grant, as determined by the Committee, and shall be subject
to Dyax's 1995 Equity Incentive Plan and standard form of Stock Option
Agreement. All options shall be treated as incentive stock options, except as
may be required by law to be treated as non-statutory options upon grant or upon
exercise. Non-statutory options shall have a three-year exercise period upon
termination of employment.
You will be eligible to participate in the Company's employee benefits,
including health and dental insurance and 401(k) Savings Plan. Dyax requires
that you execute the Company's standard Employee Confidentiality Agreement (copy
attached), and comply with federal and state employment laws and regulations.
<PAGE> 2
In the event your employment is terminated by the Company without cause, other
than as a consequence of change of control as discussed below, Dyax agrees to
continue to pay you your monthly base salary for a period of six months,
accelerate the vesting (if unvested) of 50% of all stock options granted to you
at any time through the termination of your employment, and extend the exercise
period of your resulting vested stock options for a period of three years. If
your employment is terminated for cause by the Company or is terminated by you
for any reason (other than as a result of change of control, as discussed
below), your compensation and stock options vesting shall cease as of the
terminate date. For purposes of this offer, "cause" shall mean the gross neglect
in the performance of your duties or the commission of an act of dishonesty or
moral turpitude in connection with your employment, as determined by the Board
of Directors.
In the event of a change of control of Dyax which adversely affects your
position and responsibilities as an executive of the Company and results in
termination of your employment, whether by the Company or by yourself, Dyax
agrees to continue to pay you your monthly base salary for a period of six
months, accelerate the vesting of all stock options granted to you at any time
through the termination of your employment, and extend the exercise period of
your resulting vesting stock options for a period of three years. For purposes
of this offer, "change of control" shall mean a change in ownership of more than
50% of the voting stock of the Company in one transaction or a series of related
transactions by one investor or affiliated group of investors, except as a
result of any private or public debt or equity financing the net cash proceed of
which inure to Dyax.
If this agreement accurately sets forth our understanding of your employment by
Dyax, please sign both copies of this letter and return one copy to me. We very
much look forward to having you join Dyax, and believe that you can make
significant contributions to the growth of our operations.
AGREED to by and on behalf of
DYAX CORP.
/s/ Henry E. Blair
- ------------------------------------
Henry E. Blair
Chairman and Chief Executive Officer
AGREED to by and on behalf of
KEITH S. EHRLICH:
/s/ Keith S. Ehrlich
- ------------------------------------
Date: Jan. 7, 1998
------------------------------
<PAGE> 3
DYAX EMPLOYEE CONFIDENTIALITY AGREEMENT
THIS AGREEMENT (the "Agreement") is made this 6 day of January, 1998.
BETWEEN
DYAX CORP., a Delaware corporation, having its principal place of business
at One Kendall Square, Bldg. 600, 5th Floor, Cambridge, MA 02139, and its
affiliates, ("Dyax"), and
Keith S. Ehrlich (the "Employee").
1. EMPLOYEE RESTRICTIONS.
In consideration of, and as a condition of the Employee's continued
employment with Dyax, the Employee agrees as follows:
(a) CONFIDENTIAL INFORMATION: As of the date of the Employee's employment by
Dyax and thereafter, the Employee shall treat as strictly confidential all
proprietary, secret, unpublished and confidential information and materials
which relate to the business or interests of Dyax, including, but not limited
to, the business plans, technical projects, trade secrets, know-how, operations,
customer lists, research datum or results, inventions, formulas, cell lines,
chemical and biological compounds, products and processes developed by or for
Dyax (the "Confidential Information"). The Employee shall not disclose or use
Confidential Information in any manner or form other than in performance of the
services required during his/her employment by Dyax.
(b) ASSIGNMENT OF RIGHTS: Any and all information, data, inventions,
discoveries, formulas, biological or chemical materials, notebooks and other
work product which the Employee conceives, develops or acquires during his/her
employment with Dyax, and for a period of six (6) months after the termination
date of his/her employment with Dyax, which directly or indirectly relates to
work performed for Dyax (the "Proprietary Property"), shall be the sole and
exclusive property of Dyax. The Employee shall promptly execute any and all
documents necessary to assign this property to Dyax.
(c) INTELLECTUAL PROPERTY: During the Employee's employment at Dyax, the
Employee shall promptly assist with and execute any and all applications,
assignments or other documents which an officer or director of Dyax shall deem
necessary or useful in order to obtain and maintain patent, trademark or other
intellectual property protection for Dyax's products or services. After the
termination date of his/her employment with Dyax the Employee shall use
reasonable efforts to assist Dyax on intellectual property matters as they
relate to his/her employment, and Dyax shall reasonably compensate the Employee
for his/her time and expense.
<PAGE> 4
(d) DYAX PROPERTY: Upon termination of the Employee's employment with Dyax,
the Employee shall return and deliver to Dyax all copies of Confidential
Information (as defines in (a) above) and all Proprietary Property (as defined
in (b) above and all other property furnished to the Employee by Dyax,
including, without limitation, documents, records, notebooks and equipment. The
Employee shall not take with him/her any such property, except as expressly
authorized in writing by an officer or director of Dyax.
(e) NON-SOLICITATION: As of the date of the Employee's employment by Dyax and
for a period of one (1) year after the termination date of his/her employment at
Dyax, the Employee shall not directly or indirectly solicit on behalf of himself
or others (i) the employment of any employees or exclusive consultants of Dyax,
or (ii) any of the business being conducted by Dyax or being actively pursued by
Dyax with any customer or partner.
2. SCOPE OF THIS AGREEMENT
(a) The provisions of this Agreement shall survive the termination of the
Employee's employment with Dyax.
(b) The Employee acknowledges that the restrictions contained in this
Agreement are reasonable in view of the nature of the business in which Dyax is
engaged and the Employee's knowledge of Dyax business.
(c) Dyax is permitted to assign its rights and obligations under this
Agreement.
(d) The Employee also acknowledges that any breach of this Agreement amy cause
Dyax irreparable harm for which Dyax would be entitled to the issuance by a
court of competent jurisdiction of an injunction, restraining order or other
equitable relief in favor of restraining the Employee from committing or
continuing any violation of this Agreement. Any right to obtain such equitable
relief will not be deemed a waiver of any right to assert any other remedy or
request any other relief which Dyax may have under this Agreement or otherwise
at law or in equity.
(e) If in any jurisdiction any provision of this Agreement or its application
to any party or circumstance is restricted, prohibited or determined
unenforceable, the remaining provisions of this Agreement shall remain
unaffected and enforceable. In addition, if any provision of this Agreement
shall be held to be excessively broad as to time, duration, geographical scope,
activity or subject, the provision shall be construed so as to be enforceable to
the extent compatible with the applicable law.
<PAGE> 5
(f) This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
AGREED:
EMPLOYEE DYAX CORP.
/s/ Keith S. Ehrlich /s/ Henry E. Blair
-------------------------- ------------------------
(signature) (signature)
CFO Chairman & CEO
-------------------------- ------------------------
(title) (title)
<PAGE> 1
Exhibit 10.7
DYAX CORP.
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement (this "Agreement") is made as of
March 30, 1997 (the "Effective Date"), by and between Dyax Corp., a Delaware
corporation (the "Company"), and Henry E. Blair ("Purchaser").
The Company desires to issue and sell, and Purchaser desires to purchase,
Common Stock of the Company, on the terms and conditions hereinafter set forth,
as "Restricted Stock" issued pursuant to the Company's 1995 Equity Incentive
Plan. Capitalized terms not otherwise defined herein have the meanings given to
them in the Plan. Accordingly, it is agreed between the parties as follows:
1. Purchaser hereby agrees to purchase from the Company, and the Company
agrees to sell to the Purchaser, 175,000 shares of the Company's Common Stock,
par value $0.01 per share, for a purchase price of $0.50 per share, payable in
cash at the closing. The closing hereunder shall be deemed to have occurred on
the Effective Date or at such later date as the Company receives payment of the
purchase price.
2. All of the shares of the Company's Common Stock being purchased by
Purchaser pursuant to this Agreement (hereinafter sometimes collectively
referred to as the "Stock") shall be subject to the repurchase right
("Repurchase Right") set forth in this Section 2.
(a) If the Purchaser shall cease to be providing services to the
Company as a consultant, advisor or employee (any such capacity to be deemed to
be "providing services"), then the Company may exercise the Repurchase Right, as
provided in Section 2(b) below, at the purchase price per share set forth in
Section 1 above ("Repurchase Price") with respect to all shares of Stock that
are not vested (the "Unvested Shares"). For the purposes of this Section 2(a),
the shares of Stock purchased pursuant to this Agreement shall vest in
forty-eight (48) substantially equal monthly installments (any fractional shares
to be cumulated and to become exercisable at the end of the earliest succeeding
monthly period in which a whole share equivalent is accumulated) on each monthly
anniversary of the Effective Date. In the event of the Purchaser's death or
permanent disability, all non-vested Stock owned by the Purchaser shall
automatically become vested on the date of the Purchaser's death or permanent
disability. All vested Stock shall be subject to the First Refusal right set
forth in Section 3 hereof.
(b) In the event Purchaser shall cease to be providing services to the
Company (including a parent or subsidiary of the Company, if any), the Company
shall have the right, at any time within sixty (60) days after the date
Purchaser ceases to be so providing services, to exercise the Repurchase Right,
which consists of the right to purchase
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<PAGE> 2
from the Purchaser (or his personal representative, as the case may be) all
non-vested Stock at the Repurchase Price.
(c) If the Purchaser is required to transfer his shares of stock by
operation of law (other than death of the Purchaser) or by order or decree of
any court, then the Company shall have the option, exercisable at any time
during the period of sixty (60) days after receiving notice thereof, to purchase
all of the shares of Stock which are owned by Purchaser for the Repurchase Price
and upon the terms as set forth in Section 4. Failure of the Company to elect to
purchase Purchaser's shares of Stock under this Section 2 shall not affect the
right to purchase the same shares under Section 3(a) in the event of a proposed
sale, assignment, transfer, exchange, pledge or other disposition by or to any
receiver, petitioner, assignee, transferee or other person obtaining an interest
in said shares.
(d) Nothing in this Agreement shall affect in any manner whatsoever
the right or power of the Company, or a parent or subsidiary of the Company, to
terminate Purchaser's provision of services to the Company, for any reason, with
or without cause.
3. (a) Purchaser shall not sell or otherwise transfer any shares of Stock
unless prior to any sale or other transfer thereof, Purchaser (or his personal
representative, as the case may be) shall provide the Company with written
notice, in the manner provided in Section 14 hereof, describing the number of
shares of Stock intended to be sold or transferred, the price and the general
terms of the proposed sale or transfer.
(b) The Company shall have the right (the "First Refusal Right") at
any time within sixty (60) days after the notice required by Section 3(a) above
to purchase from Purchaser (or his personal representative, as the case may be)
up to but not exceeding the number of shares of the Stock specified in, and at
the price (the "First Refusal Price") and upon the general terms specified in
such notice.
(c) If the First Refusal Right is not exercised with respect to some
or all the shares of the Stock specified in the notice required by Section 3(a)
hereof, then for a period of 120 days, Purchaser (or his personal
representative, as the case may be) shall be free to sell, or otherwise
transfer, up to but not exceeding the number of shares of the Stock specified in
the notice required by Section 3(a) hereof, minus the number of shares of the
Stock with respect to which the First Refusal Right was exercised, at a price
and upon general terms no more favorable to purchasers or transferees thereof
than specified in the notice required by Section 3(a) hereof.
(d) In the event that any shares of the Stock which are free to be
sold or otherwise transferred within said 120-day period, such shares of the
Stock shall again be subject to the First Refusal Right and Purchaser (or his
personal representative, as the case may be) shall comply with all the
provisions of this Section 3 prior to selling or otherwise transferring any such
shares of the Stock.
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<PAGE> 3
(e) Failure to exercise the First Refusal Right with respect to any
shares of the Stock shall not constitute a waiver of the First Refusal Right
with respect to any other shares of the Stock.
(f) The First Refusal Right shall continue after the Purchaser's death
or the termination of the Purchaser's association with the Company in accordance
with Section 2(b) hereof for any reason, or no reason, and shall terminate only
upon the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of shares of Common Stock of the Company to the public at a
public offering price of not less than $9.50 per share (as adjusted for stock
splits, stock dividends, distributions or subdivisions) and resulting in gross
proceeds to the Company of not less than Ten Million Dollars ($10,000,000).
4. The Repurchase Right and the First Refusal Right shall be exercised by
written notice signed by an officer of the Company and delivered or mailed as
provided in Section 14 hereof. The Repurchase Price and the First Refusal Price
shall be payable, at the option of the Company, in cancellation of all or a
portion of any outstanding indebtedness of Purchaser to the Company or in cash
(by check) or both.
5. The Company may assign its rights under Sections 2 and 3 hereof.
6. If, from time to time during the term of the Repurchase Right or the
First Refusal Right:
(a) There is any stock dividend or liquidating dividend of cash/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or substantially
all, of the assets of the Company unless such consolidation, merger or sale is
with a publicly-owned corporation and the aggregate market value of the
securities or other property the stockholders of the Company receive is in
excess of Ten Million Dollars ($10,000,000), then, in such event, any and all
new, substituted or additional securities or other property (other than cash) to
which Purchaser is entitled by reason of his ownership of Stock shall be
immediately subject to the Repurchase Right or the First Refusal Right, as the
case may be, and be included in the word "Stock" for all purposes of the
Repurchase Right and the First Refusal Right with the same force and effect as
the shares of Stock subject to the Repurchase Right and the First Refusal Right
under the terms of Section 2 and 3 hereof. While the total Repurchase Price
shall remain the same after each such event, the Repurchase Price per share of
Stock upon exercise of the Repurchase Right shall be appropriately adjusted.
Stock acquired as provided in clauses (a) or (b) above shall be deemed to have
been acquired at the time of acquisition of the Stock on which such Stock was
distributed.
7. All certificates representing any shares of Stock subject to the
provisions of this Agreement shall have endorsed thereon the following legends:
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<PAGE> 4
(a) "Any disposition of any interest in the securities represented by
this certificates is subject to restrictions, and the securities represented by
this certificate are subject to a repurchase right and a first refusal right
contained in a certain agreement between the record holder hereof and the
corporation, a copy of which will be mailed to any holder of this certificate
without charge after receipt by the corporation of a written request therefor."
(b) Any legend required to be placed thereon by federal or state
securities laws.
8. Purchaser acknowledges that he is aware that the Stock to be issued to
him by the Company pursuant to this Agreement has not been registered under the
Securities Act of 1933, as amended. In this connection, Purchaser warrants and
represents to the Company as follows:
(a) Purchaser is purchasing the Stock solely for its own account for
investment and not with a view to or for sale or distribution of the Stock or
any portion thereof and not with any present intention of selling, offering to
sell or otherwise disposing of or distributing the Stock or any portion thereof.
Purchaser also represents that the entire legal and beneficial interest of the
Stock which Purchaser is purchasing is being purchased for, and will be held for
the account of, the Purchaser only and neither in whole nor in part for any
other person.
(b) Purchaser has heretofore discussed the Company and its plans,
operations and financial condition with its officers and the Purchaser has
heretofore received all such information as Purchaser deems necessary and
appropriate to enable Purchaser to evaluate the financial risk inherent in
making an investment in the Stock of the Company and Purchaser further
represents and warrants that Purchaser has received satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) Purchaser realizes that its purchase of the Stock will be a highly
speculative investment and that Purchaser is able, without impairing its
financial condition, to hold the Stock for an indefinite period of time and to
suffer a complete loss on his investment.
(d) The Company has disclosed (or hereby does disclose) to Purchaser
in writing:
(i) the sale of the Stock which it is purchasing has not been
registered under the Securities Act of 1933, as amended (the
"Act"), and the Securities must be held indefinitely unless
a transfer of them is subsequently registered under the Act
or an exemption from such registration is available;
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<PAGE> 5
(ii) the share certificate representing the Stock will be stamped
with the legends restricting transfer specified in this
Agreement between the Company and the Purchaser; and
(iii) the Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.
(e) Purchaser understands that the shares of Stock are restricted
securities within the meaning of Rule 144 promulgated under the Act; that the
exemption from registration under Rule 144 will not be available in any event
for at least two years from the date of sale of the Stock to it, and even then
will not be available unless (i) a public trading market then exists for the
Stock of the Company, (ii) adequate current public information concerning the
Company is then available to the public, (iii) it has been the beneficial owner
and it has paid the full purchase price for the Stock at least two years prior
to the sale, and (iv) other terms and conditions of Rule 144 are complied with;
and that any sale of the Stock may be made by it only in limited amounts in
accordance with such terms and conditions, as amended from time to time.
(f) Without in any way limiting its representations set forth above,
Purchaser further agrees that it shall in no event make any disposition of all
or any portion of the Stock which it is purchasing unless and until:
(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition
is made in accordance with said Registration Statement: or
(ii) (A) It shall have notified the Company of the proposed
disposition and shall have furnished the Company with a
detailed statement of circumstances surrounding the proposed
disposition, (B) it shall have furnished the Company with an
opinion of its own counsel to the effect that such
disposition will not require registration of such shares
under the Act, and (C) such opinion of its counsel shall
have been concurred in by counsel for the Company and the
Company shall have advised it of such concurrence.
9. The Company shall not be required (a) to transfer on its books any
shares of Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
In the event of a sale of Stock by Purchaser pursuant to Section 3(c) hereof,
Purchaser shall furnish to the Company proof that such sale was made in
compliance with the provisions of Section 3(c) hereof as to price and general
terms of such sale.
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<PAGE> 6
10. Subject to the provisions of this Agreement, Purchaser shall, during
the term of this Agreement, exercise all rights and privileges of a shareholder
of the Company with respect to the Stock.
11. If Purchaser makes an election under Section 83(b) of the Code, he
will provide a copy thereof to the Company within thirty days of the filing of
such election with the Internal Revenue Service.
12. Purchaser shall pay to the Company, or make provision satisfactory to
the Committee for payment of, any taxes required by law to be withheld in
respect of the Restricted Stock no later than the date of the event creating the
tax liability. In the Committee's discretion, such tax obligations may be paid
in whole or in part in shares of Common Stock, including the Restricted Stock,
valued at Fair Market Value on the date of delivery. The Company and its
Affiliates may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to Purchaser.
13. Any determination by the Committee under, or interpretation of the
terms of, this Agreement or the Plan will be final and binding on Purchaser.
14. Any notice required or permitted hereunder by any party hereto shall
be given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed to the other party hereto at such
other party's address hereinafter shown below such other party's signature or at
such other address as such other party may have designated by ten days' advance
written notice to such party.
15. This Agreement shall inure to the benefit of the successors and
assigns of the Company and be binding upon Purchaser and his heirs, executors,
administrators, successors and assigns.
16. This Agreement shall be governed by and interpreted under the laws of
the State of Delaware.
17. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
DYAX CORP.
By: /s/ James W. Fordyce
-----------------------------------------
James W. Fordyce
Chairman of the Compensation Committee
Address: One Kendall Square
Building 600, 5th Floor
Cambridge, MA 02139
PURCHASER:
/s/ Henry E. Blair
---------------------------------------------
Henry E. Blair, individually
Address: 275 Mill Way
Barnstable, MA 02630
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<PAGE> 1
EXHIBIT 10.8
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH IT IS
CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND NEITHER
MAY BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SECURITY HAS BEEN
REGISTERED UNDER THE ACT AND SUCH LAWS OR (1)
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO MAKER IS
FURNISHED TO MAKER TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED.
SECURED CONVERTIBLE TERM NOTE
Charlottesville, Virginia
$500,000 August 11, 1995
FOR VALUE RECEIVED, Biotage, Inc., a Delaware corporation (the
"Maker"), hereby promises to pay to Sheridan G. Snyder (hereinafter referred to
as the "Holder"), or registered assigns, on or before the Maturity Date (as
hereinafter defined), as set forth herein, the principal amount of Five Hundred
Thousand Dollars ($500,000), or such part thereof as then remains unpaid,
together with interest from the date hereof on the unpaid principal balance of
this Note from time to time outstanding at a rate of interest equal to the Prime
Rate (as hereinafter defined) plus one percent (1%) per annum for the period
beginning on the date hereof and continuing for the remainder of the term
hereof. Interest shall accrue from and after the date hereof, and shall be
payable on the last day of each month commencing on August 31, 1995 and
continuing monthly thereafter until maturity. As used herein, (i) the "Maturity
Date" shall mean the earliest to occur of (a) the date of closing by Maker of a
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the offer and sale of shares of common stock for the
account of Maker at a price per share of not less than $6.00 (subject to
equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event) and which
results in proceeds to Maker, net of commissions and discounts, of not less than
$10,000,000, (b) the fifth anniversary of the date of this Note as set forth
above and (c) an Event of Default (as such term is defined below) and (ii) the
"Prime Rate" shall mean that rate of interest announced or published by Crestar
Bank, Charlottesville, Virginia as being its prime rate of interest, whether or
not such rate is actually charged.
1. Payment in Cash.
Principal and interest shall be payable in lawful money of the United
States of America, by check, at the business address of the Holder or at such
other place as the legal Holder may designate from time to time in writing to
Maker. Interest shall be computed on the basis of actual days elapsed over a
365-day year.
<PAGE> 2
2. Prepayment.
Upon ten (10) days prior written notice to the Holder of this Note, Maker
shall have the right, at any time prior to the Maturity Date or conversion of
this Note pursuant to Section 4 hereof, to prepay all of the outstanding
principal amount of this Note, and accrued and unpaid interest thereon, without
premium or penalty, subject to the rights of the Holder of this Note to convert
amounts outstanding under this Note pursuant to Section 4 below at any time
prior to the date specified in such notice for prepayment; provided, however,
that notwithstanding the foregoing, in no event shall any prepayment of
principal be made by Maker with respect to any portion of this Note unless and
until Maker shall have offered to prepay a like proportion of all Notes (as such
term is defined below).
3. Description of Notes.
This Note is one of several Notes to be issued by PEC (the "PEC Notes"),
and by Maker (the "Biotage Notes" and, collectively with the PEC Notes, the
"Notes"), of like tenor issued or to be issued as a condition to the
consummation of the transactions contemplated by the Agreement and Plan of
Merger dated as of August 4, 1995 (the "Merger Agreement") by and among Maker
and the parties named therein having an aggregate original principal balance of
$3,130,292.65. This Note is secured pursuant to, and entitled to the benefits of
(including the security described in), a certain Security Agreement dated as of
May 11, 1993 by and between Maker and the Holder (as the same may be amended
from time to time, hereinafter referred to as the "Security Agreement"). The
Holder of this Note, by his acceptance hereof, shall be entitled to the
benefits, and subject to the terms, of the Security Agreement.
4. Conversion.
If at any time after the consummation of the transactions contemplated by
the Merger Agreement and prior to the Maturity Date, Maker consummates the offer
and sale of Equity Securities (each, an "Equity Financing"), the Holder shall
have the right at the Holder's option, to convert all or any part of the
principal amount of this Note into such Holder's pro rata share of the Equity
Securities being offered in the Equity Financing at a conversion price equal to
the price per share of the Equity Securities sold in the Equity Financing. As
used herein, the term "Equity Securities" shall mean securities of Maker which
are issued for cash and which are either (i) equity securities or (ii)
securities having rights or options to acquire equity securities, but shall not
include (a) securities issued from time to time by Maker in connection with the
licensing or acquisition by Maker of technology or intellectual property, (b)
securities issued from time to time to employees or consultants of Maker
pursuant to any stock option plan, stock purchase or other equity plan of Maker
approved by a majority of Maker's Board of Directors or (c) shares of Class A
Series 3 Preferred Stock of Maker issued on or before September 30, 1995. The
Holder's pro rata portion of Equity Securities being offered in any Equity
Financing shall equal the result obtained by multiplying (A) twenty five percent
(25%) of the aggregate number of Equity Securities being offered in the Equity
Financing by (B) a fraction, the numerator of which shall be equal to the amount
of principal outstanding under this Note with respect to which the Holder has
exercised conversion rights as provided herein and the denominator of which
shall be equal to the aggregate amount of principal outstanding under all of the
Notes. In the event that the
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<PAGE> 3
Holder shall elect to convert this Note as described in this Section 4, the
Holder shall be subject to all of the terms and conditions applicable to the
purchasers buying the Equity Securities in the Equity Financing.
5. Mechanics of Conversion.
Maker shall give the Holder twenty (20) days' prior written notice (the
"Company Notice") of the occurrence of an Equity Financing, which notice shall
set forth the anticipated closing date of the Equity Financing and the Holder's
conversion price with respect thereto. The Holder may exercise its right of
conversion by (i) surrendering this Note duly endorsed at the office of Maker
and (ii) delivering written notice to Maker within ten (10) days of its receipt
of the Company Notice, specifying the principal amount of this Note which the
Holder wishes to be converted and the name or names in which the certificate or
certificates for Equity Securities are to be issued. Maker shall, as soon as
practical following the closing of the Equity Financing, issue and deliver to
the Holder a certificate or certificates for the number of Equity Securities to
which the Holder shall be entitled as aforesaid, together with the payment in
cash of all accrued but unpaid interest on this Note through the closing date of
the Equity Financing; provided, however, that if the person in whose name such
certificate or certificates are requested to be registered is other than the
registered owner of this Note, Maker may require, prior to issuance of a
certificate in the name of such other person, that it receive reasonable
transfer documentation (including opinions) or other evidence that the issuance
of certificates in such other name as requested does not and will not cause a
violation of the Securities Act, any similar Federal statute at the time in
effect or any applicable state securities laws. Such conversion shall be deemed
to have been made on the closing date of the Equity Financing, and the person or
persons entitled to receive the shares of stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
as of such date. If less than the entire outstanding principal amount of this
Note is being converted, a new Note shall be delivered to the Holder for the
unconverted principal balance and shall be of a like tenor as to all terms as
this Note.
6. Securities Act.
Upon conversion of this Note, the registered Holder will be required to
execute and deliver to Maker an instrument, in form satisfactory to Maker,
representing that the Equity Securities issuable upon conversion hereof are
being acquired for investment and not with a view to distribution within the
meaning of the Securities Act.
7. No Fractional Shares and Certificates.
No fractional shares shall be issued upon conversion of this Note and the
number of shares of Equity Securities to be issued shall be rounded down to the
nearest whole share and the Holder shall be entitled to receive in cash an
amount equal to the conversion price then in effect multiplied by the fractional
share.
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<PAGE> 4
8. Events of Default.
If any Event of Default (as defined in the Security Agreement) shall occur
and be continuing, then any Holder of this Note may, by notice to Maker, declare
the entire unpaid principal amount of this Note, and all interest accrued and
unpaid hereon to be forthwith due and payable, whereupon the Note and all such
accrued interest shall become and be forthwith due and payable.
9. Note Register.
(a) Maker shall keep at its principal executive offices a register
(herein sometimes referred to as the "Note Register"), in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), Maker shall provide for the registration and transfer
of this Note. The person or entity in whose name any registered Note shall be
registered shall be deemed and treated as the owner and holder hereof for all
purposes hereunder.
(b) Whenever this Note shall be surrendered at the principal
executive office of Maker for transfer or exchange, accompanied by a written
instrument of transfer in form reasonably satisfactory to Maker duly executed by
the Holder hereof or its attorney duly authorized in writing, Maker shall
execute and deliver in exchange therefor a new note or notes, as may be
requested by such Holder, in the same aggregate unpaid principal amount and
payable on the same terms as the principal amount of the note or notes so
surrendered; each such new Note shall be dated as of the date to which interest
has been paid on the unpaid principal amount of the note or notes so surrendered
and shall be in such principal amount and registered in such name or names as
such Holder may designate in writing; provided, however, that if the person in
whose name a Note is requested to be registered is other than the registered
owner of this Note, Maker may require, prior to issuance of a Note in the name
of such other person, that it receive reasonable transfer documentation
(including opinions) or other evidence that the issuance of a Note in such other
name as requested does not and will not cause a violation of the Securities Act,
any similar Federal statute at the time in effect or any applicable state
securities laws.
(c) Upon receipt by Maker of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Note and of indemnity
reasonably satisfactory to it, and upon reimbursement to Maker of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this Note
(in case of mutilation), Maker will make and deliver in lieu of this Note a new
Note of like tenor and unpaid principal amount and dated as of the date to which
interest has been paid on the unpaid principal amount of this Note in lieu of
which such new Note is made and delivered.
10. General.
(a) Governing Law. This Note shall be governed by and construed in
accordance with the law of the Commonwealth of Virginia, excluding the body of
law relating to conflict of laws. Notwithstanding anything to the contrary
contained herein, in no
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<PAGE> 5
event may the effective rate of interest collected or received by the Holder
exceed that which may be charged, collected or received by the Holder under
applicable law.
(b) Interpretation. If any term or provision of this Note shall be
held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
(c) Amendment. The terms of this Note and the other Notes may be
amended or waiver of compliance of any term hereof or thereof may be obtained by
Maker with the written consent of holders of greater than sixty-six and
two-thirds percent (66 2/3%) of the unpaid aggregate principal amount of all of
the Notes outstanding at the time of the amendment or waiver, whether or not the
Holder hereof shall agree to such amendment or waiver; provided, however, that
no such amendment or waiver shall be effective to reduce the principal amount
hereof or the rate of interest payable hereunder or to otherwise provide terms
herein more favorable to the Holder than the terms provided in the other Notes.
(d) Successors and Assigns; Transferability. This Note shall be
binding upon Maker and its successors and assigns and shall inure to the benefit
of the Holder and its successors and permitted assigns (which shall include
permitted transferees). This Note or any interest therein may not be assigned
except in accordance with the terms hereof.
(e) Notices. All notices, requests, consents and demands shall be
made in writing and shall be mailed postage prepaid, or delivered by hand, to
Maker or to the Holder thereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:
If to the Holder: At the address shown below.
If to Maker: Biotage, Inc.
1500 Avon Street Ext.
Charlottesville, VA 22901
Attention: President
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
(f) Saturdays, Sundays, Holidays. If any date that may at any time
be specified in this Note as a date for the making of any payment of interest
under this Note shall fall on Saturday, Sunday or on a day which in Virginia
shall be a legal holiday, then the date for the making of that payment shall be
the next subsequent day which is not a Saturday, Sunday or legal holiday.
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<PAGE> 6
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first above written.
BIOTAGE, INC.
By: /s/ Robert Dishman
--------------------------
Title: President
Name of Holder: Sheridan Snyder
Address of Holder: Sheridan G. Snyder
Route 1
Box 117
Afton, VA 22920
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<PAGE> 7
SECURITY AGREEMENT
THIS AGREEMENT is made as of May 11, 1993, between BIOTAGE, INC., a
Delaware corporation (the "Debtor") and SHERIDAN G. SNYDER (the "Secured
Party").
Recitals
A. The Secured Party has agreed to extend a line of credit to the Debtor
in the principal sum of up to $500,000.00 plus interest.
B. The Secured Party is willing to make advances under the line of credit,
but only upon the condition, among others, that the Debtor execute and deliver
this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agrees as
follows:
SECTION 1. -- DEFINED TERMS
The following terms used herein shall have the following meanings unless
the context otherwise requires:
Accounts. All accounts as defined in the Uniform Commercial Code, whether
now owned or hereafter acquired by Debtor, and all proceeds and products
thereof.
Collateral. All Accounts, Equipment, Intellectual Property and Inventory
provided as security under this Agreement.
Equipment. All of the Debtor's furniture, fixtures and equipment,
including all equipment as defined in the Uniform Commercial Code, and
including, but not limited to, any leases, rental agreements, chattel paper,
rental payments and insurance proceeds together with all accessories,
accessions, attachments, parts, replacements, substitutions, improvements,
repairs installed in or affixed to any equipment, whether now or owned or
hereafter acquired by Debtor, and all proceeds and products thereof.
Intellectual Property. All patents, patent applications, trademark,
tradenames, copyrights, technology, know-how, processes, computer programs,
databases, systems and software, and other intellectual and proprietary rights,
including all contract rights and licenses with respect thereto, together with
all good will associated therewith whether now owned or hereafter acquired by
the Debtor including, but not limited to, all of the Debtor's right, title and
interest in and to the Debtor's license (the "Patent License") of United States
Patent No. 4,250,035 issued February 10, 1981, entitled "Radial Compression of
Packed Beds", and all reissues, continuations and extensions thereof, as well as
all foreign patents and patent applications corresponding thereto.
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<PAGE> 8
Inventory. All goods and personal property of every nature which are held
for sale or furnished or are to be furnished under contracts of service or sale
or lease, supplies, stock-in-trade, all raw materials, work-in-process, finished
goods, and all returned, reclaimed and repossessed goods, whether now in the
Debtor's possession or control, in transit, in storage, or hereafter acquired by
way of replacement, substitutions, addition or otherwise and all other inventory
as defined in the Uniform Commercial Code, whether now owned or hereafter
acquired by Debtor, and all proceeds and products thereof.
Obligations. All indebtedness of the Debtor to the Secured Party evidence
by a Credit Line Note of even date made by Debtor payable to the Secured Party
in the principal sum of up to $500,000.00, including all renewals, extensions
and modifications thereof, and the agreements and warranties of the Debtor
contained in this Agreement.
SECTION 2. -- COLLATERAL.
2.1. Security Agreement. As Collateral to secure the prompt payment and
performance of the Obligations, the Debtor hereby grants to the Secured Party a
security interest in the Accounts, the Equipment, the Intellectual Property and
the Inventory, including all proceeds of any of the foregoing. Debtor will not
sell, assign, encumber or otherwise transfer the Collateral or the proceeds
therefrom other than to the Secured Party or in the ordinary course of Debtor's
business without the prior written consent of the Secured Party. Upon request of
the Secured Party, Debtor shall promptly perform all acts reasonably necessary
to further evidence or perfect the security interest of the Secured Party in the
Collateral and to obtain for the Secured Party the benefits of a secured party
under the laws of the State of Virginia.
2.2. Consent of Licensor. The Debtor shall, upon execution and delivery of
this Agreement, use its best efforts to obtain the consent of the Licensor under
the Patent License to the grant of the foregoing security interest, which
consent shall be substantially in the form of Exhibit A hereto.
SECTION 3. -- REPRESENTATIONS
The Debtor represents and warrants to the Secured Party, and such
representations and warranties shall be continuing so long as any Obligations
shall remain outstanding as follows:
3.1. Due Authorization. The Debtor has the power and authority to enter
into this Agreement and perform its obligations hereunder and by proper action
has duly authorized the execution and delivery of this Agreement and the
performance of its obligations hereunder.
3.2. Binding Agreement. This Agreement constitutes the valid and legally
binding obligation of the Debtor, enforceable in accordance with its terms.
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<PAGE> 9
3.3. Ownership of Collateral. (a) Debtor now owns, or will use the
advances secured hereby to become the owner of, the Collateral and will have the
right to grant to the Secured Party a security interest therein.
(b) The Debtor owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business. As of the date hereof, no
material claim has been asserted and it pending by any person or entity with
respect to the use by the Debtor of any Intellectual Property or challenging or
questioning the validity or effectiveness of any Intellectual Property necessary
for the conduct of the Debtor's business.
3.4. Location of Collateral. The Collateral and all records relating
thereto are located at 1500 Avon Street Extended, Charlottesville, Virginia
22901. The Debtor will not change the location of the Collateral or any part
thereof, without giving the Secured Party at least 30 days' prior written
notice.
3.5. Collateral Free of Encumbrances. The Debtor has not previously
assigned, mortgaged, or encumbered any Collateral, and the Collateral is not
subject to a prior security interest or lien in favor of any person other than
the Secured Party. The Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming any interest therein.
3.6. Setoffs, Counterclaims and Defenses to Accounts. The Accounts hereby
assigned are valid obligations, correct in amount, do not arise from or relate
to the sale of farm products by a farmer, and there are no set offs,
counterclaims or defenses of any kind thereto. The Debtor will immediately
notify the Secured Party of any account to which such representations are
untrue.
SECTION 4. -- COVENANTS
The Debtor covenants and agrees that so long as any of the Obligations
remain outstanding:
4.1. Financing Statements. The Debtor will execute financing statements
and continuation statements in form satisfactory to the Secured Party and the
Debtor will reimburse the Secured Party for all expenses incurred in the filing
of financing statements, continuation statements and termination statements. The
Debtor agrees the Secured Party may file a carbon, photographic copy or other
reproduction of any financing statement.
4.2. Maintenance of Records. The Debtor will keep and maintain, at its own
cost and expense, satisfactory, complete and current records of the Collateral,
including, but not limited to, all shipments received, deliveries made,
contracts performed, payments received, credits granted thereon and other
dealings therewith. Upon request by the Secured Party, the Debtor will provide
it with written reports of the status of the Collateral, or any part thereof, as
of the period specified. These reports shall be in such form and in such detail
as the Secured Party shall reasonably direct. The Debtor will not change the
location of its books and records without giving the Secured Party at least
thirty (30) days' prior written notice. The Debtor will protect its records
against fire, theft, loss or any other manner of destruction or loss.
4.3. Taxes. The Debtor will pay promptly when due all taxes, charges and
assessments, including penalties and interest, which are or may become a lien on
the
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<PAGE> 10
Collateral or any part thereof, except to the extent that they may be contested
in good faith and by appropriate proceedings.
4.4. Change of Name, Residence, Place of Business. The Debtor will not
change its name, operate under any assumed name or change its residence,
corporate structure or principal place of business, without giving the Secured
Party at least thirty (30) days' prior written notice.
4.5. Inspection of Books and Records. The Secured Party, or its agents,
may at any time, and from time to time, inspect the Collateral and the books and
records of the Debtor pertaining to the Collateral. It is specifically agreed
that the Secured Party shall have, and the Debtor hereby grants to the Secured
Party, a security interest in all books of accounts and records (including
computer software) of the Debtor and shall have access to them at any time for
inspection, verification, examination and audit. If requested by the Secured
Party, the Debtor will stamp all chattel paper hereby assigned in a form and
manner satisfactory to the Secured Party with an appropriate reference to the
effect that the chattel paper has been assigned to the Secured Party, and the
Debtor will similarly stamp its account ledgers and other books and records
pertaining to the assigned Accounts.
4.6. Expenses. The Debtor shall be liable for, and agrees to pay the
Secured Party any and all expenses incurred or paid by the Secured Party in
protecting or enforcing its rights under this Agreement, including reasonable
attorney's fees, whether incurred in collecting specific Accounts or otherwise.
At its option, the Secured Party may discharge taxes, liens, security interests
or other encumbrances on the Collateral. The Debtor agrees to reimburse the
Secured Party on demand for any payments so made, and until such reimbursement,
the amount of any such payment, with interest at the rate provided for in the
Obligations from date of payment until reimbursement, shall be added to the
indebtedness owed by the Debtor and shall be secured by this Security Agreement.
4.7. Insurance. The Debtor will continuously insure the Collateral with a
responsible company or companies satisfactory to the bank against fire with
extended coverage) in the full insurable value of the Collateral and against
such other casualties in such amounts as the Secured Party shall reasonably
require. This insurance policy (or policies) shall have attached thereto a
standard loss payable clause, without contribution, in favor of the Secured
Party, as its interest may appear, and shall otherwise be in form acceptable to
the Secured Party, and the Debtor will use its best efforts to have such policy
(or policies) provided that it (they) may not be cancelled without ten (10)
days' prior written notice to the Secured Party. The Debtor will deliver the
policy or policies, properly endorsed, as additional security, and where a
renewal policy is necessary in the performance of this covenant, the Debtor will
deliver it, as security, at least ten (10) days before the expiration of the
existing insurance. The Debtor hereby assigns to the Secured Party any return of
unearned premiums which may be due upon cancellation of any such policy or
policies for any reason whatsoever and directs the insurer(s) to pay to the
Secured Party any amounts so due. The Debtor hereby irrevocably appoints the
Secured Party as its attorney-in-fact, with full power of substitution to
execute loss claims and other applications for payment of benefits under any
insurance policy in the name of either the Debtor or the Secured Party, receive
all monies and endorse drafts, checks, and other instruments for the
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<PAGE> 11
payment of any proceeds off any insurance or in order to Collect any return of
unearned premiums. This appointment shall be deemed a power coupled with an
interest and shall not be terminable by the Debtor so long as the Debtor remains
indebted to the Secured Party, and shall not terminate on disability or the
Debtor.
4.8. Compliance with Federal and State Laws. The Debtor will comply wish
all federal and State Laws applicable to its business, whether now in effect or
hereafter enacted, and all statutes and regulations issued by the state or
states in which the Debtor conducts business, and upon request the Debtor will
provide the Secured Party with such evidence of compliance as the Secured Party
may reasonably request.
4.9. Audit. The Debtor will cause its books to be reviewed at least
annually and will furnish to the Secured Party within ninety (90) days after the
end of its fiscal year financial statements relating to Debtor's operations at
the Facility duly prepared and reviewed by an independent certified public
accountant, including balance sheets and profit and loss statements. The Debtor
will furnish the Secured Party within forty-five (45) days after the close of
each quarter a similar profit and loss statement for, and a balance sheet as of
the end of, such quarter, such statements to be duly certified by the president,
treasurer, or chief accounting officer of the Debtor.
4.10. Other Loans and Security Interests. If the Debtor obtains any loan
from anyone other than the Secured Party, or if the Debtor obtains an extension
or renewal of any present indebtedness to anyone other than the Secured Party,
except trade indebtedness, the Debtor will notify the Secured Party of such fact
in writing within three (3) days.
4.11. Qualification to do Business. The Debtor will, at the request of the
Secured Party, qualify to do business and obtain all requisite licenses and
permits in each state in which such action may be necessary in order to maintain
any action to collect any debt.
4.12. Compromises and Discounts. Without the prior written consent of the
Secured Party, the Debtor will not grant any extension of time in the payment of
any Accounts or compromise, compound or settle the same for less than the full
amount thereof, or release wholly or partially any person liable for payment
thereof, or allow any credit or discount whatsoever in the amount of any Account
as invoiced except for ordinary trade discounts or allowances for prompt
payment. The Debtor, moreover, will not agree to any material modification of
any Account herein assigned (whether specifically listed or not) without the
prior written consent of the Secured Party.
4.13 Promissory Notes, Trade Acceptances, and Other Instruments. If any of
the Debtor's Accounts are or should become evidenced by chattel paper or
promissory notes, trade acceptances, or other instruments, the Debtor will
promptly notify the Secured Party and upon request by the Secured Party will
immediately deliver the same to the Secured Party, appropriately endorsed or
assigned with recourse to the Secured Party's order, and regardless of the form
of such endorsement or assignment the Debtor hereby waives presentment, demand,
notice of dishonor, protest and notice of protest and all other notices with
respect thereto and agrees to take all necessary steps to preserve rights
against prior parties to instruments and chattel paper.
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<PAGE> 12
4.13. Collection of Accounts. The Bank hereby authorizes the Debtor to
collect the Accounts, subject to direction and control, but the Secured Party
may, without cause or notice, curtail or terminate said authority at any time.
Upon notice by the Secured Party, whether oral or in writing, to the Debtor, the
Debtor shall forthwith upon receipt of all checks, drafts, cash, and other
remittances in payment of or on account of the Accounts, deposit the same in one
or more special accounts maintained with the Secured Party over which the
Secured Party alone shall have the power of withdrawal. The remittance of the
proceeds of such Accounts shall not, however, constitute payment or liquidation
of such Accounts until the Secured Party shall receive good funds for such
proceeds. Funds placed in such special accounts shall be held by the Secured
Party as security for all obligations secured hereunder. These proceeds shall be
deposited in precisely the form received, except for the endorsement of the
Debtor where necessary to permit collection of items, which endorsement the
Debtor agrees to make, and which endorsement the Secured Party is also hereby
authorized, as attorney-in-fact, to make on behalf of the Debtor. In the event
the Secured Party has notified the Debtor to make deposits to a special account,
pending such deposit, the Debtor agrees that it will not commingle any such
checks, drafts, cash or other remittances with any funds or other property of
the Debtor, but will hold them separate and apart therefrom, and upon an express
trust for the Secured Party until deposit thereof is made in the special
account. The Secured Party will, from time to time, apply the whole or any part
of the Collateral funds on deposit in this special account against such
obligations as is secured hereby as the Secured Party may in its sole discretion
elect. At the sole election of the Secured Party, any portion of said funds on
deposit in the special account which the Secured Party shall elect not to apply
to the Obligations may be paid over by the Secured Party to the Debtor. The
Secured Party, and any officer or agent of the Secured Party, is hereby
constituted and appointed as true and lawful attorney-in-fact of the Debtor with
full power at any time, whether or not the Debtor be in default under this or
any other agreement: (a) to notify any and all account debtors to make payment
directly to the Secured Party and otherwise to notify the account debtors of
this assignment; (b) to ask for, demand, collect, institute and maintain suits
for, receive, compound, compromise and give acquittances for any and all sums
owing, which are now, or may hereafter become, due upon said Accounts, and to
enforce payment thereof either in its name or in the Debtor's name; (c) to
endorse the name of the Debtor on checks, drafts or other items tendered or
received in payment of said Accounts, and (d) to enter upon the premises of the
Debtor at any time for the purpose of reducing to possession the Accounts
(including chattel paper) and all cash or non-cash proceeds thereof, or for the
purpose of inspecting the Inventory and inspecting and/or auditing the books,
records and procedures of the Debtor. This power of attorney is coupled with an
interest and shall be irrevocable as long as any Obligations shall remain
outstanding, and shall not terminate on disability of the Debtor.
SECTION 5. - DEFAULT
5.1. Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
(a) Default in the payment of any of the Obligations, or in the
performance of any covenant or agreement contained or referred to herein;
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(b) Any warranty, representation or financial statement made or
furnished to the Secured Party by or on behalf of the Debtor proves to have been
false in any material respect when made or furnished;
(c) The dissolution, termination of existence, or insolvency of the
Debtor, the application by the Debtor for the appointment of a receiver or
custodian for the Debtor or the Debtor's property, any assignment for the
benefit of creditors by the Debtor or the commencement of a voluntary case under
any bankruptcy or insolvency law by the Debtor or any guarantor or surety for
the Debtor.
(d) The failure of the Debtor or any guarantor or surety for Debtor
within 60 days after the commencement of any involuntary case against it under
any bankruptcy or insolvency law to have such proceedings dismissed or stayed.
5.2. Remedies. (a) Upon any such Event of Default and at any time
thereafter, the Secured Party may declare all of the Obligations immediately due
and payable without notice, protest, presentment or demand, all of which are
hereby expressly waived by the Debtor, and may proceed to enforce payment of the
same and exercise any and all of the rights and remedies provided by the Uniform
Commercial Code as well as all other rights and remedies possessed the Secured
Party. The Secured Party will give the Debtor reasonable notice of the time and
place of any public sale of the Collateral or any part thereof or of the time
after which any private sale or any other intended disposition thereof is to be
made. The requirements of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the debtor at 1500 Avon Street Extended,
Charlottesville, Virginia 22901 at least five (5) days before the time of the
sale or disposition, but nothing contained herein shall be construed to mean
that any other notice of a shorter period of time does not constitute reasonable
notice for the sale of the Collateral, or any part thereof. Expenses of
retaking, holding, preparing for sale, selling or the like shall include the
Secured Party's reasonable attorney's fees and legal expenses. In such event of
default, the Debtor shall upon request by the Secured Party assemble the
Collateral or any designated part thereof and make it available to the Secured
Party at such place as is designated by the Secured Party.
(b) License to Use Intellectual Property. If an Event of Default
shall have occurred and be continuing and for the purpose of enabling the
Secured Party to exercise its rights and remedies under this Agreement at such
time as the Secured Party shall be entitled to exercise such rights and
remedies, the Debtor hereby grants to the Secured Party an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to the Debtor), to use, assign, license or sublicense any of the
Debtor's Intellectual Property, now owned or hereafter acquired by the Debtors
and wherever the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored; provided, however, that the Secured Party shall comply with all
pre-existing quality control standards and trademark use requirements of the
Debtor. The proceeds from, or other realization upon, any such license shall
constitute Collateral. No agreements hereafter acquired or agreed to or entered
into by the Debtor shall prohibit, restrict or impair the rights granted under
this Section.
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<PAGE> 14
(c) The security interests, rights and remedies granted by the
Debtor to the Secured Party herein are in addition to any other rights,
collateral or other remedies which the Debtor or any other person has granted or
may hereafter grant to the Secured Party by any other instrument or through the
delivery of any document, instrument, chattel paper, or other collateral.
SECTION 6. - MISCELLANEOUS
6.1. Headings. The titles and section headings herein are included for
convenience only and shall not be deemed to be a part of this Agreement.
6.2. Nature of Rights. Each and every right granted to the Secured Party
hereunder or under any other document delivered hereunder or in connection
herewith or allowed it by law or equity shall be cumulative and may be exercised
from time to time. No failure on the part of the Secured Party to exercise, and
no delay in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise by the Secured Party of any right preclude any
other or future exercise thereof or the exercise of any other right. The terms
of this Agreement shall be binding upon the successors and assigns of the
parties hereto.
6.3. Construction. This Agreement shall be governed and construed in
accordance with the internal substantive laws of the Commonwealth of Virginia
without giving effect to the conflict of law rules thereof. Wherever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement.
DEBTOR: BIOTAGE, INC.
By: /s/ Mark Kachur
---------------------------
Title:Pres/CEO
------------------------
SECURED PARTY: /s/ Sheridan G. Snyder
------------------------------
Sheridan G. Snyder
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<PAGE> 15
EXHIBIT A
CONSENT
The undersigned MILLIPORE CORPORATION, a Massachusetts corporation, as
licenser (the "Licensor") has previously entered into a certain License
Agreement, dated March 30, 1990 (the "License Agreement") with BIOTAGE,
INCORPORATED, a Delaware corporation, as licensee ("Licensee").
Pursuant to the provisions of a certain security agreement, dated May 11,
1993 (the "Security Agreement") between the Licensee and Sheridan G. Snyder
("Snyder") the Licensee proposes to grant a security interest in and to, among
other things, all of Licensee's right, title and interest in and to the License
Agreement to secure repayment of the obligations of the Licensee to Snyder under
the terms and provisions of a line of credit to the Licensee in the principal
sum of up to $500,000 plus interest (the "Credit Line Note").
Pursuant to the provisions of a certain assignment agreement, dated May
11, 1993 (the "Assignment Agreement"), between Snyder and Crestar Bank, N.A.
(the "Bank"), Snyder proposes to pledge, assign and grant to the Bank a security
interest in all rights, remedies, claims, interests and benefits now or
hereafter existing or arising in favor of the Bank under (i) the Credit Line
Note; and (ii) all proceeds receivable by Snyder from, and all security for all
of the foregoing including, but not limited to all collateral given to Snyder
pursuant to the Security Agreement.
FOR VALUE RECEIVED, the Licensor hereby agrees as follows:
1. The Licenser hereby consents to the transfer of the rights in and to
the License Agreement as set forth in the Security Agreement and the Assignment
Agreement, respectively, and further consents to the exercise by Snyder, or by
the Bank as his assignee (either individually or collectively the "Secured
party"), of the rights of the Secured Party under the Security Agreement or
Assignment Agreement as the case may be, as such rights may accrue and become
enforceable from time to time.
2. Licenser agrees that if Licensee shall be in default under she License
Agreement, Licenser agrees that any Secured Party shall have the right, but not
the obligation, to remedy or cause so be remedied such default, whether the same
consists of the failure to pay any monetary amount or failure to do or perform
any other matter or thing which Licensee is required to do or perform, and
Licensor shall accept such performance on the part of the Secured Party as
though the same had been done or performed by Licensee. If an event of default
shall occur under the License Agreement, written notice shall be sent by
Licensor to Snyder and the Bank at the following addresses:
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If to Snyder:
Sheridan G. Snyder
Route 1, Box 117
Afton, Virginia 22920
If to the Bank:
Crestar Bank
Post Office Box 8088
Charlottesville, Virginia 22906
Licensor agrees to take no action to terminate the License Agreement until
Licensor has given the Secured Party the following opportunities:
A. If such default shall be in the payment of any monetary amount
payable under the License Agreement, the Secured Party shall be allowed a period
of thirty (30) days after the receipt of such notice within which to remedy such
default;
B. If such default shall be in observing or performing any other
covenant or condition to be observed or performed by the Licensee under the
License Agreement, and such default can be remedied by the Secured Party, the
Secured Party shall be given the opportunity to remedy such default within such
period as may be necessary to remedy such default with diligence and continuity;
and
C. If a Secured Party or a person designated by a Secured Party
shall become the owner of the interest of the Licensee upon the exercise of any
remedy provided for in the Security Agreement or the Assignment Agreement, such
Secured Party or other person shall have the right to assign to any person such
interest, but only upon the written consent of the Licenser, which consent shall
not be unreasonably withheld.
3. If the License Agreement shall terminate for any reason, the Licenser
shall give the Secured Party written notice of such termination. The Secured
Party shall thereupon have the right exercisable by notice to Licenser within
sixty (60) days after the date of such notice of termination, to enter into a
new license for the subject matter of the License Agreement. The tern of such
new license shall begin on the date of termination of the License Agreement and
shall continue for the remainder of the original term of the License Agreement,
and such new agreement shall contain the same terms and conditions; provided,
however, that the Secured Party shall have remedied any default by the Licensee
under the terms of the License Agreement, as a condition to the obligation of
the Licensor to enter into such new agreement.
4. The Licensor represents and warrants to the Secured Party that the
License Agreement is in full force and effect and has not been amended or
modified and that there are no existing defaults thereunder.
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<PAGE> 17
IN WITNESS WHEREOF, the undersigned has caused this Consent to be executed
by its duly-authorized representative as of the date set forth below.
MILLIPORE CORPORATION
Date: By:
------------------------ ---------------------------
Its:
--------------------------
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<PAGE> 18
THIS ASSIGNMENT AGREEMENT is made as of May 11, 1993, by SHERIDAN G.
SNYDER, a resident of Charlottesville, Virginia (the "Assignor"), to CRESTAR
BANK, N.A. (the "Bank").
Pursuant to a Credit Line Note of even date made by Biotage, Inc. a
Delaware Corporation (the "Borrower") payable to the order of the Assignor in
the principal sum of up to $500,000.00 (the "Company Note"), Assignor agreed to
extend a line of credit to the Borrower in a principal amount up to $500,000.00.
Pursuant to a Commercial Note of even date made by the Assignor payable to the
order of the Bank in the principal sum of up to $500,000.00 (the "Assignor's
Note"), the Bank has agreed to make loans to Assignor in order to fund the
Company Note.
As security for the payment of all of Assignor's obligations under the
Commercial Note, the Assignor intends to assign to the Bank (i) the Company
Note; and (ii) all proceeds receivable by Assignor from, and all security and
collateral for, all of the foregoing.
NOW, THEREFORE, in order to induce the Bank to make loans to Assignor, the
parties agree as follows:
(1) Assignment. Assignor hereby pledges and assigns to, and grants a
security interest to the Bank in, all rights, remedies, claims, interests and
benefits now or hereafter existing or arising in favor of the Assignor under (i)
the Company Note; and (ii) all proceeds receivable by the Assignor from, and all
security for all of the foregoing including, but not limited to all collateral
given to Assignor pursuant to a Security Agreement of even date between the
Borrower and the Assignor. The assignment made hereby shall include any and all
modifications, extensions and renewals of the obligations of Borrower under the
above described instruments.
(2) Debt Secured. This Assignment is given for the purpose of securing:
(a) Payment of the indebtedness evidenced by the Assignor's Note,
including any renewals or extensions thereof.
(b) Payment of all other sums with interest thereon becoming due and
payable to the Bank under the provisions hereof.
(c) Performance and discharge of all obligations, covenants and
agreements of the Assignor herein and in the Assignor's Note.
(3) Nature of Assignment. The assignment made hereby is executed as
collateral security, and the execution and delivery hereof shall not in any way
impair or diminish any obligations of the Assignor to the Bank under the
Assignor's Note or any obligations of the Assignor or of the Borrower to the
Assignor under the Company Note or the security Agreement, nor shall any of such
obligations be imposed upon the Bank. The Bank shall not be required to make any
inquiry as to the nature or sufficiency of any payment received by the Bank, or
to present or file any claim, or to take any other action to collect or enforce
the payment of any amounts which may have been assigned to the Bank or to which
it may be
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<PAGE> 19
entitled hereunder at any time. Assignor shall indemnify and hold harmless the
Bank from any liability, loss, damage or expense the Bank may incur under the
Company Note or Security Agreement by reason of this assignment. Upon the
payment of the principal of, and all interest on the Assignor's Note and the
performance and observance of the provisions thereof, the assignment made hereby
and all rights herein assigned to the Bank shall cease and terminate and all the
right, title and interest of the Bank in and to the above described assigned
property shall revert to the Assignor or to such person or persons as may be
legally entitled thereto, and the Bank shall at the request of the Assignor or
any such person, deliver to the Assignor an instrument, in recordable form,
canceling and discharging this Assignment.
(4) Consent and Covenants of Borrower. At the request of the Assignor,
Borrower consents to the provisions of this Agreement and agrees during the term
of this Agreement: (i) to deliver directly to the Bank, at the address provided
for herein duplicate copies of all notices and other instruments or
communications required or permitted to be given or made by the Borrower
pursuant to the Company Note or Security Agreement; and (ii) to render
performance to the Bank of all its obligations under the Company Note or
Security Agreement which are required under the terms thereof to be rendered to
the Assignor. Borrower further agrees that it will not assert any offset,
counterclaim, reduction or defense in any proceeding brought under this
Assignment or otherwise. The Bank agrees with the Assignor and Borrower to apply
all remittances so received as provided in, or in accordance with instructions
received pursuant to, the Company Note or the Security Agreement.
(5) Assignor's Covenants. (a) The Assignor agrees that the Assignment made
hereby and the designation and direction to Borrower hereinabove set forth and
consented to by Borrower are irrevocable and that the Assignor will not, while
this Assignment is in effect or thereafter until the Assignor has received from
the Bank notice of the termination of this Assignment, take any action which is
inconsistent with this Assignment, or make or suffer to be made any other
assignment, designation or direction of the subject matter hereof, and that any
such assignment, designation or direction shall be void. The Assignor will from
time to time, upon request of the Bank, execute all instruments of further
assurance as the Bank may reasonably specify.
(b) The Assignor agrees not to cancel, modify, extend or in any way
alter the terms of the Security Agreement or the Company Note, not to anticipate
the payments thereunder except as provided therein, or to waive, excuse, condone
or in any manner release or discharge Borrower from the obligations, covenants,
conditions and agreements by Borrower to be performed, including the obligation
to make the payments called for thereunder in the manner and at the place and
time specified therein; and the Assignor does by these presents expressly
release, relinquish and surrender unto the Bank all the Assignor's right, power
and authority to cancel, amend, modify or in any way alter the terms or
provisions of the Security Agreement and the Company Note.
(6) Representations and Warranties of Assignor. The Assignor represents
and warrants that the Security Agreement and the Company Note are in effect and
are not in
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<PAGE> 20
default; and the Assignor further represents and warrants that it has not
executed any other assignment of, or in any way affected, the subject matter of
this Agreement.
(7) Rights Upon Default. Upon or at any time after default in the payment
of any obligation, covenant or agreement herein or under the Assignor's Note,
the Bank may declare all sums payable hereunder or under the Assignor's Note
immediately due and payable. The Bank may exercise any other rights available at
law or in equity, may fix or modify payments under the Company Note and may
issue in its own name and collect amounts due under the Company Note, including
reasonable attorney's fees as provided therein.
(8) Appointment of Attorney-in-Fact. The Assignor hereby irrevocably
constitutes and appoints the Bank, or any officer of the Bank whom the Bank
shall designate, as his true and lawful attorney-in-fact, during the entire term
of this Agreement, with full power of substitution, for him and in his name to
demand, require, receive, collect, compound and give discharges and releases of
all claims for any and all proceeds of the Company Note and all other moneys due
or to become due under the Security Agreement and to endorse any checks and
other instruments or orders in connection therewith, and, if any event of
default specified in the Assignor's Note shall occur; (a) to settle, compromise,
compound or adjust any such claims; (b) to exercise and enforce any and all
claims, rights or remedies of every kind and description of the Assignor arising
out of the Company Note and Security Agreement; (c) to file, commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction, to collect any such sums assigned by the Assignor
hereunder or to enforce any rights with respect thereto and all other claims,
rights and remedies of every kind and description of the Assignor arising out of
the Company Note and Security Agreement; and (d) generally to sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of such claims, rights and remedies as fully and completely as though the Bank
were the absolute owner thereof for all purposes, and at such times and in such
manner as may seem to the Bank to be necessary or advisable in its absolute
discretion.
