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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
------------------------ TO
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COMMISSION FILE NUMBER: 0-22788
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AXYS PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 22-2969941
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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180 KIMBALL WAY
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(650) 829-1000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
The number of outstanding shares of the registrant's Common Stock, $0.001
par value, was 30,441,037 as of July 31, 1999.
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AXYS PHARMACEUTICALS, INC.
INDEX
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PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)*
Consolidated Balance Sheets -- June 30, 1999 and
December 31, 1998......................................... 3
Consolidated Statements of Operations -- Three and
six months ended June 30, 1999 and 1998............ 4
Consolidated Statements of Cash Flows -- Six months
ended June 30, 1999 and 1998.............................. 5
Notes to Consolidated Financial Statements -- June
30, 1999.................................................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................... 15
Item 2. Changes in Securities............................... 15
Item 3. Defaults Upon Senior Securities..................... 15
Item 4. Submission of Matters to a Vote of Security
Holders................................................... 15
Item 5. Other Information................................... 16
Item 6. Exhibits and Reports on Form 8-K.................... 16
Signatures.................................................. 17
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* The financial information contained herein should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998,
filed with the Securities and Exchange Commission on March 31, 1999.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AXYS PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
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<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
(UNAUDITED) (1)
----------- ------------
(IN THOUSANDS)
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Current assets:
Cash and cash equivalents................................. $ 23,025 $ 36,261
Marketable investments.................................... 29,330 36,456
Accounts receivable, trade................................ 4,148 2,140
Inventory................................................. 996 435
Prepaid expenses and other current assets................. 3,151 4,513
--------- ---------
Total current assets.............................. 60,650 79,805
Property and equipment, net................................. 22,476 21,510
Investment in joint venture................................. 1,104 1,908
Note receivable from officer................................ 654 821
Intangible assets........................................... 3,372 2,200
Other assets................................................ 1,165 1,018
--------- ---------
TOTAL ASSETS...................................... $ 89,421 $ 107,262
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,473 $ 3,788
Accrued compensation...................................... 3,697 4,232
Other accrued liabilities................................. 3,506 2,956
Deferred revenue.......................................... 3,487 8,698
Current portion of capital lease and debt obligations..... 9,976 9,872
--------- ---------
Total current liabilities......................... 23,139 29,546
Capital lease and debt obligations, net of current
portion................................................... 13,144 16,816
Minority interest in joint venture.......................... 13,159 388
Stockholders' equity:
Preferred stock........................................... -- --
Common stock.............................................. 290,944 290,291
Accumulated other comprehensive income.................... (109) 116
Accumulated deficit....................................... (250,856) (229,895)
--------- ---------
Total stockholders' equity........................ 39,979 60,512
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $ 89,421 $ 107,262
========= =========
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(1) The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to consolidated financial statements.
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AXYS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ---------------------
1999 1998 1999 1998
-------- ------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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Revenues
Collaboration and license revenue............. $ 6,134 $ 8,299 $ 14,796 $ 16,650
Product and service revenue................... 2,193 798 5,335 881
-------- ------- -------- ---------
Total revenue......................... 8,327 9,097 20,131 17,531
Operating expenses
Cost of goods sold............................ 902 -- 1,450 387
Research and development...................... 16,740 13,887 32,665 28,987
General and administrative.................... 4,552 3,690 7,753 7,122
Acquired in-process research and
development................................ -- -- -- 124,888
-------- ------- -------- ---------
Total operating expenses.............. 22,194 17,577 41,868 161,384
-------- ------- -------- ---------
Operating loss.................................. (13,867) (8,480) (21,737) (143,853)
Interest income................................. 799 1,287 1,706 2,669
Interest expense................................ (504) (538) (1,011) (1,107)
Equity interest in loss of joint venture........ (267) (445) (830) (902)
Minority interest............................... 625 -- 911 --
-------- ------- -------- ---------
Net loss........................................ $(13,214) $(8,176) $(20,961) $(143,193)
======== ======= ======== =========
Basic and diluted net loss per share............ $ (0.44) $ (0.27) $ (0.69) $ (4.87)
======== ======= ======== =========
Shares used in computing basic and diluted net
loss per share................................ 30,359 29,999 30,340 29,390
======== ======= ======== =========
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See accompanying notes to consolidated financial statements.
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AXYS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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SIX MONTHS ENDED
JUNE 30,
---------------------
1999 1998
-------- ---------
(IN THOUSANDS)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $(20,961) $(143,193)
Adjustments to reconcile net loss to net cash and cash
equivalents used in operating activities:
Depreciation........................................... 4,303 3,801
Amortization........................................... 828 593
Gain on sale of fixed asset............................ (22) --
Equity interest in loss of joint venture............... 830 902
Forgiveness of note receivable from officer............ 183 125
Acquired in-process research and development........... -- 124,888
Changes in assets and liabilities:
Accounts Receivable.................................. (2,008) --
Inventory............................................ (561) --
Prepaid expenses and other current assets............ 1,362 986
Other assets......................................... (2,164) (3,357)
Accounts payable and accrued liabilities............. (1,301) (4,350)
Deferred revenue..................................... (5,211) (4,460)
-------- ---------
Net cash and cash equivalents used in operating
activities................................................ (24,722) (24,065)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Available-for-sale securities:
Purchases................................................. (22,424) (19,301)
Maturities................................................ 29,332 49,019
Minority interest........................................... 12,771 --
Proceeds from sale of fixed asset........................... 22 --
Sequana acquisition, net of cash............................ -- 13,270
Investment in joint venture................................. (25) (2,000)
Purchase of property and equipment.......................... (5,269) (2,332)
-------- ---------
Net cash and cash equivalents provided by investing
activities................................................ 14,408 38,656
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock.................. 653 1,586
Proceeds from note receivable............................... -- 603
Proceeds from notes payable and lease financing............. -- 2,000
Proceeds from minority interest............................. -- 500
Principal payments on notes payable and capital leases...... (3,568) (3,143)
-------- ---------
Net cash and cash equivalents provided by (used by)
financing activities...................................... (2,915) 1,546
-------- ---------
Effect of exchange rate change.............................. (7) --
-------- ---------
Net increase (decrease) in cash and cash equivalents........ (13,236) 16,137
Cash and cash equivalents, beginning of period.............. 36,261 22,938
-------- ---------
Cash and cash equivalents, end of period.................... $ 23,025 $ 39,075
======== =========
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See accompanying notes to consolidated financial statements.
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AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Axys Pharmaceuticals, Inc., a Delaware corporation ("Axys" or the
"Company"), is a drug discovery and development company with a proprietary focus
in oncology. Axys' business is focused in three primary areas: (i) drug
discovery and development programs in collaboration with pharmaceutical and
biotechnology companies, (ii) drug discovery and development programs in the
area of oncology, which are not partnered, and (iii) the spin out of affiliated
businesses in combinatorial chemistry, pharmacogenomics, and agricultural
biotechnology.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Arris Pharmaceuticals Canada, Inc., Sequana
Therapeutics, Inc. ("Sequana"), and Axys Advanced Technologies, Inc. ("AAT"),
and includes the accounts of Xyris Corporation and PPGx, Inc. the Company's
majority owned subsidiaries and (See "Formation of PPGx, Inc.", Note 3). All
significant intercompany accounts and transactions have been eliminated.
Sequana owns 50% of Genos, a joint venture with Memorial Sloan-Kettering
Cancer Center ("MSKCC"). This investment is accounted for under the equity
method.
RECLASSIFICATIONS
Certain 1998 amounts have been reclassified to conform to the June 30, 1999
presentations.
BASIS OF PRESENTATION
The unaudited consolidated financial statements included herein have been
prepared by the Company according to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in complete financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The financial statements reflect, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to state fairly the financial position and results of operations as of
and for the periods indicated. The results of operations for the three and
six-month periods ended June 30, 1999 are not necessarily indicative of the
results to be expected for subsequent quarters or the full fiscal year.
These financial statements should be read in conjunction with the audited
financial statements and the notes thereto included in the Company's 1998 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
2. ROUND OF FINANCING FOR XYRIS CORPORATION
In February 1999, Xyris executed an exclusive license to the Company's
technology in the field of agriculture (the "Technology License"). The Company
received additional shares of Xyris in exchange for the Technology License.
Also in February Xyris completed a round of financing in which it raised
$4,500,000 from a third party. During the second quarter Xyris completed a round
of financing in which it raised $5,000,000 from other third parties. Under the
terms of this financing, the Company has granted the third parties the right
(the "Put Option") to require the Company to purchase all of their interests in
Xyris in exchange for that number of shares of the Company whose market value
equals $10,000,000 at the date of the exercise of the Put Option. The Put Option
may be exercised at any time between August 2, 1999 and February 2, 2001.
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AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
The net effect of the issuance of shares in connection with the round of
financing is a reduction of the Company's ownership in Xyris from 82% at
December 31, 1998, to 52% at June 30, 1999.
3. FORMATION OF PPGX, INC.
In February 1999, the Company announced the formation of a majority-owned
subsidiary, PPGx, Inc. ("PPGx"), which is engaged in the business of providing
pharmacogenomic (the science of how genetic variations among individuals affects
drug safety and efficacy) products and services to the pharmaceutical industry.
In connection with the formation of PPGx, Axys contributed certain fixed assets
and technology, which was recorded at the company's net book value, in exchange
for an 82% ownership interest in PPGx. PPD, Inc. ("PPD"), Axys' partner in PPGx,
contributed certain assets, technology, cash and loan guarantees in exchange for
an 18% ownership interest in PPGx and the exclusive, worldwide right to market
the pharmacogenomic products and services of PPGx.
Under the terms of a shareholder agreement between the Company and PPD, PPD
has the option (the "PPD Option") to purchase 32% of PPGx from the Company at
various escalating prices until February 1, 2002 to PPD at various escalating
prices until August 1, 2002. Upon exercise of the PPD Option or the Axys Put,
the Company and PPD would have equal ownership positions in PPGx. Under certain
circumstances, the Company has the option to put (the "Axys Put") 32% of PPGx.
At such time as either the PPD Option or the Axys Put are exercised, the Company
would also become a co-guarantor of a certain PPGx line of credit to the extent
any borrowings are outstanding at that time. Additionally, at any time after the
fifth anniversary of the formation of PPGx, the Company and, provided either the
PPD Option or the Axys Put have been exercised, PPD have the right to buy all of
the outstanding equity interests in PPGx at fair market value in accordance with
the terms of buy-sell provisions of the shareholder agreement.
4. INVENTORY
Inventories are stated at the lower of cost (first-in, first-out) or
market. At June 30, 1999, inventories consisted of the following (in thousands):
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Raw materials............................................... $293
Finished goods.............................................. 703
----
$996
====
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5. COMPREHENSIVE INCOME
Total comprehensive loss was ($13,353) and ($21,186) for the three- and
six-months ended June 30, 1999, respectively and ($8,176) and ($143,193) for the
three- and six-months ended June 30, 1998, respectively.
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AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
6. SEGMENT INFORMATION
Segment information consists of the following:
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SIX MONTHS ENDED
JUNE 30,
---------------------
1999 1998
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(IN THOUSANDS)
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Revenues:
Drug discovery............................................ $ 13,063 $ 15,650
AAT....................................................... 6,726 1,881
Other..................................................... 342 --
-------- ---------
Total consolidated.......................................... $ 20,131 $ 17,531
======== =========
Operating income (loss):
Drug discovery(1)......................................... $(19,628) $(142,064)
AAT....................................................... 2,283 (1,069)
Other..................................................... (3,616) (60)
-------- ---------
Total consolidated.......................................... $(20,961) $(143,193)
======== =========
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Other represents the results of Xyris' and PPGx's principal activities which
commenced in 1998 and 1999, respectively.
- ---------------
(1) Includes $125 million in acquired in-process research and development
recorded in 1998 relating to the acquisition of Sequana Therapeutics, Inc.
in January 1998.
7. SUBSEQUENT EVENT
On July 26, 1999, the Company refinanced its two lines of credit, one with
Sumitomo Bank, Limited ("Sumitomo") and one with Sumitomo and Silicon Valley
Bank, jointly, for a new $30 million revolving line of credit with Foothill
Capital Corporation. The Company has fully drawn down this new line of credit,
and repaid the previous notes with Sumitomo and Silicon Valley Bank. The new
line is subject to the terms of a security agreement, under which certain
investments are held in designated accounts as security for the line. Interest
is due on the line monthly and is computed at the reference rate for Wells Fargo
Bank. The balance of any unpaid principal and interest is due July 2002.
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AXYS PHARMACEUTICALS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains both historical information and
forward-looking statements that involve risks and uncertainties. Forward-looking
statements include projections and other statements about events that may occur
at some point in the future. The company's actual results could differ
significantly from those described in the forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in this section as well as under "Item 1. Business,"
including, "What Factors Could Cause Our Results To Differ Significantly From
Those You Might Expect," in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 filed with the Securities and Exchange Commission.
OVERVIEW
Since the Company's founding in 1989, Axys has devoted most of its
resources to research and development programs. To date, the company's revenues
have resulted from its collaborative research programs with pharmaceutical
companies as part of its drug discovery business and more recently from the
sales of chemical compound libraries by its new combinatorial chemistry business
subsidiary, Axys Advanced Technologies, Inc. ("AAT") (formerly known as the
Company's Advanced Technologies Division).