(9) Successors and Assigns. This Assignment shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
(10) Notices. All notices, demands, approvals, consents, requests and
other communications hereunder shall be in writing and, unless otherwise
provided herein, shall be deemed to have been given when delivered in person or
mailed by first class registered or certified mail, postage prepaid, addressed
as follows:
(i) if to the Assignor, to
Sheridan G. Snyder
2611 West Main Street, Suite 1
Waynesboro, VA 22980
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<PAGE> 21
(ii) if to the Bank at
High and Park Streets
P.O. Box 8088
Charlottesville, Virginia 22906
Attn: Ms. Linda W. Hitchings
Vice President
(iii) if to Borrower, to
Biotage, Inc.
1500 Avon Street Extended
Charlottesville, VA 22901
The Assignor, the Bank and Borrower may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
demands, approvals, consents, requests or other communications shall be sent by
person to whose attention the same shall be directed.
(11) Severability. If any clause, provision or section of this Assignment
be held illegal or invalid by any court, the illegality or invalidity of such
clause, provision or section shall not affect any of the remaining clauses,
provisions or sections hereof, and this Assignment shall be construed and
enforced as if such illegal or invalid clause, provision or section had not been
contained herein. In case any agreement or obligation contained in this
Assignment be held to be in violation of law, then such agreement or obligation
of the parties hereto to the full extent permitted by law.
(12) Headings. The headings of the several sections of this Assignment are
inserted for convenience only, and do not comprise a part hereof.
(13) Applicable Law. This Assignment shall be governed by the applicable
laws of the Commonwealth of Virginia.
(14) Execution by Borrower. The Borrower has signed this Agreement for the
sole purpose of being bound by the consents and covenants set forth in paragraph
4 of this Agreement.
IN WITNESS WHEREOF, the parties have cause this Assignment to be executed
as of the date first above written.
ASSIGNOR: /s/ Sheridan G. Snyder
------------------------------
SHERIDAN G. SNYDER
THE BANK: CRESTAR BANK
By: /s/ Linda W. Hitchings
---------------------------
Its: Vice President
-----------------------
THE BORROWER: BIOTAGE, INC. a Delaware
Corporation
By: /s/ Mark Kachur
---------------------------
Its: Pres/CEO
-----------------------
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<PAGE> 22
THE BORROWER: BIOTAGE, INC., a Delaware corporation
By: /s/ Mark Kachur
---------------------------
Its: Pres/CEO
-----------------------
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<PAGE> 23
AMENDMENT TO SECURITY AGREEMENT
AND TO ASSIGNMENT AGREEMENT
This Amendment to Security Agreement and to Assignment Agreement (this
"Amendment") is made as of August 10, 1995 among Biotage, Inc., a Delaware
corporation (the "Borrower"), Sheridan G. Snyder (the "Assignor") and Crestar
Bank, N.A. (the "Bank").
Recitals
A. The Assignor has extended a line of credit to the Borrower evidenced by
a Credit Line Note dated as of May 11, 1993 in the principal amount of
$500,000.00 (the "Company Note") secured by a security agreement (the "Security
Agreement") of even date therewith pledging substantially all of the personal
property of the Borrower, including without limitation all after acquired
intellectual property.
B. The Assignor has assigned all of his rights, remedies, claims and
interests under the Company Note and the Security Agreement to the Bank pursuant
to an assignment agreement (the "Assignment") dated as of May 11, 1993 between
the Assignor and the Bank.
C. In order to permit the Borrower to raise over $1.5 million of
additional equity financing and to acquire certain technology through the
acquisition of Protein Engineering Corporation ("PEC"), and subject to the terms
and conditions of this Amendment, the Assignor and the Bank are prepared to
amend the Security Agreement and the Assignment to substitute the Company Note
with a new term note of the Borrower and to release certain collateral that
would otherwise be subject to the lien of the Security Agreement pursuant to the
after-acquired property provisions thereof.
NOW, THEREFORE, the parties agree as follows:
(1) The Company Note will be surrendered immediately by the Bank, on
behalf of the Bank and the Assignor, to the Borrower in exchange for a new
secured convertible term note of the Borrower in substantially the form of
Exhibit A hereto (the "New Note"). The New Note will be held by the Bank and all
references in the Assignment and the Security Agreement to the "Company Note" or
the "Credit Line Note", as the case may be, will hereafter be deemed to be
references to the New Note.
(2) The term "Intellectual Property" as defined in the Security Agreement
is hereby amended to exclude therefrom, and thereby to release from the lien of
the Security Agreement thereon, any patents and other technology and
intellectual property licensed or otherwise acquired from PEC or its subsidiary,
P.E.C. Technology Corp., by the Borrower, whether now existing or hereafter
acquired, and all proceeds of the foregoing exclusions.
(3) The Assignor and the Bank agree to execute and deliver to the Borrower
any UCC financing statements that the Borrower may reasonably request to further
evidence and confirm the release of collateral from the lien of the Security
Agreement set forth in Section 2 above.
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<PAGE> 24
(4) The parties hereto agree that, except as set forth above, in all other
respects the Security Agreement and the Assignment remain in full force and
effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the date first above written.
BORROWER: BIOTAGE, INC.
By: /s/ Robert Dishman
---------------------------
Its:
------------------
ASSIGNOR:
/s/ Sheridan G. Snyder
------------------------------
SHERIDAN G. SNYDER
BANK: CRESTAR BANK, N.A.
By: /s/ Linda W. Hitchings
---------------------------
Its: Vice President
-----------------
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<PAGE> 1
EXHIBIT 10.9
SUBLEASE
This instrument dated as of September 21, 1996, is a Sublease between
GENZYME CORPORATION, a Massachusetts corporation ("Sublessor"), and DYAX CORP.,
a Delaware corporation ("Sublessee").
The parties to this instrument hereby agree with each other as follows:
ARTICLE I
SUMMARY OF BASIC SUBLEASE PROVISIONS
------------------------------------
1.1 BASIC DATA
ALL CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN
THE PRIME LEASE (hereinafter defined) UNLESS OTHERWISE DEFINED HEREIN.
Commencement Date: September 21, 1996.
Sublessor: Genzyme Corporation
Present Mailing Address
of Sublessor: One Kendall Square, Building 1400
Cambridge, Massachusetts 02139
Sublessee: Dyax Corp.
Present Mailing Address
of the Sublessee: One Kendall Square, Building 600
Cambridge, Massachusetts 02139
Permitted Uses: Offices, research, development, laboratories,
manufacturing, storage, marketing and sales of
biologically derived products in connection with
biological and chemical research.
Premises: 16,183 rentable square feet of office and laboratory
space located on the fifth floor of the building
known as Building 600, One Kendall Square,
Cambridge, Massachusetts (the "Building"), as
approximately shown on the sketch attached hereto
as Exhibit A. The Premises demised under this
Sublease comprise a portion of the Leased Premises
<PAGE> 2
(as defined in the Prime Lease) leased to Sublessor
by Prime Lessor under the Prime Lease (as defined
below).
Prime Lease: That certain lease, dated as of December 20, 1988,
between the Trustees of Old Kendall Realty Trust,
as lessor (the "Prime Lessor"), and Sublessor, as
lessee as most recently amended by a Third
Amendment dated March 8, 1996; a copy of the
pertinent provisions of the Prime Lease is attached
hereto as Exhibit B.
Rent: $614,954 per annum ($38 per sq. ft.)/$51,246.16
per month [BUT SEE Section 6.1(e) below for
Sublessee's rights for a limited "rent free" period
for the "Expansion Space" portion of the Premises].
Sublease Term or Term: Beginning on the Commencement Date and expiring
on September 30, 1998.
ARTICLE II
PREMISES
--------
2.1 SUBLEASE OF PREMISES
Sublessor hereby leases to Sublessee, and Sublessee hereby accepts and
leases from Sublessor, upon and subject to the terms and provisions of the Prime
Lease, all of Sublessor's right, title and interest in and to the Premises for
the Sublease Term. As appurtenant to the Premises, Sublessee shall be entitled
to the appurtenant rights set forth in clauses (a) and (b) of Section 2 of the
Prime Lease, subject in all events to the Prime Lessor's rights reserved and
excepted in such clauses.
2.2 PRIME LEASE
2.2.1 Sublessor hereby represents and warrants that: (i) Sublessor is lessee
under the Prime Lease and has the full right to enter into this Sublease; (ii)
the Prime Lease is in full force and effect and that Sublessor has submitted to
Sublessee a true and complete copy of those portions of the Prime Lease that are
pertinent to Sublessee's rights and obligations under this Sublease; (iii)
Sublessor has not received any notice of default thereunder from Prime Lessor,
nor is Sublessor aware of any default thereunder by Sublessor or Prime Lessor or
of any event or condition which, but for the passage of time or the giving of
notice or both, would constitute a default thereunder by Sublessor or Prime
Lessor; and (iv) to Sublessor's knowledge and belief, the Premises and their
electrical, mechanical, plumbing, heating, ventilating, and air conditioning
systems and all fixtures and equipment built into the Premises are in good
working order and repair. Sublessee warrants and acknowledges that it has
reviewed the Prime Lease and is satisfied with the arrangements therein
reflected. Sublessee also warrants and acknowledges that it is satisfied with
the present condition of the Premises (which Sublessee
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<PAGE> 3
takes "as is" without any representation or warranty by Sublessor regarding the
condition of the Premises [except as set forth in Section 2.2.1 (iv) above] or
the fitness of the Premises for any particular use, and without obligation of
any kind on Sublessor to make any repairs or improvements thereto), and with
Sublessee's ability to use the Premises on the terms herein set forth.
2.2.2 The Prime Lease is by this reference incorporated into and made a part
hereof, except that:
(i) all references in the Prime Lease to "Lessor", "Lessee", "Lease"
and "Leased Premises", respectively, shall be deemed to refer to Sublessor,
Sublessee, this Sublease and the Premises subleased hereunder,
respectively; except that all references in the following sections and/or
provisions of the Prime Lease to "Lessor", "Lessee", "Lease", and "Leased
Premises", respectively, shall be deemed to refer to "Prime Lessor",
"Sublessee", this "Sublease" and the "Premises subleased hereunder",
respectively [i.e., it is the intention of the parties that Prime Lessor
shall retain all of its rights and obligations under such sections and/or
provisions; that Sublessor shall not be entitled to exercise any of Prime
Lessor's rights, nor shall be bound by any of Prime Lessor's obligations,
under such sections and/or provisions; and that Sublessee shall be entitled
to exercise all of Tenant's rights, and shall be bound by all of Tenant's
obligations, under such sections and/or provisions]:
(a) All of Section 2 except for the first sentence (relating to
appurtenant rights and Prime Lessor's reserved rights)
(b) Section 6 (Utilities and Other Services)
(c) The second and the second from the last sentence of Section 10
(relating to Lessor's obligations to maintain HVAC systems, the
Building and its structural and mechanical systems); EXCEPT THAT
Sublessee shall have no obligation to make any payments to Lessor
for maintenance of the HVAC System
(d) Section 13 (Subordination)
(e) Section 19 (Rules and Regulations)
(ii) the following sections and/or provisions of the Prime Lease are
expressly EXCLUDED from this Sublease (i.e., they shall NOT be deemed to be
incorporated in this Sublease) either because they are inapplicable or
because they are superseded by specific provisions hereof:
(a) The first sentence of Section 2 (Leased Premises) (relating to
the description of the Leased Premises)
(b) Section 2A (Parking)
(c) Section 3.1 (Term)
(d) Section 3.2 (Condition of the Premises)
(e) Section 3.2.1 (Lessee's Improvement Work)
(f) Section 3A (Construction of Bridge Between Buildings 700 and
1400)
(g) Section 4 (Rent)
(h) Section 4A (Rent Commencement)
(i) Section 5 through 5.4.5 (Rent Adjustments)
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<PAGE> 4
(j) The first six lines of Section 9A, beginning with "LESSOR agrees
to keep the Building..." and ending with "boilers and other
machinery and equipment, and"
(k) Section 10, except to the extent included in Section 2.2.2(i)
above
(l) Section 12 (Assignment-Subletting)
(m) Sections 17 through 17A (Fire, Casualty and Eminent Domain)
(n) Section 20 (Broker)
(o) Section 22 (Notice)
(p) Section 24 (Expansion Rights)
(q) Section 25 (Option to Extend)
2.2.3 This Sublease is and shall remain subject and subordinate in all respects
to the Prime Lease and to all renewals, modifications, consolidations,
replacements and extensions thereof. In the event of termination or cancellation
of the Prime Lease for any reason whatsoever with respect to all or any portion
of the Premises, this Sublease shall automatically terminate with respect to all
or such portion of the Premises.
2.2.4 Notwithstanding anything contained in this Sublease to the contrary,
Sublessor shall have no obligation during the term of this Sublease to provide
any services of any nature whatsoever to Sublessee or to, in or for the benefit
of the Premises or to expend any money for the preservation or repair of the
Premises, or to observe or perform any obligations of Sublessor under this
Sublease in any case where such services, expenditures or obligations are
required under the Prime Lease to be provided, performed or observed by Prime
Lessor for the benefit of Sublessor with respect to the Premises, and Sublessee
agrees to look solely and directly to Prime Lessor for the furnishing of any
such services, expenditure of any such sums, or observance or performance of any
such obligations to which, or the benefit of which, Sublessee may be entitled
under this Sublease. Sublessor shall, however, upon the request of Sublessee
from time to time (which may be oral), notify Prime Lessor of any default by
Prime Lessor under the Prime Lease with respect to the Premises and to use
reasonable efforts to cause Prime Lessor to provide such services, expenditures
or obligations. For purposes of this Sublease and during the term of this
Sublease, Sublessor's only obligations as lessee under the Prime Lease with
respect to the Premises shall be to make those payments of rent due to Prime
Lessor thereunder, and to make those payments due to the utility providers for
utility services (including HVAC, electricity, water and sewer) which are
separately metered and furnished to the Leased Premises, which payments
Sublessor hereby agrees to make in timely fashion, and to use reasonable efforts
to cause Prime Lessor to provide the aforesaid services, expenditures and
obligations. It is the intention of the parties that Sublessee comply with, and
Sublessee agrees to comply with, all of the Sublessor's obligations as lessee
under the Prime Lease (not excluded under Section 2.2.2 above and except for
Sublessor's obligations to pay rent and utility charges to Prime Lessor and
others) with respect to the Premises to the same extent and with the same force
and effect as if Sublessee were lessee thereunder and Sublessee hereby agrees to
so comply with all of Sublessor's such obligations under the Prime Lease with
respect to the Premises. Sublessee shall have no claim against Sublessor for any
default by the Prime Lessor under Prime Lease; if, however, Sublessor is
entitled to a rent abatement equitably allocable to the Premises as a result of
any default by Prime Lessor, Sublessee shall be entitled to receive its fair and
equitable share of such abatement. If Prime Lessor shall default under any of
its obligations under the Prime Lease with respect to the Premises, Sublessee
shall have the right, at Sublessee's expense, but in the name of Sublessor, to
make demand or prosecute any appropriate action or proceeding against Prime
Lessor for the enforcement of the obligations of Prime Lessor
- 4 -
<PAGE> 5
with respect to the Premises. Sublessor agrees that it will cooperate with
Sublessee in such actions and proceedings and will sign such demand, pleadings
and/or other papers as may be required or appropriate, to enable the Sublessee
to proceed in Sublessor's name to enforce the obligations of Prime Lessor; but
Sublessee will pay all costs and expenses in the prosecution of any action or
any proceeding so taken by Sublessee and agrees to defend and indemnify
Sublessor against all costs and liability arising therefrom.
2.2.5 Sublessee shall neither do, nor permit to do nor permit to be done,
anything that would increase Sublessor's obligations to Prime Lessor under the
Prime Lease (unless Sublessee shall indemnify Sublessor from such increased
obligation) or that would cause the Prime Lease to be terminated or forfeited.
Sublessor hereby agrees that it shall not amend or modify the Prime Lease in any
manner that affects the Premises subleased hereunder without Sublessee's prior
consent, which consent shall not be unreasonably withheld.
2.2.6 Sublessor shall promptly give Sublessee a copy of any notice of default,
termination or otherwise affecting the existence or validity of the Sublease or
relating to any casualty or taking, given by Sublessor or Prime Lessor to the
other.
2.2.7 Sublessor and Sublessee hereby acknowledge that portions of the Premises
have direct access to portions of the Leased Premises located in Buildings 650
and 700 by means of existing interior corridors and doors. In recognition of
Sublessor's reasonable business safety, security and confidentiality needs,
Sublessee agrees that, except for its limited restroom/lavatory access rights
described in Section 2.3 below, Sublessee shall have no right whatsoever to
enter or have access to or otherwise use any space in Buildings 650 and 700.
2.3 SUBLESSEE'S RIGHTS RE BUILDING 700 LAVATORY USE
Sublessor and Sublessee hereby acknowledge that, based upon Sublessee's
anticipated use of the Premises, the number of restroom/lavatory facilities
located in the Premises may be inadequate to meet Sublessee's expected need for
restroom/lavatory facilities. Accordingly to enable Sublessee to avoid the cost
of installing in the Premises the additional restroom/lavatory facilities that
might otherwise be required as a practical matter for Sublessee's expected need,
Sublessor hereby grants to Sublessee, subject to the conditions described below,
the right (the "Bldg 700 Lavatory Rights"), in common with Sublessor, to have
access through the fifth floor of Buildings 650 and 700 for the limited purpose
of traveling to and from, and use of, the restroom/lavatory facilities located
on the fifth floor of Building 700 and labeled "Fifth Floor Lavatories" on the
Attached Exhibit A; Sublessor also hereby grants to Sublessee the right to have
access through the fifth floor of Buildings 650 and 700 for the additional
limited purposes of having access to emergency exits during emergency
situations. Sublessee's Bldg 700 Lavatory Rights shall be in all events subject
to the following conditions:
(a) The Bldg 700 Lavatory Rights may only be exercised during regular
business hours; as of the date of this Sublease, regular business hours are 8AM
to 6PM Mondays through Fridays, and 8AM to 1PM on Saturdays, but excluding
holidays. Neither Sublessee nor any Permitted User (as defined below) nor any
other person claiming by, through or under Sublessee shall have any right
whatsoever to exercise the Bldg 700 Lavatory Rights at any time outside regular
business hours.
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<PAGE> 6
(b) The Bldg 700 Lavatory Rights may only be exercised by (x) "Authorized
Personnel" (as defined below) and (y) visitors, customers, contractors and other
invitees of Sublessee who are accompanied by Authorized Personnel (Authorized
Personnel and such other persons are referred to herein collectively as
"Permitted Users").
(c) In exercising the Bldg 700 Lavatory Rights, Permitted Users shall be
authorized to enter and exit Building 700 only through the one door labelled
"Access Door" on the attached Exhibit A, and once inside Building 700, Permitted
Users shall be authorized to travel between the Access Door and the Fifth Floor
Lavatories only through the portions of the corridor labelled "Access Corridor"
on Exhibit A. Neither Sublessee nor any Permitted User nor any person claiming
by, through or under Sublessee shall have any right whatsoever to enter or
travel through any portion of Buildings 650 and 700 other than the Access Door,
the Access Corridor and the Fifth Floor Lavatories.
(d) For purposes of this Sublease, "Authorized Personnel" shall mean those
individual directors, officers and employees of Sublessee who have (x) received
written instructions approved by Sublessor that describe the times when, and the
terms and conditions under which, the Bldg 700 Lavatory Rights may be exercised;
(y) signed and delivered to Sublessor's Director of Security (or his designee) a
confidentiality agreement in form and substance satisfactory to Sublessor; and
(z) received from Sublessor's Director of Security (or his designee) a security
card which shall enable such person to have access through the Security Doors.
If Sublessee, any Permitted User or any other person claiming by, through
or under Sublessee shall fail to observe and/or perform any of the terms,
provisions, conditions, restrictions, or agreements set forth in this Section
2.3 (including without limitation any failure to observe and/or perform any of
the terms, provisions, conditions, restrictions or agreements contained in the
confidentiality agreement described above), and such failure continues for five
(5) days after Sublessee's written notice of such failure from Sublessor, then
Sublessor shall have the right at any time thereafter to terminate and revoke
the Building 700 Lavatory Rights. In such case, the Sublessee shall, at its sole
expense, be solely responsible for undertaking whatever steps are necessary to
provide within the Premises the minimum number of restroom/lavatories required
for Sublessee's needs in the Premises.
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<PAGE> 7
ARTICLE III
TERM OF SUBLEASE
----------------
3.1 TERM
The Sublease Term of this Sublease shall be for the period specified in
Section 1.1 as the Sublease Term, unless earlier terminated or extended as
provided below.
ARTICLE IV
CONDITION OF PREMISES
---------------------
4.1 CONDITION OF PREMISES
(a) Sublessee agrees to accept the Premises "as is", generally in the same
order and condition as the Premises are in as of the date hereof, and agrees
that Sublessor is under no obligation to perform any work upon or alteration to
the Premises for Sublessee's use and occupancy, other than to deliver the
Premises to Sublessee on the Commencement Date.
(b) Sublessor will permit Sublessee and its agents to enter the Premises
prior to the Commencement Date in order to perform through Sublessee's own
contractors (to be first approved by Sublessor) any work necessary to prepare
the Premises for Sublessee's occupancy; all such work shall be performed
substantially in accordance with plans approved by Sublessor and Prime Lessor.
The foregoing license to enter prior to the Commencement Date is conditioned
upon Sublessee's workmen and mechanics working in harmony and not interfering
with the labor employed by Sublessor, Sublessor's mechanics or contractors or by
Prime Lessor or any other tenant or their contractors. If at any time such entry
shall cause disharmony or interference, this license may be immediately
withdrawn by Sublessor.
Worker's compensation and public liability and property damage insurance,
all in amounts and with companies and on forms satisfactory to Sublessor, shall
be provided and at all times maintained by Sublessee or Sublessee's contractors
engaged in the performance of any work and, before proceeding with any work,
certificates of such insurance shall be furnished to Sublessor.
Any such entry shall be deemed to be under all of the terms, covenants,
provisions and conditions of the Sublease except the covenant to pay Rent.
4.2 FIXTURES AND EQUIPMENT
Sublessee shall be entitled to use all built-in fixtures and equipment,
including fume hoods physically located in the Premises as of the Commencement
Date. Sublessee shall, at its expense, maintain and repair such fixtures and
equipment in good order, repair and condition and shall surrender all such
fixtures and equipment to Sublessor in such condition at the end of the term,
reasonable wear and tear and damage by fire or other casualty excepted.
ARTICLE V
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<PAGE> 8
USE, ASSIGNMENT AND SUBLETTING
------------------------------
5.1 PERMITTED USE; ACCESS
Sublessee agrees that the Premises shall be used and occupied for the
Permitted Uses only. During the Sublease Term, Sublessee shall assume and
maintain exclusive control of the Premises. Sublessee acknowledges and
understands that it shall be responsible, at its expense, for providing any
janitorial, cleaning, equipment and fixture maintenance and security services
necessary for Sublessee's use and occupancy of the Premises. Sublessee shall
have access to the Premises and the appurtenant common areas of the Building 24
hours per day, seven days per week, subject to such "after hours" security
systems, rules and regulations as Prime Lessor may from time to time impose.
5.2 ASSIGNMENT AND SUBLETTING
Sublessee shall not, without the prior written consent of both Sublessor
(which consent shall not be unreasonably withheld or delayed) and Prime Lessor
by operation of law or otherwise, assign, mortgage, pledge, encumber or in any
manner transfer this Sublease, or any part thereof or any interest of Sublessee
hereunder or sublet or permit the Premises or any part thereof to be used or
occupied by others. Notwithstanding any such consent, Sublessee shall remain
liable to Sublessor for the payment of all rent and for the performance of the
covenants and conditions of this Sublease (which liability, following any
assignment, shall be joint and several with the assignee).
ARTICLE VI
RENT AND UTILITIES
------------------
6.1 RENT
(a) The Rent (specified in Section 1.1 hereof) and any additional rent or
other charges payable pursuant to this Lease shall be payable by Sublessee to
Sublessor by mailing such rent payment to Genzyme Corporation, P.O. Box 3486,
Boston, Massachusetts 02241-3486 (or such other place as Sublessor may from time
to time designate by notice to Sublessee).
(b) Rent shall be payable in advance on the first (1st) day of each and
every calendar month during the term of this Sublease.
(c) Rent for any partial month shall be paid by Sublessee to Sublessor at
such rate on a prorata basis. Other charges payable by Sublessee on a monthly
basis, as hereinafter provided, shall likewise be prorated.
(d) All Rent and other amounts due under this Sublease shall be made
without demand, offset or deduction. Sublessee shall be entitled to a fair and
equitable share of all abatements of rent and rent adjustments set forth in the
Prime Lease which Sublessor has been granted with respect to the Premises.
(e) Sublessee represents and Sublessor acknowledges that, as of the
Commencement Date and for the period of approximately six months thereafter,
Sublessee expects to use the
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<PAGE> 9
approximately 2,638 rentable square foot portion of the Premises identified on
Exhibit A as the "Expansion Space" for only limited purposes. Accordingly,
Sublessor hereby agrees that Sublessee shall have no obligation to pay any rent
with respect to the Expansion Space until May 1, 1997. From and after May 1,
1997, however, full rent shall be due and payable with respect to the Expansion
Space. Sublessor shall provide Sublessee with such "free rent" for the Expansion
Space by applying to Sublessee's rental account for each month that Sublessee
qualifies for free rent, a credit in the amount of $8,353.67.
(f) It is the intention of the parties that Rent payable by Sublessee under
this Sublease shall be a "gross rent" that includes amounts on account of base
rent, utilities, operating expenses and real estate taxes payable by Sublessee
to Sublessor; i.e.; except under the limited circumstances set forth in Section
6.3 below and except for Sublessee's obligations under Section 9.3 to pay for
parking spaces, Sublessee shall have no obligation to make any payments to
Sublessor other than the Rent specified in Section 1.1.
6.2 LATE PAYMENTS; ADDITIONAL RENT
If any installment of Rent, additional rent or other charges is not paid
within five (5) business days of the date such payment is due and payable, then
Sublessee shall pay to Sublessor a late charge of five percent (5%) of the
amount of such payment. In addition, if Sublessee shall fail to make any such
payment within thirty (30) days after the due date, such payment shall bear
interest at the rate per annum which is two percent (2%) higher than the "prime
rate" then being charged by The First National Bank of Boston from the date such
payment became due to the date of payment thereof by Sublessee; provided,
however, that nothing contained herein shall be construed as permitting
Sublessor to charge or receive interest in excess of the maximum legal rate then
allowed by law. Such late charge and interest shall constitute additional rent
due and payable hereunder with the next installment of Base Rent due hereunder.
6.3 EXCESS UTILITY COSTS
If Sublessor, in its reasonable judgment, determines that Sublessee is
using excessive quantities of HVAC, electricity or water (for purposes of this
Sublease, "excessive quantities" shall mean quantities more than 10% higher than
the quantities being consumed by Sublessor [calculated on a per square foot
basis] in portion of the Leased Premises used by Sublessor for purposes
comparable to Sublessee's use of the Premises), Sublessee shall, upon receipt of
a written invoice therefor, reimburse Sublessor for the cost of any such excess.
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<PAGE> 10
ARTICLE VII
CASUALTY
--------
7.1 CASUALTY AND RESTORATION
If the Premises, or any part thereof, shall be damaged or destroyed by fire
or other casualty then Sublessee shall promptly notify Prime Lessor and
Sublessor. Under the Prime Lease the Prime Lessor is obligated, as soon as
possible thereafter, to repair or restore the Premises to the extent and in the
manner set forth in Section 17 of the Prime Lease. If damage is of the type
which entitles Prime Lessor or Sublessor to terminate the Prime Lease and either
such party so elects to terminate the Prime Lease, then the Prime Lease shall
cease and come to an end and this Sublease shall similarly terminate. In
addition, if damage is of the type which would entitle Sublessor to terminate
the Prime Lease, Sublessee shall have the right to terminate this Sublease by
giving both Sublessor and the Prime Lessor written notice of such termination
within the applicable notice period set forth in Section 17 of the Prime Lease.
Sublessee acknowledges that Sublessor shall, in no event, have any obligation
whatsoever to rebuild or restore any damage to the Premises.
If during the Sublease Term the Building shall be partially or
substantially damaged by fire or casualty and if such partial or substantial
damage shall materially interfere with the Sublessee's use of the Premises as
contemplated by this Sublease, a just amount of the rent and other charges
payable by the Sublessee hereunder shall be equitably abated or adjusted for the
period in which, by reason of such damage, there is such interference with the
use of the Premises, but only to the extent that Sublessor is also entitled to
an abatement under the Prime Lease on account of such fire or casualty that is
equitably allocable to the Premises subleased hereunder.
ARTICLE VIII
EMINENT DOMAIN
--------------
8.1 EMINENT DOMAIN
Should the Building or any part thereof be taken by eminent domain and such
taking (or damage caused by such taking) is of the type which entitles Prime
Lessor or Sublessor to terminate the Prime Lease and either such party elects to
terminate the Prime Lease, then, and in that event, the Prime Lease shall cease
and come to an end and this Sublease shall cease and come to an end, and the
Rent shall be apportioned as of the date of the termination notice.
If any such taking renders the remaining portion of the Premises unsuitable
for the purposes of Sublessee (in Sublessee's reasonable judgment), then
Sublessee shall have the right to terminate this Sublease by written notice to
Sublessor which shall be within sixty (60) days of the public recording of such
taking. In the event of termination by Sublessee as set forth above, the Rent
shall be apportioned as of the date of such termination notice. In addition, if
any taking is of the type which would entitle Sublessor to terminate the Prime
Lease, Sublessee shall have the right to terminate this Sublease by giving both
Sublessor and the Prime Lessor written notice of such termination within the
applicable notice period set forth in Section 17A of the Prime Lease.
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<PAGE> 11
In the event of a taking described in Section 17A of the Prime Lease, the
rent and other charges payable hereunder, or a fair and just proportion thereof
according to the nature and extent of the loss of use, shall be suspended or
abated, but only to the extent that Sublessor is also entitled to an abatement
or suspension under the Prime Lease on account of such taking that is equitably
allocable to the Premises subleased hereunder.
Sublessor reserves, and Sublessee grants to Sublessor all rights which the
Sublessee may have for damages or injury to the Premises for any taking by
eminent domain, except for damage to the Sublessee's fixtures, personal property
or equipment, if any, the Sublessee's right to relocation expenses, if any, and
the Sublessee's right for business interruption, if any.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
9.1 NO BROKERAGE
The parties represent that they have dealt with no real estate broker or
agent in connection with this Sublease other than Robert Richards of Fallon
Hines & O'Connor, and in the event of any brokerage claims against Sublessor
from any broker other than Fallon, Hines & O'Connor, predicated upon prior
dealings with Sublessee, Sublessee hereby agrees to defend, indemnify and hold
harmless Sublessor from and against any such claim.
9.2 NOTICES
Whenever by the terms of this Sublease notice, demand or other
communication shall or may be given, either to Sublessor or to Sublessee, the
same shall be adequately given if in writing and delivered by hand or sent by
registered or certified mail, postage prepaid:
If intended for Sublessor, addressed to it at the mailing address set forth
on the first page of this Lease, with a copy to Sublessor's attorneys,
Palmer & Dodge LLP, One Beacon Street, Boston, Massachusetts 02108,
Attention: Maureen P. Manning, Esquire and Thomas G. Schnorr, Esquire (or
to such other address or addresses as may from time to time hereafter be
designated by Sublessor by like notice).
If intended for Sublessee, addressed to it at the Premises to the attention
of the Director of Finance (or to such other address or addresses as may
from time to time hereafter be designated by Sublessee by like notice).
All such notices shall be effective upon receipt or refusal to receive.
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<PAGE> 12
9.3 PARKING
Under the terms of the March 8, 1996, Third Amendment to the Prime Lease,
Sublessor is entitled, as a right appurtenant to the Leased Premises, to use a
certain number of parking spaces in the One Kendall Square Parking Garage upon
payment of the then current monthly parking fee determined in accordance with
the last paragraph of Section 4 of the Prime Lease. Sublessor shall make
available to Sublessee during the term of this Sublease, at Sublessee's expense,
the right to use up to 16 of such parking spaces in such garage.
9.4 PRIME LESSOR CONSENT
This Sublease shall not be effective until and unless Prime Lessor has
given its consent hereto. Sublessor shall not be responsible for the failure of
Prime Lessor to consent to this Sublease.
EXECUTED UNDER SEAL.
Sublessor: GENZYME CORPORATION
By /S/ EVAN M. LEBSON
--------------------------------
Its Vice President and Treasurer
hereunto duly authorized
Sublessee: DYAX CORP.
By /S/ HENRY E. BLAIR
---------------------------------
Its Chairman
hereunto duly authorized
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<PAGE> 13
Exhbiit 10.9
[GENZYME LETTERHEAD]
January 23, 1998
Dyax Corp.
One Kendall Square, Bldg. 600
Cambridge, MA 02139
Attention: Director of Finance
Re: Sublease dated as of September 21, 1996, between Genzyme
Corporation, as Sublessor, and Dyax Corp., as Sublessee, with
respect to premises consisted of approximately 16,183 square
feet located on the Fifth Floor of Building 600 at One Kendall
Square, Cambridge, Massachusetts
Gentlemen:
The purpose of this letter is to confirm the agreement that we reached on
December 31, 1997 to extend the term of the captioned Sublease as of December
31, 1997 as follows:
1. The expiration date of the Sublease is hereby extended from September
30, 1998, through and including December 31, 1999 (such extension
period is referred to as the "Extended Term").
2. Sublessee has no rights or options to extend the term of the Sublease
beyond such expiration date.
3. Except as amended hereby, the Sublease remains unchanged and in full
force and effect.
Please acknowledge your agreement to the foregoing by having the two
enclosed copies of this letter signed by an authorized officer of Dyax Corp.
Once this letter is so
[This space intentionally left blank.]
<PAGE> 14
Dyax Corporation
January 23, 1998
Page 2
signed and returned to me and approved by Prime Lessor, this letter shall
constitute an amendment to the Sublease.
Very truly yours,
GENZYME CORPORATION
By: /s/ Peter Wirth
--------------------------
Peter Wirth
Executive Vice President
Chief Legal Officer
Enclosures (2)
cc: Thomas G. Schnorr, Esquire
Accepted and Agreed to this 23rd day of January, 1998:
DYAX CORP.
By: /s/ Henry E. Blair
--------------------------------
Its President
Hereunto duly authorized
The undersigned, as successor to the Trustees of Old Kendall Realty Trust as
Prime Lessor, hereby consents to the foregoing:
OLD KENDALL PROPERTY LLC
By: /s/ Allan R. Jones, President, Managing Member
--------------------
Dated: January 26, 1998
<PAGE> 1
EXHIBIT 10.10
LEASE
This Lease Agreement made this 12th day of February 1998, by and between
AStec Partnership, a Virginia general partnership, Lessor, and Dyax Corporation,
a Delaware corporation, Lessee.
W I T N E S S E T H :
That Lessor, for and in consideration of the covenants and agreements
hereinafter set forth and further consideration of the rent which Lessee agrees
to pay, hereby leases and demises unto Lessee, and Lessee hereby takes, accepts,
and rents from Lessor, the premises hereinafter set forth for the period, at the
rental, and upon the terms and conditions hereinafter set forth:
1. DEMISED PREMISES: The premises leased hereunder shall consist of the
space currently leased to Lessee for use by Biotage Incorporated in the in AStec
Center at 1500 Avon Street Extended in Albemarle County, Virginia. Said premises
are more particularly outlined in a diagram attached to this Lease as Exhibit A.
Said premises shall consist of 19,984 square feet. Said premises shall be used
by the Lessee solely as defined in the Special Permit Application and any other
related functions not in conflict with the Special Use Permit application. Any
change in the use of the facility by Lessee must be approved in writing in
advance by the Lessor; Lessor's approval shall not be unreasonably withheld.
2. TERM OF LEASE: This Lease Agreement shall be effective on this date. The
term of this Lease shall begin at 12:01 A.M. on April 15, 1998, (the
Commencement Date) and shall end on April 14, 2002.
3. RENT AND DEPOSIT: (a) The total rent due for this lease shall be
$767,842.00 based
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on a charge of $9.61 per square foot. The rent shall be payable in forty-eight
(48) consecutive monthly installments. The monthly payments shall be $15,996.71.
The first payment of $15,996.71 shall be due and payable on the Commencement
date of this Lease as defined in paragraph 2 above. Each subsequent payment
shall be due on the fifteenth day of the month. Lessor is currently holding
deposits for $25,205.28, $8,597.34 and $7,564.77 from previous leases which
shall be continued for this Lease. All amounts held by Lessor on deposit shall
be refunded after the termination of this lease provided that the Lessee
fulfills all of the covenants and requirements of the Lease. If Lessee fails to
fulfill any covenants or requirements of this Lease, or damages the premises in
any fashion (excluding normal wear and tear), the damage caused by Lessee shall
be deducted from this deposit. If the damages exceed the amount of the deposit,
Lessor retains the right to avail itself of any other legal remedies to recover
its damages. The deposit shall be refunded within thirty (30) days of
termination of the Lease. The Lessor shall hold the deposit in trust in a
separate federally insured interest bearing account over which the Lessor alone
shall have the power of withdrawal and will not commingle the deposit with any
funds or other property of the Lessor. So long as the Lessee is not in default
under the Lease, the Lessor agrees to pay the Lessee on a quarterly basis all
interest earned on the deposit.
4. CORPORATE GUARANTEES: In order to induce the Lessor to accept this Lease
without any individual guarantees, the Lessee agrees to provide the Lessor with
quarterly financial statements.
5. RENEWAL AND OPTION TO LEASE NEW SPACE: (a) Lessee shall, provided it is
not in default of any terms and conditions of this Lease, have the option to
renew this lease for one additional period of one year. If Lessee decides to
exercise this option, Lessee shall provide written notice to Lessor of its
decision, which notice must be received by Lessor six months
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<PAGE> 3
prior to the termination of the original Lease as set forth in paragraph 2
herein. If Lessee fails to give Lessor the notice set forth in this paragraph,
then Lessee's right to renew in the six months before expiration of the existing
lease term shall be at the exclusive option of the Lessor only. Thereafter,
there shall be no automatic renewal or renewal by operation of law on this
Lease.
(b) Renewal shall be for one twelve month period under the same terms
and conditions contained in this Lease except that during the renewal lease
period Lessee shall pay to the Lessor a base annual rent of $191,960.50 plus any
additional amount as determined in accordance with the provisions of
subparagraph (c), payable in advance in monthly installments on the fifth day of
each month.
(c) As used herein:
(i) "Index" shall mean the national "Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W) (1982-84 = 100)" specified for "All
Items" and issued by the Bureau of Labor Statistics of the United States
Department of Labor. In the event the Index shall hereafter be converted to a
different reference base or otherwise revised, the determination of the
Percentage Increase (defined below) shall be made with the use of such
conversion factor, formula or table for converting the Index as may be published
by the Bureau of Labor Statistics or, if such Bureau shall not publish the same,
then with use of such conversion factor, formula or table as may be published by
Prentice-Hall, Inc. or, failing such publication, by any other nationally
recognized publisher of similar statistical information. In the event the Index
shall cease to be published, then, for the purposes of this Lease, there shall
be substituted for the Index such other statistics on the cost of living
computed and published by a federal governmental agency or by a nationally
recognized publisher of similar statistical information.
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<PAGE> 4
(ii) "Base Index" shall mean the Index in effect on the Commencement
Date.
(iii) "Current Index" shall mean the Index in effect for the first
month of the lease year for which the adjustment in rent is calculated.
(iv) "Percentage Increase" shall mean the percentage equal to the
fraction, the numerator of which shall be the Current Index less the Base Index,
and the denominator which shall be the Base Index.
If the Current Index shall exceed the Base Index, then the annual rent
payable for the ensuing lease year shall be increased be an amount equal to the
"Percentage Increase" multiplied by $191,960.50. As soon a practicable after the
end of the fourth lease year during the term of this Lease, Lessor shall send
Lessee an index comparative statement setting forth the Current Index, the Base
Index, the Percentage Increase, and the increase in the annual rent. On the
fifth day of the calendar month ("Current Month") following the month in which
the index comparative statement was sent, Lessee shall pay to Lessor (i) a sum
equal to 1/12th of such increase in the base annual rent multiplied by the
number of calendar months of the new lease year elapsed, and (ii) thereafter,
commencing with the Current Month, and continuing monthly thereafter, the
monthly installments shall be increased by an amount equal to 1/12th of such
increase. In no event shall the rent charged be less than $191,960.50 per year.
(d) The parties acknowledge that the Lessee may in the future have the
need for additional space in excess of the current demised premises as described
in Paragraph 1. The parties further acknowledge that the Lessor currently owns
additional rental properties and/or may obtain in the future other
commercial/industrial rental properties.
(e) Accordingly, provided the Lessee is not in default of any terms
and conditions of this Lease, the Lessee shall have an option to lease from the
Lessor different space of not less than 25,000 square feet (hereinafter "New
Space"). In the event of the actual relocation of the
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<PAGE> 5
Lessee from the current demised premises to the New Space, this Lease shall then
terminate upon commencement of any new lease.
(f) In order to exercise this option, the Lessee shall provide the
Lessor with written notice at any time during the four (4) year lease term
described in Paragraph 2. The parties acknowledge that the said New Space will
be available within one (1) year from the date of the lease for the new space.
Accordingly in the event the written notice is received during the last lease
year of the original lease term, this lease shall continue beyond the initial
four year term until the New Space is occupied by the Lessee. The terms and
conditions of any such additional lease period shall be the same as the terms
and conditions of this lease.
(g) Upon receipt of the written notice, the parties agree to commence
negotiations regarding the New Space. Such negotiations shall include but not be
limited to the design, layout, buildout, lease terms, rental amounts and other
appropriate issues. The Lessor and the Lessee agree to undertake all reasonable
efforts and to use due diligence in order to reach a successful completion to
the negotiations. If an agreement is not reached within six (6) months of
negotiations both parties agree to accept an MAI appraisal of an appropriate
lease rate for the complete package at the then current rates.
(h) Should additional space become available in AStec Center I or II
during the term of this Lease the Lessee shall have a first right of refusal for
such space provided the Lessee is not in default of any terms and conditions of
this Lease. The Lessor shall provide written notice of the space availability
and the Lessee shall have 30 days from the date of said notice to exercise this
option by entering into a new lease for such additional space.
6. LATE FEE: In the event that the Lessor does not receive from Lessee any
installment of rent within ten (10) days of the date for which such installment
is due, a late fee of five percent (5.00%) of the monthly rent installment shall
be due as additional rent.
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<PAGE> 6
7. COST OF ENFORCEMENT OF THE LEASE: The defaulting party hereby agrees to
pay all costs, expenses, fees and charges incurred by the non defaulting party
in enforcing, by legal action or otherwise, any provisions, covenants and
conditions of this Lease including reasonable attorney's fees, Lessee hereby
waives the benefit of any Homestead or similar exemption laws with respect to
the obligations of this Lease.
8. REPAIRS AND MAINTENANCE: Lessee shall at its sole expense keep the
interior of the premises in as good order and repair as it is at the
commencement of this Lease Agreement, reasonable wear and tear excepted. A
walk-through of the current Biotage space was made by representatives of Lessee
and Lessor at the commencement of the first Lease and a checklist was prepared
which stated the condition of all leased property. This checklist was signed by
both representatives at the time of the walk-through. Repairs noted as required
to be made were completed by Lessor. A walk-through of the new Biotage space
will be made by representatives of Lessee and Lessor at the commencement of this
Lease and a checklist prepared which states the condition of all leased
property. This checklist will be signed by both representatives at the time of
the walk-through. Repairs noted as required to be made will completed by Lessor.
A walk-through shall be made no later than thirty (30) days prior to expiration
of this Lease and any repairs noted as required shall be completed by Lessee,
said repairs to be completed to the reasonable satisfaction of the Lessor. If
Lessee fails to complete any such repairs by the date of the termination of the
Lease the cost of performing such repairs shall be deducted from Lessee's
deposit. Lessee's deposit shall be released upon completion of any such repairs
in accordance with the terms of paragraph 3, above. Lessee agrees to replace or
repair all broken or damaged glass, locks, plaster and flooring at the sole
expense of Lessee and such replacement or repair shall be to the satisfaction of
Lessor. Lessee agrees to use water closets and other plumbing fixtures only for
the purpose for which they were installed and not to place sweepings,
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<PAGE> 7
rubbish, rags, chemicals, or other items in such fixtures. Lessee agrees not to
install on the property any heating unit or antenna of any kind without the
consent of the Lessor. Lessee agrees to keep all doors and windows closed during
rain or snow, not to keep any explosive or flammable chemicals in unprotected
areas on the property, and not to affix or suspend any signs, advertisements or
notices upon or from any part of the property without the written consent of the
Lessor. Lessor will provide a directory sign at the entrance to the parking area
identifying the Lessee's business. Lessee further agrees not to place an iron
safe or other heavy articles (defined as being greater than 125 lbs. per square
foot) on the property without the written consent of the Lessor and agrees to
indemnify the Lessor for all damages resulting from the placement or moving of
any such article. Lessee agrees not to use any harsh or abrasive compounds or
solvents on any tile floors and to use only waxes of a water emulsion type.
Notwithstanding any of the above, the Lessee shall not be responsible for any
repairs resulting from the negligence or willful acts of the Lessor or its
agent. Lessor agrees to maintain and keep in good repair the heating systems,
ventilation systems, air conditioning system, plumbing, sprinkler, electrical
(not including lamp and other light fixture replacement), the roof, the exterior
of the building, the grounds, and the parking areas except for any improvements
made by the Lessee which maintenance shall be the responsibility of the Lessee.
Said maintenance and repair shall be performed at Lessor's own expense, except
for (a) any damage exceeding reasonable wear and tear caused by the Lessee, and
(b) any damage which in the reasonable judgement of the Lessor is due to abuse
or improper use of the systems, etc., by Lessee, both of which kinds of damages
shall be paid for by Lessee. Lessor shall, at its sole expense, have the
sprinkler system tested annually as required for Lessor's insurance policy.
Lessor shall not be liable to Lessee, its employees, agents or invitees for any
damage or injury to persons or property or for any loss or interruption of
business sustained by Lessee resulting from any
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<PAGE> 8
occurrence or condition in or upon the leased Premises, or the land, sidewalks
and parking places adjacent thereto, unless said injury, damage, loss or
interruption was caused by the negligence or willful misconduct of Lessor, its
agents or employees.
9. UTILITIES: Lessor agrees to furnish and pay for the water and sewerage
utilities supplied to the leased premises. Lessee agrees to pay all charges for
gas, electricity, telephone, and other utilities or services (except garbage or
standard office type waste disposal and pick-up which shall be the
responsibility of the Lessor), janitorial and cleaning services, etc. used,
rendered or supplied upon or in connection with the premises. Lessee shall
notify the Lessor before signing the lease of any demand or need for water or
sewer other than for toilet, lab or reasonable cleaning of facilities (excluding
any process water usage). Lessor reserves the right to set a meter for any
additional uses and bill Lessee for the costs in excess of these normal usages.
Lessor shall provide snow removal within 24 hours of the cessation of snow fall
except when this occurs on Sunday. Lessor shall provide Lessee with 24 parking
spaces in the South parking lot and 13 spaces in the West parking lot.
10. ALTERATIONS: No alterations, additions, improvements, change in
mechanical, plumbing, or electrical systems or exterior decorations to the
premises shall be made by Lessee until after such change shall have been
approved in writing by the Lessor. So long as the Lessee shall not be in default
hereunder any fixtures, additions or improvements installed by Lessee during
this lease and previous leases shall, at Lessee's option, become the property of
the Lessee upon expiration of the full term of this Lease agreement provided,
however, that (i) the Lessor have the right to require Lessee to remove such
fixtures, additions or improvements and restore the leased premises to their
original condition at Lessee's cost upon the termination of this Lease agreement
or (ii) if the Lessee shall be in default hereunder, such property shall, at the
lessor's option, become the property of the Lessor.
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<PAGE> 9
11. CONDEMNATION: If all or a substantial part of the premises shall be
acquired for any public use by right of eminent domain, or private purchase in
lieu of such right, by a public body vested with the right of eminent domain,
this Lease and all the rights of the Lessee under it shall immediately
terminate, and the rent shall be adjusted as of the time of acquisition Lessee
shall have no claim against Lessor for any value of the unexpired term nor shall
Lessee be entitled to any part of the condemnation award or purchase price in
lieu of such award.
12. DESTRUCTION BY CASUALTY:
(a) RESTORATION OF DAMAGED PREMISES. In the event the premises are
damaged or destroyed or rendered partially untenantable for their then use by
fire or other casualty insured by Lessor, the Lessor shall promptly repair from
funds provided by Lessee as subrogee or from insurance proceeds released by the
holder of any deed of trust lien upon the building which contain the premises
and restore the same to substantially the condition in which they were
immediately prior to the happening of such casualty. The Lessor's obligation to
repair shall not extend to any improvements or addition of the Lessee. In the
event that the premises are so damaged or destroyed by fire or other casualty
that repairs to the premises required for Lessee to resume its operations within
90 days of the date of such fire or other casualty cannot be completed, then
either Lessee or Lessor shall have the right to terminate this lease effective
as of the date of the fire or other casualty.
(b) RENT ABATEMENT. During the period from the date of such casualty
until the premises are repaired and restored, Lessee's obligation to pay any
rental due hereunder, shall abate in the proportion that the premises destroyed
or rendered untenantable bears to the total leased premises. Notwithstanding the
foregoing provisions, in the event the leased property shall be damaged by fire
or other insured casualty due to the fault or neglect of the Lessee, or the
Lessee's servants, employees, contractors, agents, visitors, or licensees, then,
without prejudice
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<PAGE> 10
to any other rights and remedies of the Lessor, the damage shall be repaired by
the Lessee, but there shall be no apportionment or abatement of rent.
(c) FIRE AND OTHER CASUALTY. Except as herein expressly provided, this
Lease shall not terminate nor shall there be any abatement of rent or other
charges of items of additional rent as a result of fire or other casualty.
(d) LESSEE'S INSURANCE: Consistent with the requirements of paragraph
14, Lessee shall obtain insurance to cover any damage to the premises caused by
fire or other casualty due to the deliberate or negligent act of the Lessee or
the agents, servants, employees, visitors, or licensees of Lessee.
13. INDEMNIFICATION: Lessee shall indemnify Lessor against all liabilities,
expense (including attorney's fees) and losses incurred by the Lessor as a
result of (a) the failure of Lessee to perform any covenant required to be
performed by Lessee hereunder, (b) any accident, injury or damage which shall
happen in or about the premises or resulting from the condition, maintenance or
operation of the premises, (c) failure to comply with any requirements of any
government authority, and (d) any mechanic's lien or security agreement or other
lien filed against the premises or fixtures and equipment therein or thereon
belonging to the Lessor. Notwithstanding any of the above, the Lessee shall not
be liable to indemnify the Lessor against any of the above described liabilities
to the extent caused by any act, error or omission of Lessor, or any of Lessor's
agents, representatives, or employees.
14. INSURANCE: Within thirty (30) days of occupancy, the Lessee shall
provide Lessor with written verification from Lessee's insurance company showing
compliance with the requirement that he shall obtain insurance coverage and
shall maintain such insurance as it deems necessary to cover the value of its
property located on or about the demised premises and Lessee agrees that Lessor
shall not be responsible for any damage to the Lessee's property located on
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or about the demised premises because of fire, water, or other casualty. Lessee
shall maintain in force insurance against liability for personal injury and/or
property damage with limits of no less than $500,000/$1,000,000 per occurrence.
Lessee shall also keep in force such other insurance that may from time to time
be reasonably required by Lessor against other insurable hazards as are commonly
insured against for the type of business activity that the Lessee will conduct.
All insurance required by this paragraph and paragraph 12 shall be carried in
favor of Lessor and shall require ten (10) days notice to Lessor by registered
mail of any cancellation or change affecting any interest of Lessor. Any
increase in insurance carried by Lessor on the building, which increase is
attributable to the nature of Lessee's business or Lessee's activities on the
premises, shall be reimbursed by the Lessee to the Lessor with in (60) days of
Lessee's receiving written verification of such increase.
15. TAXES: All real property taxes on the real property shall be paid by
the Lessor. In the event Lessor shall fail to pay any such taxes as and when
due, the Lessee shall, upon ten days prior written notice, have the right to pay
such taxes and offset such payments against rental payments otherwise due
hereunder. Lessee shall be responsible for all its own personal property taxes.
16. ACCESS: Upon reasonable notice to Lessee and at reasonable times,
Lessor, and their duly designated representatives, may enter the premises in
order to inspect the same, make necessary or agreed repairs, decorations,
alterations or improvements, supply needed or agreed services, exhibit the
property to prospective or actual purchasers, mortgagees, lessees, workmen, or
contractors, and place "for rent" signs on the property. It is understood by
Lessor, however, that Lessee's operations on the property are of a highly
proprietary and confidential nature and that the utmost care must be exerted to
avoid contamination of the work area or work in progress, and unnecessary
disturbance of any kind which could be of substantial financial
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detriment to Lessee. Accordingly, Lessor agrees to accommodate to the greatest
extent possible, Lessee's requirements that the premises be entered only when an
authorized representative of Lessee is present. In the case of an emergency when
it is impracticable for Lessor to give reasonable notice to Lessee of its intent
to enter the property or if the property has been abandoned or surrendered by
Lessee, the property may be entered by Lessor without notice to Lessee.
17. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this Lease Agreement
nor sublet the premises or any portion thereof, without the prior written
consent of Lessor, which consent shall not be unreasonably withheld.
18. DEFAULT OR BREACH: Each of the following events shall constitute a
default or breach of this Lease by Lessee:
A. If Lessee, or any successor or assignee of Lessee while in
possession, shall file a voluntary petition in bankruptcy or insolvency or for
reorganization under any bankruptcy act, or shall voluntarily take advantage of
any such act by answer or otherwise, or shall make an assignment for the benefit
of creditors.
B. If involuntary proceedings under any bankruptcy law or insolvency
act shall be instituted against Lessee, or if a receiver or trustee shall be
appointed of all or substantially all of the property of Lessee, and such
proceedings shall not be dismissed or the receivership vacated within thirty
(30) days after the institution or appointment.
C. If five (5) days shall have elapsed after the Lessor has given the
Lessee written notice that the Lessee has failed to pay any rent or additional
rent when due under this Lease.
D. If Lessee fails to perform or comply with any of the conditions of
this Lease and if the nonperformance shall continue for a period of ten (10)
days after written notice thereof
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by Lessor to Lessee or if the performance cannot be reasonably completed within
the ten (10) day period, Lessee shall not in good faith have commenced
performance within the ten (10) day period and shall not diligently proceed to
completion of performance.
E. If Lessee shall vacate or abandon the demised premises.
F. If this Lease shall be transferred to or shall pass to or devolve
on any other person or property, except in the manner herein permitted.
19. EFFECT OF DEFAULT: In the event of any default by the Lessee hereunder,
as set forth in paragraph 18, the rights of Lessor shall be as follows:
A. Lessor shall have the right to cancel and terminate this Lease, as
well as all of the right, title, and interest of Lessee hereunder, by giving to
Lessee not less than ten (10) days notice of the cancellation and termination.
On expiration of the time fixed in the notice, this Lease and the right, title,
and interest of Lessee hereunder, shall terminate in the same manner and with
the same force and effect, except as to Lessee's liability, as if the date fixed
in the notice of cancellation and termination were the end of the term herein
originally determined.
B. Lessor may elect, but shall not be obligated, to make any payment
required of Lessee herein or comply with any agreement, term, or condition
required hereby to be performed by Lessee, and Lessor shall have the right to
enter the demised premises for the purpose of correcting or remedying any such
default and to remain until the default has been corrected or remedied, but any
expenditure for the correction by Lessor shall not be deemed to waive or release
the default of Lessee or the right of Lessor to take any action as may be
otherwise permissible hereunder in the case of any default.
C. Lessor may re-enter the premises immediately and remove the
property and personnel of Lessee, and store the property in a public warehouse
at the cost of and for the
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account of Lessee.
20. SUBORDINATION: This Lease and all rights of Lessee hereunder shall be
subject and subordinate to the lien of any and all deeds of trust that may now
or hereafter affect the demised premises, or any part thereof, and to any and
all renewals, modifications or extensions of any such deed of trust. Lessee
shall on demand execute, acknowledge, and deliver to Lessor without expense to
Lessor, any and all instruments that may be necessary or proper to subordinate
this lease and all rights therein to the lien of any such deeds of trust and
each renewal, modification, or extension. If Lessee shall fail at any time to
execute, acknowledge, or deliver any such subordination instrument, Lessor in
addition to any other remedies available in any consequence thereof, may
execute, acknowledge, and deliver the same as Lessee's attorney-in-fact and in
Lessee's name. Lessee hereby irrevocably makes, constitutes, and appoints
Lessors, their successors and assigns, its attorney-in-fact for that purpose.
The Lessor, however, shall exercise its best efforts to arrange with the holder
of any such underlying deed of trust for an agreement that if, by dispossess,
foreclosure, or otherwise such holder, or any successor in interest, shall come
into possession of the premises, or shall become owner of the premises, or take
over the rights of the Lessor in the premises, it will not disturb the
possession, use, or enjoyment of the leased property by the Lessee, its
successors or assigns, nor disaffirm this lease or the Lessee's rights or estate
hereunder, so long as all of the obligations of the Lessee are fully performed
in accordance with the terms of this Lease. In the event of a voluntary sale,
transfer, or other disposition of the lease premises by the Lessor, the Lessor
agrees to require the purchaser or transferee of the leased premises to agree to
and be bound by the terms and provisions here of.
21. NOTICE: All notices to be given with respect to this Lease shall be in
writing. Each notice shall be sent by registered or certified mail, postage
prepaid and return receipt requested, to the party to be notified at the address
set forth herein or at such other address as
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either party may from time to time designate in writing. Every notice shall be
deemed to have been given at the time it shall be deposited in the United States
mails in the manner prescribed herein. Nothing contained herein shall be
construed to preclude personal service of a summons or other legal process. All
notices to the Lessor shall be mailed to it at 1500 Avon Street,
Charlottesville, VA 22902. All notices to the Lessee shall be mailed to it at
1500 Avon Street, Charlottesville, VA 22902, and shall be deemed to have been
sent to Lessee's proper address unless written change of address has been
received by Lessor prior to that date.
22. SURRENDER OF POSSESSION: Lessee shall, on the last day of the term, or
on earlier termination and forfeiture of the Lease, peaceably and quietly
surrender and deliver the demised premises to Lessor free of all subtenancies,
including all buildings, additions, and improvements constructed or placed
thereon by Lessee, except moveable trade fixtures (including fume hoods and
walk-in cooler), all in good condition and repair. Any trade fixtures or
personal property not used in connection with the operation of the demised
premises and belonging to Lessee, if not removed at the termination or default,
and if Lessor shall so select, shall be deemed abandoned and become the property
of Lessor without any payment or offset therefor. Lessor may remove such
fixtures or property from the demised premises and store them at the risk and
expense of Lessee if Lessor so elect. Lessee shall repair and restore all damage
to the demised premises caused by the removal of equipment, trade fixtures. and
personal property. The Lessee, at the direction of the Lessor, pursuant to
Paragraph 10, shall remove any fixtures, additions or improvements and restore
the leased premises to its original condition, ordinary wear and tear excepted.
If Lessee shall remain in possession after termination of this lease, Lessee
shall be a tenant at sufferance, at one and one half (1-1/2) times the rent
being charged as of the last day before said termination, in which event lessee
shall become a tenant at will on a month to month basis.
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23. REMEDIES:
A. In the event of a breach or threatened breach by either party of
any of the terms or conditions hereof, the party aggrieved shall have the right
of injunction to restrain the other party and the right to invoke any remedy
allowed by law or in equity, as if the specific remedies of indemnity or
reimbursement were not provided herein.
B. The rights and remedies given to the Lessor and Lessee in this
Lease are distinct, separate, and cumulative, and no one of them, whether or not
exercised by either of them, shall be deemed to be in exclusion of any of the
other herein, by law, or by equity provided.
C. No receipt for money by Lessor from Lessee after default or
cancellation of this Lease in any lawful manner shall (1) reinstate, continue,
or extend the term or affect any notice given to Lessee, (2) operate as a waiver
of the right of Lessor to enforce the payment then due or falling due, or (3)
operate as a waiver of the right of Lessors to recover possession of the demised
premises by proper suit, action, proceeding or other remedy. After (1) service
of notice of termination and forfeiture as herein provided and the expiration of
the time specified therein, (2) the commencement of any suit, action,
proceeding, or other remedy, or (3) final order or judgement for possession of
the demised premises Lessor may demand, receive, and collect any monies due,
without in any manner affecting such notice, order, or judgement. Any and all
such monies so collected shall be deemed to be payment on account if the
liability of Lessee hereunder.
24. TOTAL AGREEMENT: APPLICABLE TO SUCCESSORS: This Lease contains the
entire agreement between the parties and cannot be changed or terminated except
by a written instrument subsequently executed by the parties hereto. This Lease
and the terms and conditions hereof apply to and are binding on the heirs, legal
representatives, successors, and assigns of
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both parties and shall replace and supersede any prior agreements between Lessor
and Lessee.
25. APPLICABLE LAW: This Agreement shall be governed by and construed in
accordance with the laws of the State of Virginia.
26. SURVIVAL OF AGREEMENT: If a court of competent jurisdiction shall, at
any time, hold that a portion of this agreement is invalid, the remainder shall
not be affected thereby and shall continue in full force and effect.
27. WAIVER: No waiver of any breach of default under this agreement shall
be deemed to be a waiver of any subsequent breach or default of the same or a
similar nature.
28. QUIET ENJOYMENT: As long as Lessee is not in default hereunder, Lessee
shall have quiet enjoyment of the leased Premises.
29. DEFAULT BY LESSOR: If the Lessor is in default of any of its
obligations or duties provided for in this Lease, and said default is not cured
within thirty (30) days after written notice of the grounds of default are
delivered to the Lessor, the Lessee may at its option terminate the Lease, or
cure the breach itself and hold the Lessor liable for any reasonable expenses,
losses or liabilities incurred by the Lessee.
30. INITIAL IMPROVEMENTS: Not applicable.
31. ENVIRONMENTAL MATTERS:
(a) "Hazardous Substances" shall mean (i) any "hazardous substance" as
defined in ss.101 (14) of the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. ss.9601 (14); (ii) any petroleum and petroleum
products, methane natural gas or synthetic gas; (iii) asbestos or any material
containing asbestos; and (iv) any substance, waste or other material considered
hazardous, dangerous or toxic under federal, state or local laws or regulations,
whether now in force or as amended or enacted in the future.
(b) "Release" shall mean any intentional or unintentional release,
spilling,
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leaking, pumping, emitting, emptying, discharging, escaping, leaching, dumping
or disposing.
(c) To the best of Lessor's knowledge after due inquiry and
investigation, Lessor warrants and represents that (i) any use, storage,
treatment, or transportation of Hazardous Substances that has occurred in or on
the property prior to the date hereof has been in compliance with all applicable
federal, state, and local laws, regulations, and ordinances, and (ii) no Release
of Hazardous Substances has occurred in, on, or under the property, and that the
property is free of Hazardous Substances as of the date hereof.
(d) Lessor agrees to indemnify and hold harmless the Lessee from any
and all claims, damages, fines, judgments, penalties, costs, liabilities, or
losses (including, without limitation, reasonable fees and expenses of attorneys
and environmental experts) arising during or after the term of this Lease from
or in connection with the presence or suspected presence of Hazardous Substances
in or on the property unless the Hazardous Substances are present solely as a
result of negligence, willful misconduct, or other acts of Lessee, Lessee's
agents, employees, contractors, or invitees. Without limitation of the foregoing
this indemnification shall include any and all costs incurred due to any
investigation of the site or any cleanup, removal, or restoration mandated by a
federal, state, or local agency or political subdivision, unless the Hazardous
Substances are present solely as a result of negligence, willful misconduct, or
other acts of Lessee, Lessee's agents, employees, contractors, or invitees. This
indemnification shall specifically include any and all costs due the Hazardous
Substances that flow, diffuse, migrate, or percolate into, onto, or under the
property after the term of this Lease commences.
(e) Prior to the Commencement Date, Lessor shall furnish to the
Lessee, without expense to Lessee, an environmental report of the condition of
the Property in form and substance reasonably satisfactory to the Lessee.
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(f) Lessee shall not use or permit any Hazardous Substance other than
those resulting from, and transported from the property and disposed off the
property in the operation of the property in the ordinary course of business and
in compliance with all applicable laws (collectively, "Permitted Substances") to
be used, stored, generated, or disposed of on or in the property by Lessee,
Lessee's agents, employees, contractors, or invitees without first obtaining
Lessor's written consent. If Hazardous Substances (other than Permitted
Substances) are used, stored, generated, or disposed of on or in the property
except as permitted above, and the property becomes contaminated, Lessee shall
indemnify and hold harmless the Lessor from any and all claims, damages, fines,
judgments, penalties, costs, liabilities, or losses (including without
limitation, reasonable fees and expenses of attorneys and environmental experts)
arising during or after the term of this Lease and arising as a result of that
contamination by Lessee, unless such contamination is a result of the
negligence, willful misconduct, or other acts of Lessor or other tenants of the
property or their agents, employees, contractors, or invitees. This
indemnification includes, without limitation, any and all costs incurred because
of any investigation of the site or any cleanup, removal, or restoration
mandated by a federal, state, or local agency or political subdivision. Without
limitation of the foregoing, if Lessee causes or permits the presence of any
Hazardous Substance on the property land that results in contamination, Lessee
shall promptly, at its sole expense, take any and all necessary actions to
return the property to the condition existing prior to the presence of any such
Hazardous Substance on the property. Lessee shall first obtain Lessor's approval
for any such remedial action.
(g) Each party shall give prompt written notice to the other of any
legal proceedings or any other communications of any nature whatsoever to or
from any party (including any governmental authority) relating to Hazardous
Substances on the property. Each
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party agrees at the other party's request to consult with the other party
concerning any matter coming within the scope of this Section 31.
(h) The representations, warranties, agreements and indemnification
contained in this Section 31 shall survive the termination of the Lease.
(i) Upon the termination of this Lease, Lessee shall furnish to the
Lessor, at the Lessee's expense, an environmental site assessment report of a
recognized environmental expert similar to the one provided to the Lessee at the
beginning of the term of this Lease relating to the environmental condition of
the property.
32. AUTHORITY: The Lessee warrants that he/she has appropriate corporate
authority to enter into this Lease. The General Partner executing this Lease on
behalf of Lessor represents and warrants that he has full power and authority to
do so.
WITNESS the following signatures and seals on this 12th day of February
1998.
AStec Partnership Dyax Corporation
By: /s/ Floyd M. Atrip By: /s/ Henry E. Blair
------------------ ------------------
Floyd M. Atrip Henry E. Blair
General Partner CEO
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EXHIBIT 10.11
LEASE
This Lease Agreement made this eleventh day of February 1997, by and
between AStec Partnership, a Virginia general partnership, Lessor, and Biotage,
Incorporated, a Delaware corporation, Lessee.
W I T N E S S E T H :
That Lessor, for and in consideration of the covenants and agreements
hereinafter set forth and further consideration of the rent which Lessee agrees
to pay, hereby leases and demises unto Lessee, and Lessee hereby takes, accepts
and rents from Lessor. the premises hereinafter set forth for the period, at the
rental, and upon the terms and conditions hereinafter set forth:
1. DEMISED PREMISES: The premises leased hereunder shall consist
of the space currently leased to Lessee in the in AStec Center at 1500 Avon
Street Extended in Albemarle County, Virginia. Said premises are more
particularly outlined in a diagram attached to this Lease as Exhibit A. Said
premises shall consist of 15,759 square feet. Said premises shall be used by the
Lessee solely as defined in the Special Permit Application and any other related
functions not in conflict with the Special Use Permit application. Any change in
the use of the facility by Lessee must be approved in writing in advance by the
Lessor; Lessor's approval shall not be unreasonably withheld.
2. TERM OF LEASE: This Lease Agreement shall be effective on this
date. The term of this Lease shall begin at 12:01 A.M. on June 5. 1997. (the
Commencement Date) and shall end on June 4,
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1999.
3. RENT AND DEPOSIT: (a) The total rent due for this lease shall
be $299,421.00 based on a charge of $9.50 per square foot. The rent shall be
payable in twenty-four (24) consecutive monthly installments. The monthly
payments shall be $12,465.88. The first payment of $12,475.88 shall be due and
payable on the Commencement date of this Lease as defined in paragraph 2 above.
Each subsequent payment shall be due on the fifth day of the month. Lessor is
currently holding deposits for $25,205.28, $8,597.34 and $7,564.77 from previous
leases which shall be continued for this Lease. All amounts held by Lessor on
deposit shall be refunded after the termination of this lease provided that the
Lessee fulfills all of the covenants and requirements of the Lease. If Lessee
fails to fulfill any covenants or requirements of this Lease, or damages the
premises in any fashion (excluding normal wear and tear), the damage caused by
Lessee shall be deducted from this deposit. If the damages exceed the amount of
the deposit, Lessor retains the right to avail itself of any other legal
remedies to recover its damages. The deposit shall be refunded within thirty
(30) days of termination of the Lease. The Lessor shall hold the deposit in
trust in a separate federally insured interest bearing account over which the
Lessor alone shall have the power of withdrawal and will not commingle the
deposit with any funds or other property of the Lessor. So long as the Lessee is
not in default under the Lease, the Lessor agrees to pay the Lessee on a
quarterly basis all interest earned on the deposit.
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4. CORPORATE GUARANTEES: In order to induce the Lessor to accept
this Lease without any individual guarantees, the Lessee agrees to provide the
Lessor with quarterly financial statements.
5. RENEWAL: (a) Lessee shall, provided it is not in default of
any terms and conditions of this Lease, have the option to renew this lease for
one additional period of one year. If Lessee decides to exercise this option,
Lessee shall provide written notice to Lessor of its decision, which notice must
be received by Lessor six months prior to the termination of the original Lease
as set forth in paragraph 2 herein. If Lessee fails to give Lessor the notice
set forth in this paragraph, then Lessee's right to renew in the six months
before expiration of the existing lease term shall be at the exclusive option of
the Lessor only. Thereafter, there shall be no automatic renewal or renewal by
operation of law on this Lease.
(b) Renewal shall be for one twelve month period under
the same terms and conditions contained in this Lease except that during the
renewal lease period Lessee shall pay to the Lessor a base annual rent of
$149,710.50 plus any additional amount as determined in accordance with the
provisions of subparagraph (c), payable in advance in monthly installments on
the fifth day of each month.
(c) As used herein:
(i) "Index" shall mean the national consumer Price
Index for Urban Wage Earners and Clerical Workers (CPI-W) (1982-84 = 100)"
specified for "All Items" and issued by the Bureau of Labor
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Statistics of the United States Department of Labor. In the event the Index
shall hereafter be converted to a different reference base or otherwise revised,
the determination of the Percentage Increase (defined below) shall be made with
the use of such conversion factor, formula or table for converting the Index as
may be published by the Bureau of Labor Statistics or, if such Bureau shall not
publish the same, then with use of such conversion factor, formula or table as
may be published by Prentice-Hall, Inc. or, failing such publication, by any
other nationally recognized publisher of similar statistical information. In the
event the Index shall cease to be published, then, for the purposes of this
Lease, there shall be substituted for the Index such other statistics on the
cost of living computed and published by a federal governmental agency or by a
nationally recognized publisher of similar statistical information.
(ii) "Base Index" shall mean the Index in effect on
the Commencement Date.
(iii) "Current Index" shall mean the Index in effect
for the first month of the lease year for which the adjustment in rent is
calculated.
(iv) "Percentage Increase" shall mean the percentage
equal to the fraction, the numerator of which shall be the Current Index less
the Base Index, and the denominator which shall be the Base Index.
If the Current Index shall exceed the Base Index, then the annual rent
payable for the ensuing lease year shall be increased
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be an amount equal to the "Percentage Increase" multiplied by $149,710.50. As
soon a practicable after the end of the second lease year during the term of
this Lease, Lessor shall send Lessee an index comparative statement setting
forth the Current Index, the Base Index, the Percentage Increase, and the
increase in the annual rent. On the fifth day of the calendar month ("Current
Month") following the month in which the index comparative statement was sent,
Lessee shall pay to Lessor (i) a sum equal to 1/12th of such increase in the
base annual rent multiplied by the number of calendar months of the new lease
year elapsed, and (ii) thereafter. commencing with the Current Month, and
continuing monthly thereafter, the monthly installments shall be increased by an
amount equal to 1/12th of such increase. In no event shall the rent charged be
greater than $158,693.13 per year.
6. LATE FEE: In the event that the Lessor does not receive from
Lessee any installment of rent within ten (10) days of the; date for which such
installment is due, a late fee of five percents (5.00%) off the monthly rent
installment shall be due as additional rent.
7. COST OF ENFORCEMENT OF THE LEASE: The defaulting party hereby
agrees to pay all costs, expenses, fees and charges incurred by the non
defaulting party in enforcing, by legal action or otherwise, any provisions,
covenants and conditions of this Lease including reasonable attorney's fees,
Lessee hereby waives the benefit of any Homestead or similar exemption laws with
respect to the obligations of this Lease.
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8. REPAIRS AND MAINTENANCE: Lessee shall at its sole expense keep
the interior of the premises in as good order and repair as it is at the
commencement of this Lease Agreement, reasonable wear and tear excepted. A
walk-through of the current Biotage space was made by representatives of Lessee
and Lessor at the commencement of the first Lease and a checklist was prepared
which stated the condition of all leased property. This checklist was signed by
both representatives at the time of the walk-through. Repairs noted as required
to be made were completed by Lessor. A walk-through shall be made no later than
thirty (30) days prior to expiration of this Lease and any repairs noted as
required shall be completed by Lessee, said repairs to be completed to the
reasonable satisfaction of the Lessor. If Lessee fails to complete any such
repairs by the date of the termination of the Lease the cost of performing such
repairs shall be deducted from Lessee's deposit. Lessee's deposit shall be
released upon completion of any such repairs in accordance with the terms of
paragraph 3, above.
Lessee agrees to replace or repair all broken or damaged glass, locks,
plaster and flooring at the sole expense of Lessee and such replacement or
repair shall be to the satisfaction of Lessor. Lessee agrees to use water
closets and other plumbing fixtures only for the purpose for which they were
installed and not to place sweepings, rubbish, rags, chemicals, or other items
in such fixtures. Lessee agrees not to install on the property any heating unit
or antenna of any kind without the consent of the Lessor. Lessee agrees to keep
all doors and windows closed during
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rain or snow, not to keep any explosive or flammable chemicals in unprotected
areas on the property, and not to affix or suspend any signs, advertisements or
notices upon or from any part of the property without the written consent of the
Lessor. Lessor will provide a directory sign at the entrance to the parking area
identifying the Lessee's business. Lessee further agrees not to place an iron
safe or other heavy articles (defined as being greater than 125 lbs. per square
foot) on the property without the written consent of the Lessor and agrees to
indemnify the Lessor for all damages resulting from the placement or moving of
any such article. Lessee agrees not to use any harsh or abrasive compounds or
solvents on any tile floors and to use only waxes of a water emulsion type.
Notwithstanding any of the above, the Lessee shall not be responsible for any
repairs resulting from the negligence or willful acts of the Lessor or its
agent.
Lessor agrees to maintain and keep in good repair the heating systems,
ventilation systems, air conditioning system, plumbing, sprinklers, electrical
(not including lamp and other light fixture replacement), the roof, the exterior
of the building, the grounds, and the parking areas except for any improvements
made by the Lessee which maintenance shall be the responsibility of the Lessee.
Said maintenance and repair shall be performed at Lessors own expense, except
for (a) any damage exceeding reasonable wear and tear caused by the Lessee, and
(b) any damage which in the reasonable judgement of the Lessor is due to abuse
or improper use of the systems, etc., by Lessee, both of which kinds of damages
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shall be paid for by Lessee. Lessor shall, at its sole expense, have the
sprinkler system tested annually as required for Lessor's insurance policy.
Lessor shall not be liable to Lessee, its employees, agents or invitees
for any damage or injury to persons or property or for any loss or interruption
of business sustained by Lessee resulting from any occurrence or condition in or
upon the leased Premises, or the land, sidewalks and parking places adjacent
thereto, unless said injury, damage, loss or interruption was caused by the
negligence or willful misconduct or Lessor, its agents or employees.
9. UTILITIES: Lessor agrees to furnish and pay for the water and
sewerage utilities supplied to the leased premises. Lessee agrees to pay all
charges for gas, electricity, telephone, and other utilities or services (except
garbage or standard office type waste disposal and pick-up which shall be the
responsibility of the Lessor), janitorial and cleaning services, etc. used,
rendered or supplied upon or in connection with the premises. Lessee shall
notify the Lessor before signing the lease of any demand or need for water or
sewer other than for toilet, lab or reasonable cleaning of facilities (excluding
any process water usage). Lessor reserves the right to set a meter for any
additional uses and bill Lessee for the costs in excess of these normal usages.
Lessor shall provide snow removal within 24 hours of the cessation of snow fall
except when this occurs on Sunday. Lessor shall provide Lessee with 24 parking
spaces in the South parking lot.
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10. ALTERATIONS: No alterations, additions, improvements, change
in mechanical, plumbing, or electrical systems or exterior decorations to the
premises shall be made by Lessee until after such change shall have been
approved in writing by the Lessor. So long as the Lessee shall not be in default
hereunder any fixtures, additions or improvements installed during this lease
and previous leases shall, at Lessee's option, become the property of the Lessee
upon expiration of the full term of this Lease agreement provided, however, that
(i) the Lessor have the right to require Lessee to remove such fixtures,
additions or improvements and restore the leased premises to their original
condition at Lessee's cost upon the termination of this Lease agreement or (ii)
if the Lessee shall be in default hereunder, such property shall, at the
lessor's option, become the property of the Lessor.
11. CONDEMNATION: If all or a substantial part of the premises
shall be acquired for any public use by right of eminent domain, or private
purchase in lieu of such right, by a public body vested with the right of
eminent domain, this Lease and all the rights of the Lessee under it shall
immediately terminate, and the rent shall be adjusted as of the time of
acquisition Lessee shall have no claim against Lessor for any value of the
unexpired term nor shall Lessee be entitled to any part of the condemnation
award or purchase price in lieu of such award.
12. DESTRUCTION BY CASUALTY:
(a) RESTORATION OF DAMAGED PREMISES. In the event the
premises are damaged or destroyed or rendered partially
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untenantable for their then use by fire or other casualty insured by Lessor, the
Lessor shall promptly repair from funds provided by Lessee as subrogee or from
insurance proceeds released by the holder of any deed of trust lien upon the
building which contain the premises and restore the same to substantially the
condition in which they were immediately prior to the happening of such
casualty. The Lessor's obligation to repair shall not extend to any improvements
or addition of the Lessee. In the event that the premises are so damaged or
destroyed by fire or other casualty that repairs to the premises required for
Lessee to resume its operations within 90 days of the date of such fire or other
casualty cannot be completed, then either Lessee or Lessor shall have the right
to terminate this lease effective as of the date of the fire or other casualty.
(b) RENT ABATEMENT. During the period from the date of such
casualty until the premises are repaired and restored, Lessee's obligation to
pay any rental due hereunder, shall abate in the proportion that the premises
destroyed or rendered untenantable bears to the total leased premises.
Notwithstanding the foregoing provisions, in the event the leased property shall
be damaged by fire or other insured casualty due to the fault or neglect of the
Lessee, or the Lessee's servants, employees, contractors, agents, visitors, or
licensees, then, without prejudice to any other rights and remedies of the
Lessor, the damage shall be repaired by the Lessee, but there shall be no
apportionment or abatement of rent.
(c) FIRE AND OTHER CASUALTY. Except as herein expressly
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provided, this Lease shall not terminate nor shall there be any abatement of
rent or other charges of items of additional rent as a result of fire or other
casualty.
(d) LESSEE'S INSURANCE: Consistent with the requirements of
paragraph 14, Lessee shall obtain insurance to cover any damage to the premises
caused by fire or other casualty due to the deliberate or negligent act of the
Lessee or the agents, servants, employees, visitors, or licensees of Lessee.
13. INDEMNIFICATION: Lessee shall indemnify Lessor against all
liabilities, expense (including attorney's fees) and losses incurred by the
Lessor as a result of (a) the failure of Lessee to perform any covenant required
to be performed by Lessee hereunder, (b) any accident, injury or damage which
shall happen in or about the premises or resulting from the condition,
maintenance or operation of the premises, (c) failure to comply with any
requirements of any government authority, and (d) any mechanic's lien or
security agreement or other lien filed against the premises or fixtures and
equipment therein or thereon belonging to the Lessor. Notwithstanding any of the
above, the Lessee shall not be liable to indemnify the Lessor from any accidents
which are caused by the negligence or willful acts of the Lessor or its agents.
14. INSURANCE: Within thirty (30) days of occupancy, the Lessee
shall provide Lessor with written verification from Lessee's insurance company
showing compliance with the requirement that he shall obtain insurance coverage
and shall maintain such insurance as it deems necessary to cover the value of
its property located on
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<PAGE> 12
or about the demised premises and Lessee agrees that Lessor shall not be
responsible for any damage to the Lessee's property located on or about the
demised premises because of fire, water, or other casualty. Lessee shall
maintain in force insurance against liability for personal injury and/or
property damage with limits of no less than $500,000/$1,000,000 per occurrence.
Lessee shall also keep in force such other insurance that may from time to time
be reasonably required by Lessor against other insurable hazards as are commonly
insured against for the type of business activity that the Lessee will conduct.
All insurance required by this paragraph and paragraph 12 shall be carried in
favor of Lessor and shall require ten (10) days notice to Lessor by registered
mail of any cancellation or change affecting any interest of Lessor.
Any increase in insurance carried by Lessor on the building, which
increase is attributable to the nature of Lessee's business or Lessee's
activities on the premises, shall be reimbursed by the Lessee to the Lessor with
in (60) days of Lessee's receiving written verification of such increase.
15. TAXES: All real property taxes on the real property shall be
paid by the Lessor. In the event Lessor shall fail to pay any such taxes as and
when due, the Lessee shall, upon ten days prior written notice, have the right
to pay such taxes and offset such payments against rental payments otherwise due
hereunder. Lessee shall be responsible for all its own personal property taxes.
16. ACCESS: Upon reasonable notice to Lessee and at
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<PAGE> 13
reasonable times, Lessor, and their duly designated representatives, may enter
the premises in order to inspect the same make necessary or agreed repairs,
decorations, alterations or improvements, supply needed or agreed services,
exhibit the property to prospective or actual purchasers, mortgagees, lessees,
workmen, or contractors, and place "for rent" signs on the property. It is
understood by Lessor, however, that Lessee's operations on the property are of a
highly proprietary and confidential nature and that the utmost care must be
exerted to avoid contamination of the work area or work in progress, and
unnecessary disturbance of any kind which could be of substantial financial
detriment to Lessee. Accordingly, Lessor agrees to accommodate to the greatest
extent possible, Lessee's requirements that the premises be entered only when an
authorized representative of Lessee is present. In the case of an emergency when
it is impracticable for Lessor to give reasonable notice to Lessee of its intent
to enter the property or if the property has been abandoned or surrendered by
Lessee, the property may be entered by Lessor without notice to Lessee.
17. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this Lease
Agreement nor sublet the premises or any portion thereof, without the prior
written consent of Lessor, which consent shall not be unreasonably withheld.
18. DEFAULT OR BREACH: Each of the following events shall
constitute a default or breach of this Lease by Lessee:
A. If Lessee, or any successor or assignee of Lessee
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<PAGE> 14
while in possession, shall file a voluntary petition in bankruptcy or insolvency
or for reorganization under any bankruptcy act, or shall voluntarily take
advantage of any such act by answer or otherwise, or shall make an assignment
for the benefit of creditors.
B. If involuntary proceedings under any bankruptcy law
or insolvency act shall be instituted against Lessee, or if a receiver or
trustee shall be appointed of all or substantially all of the property of
Lessee, and such proceedings shall not be dismissed or the receivership vacated
within thirty (30) days after the institution or appointment.
C. If five (5) days shall have elapsed after the Lessor
has given the Lessee written notice that the Lessee has failed to pay any rent
or additional rent when due under this Lease.
D. If Lessee fails to perform or comply with any of the
conditions of this Lease and if the nonperformance shall continue for a period
of ten (10) days after written notice thereof by Lessor to Lessee or if the
performance cannot be reasonably completed within the ten (10) day period,
Lessee shall not in good faith have commenced performance within the ten (10)
day period and shall not diligently proceed to completion of performance.
E. If Lessee shall vacate or abandon the demised
premises.
F. If this Lease shall be transferred to or shall pass
to or devolve on any other person or property, except in the manner herein
permitted.
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<PAGE> 15
19. EFFECT OF DEFAULT: In the event of any default by the Lessee
hereunder, as set forth in paragraph 18, the rights of Lessor shall be as
follows:
A. Lessor shall have the right to cancel and terminate
this Lease, as well as all of the right, title, and interest of Lessee
hereunder, by giving to Lessee not less than ten (10) days notice of the
cancellation and termination. On expiration of the time fixed in the notice,
this Lease and the right, title, and interest of Lessee hereunder, shall
terminate in the same manner and with the same force and effect, except as to
Lessee's liability, as if the date fixed in the notice of cancellation and
termination were the end of the term herein originally determined.
B. Lessor may elect, but shall not be obligated, to make
any payment required of Lessee herein or comply with any agreement, term, or
condition required hereby to be performed by Lessee, and Lessor shall have the
right to enter the demised premises for the purpose of correcting or remedying
any such default and to remain until the default has been corrected or remedied,
but any expenditure for the correction by Lessor shall not be deemed to waive or
release the default of Lessee or the right of Lessor to take any action as may
be otherwise permissible hereunder in the case of any default.
C. Lessor may re-enter the premises immediately and
remove the property and personnel of Lessee, and store the property in a public
warehouse at the cost of and for the account of Lessee.
20. SUBORDINATION: This Lease and all rights of Lessee
15
<PAGE> 16
hereunder shall be subject and subordinate to the lien of any and all deeds of
trust that may now or hereafter affect the demised premises, or any part
thereof, and to any and all renewals, modifications or extensions of any such
deed of trust. Lessee shall on demand execute, acknowledge, and deliver to
Lessor without expense to Lessor, any and all instruments that may be necessary
or proper to subordinate this lease and all rights therein to the lien of any
such deeds of trust and each renewal, modification, or extension. If Lessee
shall fail at any time to execute, acknowledge, or deliver any such
subordination instrument, Lessor in addition to any other remedies available in
any consequence thereof, may execute, acknowledge, and deliver the same as
Lessee's attorney-in-fact and in Lessee's name. Lessee hereby irrevocably makes,
constitutes, and appoints Lessors, their successors and assigns, its
attorney-in-fact for that purpose.
The Lessor, however, shall exercise its best efforts to arrange with
the holder of any such underlying deed of trust for an agreement that if, by
dispossess, foreclosure, or otherwise such holder, or any successor in interest,
shall come into possession of the premises, or shall become owner of the
premises, or take over the rights of the Lessor in the premises, it will not
disturb the possession, use, or enjoyment of the leased property by the Lessee,
its successors or assigns, nor disaffirm this lease or the Lessee's rights or
estate hereunder, so long as all of the obligations of the Lessee are fully
performed in accordance with the terms of this Lease.
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<PAGE> 17
21. NOTICE: All notices to be given with respect to this Lease
shall be in writing. Each notice shall be sent by registered or certified mail,
postage prepaid and return receipt requested, to the party to be notified at the
address set forth herein or at such other address as either party may from time
to time designate in writing.
Every notice shall be deemed to have been given at the time it shall be
deposited in the United States mails in the manner prescribed herein. Nothing
contained herein shall be construed to preclude personal service of a summons or
other legal process.
All notices to the Lessor shall be mailed to it at 1500 Avon Street,
Charlottesville, VA 22902. All notices to the Lessee shall be mailed to it at
1500 Avon Street, Charlottesville, VA 22902, and shall be deemed to have been
sent to Lessee's proper address unless written change of address has been
received by Lessor prior to that date.
22. SURRENDER OF POSSESSION: Lessee shall, on the last day of the
term, or on earlier termination and forfeiture of the Lease, peaceably and
quietly surrender and deliver the demised premises to Lessor free of all
subtenancies, including all buildings, additions, and improvements constructed
or placed thereon by Lessee, except moveable trade fixtures (including fume
hoods and walk-in cooler), all in good condition and repair. Any trade fixtures
or personal property not used in connection with the operation of the demised
premises and belonging to Lessee, if not removed at the termination or default,
and if Lessor shall so
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<PAGE> 18
select, shall be deemed abandoned and become the property of Lessor without any
payment or offset therefor. Lessor may remove such fixtures or property from the
demised premises and store them at the risk and expense of Lessee if Lessor so
elect. Lessee shall repair and restore all damage to the demised premises caused
by the removal of equipment, trade fixtures, and personal property. The Lessee,
at the direction of the Lessor, pursuant to Paragraph 10, shall remove any
fixtures, additions or improvements and restore the leased premises to its
original condition, ordinary wear and tear excepted. If Lessee shall remain in
possession after termination of this lease, Lessee shall be a tenant at
sufferance, at one and one half (1-1/2) times the rent being charged as of the
last day before said termination, in which event lessee shall become a tenant at
will on a month to month basis.
23. REMEDIES: A. In the event of a breach or threatened breach by
either party of any of the terms or conditions hereof, the party aggrieved shall
have the right of injunction to restrain the other party and the right to invoke
any remedy allowed by law or in equity, as if the specific remedies of indemnity
or reimbursement were not provided herein.
B. The rights and remedies given to the Lessor and
Lessee in this Lease are distinct, separate, and cumulative, and no one of them,
whether or not exercised by either of them, shall be deemed to be in exclusion
of any of the other herein, by law, or by equity provided.
C. No receipt for money by Lessor from Lessee after
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<PAGE> 19
default or cancellation of this Lease in any lawful manner shall (1) reinstate,
continue, or extend the term or affect any notice given to Lessee, (2) operate
as a waiver of the right of Lessor to enforce the payment then due or falling
due, or (3) operate as a waiver of the right of Lessors to recover possession of
the demised premises by proper suit, action, proceeding or other remedy. After
(1) service of notice of termination and forfeiture as herein provided and the
expiration of the time specified therein, (2) the commencement of any suit,
action, proceeding, or other remedy, or (3) final order or judgement for
possession of the demised premises, Lessor may demand, receive, and collect any
monies due, without in any manner affecting such notice, order, or judgement.
Any and all such monies so collected shall be deemed to be payment on account if
the liability of Lessee hereunder.
24. TOTAL AGREEMENT: APPLICABLE TO SUCCESSORS: This Lease contains
the entire agreement between the parties and cannot be changed or terminated
except by a written instrument subsequently executed by the parties hereto. This
Lease and the terms and conditions hereof apply to and are binding on the heirs,
legal representatives, successors, and assigns of both parties and shall replace
and supersede any prior agreements between Lessor and Lessee.
25. APPLICABLE LAW: This Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia.
26. SURVIVAL OF AGREEMENT: If a court of competent jurisdiction
shall, at any time, hold that a portion of this
19
<PAGE> 20
agreement is invalid, the remainder shall not be affected thereby and shall
continue in full force and effect.
27. WAIVER: No waiver of any breach of default under this
agreement shall be deemed to be a waiver of any subsequent breach or default of
the same or a similar nature.
28. QUIET ENJOYMENT: As long as Lessee is not in default
hereunder, Lessee shall have quiet enjoyment of the leased Premises.
29. DEFAULT BY LESSOR: If the Lessor is in default of any of its
obligations or duties provided for in this Lease, and said default is not cured
within thirty (30) days after written notice of the grounds of default are
delivered to the Lessor, the Lessee may at its option terminate the Lease, or
cure the breach itself and hold the Lessor liable for any reasonable expenses,
losses or liabilities incurred by the Lessee.
30. INITIAL IMPROVEMENTS: Not applicable.
31. ENVIRONMENTAL MATTERS:
(a) "Hazardous Substances" shall mean (i) any "hazardous
substance" as defined in ss.101 (14) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss.9601 (14);(ii) any
petroleum and petroleum products, methane, natural gas or synthetic gas; (iii)
asbestos or any material containing asbestos; and (iv) any substance, waste or
other material considered hazardous, dangerous or toxic under federal, state or
local laws or regulations, whether now in force or as amended or enacted in the
future.
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<PAGE> 21
(b) "Release" shall mean any intentional or unintentional
release, spilling, leaking, pumping, emitting, emptying, discharging, escaping,
leaching, dumping or disposing.
(c) To the best of Lessor's knowledge after due inquiry
and investigation, Lessor warrants and represents that (i) any use, storage,
treatment, or transportation of Hazardous Substances that has occurred in or on
the property prior to the date hereof has been in compliance with all applicable
federal, state, and local laws, regulations, and ordinances, and (ii) no Release
of Hazardous Substances has occurred in, on, or under the property, and that the
property is free of Hazardous Substances as of the date hereof.
(d) Lessor agrees to indemnify and hold harmless the
Lessee from any and all claims, damages, fines, judgments, penalties, costs,
liabilities, or losses (including, without limitation, reasonable fees and
expenses of attorneys and environmental experts) arising during or after the
term of this Lease from or in connection with the presence or suspected presence
of Hazardous Substances in or on the property unless the Hazardous Substances
are present solely as a result of negligence, willful misconduct, or other acts
of Lessee, Lessee's agents, employees, contractors, or invitees. Without
limitation of the foregoing this indemnification shall include any and all costs
incurred due to any investigation of the site or any cleanup, removal, or
restoration mandated by a federal, state, or local agency or political
subdivision, unless the Hazardous Substances are present solely as a result of
negligence, willful misconduct, or other acts of
21
<PAGE> 22
Lessee, Lessee's agents,employees, contractors, or invitees. This
indemnification shall specifically include any and all costs due the Hazardous
Substances that flow, diffuse, migrate, or percolate into, onto, or under the
property after the term of this Lease commences.
(e) Prior to the Commencement Date, Lessor shall furnish
to the Lessee, without expense to Lessee, an environmental report of the
condition of the Property in form and substance reasonably satisfactory to the
Lessee.
(f) Lessee shall not use or permit any Hazardous
Substance other than those resulting from, and transported from the property and
disposed off the property in the operation of the property in the ordinary
course of business and in compliance with all applicable laws (collectively,
"Permitted Substances") to be used, stored, generated, or disposed of on or in
the property by Lessee, Lessee's agents, employees, contractors, or invitees
without first obtaining Lessor's written consent, If Hazardous Substances (other
than Permitted Substances) are used, stored, generated, or disposed of on or in
the property except as permitted above, and the property becomes contaminated,
Lessee shall indemnify and hold harmless the Lessor from any and all claims,
damages, fines, judgments, penalties, costs, liabilities, or losses (including
without limitation, reasonable fees and expenses of attorneys and environmental
experts) arising during or after the term of this Lease and arising as a result
of that contamination by Lessee, unless such contamination is a result of the
negligence,
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<PAGE> 23
willful misconduct, or other acts of Lessor or other tenants of the property or
their agents, employees, contractors, or invitees. This indemnification
includes, without limitation, any and all costs incurred because of any
investigation of the site or any cleanup, removal, or restoration mandated by a
federal, state, or local agency or political subdivision. Without limitation of
the foregoing, if Lessee causes or permits the presence of any Hazardous
Substance on the property land that results in contamination, Lessee shall
promptly, at its sole expense, take any and all necessary actions to return the
property to the condition existing prior to the presence of any such Hazardous
Substance on the property. Lessee shall first obtain Lessor's approval for any
such remedial action.
(g) Each party shall give prompt written notice to the
other of any legal proceedings or any other communications of any nature
whatsoever to or from any party (including any governmental authority) relating
to Hazardous Substances on the property. Each party agrees at the other party's
request to consult with the other party concerning any matter coming within the
scope of this Section 31.
(h) The representations, warranties, agreements and
indemnification contained in this Section 31 shall survive the termination of
the Lease.
(i) Upon the termination of this Lease, Lessee shall
furnish to the Lessor, at the Lessee's expense, an environmental site assessment
report of a recognized environmental expert similar
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<PAGE> 24
to the one provided to the Lessee at the beginning of the term of this Lease
relating to the environmental condition of the property.
32. AUTHORITY: The Lessee warrants that he/she has appropriate
corporate authority to enter into this Lease. The General Partner executing this
Lease on behalf of Lessor represents and warrants that he has full power and
authority to do so.
WITNESS the following signatures and seals on this 11th day of January,
1998.
Astec Partnership Biotage Incorporated
By: /s/ Floyd M. Artrip By: /s/ C. Hess
--------------------------------- -------------------------------
Floyd M. Artrip Sr. V.P. Operations
General Partner Biotage Division of Dyax
24
<PAGE> 1
DATED 8TH APRIL 1991 EXHIBIT 10.12
BRIDGE GATE REAL ESTATES LIMITED
- AND -
BIOTAGE UK LIMITED
- AND -
HARTFORD COURT MANAGEMENT LIMITED
----------------------------------------
Counterpart
L E A S E
- OF -
Unit 15 Hartford Court,
Foxholes Business Park
John Tate Road, Hertfordshire
----------------------------------------
Ref: MPFOX15.LSE
<PAGE> 2
"the Ancillary Area" means that part of the Estate and adjacent
to the Demised Premises shown cross hatched
green on the Plan
"the Roadways" means all that piece or parcel of land
forming part of the Estate and hatched brown
on the Plan
"the Landscaped Areas" means all those pieces or parcels of land
forming part of the Estate and hatched green
on the Plan
"the Pathways" means all that piece or parcel of land
forming part of the Estate and coloured
yellow on the Plan
"the Parking Spaces" means all those pieces or parcels of land
forming part of the Estate set aside for the
purposes of parking vehicles on the Estate
"the Forecourt" means the area of land forming part of the
estate shown coloured blue on the Plan (and
Forecourts shall mean all such similar areas
from time to time located adjacent to other
buildings on the Estate)
"this Lease" means this Lease and includes any Schedule
hereto any license granted pursuant to and
any deed of variation of the provisions
hereof and any deed or instrument made
supplemental hereto
"Quarter Days" means the 25th March, 24th June, 29th
September and 25th December in each year
(and the term Quarter Day shall be construed
accordingly)
"Term" means the term hereby granted and shall
include where appropriate any extension
thereof whether by agreement of the Landlord
and Tenant or by or pursuant to any statute
for the time being in force
"Termination of the Term" means the determination of the Term whether
by effluxion of time re-entry notice under
the provisions hereof surrender by operation
of law or otherwise or by any other means or
cause whatsoever
"the First Reserved Rent" shall mean the rent first herein reserved
and shall include any increase therein
during the Term pursuant to the provisions
of the Fifth Schedule to this Lease
"Permitted Part" shall mean the whole of any floor of the
Demised Premises
- 2 -
<PAGE> 3
"Party Structures" means unless the context otherwise requires
the walls, columns and other structural
items dividing the Demised Premises from any
adjoining building on the Estate not let to
the Tenant excluding the internal
plasterwork or other surfaces and coverings
of the said pillars, walls and structural
items which shall be within the Demised
Premises
"Common Parts" means the parts of the Estate which have not
been and are not intended to be transferred
or demised by the Landlord and shall include
without prejudice to the generality of the
foregoing the Roadways, the Pathways, the
Parking Spaces, the Forecourts and the
Landscaped Areas
"the Insured Risks" means the risks from time to time and at the
relevant time intended to be covered by the
policy or policies of insurance effected by
the Landlord pursuant to the covenant on the
Landlord's part in that respect herein
contained against loss or damage by fire
storm tempest flood lightning, explosion,
aircraft articles dropped therefrom, riot or
civil commotion, malicious damage impact,
earthquake, landslip, subsidence bursting
and overflowing of water tanks, apparatus or
pipes and such other risks as the Landlord
shall reasonably consider it necessary to
insure against together also with property
owners and third party liability plant and
machinery cover (including the cost of
shoring demolition site clearance and
consultant's fees) and in respect of the
employment of people on the Estate and loss
of the rent and the Service Charge payable
hereunder from time to time for such period
(being not less than three years) as is
reasonably required by the Landlord from
time to time having regard to the likely
period required for reinstatement in the
event of partial and total destruction and
in an amount which would take into account
the Landlords reasonable estimate of
potential increases of rent in accordance
with the rent review provisions herein
contained
"Prescribed Rate" means four per centum (4%) per annum above
Barclays Bank Plc Base Rate (or such other
rate or rates which may replace the same and
by reference to which all or a majority of
English clearing banks determine their own
rates of interest) in force at the date of
the commencement of the period in respect of
which any payment of interest accrues due
under this Lease
- 3 -
<PAGE> 4
"Service Expenditure" shall mean the total cost to the Landlord or
the Service Company (as appropriate) of
providing the Services calculated and
payable in accordance with the provisions of
the Seventh Schedule of this Lease
"the Service Charge" shall bear the meaning ascribed to it
respectively by and shall be construed in
accordance with the Seventh Schedule to this
Lease
"the Services" the services to be carried out by the
Landlord or the Service Company as listed in
sub-paragraphs (a) - (f) inclusive of
paragraph 2 of the Fourth Schedule hereto
"Relevant Area" in relation to any part of the Estate means
the total area of the building erected on
that part in square feet (rounded up to the
nearest one hundred square foot) measured in
accordance with the Code of Measuring
Practice adopted or approved by the Royal
Institution of Chartered Surveyor's at the
material time or times
"Financial Year" means in relation to Service Expenditure the
period from the first day of January in each
year to the thirty-first day of December in
the same year or such other annual period as
the Landlord may in its discretion from time
to time determine as being that for which
the accounts of the Landlord shall be made
up
"Relevant Financial Year" in relation to the determination of the
Service Expenditure means the Financial Year
for which the amount of the Service
Expenditure is being determined
"Accountant" means an accountant appointed by the
Landlord who shall be a member of a body of
accountants established in the United
Kingdom and for the time being recognized by
the Secretary of State for the purpose of
the Companies Act 1985
"Certificate" means a written statement of the Service
Expenditure and the Service Charge certified
by the Accountant
"the Planning Acts" shall mean the Town and Country Planning
Acts 1962 to 1990 and the Town and Country
Amenities Act 1974
"Service Media" ventilators, sewers, drains, pipes, wires,
cables, gutters, conduits and other
conducting media in on or over the Estate or
some part thereof
- 4 -
<PAGE> 5
(2) (i) words importing the masculine gender only shall include the
feminine gender and vice versa;
(ii) words importing the singular number shall include the plural
number and vice versa and where there are two or more persons
included in the expression "the Tenant" covenants contained in
this Lease which are expressed to be made by the Tenant shall
be deemed to be made by such persons jointly and severally;
(iii) words importing persons shall include firms, companies and
corporations and vice versa;
(iv) any reference to an Act of Parliament shall include any
modification, extension or re-enactment thereof for the time
being in force and shall include all instruments, orders,
plans, regulations, permissions and directions for the time
being made issued or given thereunder or deriving validity
therefrom
(v) the Clause headings herein and the Schedule headings are for
reference only and shall not be deemed to form part of this
Lease nor shall they affect the construction thereof
(vi) any certificate to be given by the Landlord's Accountants
under the provisions of this Lease shall in respect of matters
of fact (unless otherwise specified in any particular Clause)
and save in the case of manifest error be final and binding on
the parties hereto
(vii) any covenant by the Tenant not to do or omit to be done an act
or thing shall be construed as if it were a covenant not to do
or permit or suffer such act or thing.
1. THE Landlord HEREBY DEMISES unto the Tenant ALL THAT the Demised Premises
TOGETHER with the rights specified in Part II of the First Schedule hereto
EXCEPT AND RESERVING unto the Landlord (and any person authorized or approved by
the Landlord) the interests, rights and easements more particularly specified in
Part III of the First Schedule hereto TO HOLD the Demised Premises unto the
Tenant for a term of 25 years from the 8th day of April One thousand nine
hundred and ninety one Together with the benefit of the rights (so far as the
Landlord is able to grant same) contained in the First Schedule of a transfer of
the Estate dated 24th March 1988 made between Foxholes Business Limited (1) S.T.
Martin (London) Limited (2) Tarmac Properties Limited (3) and Bride Hall
Developments Limited (4) and Subject to all rights, easements, quasi-easements
and privileges belonging to or enjoyed by any adjoining or neighboring property
YIELDING AND PAYING THEREFOR unto the Landlord during the said term FIRST the
yearly rent of FIFTY SIX THOUSAND TWO HUNDRED AND FIFTY TWO POUNDS
((pound)56,252,00) (or such increased rent as may hereafter become payable under
the provisions for rent revision hereinafter contained in the Fifth Schedule
hereto) by equal quarterly payments in advance (by bankers order if so required
by the Landlord) on the Quarter Days in every year
- 5 -
<PAGE> 6
and in each case without any deduction of which the first payment shall be made
on the date hereof in respect of the period from the day of One thousand
nine hundred and ninety to the day of One thousand nine hundred and ninety
AND SECONDLY by way of additional rent.
(1) on written demand by the Landlord a yearly sum equal to the due and proper
proportion attributable to the Demised Premises (as certified by the
Landlord) of the expenditure by the Landlord in effecting insurance in
respect of the Insured Risks
(2) the amount or amounts payable by the Tenant from time to time under this
Lease in respect of the Service Charge (calculated in accordance with the
Seventh Schedule to this Lease) such additional rent to be payable at the
times and in the manner specified in the Seventh Schedule and
(3) where services are provided by the Landlord to the Tenant on the request
of the Tenant in addition to or substitution for the Services on written
demand the whole of the cost to the Landlord as certified by the Landlord
acting reasonably of providing such service
3. THE Tenant HEREBY COVENANTS with the Landlord and as a separate covenant with
the Service Company in manner set out in the Second Schedule and paragraph 1 of
the Seventh Schedule hereto.
4. THE Landlord HEREBY COVENANTS with the Tenant in manner set out in the Third
Schedule hereto.
5. THE Service Company HEREBY COVENANTS with the Tenant and as a separate
covenant with the Landlord in manner set out in the Fourth Schedule hereto.
6. IT IS HEREBY AGREED AND DECLARED that the First Reserved Rent shall be
reviewed and (if appropriate) increased at the times and in manner set out in
the Fifth Schedule hereto.
7. PROVIDED ALWAYS AND AS HEREBY EXPRESSLY AGREED AND DECLARED in manner set
out in the Sixth Schedule hereto.
IN WITNESS whereof, the Landlord and Tenant and the Service Company have
executed this Lease as a Deed and have caused their respective common seals to
be hereunto affixed to day and year first above written.
THE FIRST SCHEDULE hereinbefore referred to
PART I
Description of the Demised Premises
ALL THOSE land and premises comprising Unit 15 and forming part of the Estate
such land and premises being more particularly delineated on the Plan and
thereon edged red
- 6 -
<PAGE> 7
PART II
Rights granted pursuant to Clause 2 of this Lease
with and for the benefit of the Demised Premises
The following rights in common with the Landlord and all others now or hereafter
entitled to the like rights:
(1) A right of way with or without vehicles in common with the Landlord and
all other persons who have or may hereafter be granted a like right at all
times and for all purposes connected with the Demised Premises (but not
for any other purpose) over and along the Roadways and the exclusive right
to use the Forecourt for such purposes.
(2) The right (so far as the same are not mains facilities in the ownership of
the appropriate statutory undertakers) in common with the Landlord and all
other persons who may have or may hereafter be granted a like right to the
free and uninterrupted passage and running of air water soil gas
electricity and telephone signals or impulses through the Service Media
serving or capable of serving or being enjoyed by the Demised Premises and
the right to enter upon the Estate for the purposes of making connections
with the said Service Media and inspecting maintaining or repairing and
renewing the Service Media and the said connections thereto causing as
little damage as possible and making good all damage thereby occasioned to
the reasonable satisfaction of the surveyor for the time being of the
Landlord or (if required) to the satisfaction of the relevant Highway
Authority.
(3) A right-of-way on foot only in case of fire or other emergency over the
Pathways shown hatched blue on the Plan and an exclusive right of way on
foot only other the Pathways shown hatched brown on the Plan
(4) The exclusive right to use the Parking Spaces shown coloured orange on the
Plan and to erect discreet notices in the name of the tenant thereon
PROVIDED however that the Landlord shall be entitled to vary the location
of the said spaces for the purposes of good estate management PROVIDED
FURTHER that the Tenant is always to have an entitlement to not less than
sixteen Parking Spaces at all times and that such spaces shall in any
event be located on the Estate.
(5) The right to erect a sign on the Landlord's Estate Signboard at the
entrance to the Estate in accordance with the provisions of paragraph (13)
of the Second Schedule hereto
(6) The right with servants workmen and others at all reasonable times or at
any time in case of emergency to enter and remain upon the Estate and any
buildings erected thereon or any part thereof for the purpose of repairing
maintaining inspecting renewing or rebuilding the Demised Premises or any
Party Structures making good all damage thereby effected as soon as
reasonably practicable.
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(7) The right of support and shelter from any adjoining buildings or other
structures on the Estate.
(8) The exclusive right to enter and remain upon the Ancillary Area together
with servants employees licensees and invitees of the Tenant on foot only
for recreational and leisure purposes ancillary to the use of the Demised
Premises.
(9) The right at any time during the term to erect a brick built building or
other similar structure upon the Ancillary Area for storage use in
connection with the business of the tenant PROVIDED THAT:
(a) Prior to exercising such right the Tenant shall obtain all necessary
consents and approvals from any local statutory or other authorities
(b) Prior to exercising such right the Tenant shall supply a
specification and drawings of the said structure such specifications
and drawings to be to the reasonable satisfaction of the Landlord.
(c) On the Termination of the Term the Tenant shall remove the said
structure and shall reinstate the Ancillary Area in all respects to
its former condition.
PART III
Rights excepted and reserved pursuant to
Clause 2 of this Lease
There are excepted and reserved out of this Lease to the Landlord and its
successors in title and to the Service Company or to other Tenants to the
remaining parts of the Estate (save as hereinafter provided) for the benefit of
the Estate
(1) The right to erect or to consent to any person erecting any new building
on the Estate and the right to alter or to consent to any person altering
any buildings which may now or may hereafter be built on the Estate
notwithstanding that such erection or alteration may diminish the access
of light or air enjoyed by the Demised Premises with liberty to deal with
any land adjoining opposite or near to the Demised Premises or the Estate
as may be thought fit but without prejudice to the easements granted to
the Tenant by this Lease or the Landlord's covenants set out in the Third
Schedule hereto.
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<PAGE> 9
contribute or defray (or otherwise howsoever) any such sums relating
to the income or chargeable gains of any third party or the Landlord
in relation to the Demised Premises or any other premises or
otherwise howsoever or any disposition or dealing with the same.
(b) To repay to the Landlord in the absence of direct assessment on the
Tenant the proportion properly attributable to the Demised Premises
of such of the aforesaid rates taxes duties charges assessments
impositions and outgoings as may be payable in respect of occupation
of any property of which the Demised Premises form a part insofar as
the same is not included in the calculation of the Service Charge
(such proportion to be determined by the Landlord's Surveyor acting
reasonably).
(c) To pay the cost of any connection charges in respect of the supply
of gas water and electricity and for the supply of any meters.
(3) To keep in good and substantial repair and condition the Demised Premises
damage (over and above any excess on such policy from time to time) caused
by any of the Insured Risks excepted unless any policy of insurance has
been vitiated or payment of any of the policy monies withheld or refused
due to any act neglect or default of the Tenant or any sub-tenant or their
respective servants agents lessees or invitees) and keep clean the Demised
Premises and appurtenances thereof including but without prejudice to the
generality of the foregoing the doors windows Party Structures and walls
of the Demised Premises and all glass fixtures fittings fastenings wires
gutters sewers drains and other pipes sanitary and water heating and
electrical apparatus and all heating equipment and apparatus (if any)
therein and exclusively serving the Demised Premises and the painting
papering and decoration thereof and the Landlord's fixtures and fittings
therein with all necessary reparations and cleansing works and amendments
whatsoever including save as hereinafter provided the making good of all
defects howsoever and wherever arising in or on or under the Demised
Premises (PROVIDED ALWAYS THAT the making good of all defects directly or
indirectly attributable to the defective or faulty design or construction
of the Demised Premises or the use of inadequate defective or faulty
materials or building practices in connection therewith howsoever and
whenever arising in on or under the Demised Premises shall not fall within
this or any other covenant on the part of the Tenant herein contained) and
to replace from time to time all Landlord's fixtures fittings and
appurtenances in the Demised Premises which may be or become beyond repair
at any time during or at the Termination of the term and without prejudice
to the generality of the foregoing covenants to clean all windows (both
inside and outside) including the frames thereof as often as reasonably
necessary.
(4) Without prejudice to the generality of the foregoing covenant:
(a) as and whenever necessary and in any event in every fifth year of
the term and also in the twelve months prior to the Termination of
the Term to have prepared and painted or otherwise decorated or
treated (as the case may be) all surfaces and other portions of the
fabric and finishes inside the Demised
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<PAGE> 10
Premises usually painted or decorated with two coats at least of
good quality paint or good quality polish or other suitable material
of good quality in a proper and workmanlike manner and so often as
may be necessary to have professionally treated in accordance with
an approved manner (for preserving and protecting the same) all
other parts of the interior of the Demised Premises requiring such
treatment for preservation and protection All such painting
decoration or other treatments to be carried out by the Tenant to
the reasonable satisfaction of the Landlord and in the twelve months
prior to the Termination of the Term in materials of a type standard
and quality approved by the Landlord such approval not to be
unreasonably withheld or delayed.
(b) as and whenever necessary and in any event in every fifth year of
the Term and also in the twelve months prior to the Termination of
the term to have prepared and painted or otherwise decorated or
treated (as the case may be) all surfaces and other portions of the
fabric and finishes of the exterior of the Demised Premises usually
painted or decorated with two coats at least of good quality paint
or good quality polisher other suitable material of good quality in
a good and workmanlike manner and so often as may be necessary to
have professionally treated in accordance with the approved manner
(for preserving and protecting the same) the exterior of the Demised
Premises requiring such treatment for preservation and protection
all such painting and decoration or other treatments to be carried
out by the Tenant to the reasonable satisfaction of the Landlord
(and in the twelve months prior to the Termination Date in materials
of a type standard and quality approved by the Landlord) such
approval not to be unreasonably withheld or delayed.
(c) to carry out all such painting decoration or the treatment as
aforesaid during the twelve months prior to the Termination of the
Term in colors and tints as the Landlord may reasonably require
(d) to replace all glass in the Demised Premises (including roof lights
(if any) as and when the same is broken or damaged with glass of the
same color tint and specification and in conformity to the glass
fitted in the remainder of the Demised Premises.
(5) At the Termination of the Term to yield up to the Landlord the Demised
Premises decorated repaired cleaned and kept in accordance with the
Tenant's covenants in this Lease contained together with all additions and
improvements thereto and all fixtures (other than tenant's or trade
fixtures) in or upon the Demised Premises or which during the said Term
may be fitted or fastened to or upon the Demised Premises and in
accordance also with the covenants and conditions contained or imposed in
or by virtue of any license granted by the Landlord hereunder and prior to
the Termination of the Term:
(a) in case any of the Landlord's fixtures and fittings shall be missing
broken damaged or destroyed without delay to replace them with
others of a similar character
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<PAGE> 11
(b) in the event of any alterations having been made to the Demised
Premises by the Tenant during the Term to reinstate the Demised
Premises (if the Landlord shall so require but not otherwise) to the
condition in which the same were prior to the making of such
alterations and in any event to remove any molding, sign writing, or
painting of the name or business of the Tenant and other persons
from the Demised Premises and
(c) make good any damage caused to the Demised Premises by such removal
or the removal of the Tenant's fixtures fittings furniture and
effects PROVIDED THAT in this paragraph damage (over and above any
excess on such policy from time to time) by any of the Insured Risks
is excepted unless any policy of insurance has been vitiated or
payment of any of the policy monies withheld or refused due to any
act neglect or default of the Tenant or any sub-tenant or their
respective servants agents licensees or invitees.
(6) To permit the Landlord or its agents at any reasonable time in the day
time and by prior appointment (except in case of emergency) to enter into
and upon the Demised Premises
(a) to examine the same to ensure that nothing has been done therein or
omitted which constitutes or may in the opinion of the Landlord tend
to constitute a breach or non-performance of any of the covenants
contained in this Lease
(b) to take schedules or inventories of the fixtures and things to be
yielded up at the Termination of the Term
(c) to exercise any rights excepted and reserved to the Landlord by this
Lease.
(7) As soon as reasonably practicable (and in the case of emergency without
delay) to remedy repair and make good all breaches and defects of which
notice shall e given by the Landlord to the Tenant and which the Tenant
shall be liable to remedy repair or make good under the covenants
contained in these Presents.
PROVIDED that if the Tenant fails to remedy repair and make good all breaches
and defects within three months of the notice by the Landlord or such other time
as may be reasonable the Landlord may (but shall not be obliged to) enter the
Demised Premises and at the expense of the Tenant fulfill the Tenant's
obligations under sub-paragraphs (3) (4) and (5) of this Second Schedule and the
Tenant will pay the reasonable costs and expenses properly incurred by the
Landlord to the Landlord on demand
(8) (a) Not to do or bring in or upon the Demised Premises anything which
may throw on the Demised Premises any weight or strain in excess of
that which such premises are calculated to bear with due margin for
safety and in particular nor to overload the floors nor suspend any
excessive weight from the ceilings or walls stanchions or the
structure of the Demised Premises
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<PAGE> 12
(b) Not to overload the electrical installation or any other service in
or to the Demised Premises
(9) (a) At all times during the Term to comply with all requirements and
recommendations from time to time of the appropriate authority in
relation to fire precautions affecting the Demised Premises
(b) If reasonably required by the Landlord for the purposes of safety or
to comply with the requirements of the insurers of the Estate to pay
to the Landlord within 14 days of written demand the cost of
providing and installing such fire escape prevention and
extinguishment equipment and devices for use in the Demised Premises
or at the Landlord's option to install the same at the Landlord's
direction and at the Tenant's expense.
(c) Not to bring into the Demised Premises or to any part of the Estate
any article or substance nor to carry on or suffer upon the Demised
Premises any activity in any manner nor to do or omit any act matter
or thing whatsoever the carrying on bringing doing or omission of
any of which would make void or voidable any policy of insurance
issued subject to usual conditions in respect of the Demised
Premises or in respect of the Landlord's fixtures and fittings
therein or in respect of any other part of the Estate or any
adjoining or contiguous property belonging to the Landlord or would
cause the premiums payable in respect of any insurance effected in
relation to the Demised Premises or the Estate or any part thereof
or any adjoining or contiguous premises to be increased beyond the
then existing rate.
(d) Without prejudice to the rights of the Landlord in respect of any
breach of the foregoing sub-clause the Tenant shall reimburse the
Landlord for any increased premium or premiums payable by the
Landlord in respect of the Demised Premises the Estate or any part
thereof or any adjoining or contiguous premises as a result of a
breach of the covenant contained in the foregoing sub-clause.
(e) In the event of the Demised Premises or any part thereof being
damaged or destroyed by any of the Insured Risks to give immediate
notice to the Landlord as soon as the same shall come to the
attention of the Tenant stating (if possible) whether and to what
extent such destruction or damage was brought about directly or
indirectly by any of the Insured Risks.
(f) In the event of the Demised Premises or any part thereof or any
other part of the Estate being damaged or destroyed by any of the
Insured Risks and the insurance money under any insurance against
the same effected thereon by the Landlord being wholly or partly
irrecoverable by reason solely or in part or any act or default of
the Tenant or the Tenant's servants agents or licensees then and in
every such case the Tenant will forthwith pay to the Landlord the
whole or (as the case may require) a fair proportion of the amount
irrecoverable.
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<PAGE> 13
(10) (a) Not to use or permit the use of the hand and washing up basins
lavatories water closets and incinerators included in the Demised
Premises for any purpose which may cause a stoppage in the waste
water pipes soil pipes incinerators and incinerator flues
(b) Not to allow to pass into the sewers drains or watercourses serving
the Demised Premises any noxious or deleterious effluent or other
substance whatsoever which may injure the said sewers drains or
watercourse and in the event of any such obstruction or injury
forthwith upon become aware of the same to notify the Landlord
thereof.
(c) Not to allow to accumulate any trade empties or any rubbish upon
external parts of the Demised Premises and not to hand or expose or
allow to be hung or exposed from the windows of the Demised Premises
any thing for any purpose.
(11) (a) Not at any time during the Term without the prior written consent of
the Landlord such consent not to be unreasonably withheld or delayed
to instal or make any alteration or addition to the Service Media
(whether demised or otherwise) or any Landlord's fixtures and
fittings (including the heating and sprinkler systems) (if any) or
interfere with the same.
(b) Not to erect any television or radio aerials satellite dishes or
other transmitting or receiving equipment on the exterior of any
part of the Demised Premises or on any part of the Estate without
the prior written consent of the Landlord such consent not to be
unreasonably withheld or delayed.
(c) Not to do or permit or suffer to be done on the Demised Premises any
waste spoil of destruction.
(d) Not to make or permit any alteration or additions whatsoever in the
Demised Premises or any part thereof either internally or externally
PROVIDED THAT non structural alterations or additions to the
internal layout or design of the Demised Premises may be carried out
without the Landlord's consent.
(12) (a) Not to use the demised Premises otherwise than for a trade or
business falling within Class B1 of the Town and Country Planning
(Use Classes) Order 1987 PROVIDED ALWAYS that up to fifty per cent
of the Relevant Area of the Demised Premises may be used for
purposes falling within Class B8 of the Town and Country Planning
(Use Classes) Order 1987.