In July 1999, the company announced the closing of its San Diego operations
by the end of the calendar year. The company plans to relocate its oncology
genomics operations from San Diego to its South San Francisco headquarters, and
is involved in discussions with third parties to sell its positional cloning and
other related technology programs. Following the conclusion of such discussions,
the Company plans to close any remaining San Diego operations by the end of this
calendar year. As a result of these actions, operating expenses are projected to
decrease by $17 million on an annual basis. The company anticipates a one-time
charge to range from $3.0 to $6.0 million during the third quarter of 1999 for
costs associated with the relocation of its oncology genomics efforts and the
transfer or winding up of its positional cloning and related efforts.
In the second quarter of 1999, the following collaborative relationships
were brought to an end. Two of these relationships involved early stage research
collaborations and the third involved a collaboration in which the Company's
research activities had concluded over a year earlier. The Company does not
expect the termination of any of these relationships to have a material adverse
effect on its business, financial statements or results of operations.
Since June 1995 the Company has been involved in a collaboration with
Boehringer Ingelheim International GmbH ("Boehringer Ingelheim") to identify the
genetic causes of asthma. In June 1999 the Company agreed that Boehringer
Ingelheim's research funding obligations would end as of June 30, 1999, and that
certain royalty terms in the agreement would be revised.
In May 1999 the Company was notified by Pharmacia & Upjohn of the formal
termination of the March 1993 collaborative agreement regarding the development
of synthetic, small molecule mimetics of human growth factor. The research
funding under this collaborative agreement had previously ended in 1997. Rights
to this program revert to Axys.
The Company and Memorial Sloan-Kettering Cancer Center formed and funded a
joint venture called Genos Biosciences, Inc. in January 1997 to identify genes
and related genetic information pertaining to prostate, breast and colon cancer.
In May 1999 the Board of Directors of Genos Biosciences decided to suspend its
research activities and wind up its affairs. The Company is receiving back
rights to use its technology in the identification programs in oncology as a
result of this winding up of Genos.
The company's collaborative research programs generally contain one or more
of the following sources of revenue to the company:
- Research Support: Payments which are generally based on the number of
researchers Axys is committing to a particular program. These revenues
are recorded when earned by the company.
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- License Fees: Payments generally made when a collaboration agreement is
signed. These revenues are recorded when the agreement is signed, as no
future performance obligation exists.
- Commitment Fees: Payments made in conjunction with the company's
commitment to perform certain funded research. These revenues are
recorded over the course of the research efforts.
- Milestone Payments: Payments which are based on the company or its
partner achieving certain technical or regulatory milestones in the
collaboration. These revenues are recorded upon the achievement of
mutually agreed upon milestones.
- Royalties: Upon commercialization of products resulting from a
collaboration, the company may earn royalties based on a percentage of
the revenue earned by the collaboration partner. These revenues would be
recorded when product sales result from the company's collaborations.
The company's sales of chemical compound libraries contain one or more of
the following sources of revenue to the company:
- Product Sales: As chemical compound libraries are shipped to customers of
AAT, the Company records revenue based on the contracted price per
compound.
- License Fees: Payments made when compound supply or technology license
agreements are signed. These revenues are recorded when the agreement is
signed, as no future performance obligation exists.
- Commitment Fees: Payments made in conjunction with AAT's commitment to
perform certain obligations under compound supply or technology license
agreements. These revenues are recorded over the course of the relevant
agreement, as performance obligations are completed.
- Protocol Fees: Payments made for granting access to technology know-how.
These revenues are recorded as protocol are delivered.
Although the sale of stock by the company to one of its partners is not a
source of revenue, unless sold at a premium to market, the company's
collaborative research programs have occasionally included the sale of stock by
the company to the pharmaceutical company sponsoring the research.
The Company has not been profitable since inception and expects to incur
substantial losses for at least the next several years, primarily due to the
cost of its research and development programs, including preclinical studies and
human clinical trials. The Company expects that losses will fluctuate from
quarter to quarter, that such fluctuations may be substantial, and that results
from prior quarters may not be indicative of future operating results. As of
June 30, 1999, the Company's accumulated deficit was approximately $251 million.
Included in the Company's accumulated deficit at June 30, 1999 was approximately
$147 million of acquired in-process research and development from the
acquisition of Khepri Pharmaceuticals, Inc. in 1995 and the acquisition of
Sequana in January 1998.
RESULTS OF OPERATIONS
REVENUES
Total revenue was $8.3 million and $20.1 million for the three- and
six-month periods ended June 30, 1999, respectively, compared to $9.1 million
and $17.5 million for the comparable periods in 1998. Revenue is made up of two
components, which are discussed below.
Collaboration and licensing revenues
The company's collaboration and licensing revenues were $6.1 million and
$14.8 million for the three-and six-month periods ended June 30, 1999,
respectively, compared to $8.3 million and $16.7 million, respectively, for the
comparable periods in 1998. The change was primarily due to: (i) an increase in
technology licensing fees, including the combinatorial chemistry agreement
between AAT and Daiichi Pharmaceutical Co., Ltd., signed in June 1999; (ii) the
research support in connection with an agreement with Rhone-Polenc Rorer for the
development of small molecule therapeutics that inhibit cathepsin S, associated
with certain inflammatory diseases; and (iii) the termination fee associated
with Corange International, Ltd.,
10
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which ended in February 1999. These increases were offset by lower revenues
recognized compared to the prior year for the following agreements: (i) the end
of the research funding in mid 1998 of the Pharmacia & Upjohn agreement for the
development of inhibitors of Factor Xa; (ii) the reduction in research support
in the Boehringer Ingelheim International GmbH agreement for the gene
identification program in asthma; and (iii) the conclusion of the Glaxo-Wellcome
Inc. agreement for the genomics work in the area of type II diabetes and related
conditions.
Product and service revenues
The company's product and service revenues increased to $2.2 million and
$5.3 million for the three- and six-month periods ended June 30, 1999,
respectively, compared to $798,000 and $881,000, respectively, for the
comparable periods in 1998. The increase was primarily due to an increase in the
number of compounds shipped in 1999 under three AAT agreements, as well as the
inclusion of the service revenue recognized by PPGx since its formation in
February 1999, compared to the number of compounds shipped in 1998 under one AAT
agreement.
Cost of Goods Sold
The company's cost of goods sold increased to $902,000 and $1.5 million for
the three- and six-month periods ended June 30, 1999, respectively, compared to
none and $387,000, respectively, for the comparable periods in 1998. The costs
in 1999 are directly related to the costs of producing compounds for sale. The
costs in 1998 primarily reflect start up costs for the production of compounds.
Research and Development
The company's research and development expenses increased to $16.7 million
and $32.7 million for the three- and six-month periods ended June 30, 1999,
respectively, from $13.9 million and $29.0 million, respectively, for the
comparable periods in 1998. The increases in 1999 are primarily due to the
research and development expenses of the company's newly formed subsidiaries
PPGx, and Xyris. Other factors contributing to the increase relate to the
clinical costs associated with pursuing our own clinical programs in both
ulcerative colitis and psoriasis in 1999, versus the clinical costs associated
with an inhaled therapeutic for asthma in 1998, as well as the severance costs
associated with the reduction in headcount in the first quarter.
General and Administrative
The company's general and administrative expenses increased to $4.6 million
and $7.8 million for the three- and six-month periods ended June 30, 1999,
respectively, compared to $3.7 million and $7.1 million, respectively, for the
comparable periods in 1998. The increases were primarily due to the addition of
the administrative expenses of the company's newly formed subsidiaries, PPGx,
and Xyris.
Interest Income and Interest Expense
Interest income decreased to $799,000 and $1.7 million for the three- and
six-month periods ended June 30, 1999, respectively, compared to $1.3 million
and $2.7 million, respectively, for the same periods in 1998. The decrease was
primarily due to the decrease in average cash and investment balances between
the periods. Interest expense decreased to $504,000 and $1.0 million for the
three- and six-month periods ended June 30, 1999, respectively, compared to
$538,000 and $1.1 million, respectively, for the same periods in 1998. The
decrease was primarily due to the lower debt balances from the company's two
lines of credit and capital lease arrangements.
Equity Interest in Loss of Joint Venture
Equity interest in loss of joint venture decreased to $267,000 and $830,000
for the three- and six- month periods ended June 30, 1999, respectively,
compared to $445,000 and $902,000, respectively, for the same period in 1998.
This account represents the company's 50% portion of Genos' loss for the period
based on the Company's 50% ownership of Genos. These expenses are expected to
decrease in future quarters as Genos is in the process of being wound up.
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Minority interest
Minority interest represents another investor's share of a subsidiary's
operating income (loss), where the company owns 51% to 99% of that subsidiary.
Income reported by the company, which is attributable to a minority owner was
$625,000 and $911,000 for the three- and six- month periods ended June 30, 1999,
respectively, compared to none for the same periods in 1998. This amount is the
result of the formation of the Company's majority owned subsidiaries, PPGx, Inc.
and Xyris Corporation. Since the company records all of the PPGx and Xyris
operating expenses as our expenses, a portion of the losses from these entities
is allocated to the minority shareholders in these entities as minority
interest, offsetting the company's operating loss.
IMPACT OF THE YEAR 2000
The Year 2000 problem or the "Y2K problem" is a problem that may arise at
the turn of the century in computers or other equipment utilizing microprocessor
technology. Some computer software programs and computer equipment, as well as
other equipment using embedded microprocessors, use two digit date fields rather
than four date digit fields (that is, "98" in the computer code refers to the
year "1998"). As a result, time-related functions in such software and equipment
may misinterpret dates after January 1, 2000 to refer to the twentieth century
rather than the twenty-first century (that is, "02" could be interpreted as
"1902" rather than "2002"). This could potentially cause system or equipment
shutdowns, failures or miscalculations, resulting in inaccuracies in computer
output. The Y2K problem is a global problem and has the potential to impact
virtually every company to one degree or another, including Axys.
The company has been addressing the Y2K problem for more than six months
beginning with a review of its core information technology systems, including
its servers, databases, desktop computers, significant applications (whether
licensed from third parties or developed internally) and significant
microprocessor-controlled equipment for Y2K readiness. Because the Y2K problem
potentially affects many other companies, the company has also been
investigating the Y2K readiness of its vendors, service providers and other
companies (including its collaboration partners and customers) with whom the
company has significant business relationships ("Important Third Parties").
As the company completes these internal and external reviews, the company
has been prioritizing the responses it needs to take to address the Y2K problem,
to address the highest priorities first and to develop by no later than the end
of the third quarter of 1999 such contingency plans as management believes to be
prudent. The company expects to update and revise this contingency plan
throughout the remainder of 1999 as additional information becomes known. With
respect to the company's core information technology systems, the review is
complete and modifications have been substantially completed. The review and
modification process of the desktop computers has been completed. With respect
to third party software applications, the company expects to complete its review
and to replace or upgrade such applications by the end of the third quarter of
1999. In this regard, the company has completed the replacement of its
enterprise management information system with a new system that is Y2K ready.
With respect to the few software applications the company has developed and
licensed to third parties, the company has completed its review of some of these
applications and believes them to be Y2K ready. The remaining applications are
undergoing testing and if determined not to be Y2K ready, the company expects to
provide upgrades to such applications, making them Y2K ready by the third
quarter of 1999 or as soon thereafter as practicable. With respect to other
internally-developed software applications, the company has compiled a list of
such applications and has completed the design of appropriate tests. The company
has run a number of tests and expects to complete its review by the end of the
third quarter. The company has completed the replacement or upgrade of some of
these applications and expects to complete the remaining replacements or
upgrades during the third quarter of 1999. Finally, with respect to other
significant microprocessor-controlled equipment, the company has identified and
completed its review of such equipment and has completed the necessary upgrades
or replacements.
The review of the Y2K readiness of Important Third Parties is substantially
complete and the company is in the process of assessing the nature and extent of
the risk from non-readiness by such third parties. Depending upon the outcome of
such assessment, the company plans to cease doing business with such third
parties, locate back-up businesses who are Y2K ready, obtain reasonable
assurances of Y2K readiness, or to implement other appropriate contingency
plans, by the end of 1999.
12
<PAGE> 13
The total costs associated with the company's Y2K readiness efforts is
currently believed to be in the range of $250,000. Out-of-pocket expenditures to
date with respect to the Y2K problem have not been material and the time of
company personnel to address Y2K readiness has also not been material. Until the
reviews described above are completed, the company's estimates of the extent of
the expenditures that will be necessary to address the Y2K problem are subject
to change.
The company believes that its Y2K readiness review and the actions it
intends to take prior to the end of 1999 should result in the absence of
significant Y2K-related problems for the company's computer systems,
applications and microprocessor-controlled equipment. However, there can be no
assurances that the company will be able to complete its review of various
systems within the time frames indicated, that the company, will be completely
Y2K ready by the end of 1999 or that the company will not encounter Y2K-related
problems that could have a material adverse affect on the company's results of
operations and financial condition. In addition, the company cannot guarantee
the Y2K readiness of Important Third Parties and certain business disruptions
could occur, such as a financial institution's inability to process checks drawn
on bank accounts, to accept deposits or process wire transfers, an Important
Third Party's business failure, interruption in deliveries of equipment,
supplies and services from Important Third Parties, loss of voice and/or data
connections, loss of power to electrical facilities, and other business
interruptions which cannot be predicted. Accordingly, there can be no assurance
that Y2K-related problems of Important Third Parties will not have a material
adverse affect on the company's results of operations and financial condition.
LIQUIDITY AND CAPITAL RESOURCES
The company has financed its operations since inception primarily through
private and public offerings of its capital stock and through corporate
collaborations. As of June 30, 1999, the company had realized approximately $183
million in net proceeds from offerings of its capital stock. In addition, the
company had realized approximately $182 million since inception from its
corporate collaborations.