(b) Not to use the demised Premises for any purpose connected with the
breakage or repair of motor vehicles.
(c) Not to erect or set up in or upon any part of the Demised Premises
any engine or machinery which involves undue noise or vibration
emanating from the Demised Premises without the previous consent of
the Landlord such consent
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<PAGE> 14
not to be unreasonably withheld or delayed provided that consent may
be reasonably withheld in the interest of good estate management.
(d) Not at any time to use the Demised Premises or any part thereof for
any public meeting entertainment exhibition or show or spectacle of
any kind or for any dangerous noisy noxious or offensive trade
business manufacture or occupation whatsoever or for residential
purposes or for any illegal or immoral act or purpose or as a club
nor to play or use thereon any musical instrument gramophone
wireless loud speaker or similar apparatus so as to be audible
outside the Demised Premises nor to hold any auction on the demised
Premises nor to use the Demised Premises as a sleeping place for any
person and not to keep any animal of any kind therein and not to use
the Demised Premises or any part thereof for the purpose of any
betting transactions within the meaning of the Betting Gaming and
Lotteries Act 1963 or for gaming within the meaning of the Gaming
Act 1968 and not to make any application for a Betting Office
License or a License or Registration under the Gaming Act 1968 in
respect of the Demised Premises or any part thereof and not to use
the Demised Premises for any purpose involving the sale manufacture
repair cleaning or processing of any car or other motor vehicle.
(13) That no figure letter pole flag signboard advertisement inscription bill
placard or sign whatsoever shall be attached to or exhibited on the
Demised Premises or the windows thereof so as to be seen from the exterior
without the previous consent in writing of the Landlord which shall not be
unreasonably withheld or delayed in respect of a sign on the door and
frontage of the Demised Premises and on the Landlord's Estate signboard
stating the name of the Tenant and its business or profession (such sign
to be removed and any damage caused thereby to be made good by the Tenant
at the Termination of the Term).
(14) (a) Not to assign sublet or part with or share the possession or
occupation of the whole or any part of the Demised Premises nor
permit any of the foregoing PROVIDED HOWEVER that with the prior
written consent of the Landlord such consent not to be unreasonably
withheld or delayed the Tenant may assign or sublet the whole or the
Demised Premises or underlet a Permitted Part subject to the Tenant
obtaining if the Landlord shall so reasonably require an acceptable
guarantor for any company other than a public company quoted on a
recognized stock exchange in the United Kingdom (or any other
assignee if the Landlord shall in such case so reasonably require)
and a direct covenant by an assignee with the Landlord to observe
and perform the covenants and conditions of this Lease.
(b) (i) Not to underlet the whole of the Demised Premises at a
fine or a premium nor at a rent less than the open market rack
rent of the Demised Premises at the time of such underlease
(or the due proportion thereof in the case of an underletting
of a Permitted Part)
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<PAGE> 15
(ii) Upon the Landlord consenting to an underletting of the whole
or a Permitted Part of the Demised Premises to procure that
the underlease shall contain:
(A) an unqualified covenant on the part of the underlessee
with the Landlord that the underlessee will not assign
or charge any part or parts of the Demised Premises or
the Permitted Part as the case may be (as distinct from
the whole) and will not underlet or (save by way of an
assignment of the whole) part with or share possession
of or permit any person or company to occupy the whole
or any part of the premises thereby demised
(B) a covenant on the part of the underlessee with the
Landlord that the underlessee will not assign the whole
of the Demised Premises or the Permitted Part as the
case may be without the previous consent in writing of
the Landlord such consent not to be unreasonably
withheld or delayed
(C) provision for review of the rent reserved by the
underlease corresponding as to terms with the provisions
set out and at intervals no less frequent than those
provided for in the Fifth Schedule hereto
(D) a condition for a re-entry on breach of any covenant on
the part of the underlessee
(E) in the case of an underletting of a Permitted Part only
an agreement between the Tenant and the Undertenant
excluding in the provisions of S.24-28 inclusive of the
Landlord and Tenant Act 1954 duly authorized by an
appropriate order of the Court
(F) a covenant on the part of the underlessee to observe and
perform the covenants on the part of the Tenant
contained in this Lease other than as to the payment of
rent (to the extent that the same may be appropriate in
the case of an underletting of a Permitted Part)
(iii) To procure in any underletting of the Demised Premises
that the rent under such underletting is reviewed in
accordance with the terms of such review
(c) Upon every application for consent required by this sub-clause to
disclose to the Landlord such information as to the terms of the
proposed assignment or sub-letting as the Landlord shall reasonably
require
(d) Notwithstanding anything in this sub-paragraph (14) contained the
Tenant (if a limited liability company incorporated under the
Companies Acts for the time
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<PAGE> 16
being in force) shall be entitled to share possession or occupation
of the Demised Premises or any part thereof with any other member or
members of the group (as defined in Section 42 of the Landlord and
Tenant Act 1954) of companies of which the Tenant is itself a member
Provided That a relationship of Landlord and Tenant is not created
between the Tenant and any such member
(e) Within one months after the execution of any assignment (or any
charge or underlease or the assignment of an underlease or the grant
of any sub-underlease out of an underlease notwithstanding the
foregoing prohibition) or any transmission by reason of a death or
otherwise affecting the Demised Premises to product to and leave
with the Solicitors for the time being of the Landlord a certified
copy of the deed instrument or other document evidencing or
affecting such transmission and on each occasion to pay to the
Landlord's Solicitors' reasonable registration fee plus Value Added
Tax thereon.
(15) In relation to the Planning Acts
(a) At all times during the said term to comply in all respects with the
provisions and requirements of the Planning Acts and all licenses
consents permissions and conditions (if any) granted or to be
granted or imposed thereunder or under any enactment repealed
thereby so far as the same respectively relate to or affect the
Demised Premises or any part thereof or any operations works acts or
things already or hereafter to be carried out executed done or
omitted thereon or the use thereof for any purpose
(b) So often as occasion shall require at the expense in all respects of
the Tenant to obtain all such licenses consents and permissions as
may be required for the carrying out by the Tenant or any operations
on the Demised Premises or the institution or continuance by the
Tenant therein of any use thereof which may constitute development
within the meaning of the Planning Acts
(c) To pay and satisfy any charge that may hereafter be imposed under
the Planning Acts in respect of the carrying out or maintenance by
the Tenant of any such operations or the institution or continuance
by the Tenant or any such use as aforesaid
(d) Not to make any planning application to the Local Planning Authority
in respect of the Demised Premises or any part thereof without the
prior written consent of the Landlord such consent not to be
unreasonably withheld or delayed
(e) Notwithstanding any consent which may be granted by the Landlord
under this Lease not to carry out or make any alteration or addition
to the Demised Premises or any change of use thereof (being an
alteration or addition or change of use which is prohibited by or
for which the consent of the Landlord is required to be obtained
under this Lease and for which a planning
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<PAGE> 17
permission needs to be obtained) before all necessary planning
permissions therefor have been produced to the Landlord and
acknowledged by it in writing as satisfactory (such acknowledgment
not to be unreasonably withheld or delayed) to it but so that the
Landlord may refuse so to express its satisfaction with any such
planning permission on the ground that the period thereof or
anything contained therein or omitted therefrom in the reasonable
opinion of the Landlord or its Surveyor would be or be likely to be
prejudicial to its interest in the Demised Premises or the Estate
whether during the Term or following the Termination of the Term
(f) Unless the Landlord shall otherwise direct to carry out before the
Termination of the Term any works stipulated to be carried out to
the Demised Premises by a date subsequent to the Termination of the
Term as a condition of any planning permission which may have been
granted to and implemented by the Tenant during the Term
(g) If and when called upon so to do to produce to the Landlord or the
Landlord's Surveyor all such plans documents and other evidence as
the Landlord may reasonably require in order to satisfy itself that
the provisions of this covenant have been complied within all
material respects
(h) Nothing herein shall render the Landlord or Tenant liable in respect
of any of the covenants conditions and provisions contained in the
preceding sub-paragraphs of this paragraph if and so far only as
the performance or observance of such covenants conditions and
provisions or any one or more of them shall hereafter become a
contravention of or otherwise impossible or illegal under or by
virtue of the Planning Acts but subject as aforesaid the Term and
the rents payable to the Landlord in respect thereof shall not
determine by reason only of any changes modifications or
restrictions of user of the Demised Premises or obligations or
requirements (if any) hereafter to be made or imposed under or by
virtue of the Planning Acts
(16) To the satisfaction of the Landlord and within the time limited by law or
by any notice requiring the same to be done or if there is no such time
limit within a reasonable time to do and execute all such works and comply
with all such requirements as under or by virtue of any Act of Parliament
already or hereafter to be passed and ever order regulation and by-law
made under or in pursuance thereof or by any local or other authority have
been or shall be directed to be done, executed or complied with in respect
of the Demised Premises or the user thereof or the person or persons or
any fixture machinery plant or chattel for the time being therein whether
by the owner or occupier thereof and to indemnify the Landlord at all
times against all costs charges and expenses of or incidental to the
execution of any works or the provisions and maintenance of any
arrangements so directed or required as aforesaid and not at any time
during the Term to do or omit in or about the Demised Premises any act or
thing by reason of which the Landlord may under any enactment incur or
have imposed upon it or become liable to pay any damages compensation
costs charges or expenses
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<PAGE> 18
(17) Within seven days of the receipt of notice of the same to give full
particulars to the Landlord of any permission notice order or proposal for
a notice or order relevant to the use or condition of or otherwise
concerning the Demised Premises made given or issued to the Tenant by any
Government Department Local or Public Authority under or by virtue of any
statutory powers and if so reasonably required by the Landlord to produce
such permission notice order or proposal for a notice or order to the
Landlord AND ALSO as soon as reasonably practicable to take all reasonable
or necessary steps to comply with any such notice or order AND ALSO at the
request of the Landlord to make or join with the Landlord in making such
objections or representations against or in respect of any such notice
order or proposal as aforesaid as the Landlord shall deem expedient
(18) Not to stop up or obstruct any windows or light belonging to the Demised
Premises nor permit any new window light opening doorway path drain or
encroachment or easement to be made into, against or upon the Demised
Premises and to give immediate notice to the Landlord of any such window,
light, opening, doorway, path, drain or encroachment or easement which
shall be made or attempted and shall come to the notice of the Tenant and
at the request and cost of the Landlord adopt such means as may be
reasonably required for preventing any such encroachment of the
acquisition of any such easement
(19) To pay or procure the payment to the Landlord of the due and proper
portion (if any) of any compensation paid to the Tenant or payable
consequent upon any notice served on or application refused by any
governmental or local authority in respect of the Demised Premises or the
user thereof
(20) Without prejudice to the Tenant's liability hereunder to notify the
Landlord forthwith upon becoming aware of any defect in the repair or
condition of the Demised Premise (whether or not the liability of the
Tenant hereunder) or in the Estate of which the Tenant is aware and which
is or may affect the repair and condition of the Demised Premises
(21) To pay and make good to the Landlord all damages, demands, losses, costs,
claims and expenses (including professional fees properly incurred by the
Landlord) in connection with all and every loss and damage whatsoever
incurred or sustained by the Landlord as a consequence of every breach,
non-performance or non-observance of the covenants by the Tenant herein
contained or implied and the conditions herein contained and on the part
of the Tenant to be complied with and to indemnify the Landlord from and
against all actions, claims, liabilities, costs and expenses thereby
arising PROVIDED that such indemnity shall be deemed (a) to extend to and
cover all reasonable costs and expenses properly incurred by the Landlord
in connection with any steps which the Landlord may take to remedy any
breach of covenant by the Tenant herein contained or failure of the Tenant
to observe and perform any covenant, condition or obligation on the part
of the Tenant herein contained or implied and (b) to be without prejudice
to any rights or remedies of the landlord hereunder in respect of any and
every such breach, non-performance or non-observance
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<PAGE> 19
(22) To permit the Landlord if he so desires to affix and retain without
interference upon any suitable parts of the Demised Premises in a
conspicuous place (but not so as to interfere materially with the access
of light and air to the Demised Premises) during the last six months of
the Term notices for reletting the same and during such period to permit
all persons with written authority from the Landlord or the Landlord's
agents at reasonable times of the day on prior appointment to view the
Demised Premises
(23) To pay on demand:-
(a) All reasonable legal costs and surveyors' fees properly incurred by
the Landlord attendant upon or incidental to every application made
by the Tenant for a consent or license herein required or made
necessary whether the same be granted or refused on reasonable
grounds or proffered subject to any lawful qualification or
condition or whether the application be withdrawn
(b) All reasonable expenses including solicitors' costs and surveyors'
fees properly incurred by the Landlord incidental to the preparation
and service of a notice under Section 146 of the Law of Property Act
1925 or incurred in or in contemplation of proceedings under Section
146 and 147 of that Act or incurred in consequence of any breach of
the Tenants obligations hereunder notwithstanding that in any such
case forfeiture is avoided otherwise than by relief granted by the
Court
(c) All reasonable expenses including solicitors' costs and surveyors'
fees properly incurred by the Landlord of and incidental to the
service of all notices and Scheduled relating to wants of repair to
the Demised Premises and whether served during or after the
Termination of the Term (but relating in all cases to such wants of
repair that accrued not later than the Termination of the Term)
(d) To the Landlord or (as the case may be) to its Solicitors Surveyors
or other agents or other persons to whom any payment is due under
the covenants, agreements and provisions herein contained or implied
which is a payment whereon Valued Added Tax is chargeable the amount
of Value Added Tax in respect of the payment at the rate applicable
to that payment but only on an indemnity basis and to the extent
that the Landlord or its agent is unable to deduct or recover the
same in its Value Added Tax accounting
(24) To observe and perform the covenants and stipulations referred to in the
Property and charges Registers of the Landlord's title at the date of this
Lease save those entries relating to moneys lent (if and so far as the
same are subsisting and capable of being enforced and relate to the
Demised Premises) and to indemnify the Landlord against all actions
proceedings, costs, claims and demands in respect thereof
(25) To observe and keep the Regulations set out in the Eighth Schedule hereto
with such reasonable alterations and additions thereto as may from time to
time be made by the
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Landlord for the purposes of good estate management and for the mutual
benefit of the tenants and occupiers of the Estate
(26) Upon any lawful assignment of this Lease to transfer all shares held by
the Tenant in the Service Company to the assignee
THE THIRD SCHEDULE above referred to
Covenants by the Landlord given pursuant
to and incorporated in this Lease
by Clause 4 of this Lease
(1) Upon the completion of the sale or the grant of a Lease as the case may be
of the last of the Units comprised within the Estate to transfer to the
Service Company, the Common Parts unencumbered in consideration of One
Pound ((pound)1) and to retain ownership of the Common Parts until such
Transfer
(2) So long as the Landlord has not transferred the Common Parts to the
Service Company to keep the same in good repair and condition and to
maintain the Service Media other than that which is publicly maintained or
demised to any tenant or occupier on the Estate and to keep in good repair
and neat and tidy condition the Landscaped Areas and to carry out the
Services PROVIDED ALWAYS THAT the liability of the Landlord under the
covenant contained in this Sub-clause shall altogether cease after the
Common Parts have been transferred to the Service Company without
prejudice to any claim on the part of the Tenant arising from any
antecedent breach by the Landlord of its obligations under this sub-clause
(3) The Tenant paying rents and performing and observing the several covenants
and stipulations on the part of the Tenant herein contained shall and may
peaceably and quietly hold and enjoy the Demised Premises during the Term
without any lawful interruption or disturbance from or by the Landlord or
any person lawfully or equitably claiming under or in trust for him or by
title paramount
(4) In the case of damage or destruction of the Demised Premises or any part
thereof by the occurrence of any of the Insured Risks then unless such
insurance has been vitiated or made void or voidable or forfeited by
reason of any act, default or omission of the Tenant or its servants,
agents, licensees or invitees the Landlord shall subject to the
requirements of all competent authorities completely rebuild or reinstate
the same as soon as reasonably practical Provided that the Landlord shall
be excused from rebuilding or reinstating the Demised Premises if the
competent authorities decline to give or grant the necessary permission or
permit or authority therefor (PROVIDED ALWAYS that the Landlord shall use
its best endeavors to expeditiously obtain all necessary permissions,
permits and authorities) within two years of the date of the damage or
destruction and Provided Further that if at the expiration of such period
of two years such permission, permit or authority has not been given as
aforesaid the Landlord or the Tenant may at any time thereafter and before
such permission permit or authority is given by notice in writing to the
other forthwith determine this Lease which shall thereupon cease and
determine but without
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<PAGE> 21
prejudice to any right or remedy of the Landlord or the Tenant against the
other in respect of any antecedent breach and all insurance monies shall
belong to and be paid to the Landlord absolutely
(5) To insure in the name of the Landlord the Demised Premises in a sum equal
to the full replacement cost thereof against the occurrence of any of the
Insured Risks to the extent that such cover is for the time being
available for buildings of the type of the Demised Premises and to pay and
discharge all premiums due and payable thereon and in the event of damage
or destruction to the Demised Premises or any part thereof due to the
Insured Risks (or any of them) to make up any shortfall in the insurance
monies received as may be necessary to comply with its obligations in
paragraph 4 above from its own resources
(6) To procure that all other Leases of Units on the Estate are in
substantially the same form as this lease and to enforce and procure the
remedying of any breaches of covenant thereof at the request of the Tenant
at the sole cost and expense of the Tenant
(7) To pay and make good to the Tenant all damages, demands, losses, costs,
claims and expenses (including professional fees properly incurred by the
Tenant) in connection with all and every loss and damage whatsoever
incurred or sustained by the Tenant as a consequence of every breach,
non-performance or non-observance of the covenants by the Landlord herein
contained or implied and the conditions herein contained and on the part
of the Landlord to be complied with and to indemnify the Tenant from and
against all actions, claims, liabilities, costs and expenses thereby
arising PROVIDED that such indemnity shall be deemed (a) to extend to and
cover all reasonable costs and expenses properly incurred by the Tenant in
connection with any steps which the Tenant may take to remedy any breach
of covenant by the Landlord herein contained or failure of the Landlord to
observe and perform any covenant condition or obligation on the part of
the Landlord herein contained or implied and (b) to be without prejudice
to any rights or remedies of the Tenant hereunder in respect of any and
every such breach, non-performance or non-observance
(8) To remedy or procure the remedying of all defects, directly or indirectly,
attributable to the defective or faulty design or construction of the
Demised Premises or the use of inadequate, defective or faulty materials
or building practices in connection therewith howsoever and whensoever
arising in, on or under the Demised Premises and to indemnify the Tenant
against all damages, costs, expenses and fees incurred as a result of any
such defects
(9) To procure that the owner, tenant or occupier of any building adjoining
the Demised Premises contributes a due and fair proportion of the costs of
repairing, maintaining, renewing and rebuilding the Party Structures and
to make such contribution in the event that any such adjoining building is
in the ownership of the Landlord
(10) To enforce or procure the enforcement of the covenant set out in clause 3
(and the Fourth Schedule) of a transfer of the Estate dated 24th March
1988 made between
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<PAGE> 22
Foxholes Business Park Limited (1) S.T. Martin (London) Limited (2) Tarmac
Properties Limited (3) and Bride Hall Developments Limited (4) at the
request and for the benefit of the Tenant and to indemnify the Tenant in
respect of all losses, damages, claims, proceedings, expenses and costs
arising out of any breach or non-performance by the Landlord at any time
of the covenants set out at clauses 4(f)(i) and (iii) of the said Transfer
THE FOURTH SCHEDULE hereinbefore referred to
Covenants by the Service Company
(1) To take a transfer of the Common Parts in consideration of the payment by
the Service Company of One Pound ((pound)1)
(2) From and after the transfer to the Service Company of the Common Parts
(but subject to the payment by the Tenant of the Service Charge)
(a) to pay all rates, taxes, charges, duties, burdens, assessments,
dues, outgoings and impositions whatsoever which shall be charged,
rated, assessed or imposed upon or in respect of the Common Parts
(b) so long as the Roadways are not maintainable at public expense to
effect and maintain such insurance policy or policies as may be
necessary to provide for cover against loss or damage to the
Roadways or any part or parts thereof by any perils normally covered
to the full cost of replacement plus adequate sums for professional
fees and against third party and public liability
(c) to effect and maintain such insurance policy or policies as may be
necessary to provide for cover against loss or damage to the
Pathways, the Parking Spaces and the Landscaped Areas or any part or
parts thereof by any perils normally covered to the full cost of
replacement plus adequate sums for professional fees and against
third party and public liability
(d) to keep the Roadways, the Pathways and the Parking Spaces in good
repair and condition so long as they shall not be maintainable at
public expense
(e) to keep in good repair and condition the Service Media which is not
publicly maintained or demised to any tenant or occupier on the
Estate
(f) to keep in good repair and neat and tidy condition the Landscaped
Areas
(3) Upon any lawful assignment of this Lease to enter into a deed of covenant
with the assignee in the form of Clause 5 (and this Fourth Schedule) at
the cost and expense of the Tenant
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<PAGE> 23
THE FIFTH SCHEDULE above referred to
Provisions as to Review of Rent
(1) In this Schedule, the following expressions shall have the meanings
attributed to them as follows:-
"Review Date" means the 8th day of April, 1996, 2001, 2006 and 2011 but shall
also be construed subject to the provisions of Paragraph 5 of this Schedule and
the expression "Relevant Review Date" shall be construed accordingly
"Open Market Rent" means the yearly rent at which the Demised Premises might be
expected to be let as a whole at the Relevant Review Date
(a) for a term equal to the residue of the Term unexpired on the
Relevant Review Date or fifteen years whichever shall be the longer
as between a willing lessor and a willing lessee with vacant
possession without payment of any fine or premium and having regard
to the same terms provisions and conditions including the provisions
for the review of rent set out in this Fifth Schedule but excluding
the amount of rent payable as at the Relevant Review Date
(b) upon the suppositions (if not facts):-
(i) that all parts of the Demised Premises are then ready fit and
available for immediate use and occupation and could be
immediately occupied whether by any willing lessee or
underlessee and that the Tenant has complied with all its
obligations imposed by these presents (but without prejudice
to any rights or remedies of either party in regard thereto);
and
(ii) that if the Demised Premises or any part thereof or the means
of access thereto or any Services Media enjoyed therewith
shall have been destroyed or damaged or fallen into disrepair
or restricted the same had before the Relevant Review Date
been fully repaired and reinstated and are fully available to
the Tenant; and
(iii) that no works have been carried out to the Demised Premises by
or on behalf of the Tenant or any undertenant or permitted
occupier or their respective predecessors in title at any time
which have diminished the rental value of the Demised Premises
including without prejudice to the foregoing any diminution in
floor area arising out of any underletting or permitted
occupation
(iv) all part of the Demised Premises comply with all relevant
statutes and the user permitted by this Lease is lawful
(c) but disregarding and taking no account of any effect on rent of:-
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<PAGE> 24
(i) any goodwill attributable to the Demised Premises by reason of
any trade or business carried on therein by the Tenant or any
permitted undertenant or other lawful occupier; and
(ii) any effect on rent of the fact that the Tenant or any
permitted undertenant or other lawful occupier may have been
in occupation of the Demised Premises; and
(iii) any effect on rent of the fact that the Tenant or any
permitted undertenant or other lawful occupier has carried out
any works to the Demised Premises (to which the Landlord shall
have given written consent if such consent is required
pursuant to the terms hereunder) excluding all work carried
out pursuant to an obligation to the Landlord or under
statute; and
(iv) any Statutory Rent Restrictions (as hereinafter defined)
(d) Provided always that the Open Market Rent shall be ascertained
without making any discount reduction or allowance to reflect (or
compensate the Tenant for the absence of) any rent free period or
concessionary rent free period or contribution to fitting out works
or other inducement which it might then be the practice in open
market lettings for the Landlord to make so that such Open Market
Rent shall be that which would be payable after the expiry of and
without regard to any such rent free or concessionary rent period
and after and without regard to the receipt of any such contribution
or other inducement
"Surveyor" means an independent Chartered Surveyor (being conversant and
experienced in the valuation and letting of premises within the area) appointed
from time to time to determine the Open Market Rent pursuant to the provisions
of this Schedule
"Statutory Rent Restrictions" means the restrictions imposed by any statute for
the control of rent in force on a Review Date or on the date on which any
increased rent is ascertained in accordance with this Schedule and any
regulations or orders made thereunder which operate to impose any limitation
whether in time or amount on the collection of an increase in the First Reserve
Rent or any part thereof
(2) From and after each Review Date, the First Reserved Rent shall be
whichever is the higher of:-
(i) the First Reserved Rent which was operative immediately before the
Relevant Review Date or
(ii) the First Reserved Rent which but for the Statutory Rent Restrictions
would have been operative immediately before the Relevant Review Date or
(iii) the Open Market Rent
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<PAGE> 25
(3) Surveyor's decision
(a) The Surveyor shall be agreed upon by the parties hereto or in the
event of failure so to agree to be nominated by the President (or if
he is unable to act the Vice-President) for the time being of The
Royal Institution of Chartered Surveyors and who shall act and be
deemed to act as an expert or as an arbitrator as the Landlord shall
reasonably decide and who shall be required to agree to:-
(i) afford the Landlord and the Tenant an opportunity to make
written representations to him;
(ii) afford the Landlord and the Tenant an opportunity to comment
on any written representations received by him;
(b) If the Landlord and the Tenant shall not have agreed on the amount
of the Open Market Rent as aforesaid by the Relevant Review Date
then at the election of either party made at any time thereafter the
amount aforesaid shall be determined by the Surveyor and the
determination of the Surveyor shall be binding on both the Landlord
and the Tenant Provided always that if the Surveyor dies or is for
any other reason unable to act before he shall give his
determination the amount aforesaid shall be determined by another
Surveyor ("the further Surveyor") and the provisions of this
sub-clause (3) shall continue to apply mutatis mutandis to the
further Surveyor until the amount aforesaid is determined;
(c) The fees payable to the President or the Vice-President of The Royal
Institution of Chartered Surveyors and to the Surveyor shall be
borne and paid by the Landlord and the Tenant in such shares and in
such manner as the Surveyor shall decided and failing such decision
and subject thereto in equal shares;
(4) If the Open Market Rent has not been ascertained (by agreement or
determination) by any Relevant Review Date in accordance with the
provisions hereof the Tenant shall pay to the Landlord
(a) for any interval between such Relevant Review Date and the Quarter
Day immediately following the date when the Open Market Rent has
been ascertained as aforesaid rent at the yearly rate payable for
the period immediately preceding such Relevant Review Date and
(b) upon the amount of the First Reserved Rent actually payable from
such Relevant Review Date (having been ascertained in accordance
with this Fifth Schedule) the difference (if any) between the First
Reserved Rent payable immediately before the Relevant Review Date
and the new First Reserved Rent as determined in accordance with
this Lease for the period commencing on the Relevant Review Date and
ending on the Quarter Day immediately following
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<PAGE> 26
such ascertainment shall be paid by the Tenant to the Landlord
together with interest thereon at four per cent below the Prescribed
Rate from the Relevant Review Date to the date of payment
(5) Statutory restrictions
If at any Relevant Review Date the Landlord shall be obliged legally or
otherwise to comply with any Act of Parliament dealing with the control of
rent and which shall restrict or modify the Landlord's right to revise the
First Reserved Rent in accordance with the terms of these presents or
which shall restrict the right of the Landlord to demand or accept payment
of the full amount of the First Reserved Rent for the time being payable
under these presents then the Landlord shall on each occasion that any
such enactment is removed relaxed or modified be entitled on giving not
less than three months' notice in writing to the Tenant expiring after the
date of each such removal, relaxation or modification to introduce an
intermediate review date (hereinafter called "the Intermediate Review
Date") which shall be the date of expiration of such notice and the rent
payable hereunder from an Intermediate Review Date (whichever shall first
occur) shall be determined in like manner as the rent payable from each
Relevant Date of Review as hereinbefore provided.
(6) Memorandum
As soon as the amount of First Reserved Rent payable after a Relevant
Review Date has been agreed or determined in accordance with the terms
hereof (and if required by the Landlord so to do) the parties hereto
(including any guarantor) will at their own expense forthwith sign a
memorandum thereof endorsed on the Lease and the Counterpart thereof
specifying the yearly amount of the said reviewed rent and all stamp
duties (if any) payable in respect thereof shall be borne and paid by the
Tenant
THE SIXTH SCHEDULE above referred to
Provisos Agreements and Declarations given pursuant
to and incorporated in this Lease by Clause 6
of this Lease
(1) This Lease is made on the express condition that if and whenever the rents
hereby reserved or made payable or any part thereof shall be in arrear and
unpaid for twenty-one days next after the same shall become due (whether
legally demanded or not) or if and whenever there shall be a breach or
non-performance or non-observance of any of the covenants or agreements on
the part of the Tenant or conditions herein contained or if the Tenant
being a company shall go into liquidation (other than a voluntary
liquidation for the purpose or amalgamation or reconstruction) or have a
winding-up order made against it or shall enter into a composition with
its creditors or have a receiving order made against it or being an
individual be adjudicated as bankrupt or if the Tenant shall suffer any
distress or execution to be levied on the Demised Premises or the contents
thereof or shall take the benefit of any Act for the relief of debtors
then and in any such case the Landlord or its agents may forthwith (or at
any time thereafter) notwithstanding the waiver or implied waiver of any
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<PAGE> 27
previous right of re-entry arising under this Lease at the expiry of 7
days' notice of the alleged default re-enter upon the Demised Premises or
any part thereof in the name of the whole whereupon the Term shall
absolutely determine but without prejudice to any rights or remedies which
may have then accrued to the Landlord In respect of arrears of rent or
other subsisting breach or any condition or covenant or agreement on the
part of the Tenant herein contained
(2) If the Tenant shall become subject to the Bankruptcy Laws or (in the case
of a company) a meeting to pass a resolution to go into liquidation
(otherwise than merely for the purpose of amalgamation or reconstruction)
shall be convened or if any process or execution shall be issued against
the Tenant any outstanding rent shall be immediately paid and the Landlord
may distrain for the same and no effects of the Tenant shall thereafter be
removed from the Demised Premises (save in the course of lawful execution)
but the Landlord may detain such effects to enable him to distrain the
same
(3) All notices to be given hereunder shall be in writing and the provisions
as to service of notices contained in Section 196 of the Law of Property
Act 1925 as amended by the Recorded Delivery Service Act 1962 shall be
deemed to be incorporated herein and apply to the service of all notices
hereby or by statute authorized to be served
(4) In the event of the Demised Premises or the Estate or any part thereof at
any time during the Term being damaged or destroyed by any of the Insured
Risks so as to render the Demised Premises or any part thereof unfit for
occupation and use then (save to the extent that the policy or policies of
insurance for the time being in force shall have been vitiated or the
payment of the policy monies withheld or refused due to any act negligent
or default of the Tenant or the servants, agents, licensees or invitees of
the Tenant) the First Reserved Rent and the sums payable under paragraph 1
of the Seventh Schedule hereto or a fair proportion thereof according to
the nature and extent of the damage sustained shall be suspended until the
earlier of (i) the expiration of three years from the occurrence of such
damage or (ii) the date when the Demised Premises shall again be rendered
fit for use and occupation and any dispute as to the proportion or period
of such suspension shall be referred to a single arbitrator to be agreed
by the parties or failing agreement nominated by the President (or Chief
Officer or Acting Chief Officer) for the time being of the Royal
Institution of Chartered Surveyors in accordance with the Arbitration Acts
1950 and 1979 or any statutory modification or re-enactment thereof for
the time being in force
(5) To the extent permitted by statute the Landlord shall not be responsible
to the Tenant or his servants or visitors (a) for any injury death damage
destruction or financial or consequential loss whether to person, property
or gods due directly or indirectly to the act or default of any other
permitted occupier for the time being of the Estate or (b) arising by
reason of the defective working accidental stoppage leakage or breakage of
any pipes, appliances, apparatus, machinery in or connected with or used
for the purpose of the Estate or any part thereof
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<PAGE> 28
(6) If any rents or other sums payable by the Tenant to the Landlord under
this Lease shall not be paid to the Landlord within fourteen days of the
same being due and having been demanded the Tenant shall pay to the
Landlord with any such sums (but without prejudice to all or any rights or
remedies of the Landlord hereunder) interest thereon at the Prescribed
Rate calculated on a day-to-day basis from the date the same became due
and payable down to the date of payment or reimbursement by the Tenant and
the aggregate amount for the time being so payable shall at the option of
the Landlord be recoverable by action as rent in arrear
(7) That no demand for or acceptance or receipt of any part of the First
Reserved Rent or any payment on account thereof or of any other rents
shall operate as a waiver by the Landlord of any right which the Landlord
may have to forfeit this Lease by reason of any breach of covenant by the
Tenant notwithstanding that the Landlord may know or be deemed to know of
such demand acceptance or receipt and the Tenant shall not in any
proceedings for forfeiture be entitled to rely on any such demand receipt
or acceptance as aforesaid as a defense
(8) Without prejudice to and so that the Landlord shall not derogate from or
restrict in any way the effect of its covenant given in paragraph 6 of the
Third Schedule each of the Tenant's covenants herein contained shall
remain in full force both at law and in equity notwithstanding that the
Landlord shall have waived or released temporarily or permanently
revocably or irrevocably or otherwise howsoever a similar covenant or
similar covenants affecting other premises adjoining or near the Demised
Premises for the time being belonging to the Landlord
(9) Any dispute arising between the Tenant and tenants or occupiers of
adjoining or neighboring property belonging to the Landlord about any
easement right or privilege in favor of or affecting the Demised Premises
or the premises adjoining or near the Demised Premises shall be decided by
an independent Chartered Surveyor appointed by the Landlord (whose
decision shall in the absence of manifest error be binding upon the Tenant
who shall submit to and abide by such decision)
(10) (a) The Tenant may determine this Lease on the expiry of the fifth year
of the Term ("the Determination Date") by giving to the Landlord not
more than eighteen calendar months nor less than twelve calendar
months (time to be of the essence) prior written notice of such
desire whereupon if the Tenant shall have paid all rent up to the
Determination Date (and complied with the requirement to pay the
Determination Sum in accordance with sub- paragraph (c) below) this
Lease shall cease and be void on such date but without prejudice to
the rights and remedies of the Landlord or the Tenant in respect of
any antecedent claim or breach of covenant and without prejudice to
sub-paragraphs (c) and (d) below
(b) In this Clause 10 "the Determination Sum" shall mean the amount
equal to the First Reserved Rent payable during the twelve month
period immediately prior to the Determination Date
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<PAGE> 29
(c) In the event that the Tenant shall serve on the Landlord a notice to
determine the Lease pursuant to sub-paragraph (a) above the Tenant
shall pay to the Landlord the Determination Sum as calculated by the
Landlord on the Determination Date
(d) Should this Lease be determined in accordance with this Clause 10
and the Landlord shall relet the Demised Premises within the period
of twelve months from the Determination Date ("Determination
Period") the Landlord shall return to the Tenant a proportion of the
Determination Sum calculated on the following basis:-
Amount returned = Determination Sum x B
---------------------
365
Where B is the number of days from the date upon which the demised
premises shall be relet (meaning any lease license or other
arrangement permitting occupation or use of the Demised Premises or
any part thereof whether income producing or not) until the
expiration of the Determination Period
(11) Except where any statutory provision prohibits the Tenant's right to
compensation being reduced or excluded by agreement the Tenant shall not
be entitled to claim from the Landlord on quitting the Demised Premises or
any part thereof any compensation of any kind under the Landlord and
Tenant Act 1954
THE SEVENTH SCHEDULE above referred to
Covenants by the Tenant given pursuant
to and incorporated in this Lease by
Clause 3 of this Lease
(1) To pay to the Landlord or to the Service Company as the case may be
annually and proportionately for any less period than a year a Service
Charge (hereinafter called "the Service Charge") being such proportion of
the Service Expenditure as bears to the whole thereof the same proportion
as the Relevant Area of the Demised Premises bears to the total Relevant
Area of the Estate Subject to the terms and provisions set out in this
Schedule
(2) The amount of the Service Expenditure shall be ascertained and certified
by the Accountant annually and so soon after the end of the Financial Year
as may be practicable and shall relate to such year
(3) A copy of the Certificate for the Relevant Financial Year shall be
supplied by the Landlord or the Service Company to the Tenant without
charge
(4) The Certificate shall contain a fair summary of the Service Expenditure
and shall specify a sum as the amount of the Service Charge (due credit
being given for any interim payments made by the Tenant) AND the
Certificate shall be conclusive and
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<PAGE> 30
binding on the Landlord the Service Company and the Tenant as regards all
matters of fact contained specified or certified therein save in the case
of manifest error
(5) The expression "Service Expenditure" shall be deemed to include not only
Service Expenditure actually disbursed incurred or made by the Landlord
and the Service Company during the Relevant Financial Year but also such
sum or sums on account of any other items of Service Expenditure whether
of a unique or of a periodically recurring nature and whether recurring by
regular or irregular periods and whenever disbursed incurred or made and
whether before or after the Relevant Financial Year as the Accountant may
in his or her absolute discretion (which discretion shall not be exercised
capriciously) consider it reasonable to include (whether by way of
amortization of costs expenses and outgoings already incurred or by way of
provision for anticipated future costs expenses and outgoings or
otherwise) in the amount of the Service Expenditure for the Relevant
Financial Year
(6) The Tenant shall on each of the Quarter Days falling within each Financial
Year pay to the Landlord or the Service Company payable for such Financial
Year in respect of the Demised Premises such sum (if any) as the Landlord
or the Service Company or its agents shall from time to time specify in
its or their discretion to be a fair and reasonable interim payment the
first such payment being a due proportion of such interim payment in
respect of the period from the date hereof to the Quarter Day next
following to be made within fourteen days of such date
(7) As soon as practicable after the signature of the Certificate the Landlord
or the Service Company shall furnish the same to the Tenant and upon the
furnishing of such Certificate there shall be paid by the Tenant to the
Landlord or the Service Company the Service Charge payable as aforesaid or
any balance thereof shown to be payable or credit shall be given by the
Landlord or the Service Company to the Tenant for any amount which may
have been overpaid by the Tenant by way of interim payment as the case may
require
(8) Provided Always and notwithstanding anything herein contained:
(a) if and insofar as any monies received by the Landlord or the Service
Company during any Financial Year by way of Service Charge are not
actually expended by the Landlord or the Service Company during that
Financial Year on Service Expenditure the Landlord or the Service
Company shall hold those moneys on trust to expend them in
subsequent Financial Years on Service Expenditure and subject
thereto on trust for the Tenants absolutely
(b) during such times as the said costs expenses and outgoings shall
have been incurred in respect of any part only of the Estate or for
part only of a Financial Year then the Service Expenditure shall be
calculated by reference to such notional expenditure for the whole
of the Estate for the whole of the Financial Year as shall be
certified by the Accountant to be fair and proper having regard to
the actual costs expenses and outgoings incurred in providing
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<PAGE> 31
all or any of the services herein described to a part only of the
Estate or for part only of a Financial Year as the case may be
THE EIGHTH SCHEDULE above referred to:
Regulations to be observed by the Tenant
(1) Not to park vehicles on or otherwise obstruct the Roadways or the Landscaped
Areas of the Estate nor to use the same in such a manner as will cause
inconvenience to the owners or occupiers for the time being of the Estate
(2) Not to use or permit to be used any part of the Demised Premises for the
parking of motor vehicles other than the part of the Demised Premises designated
for such purpose on the plan and on the Parking Spaces and not to permit to be
loaded or unloaded any vehicles except within the boundaries of the Demised
Premises and the Forecourt
(EXECUTED as a Deed by affixing
(THE COMMON SEAL of BIOTAGE
(UK LIMITED in the presence
(of:-
(Director /s/ C.H. Donovan
(Secretary
- 31 -
<PAGE> 1
EXHIBIT 10.13
From the Office of
THE ATHENAEUM GROUP
215 FIRST STREET
CAMBRIDGE, MA 02142
STANDARD FORM COMMERCIAL LEASE
1. PARTIES OLD KENDALL PROPERTY LLC
LESSOR, which expression shall include its heirs, successors,
and assigns where the context so admits, does hereby lease to
DYAX CORPORATION
LESSEE, which expression shall include its successors,
executors, administrators, and assigns where the context so
admits, and the LESSEE hereby leases the following described
premises:
2. PREMISES
APPROXIMATELY SIX THOUSAND THREE HUNDRED THIRTY-TWO (6,332
RSF) RENTABLE SQUARE FEET MORE OR LESS LOCATED AT SUITE 106,
BUILDING 600 AT ONE KENDALL SQUARE, CAMBRIDGE, MA AS SHOWN ON
THE ATTACHED EXHIBIT A ("LEASED PREMISES")
together with the right to use in common with others entitled
thereto, the hallways, stairways, and elevators, necessary for
access to said leased premises, and lavatories nearest
thereto.
3. TERM The term of this lease shall commence commencing on February
10, 1998 and end on December 31, 1999
4. RENT The LESSEE shall pay to the LESSOR rent at the rate of
$120,308.00 dollars per year, payable in advance in monthly
installments of $10,025.67, subject to proration in case of
any partial calendar month. All rent shall be payable without
offset or deduction.
5. SECURITY [Intentionally omitted]
DEPOSIT
6. RENT [Intentionally omitted]
ADJUSTMENT
A. TAX [Intentionally omitted]
ESCALATION
B. OPERATING [Intentionally omitted]
COST
ESCALATION
C. CONSUMER [Intentionally omitted]
PRICE
ESCALATION
<PAGE> 2
7. UTILITIES The LESSEE shall pay, as they become due, all bills for
electricity and other utilities (whether they are used for
furnishing heat or other purposes) that are furnished to the
leased premises and presently separately metered, and all
bills for fuel furnished to a separate tank servicing the
leased premises exclusively. The LESSOR agrees to provide all
other utility service and to furnish reasonably hot and cold
water and reasonable heat and air conditioning* (except to the
extent that the same are furnished through separately metered
utilities or separate fuel tanks as set forth above) to the
leased premises, the hallways, stairways, elevators, and
lavatories during normal business hours on regular business
days of the heating and air conditioning* seasons of each
year, to furnish elevator service and to light passageways and
stairways during business hours, and to furnish such cleaning
service as is customary in similar buildings in said city or
town, all subject to interruption due to any accident, to the
making of repairs, alterations, or improvements, to labor
difficulties, to trouble in obtaining fuel, electricity,
service, or supplies from the sources from which they are
usually obtained for said building, or to any cause beyond the
LESSOR's control.
LESSOR shall have no obligation to provide utilities or
equipment other than the utilities and equipment within the
premises as of the commencement date of this lease. In the
event LESSEE requires additional utilities or equipment, the
installation and maintenance thereof shall be the LESSEE's
sole obligation, provided that such installation shall be
subject to the written consent of the LESSOR.
8. USE OF The LESSEE shall use the leased premises only for the purposes
LEASED of general office.
PREMISES
9. COMPLIANCE The LESSEE acknowledges that no trade or occupation shall be
WITH LAWS conducted in the leased premises or use made thereof which
will be unlawful, improper, noisy or offensive, or contrary to
any law or any municipal by-law or ordinance in force in the
city or town in which the premises are situated. Without
limiting the generality of the foregoing (a) the LESSEE shall
not bring or permit to be brought or kept in or on the leased
premises or elsewhere on the LESSOR's property any hazardous,
toxic inflammable, combustible or explosive fluid, material,
chemical or substance, including without limitation any item
defined as hazardous pursuant to chapter 21E of the
Massachusetts General Laws; and (b) the LESSEE shall be
responsible for compliance with requirements imposed by the
Americans with Disabilities Act relative to the layout of the
leased premises and any work performed by LESSEE therein.
10. FIRE The LESSEE shall not permit any use of the leased premises
INSURANCE which will make voidable any insurance on the property of
which the leased premises are apart, or on the contents of
said property or which shall be contrary to any law or
regulation from time to time established by the New England
Fire Insurance Rating Association, or any similar body
succeeding to its powers. The LESSEE shall on demand reimburse
the LESSOR, and all other tenants, all extra insurance
premiums caused by the LESSEE's use of the premises.
11. MAINTENANCE
A. LESSEE'S OBLIGATIONS. The LESSEE agrees to maintain the leased
premises in good condition, damage by fire and other casualty only
excepted, and whenever necessary, to replace plate glass and other
glass therein, acknowledging that the leased premises are now in
good order and the glass whole. The LESSEE shall not permit the
leased premises to be overloaded, damaged, stripped, or defaced, nor
suffer any waste. LESSEE shall obtain written consent of LESSOR
before erecting any sign on the premises.
<PAGE> 3
B. LESSOR'S OBLIGATIONS. The LESSOR agrees to maintain the structure of
the building of which the leased premises are a part in the same
condition as it is at the commencement of the term or as it may be
put in during the term of this lease, reasonable wear and tear,
damage by fire and other casualty only excepted, unless such
maintenance is required because of the LESSEE or those for whose
conduct the LESSEE is legally responsible.
12. ALTERATIONS- THE LESSEE shall not make structural alterations or
ADDITIONS additions to the leased premises, but may make
non-structural alterations provided the LESSOR consents
thereto in writing, which consent shall not be
unreasonably withheld or delayed. All such allowed
alterations shall be at LESSEE'S expense and shall be in
quality at least equal to the present construction.
LESSEE shall not permit any mechanics' liens, or similar
liens, to remain upon the leased premises for labor and
material furnished to LESSEE or claimed to have been
furnished to LESSEE in connection with work of any
character performed or claimed to have been performed at
the direction of LESSEE and shall cause any such lien to
be released of record forthwith without cost to LESSOR.
Any alterations or improvements made by the LESSEE shall
become the property of the LESSOR at the terminator of
occupancy as provided herein.
13. ASSIGNMENT The LESSEE shall not assign or sublet the whole or any
SUBLEASING part of the leased premises without LESSOR'S prior
written consent. Notwithstanding such consent, LESSEE
shall remain liable to LESSOR for the payment of all
rent and for the full performance of the covenants and
conditions of this lease.
14. SUBORDIN- This lease shall be subject and subordinate to any and
ATION all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter,
a lien or liens on the property of which the leased
premises are a part and the LESSEE shall, when
requested, promptly execute and deliver such written
instruments as shall be necessary to show the
subordination of this lease to said mortgages, deeds of
trust or other such instruments in the nature of a
mortgage.
15. LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable
ACCESS times, enter to view the leased premises and may remove
placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR
should elect to do and may show the leased premises to
others, and at any time within three (3) months before
the expiration of the term, may affix to any suitable
part of the leased premises a notice for letting or
selling the leased premises or property of which the
leased premises are a part and keep the same so affixed
without hindrance or molestation.
16. INDEMNIFI- The LESSEE shall save the LESSOR harmless from all loss
CATION AND and damage occasioned by anything occurring on the leased
LIABILITY premises unless caused by the negligence or misconduct
of the LESSOR, and from all loss and damage wherever
occurring occasioned by any omission, fault, neglect or
other misconduct of the LESSEE. The removal of snow and
ice from the sidewalks bordering upon the leased
premises shall be the LESSOR'S responsibility.
17. LESSEE'S The LESSEE shall maintain with respect to the leased
LIABILITY premises and the property of which the leased premises
INSURANCE are a part comprehensive public liability insurance in
the amount of $1,000,000. with property damage insurance
in limits of $1,000,000. in responsible companies
qualified to do business in Massachusetts and in good
standing therein insuring the LESSOR as well as LESSEE
against injury to persons or damage to property as
provided. The LESSEE shall deposit with the LESSOR
certificates for such insurance at or prior to the
commencement of the term, and thereafter within thirty
(30) days prior to the expiration of any such policies.
All such insurance
<PAGE> 4
certificates shall provide that such policies shall not
be cancelled without at least ten (10) days prior
written notice to each assured named therein.
18. FIRE, Should a substantial portion of the leased premises, or of
CASUALTY- the property of which they are part, be substantially
EMINENT damaged by the fire or other casualty, or be taken by
DOMAIN eminent domain, the LESSOR may elect to terminate this
lease. When such fire, casualty, or taking renders the
leased premises substantially unsuitable for their
intended use, a just and proportionate abatement of rent
shall be made, and the LESSEE may elect to terminate this
lease if:
(a) The LESSOR fails to give written notice within thirty
(30) days of intention to restore leased premises, or
(b) The LESSOR fails to restore the leased premises to a
condition substantially suitable for their intended
use within ninety (90) days of said fire, casualty or
taking.
The LESSOR reserves, and the LESSEE grants to the LESSOR,
all rights which the LESSEE may have for damages or injury
to the leased premises for any taking by eminent domain,
except for damage to the LESSEE's fixtures, property, or
equipment.
19. DEFAULT In the event that:
AND BANK-
RUPTCY
(a) The LESSEE shall default in the payment of any
installment of rent or other sum herein specified and
such default shall continue for ten (10) days after
written notice thereof; or
(b) The LESSEE shall default in the observance or
performance of any other of the LESSEE's covenants,
agreements, or obligations hereunder and such default
shall not be corrected within thirty (30) days after
written notice thereof; or
(c) The LESSEE shall be declared bankrupt or insolvent
according to law, or, if any assignment shall be made
of LESSEE's property for the benefit of creditors,
then the LESSOR shall have the right thereafter, while
such default continues, to re-enter and take complete
possession of the leased premises, to declare the term of
this lease ended, and remove the LESSEE's effects, without
prejudice to any remedies which might be otherwise used
for arrears of rent or other default. The LESSEE shall
indemnify the LESSOR against all loss of rent and other
payments which the LESSOR may incur by reason of such
termination during the residue of the term. If the LESSEE
shall default, after reasonable notice thereof, in the
observance or performance of any conditions or covenants
on LESSEE's part to be observed or performed under or by
virtue of any of the provisions in any article of this
lease, the LESSOR, without being under any obligations to
do so and without thereby waiving such default, may remedy
such default for the account and at the expense of the
LESSEE. If the LESSOR makes any expenditures or incurs any
obligations for the payment of money in connection
therewith, including but not limited to, reasonable
attorney's fees in instituting, prosecuting or defending
any action or proceeding, such sums paid or obligations
insured, with interest at the rate of 12% per cent per
annum and costs, shall be paid to the LESSOR by the LESSEE
as additional rent.
<PAGE> 5
20. NOTICE Any notice from the LESSOR to the LESSEE relating to the
leased premises or to the occupancy thereof, shall be
deemed duly served, if left at the leased premises
addressed to the LESSEE, or if mailed to the leased
premises, registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSEE. Any
notice from the LESSEE to the LESSOR relating to the
leased premises or to the occupancy thereof, shall be
deemed duly service, if mailed to the LESSOR by registered
or certified mail, return receipt requested, postage
prepaid, addressed to the LESSOR at such address as the
LESSOR may from time to time advise in writing. All rent
notices shall be paid and sent to the LESSOR at OLD
KENDALL PROPERTY LLC, P.O. BOX 414086, BOSTON, MA
02241-4086
21. SURRENDER The LESSEE shall at the expiration or other termination of
this lease remove all LESSEE's goods and effects from the
leased premises, (including, without hereby limiting the
generality of the foregoing, all signs and lettering
affixed or painted by the LESSEE, either inside or outside
the leased premises). LESSEE shall deliver to the LESSOR
the leased premises and all keys, locks thereto, and other
fixtures connected therewith and all alterations and
additions made to or upon the leased premises, in good
condition, damage by fire or other casualty only excepted.
In the event of the LESSEE's failure to remove any of
LESSEE's property from the premises, LESSOR is hereby
authorized, without liability to LESSEE for loss or damage
thereto, and at the sole risk of LESSEE, to remove and
store any of the property at LESSEE's expense, or to
retain same under LESSOR's control or to sell at public or
private sale, without notice any or all of the property
not so removed and to apply the net proceeds of such sale
to the payment of any sum due hereunder, or to destroy
such property.
22. BROKERAGE [Intentionally omitted]
23. CONDITION Except as may be otherwise expressly set forth herein, the
OF PREMISES LESSEE shall accept the leased premises "as is" in their
condition as of the commencement of the term of this
lease, and the LESSOR shall be obligated to perform no
work whatsoever in order to prepare the leased premises
for occupancy by the LESSEE.
24. FORCE In the event that the LESSOR is prevented or delayed from
MAJEURE making any repairs or performing any other covenant
hereunder by reason of any cause reasonably beyond the
control of LESSOR, the LESSOR shall not be liable to the
LESSEE therefor nor, except as expressly otherwise
provided in case of casualty or taking, shall the LESSEE
be entitled to any abatement or reduction of rent by
reason thereof, nor shall the same give rise to a claim by
the LESSEE that such failure constitutes actual or
constructive eviction from the leased premises or any part
thereof.
25. LATE If rent or any other sum payable hereunder remains
CHARGE outstanding for a period of ten (10) days, the LESSEE
shall pay to the LESSOR a late charge equal to five
percent (5%) of the amount due for each month or portion
thereof during which the arrearage continues.
26. LIABILITY No owner of the property of which the leased premises are
OF OWNER a part shall be liable hereunder except for breaches of
the LESSOR's obligations occurring during the period of
such ownership. The obligations of the LESSOR shall be
binding upon the LESSOR'S interest in said property, but
not upon other assets of the LESSOR, and no individual
partner, agent, trustee, stockholder, officer, director,
employee or beneficiary of the LESSOR shall be personally
liable for performance of the LESSOR'S obligations
hereunder.
<PAGE> 6
27. OTHER It is also understood and agreed that
PROVISIONS (a) Any notice to LESSOR other than a rental payment shall
be sent to Old Kendall Property LLC, c/o The Athenaeum
Group, 215 First Street, Cambridge, MA 02142.
(b) The space shall be delivered in its "as is" condition,
cleaned by LESSOR prior to delivery.
(c) LESSEE shall have the right to park ten (10) cars at
the One Kendall Square Garage at Fair Market Value, as
reasonably determined by LESSOR.
(d) Prior to Lease execution, LESSEE shall deliver current
financial statements and information to LESSOR for
LESSOR's review and reasonable approval.
(e) LESSEE shall be responsible for its pro-rata share of
real estate taxes and common area maintenance (CAM)
charges, as billed by LESSOR on a monthly basis.
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals
this 20th day of February, 1998.
DYAX CORPORATION ("LESSEE") OLD KENDALL PROPERTY LLC ("LESSOR")
/s/ Henry E. Blair /s/ Allan R. Jones
- ----------------------------- ------------------------------
LESSEE LESSOR
/s/ Karen Roberts /s/ Rosalie M. Famolau
- ----------------------------- ------------------------------
WITNESS WITNESS
<PAGE> 1
EXHIBIT 10.14
CUSTOMER NO. 1101
MASTER LEASE AGREEMENT
Lessor: TRANSAMERICA BUSINESS CREDIT CORPORATION
RIVERWAY II
WEST OFFICE TOWER
WEST HIGGINS
ROSEMONT, ILLINOIS 60018
Lessee: DYAX CORP.
ONE KENDALL SQUARE
BUILDING 600, 5TH FLOOR
CAMBRIDGE, MASSACHUSETTS 02139
The lessor pursuant to this Master Lease Agreement ("Agreement") dated as of
December 30, 1997, is Transamerica Business Credit Corporation ("Lessor"). All
equipment, together with all present and future additions, parts, accessories,
attachments, substitutions, repairs, improvements, and replacements thereof or
thereto, which are the subject of a Lease (as defined in the next sentence)
shall be referred to as "Equipment." Simultaneous with the execution and
delivery of this Agreement, the parties are entering into one or more Lease
Schedules (each, a "Schedule") which refer to and incorporate by reference this
Agreement, each of which constitutes a lease (each, a "Lease") for the Equipment
specified therein. Additional details pertaining to each Lease are specified in
the applicable Schedule. Each Schedule that the parties hereafter enter into
shall constitute a Lease. Lessor has no obligation to enter into any additional
leases with, or extend any future financing to, Lessee.
1. LEASE. Subject to and upon all of the terms and conditions of this
Agreement and each Schedule, Lessor hereby agrees to lease to Lessee and Lessee
hereby agrees to lease from Lessor the Equipment for the Term (as defined in
Paragraph 2 below) thereof. The timing and financial scope of Lessor's
obligation to enter into Leases hereunder are limited as set forth in the
Commitment Letter executed by Lessor and Lessee, dated as of December 17, 1997
and attached hereto as Exhibit A (the "Commitment Letter").
2. TERM. Each Lease shall be effective and the term of each Lease
("Term") shall commence on the commencement date specified in the applicable
Schedule and, unless sooner terminated (as hereinafter provided), shall expire
at the end of the term specified in such Schedule; PROVIDED, HOWEVER, that
obligations due to be performed by Lessee during the Term shall continue until
they have been performed in full. Schedules will only be executed after the
delivery of the Equipment to the Lessee or upon completion of deliveries of
items of such Equipment with aggregate cost of not less than $50,000.
3. RENT. Lessee shall pay as rent to Lessor, for use of the Equipment
during the Term or Renewal Term (as defined in Paragraph 8), rental payments
equal to the sum of all rental payments including, without limitation, security
deposits, advance rents, and interim rents payable in the amounts and on the
dates specified in the applicable Schedule ("Rent"). If any Rent or other amount
payable by Lessee is not paid within five days after the day on which it becomes
payable, Lessee will pay on demand, as a late charge, an amount equal to 5% of
such unpaid Rent or other amount but only to
<PAGE> 2
the extent permitted by applicable law. All payments provided for herein shall
be payable to Lessor at its address specified above, or at any other place
designated by Lessor.
4. LEASE NOT CANCELABLE; LESSEE'S OBLIGATIONS ABSOLUTE. No Lease may
be canceled or terminated except as expressly provided herein. Lessee's
obligation to pay all Rent due or to become due hereunder shall be absolute and
unconditional and shall not be subject to any delay, reduction, set-off,
defense, counterclaim, or recoupment for any reason whatsoever, including any
failure of the Equipment or any representations by the manufacturer or the
vendor thereof. If the Equipment is unsatisfactory for any reason, Lessee shall
make any claim solely against the manufacturer or the vendor thereof and shall,
nevertheless, pay Lessor all Rent payable hereunder.
5. SELECTION AND USE OF EQUIPMENT. Lessee agrees that it shall be
responsible for the selection and use of, and results obtained from, the
Equipment and any other associated equipment or services.
6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN
OR CONDITION OF THE EQUIPMENT OR ITS MERCHANTABILITY, SUITABILITY, QUALITY, OR
FITNESS FOR A PARTICULAR PURPOSE, AND HEREBY DISCLAIMS ANY SUCH WARRANTY. LESSEE
SPECIFICALLY WAIVES ALL RIGHTS TO MAKE A CLAIM AGAINST LESSOR FOR BREACH OF ANY
WARRANTY WHATSOEVER. LESSEE LEASES THE EQUIPMENT"AS IS." IN NO EVENT SHALL
LESSOR HAVE ANY LIABILITY, NOR SHALL LESSEE HAVE ANY REMEDY AGAINST LESSOR, FOR
ANY LIABILITY, CLAIM, LOSS, DAMAGE, OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY BY
THE EQUIPMENT OR ANY DEFICIENCY OR DEFECT THEREOF OR THE OPERATION, MAINTENANCE,
OR REPAIR THEREOF OR ANY CONSEQUENTIAL DAMAGES AS THAT TERM IS USED IN SECTION
2-719(3) OF THE MODEL UNIFORM COMMERCIAL CODE, AS AMENDED FROM TIME TO TIME
("UCC"). Lessor grants to Lessee, for the sole purpose of prosecuting a claim,
the benefits of any and all warranties made available by the manufacturer or the
vendor of the Equipment to the extent assignable.
7. DELIVERY. Lessor hereby appoints Lessee as Lessor's agent for the
sole and limited purpose of accepting delivery of the Equipment from each vendor
thereof. Lessee shall pay any and all delivery and installation charges. Lessor
shall not be liable to Lessee for any delay in, or failure of, delivery of the
Equipment.
8. RENEWAL. So long as no Event of Default or event which, with the
giving of notice, the passage of time, or both, would constitute an Event of
Default, shall have occurred and be continuing, or the Lessee shall not have
exercised its purchase option under Paragraph 9 hereof, each Lease will
automatically renew for a term specified in the applicable Schedule (the
"Renewal Term") on the terms and conditions of this Agreement or as set forth in
such Schedule; PROVIDED, HOWEVER, that Obligations due to be performed by the
Lessee during the Renewal Term shall continue until they have been performed in
full.