The company's principal sources of liquidity are its cash and investments,
which totaled $52.3 million as of June 30, 1999. In July 1999, the company has
refinanced its former lines of credit with a new line of credit under which it
has borrowed $30 million to fund research activities. This new line of credit
increased the company's working capital by approximately $9 million.
The company's cash and investments at June 30, 1999 include the balances
from its wholly owned and majority owned subsidiaries. Xyris Corporation, the
majority owned agricultural biotechnology affiliate is in the process of merging
with Global Agro, Inc., a privately held plant science company. Once the
all-stock transaction is completed, it is anticipated that the company's
ownership percentage in Xyris will be 50% or less. The company's consolidated
financial statements will no longer include the balances of Xyris and the
activity in Xyris will be accounted for on the equity method. Xyris' cash and
investments at June 30, 1999 totalled $8.0 million.
Net cash used in operating activities during the six-month period ended
June 30, 1999 was $24.7 million, compared to $24.1 million in the same period in
1998. Operating expenses between the two periods were largely unchanged. Cash
used in operating activities is expected to fluctuate from quarter to quarter
depending in part upon the timing and amounts, if any, of cash received from
existing and any new collaboration agreements or the sale of combinatorial
chemistry compound libraries.
The company also spent approximately $5.3 million for the purchase of
property, plant and equipment during the six months ended June 30, 1999.
Additional equipment is expected to be acquired or leased in connection with the
company's continuing research and development activities. The Company is
currently in discussions to finance prior and future purchases of capital
equipment.
We expect that our existing money resources, including research and
development revenues from existing collaborations, will enable us to maintain
current and planned operations for at least the next 12 to 18 months.
We expect that our existing money resources, including research and
development revenues from existing collaborations, will enable us to maintain
current and planned operations for at least the next 12 to 18 months.
13
<PAGE> 14
However, we expect to raise substantial additional money to fund operations
before the end of this period. In addition, we will need to continue to raise
money until we achieve substantial product or royalty revenues, if ever.
We expect that we will seek additional funding through one or more of the
following: new collaborations, the extension of existing collaborations, the
sale of our interests in our affiliated businesses, or through public or private
equity or debt financings. Furthermore, we may obtain funds through arrangements
with collaborative partners or others that require us to give up rights to
technologies or products that we would otherwise seek to develop or
commercialize ourselves. We cannot be certain that additional funding will be
available or that, if available, the terms will be acceptable. Existing
stockholders will experience dilution of their investment if additional funds
are raised through private or public stock sales. If adequate funds are not
available, we may delay, reduce or eliminate any of our research or development
programs.
CERTAIN BUSINESS RISKS
We are at an early stage of development. Our technologies are, in many
cases, new and all are still under development. All of our proposed products are
in research or development and will require significant additional research and
development efforts prior to any commercial use, including extensive preclinical
and clinical testing, as well as lengthy regulatory approval involving many
complexities. Our research and development efforts may not be successful, our
proposed products may not prove to be safe and efficacious in clinical trials
and no commercially successful products may ultimately be developed by us. In
addition, many of our currently proposed products are subject to development and
licensing arrangements with our collaborators. Therefore, we are dependent, in
many cases on the research and development efforts of these collaborators.
Moreover, we are entitled only to a portion of the revenues, if any, realized
from the commercial sale of any of the proposed products covered by the
collaborations. We have experienced significant operating losses since our
inception and expect to incur significant operating losses over at least the
next several years. The development of our technology and proposed products will
require a commitment of substantial funds to conduct these costly and time
consuming activities.
Should we or our collaborators fail to perform in accordance with the terms
of the applicable agreements, any consequent loss of revenue under the
collaboration agreements could have a material adverse effect on our business,
financial condition and results of operations. The proposed products under
development by us have never been manufactured on a commercial scale and it is
possible that proposed products may not be able to be manufactured at a cost or
in quantities necessary to make them commercially viable. We have no sales,
marketing or distribution capability for our proposed products. If any of the
products subject to our collaborative agreements are successfully developed, we
must rely on our collaborators to market the products. We cannot ensure that any
collaborator's marketing efforts would be successful.
If we develop any products which are not subject to our collaborative
agreements, we must either rely on other pharmaceutical companies to market our
products or we must develop a marketing and sales force with technical expertise
and supporting distribution capability in order to market our products directly.
We cannot guarantee that these marketing efforts would be successful.
The foregoing risks reflect our early stage of development and the nature
of our industry and products. Also inherent in the Company's stage of
development are a number of additional risks, including competition, the
substantially greater financial resources of a number of our competitors, the
manufacturing challenges presented by the production of increasing numbers of
combinatorial chemistry compounds, uncertainties regarding protection of patents
and proprietary rights, and government regulation, uncertainties related to
clinical trials and health care reform and the potential volatility of our stock
price. These risks and uncertainties are discussed further in "Items 1.
Business -- What Factors Could Cause Our Results to Differ Significantly From
Those You Might Expect?" and "-- What Other Matters Should Stockholders Consider
with Respect to the Company?" in the Company's Report on Form 10-K for the year
ended December 31, 1998, filed by the Company with the Securities and Exchange
Commission on March 31, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable.
14
<PAGE> 15
AXYS PHARMACEUTICALS, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
In May and June 1999, the Company issued options (the "Put Options") to the
North American Nutrition & Agribusiness Fund, L.P. and the Missouri Soybean
Merchandising Council ("MSMC"), granting each of them the right to require the
Company to purchase the 1,201,201 shares and 300,300 shares, respectively, of
Series A Preferred Stock of Xyris Corporation ("Xyris") held by NANAF and MSMC.
If either of the Put Options is exercised, the Company would purchase the Xyris
shares held by NANAF or MSMC, as the case may be, with shares of the Company's
Common Stock, at its then market price, with an aggregate market value as the
date the Put Option is exercised equal to $4,000,000 or $1,000,000, as the case
may be, rounded down to the nearest whole number of shares. The Put Options were
granted in connection with the Series A Purchase Agreements between NANAF and
MSMC, as the case may be, and Xyris, and the Company, whereby NANAF and MSMC
each purchased Series A Preferred Stock of Xyris in connection with the
additional financing of Xyris. The Put Options may be exercised at any time
between August 2, 1999 and February 2, 2001.
The issuance of the above securities were intended to be exempt from
registration and prospectus delivery requirements under the Securities Act of
1933, as amended (the "Securities Act"), by virtue of Section 4 (2) thereof, due
to, among other things, (i) the limited number of persons to whom the securities
were issued, (ii) the distribution of disclosure documents to the investor,
(iii) the fact that such investors represented and warranted to the company,
among other things, that such investors were acquiring the securities for
investment only and not with a view to the resale of distribution thereof, and
(iv) the fact that such investors were knowledgeable, sophisticated and
experienced in making investment decisions of this kind.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1999 Annual Meeting of Stockholders was held on Wednesday,
May 26, 1999. Stockholders were asked (i) to elect directors to serve for the
ensuing year and until their successors are elected; (ii) to ratify the
selection of Ernst & Young LLP as independent auditors of the Company for its
fiscal year ending December 31, 1999; and (iii) to approve an additional 500,000
shares of common stock under the Company's Employee Stock Purchase Plan (ESPP).
All of the matters were approved by the stockholders of the Company. The
number of shares voted for, against and withheld for each matter were:
<TABLE>
<CAPTION>
IN FAVOR WITHHELD
---------- ---------
<S> <C> <C>
Election of Directors:
John P. Walker............................................ 23,718,105 243,618
Ann M. Arvin, M.D......................................... 23,720,454 241,269
Vaughn M. Kailian......................................... 23,726,865 234,858
Donald Kennedy, Ph.D...................................... 20,005,605 3,956,118
Irvin Lerner.............................................. 23,706,103 255,620
Alan Mendelson, J.D....................................... 23,729,205 232,518
J. Leighton Read, M.D..................................... 23,726,989 234,734
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
---------- ------- ------- ---------
<S> <C> <C> <C> <C>
Selection of Ernst & Young LLP................... 23,878,898 53,104 29,721 6,386,613
Additional 500,000 shares of Common stock under
the Company's ESPP............................. 23,387,304 482,338 92,081 6,386,613
</TABLE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.107* Combinatorial Chemistry Agreement between Axys Advanced
Technologies, Inc. and Daiichi Pharmaceutical Co., Ltd.,
signed June 30, 1999.
10.108* Amendment to the Collaboration Agreement between the Sequana
and Boehringer Ingelheim GmH, dated June 14, 1999.
10.109 Series A Preferred Stock Purchase Agreement dated May 14,
1999, by and among Xyris Corporation, The North American
Nutrition & Agribusiness Fund and the Registrant.
10.110 Series A Preferred Stock Purchase Agreement dated May 14,
1999, by and among Xyris Corporation and Missouri Soybean
Merchandise Council and the Registrant.
10.111 Fourth Amendment to Expansion Lease between Sequana and
ARE -- 11099 North Torrey Pines, LLC, dated March 31, 1999.
10.112* First Amendment to Lease between ARE-JOHN HOPKINS COURT LLC
and Sequana, dated December 1, 1998.
27 Financial Data Schedule.
</TABLE>
- ---------------
* Confidential treatment has been requested with respect to certain portions of
this exhibit.
(b) Reports on Form 8-K
None.
16
<PAGE> 17
AXYS PHARMACEUTICALS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AXYS PHARMACEUTICALS, INC.
Date: August 16, 1999 By: /s/ JOHN P. WALKER
--------------------------------------
John P. Walker
Chairman and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
10.107* Combinatorial Chemistry Agreement between Axys Advanced
Technologies, Inc. and Daiichi Pharmaceutical Co., Ltd.,
signed June 30, 1999.
10.108* Amendment to the Collaboration Agreement between the Sequana
and Boehringer Ingelheim GmH, dated June 14, 1999.
10.109 Series A Preferred Stock Purchase Agreement dated May 14,
1999, by and among Xyris Corporation, The North American
Nutrition & Agribusiness Fund and the Registrant.
10.110 Series A Preferred Stock Purchase Agreement dated May 14,
1999, by and among Xyris Corporation, Missouri Soybean
Merchandise Council and the Registrant.
10.111 Fourth Amendment to Expansion Lease between Sequana and
ARE -- 11099 North Torrey Pines, LLC, dated March 31, 1999.
10.112* First Amendment to Lease between ARE-JOHN HOPKINS COURT LLC
and Sequana, dated December 1, 1998.
27 Financial Data Schedule.
</TABLE>
- ---------------
* Confidential treatment has been requested with respect to certain portions of
this exhibit.
<PAGE> 1
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.107
COMBINATORIAL CHEMISTRY AGREEMENT
THIS COMBINATORIAL CHEMISTRY AGREEMENT (this "Agreement") is made and
entered into effective as of June 30, 1999 (the "Effective Date"), by and
between AXYS ADVANCED TECHNOLOGIES, INC., a Delaware corporation having a place
of business at 180 Kimball Way, South San Francisco, CA 94080 ("Axys"), a
wholly-owned subsidiary of Axys Pharmaceuticals, Inc., a Delaware corporation
having a place of business at 180 Kimball Way, South San Francisco, CA 94080,
and DAIICHI PHARMACEUTICAL CO., LTD., a corporation organized and existing under
the laws of Japan, having a place of business at 14-10 Nihonbashi 3-chome,
Chuo-ku, Tokyo 103-8234, Japan ("Daiichi"). Axys and Daiichi may be referred to
herein individually as a "Party" or, collectively, as the "Parties."
RECITALS
A. Axys has developed and owns certain capabilities, technology, and
intellectual property relating to combinatorial chemistry and the synthesis of
diverse chemistry libraries using combinatorial techniques.
B. Daiichi desires to purchase from Axys physical samples of [ * ]
custom-designed compounds synthesized by Axys, and learn how to practice such
technology and to obtain from Axys certain non-exclusive licenses to use such
technology and intellectual property for Daiichi's internal drug discovery,
development and commercialization programs.
C. Axys is willing, pursuant to the following terms and conditions, to
synthesize and sell to Daiichi such compound libraries, and to train Daiichi's
employees and grant such licenses.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
The following capitalized terms shall have the meanings ascribed to such
terms in the following definitions when used in this Agreement.
1.1 "AFFILIATE" means, with respect to a Party, any individual or entity
that controls, is controlled by, or is under common control with, such Party.
For this definition, the term "control" shall refer to (a) the ownership,
directly or indirectly, of at least 50% of the voting securities or other
ownership interest of an entity, or (b) the possession, directly or indirectly,
of the power to direct the management or policies of an entity, whether through
the ownership of voting securities, by contract or otherwise.
1.
<PAGE> 2
1.2 "AXYS KNOW-HOW" means Information that is Controlled by Axys during
this Agreement and comprises general combinatorial chemistry techniques
proprietary to Axys (other than Protocols) that are necessary to enable Daiichi
to make compounds, and to conduct accelerated medicinal chemistry, based on the
Custom Compounds, including without limitation, relevant computational methods,
library development method, library production method, analytical method and
instrumentation know-how, except for Information that was already known to
Daiichi at the time of its disclosure to Daiichi by Axys.
1.3 "AXYS PATENTS" means all patents and patent applications Controlled
by Axys during this Agreement that claim inventions which constitute Axys
Know-How or any part or aspect thereof.