9. PURCHASE OPTION. So long as no Event of Default or event which,
with the giving of notice, the passage of time, or both, would constitute an
Event of Default, shall have occurred and be continuing, Lessee may, upon
written notice to Lessor received at least one hundred eighty days before the
expiration of a Term, purchase all, but not less than all, the Equipment covered
by the applicable Lease on the date specified therefor in the applicable
Schedule ("Purchase Date"). The purchase price for such Equipment shall be its
fair market value as set forth in the applicable Schedule
- 2 -
<PAGE> 3
determined on an "In-place, In-use" basis, as mutually agreed by Lessor and
Lessee, or, if they cannot agree, as determined by an independent appraiser
selected by Lessor and approved by Lessee, which approval will not be
unreasonably delayed or withheld. Lessee shall pay the cost of any such
appraisal. So long as no Event of Default or event which, with the giving of
notice, the passage of time, or both, would constitute an Event of Default shall
have occurred and be continuing, Lessee may, upon written notice to Lessor
received at least one hundred eighty days prior to the expiration of the Renewal
Term, purchase all, but not less than all, the Equipment covered by the
applicable Schedule by the last date of the Renewal Term (the "Alternative
Purchase Date") at a purchase price equal to its then fair market value on an
"In-place, In-use" basis. On the Purchase Date or the Alternative Purchase Date,
as the case may be, for any Equipment, Lessee shall pay to Lessor the purchase
price, together with all sales and other taxes applicable to the transfer of the
Equipment and any other amount payable and arising hereunder, in immediately
available funds, whereupon Lessor shall transfer to Lessee, without recourse or
warranty of any kind, express or implied, all of Lessor's right, title, and
interest in and to such Equipment on an "As Is, Where Is" basis.
10. OWNERSHIP; INSPECTION; MARKING; FINANCING STATEMENTS. Lessee shall
affix to the Equipment any labels supplied by Lessor indicating ownership of
such Equipment. The Equipment is and shall be the sole property of Lessor.
Lessee shall have no right, title, or interest therein, except as lessee under a
Lease. The Equipment is and shall at all times be and remain personal property
and shall not become a fixture. Lessee shall obtain and record such instruments
and take such steps as may be necessary to prevent any person from acquiring any
rights in the Equipment by reason of the Equipment being claimed or deemed to be
real property. Upon request by Lessor, Lessee shall obtain and deliver to Lessor
valid and effective waivers, in recordable form, by the owners, landlords, and
mortgagees of the real property upon which the Equipment is located or
certificates of Lessee that it is the owner of such real property or that such
real property is neither leased nor mortgaged. Lessee shall make the Equipment
and its maintenance records available for inspection by Lessor at reasonable
times and upon reasonable notice. Lessee shall execute and deliver to Lessor for
filing any UCC financing statements or similar documents Lessor may reasonably
request.
11. EQUIPMENT USE. Lessee agrees that the Equipment will be operated
by competent, qualified personnel in connection with Lessee's business for the
purpose for which the Equipment was designed and in accordance with applicable
operating instructions, laws, and government regulations, and that Lessee shall
use all reasonable precautions to prevent loss or damage to the Equipment from
fire and other hazards. Lessee shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals, and consents required by federal,
state, or local laws or by any governmental body, agency, or authority in
connection with the delivery, installation, use, and operation of the Equipment.
12. MAINTENANCE. Lessee, at its sole cost and expense, shall keep the
Equipment in a suitable environment as specified by the manufacturer's
guidelines or the equivalent, shall meet all recertification requirements, and
shall maintain the Equipment in its original condition and working order,
ordinary wear and tear excepted. At the reasonable request of Lessor, Lessee
shall furnish all proof of maintenance.
13. ALTERATION; MODIFICATIONS; PARTS. Lessee may alter or modify the
Equipment only with the prior written consent of Lessor. Any alteration shall be
removed and the Equipment restored to its normal, unaltered condition at
Lessee's expense (without damaging the Equipment's originally intended function
or its value) prior to its return to Lessor. Any part installed in connection
with warranty or maintenance service or which cannot be removed in accordance
with the preceding sentence shall be the property of Lessor.
- 3 -
<PAGE> 4
14. RETURN OF EQUIPMENT. Except for Equipment that has suffered a
Casualty Loss (as defined in Paragraph 15 below) and is not required to be
repaired pursuant to Paragraph 15 below or Equipment purchased by Lessee
pursuant to Paragraph 9 above, upon the expiration of the Renewal Term of a
Lease, or upon demand by Lessor pursuant to Paragraph 22 below, Lessee shall
contact Lessor for shipping instructions and, at Lessee's own risk, immediately
return the Equipment, freight prepaid, to a location in the continental United
States specified by Lessor. At the time of such return to Lessor, the Equipment
shall (i) be in the operating order, repair, and condition as required by or
specified in the original specifications and warranties of each manufacturer and
vendor thereof, ordinary wear and tear excepted, (ii) meet all recertification
requirements, and (iii) be capable of being promptly assembled and operated by a
third party purchaser or third party lessee without further repair, replacement,
alterations, or improvements, and in accordance and compliance with any and all
statutes, laws, ordinances, rules, and regulations of any governmental authority
or any political subdivision thereof applicable to the use and operation of the
Equipment. Except as otherwise provided under Paragraph 9 hereof, at least one
hundred eighty days before the expiration of the Renewal Term, Lessee shall give
Lessor notice of its intent to return the Equipment at the end of such Renewal
Term. During the one hundred eighty-day period prior to the end of a Term or the
Renewal Term, Lessor and its prospective purchasers or lessees shall have, upon
not less than two business days' prior notice to Lessee and during normal
business hours, or at any time and without prior notice upon the occurrence and
continuance of an Event of Default, the right of access to the premises on which
the Equipment is located to inspect the Equipment, and Lessee shall cooperate in
all other respects with Lessor's remarketing of the Equipment. The provisions of
this Paragraph 14 are of the essence of the Lease, and upon application to any
court of equity having jurisdiction in the premises, Lessor shall be entitled to
a decree against Lessee requiring specific performance of the covenants of
Lessee set forth in this Paragraph 14. If Lessee fails to return the Equipment
when required, the terms and conditions of the Lease shall continue to be
applicable and Lessee shall continue to pay Rent until the Equipment is received
by Lessor.
15. CASUALTY INSURANCE; LOSS OR DAMAGE. Lessee will maintain, at its
own expense, liability and property damage insurance relating to the Equipment,
insuring against such risks as are customarily insured against on the type of
equipment leased hereunder by businesses in which Lessee is engaged in such
amounts, in such form, and with insurers satisfactory to Lessor; PROVIDED,
HOWEVER, that the amount of insurance against damage or loss shall not be less
than the greater of (a) the replacement value of the Equipment and (b) the
stipulated loss value of the Equipment specified in the applicable Schedule
("Stipulated Loss Value"). Each liability insurance policy shall provide
coverage (including, without limitation, personal injury coverage) of not less
than $1,000,000 for each occurrence, and shall name Lessor as an additional
insured; and each property damage policy shall name Lessor as sole loss payee
and all policies shall contain a clause requiring the insurer to give Lessor at
least thirty days' prior written notice of any alteration in the terms or
cancellation of the policy. Lessee shall furnish to Lessor a copy of each
insurance policy (with endorsements) or other evidence satisfactory to Lessor
that the required insurance coverage is in effect; PROVIDED, HOWEVER, Lessor
shall have no duty to ascertain the existence of or to examine the insurance
policies to advise Lessee if the insurance coverage does not comply with the
requirements of this Paragraph. If Lessee fails to insure the Equipment as
required, Lessor shall have the right but not the obligation to obtain such
insurance, and the cost of the insurance shall be for the account of Lessee due
as part of the next due Rent. Lessee consents to Lessor's release, upon its
failure to obtain appropriate insurance coverage, of any and all information
necessary to obtain insurance with respect to the Equipment or Lessor's interest
therein.
Until the Equipment is returned to and received by Lessor as provided
in Paragraph 14 above, Lessee shall bear the entire risk of the theft or
destruction of, or damage to, the Equipment including, without limitation, any
condemnation, seizure, or requisition of title or use ("Casualty Loss"). No
Casualty Loss shall relieve Lessee from its obligations to pay Rent except as
provided in clause (b)
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<PAGE> 5
below. When any Casualty Loss occurs, Lessee shall immediately notify Lessor
and, at the option of Lessor, shall promptly (a) place such Equipment in good
repair and working order; or (b) pay Lessor an amount equal to the Stipulated
Loss Value of such Equipment and all other amounts (excluding Rent) payable by
Lessee hereunder, together with a late charge on such amounts at a rate per
annum equal to the rate imputed in the Rent payments hereunder (as reasonably
determined by Lessor) from the date of the Casualty Loss through the date of
payment of such amounts, whereupon Lessor shall transfer to Lessee, without
recourse or warranty (express or implied), all of Lessor's interest, if any, in
and to such Equipment on an "AS IS, WHERE IS" basis. The proceeds of any
insurance payable with respect to the Equipment shall be applied, at the option
of Lessor, either towards (i) repair of the Equipment or (ii) payment of any of
Lessee's obligations hereunder. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make claim for, receive payment of, and execute and endorse
all documents, checks or drafts issued with respect to any Casualty Loss under
any insurance policy relating to the Equipment.
16. TAXES. Lessee shall pay when due, and indemnify and hold Lessor
harmless from, all sales, use, excise, and other taxes, charges, and fees
(including, without limitation, income, franchise, business and occupation,
gross receipts, licensing, registration, titling, personal property, stamp and
interest equalization taxes, levies, imposts, duties, charges, or withholdings
of any nature),and any fines, penalties, or interest thereon, imposed or levied
by any governmental body, agency, or tax authority upon or in connection with
the Equipment, its purchase, ownership, delivery, leasing, possession, use, or
relocation of the Equipment or otherwise in connection with the transactions
contemplated by each Lease or the Rent thereunder, excluding taxes on or
measured by the net income of Lessor. Upon request, Lessee will provide proof of
payment. Unless Lessor elects otherwise, Lessee will pay all property taxes on
the Equipment. Lessee shall timely prepare and file all reports and returns
which are required to be made with respect to any obligation of Lessee under
this Paragraph 16. Lessee shall, to the extent permitted by law, cause all
billings of such fees, taxes, levies, imposts, duties, withholdings, and
governmental charges to be made to Lessor in care of Lessee. Upon request,
Lessee will provide Lessor with copies of all such billings.
17. LESSOR'S PAYMENT. If Lessee fails to perform its obligations under
Paragraphs 15 or 16 above, or Paragraph 23 below, Lessor shall have the right to
substitute performance, in which case Lessee shall immediately reimburse Lessor
therefor.
18. GENERAL INDEMNITY. Each Lease is a net lease. Therefore, Lessee
shall indemnify Lessor and its successors and assigns against, and hold Lessor
and its successors and assigns harmless from, any and all claims, actions,
damages, obligations, liabilities, and all costs and expenses, including,
without limitation, legal fees incurred by Lessor or its successors and assigns
arising out of each Lease including, without limitation, the purchase,
ownership, delivery, lease, possession, maintenance, condition, use, or return
of the Equipment, or arising by operation of law, except that Lessee shall not
be liable for any claims, actions, damages, obligations, and costs and expenses
determined by a non-appealable, final order of a court of competent jurisdiction
to have occurred as a result of the gross negligence or willful misconduct of
Lessor or its successors and assigns. Lessee agrees that upon written notice by
Lessor of the assertion of any claim, action, damage, obligation, liability, or
lien, Lessee shall assume full responsibility for the defense thereof, provided
that Lessor's failure to give such notice shall not limit or otherwise affect
its rights hereunder. Any payment pursuant to this Paragraph (except for any
payment of Rent) shall be of such amount as shall be necessary so that, after
payment of any taxes required to be paid thereon by Lessor, including taxes on
or measured by the net income of Lessor, the balance will equal the amount due
hereunder. The provisions of this Paragraph with regard to matters arising
during a Lease shall survive the expiration or termination of such Lease.
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<PAGE> 6
19. ASSIGNMENT BY LESSEE. Lessee shall not, without the prior written
consent of Lessor, (a) assign, transfer, pledge, or otherwise dispose of any
Lease or Equipment, or any interest therein; (b) sublease or lend any Equipment
or permit it to be used by anyone other than Lessee and its employees; or (c)
move any Equipment from the location specified for it in the applicable
Schedule, except that Lessee may move Equipment to another location within the
United States provided that Lessee has delivered to Lessor (A) prior written
notice thereof and (B) duly executed financing statements and other agreements
and instruments (all in form and substance satisfactory to Lessor) necessary or,
in the opinion of the Lessor, desirable to protect Lessor's interest in such
Equipment. Notwithstanding anything to the contrary in the immediately preceding
sentence, Lessee may keep any Equipment consisting of motor vehicles or rolling
stock at any location in the United States.
20. ASSIGNMENT BY LESSOR. Lessor may assign its interest or grant a
security interest in any Lease and the Equipment individually or together, in
whole or in part. If Lessee is given written notice of any such assignment, it
shall immediately make all payments of Rent and other amounts hereunder directly
to such assignee. Each such assignee shall have all of the rights of Lessor
under each Lease assigned to it. Lessee shall not assert against any such
assignee any set-off, defense, or counterclaim that Lessee may have against
Lessor or any other person.
21. DEFAULT; NO WAIVER. Lessee or any guarantor of any or all of the
obligations of Lessee hereunder (together with Lessee, the "Lease Parties")
shall be in default under each Lease upon the occurrence of any of the following
events (each, an "Event of Default"): (a) Lessee fails to pay within two days
after notice of when due any amount required to be paid by Lessee under or in
connection with any Lease; (b) any of the Lease Parties fails to perform any
other provision under or in connection with a Lease or violates any of the
covenants or agreements of such Lease Party under or in connection with a Lease;
(c) any representation made or financial information delivered or furnished by
any of the Lease Parties under or in connection with a Lease shall prove to have
been inaccurate in any material respect when made; (d) any of the Lease Parties
makes an assignment for the benefit of creditors, whether voluntary or
involuntary, or consents to the appointment of a trustee or receiver, or if
either shall be appointed for any of the Lease Parties or for a substantial part
of its property without its consent and, in the case of any such involuntary
proceeding, such proceeding remains undismissed or unstayed for forty-five days
following the commencement thereof; (e) any petition or proceeding is filed by
or against any of the Lease Parties under any Federal or State bankruptcy or
insolvency code or similar law and, in the case of any such involuntary petition
or proceeding, such petition or proceeding remains undismissed or unstayed for
forty-five days following the filing or commencement thereof, or any of the
Lease Parties takes any action authorizing any such petition or proceeding; (f)
any of the Lease Parties fails to pay when due any indebtedness for borrowed
money or under conditional sales or installment sales contracts or similar
agreements, leases, or obligations evidenced by bonds, debentures, notes, or
other similar agreements or instruments to any creditor (including Lessor under
any other agreement) after any and all applicable cure periods therefor shall
have elapsed; (g) any judgment shall be rendered against any of the Lease
Parties which shall remain unpaid or unstayed for a period of sixty days; (h)
any of the Lease Parties shall dissolve, liquidate, wind up or cease its
business, sell or otherwise dispose of all or substantially all of its assets,
or make any material change in its lines of business; (i) any of the Lease
Parties shall amend or modify its name, unless such Lease Party delivers to
Lessor, thirty days prior to any such proposed amendment or modification,
written notice of such amendment or modification and within ten days before such
amendment or modification delivers executed financing statements (in form and
substance satisfactory to the Lessor); (j) any of the Lease Parties shall merge
or consolidate with any other entity or make any material change in its capital
structure, in each case without Lessor's prior written consent, which shall not
be unreasonably withheld; (k) any of the Lease Parties shall suffer any loss or
suspension of any material license, permit, or other right or asset necessary to
the profitable conduct of its business, fail generally to pay its debts as they
mature, or call a meeting for
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<PAGE> 7
purposes of compromising its debts; (l) any of the Lease Parties shall deny or
disaffirm its obligations hereunder or under any of the documents delivered in
connection herewith; (m) there is a change in more than 35% of the ownership of
any equity interests of any of the Lease Parties on the date hereof or more than
35% of such interests become subject to any contractual, judicial or statutory
lien, charge, security interest or encumbrance; or (n) any of the Lease Parties
suffers a material adverse change in the business, prospects, operations,
results of operations, assets, liabilities, or condition (financial or
otherwise).
22. REMEDIES. Upon the occurrence and continuation of an Event of
Default, Lessor shall have the right, in its sole discretion, to exercise any
one or more of the following remedies: (a) terminate each Lease; (b) declare any
and all Rent and other amounts then due and any and all Rent and other amounts
to become due under each Lease (collectively, the "Lease Obligations")
immediately due and payable; (c) take possession of any or all items of
Equipment, wherever located, without demand, notice, court order, or other
process of law, and without liability for entry to Lessee's premises, for damage
to Lessee's property, or otherwise; (d) demand that Lessee immediately return
any or all Equipment to Lessor in accordance with Paragraph 14 above, and, for
each day that Lessee shall fail to return any item of Equipment, Lessor may
demand an amount equal to the Rent payable for such Equipment in accordance with
Paragraph 14 above; (e) leases, sell, or otherwise dispose of the Equipment in a
commercially reasonable manner, with or without notice and on public or private
bid; (f) recover the following amounts from the Lessee (as damages, including
reimbursement of costs and expenses, liquidated for all purposes and not as a
penalty): (i) all costs and expenses of Lessor reimbursable to it hereunder,
including, without limitation, expenses of disposition of the Equipment, legal
fees, and all other amounts specified in Paragraph 23 below; (ii) an amount
equal to the sum of (A) any accrued and unpaid Rent through the later of (1) the
date of the applicable default, (2) the date that Lessor has obtained possession
of the Equipment, or (3) such other date as Lessee has made an effective tender
of possession of the Equipment to Lessor (the "Default Date") and (B) if Lessor
resells or re-lets the Equipment, Rent at the periodic rate provided for in each
Lease for the additional period that it takes Lessor to resell or re-let all of
the Equipment; (iii) the present value of all future Rent reserved in the Leases
and contracted to be paid over the unexpired Term of the Leases discounted at
five percent compound interest; (iv) the reversionary value of the Equipment as
of the expiration of the Term of the applicable Lease as set forth on the
applicable Schedule; and (v) any indebtedness for Lessee's indemnity under
Paragraph 18 above, plus a late charge at the rate specified in Paragraph 3
above, less the amount received by Lessor, if any, upon sale or re-let of the
Equipment; and (g) exercise any other right or remedy to recover damages or
enforce the terms of the Leases. Upon the occurrence and continuance of an Event
of Default or an event which with the giving of notice or the passage of time,
or both, would result in an Event of Default, Lessor shall have the right,
whether or not Lessor has made any demand or the obligations of Lessee hereunder
have matured, to appropriate and apply to the payment of the obligations of
Lessee hereunder all security deposits and other deposits (general or special,
time or demand, provisional or final) now or hereafter held by and other
indebtedness or property now or hereafter owing by Lessor to Lessee. Lessor may
pursue any other rights or remedies available at law or in equity, including,
without limitation, rights or remedies seeking damages, specific performance,
and injunctive relief. Any failure of Lessor to require strict performance by
Lessee, or any waiver by Lessor of any provision hereunder or under any
Schedule, shall not be construed as a consent or waiver of any other breach of
the same or of any other provision. Any amendment or waiver of any provision
hereof or under any Schedule or consent to any departure by Lessee herefrom or
therefrom shall be in writing and signed by Lessor.
No right or remedy is exclusive of any other provided herein or
permitted by law or equity. All such rights and remedies shall be cumulative and
may be enforced concurrently or individually from time to time.
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<PAGE> 8
23. LESSOR'S EXPENSE. Lessee shall pay Lessor on demand all costs and
expenses (including legal fees and expenses) incurred in connection with the
preparation, execution and delivery of this Agreement and any other agreements
and transactions contemplated hereby, which expenses shall not exceed $2,500
without the written consent of Lessee and all costs and expenses in protecting
and enforcing Lessor's rights and interests in each Lease and the equipment,
including, without limitation, legal, collection, and remarketing fees and
expenses incurred by Lessor in enforcing the terms, conditions, or provisions of
each Lease or upon the occurrence and continuation of an Event of Default.
24. LESSEE'S WAIVERS. To the extent permitted by applicable law,Lessee
hereby waives any and all rights and remedies conferred upon a lessee by
Sections 2A-508 through 2A-522 of the UCC. To the extent permitted by applicable
law, Lessee also hereby waives any rights now or hereafter conferred by statute
or otherwise which may require Lessor to sell, lease, or otherwise use any
Equipment in mitigation of Lessor's damages as set forth in Paragraph 22 above
or which may otherwise limit or modify any of Lessor's rights or remedies under
Paragraph 22. Any action by Lessee against Lessor for any default by Lessor
under any Lease shall be commenced within one year after any such cause of
action accrues.
25. NOTICES; ADMINISTRATION. Except as otherwise provided herein, all
notices, approvals, consents, correspondence, or other communications required
or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to Lessor, then to Transamerica Technology Finance Division,
76 Batterson Park Road, Farmington, Connecticut 06032, Attention: Assistant Vice
President, Lease Administration, with a copy to Lessor at Riverway II, West
Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018, Attention: Legal
Department, if to Lessee, then to Dyax Corp., One Kendall Square, Building 600,
5th Floor, Cambridge, Massachusetts 02319, Attention: Director of Finance, or
such other address as shall be designated by Lessee or Lessor to the other
party. All such notices and correspondence shall be effective when received.
26. REPRESENTATIONS. Lessee represents and warrants to Lessor that (a)
Lessee is duly organized, validly existing, and in good standing under the laws
of the State of its incorporation; (b) the execution, delivery, and performance
by Lessee of this Agreement are within Lessee's powers, have been duly
authorized by all necessary action, and do not and will not contravene (i)
Lessee's organizational documents or (ii) any law, regulation, rule, or
contractual restriction binding on or affecting Lessee; (c) no authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery, and
performance by Lessee of this Agreement; (d) each Lease constitutes the legal,
valid, and binding obligations of Lessee enforceable against Lessee in
accordance with its terms; (e) the cost of each item of Equipment does not
exceed the fair and usual price for such type of equipment purchased in like
quantity and reflects all discounts, rebates, and allowances for the Equipment
(including, without limitation, discounts for advertising, prompt payment,
testing, or other services) given to the Lessee by the manufacturer, supplier,
or any other person; and (f) all information supplied by Lessee to Lessor in
connection herewith is correct and does not omit any material statement
necessary to insure that the information supplied is not misleading.
27. FURTHER ASSURANCES. Lessee, upon the request of Lessor, will
execute, acknowledge, record, or file, as the case may be, such further
documents and do such further acts as may be reasonably necessary, desirable, or
proper to carry out more effectively the purposes of this Agreement. Lessee
hereby appoints Lessor as its attorney-in-fact to execute on behalf of Lessee
and authorizes Lessor to file without Lessee's signature any UCC financing
statements and amendments Lessor deems advisable.
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<PAGE> 9
28. FINANCIAL STATEMENTS. Lessee shall deliver to Lessor: (a) as soon
as available, but not later than 120 days after the end of each fiscal year of
Lessee and its consolidated subsidiaries, the consolidated balance sheet, income
statement, and statements of cash flows and shareholders equity for Lessee and
its consolidated subsidiaries (the "Financial Statements") for such year,
reported on by independent certified public accountants without an adverse
qualification; and (b) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters in any fiscal year of Lessee
and its consolidated subsidiaries, the Financial Statements for such fiscal
quarter, together with a certification duly executed by a responsible officer of
Lessee that such Financial Statements have been prepared in accordance with
generally accepted accounting principles and are fairly stated in all material
respects (subject to normal year-end audit adjustments). Lessee shall also
deliver to Lessor as soon as available copies of all press releases and other
similar communications issued by Lessee.
29. CONSENT TO JURISDICTION. Lessee irrevocably submits to the
jurisdiction of any Illinois state or federal court sitting in Illinois for any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and Lessee irrevocably agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
Illinois state or federal court.
30. WAIVER OF JURY TRIAL. LESSEE AND LESSOR IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
31. FINANCE LEASE. Lessee and Lessor agree that each Lease is a
"Finance Lease" as defined by Section 2A-103(g) of the UCC. Lessee acknowledges
that Lessee has reviewed and approved each written Supply Contract (as defined
by UCC 2A-103(y)) covering Equipment purchased from each "Supplier" (as defined
by UCC 2A-103(x)) thereof.
32. NO AGENCY. Lessee acknowledges and agrees that neither the
manufacturer or supplier, nor any salesman, representative, or other agent of
the manufacturer or supplier, is an agent of Lessor. No salesman,
representative, or agent of the manufacturer or supplier is authorized to waive
or alter any term or condition of this Agreement or any Schedule, and no
representation as to the Equipment or any other matter by the manufacturer or
supplier shall in any way affect Lessee's duty to pay Rent and perform its other
obligations as set forth in this Agreement or any Schedule.
33. SPECIAL TAX INDEMNIFICATION. Lessee acknowledges that Lessor, in
determining the Rent due hereunder, has assumed that certain tax benefits as are
provided to an owner of property under the Internal Revenue Code of 1986, as
amended (the "Code"), and under applicable state tax law, including, without
limitation, depreciation deductions under Section 168(b) of the Code, and
deductions under Section 163 of the Code in an amount at least equal to the
amount of interest paid or accrued by Lessor with respect to any indebtedness
incurred by Lessor in financing its purchase of the Equipment, are available to
Lessor as a result of the lease of the Equipment. In the event Lessor is unable
to obtain such tax benefits as a result of an act or omission of Lessee, is
required to include in income any amount other than the Rent, or is required to
recognize income in respect of the Rent earlier than anticipated pursuant to
this Agreement, Lessee shall pay Lessor additional rent ("Additional Rent") in a
lump sum in an amount needed to provide Lessor with the same after-tax yield and
after-tax cash flow as would have been realized by Lessor had Lessor (i) been
able to obtain such tax benefits, (ii) not been required to include any amount
in income other than the Rent, and (iii) not been required to recognize income
in respect of the Rent earlier than anticipated pursuant to this Agreement. The
Additional Rent shall be computed by Lessor, which computation shall be binding
on Lessee. The
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<PAGE> 10
Additional Rent shall be due immediately upon written notice by Lessor to Lessee
of Lessor's inability to obtain tax benefits, the inclusion of any amount in
income other than the Rent or the recognition of income in respect of the Rent
earlier than anticipated pursuant to this Agreement. The provision of this
Paragraph 33 shall survive the termination of this Agreement.
34. GOVERNING LAW; SEVERABILITY. EACH LEASE SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. IF ANY PROVISION SHALL BE HELD TO BE INVALID OR
UNENFORCEABLE, THE VALIDITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS SHALL
NOT IN ANY WAY BE AFFECTED OR IMPAIRED.
LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND THE SCHEDULE HERETO,
UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS. FURTHER,
LESSEE AND LESSOR AGREE THAT THIS AGREEMENT, THE SCHEDULES DELIVERED IN
CONNECTION HEREWITH FROM TIME TO TIME, AND THE COMMITMENT LETTER ARE THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES,
SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER
COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. SHOULD
THERE EXIST ANY INCONSISTENCY BETWEEN THE TERMS OF THE COMMITMENT LETTER AND
THIS AGREEMENT, THE TERMS OF THIS AGREEMENT SHALL PREVAIL.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed by their duly authorized officers as of the date
first written above.
DYAX CORP.
By: /s/ L. Edward Cannon
-------------------------------------
Name: L. Edward Cannon
Title: Executive Vice President
Federal Tax ID: 04-3053198
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: Gary P. Moro
-------------------------------------
Name: Gary P. Moro
Title: Vice President
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<PAGE> 12
[Transamerica Business Credit letterhead]
EXHIBIT A
December 17, 1997
Ms. Karen Roberts
Director of Finance
Dyax Corp.
One Kendall Square
Building 600, 5th Floor
Cambridge, MA 02139
Dear Karen:
Transamerica Business Credit Corporation - Technology Finance Division
("Lessor") is pleased to offer this commitment (this "Commitment") to lease the
equipment described below to Dyax Corp. ("Lessee"). This Commitment supersedes
all prior correspondence, commitments, and oral or other communications relating
to leasing arrangements between Lessor and Lessee.
The outline of this offer is as follows:
LESSOR: Transamerica Business Credit Corporation - Technology
Finance Division
LESSEE: Dyax Corp.
EQUIPMENT: Laboratory, production and office equipment (all equipment
subject to Lessor's approval prior to funding), including
without limitation, all additions, improvements,
replacements, repairs, appurtenances, substitutions, and
attachments thereto and all proceeds thereof ("Equipment"),
including equipment acquired during 1997.
EQUIPMENT COST: Not to exceed $3,000,000.
EQUIPMENT LOCATION: Cambridge, Massachusetts and Charlottesville, Virginia
LEASE TERM
COMMENCEMENT: Upon delivery of the Equipment or upon each completion of
deliveries of items of Equipment with aggregate cost of not
less than $50,000, but no later than December 31, 1998.
TERM: From each Lease Term Commencement until 60 months from the
first day of the month next following or coincident with
that Lease Term Commencement.
MONTHLY RENT: Monthly Rent equal to 2.09409% of Equipment Cost will be
payable monthly in advance. The first month's rent will be
due and payable in advance on or before each Lease Term
Commencement.
ADJUSTMENTS TO
<PAGE> 13
RENTAL PAYMENTS: The Lessor reserves the right to adjust the Monthly Rent
Payments as of the date of each Lease Term Commencement
proportionally to the change in the weekly average of the
interest rates of like-term U.S. Treasury Securities tracked
from September 15, 1997 (U.S. Five Year Treasury rate 6.22)
to the week preceding the date of each Lease Term
Commencement, as published in the Wall Street Journal. As of
the date of each Lease Term Commencement, the Monthly Rent
Payments will be fixed for the term. A schedule of the
actual Monthly Rent Payments will be provided by the Lessor
following each Lease Term Commencement.
INTERIM RENT: Interim Rent will accrue from each Lease Term Commencement
until the next following first day of a month (unless the
Lease Term Commencement is on the first day of a month).
Interim Rent will be at the daily equivalent of the
currently adjusted Monthly Rent Payment.
NET LEASE: The lease will be a net lease under which the Lessee will be
responsible for maintenance, insurance, taxes, and all other
costs and expenses.
TAXES: Sales or use taxes will be added to the Equipment Cost or
collected on the gross rentals, as appropriate.
INSURANCE: Prior to any delivery of Equipment, the Lessee will furnish
confirmation of insurance acceptable to the Lessor covering
the Equipment, including primary, all risk, physical damage,
property damage and bodily injury with appropriate loss
payee endorsement in favor of the Lessor.
CONDITIONS PRECEDENT
TO EACH LEASE TERM
COMMENCEMENT: 1. No material adverse change in the financial condition,
operation or prospects of the Lessee prior to funding.
The Lessor reserves the right to rescind any unused
portion of its commitment in the event of a material
adverse change in the financial condition, operation or
prospects of the Lessee.
2. Completion of the documentation and final terms of the
proposed financing satisfactory to Lessor and Lessor's
counsel.
3. Results of all due diligence, including lien, judgment
and tax searches, and other matters Lessor may
reasonably request shall be satisfactory to Lessor and
Lessor's counsel.
4. Receipt by Lessor of duly executed Lease documentation
in form and substance satisfactory to Lessor and its
counsel.
5. Lessor shall receive title and a valid and perfected
first priority lien and security interest in all
Equipment acquired through the use of this Commitment
and Lessor shall have received satisfactory evidence
that there are no liens on any Equipment except as
expressly permitted herein.
PURCHASE OPTION: The Lessee will have the option to purchase all (but not
less than all) the Equipment at the expiration of the term
of the lease for the then current Fair Market Value of the
Equipment, plus applicable sales and other taxes. It will be
agreed that Fair Market Value will be ten percent (10%) of
original Equipment Cost.
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<PAGE> 14
AUTOMATIC RENEWAL: In the event the Lessee does not exercise the Purchase
Option described above, the lease will automatically renew
for a term of one year with Monthly Rentals equal to 1.0% of
Equipment Cost payable monthly in advance. At the expiration
of the renewal period, the Lessee will have the option to
purchase all (but not less than all) the Equipment for its
then current Fair Market Value, plus applicable sales and
other taxes. It will be agreed that the Fair Market Value
will not exceed five percent (5%).
ADDITIONAL
COVENANTS: There will be no actual or threatened conflict with, or
violation of, any regulatory statute, standard or rule
relating to the Lessee, its present or future operations, or
the Equipment.
Lessee will be required to provide quarterly financial
information. All information supplied by the Lessee will be
correct and will not omit any statement necessary to make
the information supplied not be misleading. There will be no
material breach of the representations and warranties of the
Lessee in the lease. The representations will include that
the Equipment Cost of each item of the Equipment does not
exceed the fair and usual price for like quantity purchased
of such item and reflects all discounts, rebates and
allowances for the Equipment given to Lessee or any
affiliate of Lessee by the manufacturer, supplier or anyone
else including, without limitation, discounts for
advertising, prompt payment, testing or other services.
There will be no financial ratio covenants.
FEES AND EXPENSES: The Lessee will be responsible for the Lessor's reasonable
expenses in connection with the transaction. Said fees and
expenses will not exceed $2,500 without consent of Lessee.
LAW: This letter and the proposed Lease are intended to be
governed by and construed in accordance with Illinois law
without regard to its conflict of law provisions.
INDEMNITY: Lessee agrees to indemnify and to hold harmless Lessor, and
its officers, directors and employees against all claims,
damages, liabilities and expenses which may be incurred by
or asserted against any such person in connection with or
arising out of this letter and the transactions contemplated
hereby, other than claims, damages, liability, and expense
resulting from such person's gross negligence or willful
misconduct.
CONFIDENTIALITY: This letter is delivered to you with the understanding that
neither it nor its substance shall be disclosed publicly or
privately to any third person except those who are in a
confidential relationship to you (such as your legal counsel
and accountants), or where the same is required by law and
then only on the basis that it not be further disclosed,
which conditions Lessee and its agents agree to be bound by
upon acceptance of this letter.
Without limiting the generality of the foregoing, none of
such persons shall use or refer to Lessor or to any
affiliate name in any disclosures made in connection with
any of the transactions without Lessor's prior written
consent.
- 3 -
<PAGE> 15
Upon completion of the initial takedown by Lessor and
Lessee, the Lessee will no longer be required to obtain
Lessor's prior written consent to disclose the transaction
contemplated hereby. In addition, the Lessee agrees to
provide camera ready artwork of typestyles and logos of the
Lessee for use in promotional material by the Lessor.
CONDITIONS OF
ACCEPTANCE: This Commitment Letter is intended to be a summary of the
most important elements of the agreement to enter into a
leasing transaction with Lessee, and it is subject to all
requirements and conditions contained in Lease documentation
proposed by Lessor or its counsel in the course of closing
the Lease described herein. Not every provision that imposes
duties, obligations, burdens, or limitations on Lessee is
contained herein, but shall be contained in the final Lease
documentation satisfactory to Lessor and its counsel.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS
LETTER OR THE TRANSACTION DESCRIBED IN THIS LETTER.
APPLICATION FEE: The $20,000 Application Fee previously paid by Lessee shall
be first applied to the costs and expenses of the Lessor in
connection with the transaction (not to exceed $2,500
without the consent of the Lessee), and any remainder shall
be applied pro rata to the second month's rent due under
each Lease Schedule.
COMMITMENT
EXPIRATION: This commitment shall expire on December 23, 1997 unless
prior thereto either extended in writing by the Lessor or
accepted as provided below by the Lessee.
- 4 -
<PAGE> 16
Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed duplicate
copy of this letter to me by December 23, 1997.
Yours truly,
TRANSAMERICA BUSINESS CREDIT CORP.
TECHNOLOGY FINANCE DIVISION
By: /s/ Gerald A. Michaud
-------------------------------------
Gerald A. Michaud
Senior Vice President - Marketing
Accepted this 19th day of December, 1997
DYAX CORPORATION
By: /s/ Karen Roberts
- ------------------------------------
- 5 -
<PAGE> 17
SCHEDULE A
Equipment Locations:
1500 Avon Street Ext.
Charlottesville, Virginia 22902
One Kendall Square
Building 600, 5th Floor
Cambridge, Massachusetts 02139
<PAGE> 18
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of December 30, 1997
Schedule No. 1
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transmerica Business Credit Corporation Dyax Corp.
Riverway II One Kendall Square
West Office Tower Building 600, 5th Floor
9399 West Higgins Road Cambridge, Massachusetts 02139
Rosemont, Illinois 60018
Equipment Location (if different from above):
This Schedule covers the following described equipment ("Equipment"):
See Exhibit II attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated December 30, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions, and modifications. The
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated December 17, 1997, if the Lessor has not received this
Schedule and an Acceptance and Delivery Certificate executed by the Lessee
within five business days from the date first set forth above.
<TABLE>
<S> <C> <C>
1. Term (Number of Months) 60 months
2. Equipment Cost $ 325,518.51
3. Commencement Date December 30, 1997
4. Rate Factor 2.09409% of Equipment Cost
5. Total Rents $408,999.03
Total sales/use tax $ 20,449.95 $ 429,448.98
6. Advance Rents (first) $ 6,816.65
Sales/use tax for advance rent $ 340.83 $ 7,157.48
7. Monthly rental payments $ 6,816.65
Monthly sales/use tax $ 340.83 $ 7,157.48
and the second such rental payment
will be due on and subsequent rental February 1, 1998
payments will be due on the same day
of each month thereafter
8. Security Deposit NONE
</TABLE>
<PAGE> 19
<TABLE>
<S> <C>
9. In addition to the monthly rental
payments provided for herein, Lessee
shall pay to Lessor, as interim rent,
payable on the commencement date
specified above, an amount equal to
1/30th of the monthly rental payment
(including monthly sales/use tax)
multiplied by the number of days from
and including the commencement date
through the end of the same calendar
month. $ 477.17
</TABLE>
Renewal terms:
In the event the Lease does not exercise the Purchase Option described below,
the Lease shall automatically renew for a term of 12 months with Monthly Rental
equal to 1% of the original Equipment Cost payable in monthly in advance. At the
expiration of the renewal period, the Lessee shall have the option to purchase
all (but not less than all) the Equipment for its then current Fair Market
Value, plus applicable and other taxes. It is agreed that the Fair Market Value
at the end of the renewal period shall not exceed 5% of Equipment Cost.
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Lessee shall have the option to purchase all (but not less than all) the
Equipment at the expiration of the term of the lease for the then Fair Market
Value of the Equipment, plus applicable sales and other taxes. It is agreed that
the Fair Market Value will be 10% of the Equipment Cost. The Purchase Date shall
be December 31, 2002.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 5% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
TRANSAMERICA BUSINESS CREDIT DYAX CORP.
CORPORATION (Lessee)
(Lessor)
By: /s/ Gary P. Moro By: /s/ L. E. Cannon
-------------------------------- --------------------------------
Title: Vice President Title: Executive Vice President
----------------------------- -----------------------------
<PAGE> 20
EXHIBIT II
To
Schedule No. 1
To:
X Schedule to Master Lease Agreement X Sale and Leaseback Agreement
X UCC X Bill of Sale
__ Collateral Access Agreement __
Dated as of December 30, 1997,
Between
TRANSAMERICA BUSINESS CREDIT CORPORATION
And DYAX CORPORATION
Equipment Locations: One Kendall Square
Cambridge, MA
<TABLE>
====================================================================================================================================
<CAPTION>
QTY EQUIPMENT INVOICE SERIAL SUPPLIER/ PURCH. DATE EQUIPMENT
DESCRIPTION NO. NO. VENDOR COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5 Micron Millenia 1368162 Micron 5/2/97
LXA Desktop Electronics
Computers and
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 17" Monitor 1368162 Micron 5/2/97
Electronics
- ------------------------------------------------------------------------------------------------------------------------------------
Total Invoice $ 9,299.50
- ------------------------------------------------------------------------------------------------------------------------------------
2 Micron 1422676 Micron 5/2/97 $ 8,954.70
Transport Electronics
Notebook
Computers
- ------------------------------------------------------------------------------------------------------------------------------------
1 Geneamp PCR 852335 N19460 Perkin Elmer 2/17/97 $ 10,110.01
System 9600
- ------------------------------------------------------------------------------------------------------------------------------------
1 PE Applied 839951 PE Applied 5/27/97 $ 55,378.00
Biosystems Biosystems
Model 310
Genetic Analyser
- ------------------------------------------------------------------------------------------------------------------------------------
1 Micron Millenia 1712483 Micron 8/29/97 $ 2,793.35
MME 200 Electronics
Desktop
Computer
- ------------------------------------------------------------------------------------------------------------------------------------
2 Bio-Tek 183711 90577 Bio-Tek 7/16/97 $ 3,020.47
Instruments Instruments,
EL403B Robotic Inc.
System
- ------------------------------------------------------------------------------------------------------------------------------------
1 Bio-Tek 183706 128827 Bio-Tek 7/16/97 $ 1,950.00
Instruments Instruments,
Combo Pressure Inc.
Vacuum system
</TABLE>
<PAGE> 21
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 DSA Firewall-2 1 Decision- 4/1/97 $ 7,182.00
VPN 2.1 Science
Applications,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
4 Impact-2 8 67335 00713571, Matrix 11/10/97 $ 4,701.72
Challen 1250ul 00713577, Technologies
Pipe 00713575, Corp
00713578
- ------------------------------------------------------------------------------------------------------------------------------------
1 Beckman TL-45 305062CL01 940-801 Beckman 1/27/97 $ 2,786.93
Rotor Assy. Instruments
2 Tubes
- ------------------------------------------------------------------------------------------------------------------------------------
1 Sorvall RC-5C 0220217182 9700232 Sorvall, Inc. 2/27/97
Plus Centrifuge
- ------------------------------------------------------------------------------------------------------------------------------------
2 Rotor, SLA 0220217182 9750858, Sorvall, Inc. 2/27/97
1500 9750874
- ------------------------------------------------------------------------------------------------------------------------------------
2 SS34 Superspeed 0220217182 9700222, Sorvall, Inc. 2/27/97
Rotor 9613255
- ------------------------------------------------------------------------------------------------------------------------------------
Total Invoice $ 27,723.50
- ------------------------------------------------------------------------------------------------------------------------------------
Various Office furniture 725594, OfficeEnviron- Various $ 46,929.55
728809, ments of New
740565, England
733679,
739494,
730207
- ------------------------------------------------------------------------------------------------------------------------------------
1 Buchi RE 111 6299 American 10/20/97 $ 1,688.78
w/bath std. gl Instrument
EVAP Exchange
- ------------------------------------------------------------------------------------------------------------------------------------
1 Heat stir plate, American 10/03/97 $ 3,010.00
(2) watson Instrument
marlow pumps, Exchange
(2) Millipore
Chart recorders,
K&Z Chart
recorder
- ------------------------------------------------------------------------------------------------------------------------------------
1 JEOL JNM- 92259, JEOL USA, 9/09/97, $139,990.00
LA300 300 Mhz 56804 Inc. 10/23/97
NMR system
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total $325,518.51
====================================================================================================================================
</TABLE>
Transamerica Business Credit Dyax Corporation
Corporation (Lessee)
(Lessor)
By: Gary P. Moro By: /s/ L. E. Cannon
-------------------------------- -----------------------------
Title: Vice President Title: Executive Vice President
----------------------------- ---------------------------
<PAGE> 22
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of December 30, 1997
Schedule No. 2
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Corporation Dyax Corp.
Riverway II One Kendall Square
West Office Tower Building 600, 5th Floor
9399 West Higgins Road Cambridge, Massachusetts 02139
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
1500 Avon Street Ext.
Charlottesville, VA 22902
This Schedule covers the following described equipment ("Equipment"):
See Exhibit II attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated December 30, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions, and modifications. The
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated December 17, 1997, if the Lessor has not received this
Schedule and an Acceptance and Delivery Certificate executed by the Lessee
within five business days from the date first set forth above.
<TABLE>
<S> <C> <C>
1. Term (Number of Months) 60 months
2. Equipment Cost $120,135.84
3. Commencement Date December 30, 1997
4. Rate Factor 2.09409% of Equipment Cost
5. Total Rents $151,073.32
Total sales/use tax $ 6,798.30 $157,871.62
6. Advance Rents (first) $ 2,515.75
Sales/use tax for advance rent $ 113.21 $ 2,628.96
7. Monthly rental payments $ 2,515.75
Monthly sales/use tax $ 113.21 $ 2,628.96
and the second such rental payment
will be due on and subsequent rental February 1, 1998
payments will be due on the same day
of each month thereafter
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
8. Security Deposit N/A
9. In addition to the monthly rental
payments provided for herein, Lessee
shall pay to Lessor, as interim rent,
payable on the commencement date
specified above, an amount equal to
1/30th of the monthly rental payment
(including monthly sales/use tax)
multiplied by the number of days from
and including the commencement date
through the end of the same calendar
month. $ 175.26
</TABLE>
Renewal terms:
In the event the Lease does not exercise the Purchase Option described below,
the Lease shall automatically renew for a term of 12 months with Monthly Rental
equal to 1% of the original Equipment Cost payable in monthly in advance. At the
expiration of the renewal period, the Lessee shall have the option to purchase
all (but not less than all) the Equipment for its then current Fair Market
Value, plus applicable and other taxes. It is agreed that the Fair Market Value
at the end of the renewal period shall not exceed 5% of Equipment Cost.
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Lessee shall have the option to purchase all (but not less than all) the
Equipment at the expiration of the term of the lease for the then Fair Market
Value of the Equipment, plus applicable sales and other taxes. It is agreed that
the Fair Market Value will be 10% of the Equipment Cost. The Purchase Date shall
be December 31, 2002.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 5% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
TRANSAMERICA BUSINESS CREDIT DYAX CORP.
CORPORATION (Lessee)
(Lessor)
By: /s/ Gary P. Moro By: /s/ L. E. Cannon
---------------------------------- ----------------------------------
Title: Vice President Title: Executive Vice President
------------------------------- -------------------------------
<PAGE> 24
EXHIBIT II
To
Schedule No. 2
To:
X Schedule to Master Lease Agreement X Sale and Leaseback Agreement
X UCC X Bill of Sale
__ Collateral Access Agreement __ Option of Counsel
Dated as of December 30, 1997
Between
TRANSAMERICA BUSINESS CREDIT CORPORATION
And DYAX CORPORATION
Equipment Locations: 1500 Avon Street Ext.
Charlottesville, VA 22902
<TABLE>
====================================================================================================================================
<CAPTION>
QTY EQUIPMENT INVOICE SERIAL NO. SUPPLIER/ PURCH. EQUIPMENT
DESCRIPTION NO. VENDOR DATE COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 8101 analog Ath Inc. 7/4/97 $ 204.00
telephones
- ------------------------------------------------------------------------------------------------------------------------------------
1 Coulter 100Q 190795 UU AA16275 Coulter 10/29/97 $ 35,054.53
Optical Bench Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
1 DEH1963 Super A2063386 Data Comm 5/06/97 $ 1,010.45
stack II 24 Port hub Warehouse
with coax module
- ------------------------------------------------------------------------------------------------------------------------------------
2 Dell Dimension XPS 120817408 B1WLQ Dell Direct 8/14/97 $ 4,524.00
233 Mhz pentium B1WLY Sales L.P.
processor and
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Dimension 111519021 95KCY Dell Direct 5/13/97 $ 2,978.00
Pentium Pro200n Sales L.P.
Minitower and
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Latitude 128020062 BCG87 Dell Direct 10/20/97 $ 3,007.00
Notebook computer Sales L.P.
with accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Dimension 200v 103950887 8GM9R Dell Direct 2/25/97 $ 3,320.80
Mini Tower and Sales L.P.
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Latitude Xpi 101855039 82MY4 Dell Direct 2/26/97 $ 5,233.00
CD laptop computer Sales L.P.
and acc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 25
<TABLE>
====================================================================================================================================
<CAPTION>
QTY EQUIPMENT INVOICE SERIAL NO. SUPPLIER/ PURCH. EQUIPMENT
DESCRIPTION NO. VENDOR DATE COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 Dell Dimension 133v 102390739 8BTDX, Dell Direct 2/10/97 $ 4,014.00
minitowers and 8BTFI Sales L.P.
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Latitude Xpi 101939221 7Y8HO Dell Direct 2/07/97 $ 3,904.00
133 Mhz laptop Sales L.P.
computer with
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Dimension XPS 120816830 B4X84 Dell Direct 8/18/97 $ 2,545.00
M233 Mhz Pentium Sales L.P.
processor minitower
and acc.
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Dimension XPS 119069029 9VT7B Dell Direct 7/28/97 $ 3,237.00
H233 Mhz minitower Sales L.P.
and acc
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell P133/GsM and 106274459 8MDP8 Dell Direct 3/31/97 $ 1,751.00
accessories Sales L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Dimension 113561153 9B01F Dell Direct 6/03/97 $ 3,172.00
Pentium Pro200n Sales L.P.
minitower and acc.
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Latitude LM 112641261 8WGKC Dell Direct 6/10/97 $ 4,836.00
M166MMX Sales L.P.
notebook computer
and acc.
- ------------------------------------------------------------------------------------------------------------------------------------
3 Dell Dimension 108903634 90DXL, Dell Direct 4/23/97 $ 9,135.00
Pentium Pro2000n 90DXQ, Sales L.P.
minitowers and 90DXX
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Latitude LM 107809568 84MCV Dell Direct 4/01/97 $ 4,291.29
P133 Mhz notebook Sales L.P.
and acc. including 108353020
MS office pro
bookshelf
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dell Latitude P133 62XNK Patrick 5/27/97 $ 4,302.00
Mhz laptop and Coffey
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
1 Office printer Edward 3/5/97 $ 610.74
Stefanczyk
- ------------------------------------------------------------------------------------------------------------------------------------
1 Dielectric tester 153797 E.I.L. 6/23/97 $ 2,604.00
system with Instruments
calibration and Transcat
ground leakage tester
- ------------------------------------------------------------------------------------------------------------------------------------
1 Wire cabling Ath, Inc. 7/4/97 $ 348.77
- ------------------------------------------------------------------------------------------------------------------------------------
1 STA 120A6 supplies 2120150-01 Industrial 3/06/97 $ 243.40
Supply Co.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 26
<TABLE>
====================================================================================================================================
<CAPTION>
QTY EQUIPMENT INVOICE SERIAL NO. SUPPLIER/ PURCH. EQUIPMENT
DESCRIPTION NO. VENDOR DATE COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 STA 36x48 surplate 2120150-02 Industrial 3/14/97 $ 1,900.60
and statstand Supply Co.
- ------------------------------------------------------------------------------------------------------------------------------------
1 Digimatic Height 3022923-01 James 3/21/97 $ 3,991.88
gage with Touch McGraw, Inc.
Probe
- ------------------------------------------------------------------------------------------------------------------------------------
1 6' Compact tabletop A 59970 Photoworks 3/18/97 $ 1,677.50
system of Virginia,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
1 each Used desk, used 21738 S&W Office 4/18/97 $ 467.11
utility table, used Products, Inc.
steno chair
- ------------------------------------------------------------------------------------------------------------------------------------
1 each Used desk, used 22001 S&W Office 6/22/97 $ 363.66
chair Products, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
1 3Com etherlink III A3316726 inmac 6/9/97 $ 559.24
and 2 etherlink Enet
PCMCIA cards with
cable
- ------------------------------------------------------------------------------------------------------------------------------------
2 etherlink III B A3579570 inmac 6/16/97 $ 979.90
combo ISA card
- ------------------------------------------------------------------------------------------------------------------------------------
1 Chromatogram 9790915-04 960729-12- Scientific 9/15/97 $ 2,638.48
system validation 412 Software, Inc.
package
- ------------------------------------------------------------------------------------------------------------------------------------
1 AMS A-100 Auger 100658-1 AMS Filling 10/01/97 $ 5,260.00
filler Systems, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
1 2MB module for -87803 Entre 10/14/97 $ 648.00
laser jet printer and Computer
print server Center
- ------------------------------------------------------------------------------------------------------------------------------------
1 Laserjet 6PXT -87643 USCD012958 Entre 10/06/97 $ 769.00
printer Computer
Center
- ------------------------------------------------------------------------------------------------------------------------------------
1 Workbench with 4374613 McCaster- 3/04/97 $ 554.49
flared leg and fixed Carr Supply
height Co.
- ------------------------------------------------------------------------------------------------------------------------------------
Total $120,135.84
Invoices
====================================================================================================================================
</TABLE>
Transamerica Business Credit Dyax Corporation
Corporation (Lessee)
(Lessor)
By: /s/ Gary P. Moro By: /s/ L. E. Cannon
---------------------------------- ---------------------------------
Title: Vice President Title: Executive Vice President
------------------------------- ------------------------------
<PAGE> 1
Exhibit 10.15
SALE AND LEASEBACK AGREEMENT
THIS SALE AND LEASEBACK AGREEMENT (this "Agreement") is made as of December
30, 1997, among Dyax Corp., a Delaware corporation ("Seller"), and Transamerica
Business Credit Corporation, a Delaware Corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the owner of the equipment more particularly described
on Exhibit II hereto (the "Equipment");
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the Equipment; and
WHEREAS, Buyer, as a condition to such purchase, wishes to lease to Seller
and Seller wishes to lease from Buyer the Equipment under the terms and
conditions of the Master Lease Agreement dated as of December 30, 1997 and
Schedule No. 1 thereto (collectively, as amended, supplemented or otherwise
modified from time to time, the "Lease") between Buyer, as lessor, and Seller,
as lessee.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. AMOUNT AND TERMS OF PURCHASE.
(a) Subject to the terms and conditions of this Agreement, and in
reliance upon the representations and warranties of the Seller herein set forth,
the Buyer agrees to purchase all of the Sellers' right, title and interest in
and to all of the Equipment such that the Buyer will become the owner of all
such Equipment for all purposes whatsoever. The Seller hereby agrees that the
Buyer is under no obligation to purchase any other equipment now or in the
future and shall not assert a claim that the Buyer may have any such obligation.
(b) The price to be paid by the Buyer with respect to the purchase of
the Equipment (the "Purchase Price") is $_______. The Purchase Price shall be
payable to the Seller on the Lease Commencement Date (as defined in the Lease).
(c) The Seller shall pay any and all applicable federal, state, county
or local taxes and any and all present or future taxes or other governmental
charges arising in connection with the sale of the Equipment hereunder,
including sales, use or occupation taxes due upon the purchase by the Buyer.
(d) The purchase of the Equipment shall be evidenced by a bill of
sale, substantially in the form attached hereto as Exhibit A (the "Bill of
Sale"), duly executed by the Seller.
<PAGE> 2
2. CONDITIONS TO PURCHASE. The obligation of the Buyer to purchase the
Equipment is subject to the following conditions:
(a) The Buyer shall have received this Agreement, duly executed by the
Seller.
(b) The Buyer shall have received the Bill of Sale, duly executed by
the Seller.
(c) The Buyer shall have received the Lease, duly executed by the
Seller.
(d) The Buyer shall have received resolutions of the Board of
Directors of the Seller approving and authorizing the execution, delivery and
performance by the Seller of this Agreement, the Lease and the notices and other
documents to be delivered by the Seller hereunder and thereunder (collectively,
the "Sale and Leaseback Documents").
(e) The Buyer shall have received the certificate of title or similar
evidence of ownership with respect to each item of Equipment and Uniform
Commercial Code financing statements covering the Equipment in form and
substance satisfactory to the Buyer, duly executed by the Seller.
(f) No material adverse change has occurred with respect to the
business, prospects, properties, results of operations, assets, liabilities or
condition (financial or otherwise) of the Seller and its affiliates, taken as a
whole, since December 31, 1996.
(g) The Buyer shall have received all warranties and other
documentation received or executed by Seller in connection with the original
acquisition of the Equipment by the Seller (and by its execution hereof, the
Seller hereby assigns to the Buyer all such warranties and other Documentation).
(h) The Buyer shall have received an opinion of Seller's counsel,
substantially in the form attached hereto as Exhibit B.
(i) The Buyer shall have received such other approvals, opinions or
documents as the Buyer may reasonably request.
3. REPRESENTATIONS AND WARRANTIES. To induce the Buyer to enter into this
Agreement, the Seller represents and warrants to the Buyer that:
(a) The Seller is duly authorized to execute, deliver and perform its
obligations under each of the Sale and Leaseback Documents and all corporate
action required on its part for the due execution, delivery and performance of
the transactions contemplated herein and therein has been duly and effectively
taken.
(b) The execution, delivery and performance by the Seller of each of
the Sale and Leaseback Documents and the consummation of the transactions
contemplated herein and therein does not and will not violate any provision of,
or result in a default under, the Seller's Articles or Certificates of
Incorporation or By-laws or any indenture or agreement to which the Seller is a
party or to which its assets are bound or any order, permit, law, statute, code,
-2-
<PAGE> 3
ordinance, rule, regulation, certificate or any other requirement of any
governmental authority or regulatory body to which the Seller is subject, or
result in the creation or imposition of any mortgage, deed of trust, pledge,
security interest, lien or encumbrance of any kind upon or with respect to the
Equipment or any proceeds thereof, other than those in favor of the Buyer as
contemplated by the Sale and Leaseback Documents.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Seller of any of the Sale and
Leaseback Documents to which it is a party.
(d) Each Sale and Leaseback Document to which the Seller is a party
constitutes or will constitute, when delivered hereunder, the legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its respective terms, except as such enforceability may be (i) limited by
the effect of applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally or (ii) subject to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law).
(e) There are no actions, suits or proceedings pending, threatened
against or affecting the Seller which seek to enjoin, prohibit or restrain the
consummation of any of the transactions contemplated hereby or by the other Sale
and Leaseback Documents.
(f) Each item of Equipment is owned by the Seller free and clear of
any liens and encumbrances of any kind or description. Upon purchase of the
Equipment hereunder, the Buyer will acquire good and marketable title in and to
the Equipment.
All representations and warranties herein shall survive the execution of this
Agreement and the purchase of the Equipment.
4. INDEMNITIES. The Seller agrees to indemnify, defend and save harmless
the Buyer and its officers, directors, employees, agents and attorneys, and each
of them (the "Indemnified Parties"), from and against all claims, actions, suits
and other legal proceedings, damages, costs, interest, charges, counsel fees and
other expenses and penalties (collectively, the "Indemnified Amounts") which any
of the Indemnified Parties may sustain or incur by reason of or arising out of
(i) the Seller's ownership of any Equipment prior to the date on which such
Equipment is sold to the Buyer, or the Seller's acts or omissions prior to such
date under, in connection with or relating to such Equipment or any of the Sale
and Leaseback Documents, (ii) the operation, maintenance or use of such
Equipment prior to such date, (iii) the accuracy of any of the Seller's
representations or warranties contained in any of the Sale and Leaseback
documents, (iv) the breach of any of the Seller's covenants contained in any of
the Sale and Leaseback Documents, (v) any loss or damage to any Equipment in
excess of the deductible which is not paid by insurance or (vi) any sales, use,
excise and other taxes, charges and fees (including, without limitation, income,
franchise, business and occupation, gross receipts, sales, use, licensing,
registration, titling, personal property, stamp and interest equalization taxes,
levies, imposts, duties, charges or withholdings of any nature), and any fines,
penalties or interest thereon, imposed or levied by any governmental body,
agency or tax authority upon or
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in connection with the Equipment, its acquisition, ownership, delivery, leasing,
possession, use or relocation or otherwise in connection with the transactions
contemplated by each Sale and Leaseback Document.
5. REMEDIES. Upon the Sellers' violation of or default under any
provision of this Agreement, the Buyer may (subject to the provisions of the
other Sale and Leaseback Documents) proceed to protect and enforce its rights
either by suit in equity or by action at law or both, whether for the specific
performance of any covenant or agreement contained herein or in aid of the
exercise of any power granted in any Sale and Leaseback Document; it being
intended that the remedies contained in any Sale and Leaseback Document shall be
cumulative and shall be in addition to every other remedy given under such Sale
and Leaseback Document or now or hereafter existing at law or in equity or by
statute or otherwise.
6. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement, nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Buyer, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
7. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing and sent:
if to the Seller, at its address at:
Dyax Corp.
One Kendall Square
Building 600, 5th Floor
Cambridge, Massachusetts 02139
Attention: Director of Finance
Telephone No.: 617-225-2500
Telecopy No.: 617-225-2501
if to the Buyer, at its address at:
Transamerica Business Credit Corporation
Technology Finance Division
76 Batterson Park Road
Farmington, Connecticut 06032-2571
Attention: Assistant Vice President, Lease Administration
Telephone No.: 860-677-6466
Telecopy No.: 860-677-6766
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with a copy to:
Transamerica Business Credit Corporation
9399 West Higgins Road
Rosemont, Illinois 60018
Attention: Legal Department
Telephone No.: 847-685-1106
Telecopy No.: 847-685-1143
or to such other address as shall be designated by such party in a written
notice to the other party. All such notices shall be deemed given (i) if sent by
certified or registered mail, three days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused and (iii) if sent by facsimile transmission, when receipt of
such transmission is acknowledged.
8. NO WAIVER; REMEDIES. No failure on the part of the Buyer to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
9. BENEFIT. Without the prior written consent of the Buyer, the Seller
may not transfer, assign or delegate any of its rights, duties or obligations
hereunder.
10. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Seller and the Buyer and their respective successors and assigns.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original and all of
which taken together shall constitute one and the same agreement.
13. SEVERABILITY. If one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein, and any other application thereof, shall not in any way be affected or
impaired thereby.
14. SUBMISSION TO JURISDICTION. ALL DISPUTES ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT THE BUYER SHALL HAVE THE RIGHT, TO THE EXTENT
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<PAGE> 6
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE SELLER OR ITS PROPERTY IN
ANY LOCATION REASONABLY SELECTED BY THE BUYER IN GOOD FAITH TO ENABLE THE BUYER
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE BUYER. EACH PARTY AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE BUYER;
IT BEING UNDERSTOOD THAT THIS SENTENCE DOES NOT PRECLUDE THE SELLER FROM
ASSERTING COMPULSORY COUNTERCLAIMS. THE SELLER WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE BUYER HAS COMMENCED A PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
FORUM NON CONVENIENS.
15. JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE TO THE FULLEST EXTENT
PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.
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<PAGE> 1
EXHIBIT 10.16
LICENSE AGREEMENT
(Therapeutic Field)
THIS LICENSE AGREEMENT (this "Agreement"), effective as of _________
__, 1998 the "Effective Date"), is between DYAX CORP., a Delaware corporation,
having a principal place of business at One Kendall Square, Bldg. 600, 5th Fl.
Cambridge, Massachusetts 02139 (collectively referred to herein as "Licensor");
and _____________________________________________ ("Licensee"), a
____________________ corporation having its principal place of business at
______________________________________________________________.
R E C I T A L S
A. Licensor has the right to grant licenses to and under certain
technology described and claimed in U.S. Patent No. 5,223,409 entitled "Directed
Evolution of Novel Binding Proteins", U.S. Patent No. 5,403,484 entitled
"Viruses Expressing Chimeric Binding Proteins", U.S. Patent No. 5,571,698
entitled "Directed Evolution of Novel Binding Proteins", and associated patent
rights.
B. Licensee desires to obtain a license from Licensor to practice the
inventions described in the patents referenced above and Licensor is willing to
grant such a license on the terms and subject to the conditions provided herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below:
1.1. "AFFILIATE" shall mean a corporation or other legal entity that
controls, is controlled by, or is under common control with such party. For
purposes of this definition, "control" means the ownership, directly or
indirectly, of more than fifty percent (50%) of the outstanding equity
securities of a corporation which are entitled to vote in the election of
directors or a more than fifty percent (50%) interest in the net assets or
profits of an entity which is not a corporation.
1.2. "BULK PRODUCTS" shall mean Licensed Products other than Finished
Products.
1.3. "END USER" shall mean a person or entity whose use of a product
results in its destruction, loss of activity, and/or loss of value.
1.4. "FINISHED PRODUCTS" shall mean Licensed Products which are in a
form ready for use by an End User without further formulation, processing or
chemical transformation.
1.5. "FIELD OF USE" shall mean human therapeutics only and not any in
vitro or in vivo diagnostics, purification or separations, research products,
or other purposes.
1.6. "FIRST COMMERCIAL SALE" shall mean the initial transfer by
Licensee or its Affiliate (or a Third Party Transferee of any of the foregoing)
of a Licensed Product for value and not for demonstration, testing or
promotional purposes.
1.7. "LICENSED INTERMEDIATE" shall mean any fusion protein (including
without limitation any chimeric binding protein), genetic package (including
without limitation any virus, spore or cell) or other intermediate compound, or
any compound derived from any of the foregoing, that is (i) discovered, made or
developed by Licensee or its Affiliates using a method covered in whole or in
part by Patent Rights or (ii) is otherwise covered by Patent Rights.
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1.8. "LICENSED PRODUCT" shall mean any product intended for sale to an
End User as a human therapeutic that is (i) discovered, made or developed,
whether by Licensee, its Affiliates or any Third Party Transferee, using a
Licensed Intermediate or a method covered in whole or in part by Patent Rights
or (ii) otherwise covered by Patent Rights.
1.9. "NET SALES" shall mean the amounts received on sales of Licensed
Products in the Field of Use by Licensee, its Affiliates and any Third Party
Transferee, less five percent (5%) as credit for normal and customary deduction
such as trade discounts, rebates, or commissions actually allowed and taken,
credits or allowances given for rejections or returns, taxes levied, and
shipping costs charged to a customer, without any further reduction. In any
transfers of Licensed Products between Licensee and one of its Affiliates or
between any of the foregoing and a Third Party Transferee and its Affiliates,
the Net Sales shall be calculated based on the final sale of the Licensed
Product to parties which are not Affiliates of Licensee or of such Third Party
Transferee. In the event that non-monetary consideration is received for any
Licensed Products, Net Sales with respect to such Licensed Products shall be
calculated based on the fair market value of such consideration.
1.10. "PATENT RIGHTS" shall mean all Valid Claims (defined below) of
United States Patent Nos. 5,223,409, 5,403,484 and 5,571,698 (collectively, the
"U.S. Patents"), reissues, reexaminations, renewals and extensions thereof, and
all continuations, continuations-in-part and divisionals of the applications for
such patents in the United States and all counterparts thereto in countries
outside the United States, all of which patents and patent applications as of
the Effective Date are listed in ATTACHMENT B. Patent Rights shall not include
(i) Valid Claims in U.S. Patent No. 5,233,409 to the extent they cover single
chain antibodies, nor (ii) Valid Claims of any continuation,
continuation-in-part or divisional applications of the U.S. Patents or any
counterparts of the U.S. Patents in countries outside of the United States, that
cover particular protein or peptide sequences, or nucleic acids thereof, that
bind to a specific biological or molecular target.
1.11. "ROYALTY PERIOD" shall mean the calendar quarter, or partial
calendar quarter, commencing with the First Commercial Sale of any Licensed
Product in each country, and each calendar quarter thereafter.
1.12. "THIRD PARTY TRANSFEREE" shall mean any party, other than an
Affiliate of Licensee, which is undertaking to make, have made, use, sell or
have sold Licensed Products and (i) to which Licensee (or any of its
Affiliates), sells, transfers, or otherwise makes available any Licensed
Intermediate or (ii) for which Licensee (or any of its Affiliates) performs
services or provides proprietary information, with respect to any Licensed
Intermediate.
1.13. "VALID CLAIM" shall mean either (a) a claim of an issued patent
that has not been held unenforceable or invalid by an agency or a court of
competent jurisdiction in any unappealable or unappealed decision or (b) a claim
of a pending patent application that has not been abandoned or finally rejected
without the possibility of appeal or refiling.
The above definitions are intended to encompass the defined terms in
both the singular and plural forms.
ARTICLE 2 GRANT OF RIGHTS
2.1. LICENSE GRANT. Subject to the terms and conditions set forth
herein, Licensor hereby grants Licensee and its Affiliates a world-wide,
nonexclusive, royalty-bearing license (without the right to grant sublicenses)
under Patent Rights (i) to make, have made, use, sell and have sold Licensed
Products in the Field of Use and (ii) to make and use Licensed Intermediates in
the Field of Use for sale or transfer to any Third Party Transferee.
2.2. LIMITATION OF RIGHTS. Licensee acknowledges that its rights under
Patent Rights are limited to those expressly granted herein and that Licensee
and its Affiliates are expressly prohibited from selling, transferring or
otherwise making available to third parties Licensed Products or Licensed
Intermediates for use outside the Field of Use.
2.3. COVENANT NOT TO SUE. In partial consideration for the grant of
rights hereunder, Licensee agrees not to enforce against Licensor or its
Affiliates any patent right owned or controlled by Licensee or its Affiliates
during the term of this Agreement that Licensor or its Affiliates may infringe
in practicing the inventions claimed
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<PAGE> 3
in Patent Rights. Nothing in this Section 2.3 is intended to grant Licensor or
its Affiliates any proprietary rights or rights to nonsuit with respect to
specific peptides or proteins or analogs thereof.
ARTICLE 3. THIRD PARTY AGREEMENTS
3.1. REQUIRED AGREEMENT. Licensee acknowledges that the value of Patent
Rights is measured in part by the value of products resulting from any Licensed
Intermediate. Licensee agrees, therefore, that it will not sell, transfer, or
otherwise make available a Licensed Intermediate to any Third Party Transferee
and will not provide services or proprietary information with respect to any
Licensed Intermediate to any Third Party Transferee, unless such Third Party
Transferee executes and delivers an agreement in the form attached hereto as
ATTACHMENT C (a "Third Party Agreement").
ARTICLE 4. PAYMENTS, RECORDS AND REPORTS
4.1. PAYMENT OPTION SELECTION. Licensee has, upon execution of this
Agreement and as a condition hereto, irrevocably elected one and only one of the
payment options (such selected option being herein referred to as the "Payment
Schedule") as set forth in ATTACHMENT A, which election is evidenced and
confirmed by Licensee's signature thereon.
4.1.1. SIGNING FEE. Licensee agrees to pay Licensor, within ten
(10) days of the Effective Date, a non-refundable signing fee in the amount
specified in the Payment Schedule.
4.1.2. MAINTENANCE FEE. Licensee agrees to pay Licensor, on every
anniversary of the Effective Date, an annual maintenance fee for the license
granted under this Agreement in the amount specified in the Payment Schedule.
4.1.3. TRANSFER FEE. Licensee agrees to pay Licensor the amount
specified in the Payment Schedule within thirty (30) days of the first event
relating to each specific biological or molecular target for which a Third Party
Agreement is required (or would be required but for the fact that the Third
Party Transferee has previously executed and delivered a Third Party Agreement)
pursuant to Section 3.1 above.
4.1.4. IND MILESTONE. Licensee agrees to pay Licensor the amount
specified therefor in the Payment Schedule within thirty (30) days of the first
application for an Investigational New Drug ("IND") in the United States or
foreign equivalent thereof for each indication for a Licensed Product. As used
herein, "indication" refers to a new and distinct primary disease (for example
cancer versus inflammation) and does not refer to the subsequent filing of a
different type of the same primary disease (for example colon versus breast
cancer).
4.1.5. NDA MILESTONE. Licensee agrees to pay Licensor the amount
specified therefor in the Payment Schedule within thirty (30) days of the first
New Drug Application ("NDA") in the United States or foreign equivalent thereof
for each indication for a Licensed Product. As used herein, "indication" refers
to a new and distinct primary disease (for example cancer versus inflammation)
and does not refer to the subsequent filing of a different type of the same
primary disease (for example colon versus breast cancer).
4.1.6. ROYALTIES. Licensee agrees to pay Licensor, concurrently
with delivery of the quarterly report set forth in Section 4.2, royalties on
aggregate Net Sales during the prior Royalty Period, as follows:
a. on Net Sales of Finished Products, at the royalty rate
specified in the Payment Schedule; and
b. on Net Sales of Bulk Products, at one hundred thirty percent
(130%) of the royalty rate specified therefor in the Payment Schedule;
provided, however, that for any Licensed Product that is not a peptidic compound
(i.e. cannot in whole or part be genetically encoded), the royalty rate
specified in the Payment Schedule shall be reduced by fifty percent (50%).
4.2. REPORTS AND PAYMENTS.
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<PAGE> 4
4.2.1. THIRD PARTY TRANSFEREE TRANSFERS AND REPORTS. On each
anniversary of the Effective Date, and within thirty (30) days after a transfer
described in Section 4.1.3, Licensee shall deliver to Licensor a report
containing the following information with respect to each Third Party Transferee
to whom Licensee has transferred Licensed Intermediates during the period since
the last such report or, in the case of the first such period, since the
Effective Date:
a. a copy of the Third Party Agreement with such Third Party
Transferee; and
b. to the extent publicly available or not subject to
confidentiality obligations, identification of the specific biological or
molecular target to which such Licensed Intermediates are to be directed.
4.2.2. ROYALTY PAYMENTS AND REPORTS. Commencing with the First
Commercial Sale of a Licensed Product in any country, within thirty (30) days
after the conclusion of each Royalty Period, Licensee shall deliver to Licensor
a report containing the following information:
a. gross sales of Licensed Products, in each country of sale, made
by or on behalf of Licensee and its Affiliates during the applicable Royalty
Period;
b. calculation of Net Sales for the applicable Royalty Period in
each country of sale, together with the exchange rates used for conversion; and
c. calculation of the amount payable to Licensor for the
applicable Royalty Period.
All such reports shall be maintained in confidence by Licensor. If no royalties
or other payments are due to Licensor for any reporting period, the report shall
so state. Concurrent with these reports, Licensee shall remit to Licensor any
payment due for the applicable Royalty Period. The method of payment shall be by
check or wire transfer as directed from time to time by Licensor. All amounts
payable to Licensor under this Section will first be calculated in the currency
of sale and then converted into U.S. dollars in accordance with Section 4.3, and
such amounts shall be paid without deduction of any withholding taxes,
value-added taxes, or other charges applicable to such payments.
4.3. PAYMENTS IN U.S. DOLLARS. All payments due under this Agreement
shall be payable in United States dollars. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate existing in the United States
(as reported in the WALL STREET JOURNAL) on the last working day of the calendar
quarter preceding the applicable calendar quarter. Such payments shall be
without deduction of exchange, collection, or other charges.
4.4. RECORDS. Licensee and its Affiliates shall maintain, and shall
ensure that any Third Party Transferee shall maintain, complete and accurate
records of Licensed Products made, used, or sold under this Agreement and any
amounts payable to Licensor in relation to such Licensed Products, which records
shall contain sufficient information to permit Licensor to confirm the accuracy
of any reports delivered to Licensor in accordance with Section 4.2. Licensee
and its Affiliates shall retain such records relating to a given Royalty Period
for at least three (3) years after the conclusion of that Royalty Period, during
which time Licensor shall have the right, at its expense, to cause an
independent certified public accountant to inspect such records during normal
business hours for the sole purpose of verifying any reports and payments
delivered under this Agreement. Such accountant shall not disclose to Licensor
any information other than information relating to accuracy of reports and
payments delivered under this Agreement and shall provide Licensee with a copy
of any report given to Licensor. The parties shall reconcile any underpayment or
overpayment within thirty (30) days after the accountant delivers the results of
the audit. In the event that any audit performed under this Section reveals an
underpayment in excess of five percent (5%) in any Royalty Period, Licensee
shall bear the full cost of such audit.
4.5. LATE PAYMENTS. Any payments by Licensee that are not paid on or
before the date such payments are due under this Agreement shall bear interest,
to the extent permitted by law, at two percentage points above the base prime
rate of interest most recently reported by The WALL STREET JOURNAL, calculated
based on the number of days that payment is delinquent.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1. AUTHORIZATION. Each party represents and warrants to the other
that it has the legal right and power to
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enter into this Agreement, to extend the rights and licenses granted to the
other in this Agreement, and to fully perform its obligations hereunder, and
that the performance of such obligations will not conflict with its charter
documents or any agreements, contracts, or other arrangements to which it is a
party.
5.2. OWNERSHIP OF PATENT RIGHTS. Licensor represents and warrants that,
as of the Effective Date, it possesses the exclusive right, title, and interest
in and to the Patent Rights and that it has the full legal right and power to
enter into the obligations and grant the rights and licenses set forth in this
Agreement.
5.3. DISCLAIMER OF WARRANTIES. Nothing in this Agreement shall be
construed as:
a. a warranty or representation by Licensor as to the validity or
scope of any patent included within the Patent Rights;
b. a warranty or representation that the exploitation of the
Patent Rights or the manufacture, use or sale of a Licensed Intermediate or a
Licensed Products is or will be free from infringement of patents of third
parties;
c. an obligation of either party to bring or prosecute actions or
suits against third parties for infringement;
d. an obligation of Licensor to maintain any patent or to continue
to prosecute any patent application included within the Patent Rights in any
country;
e. an obligation of either party to furnish any confidential
information or know-how;
f. creating any agency, partnership, joint venture or similar
relationship between Licensor and Licensee; or
g. conferring by implication, estoppel or otherwise any license,
immunity or right under any patent of Licensor other than those specified in
Patent Rights.
ARTICLE 6. INDEMNIFICATION
6.1. INDEMNIFICATION. Licensee shall indemnify, defend, and hold
harmless Licensor and its Affiliates and their directors, officers, employees,
and agents and their respective successors, heirs and assigns (the
"Indemnities") against any liability, damage, loss, or expense (including
reasonable attorneys fees and expenses of litigation) incurred by or imposed
upon the Indemnitees or any one of them in connection with any claims, suits,
actions, demands, or judgments concerning any product, process or service that
is made, used, sold or provided pursuant to any right or license granted under
this Agreement.
ARTICLE 7. TERM AND TERMINATION.
7.1. TERM. Unless sooner terminated as provided herein, this Agreement
shall commence on the Effective Date and shall remain in effect until the
expiration of the last to expire of the applicable Patent Right, unless earlier
terminated as provided in this Article.
7.2. TERMINATION BY LICENSEE. Licensee may terminate this agreement for
any reason upon six (6) months notice to Licensor.
7.3. TERMINATION BY LICENSOR. In the event that Licensee fails to make
timely payment of any amounts due to Licensor under this Agreement, including
amounts due under Article 4 hereof, Licensor may terminate this Agreement upon
thirty (30) days written notice to Licensee, unless Licensee pays all past-due
amounts prior to the expiration of such thirty (30)-day notice period.
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7.4. OTHER MATERIAL BREACH. In the event that either party commits a
material breach of any of its obligations under this Agreement, other than that
stated in Section 7.3, and such party fails to remedy that breach within ninety
(90) days after receiving written notice thereof from the other party, that
other party may immediately terminate this Agreement upon written notice to the
breaching party.
7.5. EFFECT OF TERMINATION. Upon the expiration or termination of this
Agreement, Licensee's rights under the Patent Rights shall terminate
immediately. Such expiration or termination shall not affect the rights of any
Third Party Transferee if any such Third Party Transferee performs its
obligations under the Third Party Agreement. The following provisions shall
survive the expiration or termination of this Agreement: Articles 1, 3, 6 and 8
and Section 2.3; as well as Licensee's obligations to make payments and reports
pursuant to Article 4 with respect to Licensed Products developed using the
Patent Rights, or developed as a result of Licensed Intermediates, during the
term of this Agreement.
7.6. NOTICE OF TERMINATION. Licensee agrees that, in the event that
this Agreement is terminated pursuant to the terms hereof, Licensee shall so
notify each Third Party Transferee within twenty (20) days of such termination.
ARTICLE 8 MISCELLANEOUS
8.1. NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized international overnight courier, confirmed
facsimile transmission, or registered or certified mail, return receipt
requested, postage prepaid to the following addresses or facsimile numbers:
If to Licensor: If to Licensee:
Dyax Corp. To the address or facsimile
One Kendall Square, Bldg. 600, 5th Fl. set forth below the signature
to this Agreement
Cambridge, MA 02139
Attention: Chief Executive Officer
Facsimile: (617) 225-2501
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
8.2 GOVERNING LAW & JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
The parties hereby irrevocably consent and submit to the exclusive jurisdiction
of any Commonwealth of Massachusetts or Federal court sitting in Boston in any
action or proceeding of any type whatsoever arising out of or relating to this
Agreement.
8.3. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
will occur in the event that the provisions of Article 3 are not specifically
enforced. In the event of a breach or threatened breach of any such provisions,
Licensee agrees that Licensor shall, in addition to all other remedies, be
entitled to temporary or permanent injunction, without showing any actual damage
or that monetary damages would not provide an adequate remedy and without the
necessity of posting any bond, and/or a decree for specific performance, in
accordance with the provisions hereof.
8.4. ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either party
may assign this Agreement to any of its Affiliates or to a successor in
connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business pertaining to the subject matter
of this Agreement, with prompt written notice to the other party of any such
assignment. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective lawful successors and assigns.
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8.5. COMPLIANCE WITH LAW. Nothing in this Agreement shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provision of this Agreement and any statute, law,
ordinance or treaty, the latter shall prevail, but in such event the affected
provisions of the Agreement shall be conformed and limited only to the extent
necessary to bring it within the applicable legal requirements.
8.6. AMENDMENT AND WAIVER. This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.
8.7. SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the parties shall negotiate in good faith to modify the Agreement to
preserve (to the extent possible) their original intent.
8.8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements or understandings between the parties relating to
the subject matter hereof.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
LICENSOR: LICENSEE:
DYAX CORP. ____________________
By: By:
Name: Name:
Title: Title:
Address of Licensee:
Facsimile:
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ATTACHMENT A
PAYMENT SCHEDULE OPTIONS
<TABLE>
<CAPTION>
==============================================================================
Payments Option 1 Option 2 Option 3
- -------- -------- -------- --------
==============================================================================
<S> <C> <C> <C>
Signing Fee $ 40,000 $ 80,000 $160,000
- ------------------------------------------------------------------------------
Annual Maintenance Fee $ 30,000 $ 60,000 $ 90,000
- ------------------------------------------------------------------------------
Each transfer of one or more Li- $ 55,000 $ 55,000 $ 55,000
censed Intermediates or provision of
services therefor for a specific target
- ------------------------------------------------------------------------------
First application for an IND or $ 80,000 $160,000 $260,000
equivalent for each indication
- ------------------------------------------------------------------------------
First NDA or equivalent for each $160,000 $320,000 $510,000
indication
- ------------------------------------------------------------------------------
Royalty rate on Net Sales 2.2% 1.65% 1.1%
==============================================================================
</TABLE>
The undersigned hereby irrevocably elects payment option __ (fill in 1, 2 or 3).
-------------------------------
(signature of individual signing
on behalf of Licensee)
8
<PAGE> 9
ATTACHMENT B
PATENT RIGHTS
<TABLE>
<CAPTION>
================================================================================
Application/
Country Patent No. Filing Date Patent No. Issue Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
US 07/664,989* 3/1/91 5,223,409 6/29/93
- --------------------------------------------------------------------------------
US 9,319 1/26/93 5,403,484 4/4/95
- --------------------------------------------------------------------------------
US 08/057,667 6/18/93 5,571,698 11/5/96
- --------------------------------------------------------------------------------
US 08/415,922 4/3/95 allowed
- --------------------------------------------------------------------------------
US 08/993,776 12/18/97
- --------------------------------------------------------------------------------
PCT US89/03731 9/1/89
W09002809 (pub) 3/22/90
- --------------------------------------------------------------------------------
EPO 89/910702.3 9/1/89 436,597 4/2/97
EP436597 (pub) 7/17/91
- --------------------------------------------------------------------------------
EPO div 96/112867.5 8/9/96
- --------------------------------------------------------------------------------
Japan 89510087 9/1/89
JP4502700 (pub) 5/21/92
- --------------------------------------------------------------------------------
Canada 610,176 9/1/89
- --------------------------------------------------------------------------------
Ireland IR89/2834 9/4/89
- --------------------------------------------------------------------------------
Israel (& 3 divs) 91501 9/1/89
- --------------------------------------------------------------------------------
PCT US92/01456 2/27/92
W09215677 (pub) 9/17/92
- --------------------------------------------------------------------------------
EPO 92/908057.0 2/27/92
- --------------------------------------------------------------------------------
Canada 2105300 2/27/92
- --------------------------------------------------------------------------------
Japan 92507558 2/27/92
- --------------------------------------------------------------------------------
PCT US92/01539 2/28/92
W09215679 (pub) 9/17/92
- --------------------------------------------------------------------------------
EPO 92/908799.7 2/28/92
- --------------------------------------------------------------------------------
Canada 2105303 2/28/92
- --------------------------------------------------------------------------------
Japan 92508216 2/28/92
================================================================================
</TABLE>
* CIP of US SN487,063 filed 3/2/90 which is a CIP of US SN240,160 filed 9/2/88
Protein Engineering Corporation patent rights now assigned to Dyax Corp.
9
<PAGE> 10
ATTACHMENT C
THIRD PARTY AGREEMENT
The undersigned hereby acknowledges that Dyax Corp. ("Licensor"),
having a principal place of business at One Kendall Square, Bldg. 600, 5th Fl.,
Cambridge, Massachusetts 02139, has licensed certain patent rights to and under
U.S. Patent No. 5,223,409 entitled "Directed Evolution of Novel Binding
Proteins", U.S. Patent No. 5,403,484 entitled "Viruses Expressing Chimeric
Binding Proteins", U.S. Patent 5,571,698, U.S. Patent No. 5,571,698 and
associated patent rights, to ______________ ("Licensee") under a License
Agreement (the "License") effective as of _____________, a copy of which has
been provided to the undersigned by Licensee; and that the undersigned as a
Third Party Transferee expects to receive from Licensee or its Affiliates one or
more Licensed Intermediates or services or proprietary information with respect
to one or more Licensed Intermediates (collectively, the "Transferred
Technology"). All terms not otherwise defined herein shall have the same
meanings set forth tin the License.
1. In consideration of the value of the patent rights referenced above in
developing the Transferred Technology, the undersigned agrees (a) to use the
Transferred Technology solely within the Field of Use to make, have made, use,
sell and have sold Licensed Products (collectively, "Covered Products"); and (b)
to maintain and retain complete and accurate records of sales of Covered
Products and any amounts paid or payable to Licensee in relation to such Covered
Products, all in accordance with Article 4 of the License.
2. If the undersigned is notified, by Licensor or Licensee or otherwise, that
the License has been terminated in accordance with its terms, such termination
shall not affect the rights of the undersigned to make, use and sell Covered
Products; provided, however, that the undersigned hereby agrees that from and
after the date of such termination the undersigned shall have the obligation (a)
to pay directly to Licensor all amounts due pursuant to the Payment Schedule
elected by Licensee under Section 4.1 of the License (as determined, in the
event of any conflict, by the records of Licensor), including royalties on Net
Sales, with respect to all Covered Products (which shall be deemed for purposes
of this paragraph to be "Licensed Products" as defined in the License), and (b)
deliver directly to Licensor all reports otherwise due to Licensee pursuant to
paragraph 1 above. All such payments and reports shall be subject to the terms
and conditions therefor set forth in the License, which are incorporated herein.
To the extent that the foregoing constitutes a grant of rights to the
undersigned under Patent Rights with respect to the Transferred Technology, such
rights shall be contingent and, in the event of a failure to make any such
payments or any other material breach by the undersigned, terminate upon thirty
(30) days notice unless the breach is cured prior to expiration of such period.
Licensor shall not be deemed to have assumed, and will not be liable for, any
representations, warranties or obligations of Licensee to the undersigned.
3. This Agreement is executed and delivered as an instrument under seal
expressly for the benefit of each of Licensor and Licensee and their respective
Affiliates and permitted successors.
(Company
Name) Address:
By:
Title:
10
<PAGE> 1
EXHIBIT 10.17
LICENSE AGREEMENT
(Antibody Diagnostic Field)
THIS LICENSE AGREEMENT (this "Agreement"), effective as of _________ __, 1998
(the "Effective Date"), is between DYAX CORP., having a principal place of
business at One Kendall Square, Bldg. 600, 5th Fl., Cambridge, Massachusetts
02139 (collectively referred to herein as "Licensor"); and
_________________________("Licensee"), a ___________________ corporation having
its principal place of business at ________________________________________.
R E C I T A L S
A. Licensor has the right to grant licenses to and under certain
technology described and claimed in U.S. Patent No. 5,223,409 entitled "Directed
Evolution of Novel Binding Proteins", U.S. Patent No. 5,403,484 entitled
"Viruses Expressing Chimeric Binding Proteins", and U.S. Patent No. 5,571,698
entitled "Directed Evolution of Novel Binding Proteins", and associated patent
rights.
B. Licensee desires to obtain a license from Licensor to practice the
inventions described in the patents referenced above and Licensor is willing to
grant such a license on the terms and subject to the conditions provided herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall have the
meanings specified below:
1.1 "AFFILIATE" shall mean a corporation or other legal entity that
controls, is controlled by, or is under common control with such party. For
purposes of this definition, "control" means the ownership, directly or
indirectly, of more than fifty percent (50%) of the outstanding equity
securities of a corporation which are entitled to vote in the election of
directors or a more than fifty percent (50%) interest in the net assets or
profits of an entity which is not a corporation.
1.2. "END USER" shall mean a person or entity whose use of a product
results in its destruction, loss of activity, and/or loss of value.
1.3. "FIELD OF USE" shall mean human IN VITRO diagnostic or research
reagent uses, and not for any therapeutic, IN VIVO diagnostic, purification or
separations, industrial applications or other purposes.
1.4. "FIRST COMMERCIAL SALE" shall mean the initial transfer by
Licensee or its Affiliate (or a Third Party Transferee of any of the foregoing)
of a Licensed Product for value and not for demonstration, testing or
promotional purposes.
1.5. "LICENSED INTERMEDIATE" shall mean any fusion protein (including
without limitation any chimeric binding protein), genetic package (including
without limitation any virus, spore or cell) or other intermediate compound, or
any compound derived from any of the foregoing, that is (i) discovered, made or
developed by Licensee using a method covered in whole or in part by Patent
Rights or (ii) is otherwise covered by Patent Rights.
1.6. "LICENSED PRODUCT" shall mean any product intended for sale to an
End User as an IN VITRO diagnostic or research reagent and containing one or
more antibodies as a binding moiety that (i) is discovered, made or developed,
whether by Licensee, its Affiliates or any Third Party Transferee, using a
Licensed Intermediate or a method covered in whole or in part by Patent Rights
or (ii) otherwise covered by Patent Rights.
1
<PAGE> 2
1.7. "NET SALES" shall mean the amounts received on sales of Licensed
Products in the Field of Use by Licensee, its Affiliates and any Third Party
Transferee, less five percent (5%) for normal and customary deductions, such as
trade discounts, rebates, or commissions actually allowed and taken, credits for
rejections or returns, taxes levied, and shipping costs, without any further
reductions. In any transfers of Licensed Products between Licensee and one of
its Affiliates or between any of the foregoing and a Third Party Transferee and
its Affiliates, the Net Sales Price shall be calculated based on the final sale
of the Licensed Product to parties which are not Affiliates of Licensee or of
such Third Party Transferee. In the event that non-monetary consideration is
received for any Licensed Products, Net Sales with respect to such Licensed
Products shall be calculated based on the fair market value of such
consideration.
1.8. "PATENT RIGHTS" shall mean all Valid Claims (defined below) of
United States Patent Nos. 5,223,409, 5,403,484 and 5,571,698 (collectively, the
"U.S. Patents"), reissues, reexaminations, renewals and extensions thereof, and
all continuations, continuations-in-part and divisionals of the applications for
such patents in the United States and all counterparts thereto in countries
outside the United States, all of which patents and patent applications as of
the Effective Date are listed in ATTACHMENT B. Patent Rights shall not include
(i) Valid Claims in U.S. Patent No. 5,223,409 to the extent they cover single
chain antibodies nor (ii) Valid Claims of any continuation, continuation-in-part
or divisional applications of the U.S. Patents or any counterparts of the U.S.
Patents in countries outside of the United States, that cover particular protein
or peptide sequences, or nucleic acids thereof, that bind to a specific
biological or molecular target.
1.9. "ROYALTY PERIOD" shall mean the calendar quarter, or partial
calendar quarter, commencing with the First Commercial Sale of any Licensed
Product in each country, and each calendar quarter thereafter.
1.10. "THIRD PARTY TRANSFEREE" shall mean any party, other than an
Affiliate of Licensee, which is undertaking to make, have made, use, sell or
have sold Licensed Products and (i) to which Licensee (or any of its
Affiliates), sells, transfers, or otherwise makes available any Licensed
Intermediate or (ii) for which Licensee (or any of its Affiliates) performs
services or provides proprietary information, with respect to any Licensed
Intermediate.
1.11. "VALID CLAIM" shall mean either (a) a claim of an issued patent
that has not been held unenforce- able or invalid by an agency or a court of
competent jurisdiction in any unappealable or unappealed decision or (b) a claim
of a pending patent application that has not been abandoned or finally rejected
without the possibility of appeal or refiling.
The above definitions are intended to encompass the defined terms in both the
singular and plural forms.
ARTICLE 2. GRANT OF RIGHTS
2.1. LICENSE GRANT. Subject to the terms and conditions set forth
herein, Licensor hereby grants Licensee and its Affiliates a world-wide,
nonexclusive, royalty-bearing license (without the right to grant sublicenses)
under Patent Rights (i) to make, have made, use, sell and have sold Licensed
Products in the Field of Use and (ii) to make and use Licensed Intermediates in
the Field of Use for sale or transfer to any Third Party Transferee.
2.2. LIMITATION OF RIGHTS. Licensee acknowledges that its rights under
Patent Rights are limited to those expressly granted herein and that Licensee is
expressly prohibited from selling, transferring or otherwise making available to
third parties Licensed Products or Licensed Intermediates for use outside the
Field of Use.
2.3. COVENANT NOT TO SUE. In partial consideration for the grant of
rights hereunder, Licensee agrees not to enforce against Licensor or its
Affiliates any patent right owned or controlled by Licensee or its Affiliates
during the term of this Agreement that Licensor or its Affiliates may infringe
in practicing the inventions claimed in Patent Rights. Nothing in this Section
2.3 is intended to grant Licensor or its Affiliates any proprietary rights or
rights to nonsuit with respect to specific peptides or proteins or analogs
thereof.
ARTICLE 3. THIRD PARTY AGREEMENTS
2
<PAGE> 3
3.1. REQUIRED AGREEMENT. Licensee acknowledges that the value of Patent
Rights is measured in part by the value of products resulting from any Licensed
Intermediate. Licensee agrees, therefore, that it will not sell, transfer, or
otherwise make available a Licensed Intermediate to any Third Party Transferee
and will not provide services or proprietary information with respect to any
Licensed Intermediate to any Third Party Transferee, unless such Third Party
Transferee executes and delivers an agreement in the form attached hereto as
Attachment C (a "Third Party Agreement").
ARTICLE 4. PAYMENTS, RECORDS AND REPORTS
4.1. PAYMENTS. Licensee shall make the payments in the Payment Schedule
as set forth in Attachment A.
4.1.1. SIGNING FEE. Licensee agrees to pay Licensor, within ten
(10) days of the Effective Date, a non-refundable signing fee in the amount
specified in the Payment Schedule.
4.1.2. MAINTENANCE FEE. Licensee agrees to pay Licensor, on every
anniversary of the Effective Date, an annual maintenance fee for the license
granted under this Agreement in the amount specified in the Payment Schedule.
4.1.3. TRANSFER FEE. Licensee agrees to pay Licensor the amount
specified in the Payment Schedule within thirty (30) days of the first event
relating to each specific biological or molecular target for which a Third Party
Agreement is required (or would be required but for the fact that the Third
Party Transferee has previously executed and delivered a Third Party Agreement)
pursuant to Section 3.1 above.
4.1.4. 510(K) OR PMA MILESTONE. Licensee agrees to pay Licensor
the amount specified in the Payment Schedule within thirty (30) days of the
first 510(k) application or Pre-Market Approval application in the United States
or foreign equivalent thereof for each indication for a Licensed Product.
4.1.5. ROYALTIES. Licensee agrees to pay Licensor, concurrently
with delivery of the quarterly report set forth in Section 4.2, royalties on
aggregate Net Sales of Licensed Products during the prior Royalty Period;
provided, however that in the event Licensed Products contain one or more active
components which are not covered by the Patent Rights, the royalty due on such
Net Sales shall be calculated by dividing the Net Sales price of the combination
product by the number of active components not covered by the Patent Rights, but
in no event shall the amount due Licensor be reduced by more than 75%.
4.2. REPORTS AND PAYMENTS.
4.2.1. THIRD PARTY TRANSFEREE TRANSFERS AND REPORTS. On each
anniversary of the Effective Date, and within thirty (30) days after a transfer
described in Section 4.1.3, Licensee shall deliver to Licensor a report
containing the following information with respect to each Third Party Transferee
to whom Licensee has transferred Licensed Intermediates during the period since
the last such report or, in the case of the first such period, since the
Effective Date:
a. a copy of the Third Party Agreement with such Third
Party Transferee; and
b. to the extent publicly available or not subject to
confidentiality obligations, identification of the specific biological or
molecular target to which such Licensed Intermediates are to be directed.
4.2.2. ROYALTY PAYMENTS AND REPORTS. Commencing with the First
Commercial Sale of a Licensed Product in any country, within thirty (30) days
after the conclusion of each Royalty Period, Licensee shall deliver to Licensor
a report containing the following information:
a. gross sales of Licensed Products, in each country of
sale, made by or on behalf of Licensee and its Affiliates during the applicable
Royalty Period;
b. calculation of Net Sales for the applicable Royalty
Period in each country of sale, together with the exchange rates used for
conversion; and
c. calculation of the amount payable to Licensor for the
applicable Royalty Period.
3
<PAGE> 4
All such reports shall be maintained in confidence by Licensor. If no royalties
or other payments are due to Licensor for any reporting period, the report shall
so state. Concurrent with these reports, Licensee shall remit to Licensor any
payment due for the applicable Royalty Period. The method of payment shall be by
check or wire transfer as directed from time to time by Licensor. All amounts
payable to Licensor under this Section will first be calculated in the currency
of sale and then converted into U.S. dollars in accordance with Section 4.3, and
such amounts shall be paid without deduction of any withholding taxes,
value-added taxes, or other charges applicable to such payments.
4.3. PAYMENTS IN U.S. DOLLARS. All payments due under this Agreement
shall be payable in United States dollars. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate existing in the United States
(as reported in the Wall Street Journal) on the last working day of the calendar
quarter preceding the applicable calendar quarter. Such payments shall be
without deduction of exchange, collection, or other charges.
4.4. RECORDS. Licensee and its Affiliates shall maintain, and shall
ensure that any Third Party Transferee shall maintain, complete and accurate
records of Licensed Products made, used, or sold under this Agreement and any
amounts payable to Licensor in relation to such Licensed Products, which records
shall contain sufficient information to permit Licensor to confirm the accuracy
of any reports delivered to Licensor in accordance with Section 4.2. Licensee
and its Affiliates shall retain such records relating to a given Royalty Period
for at least three (3) years after the conclusion of that Royalty Period, during
which time Licensor shall have the right, at its expense, to cause an
independent certified public accountant to inspect such records during normal
business hours for the sole purpose of verifying any reports and payments
delivered under this Agreement. Such accountant shall not disclose to Licensor
any information other than information relating to accuracy of reports and
payments delivered under this Agreement and shall provide Licensee with a copy
of any report given to Licensor. The parties shall reconcile any underpayment or
overpayment within thirty (30) days after the accountant delivers the results of
the audit. In the event that any audit performed under this Section reveals an
underpayment in excess of five percent (5%) in any Royalty Period, Licensee
shall bear the full cost of such audit.
4.5. LATE PAYMENTS. Any payments by Licensee that are not paid on or
before the date such payments are due under this Agreement shall bear interest,
to the extent permitted by law, at two percentage points above the base prime
rate of interest most recently reported in The Wall Street Journal, calculated
based on the number of days that payment is delinquent.
4.6. OTHER LICENSES. In the event that Licensor enters into an
agreement with a third party (other than a not-for-profit institution) in which
Licensor grants a license solely under the Patent Rights for Licensed Products
in the Field of Use only and the amounts to be paid to Licensor are more
favorable to such third party than the amounts to be paid by Licensee under this
Agreement, then Licensor shall notify Licensee and Licensee shall have the right
to substitute such payment amounts for the payments due in this Agreement.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1. AUTHORIZATION. Each party represents and warrants to the other
that it has the legal right and power to enter into this Agreement, to extend
the rights and licenses granted to the other in this Agreement, and to fully
perform its obligations hereunder, and that the performance of such obligations
will not conflict with its charter documents or any agreements, contracts, or
other arrangements to which it is a party.
5.2. OWNERSHIP OF PATENT RIGHTS. Licensor represents and warrants that,
as of the Effective Date, it possesses the exclusive right, title, and interest
in and to the Patent Rights and that it has the full legal right and power to
enter into the obligations and grant the rights and licenses set forth in this
Agreement.
5.3. DISCLAIMER OF WARRANTIES. Nothing in this Agreement shall be
construed as:
a. a warranty or representation by Licensor as to the validity or
scope of any patent included within the Patent Rights;
4
<PAGE> 5
b. a warranty or representation that the exploitation of the Patent
Rights or the manufacture, use or sale of a Licensed Intermediate or a Licensed
Products is or will be free from infringement of patents of third parties;
c. an obligation of either party to bring or prosecute actions or
suits against third parties for infringement;
d. an obligation of Licensor to maintain any patent or to
continue to prosecute any patent application included within the Patent Rights
in any country;
e. an obligation of either party to furnish any confidential
information or know-how;
f. creating any agency, partnership, joint venture or similar
relationship between Licensor and Licensee; or
g. conferring by implication, estoppel or otherwise any license,
immunity or right under any patent of Licensor other than those specified in
Patent Rights.
ARTICLE 6. INDEMNIFICATION
6.1. INDEMNIFICATION. Licensee shall indemnify, defend, and hold
harmless Licensor and its Affiliates and their directors, officers, employees,
and agents and their respective successors, heirs and assigns (the
"Indemnities") against any liability, damage, loss, or expense (including
reasonable attorneys fees and expenses of litigation) incurred by or imposed
upon the Indemnitees or any one of them in connection with any claims, suits,
actions, demands, or judgments concerning any product, process or service that
is made, used, sold or provided pursuant to any right or license granted under
this Agreement.
ARTICLE 7. TERM AND TERMINATION.
7.1. TERM. Unless sooner terminated as provided herein, this Agreement
shall commence on the Effective Date and shall remain in effect until the
expiration of the last to expire of the applicable Patent Right, unless earlier
terminated as provided in this Article.
7.2. TERMINATION BY LICENSEE. Licensee may terminate this agreement for
any reason upon six (6) months notice to Licensor.
7.3. TERMINATION BY LICENSOR. In the event that Licensee fails to make
timely payment of any amounts due to Licensor under this Agreement, including
amounts due under Article 4 hereof, Licensor may terminate this Agreement upon
thirty (30) days written notice to Licensee, unless Licensee pays all past-due
amounts prior to the expiration of such thirty (30)-day notice period.
7.4. OTHER MATERIAL BREACH. In the event that either party commits a
material breach of any of its obligations under this Agreement, other than that
stated in Section 7.3, and such party fails to remedy that breach within ninety
(90) days after receiving written notice thereof from the other party, that
other party may immediately terminate this Agreement upon written notice to the
breaching party.
7.5. EFFECT OF TERMINATION. Upon the expiration or termination of this
Agreement, Licensee's rights under the Patent Rights shall terminate
immediately. Such expiration or termination shall not affect the rights of any
Third Party Transferee if any such Third Party Transferee performs its
obligations under the Third Party Agreement. The following provisions shall
survive the expiration or termination of this Agreement: Articles 1, 3, 6 and 8
and Section 2.3; as well as Licensee's obligations to make payments and reports
pursuant to Article 4 with respect to Licensed Products developed using the
Patent Rights, or developed as a result of Licensed Intermediates, during the
term of this Agreement.
5
<PAGE> 6
7.6. NOTICE OF TERMINATION. Licensee agrees that, in the event that
this Agreement is terminated pursuant to the terms hereof, Licensee shall so
notify each Third Party Transferee within twenty (20) days of such termination.
ARTICLE 8. MISCELLANEOUS
8.1. NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized international overnight courier, confirmed
facsimile transmission, or registered or certified mail, return receipt
requested, postage prepaid to the following addresses or facsimile numbers:
<TABLE>
<S> <C>
If to Licensor: If to Licensee:
Dyax Corp. To the address or facsimile
One Kendall Square, Bldg. 600, 5th Fl. number set forth below Licensee's signature
Cambridge, MA 02139 to this Agreement
Attention: Chief Executive Officer
Facsimile: (617) 225-2501
</TABLE>
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
8.2. GOVERNING LAW & JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
The parties hereby irrevocably consent and submit to the exclusive jurisdiction
of any Commonwealth of Massachusetts or Federal court sitting in Boston in any
action or proceeding of any type whatsoever arising out of or relating to this
Agreement.
8.3. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
will occur in the event that the provisions of Article 3 are not specifically
enforced. In the event of a breach or threatened breach of any such provisions,
Licensee agrees that Licensor shall, in addition to all other remedies, be
entitled to temporary or permanent injunction, without showing any actual damage
or that monetary damages would not provide an adequate remedy and without the
necessity of posting any bond, and/or a decree for specific performance, in
accordance with the provisions hereof.
8.4. ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either party
may assign this Agreement to any of its Affiliates or to a successor in
connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business pertaining to the subject matter
of this Agreement, with prompt written notice to the other party of any such
assignment. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective lawful successors and assigns.
8.5. COMPLIANCE WITH LAW. Nothing in this Agreement shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provision of this Agreement and any statute, law,
ordinance or treaty, the latter shall prevail, but in such event the affected
provisions of the Agreement shall be conformed and limited only to the extent
necessary to bring it within the applicable legal requirements.
8.6. AMENDMENT AND WAIVER. This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.
6
<PAGE> 7
8.7. SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the parties shall negotiate in good faith to modify the Agreement to
preserve (to the extent possible) their original intent.
8.8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties relating to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as a sealed instrument effective as of the date first above written.
LICENSOR: LICENSEE:
DYAX CORP.
- --------------------- ---------------------
By: By:
Name: Name:
Title: Title
Address:
Facsimile:
7
<PAGE> 8
ATTACHMENT A
PAYMENT SCHEDULE
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------
Payments
- --------
- -----------------------------------------------------------
Signing Fee $ 52,500
- -----------------------------------------------------------
Annual Maintenance Fee $ 27,500
- -----------------------------------------------------------
Each transfer of one or more Licensed $ 27,500
Intermediates or provision of services
therefor for a specific target
- -----------------------------------------------------------
First application for a 510(k), PMA or $102,500
equivalent for each indication
- -----------------------------------------------------------
Royalty rate on Net Sales 2.2%
- -----------------------------------------------------------
</TABLE>
8
<PAGE> 9
ATTACHMENT B
Patent Rights
<TABLE>
<CAPTION>
================================================================================
Application/
Country Patent No. Filing Date Patent No. Issue Date
- ------- -------- ----------- ---------- ----------
================================================================================
<S> <C> <C> <C> <C>
US 664,989* 3/1/91 5,223,409 6/29/93
================================================================================
US 9,319 1/26/93 5,403,484 4/4/95
================================================================================
US 08/057,667 6/18/93 5,571,698
================================================================================
US 08/415,922 4/3/95 allowed
================================================================================
US 12/18/97
================================================================================
PCT US89/03731 9/1/89
W09002809 (pub) 3/22/90
================================================================================
EPO 89910702 9/1/89 436,597 4/2/97
EP436597 (pub) 7/17/91
================================================================================
EPO div 96112876.5 8/9/96
================================================================================
Japan 89510087 9/1/89
JP4502700 (pub) 5/21/92
================================================================================
Canada 610,176 9/1/89
================================================================================
Ireland IR89/2834 9/4/89
================================================================================
Israel & 091501 9/1/89
divs
================================================================================
PCT US92/01456 2/27/92
W09215677 (pub) 9/17/92
================================================================================
EPO 92908057 2/27/92
================================================================================
Canada 2105300 2/27/92
================================================================================
Japan 92507558 2/27/92
================================================================================
PCT US92/01539 2/28/92
W09215679 (pub) 9/17/92
================================================================================
EPO 92908799.7 2/28/92
================================================================================
Canada 2105303 2/28/92
================================================================================
Japan 92508216 2/28/92
================================================================================
</TABLE>
*CIP of US SN 487,063 filed 3/2/90 which is a CIP of US SN 240,160 filed 9/2/88
All Protein Engineering Corporation patent rights have been assigned to Dyax
Corp.
9
<PAGE> 10
ATTACHMENT C
THIRD PARTY AGREEMENT
The undersigned hereby acknowledges that Dyax Corp. ("Licensor"), having a
principal place of business at One Kendall Square, Bldg. 600, 5th Fl.,
Cambridge, Massachusetts 02139, has licensed certain patent rights to and under
U.S. Patent No. 5,223,409 entitled "Directed Evolution of Novel Binding
Proteins", U.S. Patent No. 5,403,484 entitled "Viruses Expressing Chimeric
Binding Proteins", U.S. Patent 5,571,698, U.S. Patent No. 5,571,698 and
associated patent rights, to
_____________________________
("Licensee") under a License Agreement (the "License") effective as of
_____________, a copy of which has been provided to the undersigned by Licensee;
and that the undersigned as a Third Party Transferee expects to receive from
Licensee or its Affiliates one or more Licensed Intermediates or services or
proprietary information with respect to one or more Licensed Intermediates
(collectively, the "Transferred Technology"). All terms not otherwise defined
herein shall have the same meanings set forth in the License.
1. In consideration of the value of the patent rights referenced
above in developing the Transferred Technology, the undersigned agrees (a) to
use the Transferred Technology solely within the Field of Use to make, have
made, use, sell and have sold Licensed Products (collectively, "Covered
Products"); and (b) to maintain and retain complete and accurate records of
sales of Covered Products and any amounts paid or payable to Licensee in
relation to such Covered Products, all in accordance with Article 4 of the
License.
2. If the undersigned is notified, by Licensor or Licensee or
otherwise, that the License has been terminated in accordance with its terms,
such termination shall not affect the rights of the undersigned to make, use and
sell Covered Products; provided, however, that the undersigned hereby agrees
that from and after the date of such termination the undersigned shall have the
obligation (a) to pay directly to Licensor all amounts due pursuant to the
Payment Schedule of the License, including royalties on Net Sales, with respect
to all Covered Products (which shall be deemed for purposes of this paragraph to
be "Licensed Products" as defined in the License), and (b) deliver directly to
Licensor all reports otherwise due to Licensee pursuant to paragraph 1 above.
All such payments and reports shall be subject to the terms and conditions
therefor set forth in the License, which are incorporated herein. To the extent
that the foregoing constitutes a grant of rights to the undersigned under Patent
Rights with respect to the Transferred Technology, such rights shall be
contingent and, in the event of a failure to make any such payments or any other
material breach by the undersigned, terminate upon thirty (30) days notice
unless the breach is cured prior to expiration of such period. Licensor shall
not be deemed to have assumed, and will not be liable for, any representations,
warranties or obligations of Licensee to the undersigned.
3. This Agreement is executed and delivered as an instrument under
seal expressly for the benefit of each of Licensor and Licensee and their
respective Affiliates and permitted successors.
(Company
Name) Address:
By:
Title:
10
<PAGE> 1
EXHIBIT 10.18
COLLABORATION AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement"), effective as of June 20,
1997 (the "Effective Date"), is between DYAX CORP., a Delaware corporation,
having a principal place of business at One Kendall Square, Bldg. 600, 5th Fl.,
Cambridge, Massachusetts 02139 ( "DYAX"); and EPIX MEDICAL INC. , a Delaware
corporation, having its principal place of business at 71 Rogers St., Cambridge
MA 02142 ("EPIX").
RECITALS
WHEREAS, DYAX has technology and expertise relating to the discovery
and development of ligands useful in diagnostic imaging;
WHEREAS, EPIX has technology and expertise relating to magnetic
resonance diagnostic imaging; and
WHEREAS, DYAX and EPIX wish to collaborate in the research, development
and commercialization of new ligands useful in the imaging of thrombi.
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below:
1.1. "AFFILIATE" shall mean a corporation or other legal entity that
controls, is controlled by, or is under common control with such party. For
purposes of this definition, "control" means the ownership, directly or
indirectly, of more than fifty percent (50%) of the outstanding equity
securities of a corporation which are entitled to vote in the election of
directors or a more than fifty percent (50%) interest in the net assets or
profits of an entity which is not a corporation.
1.2. "DYAX REVENUES" shall mean all payments received by DYAX from
third parties, including customers, sublicensees, partners and distributors,
directly from the sale of RadioPharma Products.
1.3. "EPIX NET SALES" shall mean the invoiced sales price for any MRI
Product billed to independent customers by EPIX or any of its Affiliates,
sublicensees, partners or distributors, less (a) actual credited allowances to
such independent customers for such MRI Product which was spoiled, damaged,
out-dated or returned; (b) freight and insurance costs
<PAGE> 2
incurred in transporting such MRI Product to such customers; (c) quantity and
other trade discounts actually allowed and taken; and (d) customs duties and
surcharges and other governmental charges incurred in connection with the
exportation or importation of such MRI Product. The transfer of any Product by
EPIX or one of its Affiliates to another Affiliate of EPIX shall not be
considered a sale; in such cases, EPIX Net Sales shall be determined based on
the invoiced sales price by the Affiliate to its customer, less the deductions
allowed under this Section.
1.4. "IMAGING FIELD" shall mean the diagnostic imaging of diseases or
medical conditions in humans or animals, including, but not limited to,
detection of analytes, and not any therapeutic, in vitro diagnostic,
purifications or separations or other purposes.
1.5. "MRI-BASED CHELATE COMPOUND" shall mean metal chelate complexes
that enhance a magnetic resonance signal and which are proprietary to EPIX.
1.6. "MRI PRODUCTS" shall mean magnetic resonance imaging products
incorporating one or more Thrombus Ligands and one or more MRI-Based Chelate
Compounds and which are marketed and sold for the Imaging Field.
1.7. "NONPEPTIDIC THROMBUS LIGANDS" shall mean any non-peptidic
ligand compound based on structure and activity relationships derived from
Peptidic Thrombus Ligands which bind to fibrin and have potential utility for
identifying and localizing thrombi in vivo.
1.8. "PEPTIDIC THROMBUS LIGANDS" shall mean any peptidic compounds
discovered during the Research Program, and any analogs or derivatives thereof,
which bind to fibrin and have potential utility for identifying and localizing
thrombi in vivo.
1.9. "RADIOPHARMA PRODUCTS" shall mean radiopharmaceutical imaging
products incorporating one or more Thrombus Ligands and which are marketed and
sold for the Imaging Field.
1.10. "RESEARCH PROGRAM" shall mean the program for the discovery and
development of Thrombus Ligands which is conducted pursuant to Article 2 and is
described in Attachment A, which may be amended from time to time by mutual
agreement of the parties.
1.11. "THROMBUS LIGANDS" shall mean any Peptidic Thrombus Ligands or
any Nonpeptidic Thrombus Ligands, but excluding MRI-Based Chelate Compounds.
The above definitions are intended to encompass the defined terms in
both the singular and plural forms.
- 2 -
<PAGE> 3
ARTICLE 2. RESEARCH & DEVELOPMENT PROGRAMS
2.1. CONDUCT OF RESEARCH PROGRAM. DYAX undertakes to diligently
conduct the Research Program described in detail in ATTACHMENT A hereto. EPIX
will fund DYAX's reasonable costs and expenses of the Research Program in
accordance with Section 4.1. The specific tasks of the Research Program may be
reduced, modified or supplemented from time to time by mutual consent of the
Steering Committee. During the Research Program, DYAX shall provide the Steering
Committee on a quarterly basis with written reports of the status of the program
and a summary of the data and results as of that date in sufficient detail to
allow the Steering Committee to reasonably assess the progress of the Research
Program. Within 30 days of completion of the Research Program, DYAX shall
provide the Steering Committee with a final written report with all data and
results, and shall provide EPIX with an appropriate amount of all lead Thrombus
Ligands discovered during the Research Program sufficient for EPIX to further
evaluate such Thrombus Ligands, and shall provide EPIX with the confirmed
chemical composition, sequence and purity information for all such lead Thrombus
Ligands.
2.2. TRAINING OF EPIX STAFF. Upon EPIX's request, DYAX will provide
onsite training during the conduct of the Research Program to one member of
EPIX's research staff in the field of phage display technology chosen by EPIX
and reasonably acceptable to DYAX. Any materials (including vectors, libraries
and peptides) and inventions conceived or made during the onsite training shall
be the sole property of DYAX. EPIX shall fund the reasonable costs and
expenses of the training as part of the Research Program funding as shown on
ATTACHMENT A.
2.3. DEVELOPMENT PROGRAMS. Within 90 days of the completion of the
Research Program, DYAX and EPIX shall discuss and agree upon the following
development programs for the Imaging Field: For the optimization of the lead
Thrombus Ligands suitable for magnetic resonance imaging and preclinical and
clinical development of MRI Products exclusively by EPIX ("MRI Development
Program"); and for the optimization of lead Thrombus Ligands suitable for
radiopharmaceutical imaging and preclinical and clinical development of
RadioPharma Products exclusively by DYAX ("RadioPharma Development Program").
EPIX will have responsibility for the costs and decisions of the MRI Development
Program, and DYAX will have responsibility for the costs and decisions of the
RadioPharma Development Program. Each party agrees to use all commercially
reasonable efforts to diligently develop MRI Products and RadioPharma Products,
as applicable, and to provide the Steering Committee with semi-annual reports on
the status and results of their respective development programs, which each
party shall be entitled to use in the development and commercialization of
products pursuant to this Agreement.
2.4. COMPOSITION OF STEERING COMMITTEE. EPIX and DYAX hereby
establish a Steering Committee comprised of four (4) members, with two (2)
representatives appointed by each party. The initial members of the Steering
Committee shall be as follows:
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<PAGE> 4
EPIX REPRESENTATIVES DYAX REPRESENTATIVES
Stephen C. Knight, M.D. Edward Cannon, Ph.D.
V.P. of Strategic Planning President, Research Division
and Corporate Development
James E. Smith, Ph.D. Arthur Ley, Ph.D.
Executive V.P. of Research Associate Director of Research
and Development
A party may change one or more of its representatives to the Steering Committee
at any time upon notice to the other party. Each party will designate one of its
representatives as its team leader.
2.5. DUTIES OF THE STEERING COMMITTEE. The Steering Committee shall
direct and administer the Research Program, and shall have the following
responsibilities:.
(i) administration of the Research Program, as described in
Attachment A hereto, to include recommending to the management
of the respective parties decisions on approving, reducing,
modifying or supplementing the steps of the Research Program and
the resulting budget, allocating personnel resources to be
utilized by the parties under the Agreement, and revising and/or
extending the Research Program based on prior developments;
(ii) making recommendations on: the Thrombus Ligands for advancement
to optimization and development, the criteria of significant
functional activity necessary to identify a lead Thrombus
Ligand, the identity of lead Thrombus Ligands, the appropriate
quantity of lead Thrombus Ligands to be delivered to EPIX, and
the resolution of all matters involving scientific questions;
(iii) providing advice and guidance on the MRI Development Program and
RadioPharma Development Program, and reviewing each party's
diligence towards commercialization in such programs;
(iv) reviewing and approving all reports provided by both parties to
the Steering Committee under Sections 2.1 and 2.3 above;
(v) discussing and reaching agreement on the development and
commercialization of opportunities in the Imaging Field other
than MRI Products and RadioPharma Products; and;
(vi) monitoring the expenditures of each party relevant to the
payments due either party pursuant to Article 4.
- 4 -
<PAGE> 5
2.6. MEETINGS OF THE STEERING COMMITTEE. The Steering Committee shall
conduct monthly telephone conferences during the Research Program, and quarterly
telephone conferences during the MRI Development Program and RadioPharma
Development Program, and shall prepare and deliver a brief written report
describing the significant issues and discussions that take place during such
conferences. A representative of the Steering Committee jointly appointed by its
members shall provide each member with five (5) business days notice of the time
of any such meetings and the proposed agenda with respect thereto, unless waived
by all members. The Steering Committee shall meet at least once each quarter
alternately at the parties' locations, or at such other times and locations as
the Steering Committee determines. A representative of the Steering Committee
jointly appointed by its members shall provide each member with five (5)
business days notice of the time and location of meetings, unless such notice is
waived by all members. If a designated representative of a party cannot attend
any meeting of the Steering Committee, such party may designate a different
representative for that meeting without notice to the other party, and the
substitute member will have full power to vote on behalf of the permanent
member. Except as otherwise provided in this Section 2, all actions and
decisions of the Steering Committee will require the unanimous consent of all of
its members. If the Steering Committee fails to reach agreement upon any matter,
the dispute will be resolved in accordance with the procedures set forth in
Section 8.3 below. Within ten (10) days following each quarterly meeting of the
Steering Committee, the Steering Committee shall prepare and deliver, to both
parties, a written report describing the decisions made, conclusions and actions
agreed upon.
2.7. COOPERATION. Each party agrees to provide the Steering Committee
with information and documentation as reasonably required for the Steering
Committee to fulfill its duties under this Agreement. In addition, each party
agrees to make available its employees and consultants as reasonably requested
by the Steering Committee. The parties anticipate that members of the Steering
Committee will communicate informally with each other and with employees and
consultants of the parties on matters relating to the Research Program.
2.8. VISITS TO FACILITIES. Members of the Steering Committee shall
have reasonable access to the facilities of each party where activities under
this Agreement are in progress, but only during normal business hours and with
reasonable prior notice. Each party shall bear its own expenses in connection
with such site visits.
2.9. OWNERSHIP OF RESULTS AND INVENTIONS.
(a) DYAX shall own all Thrombus Ligands and associated libraries
(whether or not patentable) developed from the Research Program, subject to
EPIX's rights as set forth herein, and shall own all RadioPharma Products and
results (whether or not patentable) from the RadioPharma Development Program.