1.4 "AXYS RESTRICTED INFORMATION" means all Confidential Information of
Axys, other than Axys Know-How, Axys Patents, Protocol Know-How and Protocol
Patents, that is learned by the employees of Daiichi who work at Axys as
permitted under Section 5.1 at any time they are at an Axys facility.
1.5 "AXYS TECHNOLOGY" means the Axys Know-How, Axys Patents, Protocol
Know-How, Protocol Patents and/or Software Programs, or any part or aspect
thereof.
1.6 "COMBINATORIAL CHEMISTRY LIBRARY" means the aggregate of all the
physical samples of the Custom Compounds in the Libraries provided to Daiichi
hereunder.
1.7 "CONFIDENTIAL INFORMATION" means the Information of a Party that it
considers proprietary and/or confidential, and that, if disclosed under this
Agreement to the other Party in written, graphic or electronic form, is marked
or otherwise designated as "confidential" or "proprietary" or the equivalent
and, if disclosed orally, is characterized as "confidential" or "proprietary" by
the disclosing Party at the time of such disclosure. "Confidential Information"
of Axys shall include, without limitation, (a) those portions of the Software
Programs along with associated documentation, if any, whether in source or
object code form, along with any Information pertaining to the design of
Software Programs, and (b) any Information, including but not limited to, design
specifications, schematics, algorithms, API's, interfaces, procedures and code
examples, relevant to any of the foregoing which may be provided by Axys to
Daiichi hereunder. The disclosing Party shall make reasonable efforts to
summarize in writing all oral disclosures of Confidential Information.
1.8 "CONTROLLED" means, with respect to any material, item of
Information or intellectual property right, that the applicable Party owns or
has a license or right to such material, item of Information or intellectual
property right, and has the ability to grant to the other Party access to and a
right and license as provided for herein under such material, item of
Information or intellectual property right without violating the terms of any
agreement or other arrangements with or the rights of any third party.
1.9 "CUSTOM COMPOUND" means any individual [ * ] chemical compound, a
physical sample of which Axys synthesizes and provides to Daiichi under the
terms of Article 2 of this Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
2.
<PAGE> 3
1.10 "DAIICHI MODIFICATIONS" means any modification or derivative work of
the Software Programs developed by or for Daiichi in any form in accordance with
Section 3.3(b) based on or incorporating any Confidential Information of Axys.
1.11 "GENERAL SCREENING" means use of any Library or any group of Custom
Compounds or Program Compounds in assays to screen for activity against targets
in the pursuit of the identification of lead compounds or structures in drug
discovery and development programs, where the party conducting such screening is
not expressly limited to [ * ].
1.12 "INFORMATION" means information and data of any type and in any
tangible or intangible form, including without limitation inventions, practices,
methods, techniques, specifications, formulations, formulae, knowledge,
know-how, skill, experience, test data, analytical and quality control data,
stability data, results of studies and patent and other legal information or
descriptions.
1.13 "LIBRARY" means a collection of approximately [ * ] different
physical samples of Custom Compounds synthesized by Axys and provided to Daiichi
as a single library, which Custom Compounds are related to each other by the
specific synthetic techniques that Axys used to make such group of Custom
Compounds.
1.14 "PROGRAM COMPOUND" means any compound, including without limitation
a Custom Compound, that is made by Daiichi or a permitted sublicensee of Daiichi
by directly practicing or utilizing any of the Axys Know-How, Axys Patents,
Protocols, Protocol Know-How and/or Protocol Patents licensed under this
Agreement.
1.15 "PROTOCOL" means, with respect to a particular Library, the detailed
set of combinatorial chemistry synthetic methods and operating procedures
designed to be used for synthesizing the set of compounds in such Library using
combinatorial chemistry techniques, and Information relating to the Custom
Compounds in such Library comprising the structure and well locations of each
physical sample of Custom Compound in such Library, the physicochemical
properties (distribution of MW and ClogP) of such Library and the results of the
analysis on such Library performed by Axys according to the methods of analysis
set forth in Exhibit A attached hereto, and the related analytical data.
1.16 "PROTOCOL KNOW-HOW" means Information that is Controlled by Axys
during this Agreement and comprises Protocols, which shall include any
intellectual property of Axys relating to the Custom Compound in a Library.
1.17 "PROTOCOL PATENTS" means all patents and patent applications
Controlled by Axys during this Agreement that claim inventions which constitute
Protocol Know-How or any part or aspect thereof.
1.18 "SOFTWARE PROGRAMS" means the software programs provided to Daiichi
by Axys pursuant to this Agreement related to [ * ] and defined in Exhibit C
attached hereto and made a part hereof, [ * ], accompanying documentation and
other material related to such software programs and provided by Axys hereunder,
and including any part or aspect of any of the foregoing, and [ * ].
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
3.
<PAGE> 4
1.19 "TECHNOLOGY COMMITTEE" means the committee formed by the Parties
under Article 4 of this Agreement.
1.20 "UPDATES" means any improvements, extensions and other changes to
the Software Programs that are [ * ] and are provided to Daiichi by Axys as set
forth in Section 3.2.
2. DEVELOPMENT AND TRANSFER OF LIBRARIES
2.1 LIBRARIES SYNTHESIS. Commencing promptly after the Effective Date,
Axys will use [ * ] to synthesize the physical samples of the Custom Compounds
comprising the [ * ] Libraries to be provided to Daiichi under this Agreement.
Axys will ensure that each Library will be composed of physical samples of an
average of approximately [ * ] of the Custom Compounds.
2.2 DELIVERY OF PHYSICAL SAMPLES OF CUSTOM COMPOUNDS. Axys shall
synthesize and sell to Daiichi and Daiichi shall purchase, subject to the terms
of this Agreement, quantities of physical samples of the Custom Compounds [ * ].
Axys shall use [ * ] to deliver the physical samples of the Custom Compounds to
Daiichi according to the following schedule: physical samples of [ * ] Custom
Compounds to be delivered by [ * ]; physical samples of [ * ] additional Custom
Compounds to be delivered by [ * ]; physical samples of [ * ] additional Custom
Compounds to be delivered [ * ]; and physical samples of the remaining Custom
Compounds (to bring the total delivered physical samples of the Custom Compounds
to [ * ]) to be delivered [ * ]. The physical samples of the Custom Compounds
shall be delivered in accordance with Section 2.3 and either in [ * ] or in
another [ * ]. Within [ * ] of the delivery of a Library to Daiichi, Axys shall
provide Daiichi with the Protocol for such Library. Such Protocol shall be
provided to Daiichi in written form, CD-ROM, microfilm or other appropriate
medium and format as reasonably selected by Axys in consultation with Daiichi.
2.3 DELIVERY AND RISK OF LOSS. Delivery of the physical samples of the
Custom Compounds shall be [ * ]. The physical samples of the Custom Compounds
shall be appropriately packaged by Axys, [ * ], for export shipment. Axys shall
provide Daiichi, [ * ], with information concerning the structure and well
locations of physical samples of the Custom Compounds to be delivered on a
Library basis prior to such shipment. Axys shall also provide to the shipper,
for compliance with exportation and importation laws and regulations, such
information as reasonably requested by the shipper for such shipment. The
physical samples of the Custom Compounds shall be [ * ]. Daiichi shall be
responsible for obtaining all customs clearances required and for compliance
with all exportation and importation laws and regulations.
2.4 [ * ]. Within [ * ] of physical samples of the Custom Compounds,
Daiichi may provide Axys with written notification that (a) [ * ], and (b)
[ * ].
2.5 USE OF THE PHYSICAL SAMPLES OF THE CUSTOM COMPOUNDS BY DAIICHI.
Subject to the terms of this Agreement, Daiichi shall have the right, under the
Protocol Know-How and the Protocol Patent, to use the Combinatorial Chemistry
Library and the physical samples of the Custom Compounds therein solely [ * ].
Except as expressly permitted in the foregoing or as permitted in Section 8.3,
Daiichi covenants that it shall not transfer or disclose the Libraries or
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
4.
<PAGE> 5
the physical samples of the Custom Compounds, or the structures thereof, or
Protocols to any third party for any purpose. Daiichi may use the Information
generated by the permitted uses of the Libraries and the physical samples of the
Custom Compounds, for any purpose in conjunction with the permitted use of the
physical samples of the Custom Compounds, subject to and in compliance with the
limitations in this Agreement. Daiichi further covenants that it is only
permitted to transfer or disclose the Libraries, the physical samples of the
Custom Compounds or the structures thereof, or Protocols to any of its
Affiliates subject to all relevant restrictions in this Agreement, including
without limitation, the restrictions set forth in this Section 2.5. Daiichi
hereby guarantees the compliance of each of its Affiliates with all such
restrictions regarding the Libraries, the physical samples of the Custom
Compounds or the structures thereof, or Protocols transferred or disclosed to
such Affiliate.
2.6 USE OF CUSTOM COMPOUNDS BY AXYS. Axys may sell or provide the
Combinatorial Chemistry Library or Custom Compounds therein to other companies
for their uses, including without limitation General Screening, provided that
Axys may not provide the Combinatorial Chemistry Library and the Protocols to [
* ] for use in General Screening. Axys covenants that during the term of this
Agreement, it shall not provide the Combinatorial Chemistry Library, a
substantial portion thereof or the Protocols to [ * ] for use in General
Screening. Without limiting the generality of Axys' retained rights, Axys and
its Affiliates shall retain full rights to use the Combinatorial Chemistry
Library, the Custom Compounds and their Protocols for all internal purposes,
including without limitation General Screening, combinatorial chemistry and
medicinal chemistry, and drug discovery, development and commercialization
activities of Axys and its Affiliates, and to sell such Custom Compounds to
third parties for any uses, subject only to the foregoing covenant. Further, it
is understood that Axys and its Affiliates retain the right to use the
Combinatorial Chemistry Library and the Custom Compounds in screening for
activity in assays for specific targets covered by research, development or
commercialization programs pursuant to collaborative research agreements with
third parties, and to provide the Combinatorial Chemistry Library, specific
Custom Compounds and the specifications for such Custom Compounds and related
Protocols to third party corporate partners of Axys or its Affiliates for use by
such partner in screening for activity in specific assays for targets, pursuant
to a collaborative research agreement between such corporate partner and Axys
(or its Affiliate, as applicable).
2.7 OPTIONAL CHEMISTRY SERVICES. Axys agrees to provide Daiichi with [ *
]. If Daiichi is interested in pursuing such a project at Axys, Daiichi shall
give Axys written notice of the desired project and details thereof, the Parties
shall meet to negotiate in good faith the economic and other relevant terms of
Axys conducting such a project, [ * ].
3. TECHNOLOGY TRANSFER AND LICENSE
3.1 TRANSFER OF COMBINATORIAL CHEMISTRY TECHNOLOGY. Axys shall transfer
to Daiichi, on an orderly basis, the Axys Know-How, Protocol Know-How, copies of
the Axys Patents or Protocol Patents [ * ], and copies of the Protocols. [ * ].
Within [ * ] after the Effective Date, Axys shall complete the transfer to
Daiichi of the Axys Patents Controlled by Axys on the Effective Date and shall
commence the transfer to Daiichi of the Axys Know-How. Such transfer will be
managed and coordinated by the Technology Committee, as provided in Article 4
below, in accordance with Exhibit D. The schedule for such transfer will be
reasonable
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
5.
<PAGE> 6
and orderly, as established by the Technology Committee. In addition, Daiichi
may provide, at its cost and expense, [ * ] Daiichi scientists to work at Axys
at any one time during [ * ] to assist and direct the transfer to Daiichi of the
Axys Know-How, Protocols, Protocol Know-How and Software Programs and the
related technical training; provided that access or exposure to Axys Restricted
Information by the Daiichi scientists shall be subject to the provisions of
Article 8. The total number of such Daiichi scientists that may work at Axys
hereunder shall be [ * ]. Any such Daiichi scientists that work at Axys under
the terms of this Section 3.1 shall be restricted from access to any Axys
facilities or locations other than those necessary for completing the technology
transfer and training as provided above. Further, Axys shall use reasonable
efforts to limit and restrict such Daiichi scientists from access or exposure to
any confidential information of Axys that is not Axys Know-How or Protocol
Know-How.
3.2 DELIVERY OF SOFTWARE PROGRAMS AND UPDATES. Commencing [ * ], Axys
will deliver to Daiichi and install each of the Software Programs [ * ],
according to the delivery schedule therefor established by the Technology
Committee. The Software Programs shall be delivered in electronic format, or in
such other suitable format as selected by Axys and reasonably acceptable to
Daiichi. All Software Programs (including Updates) [ * ]. Axys may make Updates
during the term of this Agreement [ * ]. [ * ]
3.3 TECHNOLOGY AND SOFTWARE PROGRAMS LICENSE RIGHTS.
(a) Subject to the terms of this Agreement, Axys hereby grants
Daiichi a limited, non-exclusive, non-transferable, worldwide, perpetual
(subject to termination under Article 10) license to use and practice the Axys
Know-How, Protocol Know-How, Protocol Patents and Axys Patents solely for
Daiichi to make and use Custom Compounds and Program Compounds for any purpose
permitted under this Agreement, and subject to the limitations in Section 3.6 of
this Agreement.
(b) Subject to the terms of this Agreement, Axys hereby grants to
Daiichi a limited, non-exclusive, non-transferable, world-wide, perpetual
(subject to termination under Article 10) license, solely within Daiichi's
organization and facilities: to use, [ * ] the Software Programs, and to [ * ],
provided that all such uses of the Software Programs are solely for [ * ]. The
foregoing license includes [ * ].
The foregoing license rights may not be sublicensed to a third party without the
prior written consent of Axys, and any such permitted sublicense shall only be
in conjunction with and in compliance with Daiichi's permitted use of Program
Compounds as described in Section 3.5 and only to the extent needed to
accomplish such permitted purposes. Daiichi covenants that it will not transfer
or disclose any such Axys Know-How, Protocol Know-How, Protocol Patents, Axys
Patents or Software Programs to any third party except as part of such permitted
sublicenses and only subject to limitations consistent with the above
restrictions and those in Sections 3.5 and 3.6. Daiichi further covenants that
it will only transfer or disclose any such Axys Know-How, Protocol Know-How,
Protocol Patents, Axys Patents or Software Programs to any of its Affiliates
pursuant to agreements that subject such Affiliates to all relevant limitations
in this Agreement, including without limitation, the restrictions regarding
permitted use of Custom Compounds or Program Compounds as described in Sections
2.5, 3.2, 3.3, 3.4, 3.5 and 3.6. Daiichi hereby guarantees the compliance of
each of its Affiliates with all such restrictions and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
6.
<PAGE> 7
limitations on the use of the Axys Know-How, Protocol Know-How, Protocol
Patents, Axys Patents or Software Programs transferred or disclosed to such
Affiliate.
3.4 LIMITED COMMERCIAL LICENSES. Subject to the terms of this Agreement,
Axys hereby grants Daiichi the limited, non-exclusive, worldwide, perpetual
(subject to termination under Article 10) license, with the right to sublicense,
under the Axys Know-How, Protocol Know-How, Protocol Patents and Axys Patents,
solely for Daiichi to offer for sale, sell and manufacture (a) any products
containing Custom Compounds or Program Compounds [ * ], or (b) any such Custom
Compounds or Program Compounds in bulk material for use in manufacturing such
products.
3.5 RIGHT TO USE PROGRAM COMPOUNDS. Daiichi shall have the right to use
the Program Compounds and the Protocols solely in [ * ]. Daiichi shall be
permitted to transfer the Program Compounds only (a) [ * ], or (b) [ * ] and are
subject to written confidentiality agreements at least as restrictive as the
provisions of Article 8. Except as expressly permitted in the foregoing, Daiichi
covenants that it and its Affiliates shall not transfer or disclose Program
Compounds, or the structures thereof, or the Protocols to any third party for
any purpose. Daiichi and its Affiliates may use the Protocols, and Information
generated by the permitted use of the Program Compounds, for any purpose in
conjunction with the permitted use of Program Compounds, subject to and in
compliance with the limitations in this Agreement.
3.6 LIMITATIONS.
(a) Daiichi understands and agrees that Axys retains all its
rights to use all technology, Information and intellectual property rights for
its own purposes and to license or disclose such technology, Information and
intellectual property rights to third parties without restriction, subject only
to the right and the licenses granted to Daiichi in Sections 2.5, 3.3, 3.4 and
3.5 of this Agreement. Daiichi covenants that it and its Affiliates shall not
use or practice the Axys Know-How, Protocol Know-How, Protocol Patents, Axys
Patents, Software Programs, Libraries, Custom Compounds or Program Compounds for
any use or purpose except as expressly permitted in Sections 2.5, 3.3, 3.4 and
3.5. Daiichi further covenants that Daiichi and its Affiliates will not [ * ],
except as expressly permitted in Sections 2.5, 3.3, 3.4 and 3.5, but excluding
from the foregoing limitation [ * ]. It is understood that the foregoing
sentence shall not be interpreted to prevent Daiichi or its Affiliate or
sublicensee from [ * ].
(b) Daiichi may not: (i) distribute in any manner any of the
Software Programs or any derivative work of any portion of the Software
Programs, except as expressly permitted in this Agreement; (ii) publicly
disclose, publicly perform or publicly display the Software Programs; (iii) use,
copy, compile, adapt, translate the Software Programs except as expressly
permitted in this Agreement; (iv) sell, lease, loan, trade, transfer (including
over a network including the Internet), sublicense, market or publish the
Software Programs except as expressly permitted in this Agreement; or (v) copy
the documentation, except as expressly permitted in this Agreement. Daiichi
acknowledges and agrees that [ * ] is highly confidential and warrants the
imposition of appropriate security precautions above and beyond those
implemented for its own proprietary or confidential information.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
7.
<PAGE> 8
4. TECHNOLOGY COMMITTEE
Within thirty (30) days of the Effective Date, Axys and Daiichi will form
a committee consisting of two (2) representatives of each Party (the "Technology
Committee"). Each Party's representatives on the Technology Committee are listed
on Exhibit E and may be [ * ] with the approval of the Technology Committee. The
Technology Committee shall meet as needed at times as agreed upon [ * ] (on a
quarterly basis in principle) (a) to discuss proposals for Libraries proposed by
either Party, (b) to review the diversity of Custom Compounds to be made in each
Library, (c) [ * ], (d) to discuss and establish the technology transfer to
Daiichi contemplated under Section 3.1, including appropriate schedules and
mechanisms therefor, (e) to establish and supervise the training of Daiichi
employees with respect to use of the Axys Technology as provided in Article 3
and (f) to discuss and resolve any non-business aspects of the relationship of
the Parties under this Agreement that require attention. The Technology
Committee shall act by unanimous consent, and may meet by telephone,
video-conference or in face-to-face meetings, as agreed upon by the members of
the Technology Committee. A chairperson shall be appointed for each meeting of
the Technology Committee by the members of the Technology Committee. Each Party
may send non-voting representatives to attend Technology Committee meetings as
observers.
5. TECHNOLOGY TRAINING
5.1 PROVISION OF TRAINING. Axys hereby agrees to provide specified
Daiichi employees with training regarding the use of the Axys Technology as
permitted under Sections 2.5, 3.3, 3.4 and 3.5 [ * ]. Such training shall be in
accordance with the custom training program set forth in Exhibit D attached
hereto, which exhibit may be modified as appropriate by the Technology
Committee. Such training shall be provided at Axys' facilities, unless otherwise
agreed by the Parties. All salary, benefits, costs and expenses of any Daiichi
employees who participate in such training program shall be paid for by Daiichi.
All Daiichi employees who attend Axys' facilities shall be subject to
appropriate and reasonable limitations and restrictions to protect access to any
Axys' proprietary or confidential information not related to this Agreement.
5.2 TRAINING EFFORTS. Axys agrees to use [ * ], to provide the training
set forth in Section 5.1.
6. PAYMENTS
6.1 PAYMENTS FOR PHYSICAL SAMPLES OF CUSTOM COMPOUNDS. Daiichi shall pay
Axys a purchase price for each physical sample of Custom Compound delivered
hereunder equal to [ * ] for each physical sample of Custom Compound delivered.
6.2 PROTOCOL FEE. In consideration for Axys' grant of license rights to
the Protocol Know-How and Protocol Patents under Article 3, Daiichi shall pay to
Axys [ * ] for each Protocol delivered to Daiichi as the non-refundable Protocol
fee for such Protocol.
6.3 PAYMENT PROCEDURES. Payment of the purchase price set forth in
Section 6.1 for physical samples of Custom Compounds delivered shall be made
within [ * ] of delivery of an invoice from Axys regarding such samples, which
invoice shall be submitted promptly upon
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
8.
<PAGE> 9
receipt of delivery of such samples under the terms of Section 2.2. Payment of
the Protocol fee set forth in Section 6.2 shall be made within [ * ] of receipt
of delivery of an invoice from Axys regarding such Protocol, which invoice shall
be submitted promptly upon delivery of such Protocol by Axys under the terms of
Section 2.2. Daiichi shall be responsible for payment of all shipping and
insurance costs and any sales, transfer, excise, export or other tax and of any
customs tax or duties assessed on the sale or transfer of such samples under the
terms of this Agreement, but excluding taxes based upon net income of Axys.
6.4 LICENSE FEE. Daiichi shall pay to Axys the following amounts as the
non-refundable license fee for the grant of license rights under the Axys
Know-How, Axys Patents and Software Programs under Article 3 hereof:
(a) [ * ],
(b) [ * ], and
(c) [ * ].
It is expressly understood that Axys shall in no way require Daiichi any
additional payment other than [ * ] for the grant of the license right by Axys
to Daiichi under Article 3.
6.5 BANK ACCOUNT. All payments payable by Daiichi to Axys under this
Agreement shall be made by wire transfer remittance to the bank account
designated by Axys.
6.6 WITHHOLDING TAX. Any tax required to be withheld in Japan on any
payment payable to Axys under Section 6.2 or 6.4 of this Agreement shall be
withheld and promptly paid by Daiichi for and on behalf of Axys to the competent
authorities. Daiichi shall procure official tax certificate(s) proving payment
of the tax withheld and pass the original(s) on to Axys. In addition, Axys shall
[ * ] under strict confidentiality, with [ * ] may require [ * ], and [ * ]. If,
as a result of [ * ], then [ * ]. Daiichi shall procure official tax
certificate(s) proving payment of the tax withheld and pass the original(s) on
to Axys.
7. INTELLECTUAL PROPERTY MATTERS
7.1 OWNERSHIP. All intellectual property rights, including but not
limited to all copyrights, patent rights, moral rights, and trade secrets, in
and to the Protocols, Axys Know-How, Protocol Know-How, Protocol Patents, Axys
Patents, and the Software Programs that are Controlled by Axys as of the
Effective Date or during this Agreement shall remain exclusively with Axys,
subject only to the license rights granted to Daiichi under Sections 2.5, 3.3,
3.4 and 3.5. The sale to Daiichi of the physical samples of Custom Compounds
hereunder does not involve the sale or transfer of Axys intellectual property
rights (if any) relating thereto, which Axys retains. Axys shall own the entire
right, title and interest in and to any inventions and Information, and all
intellectual property rights therein, developed solely by employees or agents of
Axys or its Affiliates in the course of this Agreement. Daiichi shall own the
entire right, title and interest in and to any inventions and Information, and
all intellectual property rights therein, developed solely by employees or
agents of Daiichi or its Affiliates in the course of this Agreement. The Parties
shall own jointly the entire right, title and interest in and to any inventions
and Information, and all intellectual property rights therein, developed jointly
by
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
9.
<PAGE> 10
employees or agents of Axys or its Affiliates and employees or agents of Daiichi
or its Affiliates in the course of this Agreement.
7.2 LIMITATION ON PATENT APPLICATIONS. The Parties agree that each Party
and its Affiliates shall [ * ] filing or prosecuting any patent applications
that [ * ]. Each Party and its Affiliates shall also [ * ] filing or prosecuting
any patent application that [ * ]. In addition, it is understood and agreed
that, notwithstanding the foregoing, if Daiichi or its Affiliate or Axys or its
Affiliate or licensee [ * ].
7.3 LIMITED CROSS-LICENSES.
(a) Daiichi hereby grants to Axys a non-exclusive, world-wide,
perpetual (subject to termination by Daiichi under Section 10.2), royalty-free
license, with right to sublicense, under issued patents Controlled by Daiichi or
its Affiliate that [ * ] solely for Axys and its Affiliates and sublicensees to
make, have made, import, use, offer for sale and sell such Custom Compound as
permitted in Section 2.6 of this Agreement, but excluding from the foregoing
license (i) [ * ], and (ii) [ * ].
(b) Axys hereby grants to Daiichi a non-exclusive, world-wide,
perpetual (subject to termination by Axys under Section 10.2), royalty-free
license, with right to sublicense, under issued patents Controlled by Axys or
its Affiliate that [ * ] solely for Daiichi and its Affiliates and sublicensees
to make, have made, import, use, offer for sale and sell such Custom Compound as
permitted in Section 2.5 of this Agreement, but excluding from the foregoing
license any [ * ].
7.4 ENFORCEMENT OF PATENTS. If Daiichi becomes aware of any actions of a
third party that it considers infringing upon any Axys Patent or Protocol
Patent, it shall notify Axys and provide all evidence of such infringement that
is reasonably available. Axys shall have the sole and exclusive right, at its
own expense, to attempt to terminate such infringement by commercially
appropriate steps, including suit. Any amounts recovered by Axys, whether by
settlement or judgment, shall be retained by Axys.
7.5 THIRD PARTY PATENT RIGHTS. If any warning letter or other notice of
infringement is received by a Party, or action, suit or proceeding is brought
against a Party alleging infringement of a patent right of any third party in
the manufacture, use or sale of a Library, Custom Compound or Program Compound
or use or practice of the Axys Know-How, Protocol Know-How, Protocol Patents or
Axys Patents or Software Programs as permitted herein, the Parties shall
promptly discuss and decide the best way to respond.
8. CONFIDENTIALITY
8.1 CONFIDENTIALITY OBLIGATIONS. Each Party agrees that, for the term of
this Agreement and for [ * ] thereafter, such Party shall keep, and shall ensure
that its officers, directors, employees and agents keep, completely confidential
and shall not publish or otherwise disclose and shall not use for any purpose
except as expressly permitted hereunder any Confidential Information furnished
to it by the other Party pursuant to this Agreement; except that the foregoing
obligations shall not apply to any Information to the extent that it can be
established by such receiving Party that such Information:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
10.
<PAGE> 11
(a) was already known to the receiving Party or any of its
Affiliates, other than pursuant to an obligation of confidentiality owed to the
disclosing Party, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure other than through any act or omission of
the receiving Party in breach of this Agreement;
(d) was subsequently lawfully disclosed to the receiving Party or
its Affiliates by a third party other than in contravention of a confidentiality
obligation of such third party to the disclosing Party; or
(e) was developed or discovered by employees of the receiving
Party or its Affiliates who had no access to the Confidential Information of the
disclosing Party.