EPIX shall own all MRI Products and results (whether or not patentable)
developed from the Research Program and/or from the MRI Development Program.
- 5 -
<PAGE> 6
(b) Subject to subsection(a) above and DYAX's ownership of inventions
made by EPIX staff trained at DYAX pursuant to Section 2.2, all patentable
inventions (the "Inventions") made during the Research Program and development
of products hereunder shall be owned in accordance with the employment
relationship of the inventors, as follows: DYAX shall own the inventions of DYAX
employees; EPIX shall own the inventions of EPIX employees; and DYAX and EPIX
shall jointly own the inventions jointly made by their employees. Inventorship
shall be determined in accordance with federal law governing patent inventors.
Each party shall have responsibility for the cost and decisions in filing for,
maintaining and defending patent applications and patents for their solely owned
inventions, and the parties shall jointly agree upon such responsibility for
joint inventions.
ARTICLE 3. COMMERCIAL RIGHTS & OBLIGATIONS
3.1. RIGHTS TO IMAGING FIELD. The parties agree that the rights to
develop and commercialize Thrombus Ligands in the Imaging Field shall be as
follows:
(a) EPIX shall have the exclusive worldwide rights, with the right to
grant sublicenses, to the Thrombus Ligands and the Inventions to develop, make,
have made, use, sell, have sold and import MRI Products, subject to the payment
obligations to DYAX pursuant to Article 4.
(b) DYAX shall have the exclusive worldwide rights, with the right to
grant sublicenses, to the Thrombus Ligands and the Inventions to develop, make,
have made, use, sell, have sold and import RadioPharma Products, subject to the
payment obligations to EPIX pursuant to Article 4.
(c) EPIX and DYAX shall jointly have the right to the Thrombus Ligands
and Inventions to develop, make, have made, use, sell, have sold and import
products in the Imaging Field other than MRI Product and RadioPharma Products,
subject to mutual agreement by the Steering Committee on the joint development,
commercialization and revenue sharing for such products.
3.2. RIGHTS OUTSIDE IMAGING FIELD. DYAX shall have the exclusive
worldwide rights, with the right to grant sublicense, to the Thrombus Ligands
and DYAX Inventions, but excluding EPIX Inventions not related to Thrombus
Ligands, to develop, make, have made, use, sell, have sold and import products
outside of the Imaging Field, with no payment or financial obligation to EPIX.
3.3. NO OTHER RIGHTS OR LICENSES. Except as set forth herein, neither
party grants any rights or licenses to the other party to any patents, patent
applications, inventions, trademarks, trade secrets or other intellectual
property.
- 6 -
<PAGE> 7
3.4. COMMERCIAL DILIGENCE. EPIX agrees to use all commercially
reasonable efforts on its own or with third parties to diligently market and
sell MRI Products in all major markets for such products in the world, and upon
request, but in no event more than twice per calendar year, to provide DYAX with
a written report of summarizing its marketing and sales efforts. DYAX agrees to
use all commercially reasonable efforts on its own or with third parties to
diligently market and sell RadioPharma Products in all major markets for such
products in the world, and upon request, but in no event more than twice per
calendar year, to provide EPIX with a written report of summarizing its
marketing and sales efforts.
3.5. MOST FAVORED LICENSEE. In the event that DYAX offers broad,
non-exclusive licenses to one or more third parties under its phage display
patent rights in the Imaging Field, DYAX agrees to notify EPIX and offer EPIX
such license on the same terms as being offered to others.
ARTICLE 4. FUNDING AND REVENUE SHARING
4.1. RESEARCH FUNDING. Subject to a budget for the Research Program
approved by the parties as recommended by the Steering Committee, EPIX shall
fund the Research Program at DYAX at a rate equal to DYAX's full time equivalent
rate (FTE) per technical staff at the time the work is performed, but not to
exceed $225,000 per FTE without approval of the Steering Committee, plus
reimbursement for all commercially reasonable external costs. The estimated
budget for the Research Program as of the Effective Date is set forth in
Attachment A. EPIX shall make payment to DYAX quarterly in advance based on the
estimated budget, with payment of the first quarterly estimate due within 10
days of the Effective Date and the remaining quarterly payments due within 10
days of invoice. The parties shall review the budget against actual FTE costs
and external costs on a monthly basis at the Steering Committee, with the
applicable adjustment made to the next invoice to EPIX.
4.2. REVENUE SHARING OF MRI PRODUCTS. In consideration for the rights
and licenses granted to EPIX hereunder, upon the first commercial sale of MRI
Products, EPIX shall pay DYAX a royalty of 8% on EPIX Net Sales of MRI Products
based on Peptidic Thrombus Ligands, 4% on EPIX Net Sales of MRI Products based
on Nonpeptidic Thrombus Ligands discovered solely by EPIX, 8% on EPIX Net Sales
of MRI Products based on Nonpeptidic Thrombus Ligands discovered jointly by EPIX
and DYAX, or 12% on EPIX Net Sales of MRI Products based on Nonpeptidic Thrombus
Ligands discovered solely by DYAX, for the remainder of the term of the royalty
obligation. Such royalty obligation shall commence with the first commercial
sale of MRI Products and shall end on a country-by-country basis 15 years after
the first commercial sale of MRI Products in each country. The payments shall be
made to DYAX on a quarterly basis, within 45 days after the end of each quarter.
If EPIX is required to pay royalties to a third party in order to make, use,
sell or import an MRI Product for which EPIX is then paying royalties to DYAX,
to avoid infringing such
- 7 -
<PAGE> 8
third party's patent rights, and where such infringement arises solely and
directly from the use or sale of an MRI Product, EPIX may deduct up to fifty
percent (50%) of such third party royalty payments from royalties thereafter
payable to DYAX; PROVIDED, HOWEVER, under no circumstances shall the royalties
due DYAX be reduced to less than (i) four percent (4.0%) for MRI Products based
on Peptidic Thrombus Ligands, or Nonpeptidic Thrombus Ligands discovered jointly
by EPIX and DYAX, (ii) six percent (6.0%) for MRI Products based on Nonpeptidic
Thrombus Ligands discovered solely by DYAX, or (iii) two percent (2.0%) for MRI
Products based on Nonpeptidic Thrombus Ligands discovered solely by EPIX.
4.3. REVENUE SHARING OF RADIOPHARMA PRODUCTS. In consideration for
the funding and rights and licenses granted to DYAX hereunder, DYAX shall pay to
EPIX upon the first commercial sale of RadioPharma Products a percentage of DYAX
Revenues, excluding license fees and milestone payments, based on the following
formula: Y% x A/(A+B), where A is the total amount of funding made by EPIX for
the Research Program, B is the total amount expenses incurred by DYAX for the
RadioPharma Development Program (excluding research and/or development funding
received by DYAX from a third party), and Y% equals 40% for RadioPharma Products
based on Peptidic Thrombus Ligands, 20% for RadioPharma Products based on
Nonpeptidic Thrombus Ligands discovered solely by DYAX, 40% for RadioPharma
Products based on Nonpeptidic Thrombus Ligands discovered jointly by DYAX and
EPIX, or 60% for RadioPharma Products based on Nonpeptidic Thrombus Ligands
discovered solely by EPIX. (For example, if EPIX funds $500,000 and DYAX expends
$1,500,000, the percentage would be 40% X .25 = 10% for RadioPharma Products
based on Peptidic Thrombus Ligands). Such payment obligation shall commence with
the first DYAX Revenues and shall end on a country-by-country basis 15 years
after the first commercial sale of RadioPharma Products in each country. The
payments shall be made to EPIX on a quarterly basis, within 45 days after the
end of each quarter.
If DYAX is required to pay a percentage of DYAX Revenues to a third party in
order to make, use, sell or import a RadioPharma Product for which DYAX is then
paying a percentage of DYAX Revenues to EPIX, to avoid infringing such third
party's patent rights, and where such infringement arises solely and directly
from the use or sale of a RadioPharma Product, DYAX may deduct up to fifty
percent (50%) of such third party DYAX Revenue payments from the portion of DYAX
Revenue thereafter payable to EPIX; PROVIDED, HOWEVER, under no circumstances
shall the percentage of DYAX Revenues due EPIX be reduced to less than (i)
twenty percent (20%) for RadioPharma Products based on Peptidic Thrombus
Ligands, or Nonpeptidic Thrombus Ligands discovered jointly by EPIX and DYAX,
(ii) thirty percent (30%) for RadioPharma Products based on Nonpeptidic Thrombus
Ligands discovered solely by EPIX, or (iii) ten percent (10%) for RadioPharma
Products based on Nonpeptidic Thrombus Ligands discovered solely by DYAX.
4.4. REPORTS. Concurrent with each payment due under this Article 4,
each party shall deliver to the other party a report containing the following
information: (a) Total DYAX Revenues and EPIX Net Sales (including gross
receipts), as applicable, during the
- 8 -
<PAGE> 9
reporting period, and (b) calculation of the actual payment due the other party
for the reporting period. All such reports shall be maintained in confidence by
the parties.
4.5. RECORDS. Each party shall maintain complete and accurate records
relating to the DYAX Revenues and EPIX Net Sales, as applicable, including of
all payments received from third parties, product sales and product development
costs which are necessary for the accurate calculation of the amounts due the
other party in this Article 4. Such records shall be maintained according to
Good Accounting Practices and shall be retained for at least three (3) years
after the conclusion of each payment period. Each party shall have the right, at
its expense, to cause an independent certified public accountant reasonably
acceptable to the other party to inspect such records of the other party during
normal business hours for the sole purpose of verifying any reports and payments
delivered under this Agreement. The parties shall reconcile any underpayment or
overpayment within 30 days after the accountant delivers the results of the
audit. In the event that any audit performed under this Section reveals an
underpayment in excess of 5% for any royalty period, the reporting party shall
bear the full cost of such audit.
4.6. PAYMENTS IN U.S. DOLLARS. All payments due under this Agreement
shall be payable in United States dollars. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate existing in the United States
as reported in THE WALL STREET JOURNAL on the last working day of the calendar
quarter preceding the applicable calendar quarter. Such payments shall be
without deduction of exchange, collection, or other charges. The method of
payment shall be by check or wire transfer as directed from time to time by the
receiving party.
4.7. LATE PAYMENTS. Any payments due any party hereunder that are not
paid on or before the date such payments are due under this Agreement shall bear
interest, to the extent permitted by law, at two percentage points above the
base rate of interest most recently reported by THE WALL STREET JOURNAL,
calculated based on the number of days that payment is delinquent.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES & INDEMNIFICATION
5.1. REPRESENTATIONS AND WARRANTIES. Each party represents and
warrants to the other that it has the legal right and power to enter into this
Agreement, to extend the rights and licenses granted to the other in this
Agreement, and to fully perform its obligations hereunder, and that the
performance of such obligations will not conflict with its charter documents or
any agreements, contracts, or other arrangements to which it is a party.
5.2. DISCLAIMERS. Nothing in this Agreement shall be construed as a
warranty or representation by either party of the success of the Research
Program, MRI Development Program or RadioPharma Development Program.
- 9 -
<PAGE> 10
5.3. INDEMNIFICATION BY DYAX. DYAX agrees to indemnify, defend, and
hold harmless EPIX and its Affiliates and their directors, officers, employees,
and agents (the "EPIX Indemnitees") against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses of litigation)
incurred by or imposed upon any of the EPIX Indemnitees as a result of any
claims, suits, actions, demands, or judgments concerning (i) the negligent or
willful acts of DYAX or its Affiliates and their directors, officers, employees,
and agents or (ii) any Thrombus Ligand products or RadioPharma Products marketed
and sold by or on behalf of DYAX hereunder.
5.4. INDEMNIFICATION BY EPIX. EPIX agrees to indemnify, defend, and
hold harmless DYAX and its Affiliates and their directors, officers, employees,
and agents (the "DYAX Indemnitees") against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses of litigation)
incurred by or imposed upon any of the DYAX Indemnitees as a result of any
claims, suits, actions, demands, or judgments concerning (i) any negligent or
willful acts of EPIX or its Affiliates and their directors, officers, employees,
and agents or (ii) any Thrombus Ligand products or MRI Products marketed and
sold by or on behalf of EPIX hereunder.
ARTICLE 6. CONFIDENTIALITY & PUBLICITY
6.1. CONFIDENTIAL INFORMATION. In connection with the performance of
their respective obligations under this Agreement, each party intends to
disclose certain confidential information and materials to the other party ,
including such information and materials as are developed hereunder ( the
"Confidential Information"). During the term of this Agreement and for a period
of (5) years thereafter, each party shall maintain all Confidential Information
in strict confidence, except that the receiving party may disclose or permit the
disclosure of any Confidential Information to its directors, officers,
employees, consultants, advisors and commercial partner candidates who are
obligated to maintain the confidential nature of such Confidential Information
and who need to know such Confidential Information for the purposes set forth in
this Agreement; and each party shall use all Confidential Information solely for
the purposes set forth in this Agreement. The obligations of confidentiality and
non-use set forth above shall not apply to the extent that the receiving party
can demonstrate that Confidential Information: was in the public domain or
became party of the public domain prior through no fault of the receiving party;
was independently developed or discovered by the receiving party prior to the
time of its disclosure under this Agreement; is or was disclosed to the
receiving party at any time by a third party having no obligation of
confidentiality with respect to such Confidential Information; or is required to
be disclosed to comply with applicable laws or regulations, or with a court or
administrative order.
6.2. PUBLICATION OF RESULTS & PUBLICITY. DYAX and EPIX shall mutually
agree upon any publication, whether oral or in writing, of the results of the
Research Program, MRI Development Program and RadioPharma Development Program.
In any such
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<PAGE> 11
publication, each party shall recognize the contribution of the other party.
Additionally, DYAX and EPIX shall mutually agree upon any press release or
similar public disclosure concerning this Agreement.
ARTICLE 7. TERM AND TERMINATION.
7.1. TERM. Unless sooner terminated as provided herein, this
Agreement shall commence on the Effective Date and shall remain in effect on a
country-by-country basis until no further payments are due under Article 4.
7.2. VOLUNTARY TERMINATION DURING THE RESEARCH PROGRAM. EPIX shall
have the right terminate this agreement for any reason upon 3 months notice
during the Research Program. In the event of such termination by EPIX, DYAX
shall have the right to continue the research and development of Thrombus
Ligands, with no payment obligations to EPIX.
7.3. VOLUNTARY TERMINATION AFTER THE RESEARCH PROGRAM. After
completion of the Research Program, either party may terminate this Agreement
for any reason upon 3 months notice. In the event of such termination by EPIX,
all rights and obligations of EPIX hereunder, including rights to any Thrombus
Ligands, shall cease, except for the right to receive payments and reports under
Article 4 hereunder with respect to RadioPharma Products. In the event of such
termination by DYAX, all rights and obligations of DYAX hereunder in the Imaging
Field shall cease, except for the right to receive payments and reports under
Article 4 with respect to MRI Products.
7.4. TERMINATION FOR MATERIAL BREACH. In the event that either party
commits a material breach of any of its obligations under this Agreement,
including failure to make timely payment of any amounts due, the non-breaching
party may terminate this Agreement upon 60 days written notice to the other
party, unless the party in breach cures such breach within the 60 days notice
period.
7.5. EFFECT OF TERMINATION. Notwithstanding anything to the contrary
in this Article 7, upon the expiration or termination of this Agreement, the
following provisions shall survive the expiration or termination of this
Agreement: Article 5 and 6, and the obligations under Article 4 to make payments
and reports for any amounts and reports which have accrued or are owing prior to
the effective date of termination.
ARTICLE 8. MISCELLANEOUS
8.1. NOTICES. All notices required or permitted to be given pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given upon the date of receipt if delivered by hand, international overnight
courier, confirmed facsimile transmission,
- 11 -
<PAGE> 12
or registered or certified mail, return receipt requested, postage prepaid
to the following addresses or facsimile numbers:
<TABLE>
<S> <C>
If to DYAX: If to EPIX:
Dyax Corp. Epix Medical Inc.
One Kendall Square, Bldg. 600, 5th Fl. 71 Rodgers St.
Cambridge, MA 02139 Cambridge , MA 02142
Attention: Chief Executive Officer Attention: Chief Executive Officer
Facsimile: (617) 225-2501 Facsimile: (617) 499-1414
</TABLE>
Either party may change its designated address and facsimile number by
notice to the other party in the manner provided in this Section.
8.2. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
8.3. ARBITRATION. In the event either party has a dispute regarding
any of the terms of this Agreement, that party shall notify the other party in
writing. The parties shall use their best efforts to resolve the dispute
amicably at the Steering Committee, or if the Steering Committee is unsuccessful
in reaching resolution, the parties shall refer the matter for resolution by
their Chief Executive Officers. If such attempts are not successful in resolving
the dispute within a period of 90 days following the notice of dispute, either
party may refer the dispute to the American Arbitration Association for hearing
and resolution, using a mutually agreed upon arbitrator at a forum in the Boston
area. Upon reference of the dispute for arbitration, neither party shall contest
such dispute in a court of law until the completion of the arbitration process.
8.4. CONSENT TO JURISDICTION. The parties hereby irrevocably consent
and submit to the exclusive jurisdiction of any Commonwealth of Massachusetts or
Federal court sitting in Boston in any action or proceeding of any type
whatsoever arising out of or relating to this Agreement.
8.5. HEADINGS & COUNTERPARTS. All headings in this Agreement are for
convenience only and shall not affect the meaning of any provision hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall be deemed to be one and the
same instrument.
8.6. BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective lawful successors and assigns.
8.7. ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either
party may assign this Agreement to any of its Affiliates or to a successor in
connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business pertaining to the subject
- 12 -
<PAGE> 13
matter of this Agreement, with prompt written notice to the other party of any
such assignment.
8.8. COMPLIANCE WITH LAW. Nothing in this Agreement shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision of this Agreement and any
statute, law, ordinance or treaty, the latter shall prevail, but in such event
the affected provisions of the Agreement shall be conformed and limited only to
the extent necessary to bring it within the applicable legal requirements.
8.9. AMENDMENT AND WAIVER. This Agreement may be amended,
supplemented, or otherwise modified only by means of a written instrument signed
by both parties. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance, whether or
not similar.
8.10. SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the parties shall negotiate in good faith to modify the Agreement to
preserve their original intent.
8.11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings between the parties relating
to the subject matter hereof.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
DYAX CORP. EPIX MEDICAL INC.
By: /s/ Henry E. Blair By: /s/ Michael D. Webb
------------------------ ------------------------
Name: HENRY E. BLAIR Name: MICHAEL D. WEBB
Title: CHAIRMAN AND CEO Title: PRESIDENT AND CEO
- 13 -
<PAGE> 14
ATTACHMENT A
RESEARCH PROGRAM
[summary of research program and time line to be added]
* DYAX and EPIX will have joint responsibility for preparing fibrin in a form
suitable for use a thrombus diagnostic marker
* DYAX will design, construct and screen phage display libraries
to identify peptidic compounds which bind the fibrin.
- 14 -
<PAGE> 1
Exhibit 10.19
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
MASSACHUSETTS INSTITUTE OF TECHNOLOGY,
WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH
and
DYAX CORP.
PATENT LICENSE AGREEMENT
(EXCLUSIVE)
<PAGE> 2
<TABLE>
<CAPTION>
(i)WHI Vers 2/9/96 (i) LN
Patent/Ex June 18, 1997
TABLE OF CONTENTS
PAGE
<S> <C>
PREAMBLE..............................................................................................1
ARTICLES
1 DEFINITIONS..................................................................................2
2 GRANT........................................................................................3
3 DUE DILIGENCE................................................................................4
4 ROYALTIES....................................................................................4
5 REPORTS AND RECORDS..........................................................................6
6 PATENT PROSECUTION...........................................................................7
7 INFRINGEMENT.................................................................................7
8 PRODUCT LIABILITY............................................................................9
9 EXPORT CONTROLS..............................................................................9
10 NON-USE OF NAMES.............................................................................10
11 ASSIGNMENT...................................................................................10
12 DISPUTE RESOLUTION...........................................................................10
13 TERMINATION..................................................................................11
14 PAYMENTS, NOTICES AND OTHER
COMMUNICATIONS...............................................................................12
15 MISCELLANEOUS PROVISIONS.....................................................................12
16 APPENDIX A...................................................................................14
</TABLE>
<PAGE> 3
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 1 -
MASSACHUSETTS INSTITUTE OF TECHNOLOGY,
WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH
and
DYAX CORP.
PATENT LICENSE AGREEMENT
This Agreement is made and entered into this day of
, 199 , (the "EFFECTIVE DATE") by and between the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a corporation organized and existing
under the laws of Massachusetts and having its principal office at 77
Massachusetts Avenue, Cambridge, Massachusetts 02139, U.S.A. (hereinafter
referred to as "M.I.T."), and the WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH, a
corporation organized and existing under the laws of Delaware and having its
principal office at Nine Cambridge Center, Cambridge, Massachusetts 02142,
U.S.A., (hereinafter referred to "WHITEHEAD") and DYAX CORP., a corporation
organized and existing under the laws of Delaware and having its principal
office at One Kendall Square, Bldg. 600, 5th Floor, Cambridge, 02139
(hereinafter referred to as "LICENSEE").
WITNESSETH
WHEREAS, WHITEHEAD and the MASSACHUSETTS GENERAL HOSPITAL (herein
referred to as "M.G.H.") are the joint owners of certain PATENT RIGHTS (as later
defined herein) relating to WHITEHEAD Case No. WHI ***************, (M.I.T. Case
No.***************,) "Adipocyte-Specific Sequences" by: Perry Bickel, Harvey F.
Lodish and Philipp Scherer and has the right to grant licenses under said PATENT
RIGHTS subject only to a ***************.
WHEREAS, M.G.H. has authorized M.I.T. to act as its sole and
exclusive agent for the purposes of licensing the PATENT RIGHTS and
has authorized M.I.T. to enter into this Patent License Agreement
on its behalf;
WHEREAS, M.I.T. and WHITEHEAD desire to have the PATENT RIGHTS
utilized in the public interest, and M.I.T. is willing to grant a
license thereunder;
WHEREAS, LICENSEE has represented to M.I.T., to induce M.I.T. to enter
into this Agreement, that LICENSEE shall commit itself to a thorough, vigorous
and diligent program of exploiting the PATENT RIGHTS so that public utilization
shall result therefrom; and
WHEREAS, LICENSEE desires to obtain a license under the PATENT RIGHTS
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
<PAGE> 4
- 2 -
ARTICLE 1 - DEFINITIONS
For the purposes of this Agreement, the following words and phrases
shall have the following meanings:
1.1 "LICENSEE" shall include a related company of Dyax Corp., the
voting stock of which is directly or indirectly at least Fifty Percent (50%)
owned or controlled by Dyax Corp., an organization which directly or indirectly
controls more than Fifty Percent (50%) of the voting stock of Dyax Corp. and an
organization, the majority ownership of which is directly or indirectly common
to the ownership of Dyax Corp.
1.2 "PATENT RIGHTS" shall mean all of the following WHITEHEAD
intellectual property:
(a) the United States provisional patent application
listed in Appendix A;
(b) the United States patent applications corresponding
to the provisional application listed in Appendix A,
and divisionals, the completed continuations and
claims of continuation-in-part applications which
shall be directed to subject matter specifically
described in such patent applications, and the
resulting patents;
(c) any patents resulting from reissues or
reexaminations of the United States patents
described in a. and b. above;
(d) Foreign patent applications filed corresponding to
a. and b. above and divisionals, continuations and
claims of continuation-in-part applications which
shall be directed to subject matter specifically
described in such patent applications, and the
resulting patents; and
(e) any Foreign patents, resulting from equivalent
Foreign procedures to United States reissues
and reexaminations, of the Foreign patents
described in d. above.
1.3 A "LICENSED PRODUCT" shall mean any product or part thereof which
is covered in whole or in part by an issued, unexpired claim or a pending claim
contained in the PATENT RIGHTS.
1.4 A "LICENSED PROCESS" shall mean any process which is covered in
whole or in part by an issued, unexpired claim or a pending claim contained in
the PATENT RIGHTS.
1.5 "IDENTIFIED PRODUCT" shall mean any product, or direct derivative
thereof, which was identified or selected through the use of the LICENSED
PROCESS.
<PAGE> 5
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 3 -
ARTICLE 2 - GRANT
2.1 WHITEHEAD has authorized M.I.T. to act as its sole and
exclusive agent for the purposes of licensing the PATENT RIGHTS and
has authorized M.I.T. to enter into this Patent License Agreement
on its behalf.
2.2 M.I.T. hereby grants to LICENSEE the right and license to practice
under the PATENT RIGHTS to make, have made, use, lease, sell and import LICENSED
PRODUCTS and to practice the LICENSED PROCESSES, until the expiration of the
last to expire of the PATENT RIGHTS, unless this Agreement shall be sooner
terminated according to the terms hereof.
2.3 LICENSEE agrees that LICENSED PRODUCTS leased or sold in the United
States shall be manufactured substantially in the United States.
2.4 In order to establish a period of exclusivity for LICENSEE, M.I.T.
hereby agrees that it shall not grant any other license to make, have made, use,
lease, sell and import LICENSED PRODUCTS or to utilize LICENSED PROCESSES,
except for the ***************.
2.5 WHITEHEAD, M.I.T. and M.G.H. reserve the right to
practice under the PATENT RIGHTS for noncommercial research
purposes.
2.6 LICENSEE shall have the right to enter into sublicensing agreements
for the rights, privileges and licenses granted hereunder. Upon any termination
of this Agreement, sublicensees' rights shall also terminate, subject to
Paragraph 13.6 hereof.
2.7 LICENSEE agrees to incorporate into all sublicensing agreements,
language that enables such sublicensing agreements to comply with LICENSEE's
obligations to M.I.T. under this License Agreement.
2.8 LICENSEE agrees to forward to M.I.T. with the major terms
of any and all sublicense agreements promptly upon execution by the
parties which shall be treated as confidential by M.I.T.
2.9 LICENSEE shall not receive from sublicensees anything of value in
lieu of cash payments in consideration for any sublicense under this Agreement,
without the express prior written permission of M.I.T.
2.10 Nothing in this Agreement shall be construed to confer any rights
upon LICENSEE by implication, estoppel or otherwise as to any technology or
patent rights of M.I.T. or WHITEHEAD or any other entity other than the PATENT
RIGHTS, regardless of whether such patent rights shall be dominant or
subordinate to any PATENT RIGHTS.
ARTICLE 3 - DUE DILIGENCE
3.1 LICENSEE shall use its best commercial efforts to commercialize the
results of utilizing LICENSED PROCESSES through a thorough, vigorous and
diligent program for exploitation of the PATENT RIGHTS throughout the life of
this Agreement.
<PAGE> 6
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 4 -
3.2 In addition, LICENSEE shall adhere to the following
milestones:
(a) LICENSEE shall deliver to M.I.T. *************** a
business plan showing the amount of money, number and
kind of personnel and time budgeted and planned for
each phase of development of the LICENSED PRODUCTS
and LICENSED PROCESSES and shall provide similar
reports to M.I.T. *************** which shall be kept
confidential by M.I.T.
(b) LICENSEE shall develop a working model of LICENSED
PROCESS *************** and permit an in-plant
inspection by M.I.T. ***************, and
thereafter permit in-plant inspections by M.I.T. at
regular intervals with at least ***************
between each such inspection, subject to
appropriate notice and confidentiality obligations.
3.3 LICENSEE's failure to perform in accordance with Paragraphs 3.1 and
3.2 above shall be grounds for M.I.T. to terminate this Agreement pursuant to
Paragraph 13.3 hereof.
ARTICLE 4 - ROYALTIES
4.1 For the rights, privileges and license granted hereunder, LICENSEE
shall make payments to M.I.T. in the manner hereinafter provided to the end of
the term of the PATENT RIGHTS or until this Agreement shall be terminated:
(a) License Issue Fee of ***************, which said
License Issue Fee shall be deemed earned and due
within *************** of the ***************.
(b) License Maintenance Fees of *************** payable
on *************** and on ***************
thereafter through and including ***************.
(c) *************** of *************** received by
LICENSEE for the practice of LICENSED PROCESSES on
behalf of third parties, excluding revenues received
from grants from the Federal Government, and
excluding sublicensing payments paid by any third
parties, which shall be covered under P. 4.1 (d)
below.
(d) *************** received by LICENSEE for
***************. This ***************
<PAGE> 7
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 5 -
shall include, but not limited to, ***************
from *************** for ***************. No
***************, however, on *************** covered
under ***************.
(e) Milestone payments as follows, regardless of whether
the milestone is reached by LICENSEE or a partner
(such as a sublicensee, corporate partner or other)
of LICENSEE, but excluding sublicensees to the PATENT
RIGHTS under 4.1.d.
(i) For each successful reduction to practice of
a LICENSED PROCESS *************** by the
*************** for that ***************.
(ii) For each successful identification of each
IDENTIFIED PRODUCT from *************** by
*************** regardless of whether it is
the first IDENTIFIED PRODUCT from
***************.
(iii) For each IDENTIFIED PRODUCT for
*************** per IDENTIFIED
PRODUCT, regardless of whether it is
the first IDENTIFIED PRODUCT from
***************.
(iv) For each IDENTIFIED PRODUCT for
*************** per IDENTIFIED PRODUCT,
regardless of whether it is the first
IDENTIFIED PRODUCT from ***************.
(v) For each IDENTIFIED PRODUCT ***************
per IDENTIFIED PRODUCT, regardless of whether
it is the first IDENTIFIED PRODUCT for
***************.
(vi) For each IDENTIFIED PRODUCT ***************
of an IDENTIFIED PRODUCT arising from each
IDENTIFIED PRODUCT: *************** per
IDENTIFIED PRODUCT, regardless of whether it
is the first IDENTIFIED PRODUCT for
***************.
<PAGE> 8
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 6 -
(f) As of the Effective Date, LICENSEE and M.I.T.
contemplate that the primary use of the PATENT
RIGHTS will be in the development of
*************** by LICENSEE (on behalf of itself
and third parties) and/or by its sublicensees.
However, LICENSEE's rights under this Agreement are
in all fields of use and it is possible that
LICENSEE and/or sublicensees may later develop
products for sale to third parties which are
reagents derived specifically from or used
specifically to practice LICENSED PROCESSES, or are
LICENSED PRODUCTS. If such occurs, such that
LICENSEE or its sublicensees contemplates selling
such products, then LICENSEE and M.I.T. shall meet
to negotiate reasonable royalties which shall be
due to M.I.T. for such products.
4.2 All payments due hereunder shall be paid in full, without deduction
of taxes or other fees which may be imposed by any government.
4.3 No multiple royalties shall be payable because any LICENSED PROCESS
or LICENSED PRODUCT, its manufacture, use, lease or sale are or shall be covered
by more than one PATENT RIGHTS patent application or PATENT RIGHTS patent
licensed under this Agreement.
4.4 Royalty payments shall be paid in United States dollars in
Cambridge, Massachusetts, or at such other place as M.I.T. may reasonably
designate consistent with the laws and regulations controlling in any foreign
country. If any currency conversion shall be required in connection with the
payment of royalties hereunder, such conversion shall be made by using the
exchange rate prevailing at the Chase Manhattan Bank (N.A.) on the last business
day of the calendar quarterly reporting period to which such royalty payments
relate.
ARTICLE 5 - REPORTS AND RECORDS
5.1 LICENSEE shall keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of showing the
amounts payable to M.I.T. hereunder. Said books of account shall be kept at
LICENSEE's principal place of business or the principal place of business of the
appropriate division of LICENSEE to which this Agreement relates. Said books and
the supporting data shall be open at all reasonable times for ***************
following the end of the calendar year to which they pertain, to the inspection
of M.I.T. or its agents for the purpose of verifying LICENSEE's royalty
statement or compliance in other respects with this Agreement. Should such
inspection lead to the discovery of a greater than *************** discrepancy
in reporting to M.I.T.'s detriment, LICENSEE agrees to pay the full cost of such
inspection.
<PAGE> 9
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 7 -
5.2 LICENSEE shall deliver to M.I.T. true and accurate reports which
shall be kept confidential by M.I.T., giving such particulars of the business
conducted by LICENSEE and its sublicensees under this Agreement as shall be
pertinent to diligence under Article 3 and royalty accounting hereunder
*************** after the end of each calendar half year, reporting for the
events of the preceding half-year period:
(a) Names and addresses of third parties contracting with
LICENSEE for research and development services practicing
LICENSED PROCESSES
(c) Names and addresses of sublicensees under this Agreement
(d) Research and development contract revenue and other
revenue received by LICENSEE for the practice of LICENSED
PROCESSES on behalf of third parties: and the payments
due to M.I.T. for them under P. 4.1 (c).;
(e) Third Party Milestone Payments and the payments due to
M.I.T. for them under P. 4.1(d);
(f) LICENSEE's and any sublicensee milestones met, as defined
under P. 4.1(e), and the payments due to M.I.T. for each
milestone met.
(g) Total amount due to M.I.T.
5.3 With each such report submitted, LICENSEE shall pay to
M.I.T. the royalty payments due and payable under this Agreement.
If no royalties shall be due, LICENSEE shall so report.
5.4 On or before the *************** following the close of LICENSEE's
fiscal year, LICENSEE shall provide M.I.T. with LICENSEE's certified financial
statements for the preceding fiscal year including, at a minimum, a balance
sheet and an income statement.
5.5 The amounts due under Articles 4 and 6 shall, if overdue, bear
interest until payment at a per annum rate *************** above the prime rate
in effect at the Chase Manhattan Bank (N.A.) on the due date. The payment of
such interest shall not foreclose M.I.T. from exercising any other rights it may
have as a consequence of the lateness of any payment.
ARTICLE 6 - PATENT PROSECUTION
6.1 WHITEHEAD shall apply for, seek prompt issuance of, and maintain
the PATENT RIGHTS during the term of this Agreement, subject to LICENSEE's
advance approval of the foreign countries to be applied for. The filing,
prosecution and maintenance of all PATENT RIGHTS applications and patents shall
be the primary
<PAGE> 10
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- 8 -
responsibility of WHITEHEAD; provided, however, LICENSEE shall have reasonable
opportunities to advise WHITEHEAD in advance and shall cooperate with WHITEHEAD
in such filing, prosecution and maintenance.
6.2 Payment of all fees and costs relating to the filing, prosecution
and maintenance of the PATENT RIGHTS shall be the responsibility of
*************** after the filing of the first non-provisional U.S. patent
application. Such fees and costs incurred shall be paid by ***************
within *************** of invoicing. Payment of fees and costs incurred for the
filing of the first provisional U.S. patent application and the first non-
provisional patent application shall be due *************** from the issuance of
the first U.S. claim of the PATENT RIGHTS.
ARTICLE 7 - INFRINGEMENT
7.1 LICENSEE shall inform M.I.T. promptly in writing of any
alleged infringement of the PATENT RIGHTS by a third party and of
any available evidence thereof, and M.I.T. shall so inform
WHITEHEAD.
7.2 WHITEHEAD shall have the right, but shall not be obligated, to
prosecute *************** all infringements of the PATENT RIGHTS and, in
furtherance of such right, LICENSEE hereby agrees that WHITEHEAD may include
LICENSEE as a party plaintiff in any such suit, without expense to LICENSEE. The
total cost of any such infringement action commenced or defended solely by
WHITEHEAD shall be *************** shall keep any recovery or damages for past
infringement derived therefrom.
7.3 If within *************** after having been notified of any alleged
infringement, WHITEHEAD shall have been unsuccessful in persuading the alleged
infringer to desist and shall not have brought and shall not be diligently
prosecuting an infringement action, or if WHITEHEAD shall notify LICENSEE at any
time prior thereto of its intention not to bring suit against any alleged
infringer, then, and in those events only, LICENSEE shall have the right, but
shall not be obligated, to prosecute at its own expense any infringement of the
PATENT RIGHTS and LICENSEE may, for such purposes, use the name of WHITEHEAD as
party plaintiff; provided, however, that such right to bring such an
infringement action shall remain in effect only during the EXCLUSIVE PERIOD. No
settlement, consent judgment or other voluntary final disposition of the suit
may be entered into without the consent of WHITEHEAD, which consent shall not
unreasonably be withheld. LICENSEE shall indemnify WHITEHEAD and M.I.T. against
any order for costs that may be made against WHITEHEAD and M.I.T. in such
proceedings.
7.4 In the event that LICENSEE shall undertake litigation for the
enforcement of the PATENT RIGHTS, or the defense of the PATENT RIGHTS under
Paragraph 7.5, LICENSEE may withhold up to *************** of the payments
otherwise thereafter due M.I.T. under Article 4 hereunder and apply the same
toward reimbursement of up to half of LICENSEE's expenses, including reasonable
attorneys' fees, in connection therewith. Any recovery of damages
<PAGE> 11
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 9 -
by LICENSEE for each such suit shall be applied first in satisfaction of any
unreimbursed expenses and legal fees of LICENSEE relating to such suit, and next
toward reimbursement of M.I.T. for any payments under Article 4 past due or
withheld and applied pursuant to this Article 7. The balance remaining from any
such recovery shall be ***************.
7.5 In the event that a declaratory judgment action alleging invalidity
or noninfringement of any of the PATENT RIGHTS shall be brought against
WHITEHEAD or LICENSEE, WHITEHEAD, at its option, shall have the right, within
*************** after commencement of such action, to intervene and take over
the sole defense of the action at its own expense. If WHITEHEAD shall not
exercise this right, LICENSEE may take over the sole defense at LICENSEE's sole
expense, subject to Paragraph 7.4.
7.6 In any infringement suit as either party may institute to enforce
the PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at
the request and expense of the party initiating such suit, cooperate in all
respects and, to the extent possible, have its employees testify when requested
and make available relevant records, papers, information, samples, specimens,
and the like.
7.7 LICENSEE, during the EXCLUSIVE PERIOD, shall have the sole right in
accordance with the terms and conditions herein to sublicense any alleged
infringer for future use of the PATENT RIGHTS. Sublicensee revenues shall be
treated per Article 4.
ARTICLE 8 - PRODUCT LIABILITY
8.1 LICENSEE shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold M.I.T., WHITEHEAD and M.G.H., their
trustees, officers, employees and affiliates, harmless against all claims,
proceedings, demands and liabilities of any kind whatsoever, including legal
expenses and reasonable attorneys' fees, arising out of the death of or injury
to any person or persons or out of any damage to property, resulting from the
production, manufacture, sale, use, lease, consumption or advertisement of the
LICENSED PRODUCT(s) and/or LICENSED PROCESS(es) or arising from any obligation
of LICENSEE hereunder.
8.2 LICENSEE shall obtain and carry in full force and effect
commercial, general liability insurance which shall protect LICENSEE and M.I.T.,
WHITEHEAD and M.G.H. with respect to events covered by Paragraph 8.1 above.
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T.,
WHITEHEAD AND M.G.H., THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AND
AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR
PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION
MADE OR WARRANTY GIVEN BY M.I.T. OR WHITEHEAD THAT
<PAGE> 12
- 10 -
THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE
PATENT RIGHTS OF ANY THIRD PARTY. IN NO EVENT SHALL M.I.T., WHITEHEAD AND
M.G.H., THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE
OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER M.I.T., WHITEHEAD
AND/OR M.G.H. SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT
SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
ARTICLE 9 - EXPORT CONTROLS
LICENSEE acknowledges that it is subject to United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended and the United States Department of Commerce Export
Administration Regulations). The transfer of such items may require a license
from the cognizant agency of the United States Government and/or written
assurances by LICENSEE that LICENSEE shall not export data or commodities to
certain foreign countries without prior approval of such agency. M.I.T. neither
represents that a license shall not be required nor that, if required, it shall
be issued.
ARTICLE 10 - NON-USE OF NAMES
LICENSEE shall not use the names or trademarks of the Massachusetts
Institute of Technology nor of the Whitehead Institute for Biomedical Research,
nor any adaptation thereof, nor the names of any of their employees, in any
advertising, promotional or sales literature without prior written consent
obtained from M.I.T., or said employee, in each case, except that LICENSEE may
state that it is licensed by M.I.T. under one or more of the patents and/or
applications comprising the PATENT RIGHTS.
ARTICLE 11 - ASSIGNMENT
This Agreement is not assignable and any attempt to do so shall be
void; provided, however, with the prior written consent of M.I.T., which shall
not be unreasonably withheld, LICENSEE may assign this Agreement in connection
with the sale or transfer of all or substantially all of LICENSEE's equity and
assets, by merger, consolidation or otherwise, so long as the assignee shall
agree in writing to be bound by the terms and conditions hereof prior to such
assignment. Failure of such assignee to so agree shall be grounds for
termination by M.I.T. under Paragraph 13.3
ARTICLE 12 - DISPUTE RESOLUTION
12.1 Except for the right of any party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable harm,
any and all claims,
<PAGE> 13
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 11 -
disputes or controversies arising under, out of, or in connection with the
Agreement, including any dispute relating to patent validity or infringement,
which the parties shall be unable to resolve within *************** shall be
mediated in good faith. The party raising such dispute shall promptly advise the
other parties of such claim, dispute or controversy in a writing which describes
in reasonable detail the nature of such dispute. By not later than
*************** after the recipient has received such notice of dispute, each
party shall have selected for itself a representative who shall have the
authority to bind such party, and shall additionally have advised the other
parties in writing of the name and title of such representative. By not later
than *************** after the date of such notice of dispute, the party against
whom the dispute shall be raised shall select a mediation firm in the Boston
area and such representatives shall schedule a date with such firm for a
mediation hearing. The parties shall enter into good faith mediation and shall
share the costs equally. If the representatives of the parties have not been
able to resolve the dispute within *************** after such mediation hearing,
then any and all claims, disputes or controversies arising under, out of, or in
connection with this Agreement, including any dispute relating to patent
validity or infringement, shall be resolved by final and binding arbitration in
Boston, Massachusetts under the rules of the American Arbitration Association,
or the Patent Arbitration Rules if applicable, then obtaining. The arbitrators
shall have no power to add to, subtract from or modify any of the terms or
conditions of this Agreement, nor to award punitive damages. Any award rendered
in such arbitration may be enforced by either party in either the courts of the
Commonwealth of Massachusetts or in the United States District Court for the
District of Massachusetts, to whose jurisdiction for such purposes M.I.T.,
WHITEHEAD and LICENSEE each hereby irrevocably consents and submits.
12.2 Notwithstanding the foregoing, nothing in this Article shall be
construed to waive any rights or timely performance of any obligations existing
under this Agreement.
ARTICLE 13 - TERMINATION
13.1 If LICENSEE shall cease to carry on its business, this Agreement
shall terminate upon notice by M.I.T.
13.2 Should LICENSEE fail to make any payment whatsoever due and
payable to M.I.T. hereunder, M.I.T. shall have the right to terminate this
Agreement effective on *************** notice, unless LICENSEE shall make all
such payments to M.I.T. within said *************** period. Upon the expiration
of the *************** period, if LICENSEE shall not have made all such payments
to M.I.T., the rights, privileges and license granted hereunder shall
automatically terminate.
13.3 Upon any material breach or default of this Agreement by LICENSEE
(including, but not limited to, breach or default under Paragraph 3.3), other
than those occurrences set out in Paragraphs
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- 12 -
13.1 and 13.2 hereinabove, which shall always take precedence in that order over
any material breach or default referred to in this Paragraph 13.3, M.I.T. shall
have the right to terminate this Agreement and the rights, privileges and
license granted hereunder effective on *************** notice to LICENSEE. Such
termination shall become automatically effective unless LICENSEE shall have
cured any such material breach or default prior to the expiration of the
*************** period.
13.4 LICENSEE shall have the right to terminate this Agreement at any
time on *************** notice to M.I.T., and upon payment of all amounts due
M.I.T. through the effective date of the termination.
13.5 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination; and Articles ***************
shall survive any such termination. LICENSEE and any sublicensee thereof may,
however, after the effective date of such termination, sell all LICENSED
PRODUCTS, and complete LICENSED PRODUCTS in the process of manufacture at the
time of such termination and sell the same, provided that LICENSEE shall make
the payments to M.I.T. as required by *************** of this Agreement and
shall submit the *************** hereof.
13.6 Upon termination of this Agreement for any reason, any
sublicensee not then in default shall have the right to seek a
license from M.I.T. M.I.T. agrees to negotiate such licenses in
good faith under reasonable terms and conditions.
ARTICLE 14 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
Any payments, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of mailing if sent to such party
by certified first class mail, return receipt requested, postage prepaid,
addressed to it at its address below or as it shall designate by written notice
given to the other party:
In the case of M.I.T.:
Director
Technology Licensing Office
Massachusetts Institute of Technology
Room NE25-230
Five Cambridge Center, Kendall Square
Cambridge, Massachusetts 02142-1493
<PAGE> 15
- 13 -
In the case of WHITEHEAD:
Vice President
Whitehead Institute for Biomedical Research
Nine Cambridge Center
Cambridge, MA 02142
In the case of LICENSEE:
Chief Executive Officer
Dyax Corp.
One Kendall Square, Bldg. 600
5th Floor
Cambridge, MA 02139
ARTICLE 15 - MISCELLANEOUS PROVISIONS
15.1 All disputes arising out of or related to this Agreement, or the
performance, enforcement, breach or termination hereof, and any remedies
relating thereto, shall be construed, governed, interpreted and applied in
accordance with the laws of the Commonwealth of Massachusetts, U.S.A., except
that questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent shall have been
granted.
15.2 The parties hereto acknowledge that this Agreement sets forth the
entire Agreement and understanding of the parties hereto as to the subject
matter hereof, and shall not be subject to any change or modification except by
the execution of a written instrument signed by the parties.
15.3 The provisions of this Agreement are severable, and in the event
that any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
15.4 LICENSEE agrees to mark the LICENSED PRODUCTS sold in the United
States with all applicable United States patent numbers. All LICENSED PRODUCTS
shipped to or sold in other countries shall be marked in such a manner as to
conform with the patent laws and practice of the country of manufacture or sale.
15.5 The failure of either party to assert a right hereunder or to
insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
<PAGE> 16
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IN WITNESS WHEREOF, the parties have duly executed this Agreement the
day and year set forth below.
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
By /s/ Lita Nelson
-----------------------------------------------
Name Lita L. Nelson
---------------------------------------------
Title Director Technology Licensing Office
--------------------------------------------
Date JUNE 17, 1997
WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH
By /s/ John Pratt
-----------------------------------------------
Name John Pratt
---------------------------------------------
Title Vice President
--------------------------------------------
Date June 19, 1997
---------------------------------------------
DYAX Inc.
By /s/ L. E. Cannon
-----------------------------------------------
Name L. E. Cannon
---------------------------------------------
Title President
--------------------------------------------
Date June 19, 1997
---------------------------------------------
<PAGE> 17
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
- 15 -
APPENDIX A
PATENT RIGHTS on the EFFECTIVE DATE
***************
M.I.T. Case No. ***************
WHITEHEAD Case No. WHI ***************
U.S. Provisional Patent No. *************** Filed on
***************
"Subtractive Antibody Screening (SAS) and Uses Therefor"
By: Perry E. Bickel, Philipp E. Scherer and Harvey F. Lodish
***************
<PAGE> 18
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
FIRST AMENDMENT
This Amendment with the Effective Date of November 10, 1997 is to the License
Agreement dated June 19, 1997 between Massachusetts Institute of Technology
(hereinafter "M.I.T."), Whitehead Institute for Biomedical Research (hereinafter
"WHITEHEAD") and Dyax Corp. (hereinafter "LICENSEE").
WHEREAS, the parties wish to acknowledge The General Hospital doing business as
The Massachusetts General Hospital ("M.G.H.") as a co-owner of the PATENT RIGHTS
and wish to amend Paragraphs 2.1, 2.5, and Article 10, and to modify the
insurance clause to reflect M.G.H.'s requirements.
The parties thereto now further agree as follows:
1. Paragraph 2.1 shall be deleted and replaced in its entirety
with the following:
2.1 WHITEHEAD and M.G.H. have authorized M.I.T. to act
as their sole and exclusive agent for the purposes
of licensing the PATENT RIGHTS and have authorized
M.I.T. to enter into this Patent License Agreement
on their behalf.
2. Paragraph 2.5 shall be deleted and replaced in its entirety
with the following:
2.5 WHITEHEAD, M.I.T. and M.G.H. reserve the right to
practice under the PATENT RIGHTS for noncommercial
research and patient care purposes.
3. Paragraph 8.2 of the License Agreement shall be deleted in
its entirety and replaced with the following:
8.2 a. Beginning at such time as any LICENSED PRODUCT
and/or LICENSED PROCESS is being commercially
distributed or sold (other than for the purpose of
research and development and obtaining regulatory
approvals) by LICENSEE or by a licensee, affiliate or
agent of LICENSEE, LICENSEE shall, at its sole cost
and expense, procure and maintain commercial general
liability insurance in amounts not less than
*************** per incident and *************** and
naming M.I.T., WHITEHEAD and M.G.H. as additional
insureds. Such commercial general liability insurance
shall provide (i) product liability coverage and (ii)
broad form contractual liability coverage for
LICENSEE's indemnification under Paragraph 8.1 of
this agreement. If LICENSEE elects to self-insure all
or part of the limits described above
<PAGE> 19
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(including deductibles or retentions which are in
excess of ***************) such self-insurance
program must be acceptable to the M.G.H., WHITEHEAD
and M.I.T. and the Risk Management Foundation. The
minimum amounts of insurance coverage required under
this Paragraph 8.2 shall not be construed to create a
limit of LICENSEE's liability with respect to its
indemnification under Paragraph 8.1 of this
agreement.
b. LICENSEE shall provide M.I.T. with written
evidence of such insurance upon request of M.I.T.
LICENSEE shall provide M.I.T. with written notice at
least *************** prior to cancellation,
non-renewal or material change in such insurance; if
LICENSEE does not obtain replacement insurance
providing comparable coverage prior to the expiration
of such *************** period, M.I.T. shall have the
right to terminate this Agreement effective at the
end of such *************** period without notice or
any additional waiting periods.
c. LICENSEE shall maintain such commercial general
liability insurance beyond the expiration or
termination of this Agreement during (i) the period
that any LICENSED PRODUCT and/or LICENSED PROCESS is
being commercially distributed or sold (other than
for the purpose of research and development and
obtaining regulatory approvals) by LICENSEE or by a
licensee, affiliate or agent of LICENSEE and (ii) a
reasonable period after the period referred to in (c)
(i) above which in no event shall be less than
***************.
d. This ***************.
4. Article 10 shall be deleted and replaced with the following:
LICENSEE shall not use the names or trademarks of the
Massachusetts Institute of Technology, Massachusetts General
Hospital, nor the Whitehead Institute for Biomedical Research,
nor any adaptation thereof, nor the names of any of their
employees, in any advertising, promotional or sales literature
without prior written consent obtained from M.I.T., M.G.H. or
WHITEHEAD, or said employee, in each case, except that
LICENSEE may state that it is licensed by M.I.T., M.G.H. and
WHITEHEAD, under one or more of the patents and/or
applications comprising the PATENT RIGHTS.
All other terms and conditions as set forth in the Agreement.
<PAGE> 20
Agreed to for:
MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By /s/ Lita Nelson
-----------------------------------------------
Name Lita L. Nelson
---------------------------------------------
Title Technology Licensing Office
--------------------------------------------
Date October 30,1997
---------------------------------------------
WHITEHEAD INSTITUTE FOR
BIOMEDICAL RESEARCH
By /s/ John Pratt
-----------------------------------------------
Name John Pratt
---------------------------------------------
Title Vice President
--------------------------------------------
Date November 3, 1997
---------------------------------------------
DYAX Inc.
By /s/ L. Edward Cannon
-----------------------------------------------
Name L. Edward Cannon
---------------------------------------------
Title President
--------------------------------------------
Date November 10, 1997
---------------------------------------------
<PAGE> 1
EXHIBIT 10.20
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
RESEARCH AND DEVELOPMENT AGREEMENT
This RESEARCH AND DEVELOPMENT AGREEMENT ("Agreement") is made as of this
10th day of March, 1997 (hereinafter "Effective Date") by and between DEBIOPHARM
S.A., having its principal place of business at 17, rue des Terreaux, CH-1000
Lausanne 9, Switzerland ("Debio") and Dyax Corp., having its principal place of
business at One Kendall Square, Bldg. 600, 5th Floor, Cambridge, Massachusetts,
02139, USA ("Dyax") with respect to the following facts:
WITNESSETH:
WHEREAS, Dyax possesses certain know-how and proprietary rights, including
patents (granted and pending) concerning the identification, production and
purification of EPI-HNE4, an inhibitor of human neutrophil elastase, and of
other molecules with similar anti- neutrophil elastase activity;
WHEREAS, Debio possesses expertise in the development and registration of
therapeutic products and wishes to conduct certain "Research," as defined
herein, concerning EPI-HNE4 for the purpose of determining whether EPI-HNE4 has
therapeutic potential in humans; and
WHEREAS, both Dyax and Debio wish to enter into a Research and Development
Agreement, governing the "Research" to be conducted by Debio, which will then
provide Debio with the exclusive option to license certain exclusive rights to
develop and distribute EPI-HNE4 within certain geographic markets;
NOW, THEREFORE, Dyax and Debio agree as follows:
1. Definitions and Interpretations.
Terms, when used with initial capital letters, shall have the meanings set
forth below or at their first use when used in the Agreement.
1.1 "Affiliates" means any corporation or other business entity controlled
by, controlling, or under common control with or by either party to this
Agreement. For this purpose, "control" means direct or indirect beneficial
ownership of more than fifty percent (50%) of the voting stock, or more
than fifty percent (50%) interest in the income, of a party or such
corporation or other business.
<PAGE> 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
1.3 "Confidential Information," as used herein shall mean each party's
confidential information, know-how or data, and includes manufacturing,
marketing, personnel and other business information and plans, whether in
oral, written graphic or electronic form, and which is identified as
confidential. Confidential information shall not be deemed confidential,
and the receiving party shall have no obligation with respect to any
information which is (a) known by the receiving party prior to disclosure
by the furnishing party, and reduced to writing by the receiving party,
(b) information which is in the public domain or subsequently enters the
public domain through no fault of either party, (c) information that is
received by the receiving party from an independent third party with the
lawful right to disclose. All test and development data, processes,
methods and other technology developed by Debio pursuant to the Agreement
shall also be "Confidential Information"
1.4 "Debio" shall mean Debiopharm S.A. and Affiliates.
1.5 Dyax" shall mean Dyax Corp. and Affiliates, and their successors and
assigns.
1.6 "EPI-HNE" shall mean molecules, *************** described in the Dyax
patent application designated LEY-1PCT in Exhibit A.
1.7 "EPI-HNE Patent Rights" shall mean the patent applications listed as
Exhibit A, attached hereto and hereby made a part hereof and any and all
continuations, divisions, renewals, reissues, reexaminations,
continuations-in-part and extensions corresponding thereto, and any
patents issuing therefrom.
1.8 "Know-How" shall mean any and all technical information, test and
development data, formulations, processes, ideas, protocols, regulatory
files and the like, which is non-patentable and discovered or developed
pursuant to the Research.
1.9 "Product" means any pharmaceutical formulation containing EPI-HNE for
use in the Field of Use (as defined in Section 15.2), pursuant to EPI-HNE
Patent Rights.
1.10 "Research" by Debio shall mean the procurement, investigation and
study of EPI-HNE4 for the purposes of determining whether EPI-HNE4 has
therapeutic potential in humans for the treatment of cystic fibrosis,
ARDS, or chronic obstructive pulmonary diseases, such as emphysema and
chronic bronchitis, all as set forth in the Research Plan in Exhibit B,
attached hereto and hereby made a part hereof.
1.11 "Revenues" shall mean the *************** from the commercial use or
sale of Product, including all payments from sublicensees, less the
following items: (a) ***************,
2
<PAGE> 3
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SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(b) payments ***************, and (c) payments *************** (and
***************).
1.12 "Territory" means *************** in which Dyax may grant rights to
Debio pursuant to Article 15.2.2
2. The Development and Evaluation Work Phase.
2.1 Scope of Agreement.
2.1.1 Obligation of Dyax. To facilitate the Research, Dyax shall provide
*************** for use solely in performance of the Research, under the
conditions set forth herein. Dyax shall also provide available information
developed by Dyax and third parties concerning the therapeutic potential
of EPI-HNE in humans.
2.1.2 Obligation of Debio. Debio agrees to perform the Research in
accordance with the Research Plan, as may be amended from time to time by
mutual agreement of the parties. The Research shall be conducted
***************.
2.1.3 Recordkeeping by Debio. Debio agrees to maintain records, in
accordance with generally accepted accounting practices in Switzerland, of
its research and development costs in performing the Research Plan. In the
event such costs are relevant to Revenue sharing in accordance with
Sections 4.4.1 or 15.3, Dyax shall have the right from time to time to
audit such records using an independent accountant.
2.2 Due Diligence and Workmanship. Debio shall use its best efforts to
conduct the Research in accordance with Good Clinical Practices and to
deliver to Dyax reports of the results. However, the parties agree that
the results of the Research cannot be accurately predicted, and that Debio
does not warrant or guarantee that the Research will yield any useful or
anticipated results. The sole obligation of Debio is to diligently pursue
the activities pursuant to the Research.
2.3 Development and Evaluation Phase Research Licenses.
2.3.1 License to Debio. For the term of this Agreement only and as
reasonably necessary to perform the Research (and with no commercial
rights), Dyax grants to Debio an exclusive royalty-free license under the
EPI-HNE Patent Rights, Dyax Know-How, EPI-HNE4 Materials and rights
arising under Section 4.1 herein in the Field of Use for the Territory.
2.3.2 To the best of Dyax's knowledge up to the Effective Date, the
EPI-HNE Patent Rights are valid and effective, as shown in Exhibit A, has
been properly filed, prosecuted and/or issued in the respective offices
and jurisdictions, and all applicable fees due and payable have been paid.
3
<PAGE> 4
2.3.3 In the event that any of the EPI-HNE Patent Rights under Exhibit A
should not be granted or established by reasonable proof to Debio's
satisfaction, Debio may either terminate this Agreement under Section 8.1
or negotiate a license agreement with the relevant third party, in its
sole discretion, to conduct the Research.
3. Transfer and Handling of Materials.
3.1 Debio shall use the EPI-HNE4 Materials and Dyax Confidential
Information solely for the purposes specified in this Agreement and for no
other purpose, including without limitation, use in any research
activities other than those which relate directly to the purposes
specified herein, or for any commercial purpose. Such use shall be in
compliance with all applicable laws and regulations. Upon conclusion of
the Research, Debio shall return or destroy, as directed by Dyax, all
unused EPI-HNE4 Materials. Debio shall not sell, transfer, disclose or
otherwise provide access to the EPI-HNE4 Materials or Dyax Confidential
Information, any method or process relating thereto or any material that
could not have been made but for the foregoing, to any person or entity
without the prior express written consent of Dyax, except that Debio may
allow access to the EPI-HNE4 Materials to employees or agents for purposes
consistent with the Agreement. Debio will make diligent efforts to ensure
that such employees and agents will use the EPI-HNE4 Materials in a manner
that is consistent with the terms of the Agreement. Dyax shall use Debio
Know-How solely for the purposes specified in this Agreement and for no
other purpose.
3.2 Upon termination of the Agreement and except as provided under any
license agreement, Debio shall immediately cease all use, including,
without limitation, research and commercial use, of the EPI-HNE4 Materials
and Dyax Confidential Information and shall, according to Dyax's
instructions, destroy or return the EPI-HNE4 Materials and any copies or
replications thereof, under the control of Debio.
3.3 Debio acknowledges and agrees that the EPI-HNE4 Materials may have
biological and/or chemical properties that are unpredictable and unknown
at the time of transfer and that they are to be used with caution and
prudence.
3.4 Title to and ownership rights in the EPI-HNE4 Materials shall remain
with Dyax and Debio will acquire no title thereto as a result of this
Agreement.
4. Ownership of Results.
4.1 Patentable Inventions. Unless otherwise agreed to by the parties in
any license or other agreement, all patentable inventions,
improvements and any patent rights appurtenant thereto, conceived
and reduced to practice pursuant
4
<PAGE> 5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
to the Research shall be owned ***************. Licenses to any such
inventions, improvements and patent rights, however owned, shall be
governed by the terms of this Agreement and/or any future license
agreement pertaining to such rights.
4.1.1 If either party identifies or becomes aware of a patentable
invention, that party shall promptly submit a written description of
the subject matter of such invention to the other party. With regard
to inventions with application to the Research or future products
within the Field of Use, *************** shall have primary
responsibility for determining whether to file patent applications in
the Territory, and shall be responsible for determining the timing and
scope of a patent application and for selecting the countries for
filing, and for the filing, prosecution and maintenance of such patent
application and all patents issuing therefrom. Debio and Dyax shall
provide to each other all necessary cooperation relating to the
filing, prosecution and maintenance of such patent applications. All
expenses for such matters in the Territory shall be borne by
***************.
4.2 Know-How. Subject to Section 8 and unless otherwise agreed to by the
parties, ***************.