Notwithstanding the foregoing, each Party may disclose the other's Confidential
Information only to the extent such disclosure is necessary in prosecuting or
defending litigation or complying with applicable governmental laws or
regulations, provided that if a Party is required to make any such disclosure of
the other Party's Confidential Information, it will, whenever reasonably
possible, give advance notice to the latter Party of such disclosure
requirement, will cooperate with the other Party in its efforts to secure
confidential treatment of such Confidential Information prior to its disclosure
(whether through protective orders or confidentiality agreements or otherwise),
and will use reasonable efforts to limit the extent of such disclosure and, if
requested by the other Party because of an inability of such other Party to seek
confidential treatment, to secure confidential treatment of such Confidential
Information prior to its disclosure (whether through protective orders or
confidentiality agreements or otherwise).
8.2 PRESS RELEASES. Except to the extent required by law or as otherwise
permitted in accordance with this Section 8.2 or Section 8.3, neither Party
shall make any public announcements concerning this Agreement or the subject
matter hereof without the prior written consent of the other, which shall not be
unreasonably withheld. Notwithstanding the foregoing, the Parties agree that
each Party may desire or be required to issue press releases relating to this
Agreement or activities thereunder, and the Parties agree to consult with each
reasonably and in good faith with respect to the text of such press releases
prior to the issuance thereof, provided that a Party may not unreasonably
withhold consent to such releases, and that either Party may issue such press
releases as it determines are reasonably necessary to comply with laws or
regulations or, based on advice of counsel, for appropriate market disclosure.
The principles to be observed by Axys and Daiichi in public disclosures with
respect to this Agreement shall be: accuracy, the requirements of
confidentiality under this Article 8, and the normal business practice in the
pharmaceutical and biotechnology industries for disclosures by companies
comparable to Axys and Daiichi. Except as set forth in Section 8.3 hereof, in
the event of a required or desired public announcement, such Party shall provide
the other Party with a reasonable opportunity and the right to approve the
content of such announcement prior to its being made, which approval shall not
be delayed or unreasonably withheld. Each Party agrees
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
11.
<PAGE> 12
that any filings it makes with the Securities and Exchange Commission describing
the terms of this Agreement shall be consistent with the prior press releases
and other public disclosures of such terms.
[ * ].
8.3 PUBLICATIONS. Notwithstanding the terms of Section 8.2, either Party
may publish Information that such Party discovered or developed in its research,
development or commercialization activities derived from use of any Library,
Custom Compound, Axys Know-How, Protocol, Protocol Know-How or Program Compound
without the consent of or notice to the other Party, provided, however, that no
such publication may contain the Confidential Information of the other Party, or
may disclose the structure of a Program Compound or Information that reasonably
may be interpreted to disclose the structure of a Custom Compound or Program
Compound unless:
(a) such structure is in the public domain at the time of such
publication;
(b) such structure was independently discovered by employees of
the publishing Party who had no access to the Libraries, the Custom Compounds or
the Program Compounds or any Confidential Information of the other Party; or
(c) the other Party has consented in writing to such disclosure;
or
(d) such Party has filed, in compliance with the terms of this
Agreement, a patent application covering such Custom Compound or Program
Compound.
[ * ].
9. INDEMNIFICATION
9.1 INDEMNIFICATION BY DAIICHI. Daiichi shall indemnify, defend and hold
Axys and its agents, employees, officers and directors (the "Axys Indemnitees")
harmless from and against any and all liability, damage, loss, cost or expense
(including reasonable attorneys' fees) arising out of third party claims or
suits related to (a) Daiichi's or its Affiliate's negligence, willful misconduct
or breach of this Agreement; or (b) the manufacture or use of Custom Compounds,
or the manufacture, use or sale, by Daiichi and its Affiliates, distributors and
agents, of Program Compounds or products containing Program Compounds or
compounds that are based upon or derived from a Custom Compound or Program
Compound, except to the extent such claims or suits result from (i) negligence
or willful misconduct of or breach of this Agreement by any of the Axys
Indemnitees or (ii) the manufacture, use or sale to third parties by Axys, its
Affiliates, third party licensees, distributors or agents (provided such party
is not Daiichi or an Affiliate, sublicensee, distributor or agent of Daiichi) of
compounds having the same structure as Custom Compounds made by Axys, its
Affiliates, third party licensees, or agents or products containing such
compounds or any compound based upon or derived therefrom. Upon the assertion of
any such claim or suit, the Axys Indemnitees shall promptly notify Daiichi
thereof, and Daiichi shall appoint counsel reasonably acceptable to the Axys
Indemnitees to represent the Axys Indemnitees with respect to any claim or suit
for which indemnification is sought, provided that Daiichi shall have sole
control over the defense and settlement of such claim or suit. Axys may
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
12.
<PAGE> 13
nevertheless retain co-counsel at its own expense. As a condition to obtaining
indemnification hereunder, the Axys Indemnitees shall not settle or attempt to
settle or defend or attempt to defend any such claim or suit without the prior
written consent of Daiichi, unless they shall have first waived their rights to
indemnification hereunder; provided that the foregoing shall in no way limit
Axys' right to challenge or defend against a claim (whether by Daiichi or any
third party) that the claim or suit that is the subject of a claim for
indemnification by Axys hereunder results from negligence or willful misconduct
of or breach of the Agreement by any of the Axys Indemnitees.
9.2 INDEMNIFICATION BY AXYS. Axys shall indemnify, defend and hold
Daiichi and its agents, employees, officers and directors (the "Daiichi
Indemnitees") harmless from and against any and all liability, damage, loss,
cost or expense (including reasonable attorney's fees) arising out of third
party claims or suits related to (a) Axys' negligence, willful misconduct or
breach of this Agreement, or (b) the manufacture, use or sale to third parties
by Axys, its Affiliates, third party licensees, distributors or agents (provided
such party is not Daiichi or an Affiliate, distributor or agent of Daiichi) of
compounds having the same structure as Custom Compounds or products containing
such compounds or any compound based upon or derived therefrom, except to the
extent that such claims or suits result from (i) the manufacture, use, or sale
by Daiichi and its Affiliates, sublicensees, distributors and agents of Custom
Compounds, Program Compound or products containing Program Compound or compounds
that are based upon or derived from a Custom Compound or Program Compound, or
(ii) negligence or willful misconduct of or breach of this Agreement by any of
the Daiichi Indemnitees. Upon the assertion of any such claim or suit, the
Daiichi Indemnitees shall promptly notify Axys thereof, and Axys shall appoint
counsel reasonably acceptable to the Daiichi Indemnitees to represent the
Daiichi Indemnitees with respect to any claim or suit for which indemnification
is sought, provided that Axys shall have sole control over the defense and
settlement of such claim or suit. Daiichi may nevertheless retain co-counsel at
its own expense. As a condition to obtaining indemnification hereunder, the
Daiichi Indemnitees shall not settle or attempt to settle or defend or attempt
to defend any such claim or suit without the prior written consent of Axys,
unless they shall have first waived their rights to indemnification hereunder;
provided that the foregoing shall in no way limit Daiichi's right to challenge
or defend against a claim (whether by Axys or any third party) that the claim or
suit that is the subject of a claim for indemnification by Daiichi hereunder
results from negligence or willful misconduct of or breach of the Agreement by
any of the Daiichi Indemnitees.
10. TERMINATION AND EXPIRATION
10.1 TERM AND TERMINATION. This Agreement shall commence upon the
Effective Date and, unless earlier terminated as provided herein, shall expire
on the latest to occur of the following: (i) the third anniversary of the
Effective Date, (ii) the completion of delivery of the Libraries to Daiichi
under Article 2, (iii) completion of transfer to Daiichi of the Axys Technology
under Article 3 or (iv) the completion of the training program under Articles 3
and 5. Sections 2.5, 3.3 and 3.4 shall survive such expiration, subject to
compliance by Daiichi, its Affiliates and any permitted sublicensees with all
limitations on the practice of such rights set forth in Sections 2.5, 3.5, 3.6
and Article 8.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
13.
<PAGE> 14
10.2 TERMINATION UPON MATERIAL BREACH.
(a) Failure by a Party to comply with any of its material
obligations contained herein shall entitle the Party not in default to give to
the Party in default notice specifying the nature of the default, requiring it
to make good or otherwise cure such default, and stating its intention to
terminate if such default is not cured. If such default is not cured within [ *
] after the date of such notice (or, if such default cannot be cured within such
[ * ], if the Party in default does not commence and diligently continue actions
to cure such default), the Party not in default shall be entitled, without
prejudice to any of its other rights conferred on it by this Agreement, and in
addition to any other remedies available to it by law or in equity, to terminate
this Agreement; provided, however, that such right to terminate shall be stayed
in the event that, during such [ * ], the Party alleged to have been in default
shall have initiated dispute resolution proceedings in accordance with Section
11.11 with respect to the alleged default, which stay shall last so long as the
initiating Party diligently and in good faith pursues the prompt resolution of
such proceedings.
(b) The right of a Party to terminate this Agreement, as provided
above, shall not be affected in any way by its waiver or failure to take action
with respect to any prior default. A Party may waive its right to terminate this
Agreement with respect to a particular default, provided that any such waiver
shall not constitute a waiver of, and such Party shall retain all rights to
pursue, any and all other remedies it may have at law or in equity of such
default by the other Party.
10.3 CONSEQUENCES OF TERMINATION.
(a) Upon termination of this Agreement by Daiichi pursuant to
Section 10.2 for the uncured material breach of Axys, then: (i) Section 2.5
shall survive termination for physical samples of the Custom Compounds delivered
and paid for by Daiichi, subject to compliance by Daiichi (and any permitted
Affiliates) with the limitations set forth in Sections 2.5 and 3.6; (ii) the
rights granted under Sections 3.3 and 3.4 shall survive termination, subject to
compliance by Daiichi and its Affiliates with all limitations on the practice of
such rights set forth in Sections 3.5 and 3.6; (iii) Axys shall promptly return
all Confidential Information of Daiichi in its possession; and (iv) all
obligations and rights of Axys to provide additional physical samples of the
Custom Compounds shall terminate.
(b) Upon termination of this Agreement by Axys pursuant to Section
10.2 for the uncured material breach of Daiichi, then: (i) all rights granted to
Daiichi under this Agreement shall terminate, except that Sections 2.5 and 3.3
shall survive solely with respect to those physical samples of the Custom
Compounds and the Protocols already paid for by Daiichi and for which Daiichi
(and any permitted Affiliates) has complied and continues to fully comply with
the limitations set forth in Sections 2.5 and 3.6; (ii) with respect to any
physical sample of a Custom Compound not covered by subsection (i) above,
Daiichi shall return all existing physical samples of such Custom Compound and
Daiichi may not further use such compounds; (iii) all obligations of Axys to
provide additional physical samples of the Custom Compounds shall terminate;
(iv) Daiichi shall promptly return to Axys or destroy all copies of Confidential
Information of Axys, including without limitation all Software Programs; and (v)
all obligations of Axys to provide additional Axys Technology shall terminate.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
14.
<PAGE> 15
10.4 ACCRUED RIGHTS; SURVIVING OBLIGATIONS.
(a) Termination or expiration of this Agreement for any reason
shall be without prejudice to any rights which shall have accrued to the benefit
of a Party prior to such termination or expiration. Such termination or
expiration shall not relieve a Party from obligations which are expressly
indicated to survive termination or expiration of this Agreement.
(b) Without limiting the foregoing, Sections 2.6, 7.1, 7.2, 7.3,
7.4 and 7.5 and Articles 1, 8, 9 and 10 of this Agreement shall survive the
expiration or termination of this Agreement for the following periods of time:
Sections 7.2, 7.4 and 7.5 and Article 8 shall survive for [ * ] after the
effective date of expiration or termination, and all other Sections and Articles
referred to in this subsection (b) shall survive indefinitely.
11. MISCELLANEOUS PROVISIONS
11.1 RELATIONSHIP OF THE PARTIES. Nothing in this Agreement is intended
or shall be deemed to constitute a partnership, agency or employer-employee
relationship between the Parties. Neither Party shall incur any debts or make
any commitments for the other.
11.2 ASSIGNMENTS. Except as expressly provided herein, neither this
Agreement nor any interest hereunder shall be assignable, nor any other
obligation delegable, by a Party without the prior written consent of the other;
provided, however, that a Party may assign this Agreement to any Affiliate or to
any successor in interest by way of merger, acquisition or sale of all or
substantially all of its assets in a manner such that the assignee shall be
liable and responsible for the performance and observance of all such Party's
duties and obligations hereunder, but provided that if such assignee is an
Affiliate of the assigning Party, such Party shall guarantee the performance by
such Affiliate of all its obligations under this Agreement. This Agreement shall
be binding upon the successors and permitted assigns of the Parties. Any
assignment not in accordance with this Section 11.2 shall be void.
11.3 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTIES SET FORTH IN
SECTION 11.4, AXYS DOES NOT GRANT, AND HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NON-INFRINGEMENT OF THIRD PARTY RIGHTS. DAIICHI ACKNOWLEDGES THAT THE SOFTWARE
PROGRAMS ARE SUPPLIED HEREUNDER ON AN "AS IS" BASIS. AXYS DOES NOT WARRANT, AND
HEREBY DISCLAIMS ANY WARRANTY, THAT ANY SOFTWARE PROGRAM OR ANY SOFTWARE PROGRAM
GENERATED FROM THE SOURCE CODE WILL MEET DAIICHI'S SPECIFIC NEEDS OR THAT
DAIICHI'S USE OF SUCH PROGRAMS WILL BE UNINTERRUPTED OR ERROR-FREE. AXYS
EXPRESSLY DISCLAIMS ANY AND ALL EXPRESS, IMPLIED OR STATUTORY WARRANTIES
RELATIVE TO THE SOFTWARE PROGRAMS INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A
PARTICULAR PURPOSE.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
15.