4.3 Cooperation. Both Debio and Dyax undertake to promptly notify the
other of any patentable invention, as described in Section 4.1, and to
cause their respective employees to sign and complete all such deeds,
documents, patent applications, assignments, and other instruments and to
do all such acts and things as are necessary to give full force and effect
to the terms and conditions contemplated by the Agreement and to make such
terms and conditions binding on their respective employees.
4.4 Rights of Dyax. Subject to Debio's rights to add additional countries
to its license pursuant to Section 15.2.2, as for all patentable
inventions and Know-How conceived as a result of the Research and owned
solely or jointly by Debio and subject to restrictions imposed by any
government source of grant monies received by Debio after the Effective
Date:
4.4.1 Outside of the Territory for all therapeutic uses, Dyax shall have
an exclusive license with the right to grant sublicenses; provided that
for any patentable invention and Know-How solely owned by Debio, Dyax
shall pay Debio ***************; and
4.4.2 Throughout the world for all non-therapeutic uses, Dyax shall have a
royalty free exclusive license with the right to grant sublicenses.
5
<PAGE> 6
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
5. Administration and Indemnification.
5.1 Representatives. Debio and Dyax will designate a person or persons of
their choice to act representatives during the term of this Agreement.
Dyax designates Dr. Edward Cannon and Debio designates Neil L. Brown to
act as representatives under this Agreement. Each party may change its
representative upon reasonable notice to the other party.
5.2 Reports and Access to Data. The parties agree to provide each other
with written detailed Research Status Reports no less frequently than
*************** and to provide the other with access to all Know-How and
any information related to any pre-clinical or clinical investigations
developed from the Research.
5.3 Insurance and Indemnification.
5.3.1 Debio shall indemnify and hold harmless Dyax, its employees and
agents against all third party actions, proceedings, claims, demands,
losses, costs, damages or expenses whatsoever which may be brought against
or suffered by Dyax or which Dyax may sustain as a result of use of
Product for testing in or treatment of humans by Debio or under Debio's
supervision.
5.3.2 Both Dyax and Debio agree that ***************, the Research or any
other work performed under this Agreement, except as provided for under
Section 5.3.1 or where losses, costs, damages or expenses are the result
of the willful breach of any term hereof by the other party, or by the
other party's servants, agents, employees or subcontractors. Each party
shall indemnify and hold harmless the other party, its employees and
agents against all third party actions, proceedings, claims, demands,
losses, costs, damages or expenses whatsoever which may be brought against
or suffered by the other party or which such party may sustain, as a
result of willful breach of any term hereof by the indemnifying party.
Such indemnification will survive termination of the Agreement.
5.3.3 Each party undertakes to notify the other party if it has any reason
to believe that the use of EPI-HNE, EPI-HNE4 Materials, or Confidential
Information could result in a claim by any third party, and the parties
agree that in such case they shall consult in good faith to take such
remedial actions that are necessary to avoid such liability.
5.3.4 *************** shall take reasonable action to institute and
prosecute legal proceedings against third parties who infringe patents
from the EPI-HNE Patent Rights, or to otherwise defend any issued patent
rights for EPI-HNE4, in the Fields of Use in the Territory. Any such
action, taken under this paragraph, shall be at *************** expense.
6
<PAGE> 7
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
*************** shall, if requested by *************** and at
*************** expense, assist in the prosecution of such action.
5.4 Steering Committee.
5.4.1 The parties agree to form a Steering Committee to oversee the
Research and to undertake a development program to exploit all indications
for EPI-HNE ***************. The Steering Committee shall be composed of
two representatives of Debio and two representatives of Dyax. Such
Committee shall meet at least every six months (more frequently, if deemed
necessary by at least two members of the Committee) to discuss the
progress of the Research and to consider options for development of new
indications. Representatives may be accompanied at such meetings by
consultants and experts bound by appropriate confidentiality agreements
who may participate, but may not vote at said meetings. Decisions of the
Steering Committee shall be made by a vote of three or more
representatives of the parties. Each party shall bear their own respective
travel and accommodation expenses, as well as all fees and costs incurred
by their consultants associated with attending such meetings.
6. Confidentiality.
6.1 The parties agree that Confidential Information exchanged during the
course of the Agreement will be accorded confidential treatment and shall not be
used for any other purpose than the performance of this Agreement for a period
of *************** from the expiration or termination of the Agreement. Debio
and Dyax may disclose confidential information to candidate sublicensees solely
for the purpose of entering into a business relationship subject to these
candidate sublicensees entering into confidentiality and non-use agreements no
less restrictive than the terms and conditions of Section 6.1.
7. General Provisions.
7.1 Notices. Notices required or permitted to be made or given to either
party hereto pursuant to this Agreement shall be sufficiently made or
given on the date of mailing if sent to such party by certified or
registered mail, postage prepaid, addressed to it at its address set forth
or to such other address as it shall designate by written notice to the
other party as follows:
In the case of Dyax:
Dyax Corp.
One Kendall Square, Bldg. 600, 5th Floor
Cambridge, Massachusetts 02139
Attn: Edward Cannon
7
<PAGE> 8
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
In the case of Debio:
Debiopharm S.A.
17, rue des Terreaux
Case Postale 211
CH-1000 Lausanne 9
Switzerland
Attn: Legal Department
Copies to:
Kostopulos & Associates
205 S. Whiting St., Suite 201
Alexandria, VA 22304
Attn: N. Peter Kostopulos
Telecopier: (703) 751-2807
8. Termination. The Agreement can be terminated at anytime depending upon the
following circumstances:
8.1 The Agreement can be terminated by *************** alone, at any time
upon *************** written notice to ***************.
8.2 In the event that the Agreement is terminated by *************** under
Section 8.1 or by *************** under Section 8.3, all rights granted to
Debio under Section 2.3.1 shall revert to Dyax. The parties shall meet
*************** to negotiate an assignment to Dyax to ***************
under ***************, information under ***************, and
***************. With respect to the assignment of any patentable
inventions and/or patent filings which are solely owned by
***************.
8.3 In the event of any breach of any material term or condition of this
Agreement by either party, the non-breaching party shall give
*************** written notice to the breaching party to correct such
breach, along with a written explanation supporting its reasons for
termination. In the event the breach is not cured with the ***************
period, the non-breaching party shall have the following rights:
8.3.1 immediately terminate and/or modify this Agreement; provided,
however the non-breaching party shall continue to have all rights under
this Agreement, including the right to *************** and the right
*************** under *************** under *************** under
***************, and ***************, as well as *************** under
***************; all of which, under terms and conditions no less
favorable than provided for under this Agreement;
8.3.2 receive losses and damages sustained as a result of the breach(s) by
the breaching party, unless otherwise excluded or limited by a provision
of the Agreement.
8
<PAGE> 9
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
9. Term of Agreement. Unless terminated earlier pursuant to Section 8 or other
mutual agreement, this Agreement shall commence upon the Effective Date and
shall terminate upon the expiration of the option set forth in Section 15.
Sections *************** shall survive expiration or termination of the
Agreement
10. Independent Contractor. The relationship of Debio and Dyax under this
Agreement is intended to be that of an independent contractor. Nothing contained
in this Agreement is intended or is to be construed so as to constitute the
undersigned parties as partners or either party hereto as an agent or employee
of the other. Neither party has any express or implied right or authority under
this Agreement to assume or create any obligations on behalf of or in the name
of the other, or to bind the other party hereto to any contract, agreement or
undertaking with any third party.
11. Complete Agreement. The parties hereto acknowledge that this document sets
forth the entire agreement and understanding of the parties, except for
pre-existing confidentiality obligations between the parties, and supersedes all
prior written or oral agreements or understandings with respect to the subject
matter hereof. No modification of this Agreement shall be deemed to be valid
unless in writing and signed by both parties.
12. Assignment. This Agreement shall be binding upon and inure to the benefit of
the successors or permitted assignees of each of the parties, and may not be
assigned or transferred by either party without the prior written consent of the
other.
13. Law Governing and Dispute Resolution.
13.1 This Agreement shall be governed by and construed under the laws of
the Commonwealth of Massachusetts.
13.2 In the event the parties are unable to resolve a dispute, the parties
shall engage a single mediator acceptable to both parties. Said mediator
will immediately meet with Senior Vice Presidents of both parties to
discuss the basis for the dispute and to attempt to resolve the dispute.
13.3 Any dispute, controversy or claim arising under, out of or relating
to this Agreement and any subsequent amendments of this Agreement,
including, without limitation, its formation, validity, binding effect,
interpretation, performance, breach or termination, as well as non
contractual claims, shall be referred to and finally determined by
arbitration in accordance with the WIPO Arbitration Rules. The arbitral
tribunal shall consist of three arbitrators. The place of arbitration
shall be Geneva, Switzerland. The language to be used in the arbitral
proceedings shall be English.
14. Execution. This Agreement shall be executed in two (2) counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.
9
<PAGE> 10
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
15. Option to Obtain License. Dyax hereby grants to Debio an option to enter
into an exclusive license to manufacture, have manufactured, use and sell
EPI-HNE products in the Territory (the "License Agreement"), for a period of
three (3) years after the Effective Date subject to extension until completion
of the *************** in the Research Plan if such *************** has been
started (the "Option Period"). Debio shall not *************** to Dyax for
entering into the License Agreement. Such a license with Debio shall include,
among other things, the following terms:
15.1 Definitions. The license agreement shall incorporate definitions from
the Research and Development Agreement, plus additional definitions deemed
appropriate by the parties.
15.2 Grant of Rights Dyax shall grant exclusive rights, including the
right to sublicense, to make, have made, use and sell Product, under the
EPI-HNE Patent Rights, Dyax Know-How, inventions and know-how developed
under Sections 4.1 and 4.2 in this Agreement, for the following
therapeutic uses: ***************, such as *************** ("Field of
Use").
15.2.1 Other Indications. Debio shall have the *************** a license
in the Territory for the rights to any other therapeutic indication
outside of the Field of Use, provided that a third party does not already
control the licensing of such rights.
15.2.2 Additional Countries. *************** and rights to commercialize
EPI-HNE in the Field of Use *************** outside the Territory
*************** Dyax shall grant Debio a *************** to such other
countries. Dyax will *************** to Debio of ***************
(***************). Debio shall *************** after the ***************
during which ***************. If Debio ***************, Dyax shall
*************** and to ***************. Before *************** with
***************, Dyax ***************.
15.3 Royalties.
15.3.1 Payments to Dyax. As to rights granted by Dyax to Debio, Debio
shall pay Dyax *************** of all Revenues received by Debio in the
Field of Use in the Territory. Prior to sharing such Revenues with Dyax,
Debio shall be entitled to *************** equal to ***************. In
the event that ***************, the parties agree ***************.
15.3.2 Duration of Payments. Payments under 15.3.1 shall continue on a
country-by-country basis until the *************** covering the products
for which Revenues are being received in each country, or for
*************** from the first Commercial Sale of Product in each country,
***************, provided that revenues are being received on the Product.
10
<PAGE> 11
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
15.4 Territory. The territory will be the same geographic areas as defined
in the Agreement.
15.5 Exercise of the option. At any time during the Option Period, Debio
may notify Dyax that Debio exercises the option. Debio and Dyax shall then
meet at their mutual convenience to negotiate in good faith the remaining
terms of the License Agreement.
15.5.1 If Debio and Dyax have not signed the License Agreement within
*************** from the exercise of the option, either party may refer
the matter to mediation followed, in the absence of an agreement, by
arbitration.
15.5.2 The License Agreement will be effective no later than
*************** after the commencement of the mediation, even if the final
agreement is reached later or the final decision is rendered later.
15.5.3 Mediation. Any disagreement as to the terms of the License
Agreement shall be submitted to mediation in accordance with the WIPO
Mediation Rules. The place of mediation shall be Geneva. The language to
be used in the mediation shall be English.
15.5.4 Arbitration. If, and to the extent that, any such disagreement as
to the terms of the License Agreement has not been settled pursuant to the
mediation within *************** of the commencement of the mediation, it
shall, upon the filing of a Request for Arbitration by either party, be
referred to and finally determined by arbitration in accordance with the
WIPO Expedited Arbitration Rules. Alternatively, if, before the expiration
of the said period of ***************, either party fails to participate
or to continue to participate in the mediation, the disagreement as to the
terms of the License Agreement shall, upon the filing of a Request for
Arbitration by the other party, be referred to and finally determined by
arbitration in accordance with the WIPO Expedited Arbitration Rules. The
place of arbitration shall be Geneva. The language to be used in the
arbitral proceedings shall be English.
15.5.4.1 Within a short period to be fixed by the Arbitral Tribunal,
each party shall submit to the Arbitral Tribunal a full proposal for
the License Agreement, which will not be communicated to the other
party. The Arbitral Tribunal shall then decide which of the two
proposals is closer to the common intent of the parties as evidenced
by documentary record between the two parties, including, but not
limited to the research and development program and correspondence
between the parties. The Arbitral Tribunal is authorised to decide
ex aequo et bono. The Arbitral Tribunal may not take
11
<PAGE> 12
some terms in one proposal and some other terms in the other proposal,
but shall choose one proposal and decide that it shall constitute the
License Agreement deemed entered into by the parties.
16. Force Majeure.
16.1 Neither party shall be liable for a failure to comply with a
provision herein, if it is prevented from performing the said provision
because of force majeure, this notion being defined as an event beyond the
control of the parties hereto and independent from their will including,
but not limited to, strikes or other labor trouble, war, insurrection,
fire, flood, explosion, discontinuity in supply of power, court order or
governmental interference.
16.2 Despite the event of force majeure, either party hereto shall
undertake reasonable efforts to comply to the extent possible with its
obligations vis-a-vis the other party, pursuant to this Agreement.
16.3 The party invoking an event of force majeure must notify it forthwith
to the other party, and must specify which one or ones of its obligations
it is being prevented from complying with, and the nature of force
majeure, and must give an estimate of the period during which it is likely
that it shall be prevented from complying with the said obligation or
obligations.
17. Miscellaneous.
17.1 In the event that, during the duration of this Agreement, the
regulations in force at the time of its execution are drastically
modified, or in the event that the data on which the parties hereto relied
to enter into this Agreement change in such a manner that one party shall
suffer severe hardship, which could not reasonably be foreseen as of the
date on which this Agreement was executed, the parties hereto shall then
meet and adapt the conditions of this Agreement to the new situation, in a
manner equitable to both parties.
17.2 If any provision of this Agreement should be or become fully or
partly invalid or unenforceable for any reason whatsoever or should
violate any applicable law, this Agreement is to be considered divisible
as to such provision and such provision is to be deemed deleted from this
Agreement, and the remainder of this Agreement shall be valid and binding
as if such provision were not included therein. There shall be substituted
for any such provision deemed to be deleted a suitable provision which, as
far as is legally possible, comes nearest to the sense and purpose of the
stricken provision.
17.3 Failure by any party to enforce any term or provision
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<PAGE> 13
of this Agreement in any specific instance or instances hereunder shall
not constitute a waiver by such party of any such term or provision, and
such party may enforce such term or provision in any subsequent instance
without any limitation or penalty whatsoever.
17.4 The headings set forth in this Agreement are for convenience only and
do not qualify or affect the terms or conditions of this Agreement.
13
<PAGE> 14
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.
DEBIOPHARM S.A. DYAX CORP.
By: /s/ R.Y. Mauvernay By: /s/ L. Edward Cannon
-------------------------- ---------------------------
11/3/97 3/3/97
14
<PAGE> 15
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A - EPI-HNE Patent Rights
Confidential
DYAX NEUTROPHIL ELASTASE INHIBITOR PATENT RIGHTS
<TABLE>
<CAPTION>
================================================================================
COUNTRY APPLICATION NO. FILING DATE STATUS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
US *************** *************** Abandoned
(Ladner 7C) in favor
of US
*********
******
- --------------------------------------------------------------------------------
Canada *************** *************** Pending
(Ladner 7C)
- --------------------------------------------------------------------------------
EPO *************** *************** Pending
(Ladner 7C)
- --------------------------------------------------------------------------------
Japan *************** *************** Pending
(Ladner 7C)
- --------------------------------------------------------------------------------
PCT *************** ***************
(Ladner 7C)
- --------------------------------------------------------------------------------
US *************** *************** Allowed
(Ley 1)
- --------------------------------------------------------------------------------
PCT *************** *************** Will go
(Ley 1A) national
6/16/97
================================================================================
</TABLE>
* Priority applications: USSN *************** filed
*************** (Ladner 7 which issued as US Patent
5,223,409) and USSN *************** filed ***************
(Ladner 9 abandoned in favor of ***************)
<PAGE> 1
EXHIBIT 10.21
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
JOINT COLLABORATION AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement"), effective as of October 1, 1997 (the
"Effective Date"), is between DYAX CORP., a Delaware corporation, having places
of business at One Kendall Square, Bldg. 600, 5th Fl., Cambridge, Massachusetts
02139 and 1500 Avon Street Extended, Charlottesville, VA 22902 ("DYAX"); and
CROPTECH DEVELOPMENT CORPORATION, a Virginia corporation, having its principal
place of business at 1861 Pratt Drive, Blacksburg, Virginia 24060 ("CROPTECH").
RECITALS
WHEREAS, DYAX and CROPTECH have submitted a proposal to the Advanced Technology
Program administered by the National Institute of Standards and Technology
("NIST") to undertake a joint venture to conduct the Researched Program, as
defined herein;
WHEREAS, NIST has selected such proposal for funding, with such funding to be
governed by a NIST Cooperative Agreement;
WHEREAS, DYAX and CROPTECH wish to enter into an agreement setting forth their
respective rights and responsibilities in respect to the Research Program.
WHEREAS, the Parties have selected CropTech Development Corporation to serve as
the Administrator (the "Administrator") for the joint venture and wish to
authorize that organization to perform certain functions, specifically including
execution of the NIST Cooperative Agreement and thereby binding all the Parties
to the terms and conditions of that Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall have the
meanings specified below:
1.1. "CROPTECH TECHNOLOGY" shall mean any and all know-how, data,
technology, equipment, biological or chemical materials,
inventions and patent rights relating to *************** and the
*************** (including,
<PAGE> 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
without limitation the ***************), which is owned or controlled by
CROPTECH prior to the Effective Date or which results from the Research Program.
1.2. "DYAX TECHNOLOGY" shall mean any and all know-how, data, technology,
equipment, biological or chemical materials, inventions and patent rights
relating to *************** (including, without limitation, ***************),
and which is owned or controlled by DYAX prior to the Effective Date or which
results from the Research Program.
1.3. "GOVERNMENT USE LICENSE" shall mean a non-exclusive, non-transferrable,
irrevocable, paid-up license which may be granted to the United States
government as set forth in Section 2.4(d) below.
1.4. "PARTY" or "PARTIES" shall mean the parties identified in
the Form NIST-Form-1263 contained in the proposal.
1.5. "PRODUCTS" shall mean proteins and production technologies utilizing
CropTech Technology and Dyax Technology, and which are listed on ATTACHMENT C,
as may be amended from to time by the parties.
1.6. "RESEARCH PRODUCTS" shall mean the research program as
described on a project by project basis in ATTACHMENT A, which
may be amended from time to time by the parties.
ARTICLE 2. RESEARCH PROGRAM
2.1. CONDUCT OF RESEARCH PROGRAM. DYAX and CROPTECH agree to work together to
diligently conduct each project of the Research Program, as set forth in
ATTACHMENT A hereto, and to carry out their respective responsibilities as set
forth in the Research Program and the NIST Cooperative Agreement. Further, the
parties agree to contribute the funds and internal and external resources which
are set forth in the estimated multi-year budget set forth in ATTACHMENT B.
2.2. ADMINISTRATION OF THE RESEARCH PROGRAM. The parties agree that CropTech
Development Corporation shall serve as the administrator for the joint
collaboration ("Administrator") and is authorized to execute a NIST Cooperative
Agreement with NIST and communicate with NIST on the progress of each project of
the Research Program. DYAX and CROPTECH shall each promptly appoint two
representatives to a Management Committee. The Management Committee shall meet
no less frequently than semi-annually during Research Program and shall have the
following responsibilities:
(i) administering the Research Program in accordance with all legal and
regulatory requirements, including review of all progress reports;
2
<PAGE> 3
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(ii) monitor the expenditures of each party for each project in
accordance with B.
(iii) discussing reaching agreement on the *************** of Products
resulting from each project of the Research Program.
2.3. RECORD & REPORTS. Each party shall retain industry standard records of all
data generated during the Research Program. During the Research Program, each
party shall provide the Management Committee, as defined below, with regular
written reports, no less frequently than ***************, of the status of the
program and a summary of the data and results as of that date.
2.4. OWNERSHIP OF INTELLECTUAL PROPERTY.
(a) The protection of intellectual property rights, including any
invention conceived or first reduced to practice in the course of the
Research Program, all technical information generated in the course of
the Research Program and trade secrets under the Research Program will
be in accordance with the NIST Cooperative Agreement and the Proposal
which is attached to this Agreement as Attachment D subject to Section
2.4(d) below.
(b) DYAX shall own all Dyax Technology and CROPTECH shall own all CropTech
Technology, subject to certain rights retained by the government in
accordance with the NIST Cooperative Agreement.
(c) For inventions resulting from the Research Program, inventorship shall
be determined in accordance with federal law governing patent
inventors, and ownership shall be determined in accordance with (a)
above. Each party shall have responsibility for the cost and decisions
in filing for, maintaining and defending patent applications and
patents for their respective inventions. Further each party shall
provide reasonable cooperation to the other on such patent matters.
(d) The United States may reserve a nonexclusive, nontransferable,
irrevocable paid-up license to practice or have practiced for or on
behalf of the United States any intellectual property that arises out
of the Research Program, but shall not, in the exercise of such
license, publicly disclose proprietary information related to such
license.
(e) Dyax and CropTech hereby authorize that, in accordance with the
Advanced Technology Program rules and
3
<PAGE> 4
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
regulations, specifically 15 CFR ss.295.8(a)(1), title to inventions
arising from assistance by the Program will vest in a company or
companies incorporated in the United States. Title to any such
intellectual property shall not be transferred or passed, except to a
company incorporated in the United States, until the expiration of the
first patent obtained in connection with such intellectual property.
Nothing in this paragraph shall be construed to prohibit the licensing
to any company of intellectual property rights arising from assistance
provided under this Section.
2.5. CONFIDENTIAL INFORMATION. In connection with the performance of their
respective obligations under this Agreement, each party intends to disclose
certain confidential information and materials to the other party, to include
CropTech Technology and Dyax Technology (the "Confidential Information"). During
the term of this Agreement and for a period of *************** thereafter, each
party shall maintain all Confidential Information in strict confidence, except
that the receiving party may disclose or permit the disclosure of any
Confidential Information to its directors, officers, employees, consultants,
advisors and commercial partner candidates who are obligated to maintain the
confidential nature of such Confidential Information and who need to know such
Confidential Information for the purposes set forth in this Agreement; and each
party shall use all Confidential Information solely for the purposes set forth
in this Agreement. The obligations of confidentiality and non-use set forth
above shall not apply to the extent that the receiving party can demonstrate
that Confidential Information: was in the public domain or became party of the
public domain prior through no fault of the receiving party; was independently
developed or discovered by the receiving party prior to the time of its
disclosure under this Agreement; is or was disclosed to the receiving party at
any time by a third party having no obligation of confidentiality with respect
to such Confidential Information; or is required to be disclosed to comply with
applicable laws or regulations, or with a court or administrative order.
ARTICLE 3. COMMERCIAL RIGHTS & OBLIGATIONS
3.1. COMMERCIALIZATION OF PRODUCTS. No later than *************** of completion
of each project set forth in the Research Program, the parties shall meet and
negotiate and agree upon a *************** for the Product resulting from each
project, the terms of which shall be set forth in a ***************. If the
parties are unable to reach agreement for any Product, the matter shall be
resolved in accordance with Section 6.2 herein.
3.2. NO RIGHTS OF LICENSE. Except for the rights set forth in
this Agreement, neither DYAX nor CROPTECH grants to the other
4
<PAGE> 5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
party any rights or licenses to any of its trade secrets, know-how, technology,
intellectual property or patent rights.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES & INDEMNIFICATION
4.1. REPRESENTATIONS AND WARRANTIES. Each party represents and warrants to the
other that it has the legal right and power to enter into this Agreement, to
extend the rights and licenses granted to the other in this Agreement, and to
fully perform its obligations hereunder, and that the performance of such
obligations will not conflict with it charter documents or any agreements,
contracts, or other arrangements to which it is a party. Further, each party
represents and warrants to the other that it will be solely responsible for
analyzing, defending and/or licensing any patent rights of third parties which
relate to its activities for the Research Program.
4.2. DISCLAIMERS. Nothing in this Agreement shall be construed
as a warranty or representation by either party of the success of
the Research Program or of the Dyax Technology or the CropTech
Technology.
4.3. INDEMNIFICATION BY DYAX. DYAX agrees to indemnify, defend, and hold
harmless CROPTECH and its directors, officers, employees, and agents (the
"CROPTECH Indemnitees") against any liability, damage, loss or expense
(including reasonable attorneys fees and expenses of litigation) incurred by or
imposed upon any of the CROPTECH Indemnitees as a result of any claims, suits,
actions, demands, or judgments concerning the negligent, willful or infringement
acts of DYAX or its directors, officers, employees, and agents, including,
without limitation, any acts of patent infringement.
4.4. INDEMNIFICATION BY CROPTECH. CROPTECH agrees to indemnify, defend, and hold
harmless DYAX and its directors, officers, employees, and agents (the "DYAX
Indemnities") against any liability, damage, loss or expense (including
reasonable attorneys fees and expenses of litigation) incurred by or imposed
upon any of the DYAX Indemnities as a result of any claims, suits, actions,
demands, or judgments concerning the negligent, willful or infringement acts of
CROPTECH or its directors, officers, employees, and agents, including, without
limitation, any acts of patent infringement.
ARTICLE 5. TERM AND TERMINATION.
5.1. TERM. Unless sooner terminated as provided herein, this Agreement shall
commence on the Effective Date and shall remain in effect until each
***************, as set forth in Article 3.
5.2. VOLUNTARY TERMINATION. Either party shall have the right
to terminate this Agreement for any reason upon ***************
notice during the Research Program. In the event of such
5
<PAGE> 6
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
termination the rights and obligations of the parties shall be
governed by the NIST Cooperative Agreement.
5.3. TERMINATION FOR MATERIAL BREACH. In the event that either party commits a
material breach of any of its obligations under this Agreement, including
failure to make timely payment of any amounts due, the non-breaching party may
terminate this Agreement upon *************** written notice to the other party,
unless the party in breach cures such breach within the *************** notice
period.
5.4. EFFECT OF TERMINATION. Notwithstanding anything to the contrary in this
Article 5, upon the expiration of termination of this Agreement, the following
provisions shall survive the expiration or termination of this Agreement:
Articles *************** and Sections ***************, and any obligations to
NIST or the other party as set forth in the NIST Cooperative.
ARTICLE 6. MISCELLANEOUS
6.1. NOTICES. All notices required or permitted to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given upon
the date of receipt if delivered by hand, international overnight courier,
confirmed facsimile transmission, or registered or certified mail, return
receipt requested, postage prepaid to the following addresses or facsimile
numbers:
If to DYAX: If to CROPTECH:
Dyax Corp. CropTech Development
Corporation
One Kendall Square 1861 Pratt Drive
Bldg. 600 5th Fl. Blacksburg, VA 24060
Cambridge, MA 02139 Attention: Chief Executive
Attention: Chief Executive Officer Officer
Facsimile: (617) 225-2501 Facsimile: (540) 231-8223
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
6.2. DISPUTE RESOLUTION. In the event either party has a dispute regarding any
of the terms of this Agreement, that party shall notify the other party in
writing. The parties shall use their best efforts to resolve the dispute
amicably at the Management Committee, or if the Management Committee is
unsuccessful in reaching resolution, the parties shall refer the matter for
resolution by their Chief Executive Officers. If such attempts are not
successful in resolving the dispute within a period of *************** following
the notice of dispute, either party may refer the dispute to the American
Arbitration Association for hearing and resolution within ***************, using
one mutually agreed upon arbitrator with industry
6
<PAGE> 7
experience relevant to this Agreement and at a forum in the Charlottesville,
Virginia area. Upon reference of the dispute for arbitration, neither party
shall contest such dispute in a court of law until the completion of the
arbitration process.
6.3. POWERS OF ATTORNEY. By signing this Agreement, the Parties
grant to Administrator a Power of Attorney for the sole purpose
of binding each Party to the terms and conditions of the NIST
Cooperative Agreement.
6.4. PRESS RELEASES & USE OF NAMES. The parties shall mutually
agree upon any press release or similar public disclosure
concerning this Agreement.
6.5. HEADINGS & COUNTERPARTS. All headings in this Agreement are for convenience
only and shall not affect the meaning of any provisions hereof. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, and all of which together shall be deemed to be one and the same
instrument.
6.6. ASSIGNMENT. This Agreement may not be assigned by either party without the
prior written consent of the other party, except that either party may assign
this Agreement to any of its Affiliates or to a successor in connection with the
merger, consolidation, or sale of all or substantially all of its assets or that
portion of its business pertaining to the subject matter of this Agreement, with
prompt written notice to the other party of any such assignment.
6.7. COMPLIANCE WITH LAW. Nothing in this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement and any statute, law, ordinance
or treaty, the latter shall prevail, but in such event the affected provisions
of the Agreement shall be conformed and limited only to the extent necessary to
bring it within the applicable legal requirements.
6.8. AMENDMENT AND WAIVER. This Agreement may be amended, supplemented, or
otherwise modified only by means of a written instrument signed by both parties.
Any waiver of any rights or failure to act in specific instance shall relate
only to such instance and shall not be construed as an agreement to waive any
rights or fail to act in any other instance, whether or not similar.
6.9. PRECEDENCE. Should there be any conflict between the terms
and conditions of this Agreement and the NIST Cooperative
Agreement, the NIST Cooperative Agreement shall take precedence.
6.10. SEVERABILITY. In the event that any provision of this
Agreement shall, for any reason, be held to be invalid or
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision hereof, and the parties shall negotiate in good faith
to modify the Agreement to preserve their original intent.
6.11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements or understandings
between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as a sealed instrument effective as of the date first above written.
DYAX CORP. CROPTECH DEVELOPMENT CORPORATION
By: /s/ Henry E. Blair By: /s/ David N. Radin
------------------ ------------------
Name: Henry E. Blair Name: David N. Radin
Title: Chairman & CEO Title: President
Attachments:
Attachment A: ***************
Attachment B: ***************
Attachment C: ***************
Attachment D: ***************
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<PAGE> 1
EXHIBIT 10.22
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
COOPERATION AGREEMENT
between DYAX CORP. One Kendall Square
Building 600, 5th Floor Cambridge,
MA 02139 USA
(hereinafter referred to as DYAX)
and NOVO NORDISK A/S Novo Alle DK-2880
Bagsvaerd Denmark
(hereinafter referred to as NOVO
NORDISK)
WITNESSETH:
WHEREAS NOVO NORDISK is one of the world's largest
manufacturers of insulin and possesses valuable
know-how and expertise relating to analysis and
purification of proteins; and
WHEREAS DYAX is a biotechnology and separation products
company that possesses valuable know-how and
expertise relating to phage display and
chromatography technology;
WHEREAS NOVO NORDISK and DYAX wish to i) cooperate in the
discovery and development of ***************
systems (as further defined below), ii) to provide
for NOVO NORDISK to have certain exclusive
worldwide rights and licenses to the discoveries
and development resulting from the cooperation,
and iii) to provide for DYAX to receive
appropriate payment for its contribution to such
discovery and development;
<PAGE> 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
NOW THEREFORE in consideration of the foregoing and of the mutual promises and
covenants contained herein NOVO NORDISK and DYAX agree as follows:
1 DEFINITIONS
1.1 The term "Affiliate" of a Party shall mean any person,
corporation, firm, partnership or other entity which directly
or indirectly controls, is controlled by or is under common
control of either Party. For the purposes of this definition
only, "control" shall mean the power to direct or cause the
direction of the management and the policies of an entity,
whether through the ownership of a majority of the outstanding
voting securities or by contract or otherwise.
1.2 The term "controlled" shall mean possession of the ability to
grant licenses or sublicenses without violating the terms of
any agreement or other arrangement with, or the rights of, any
third party.
1.3 The term "DYAX Know-how" shall mean all proprietary know-how,
technology, biological or chemical materials, discoveries,
inventions, patent rights, trade secrets, formulated
procedures and results owned or controlled by DYAX.
1.4 The term "Effective Date" shall mean the date of the last
party's signature hereto.
1.5 The term "*************** Site" shall mean ***************.
1.6 The term "Field" shall mean development of ***************
Systems including Ligands directed against a given
*************** for use ***************.
1.7 The term "Ligand" shall mean any *************** binding to
the *************** or *************** Sequence.
1.8 The term "*************** Sequence" shall mean the
***************.
1.9 The term "NOVO NORDISK know-how", shall mean all proprietary
know-how, technology, biological or chemical materials,
discoveries, inventions, patent rights, trade secrets,
formulated procedures and results owned or controlled by NOVO
NORDISK.
1.10 The term "Phage Display Technology" shall mean the DYAX
Know-How which relates to the display of genetic
2
<PAGE> 3
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
diversity on the bacteriophage, and DYAX's associated
patent rights.
1.11 "Product" shall mean any therapeutic product, in which the
discovery or development involved the use of a ***************
System.
1.12 The term *************** shall mean *************** which is
part of the Project hereunder, and as further specified in
Exhibit A which Exhibit is an integral part of this Agreement
and which Exhibit shall be updated on a regular basis.
1.13 "*************** Systems" shall mean each system comprising a
*************** and Ligand for which NOVO NORDISK has made the
transfer fee set forth in Section 4.2
2 SCOPE OF AGREEMENT
2.1 OBJECTIVES
The objectives of this Agreement are to cooperate in the Field
in order to enable the parties to use the results arising
therefrom as further described below.
2.2 DESCRIPTION OF THE COOPERATION
The Cooperation shall consist of a *************** program of
discovery and development in the Field sponsored by NOVO
NORDISK and conducted by NOVO NORDISK and DYAX (the Project).
The Project shall during the term of this Agreement and for a
period of *************** after termination hereof be the
exclusive effort of DYAX for work with ***************. NOVO
NORDISK shall be free to work in the Field with third parties
provided, however, that nothing herein grants any right to
NOVO NORDISK under DYAX's Phage Display Technology.
The Project shall be conducted in accordance with the Project
program developed by the parties, the current version of which
is attached hereto as Exhibit A. The parties will from time to
time review, redesign and/or redirect the Project program in
accordance with the parties' discussions and the progress and
results of the cooperation.
DYAX will disclose DYAX Know-how and NOVO NORDISK will
disclose NOVO NORDISK Know-how only to the extent it is
3
<PAGE> 4
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
necessary for the work to be carried out under the Project
Program. The parties shall only use materials and samples
supplied by the other party and the DYAX Know-how and the NOVO
NORDISK know-how as provided for in this Agreement.
2.3 FUNDING AND PAYMENT
NOVO NORDISK shall fund DYAX researchers equivalent to
*************** to conduct the *************** Project program
covered by this Agreement. *************** funded by NOVO
NORDISK shall be subject to review and approval by NOVO
NORDISK in connection with the quarterly meetings pursuant to
Section 2.4. The *************** will be funded by NOVO
NORDISK at a rate of USD *************** per year (the
*************** rate) payable in *************** installments
of USD ***************.
Payment by NOVO NORDISK to DYAX for the first ***************
of the Project program shall be made by NOVO NORDISK to DYAX
***************. Thereafter payments shall be made by NOVO
NORDISK to DYAX ***************. The *************** rate
shall cover ***************.
2.4 TIMINGS, MINUTES OF MEETING AND REPORTS
Work on the stages stated in Exhibit A will be performed
continuously but not necessarily in the sequence stated.
Meetings will be held between the parties no less than every
*************** and the locations will alternate between
Copenhagen and Cambridge, MA, or as otherwise mutually agreed
upon between the parties. The representatives of each party
present during the meetings are responsible for ensuring that
decisions taken are in compliance with the policy of their
respective party and that except as otherwise explicitly
stated all formal approvals or authorizations which may be
required under the decision making procedures of each of the
parties have been obtained.
After the each meeting held, NOVO NORDISK will draw up written
minutes, such written minutes to be signed by all
representatives present and participating in the meeting in
question. The minutes must be issued within *************** of
each meeting.
Each party shall bear its own costs in connection with all
meetings held, including its own travel and lodging expenses.
4
<PAGE> 5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
*************** shall have the casting vote in the event of
disagreement between the parties relating to the conduct of
the Project.
DYAX will provide NOVO NORDISK on a current basis with
reasonably detailed written reports on the result and status
of its discovery and development work and no later than
*************** after the expiry of this Agreement shall DYAX
to NOVO NORDISK provide a written report covering the results
of the Project program and all activities carried out
hereunder. The report shall be the property of NOVO NORDISK.
2.5 RESPONSIBILITIES OF THE PARTIES
NOVO NORDISK undertakes to:
- ***************
- ***************
DYAX undertakes to:
- ***************
- ***************.
3 INTELLECTUAL PROPERTY RIGHTS
DYAX shall remain the sole owner of all DYAX Know-how possessed by DYAX prior
to entering into this Cooperation Agreement and shall own all Ligands and
Phage Display Technology resulting from this Agreement which are proprietary
to DYAX.
NOVO NORDISK shall remain the sole owner of all NOVO NORDISK Know-how
possessed by NOVO NORDISK prior to entering into this Cooperation Agreement
and shall own all *************** and *************** Sites resulting from
this Agreement and which are proprietary to NOVO NORDISK.
Except as set forth above NOVO NORDISK and DYAX *************** of any and all
inventions whether patentable *************** by the parties during the
Project Program under this Agreement. *************** is hereby granted the
first right to decide if and how to file and where to ***************. In the
event *************** decides against such a filing, *************** shall
have the right to decide on such filing. The parties will mutually agree how
to defend such *************** and how to share the costs relating thereto.
4 EXCLUSIVE LICENSE, PAYMENTS AND LIGAND SUPPLY
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<PAGE> 6
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
4.1 Subject to the payment and other obligations herein, DYAX
hereby grant to NOVO NORDISK an exclusive, unrestricted,
perpetual worldwide right and license, with the right to grant
sublicenses to Affiliates, under any DYAX Know-How and patent
rights to make, have made, use and sell the ***************
Systems in the Field and to make, have made, use and sell
Products. In the event that NOVO NORDISK desire to utilize any
*************** System outside the Field (e.g.
***************), the parties shall negotiate in good faith
the terms of such license extension.
4.2 Upon the transfer of each Ligand from DYAX to NOVO NORDISK in
accordance with the Project, NOVO NORDISK shall have
*************** to evaluate the Ligand and determine whether
it wishes an exclusive license to a *************** System
which includes such Ligand pursuant to Section 4.1 including
improvements thereof. DYAX undertakes to transfer to NOVO
NORDISK for NOVO NORDISK's evaluation all Ligands developed
under the Project. If NOVO NORDISK so wishes to be granted
such license, NOVO NORDISK shall pay to DYAX the sum of
*************** as a license fee for each such ***************
System prior to expiration of the relevant ***************
period. There shall be no obligation or restriction as to the
number of *************** Systems licensed, if any, by NOVO
NORDISK.
4.3 As additional consideration for the rights granted by DYAX
hereunder, NOVO NORDISK agrees to make the following
*************** to DYAX for each Product of NOVO NORDISK or
its sublicensees, payable within *************** of the
achievement of each ***************:
(a) For the first ***************, or ***************,
for each Product, whichever comes earlier: The sum of
***************;
(b) For the initiation of *************** or its
*************** for each Product: The sum of
***************;
(c) For the filing of *************** or its
*************** for each Product: The Sum of
***************; and
(d) For the *************** of each Product: The sum of
***************.
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<PAGE> 7
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
4.4 NOVO NORDISK agrees that during the term of this Agreement,
DYAX shall have the first right to supply NOVO NORDISK with
its requirements for Ligand for use in *************** Systems
at a cost equal to ***************. (The parties will
negotiate in good faith more detailed terms of such agreement
when appropriate.
5 CONFIDENTIALITY
The parties have entered into a Secrecy Agreement dated September 6, 1996,
(including amendment thereof of October 28, 1996) which Secrecy Agreement
shall still be valid.
In addition to the Secrecy Agreement NOVO NORDISK and DYAX agree that they
will exert diligent efforts to ensure their employees, agents, and consultants
will not disclose or publish any proprietary or confidential technical or
business information or any proprietary biological or chemical materials
(collectively hereinafter referred to as "Information") transmitted to one
another for use in the performance of this Agreement. The confidentiality
obligations herein shall not apply to:
i) Information, that at the time of disclosure, is in the public domain;
or
ii) Information, that after disclosure, becomes available to the public or
is lawfully made available to DYAX or NOVO NORDISK by a third party
without restrictions as to disclosure; or
iii) Information that NOVO NORDISK and DYAX mutually agree in writing to
release from the terms of this Agreement; or
iv) Information required to be disclosed by order of a court or other
governmental body after consultation with the party who owns the
Information.
NOVO NORDISK and DYAX will not publicise the existence of this Agreement in
any way without the prior written consent of the other subject to the
disclosure requirements of applicable law and regulations. In the event that
either party wishes to make an announcement concerning this Agreement, that
party will seek the consent of the other party. The terms of any such
announcement shall be agreed in good faith.
6 REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF DYAX
Corporate Power:
DYAX is duly organized and validly existing under the
laws of Delaware and has full corporate power and
7
<PAGE> 8
authority to enter into this Agreement and to carry out
the provisions hereof.
Due authorization:
DYAX is duly authorized to execute and deliver this Agreement
and to perform its obligations hereunder. The person executing
this Agreement on DYAX' behalf has been duly authorized to do
so by all requisite, corporate action.
Binding agreement - no conflicts:
This Agreement is a legal and valid obligation binding upon
DYAX and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by DYAX
does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by
which it may be bound, nor violate any material law or
regulation of any court, governmental body or administrative
or other agency having jurisdiction over it. DYAX is not a
party to any contract the terms of which would conflict with
the terms of this Agreement or under which a default or
violation would arise as a result of the execution, entering
into or performance of this Agreement. DYAX has not granted
any third party any rights which would conflict with the
rights granted to NOVO NORDISK hereunder.
Patents and other proprietary rights:
i) DYAX owns or has the right to use free and clear
of all liens, claims and restrictions all patents,
patent applications, trade marks, service marks,
trade names, inventions, trade secrets,
copyrights, licenses and rights, with respect to
the foregoing, used by DYAX for the transactions
proposed to be conducted by it under this
Agreement.
ii) DYAX has not granted any license or right to use its
proprietary information or intellectual property
related to the matters covered by this Agreement and
will not grant any license or rights inconsistent
with NOVO NORDISK's rights hereunder.
6.2 REPRESENTATIONS AND WARRANTIES OF NOVO NORDISK
Corporate Power:
NOVO NORDISK is duly organized and validly existing under the
laws of Denmark and has full corporate power and authority to
enter into this Agreement and to carry out the provisions
hereof.
8
<PAGE> 9
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
Due authorization:
NOVO NORDISK is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder. The person
executing this Agreement on NOVO NORDISK's behalf has been
duly authorized to do so by all requisite, corporate action.
Binding Agreement-no conflicts:
This Agreement is a legal and valid obligation binding upon
NOVO NORDISK and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by NOVO
NORDISK does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by
which it may be bound, nor violate any material law or
regulation of any court, governmental body or administrative
or other agency having jurisdiction over it. NOVO NORDISK is
not a party to any contract the terms of which would conflict
with the terms of this Agreement or under which a default or
violation would arise as a result of the execution, entering
into or performance of this Agreement. NOVO NORDISK has not
granted any third party any rights which would conflict with
the rights granted to DYAX hereunder.
7 PUBLICATION
During the term of this Agreement each party primarily responsible in
the Field for proposed publication whether written or oral (the
publishing party) shall at least *************** before presentation or
submission of the proposed publication to a third party submit such
proposed publication to the other party (the non-publishing party) for
review in connection with preservation of patentable rights and/or to
determine whether confidential information should be modified or
deleted. If the non-publishing party determines that confidential
information should be deleted from the proposed publication, the
publishing party shall make such deletion before publication. The
non-publishing party shall have *************** in which to review each
proposed publication. The review period may be extended for an
additional *************** when the non-publishing party provides a
reasonable need for such extension including but not limited to the
preparation and filing of pertinent patent applications. The parties
will treat matters of authorship in a proper collaborative spirit,
giving credit where it is due, but will not publish any information
relating to the Project program which might jeopardize any patent
rights of either party.
9
<PAGE> 10
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
8 TERM
8.1 The term of the Project shall commence as of the Effective
Date and continue, unless terminated as provided for below,
for *************** plus an additional *************** period
for NOVO NORDISK to carry out evaluation, cf. Article 4.2.
8.2 The term of the exclusive license for each ***************
System granted in accordance with Article 4 shall, unless
terminated as provided for below, be for a period of
*************** for each *************** System.
9 TERMINATION
9.1 NOVO NORDISK shall be entitled to terminate this
Agreement without cause with a prior written notice of
***************. In such event NOVO NORDISK shall
***************.
9.2 Upon *************** prior written notice, either Party hereto
shall be entitled to terminate this Agreement if the other
Party has committed a material breach of any of its
obligations or has failed to comply with material conditions
under this Agreement and such breach or failure to perform has
not been incurred within a *************** period after being
notified in writing of the other Party's or parties' intention
to terminate this Agreement, or if such failure, breach or
default cannot be cured within such a *************** period
within a reasonable time provided that the Party in breach has
committed substantial remedial actions within such
*************** period and is diligently pursuing the same.
All of the parties hereto in addition to any other remedies
available to them in law may terminate this Agreement by
written notice to the other Party or parties hereto in the
event the other Party or parties shall
a) become insolvent or bankrupt;
b) make an assignment for the benefit of its or their
creditors;
c) appoint a trustee or receiver for itself or
themselves for all or a substantial part of its or
their property, seek reorganization, liquidation,
dissolution, a winding arrangement, composition or
readjustment of its or their debts;
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<PAGE> 11
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
d) ***************.
10 EFFECT OF TERMINATION
Expiration or termination of this Agreement shall not relieve the parties of
any obligation accruing prior to such expiration or termination and the
provisions of Articles *************** and *************** shall survive the
expiration or termination of this Agreement. If NOVO NORDISK terminates under
Article 9.1 or DYAX terminates under Article 9.2, then all rights to licenses
revert to DYAX.
11 INDEMNIFICATION PROVISION
11.1 INDEMNIFICATION BY NOVO NORDISK
NOVO NORDISK shall defend, indemnify and hold DYAX harmless
from and against any and all liability, damage, loss, cost
(including reasonable attorney's fees) and expense resulting
from any claim of death, personal injury or property damage
arising out of NOVO NORDISK's use of the results arising from
the Project Programme. Notwithstanding the foregoing DYAX
shall not be entitled to indemnification under this Article 10
against any claim of personal injury or property damage
resulting from DYAX' negligence or wilful actions or
misconduct.
11.2 INDEMNIFICATION BY DYAX
DYAX shall defend, indemnify and hold NOVO NORDISK harmless
from and against any and all liability, damage, loss, cost
(including reasonable attorney's fees) and expense resulting
from any claim of death, personal injury or property damage in
connection with DYAX's conduct of the Project program.
Notwithstanding the foregoing NOVO NORDISK shall not be
entitled to indemnification under this Article 10 against any
claim of personal injury or property damage resulting from
NOVO NORDISK's negligence or wilful actions or misconduct.
11.3 INDEMNIFICATION PROCEDURE
In the event that either party shall receive notice of a claim
for which indemnification may be sought under Articles 10.1
and 10.2 above such party shall inform the indemnifying party
and the indemnifying party shall decide how to respond to the
claim and how to handle the claim in an efficient manner.
12 FORCE MAJEURE
11
<PAGE> 12
Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in fulfilling or performing any term of this Agreement when such failure or
delay is caused by or results from causes beyond the reasonable controlled of
the affected party including but not limited to fire, floods, embargoes, war,
acts of war (whether war be declared or not) insurrections, riots, civil
commotions, acts of God or acts, omissions or delays in action by any
governmental authority or the other party.
13 ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by either party
without the consent of the other party, except to an Affiliate.
14 MISCELLANEOUS
14.1 NOTICES
Any notice to be given under this Agreement shall be sent in
writing in English by registered airmail or telecopied to:
DYAX CORP.
One Kendall Square
Building 600, 5th Floor
Cambridge, MA 02139
USA
Attention: Chief Executive Officer
Telephone: 617 225 2500
Telefax: 617 225 2501
12
<PAGE> 13
NOVO NORDISK A/S
Novo Alle
DK-2880 Bagsvaerd
Denmark
Attention: Protein Technology
Telephone: 45 44 43 94 78
Telefax: 45 44 43 84 00
or to such other address(es) and telecopier numbers as may
from time to time be notified by either party to the other
hereunder.
Any notice sent by mail shall be deemed to have been delivered
within seven (7) working days after dispatch and any notice
sent by telex or telecopy shall be deemed to have been
delivered within twenty-four (24) hours of the time of the
dispatch. Notice of change of address shall be effective upon
receipt.
14.2 AMENDMENTS OF AGREEMENT
This Agreement may be amended, or any term hereof modified, or
only by a written instrument duly executed by both parties
hereto.
14.3 WAIVER
The waiver by either party hereto of any right hereunder or
the failure to perform or of a breach by the other party shall
not be deemed a waiver of any other right hereunder of any
other breach or failure by said other party whether of a
similar nature or otherwise.
14.4 SEVERABILITY
In the event that anyone or more of the provisions of this
Agreement should for any reason be held by any court or
authority having jurisdiction over this Agreement and the
parties to be invalid, illegal or unenforceable, such
provisions shall be deleted in such jurisdiction, provided,
however, that the invalid provisions are not of such essential
importance to this Agreement that it is to be reasonably
assumed that the parties would not have entered into this
Agreement without the invalid provisions.
14.5 APPLICABLE LAW
This Agreement shall be governed by and construed in
accordance with the laws of England.
13
<PAGE> 14
14.6 JURISDICTION
Both parties will use their best endeavors to settle all
matters in dispute amicably. All disputes and differences of
any kind related to this Agreement, which cannot be solved
amicably by the parties, shall be referred to arbitration.
The arbitration court shall consist of three arbitrators. The
arbitration, including appointment of arbitrators, shall be
carried out in accordance with the valid rules of the
International Chamber of Commerce (excluding the conciliation
procedure). The arbitration shall take place in London and
shall be conducted in the English language. The award of the
arbitrators shall be final and binding on both parties. The
parties bind themselves to carry out the awards of the
arbitrators.
Cambridge, MA 1997-16-Jan Bagsvaerd, 1997-16-Jan
DYAX Corp. NOVO NORDISK A/S
/s/ Thomas C. Ransohoff /s/ Leo Snel
- --------------------------------- ----------------------------------
By: Thomas C. Ransohoff By: Leo Snel
V.P., Bioseparations Director of Biologics
Development
14
<PAGE> 15
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT A (Novo Nordisk - Dyax Co-operation)
The *************** system outlined by Novo Nordisk is displayed in figure 1.
***************.
Figure 1:
A) ***************
B) ***************
C) ***************
D) ***************
***************.
Signed
/s/ Leo Snel /s/ Thomas C. Ransohoff
----------------------------------- --------------------------------
Novo Nordisk A/S Dyax
Copenhagen, January 16, 1997 16 Jan. 1997
15
<PAGE> 1
Exhibit 10.23
INDEMNIFICATION AGREEMENT
[Director]
This Agreement dated ___________, 1998 is between Dyax Corp. (the
"Company"), a Delaware corporation, and _______________________________ (the
"Indemnitee"), who is a director of the Company. Its purpose is to provide the
maximum protection for the Indemnitee against personal liability arising out of
his service to the Company so as to encourage the continuation of such service
and the effective exercise of his business judgment in connection therewith.
The parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings hereafter assigned to them:
(a) "CHANGE IN CONTROL" means the occurence of (i) a change in
control of the Company, not approved by a resolution of the Company's Board
of Directors, of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
in any event the acquisition by any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) of beneficial ownership,
directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then outstanding
securities, and (ii) within a period of not more than two years after the
event described in the preceding clause (i), a change in the identity of a
majority of the members of the Company's Board of Directors otherwise than
through death, disability or retirement in accordance with the Company's
normal retirement policies.
(b) "CLAIM" means any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether conducted by the
Company or any other party, that the Indemnitee in good faith believes
might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or other.
(c) "EXPENSES" means attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any Claim relating
to any Indemnifiable Event.
(d) "INDEMNIFIABLE EVENT" means any event or occurrence related to
the fact that the Indemnitee is or was a director, officer, employee, agent
or fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise, or by reason of anything done or not done by the
Indemnitee in any such capacity.
<PAGE> 2
(e) "POTENTIAL CHANGE IN CONTROL" means the occurence of (i) any
person's public announcement of an intention to take or to consider taking
actions which if consummated might result in a Change in Control, (ii) the
acquisition by any "person" (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act) of beneficial ownership, directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities, or
(iii) the adoption by the Company's Board of Directors of a resolution to
the effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(f) "REVIEWING PARTY" means the person or body appointed by the
Company's Board of Directors pursuant to Section 2(b), which shall not be
or include a person who is a party to the particular Claim for which the
Indemnitee is seeking indemnification.
2. Basic Indemnification Arrangement.
(a) In the event that the Indemnitee was or is a party to or witness
or other participant in, or is threatened to be made a party to or witness
or other participant in, a Claim by reason of (or arising in part out of)
an Indemnifiable Event, the Company shall indemnify the Indemnitee to the
fullest extent permitted by law as soon as practicable, but in any event no
later than thirty days after written demand is presented to the Company,
against all Expenses, judgments, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in respect of such Expenses, judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested by the Indemnitee, the
Company shall advance (within two business days of such request) all
Expenses to the Indemnitee (an "Expense Advance"). Notwithstanding anything
in this Agreement to the contrary, prior to a Change in Control, the
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by the Indemnitee against
the Company or any director or officer of the Company (otherwise than to
enforce his rights under this Agreement) unless the Company has consented
to the initiation of such Claim.
(b) In the event of any demand by the Indemnitee for indemnification
hereunder or under the Company's Restated Certificate of Incorporation or
By-laws, the Board of Directors of the Company shall designate a Reviewing
Party, who shall, if there has been a Change of Control of the Company, be
the special independent counsel referred to in Section 3 hereof. The
obligations of the Company under Section 2(a) shall be subject to the
condition that the Reviewing Party shall not have determined (in a written
opinion, in any case in which the special independent counsel referred to
in Section 3 hereof is involved) that the Indemnitee is not permitted to be
indemnified under applicable law, and the obligation of the Company to make
an Expense Advance pursuant to Section 2(a) shall be subject to the
condition that, if, when and to the extent that the Reviewing Party
determines that the Indemnitee is not permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by the
Indemnitee (who hereby agrees to reimburse the Company) for all such
amounts theretofore paid. If the Indemnitee has commenced legal
- 2 -
<PAGE> 3
proceedings in a court of competent jurisdiction to secure a determination
that the Indemnitee may be indemnified under applicable law, any
determination made by the Reviewing Party that the Indemnitee is not
permitted to be indemnified under applicable law shall not be binding, and
the Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with respect
hereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has been no determination by the Reviewing Party or if
the Reviewing Party determines that the Indemnitee is not permitted to be
indemnified in whole or in part under applicable law, the Indemnitee shall
have the right to commence litigation in any court in the State of Delaware
having subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, and the Company
hereby consents to service of process and to appear in any such proceeding.
Any determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and the Indemnitee.
3. Change in Control. The Company agrees that if there is a Change in
Control of the Company, then with respect to all matters thereafter arising
concerning the rights of the Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under the Company's
Restated Certificate of Incorporation or By-laws now or hereafter in effect
relating to Claims for Indemnifiable Events, the Company shall seek legal advice
only from special independent counsel selected by the Indemnitee and approved by
the Company (which approval shall not be unreasonably withheld) who has not
otherwise performed services for the Company within the last ten years (other
than in connection with such matters) or for the Indemnitee. Such counsel among
other things, shall render its written opinion to the Company and the Indemnitee
as to whether and to what extent the Indemnitee is permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
special independent counsel and to indemnify such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages relating
to this Agreement or its engagement pursuant hereto.
4. Establishment of Trust. In the event of a Potential Change in Control,
the Company may create a Trust for the benefit of the Indemnitee (either alone
or together with one or more other indemnitees) and from time to time fund such
Trust in such amounts as the Company's Board of Directors may determine to
satisfy Expenses reasonably anticipated to be incurred in connection with
investigating, preparing for and defending any Claim relating to an
Indemnifiable Event, and all judgments, fines, penalties and settlement amounts
of all Claims relating to an Indemnifiable Event from time to time paid or
claimed, reasonably anticipated or proposed to be paid. The terms of any Trust
established pursuant hereto shall provide that upon a Change in Control (i) the
Trust shall not be revoked or the principal thereof invaded (except as provided
in any of the circumstance described in the following clauses (ii) through
(iv)), without the written consent of the Indemnitee, (ii) the Trustee shall
advance, within two business days of a request by the Indemnitee, all Expenses
to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under
the circumstances under which the Indemnitee would be required to reimburse the
Company under Section 2(b) of this Agreement), (iii) the Trustee shall promptly
pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this
- 3 -
<PAGE> 4
Agreement or otherwise, and (iv) all unexpended funds in such Trust shall revert
to the Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified under the terms of this Agreement. The Trustee shall be a person or
entity satisfactory to the Indemnitee. Nothing in this Section 4 shall relieve
the Company of any of its obligations under this Agreement.
5. Indemnification for Additional Expenses. The Company shall indemnify
the Indemnitee against all expenses (including attorneys' fees) and, if
requested by the Indemnitee, shall (within two business days of such request)
advance such expenses to the Indemnitee, which are incurred by the Indemnitee in
connection with any claim asserted against or action brought by the Indemnitee
for (i) indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or Company By-law or provision of the Company's
Restated Certificate of Incorporation now or hereafter in effect relating to
Claims for Indemnifiable Events or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company, regardless of
whether the Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case
may be.
6. Partial Indemnity, Etc. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not for the total amount thereof, the Company shall indemnify the
Indemnitee for the portion thereof to which the Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of Claims
relating to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all Expenses incurred in connection therewith. In connection with any
determination by the Reviewing Party or otherwise as to whether the Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that the Indemnitee is not so entitled.
7. No Presumption. For purposes of this Agreement, the termination of
any claim, action, suit or proceeding by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law.
8. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights the Indemnitee may have under the Company's
Restated Certificate of Incorporation and By-laws or the Delaware General
Corporation Law or otherwise. To the extent that a change in the Delaware
General Corporation Law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
Company's Restated Certificate of Incorporation and By-laws and this Agreement,
it is the intent of the parties hereto that the Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change.
- 4 -
<PAGE> 5
9. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, the Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer thereunder.
10. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
11. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnitee, who shall execute all such papers and do all such
things as may be necessary or desirable to secure such rights.
12. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against the
Indemnitee to the extent the Indemnitee has otherwise received payment (under
any insurance policy, Restated Certificate of Incorporation, By-law or
otherwise) of the amounts otherwise indemnifiable hereunder.
13. Binding Effect, Etc. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company, spouses, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
the Indemnitee continues to serve as an officer or director of the Company or of
any other enterprise at the Company's request.
14. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of law.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Indemnification
Agreement as of the date first above written.
DYAX CORP.
By:_________________________________
Title:
____________________________________
[Director]
- 6 -
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 to
register 2,875,000 shares of common stock of Dyax Corp. of our report dated
March 20, 1998, on our audits of the financial statements and financial
statement schedule of Dyax Corp.
We also consent to the inclusion in this registration statement of our report
dated February 17, 1998, on our audit of the financial statements of Protein
Engineering Corporation.
We also consent to the references to our firm under the captions "Experts" and
"Selected Consolidated Financial Data."
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 23, 1998
<PAGE> 1
EXHIBIT 23.3
Yankwich & Associates
130 Bishop Allen Drive
Cambridge, Massachusetts 02139
TELEPHONE: (617) 491-4343
TELEFAX: (617) 491-8801
LEON R. YANKWICH
DIRECT LINE: (617) 491-8909
CONSENT OF INTELLECTUAL PROPERTY COUNSEL
March 20, 1998
We hereby consent to the reference to our firm under the caption "Experts"
in the Prospectus that is a part of the Registration Statement on Form S-1 of
Dyax Corp.
/s/ LEON R. YANKWICH
--------------------
Leon R. Yankwich
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27,258
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