<PAGE> 16
11.4 REPRESENTATIONS AND WARRANTIES.
(a) Each Party represents and warrants to the other Party that, as
of the date of this Agreement:
(i) such Party is duly organized and validly existing under
the laws of the state of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;
(ii) such Party has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement;
(iii) this Agreement is a legal and valid obligation of such
Party, binding upon such Party and enforceable against such Party in accordance
with the terms of this Agreement, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance. All consents, approvals and authorizations from all
governmental authorities or other third parties required to be obtained by such
Party in connection with this Agreement have been obtained; and
(iv) such Party has obtained written confidentiality
agreements from each of its employees and consultants who have access to the
Confidential Information of the other Party hereunder, whether in the form of
general confidentiality agreements from the employees obtained at the time of
commencement of such employees' employment by such Party or otherwise, which
agreements obligate such persons to maintain as confidential all confidential
information obtained by such Party in confidence from a third party.
(b) Axys represents and warrants to Daiichi that as of the date of
this Agreement:
(i) it has the full right, power and authority to enter into
this Agreement and to grant the right and licenses granted under Articles 2 and
3 and Section 7.3 hereof;
(ii) the execution, delivery and performance of this
Agreement by Axys does not constitute a material breach under, and is not
precluded by the terms of, any agreement to which Axys is a party or by which
Axys is bound; and
(iii) [ * ].
(c) Daiichi represents and warrants to Axys that as of the date of
this Agreement:
(i) it has the full right, power and authority to enter into
this Agreement; and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
16.
<PAGE> 17
(ii) the execution, delivery and performance of this
Agreement by Daiichi does not constitute a material breach under, and is not
precluded by the terms of, any agreement to which Daiichi is a party or by which
Daiichi is bound.
11.5 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments and to do all such other acts as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
11.6 FORCE MAJEURE. The failure of a Party to perform any obligation
under this Agreement by reason of acts of God, acts of governments, riots, wars,
strikes, accidents or deficiencies in materials or transportation or other
causes of any nature (whether similar or dissimilar) beyond its control for the
duration thereof and for [ * ] thereafter shall not be deemed to be a breach of
this Agreement.
11.7 NO TRADEMARK RIGHTS. No right, express or implied, is granted by
this Agreement to a Party to use in any manner the name or any other trade name
or trademark of a Party in connection with the performance of this Agreement.
11.8 ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS. This Agreement
constitutes and contains the entire understanding and agreement of the Parties
respecting the subject matter hereof and cancels and supersedes any and all
prior negotiations, correspondence, understandings and agreements between the
Parties, whether oral or written, regarding such subject matter. No waiver,
modification or amendment of any provision of this Agreement shall be valid or
effective unless made in writing and signed by a duly authorized officer of each
Party.
11.9 CAPTIONS. The captions and headings to this Agreement are for
convenience only, and are to be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
11.10 APPLICABLE LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the [ * ] applicable to contracts entered into
and to be performed wholly within the [ * ] excluding conflict of laws
principles. This Agreement is made and shall be interpreted solely in English,
and all proceedings to enforce this Agreement shall be in English.
11.11 DISPUTES. In the event of any controversy or claim arising out of,
relating to or in connection with any provision of this Agreement, or the rights
or obligations of the Parties hereunder, the Parties shall try to settle their
differences amicably between themselves by referring the disputed matter to the
Chief Executive Officer of Axys and the Board Director (Basic Technology
Research Laboratory and New Product Research Laboratory) of Daiichi or another
Daiichi designee of similar management level for discussion and resolution.
Either Party may initiate such informal dispute resolution by sending written
notice of the dispute to the other Party, and within [ * ] after such notice
such representatives of the Parties shall meet for attempted resolution by good
faith negotiations. If such personnel are unable to resolve such dispute within
[ * ] of their first meeting of such negotiations, either Party may seek to have
such dispute resolved by mediation or arbitration conducted in the [ * ] in
accordance with, [ * ]. It is
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
17.
<PAGE> 18
understood and agreed by the Parties that, on showing of good cause, each Party
shall be entitled to such discovery as may be permitted by the arbitrator. Each
Party hereby consents to jurisdiction, for the foregoing purposes of enforcing
any award rendered by the arbitrator, in the [ * ]. Notwithstanding the
foregoing, all disputes relating to the validity, scope or enforceability of any
patent shall be submitted for resolution to a court of competent jurisdiction.
In any arbitration proceeding, the prevailing Party shall be entitled to recover
attorneys' fees and costs.
11.12 NOTICES AND DELIVERIES. Any notice, request, delivery, approval or
consent required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been sufficiently given if delivered in
person, transmitted by telecopier (receipt verified) or five (5) days after it
was sent by express courier service (signature required) or registered letter,
return receipt requested (or its equivalent), to the Party to which it is
directed at its address shown below or such other address as such Party shall
have last given by notice to the other Parties.
If to Daiichi, addressed to:
Daiichi Pharmaceutical Co., Ltd.
16-13, Kitakasai 1-Chome
Edogawa-ku, Tokyo 134-8630 Japan
Telecopier: +81-3-5696-8336
Attn: General Manager, Basic Technology Research Laboratory
If to Axys, addressed to:
Axys Advanced Technologies, Inc.
180 Kimball Way
South San Francisco, CA USA 94080
Telecopier: +1 (650) 829-1067
Attn: Chief Executive Officer
with a copy to:
Axys Pharmaceuticals, Inc.
180 Kimball Way
South San Francisco, CA USA 94080
Telecopier: +1 (650) 829-1067
Attn: General Counsel
11.13 NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY OR ANY OF
ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES
FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT,
WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, including, but not
limited to, loss of profits or revenue, or claims of customers of any of them or
other third parties for such or other damages, but excluding from the foregoing
liabilities arising from breach of the limitations in Sections 2.5, 3.4, 3.5,
3.6 or Article 8.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
18.
<PAGE> 19
11.14 WAIVER. A waiver by either Party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent breach
hereof. All rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative and none of them shall be in limitation of
any other remedy, right, undertaking, obligation or agreement of either Party.
11.15 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a Party to export, reexport or otherwise transfer any physical sample of
the Custom Compound or any Confidential Information of Axys provided under this
Agreement without compliance with all applicable laws.
11.16 SEVERABILITY. When possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
11.17 COUNTERPARTS. This Agreement may be executed in two counterparts,
each containing the signature of one Party. Each counterpart shall be deemed an
original, and both counterparts together shall constitute one and the same
agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
19.
<PAGE> 20
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be an original.
DAIICHI PHARMACEUTICAL CO., LTD.
By: /s/ Kiyoshi Morita
--------------------------------------------
Name: Kiyoshi Morita
------------------------------------------
Title: President
-----------------------------------------
AXYS ADVANCED TECHNOLOGIES, INC.
By: /s/ Frederick J. Ruegsegger
--------------------------------------------
Name: Frederick J. Ruegsegger
------------------------------------------
Title: Chief Financial Officer
-----------------------------------------
[ * ].
WITNESS:
AXYS PHARMACEUTICALS, INC.
By: /s/ William J. Newell
--------------------------------------------
Name: William J. Newell
------------------------------------------
Title: Senior Vice President/General Counsel
-----------------------------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
20.
<PAGE> 21
EXHIBIT A
METHODS OF ANALYSIS
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
21.
<PAGE> 22
EXHIBIT B
CHARACTERISTICS OF LIBRARIES
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
22.
<PAGE> 23
EXHIBIT C
SOFTWARE PROGRAMS
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
23.
<PAGE> 24
EXHIBIT D
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
24.
<PAGE> 25
EXHIBIT E
TECHNOLOGY COMMITTEE MEMBERS
Axys Representatives:
[*]
[*]
Daiichi Representatives:
[*]
[*]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
25.
<PAGE> 26
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
26.
<PAGE> 1
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. EXHIBIT 10.108
BOEHRINGER INGELHEIM
BOEHRINGER INGELHEIM Board of Managing Directors
INTERNATIONAL GMBH Dr. Herlbert Johann
(Chairman)
Our reference BPG Dr.Mi/sk Prof. Dr. Dr. Lic. Rolf Krebs
amendment2202.doc (Vice Chairman)
Dr. Hans-Jorgen Leuchs
Dr. Claus D. Rohleder
Dr. David Mitchand
Phone +49/61 32/77-34 08 Seat Ingelheim am Rhein
Fax +49/61 32/77-35 83 Commercial Register
Bingen HR B 1063
Deutsche Bank AG
BLZ 550 7000 40
Account No. 0122 5BO
Binger Strasse 173
D-55216 Ingelheim am Rhein
Germany
Phone +49/61 32/77-0
Fax +49/61 32/72-0
www.boehringer-ingelheim.com
14 June 1999
AxyS Pharmaceuticals, Inc.
11099 North Torrey Pines Road
Suite 160
La Jolla, CA 92037
U.S.A.
AGREEMENT OF JUNE 12, 1995 BETWEEN BOEHRINGER INGELHEIM INTERNATIONAL GMBH
("BI") AND SEQUANA THERAPEUTICS, INC. (NOW AXYS PHARMACEUTICALS, INC.) ("AXYS")
AS AMENDED (THE "AGREEMENT").
Dear Mr. Petree
We are writing to confirm our agreement to amend certain provisions of the
Agreement. The background to this amendment is both Parties' understanding that
[ * ]. AxyS will [ * ].
BI's interest in the remaining collaboration is limited to [ * ]. The Parties
agree that each Party is [ * ], as described below.
Specifically, the provisions of this Amendment are as follows:
1.9 "BI Patent": The words "based on or incorporating data derived through the
use of Results, or" shall be inserted after the words "owned or controlled by
BI".
1.
<PAGE> 2
1.33 "Research Term": The words "fifth anniversary of the Effective Date" are
deleted and replaced by "June 30, 1999".
1.37 "Sequana Patent": The words "based on or incorporating data derived through
the use of Results, or" shall be inserted after the words "owned or controlled
by Sequana".
2.3.2 "Sequana Research Obligations": As from February 1, 1999, AxyS' commitment
to the Research is reduced from [ * ] to [ * ] FTE's.
2.3.4 "BI Funding Obligations": An additional sentence is added at the end as
follows: "BI's funding obligations for AxyS researchers involved in the Research
will end June 30, 1999.".
2.5 [ * ].
2.7.3 [ * ] AxyS agrees to provide BI by September 30th 1999 with [ * ] from the
[ * ] collection and [ * ] from the [ * ] collections, in AxyS' possession.
2.8 [ * ] AxyS agrees to transfer to BI in electronic form by September 30th
1999 the [ * ] from the [ * ] collections.
Article 4: The development milestones in 4.1.1 and the royalties in 4.2 will
[ * ].
[ * ], BI will pay AxyS [ * ] on the Net Sales of any BI Product [ * ].
[ * ], BI will pay AxyS [ * ] on the Net Sales of such BI Product. [ * ].
Notwithstanding the above, royalty payments will [ * ].
4.11 [ * ] BI's obligation to [ * ] shall end on [ * ].
Article 5 "Grant of Licenses": In addition to the rights granted in Article 5,
each Party grants the other a fully paid-up, non-exclusive perpetual license to
[ * ]. Each Party shall have the [ * ].
In the event that pursuant to the rights granted BI under the Agreement and this
Amendment, BI [ * ], BI agrees to [ * ].
5.1.2 "Technology License for Commercialization of BI Products": This clause is
deleted in its entirety and replaced with the following:
"Subject to the terms and conditions of this Agreement, Sequana grants to BI:
(a) an exclusive, even as to Sequana, worldwide license, with the right to
sublicense pursuant to Article 5.3.1 under the (i) Sequana Technology
and (ii) Sequana's interest in the Joint Results and Joint Patents, to
make, have made, and use Compounds based on data derived [ * ] and to
make, have made, use and sell BI Products based on data derived [ * ],
including all activities necessary to discover and develop such
Compounds and BI Products.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
2.
<PAGE> 3
(b) a non-exclusive, worldwide license, with the right to sublicense
pursuant to Article 5.3.1 under the (i) Sequana Technology and (ii)
Sequana's interest in the Joint Results and Joint Patents, to make, have
made, and use Compounds based on data derived [ * ], and to make, have
made, use and sell BI Products based on data derived [ * ], including
all activities necessary to discover and develop such Compounds and BI
Products."
6.1 [ * ].
8.1 "Obligation of Non-Disclosure": The following sentence shall be added to the
end of the clause: "Notwithstanding the terms of Article 8, each Party will be
permitted to disclose the Confidential Information of the other Party to Third
Parties only to the extent required to exercise the rights granted each Party
under the Agreement and this Amendment."
Article 10 "Property Rights and Patents": BI retains [ * ].
Except as modified above, the Agreement remains in full force and effect.
Please signify your agreement to the above by your signing below and returning
one of the originals to us. This letter will then constitute an amendment of the
Agreement effective June 14, 1999.
Best Regards Agreed on behalf of
BOEHRINGER INGELHEIM AxyS Pharmaceuticals, Inc.
INTERNATIONAL GmbH by
ppa.
/s/ B. Wetzel /s/ H. Muller /s/ D. H. Petree
Prof. Dr. B. Wetzel H. P. Muller Daniel Petree
President & COO
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
3.
<PAGE> 1
EXHIBIT 10.109
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of May 14, 1999, by and among XYRIS CORPORATION, a California
corporation (the "Company"), THE NORTH AMERICAN NUTRITION & AGRIBUSINESS FUND,
L.P., a Delaware limited partnership ("Purchaser"), and AXYS PHARMACEUTICALS,
INC., a Delaware corporation, as Put Grantor ("Axys").
RECITALS
WHEREAS, Purchaser desires to purchase 1,201,201 shares of Series A
Preferred Stock (the "Shares") on the Closing Date (as defined below) on the
terms and conditions set forth herein;
WHEREAS, the Company desires to issue and sell the Shares to Purchaser
and Axys desires to issue to Purchaser the Put Option (as defined below) for the
Shares on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as defined
in Section 2 below), the Company shall have authorized (i) the sale and issuance
to Purchaser of the Shares and (ii) the issuance of 1,201,201 shares of Common
Stock upon conversion of the Shares (the "Conversion Shares"). The Shares and
the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Amended and Restated Articles of Incorporation of
the Company in the form attached as Exhibit B to that certain Series A Preferred
Stock Purchase Agreement dated June 1, 1998 among the Company, Bay City Capital
Fund I and Axys Pharmaceuticals, Inc. (the "Restated Articles").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof,
at the Closing the Company hereby agrees to issue and sell to Purchaser and
Purchaser agrees to purchase from the Company the Shares at a purchase price of
three dollars and thirty-three cents ($3.33) per share.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the Shares
under this Agreement (the "Closing") shall take place at 5:00 p.m. on May 26,
1999, at the offices of Heller, Ehrman, White & McAuliffe, 333 Bush Street,
Suite 3100, San Francisco, California or at such other time or place as the
Company and Purchaser may mutually agree (such date is hereinafter referred to
as the "Closing Date").
1.
<PAGE> 2
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to Purchaser a certificate representing the
Shares, against payment of the purchase price therefor by wire transfer or check
made payable to the order of the Company. At the Closing, subject to the terms
and conditions hereof, Purchaser and Axys Pharmaceuticals, Inc. shall each
execute and deliver to each other the Side Letter (as defined in Section 3.5
hereof).
3. PUT OPTION.
3.1 Subject to the terms and conditions herein set forth, Axys
hereby grants Purchaser the right (the "Put Option") at any time after the
Trigger Date (as defined in Section 3.3 below) to require Axys to purchase from
Purchaser, the Shares in exchange for shares of Axys Common Stock, at its then
"market price," with an aggregate market value on the date immediately prior to
the day the Put Option is exercised equal to $4,000,000, rounded down to the
nearest whole number of shares (the "Put Option Shares"), on or prior to the
Expiration Date set forth in Section 3.4 below. For purposes of the Put Option,
the market price for Axys Common Stock shall be (i) if the Axys Common Stock is
then reported on The Nasdaq National Market or its successor, the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
in The Nasdaq National Market or its successor on the last market trading day
prior to exercise of the Put Option, (ii) if the Axys Common Stock is then
listed or admitted to trading on the New York Stock Exchange, the last sale
price, regular way (or, in case no such sale takes places on such day, the
average of the closing bid and asked prices, regular way) in either case as
reported in the consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange on the
last market trading day prior to exercise of the Put Option, (iii) if the Axys
Common Stock is not then reported on The Nasdaq National Market or then listed
or admitted to trading on the New York Stock Exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market) as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use on the
last market trading day prior to exercise of the Put Option, or (iv) in the
event none of the foregoing situations applies, the average of the closing bid
and asked prices, as furnished by a professional market maker making a market in
Axys Common Stock selected by the Axys Board of Directors, on the last market
trading day prior to exercise of the Put Option.
3.2 The Put Option shall be deemed to have been exercised
immediately prior to the close of business on the date of surrender to Axys of
the Put Option Subscription Form, attached hereto as Exhibit A.
3.3 The Put Option shall not be exercisable until August 2, 1999
(the "Trigger Date").
3.4 The Put Option shall terminate in full on February 2, 2001.
3.5 The Put Option shall not be transferable by Purchaser except to
an affiliate of Purchaser reasonably acceptable to Axys who is also a transferee
of the Shares and agrees in a writing reasonably acceptable to Axys to be bound
by the provisions of this Agreement pertaining to the Put Option and the Put
Option Shares, the Registration Rights Agreement and the side letter referred to
in Section 3.4 thereof (the "SIDE LETTER") to the same extent as Purchaser.
2.
<PAGE> 3
3.6 Upon the exercise of the Put Option and concurrent with the
issuance of the Put Option Shares within a reasonable time period (not to exceed
10 business days after Axys' receipt of the Put Option Subscription Form), Axys
shall execute the Registration Rights Agreement in the form attached as Exhibit
B (the "REGISTRATION RIGHTS AGREEMENT"). Purchaser shall provide such reasonable
cooperation as Axys requests in connection with the issuance of the Put Option
Shares.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AXYS.
(a) The Company hereby represents and warrants to Purchaser as of the
date of this Agreement as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF THE COMPANY.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. The Company has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement, to issue and sell the Shares and
the Conversion Shares, to carry out the provisions of this Agreement and the
Restated Articles and to carry on its business as presently conducted and as
presently proposed to be conducted.
4.2 CAPITALIZATION; VOTING RIGHTS OF THE COMPANY. The authorized
capital stock of the Company, immediately prior to the Closing, will consist of
10,000,000 shares of Common Stock, no par value per share, 650,000 shares of
which are issued and outstanding as of the date of this Agreement; 8,200,000
shares of Preferred Stock no par value per share, all of which are designated
Series A Preferred Stock, 6,501,501 of which are issued and outstanding as of
the date of this Agreement. All issued and outstanding shares of the Company's
Common Stock have been duly authorized and validly issued. The rights,
preferences, privileges and restrictions of the Shares are as stated in the
Restated Articles. The Conversion Shares have been or, prior to the Closing,
will have been duly and validly reserved for issuance. Other than as set forth
in this Agreement; the Series A Stock Purchase Agreements between the Company,
Axys and Bay City Capital Fund I, dated June 1, 1998 and February 2, 1999,
respectively; the Series A Preferred Stock Purchase Agreements between the
Company and Axys dated as of June 1, 1998 and February 2, 1999, respectively;
the Common Stock Purchase Agreement between the Company and Jerry Caulder, dated
as of April 30, 1998; the Shareholders' Agreement between the Company, Jerry
Caulder, Purchaser and Axys, dated as of June 1, 1998; and the Company's 1998
Equity Incentive Plan (pursuant to which options to purchase 556,000 shares of
Common Stock and 650,000 shares of Common Stock pursuant to restricted stock
grants are outstanding as of the date of this Agreement), and other than as
contemplated by or in connection with that certain letter of intent dated
January 22, 1999 between Global Agro, Inc. and the Company; there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or shareholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities. When issued in compliance with the provisions of this Agreement and
the Restated Articles, the Shares and the Conversion Shares will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances other than liens and encumbrances created by or imposed upon
Purchaser; provided, however, that the Shares and the Conversion Shares may be
subject to restrictions on transfer under the Company's Bylaws or state and/or
federal securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed.
3.
<PAGE> 4
4.3 AUTHORIZATION; BINDING OBLIGATIONS OF THE COMPANY. All
corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization of this Agreement, the performance
of all obligations of the Company hereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and the
Conversion Shares pursuant to the Restated Articles has been taken or will be
taken prior to the Closing. The Agreement, when executed and delivered, will be
a valid and binding obligation of the Company enforceable in accordance with its
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; and (b) general principles of equity that
restrict the availability of equitable remedies.
4.4 AGREEMENTS; ACTION.
Except for agreements explicitly contemplated hereby and pursuant to
the Employment Agreement by and between the Company and Jerry Caulder, dated
April 30, 1998, as amended by Amendment No. 1 to Employment Agreement dated
March 26, 1999, and agreements between the Company and its employees with
respect to the sale, or the issuance of options and restricted stock awards
providing for the sale, of the Company's Common Stock, pursuant to the Company's
1998 Equity Incentive Plan, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
4.5 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS.
Each employee, officer and consultant of the Company has executed a
Proprietary Information and Inventions Agreement in the form previously approved
by Axys and Purchaser.
(b) Axys, as Put Grantor, hereby represents and warrants to Purchaser
as of the date of this Agreement as follows:
4.6 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF AXYS. Axys is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Axys has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to issue and sell the Put Option and Put Option Shares, to carry
out the provisions of this Agreement relating to it as Put Grantor and to carry
on its business as presently conducted and as presently proposed to be
conducted.
4.7 CAPITALIZATION OF AXYS. The authorized capital stock of Axys,
as of March 31, 1999, consisted of 50,000,000 shares of Common Stock, $.001 par
value per share, 30,321,328 shares of which were then issued and outstanding;
10,000,000 shares of Preferred Stock $.001 par value per share, 500,000 of which
are designated as Series A Junior Participating Preferred Stock and none of
which were then issued and outstanding. All issued and outstanding shares of the
Company's Common Stock and the related Preferred Share Purchase Rights have been
duly authorized and validly issued. The rights, preferences, privileges and
restrictions of the shares of the Company's Common Stock and the related
Preferred Share Purchase Rights are as stated in Axys' public filings. The Put
Option Shares have been or, by the Closing, will have been, duly and validly
reserved for issuance. When issued in compliance with the provisions of this
Agreement and Axys' public filings, the Put Option Shares will be validly
issued, fully paid and nonassessable,
4.
<PAGE> 5
and will be free of any liens or encumbrances other than liens and encumbrances
created by or imposed upon Purchaser; provided, however, that the Put Option
Shares may be subject to restrictions on transfer under state and/or federal
securities laws, as set forth herein, or as otherwise required by such laws at
the time a transfer is proposed.
4.8 AUTHORIZATION; BINDING OBLIGATIONS OF AXYS. All corporate
action on the part of Axys, its officers, directors and stockholders necessary
for the authorization of this Agreement, the performance of all obligations of
Axys as Put Grantor hereunder at the Closing and the authorization, sale,
issuance and delivery of the Put Option and the Put Option Shares pursuant
hereto has been taken or will be taken prior to the Closing. The Agreement, when
executed and delivered, will be a valid and binding obligation of Axys
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; and (b) general
principles of equity that restrict the availability of equitable remedies.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
Purchaser hereby represents and warrants to the Company as follows:
5.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out its provisions. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to the Closing. Upon its execution and delivery,
this Agreement will be a valid and binding obligation of Purchaser, enforceable
in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and (b) general principles of equity
that restrict the availability of equitable remedies
5.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Shares, the Conversion Shares, the Put Option nor the Put Option Shares have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"). Purchaser also understands that the Shares and the Put Option are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon Purchaser's representations contained in this
Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) and
the Put Option (or the Put Option Shares) are registered pursuant to the
Securities Act, or an exemption from registration is available. Purchaser
understands that the Company has no present intention of registering the Shares,
the Conversion Shares, or any shares of its Common Stock and that Axys has no
present intention of registering the Put Option and only intends to register the
Put Option Shares pursuant to the terms and provisions of the Registration
Rights Agreement. Purchaser also understands that there is no assurance that any
exemption from registration under the Securities Act will be available and that,
even if available, such exemption may not allow Purchaser to
5.
<PAGE> 6
transfer all or any portion of the Shares or the Conversion Shares or the Put
Option or the Put Option Shares under the circumstances, in the amounts or at
the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares,
the Conversion Shares, the Put Option and the Put Option Shares for Purchaser's
own account for investment only, and not with a view towards their distribution;
provided that Purchaser may transfer the Shares and the Conversion Shares to an
affiliate of Purchaser reasonably acceptable to Axys, may transfer the Put
Option as provided herein and may transfer the Put Option Shares (subject to the
provisions of the Side Letter) as permitted by applicable law or pursuant to the
Registration Rights Agreement.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in this Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has had an opportunity to discuss
the Company's business, management and financial affairs with the directors of
the Company. Purchaser has also had the opportunity to ask questions of and
receive answers from the Company and its management regarding the terms and
conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares and
the Put Option, and, if issued, the Conversion Shares and the Put Option Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser
has been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act as in effect from time to time, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about the Company, the resale occurring following the
required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.
5.3 TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees that
the Shares and the Put Option and, if issued, the Conversion Shares and the Put
Option Shares are subject to restrictions on transfer as set forth in the
Company's Bylaws.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
Purchaser's obligations to purchase the Shares and the Put Option at the Closing
are subject to the satisfaction, at or prior to the Closing Date, of the
following conditions, any one or more of which may be waived in writing by
Purchaser:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 4
hereof shall be true and correct in all material
6.
<PAGE> 7
respects as of the Closing Date with the same force and effect as if they had
been made as of the Closing Date, with the exceptions that (i) the Company may
have entered into subsequent to the date hereof an agreement and plan of merger
and reorganization with Global Agro, Inc. pursuant to which the Company would be
obligated to issue shares of Series B Preferred Stock of the Company to the
stockholders of Global Agro, Inc. aggregating 27.5% of the outstanding shares of
the Company and restricted stock awards and stock options as contemplated in
such agreement and (ii) the Company may have entered into subsequent to the date
hereof an agreement to issue and sell for $1,000,000 an additional 300,300
shares of Series A Preferred Stock of the Company on the same terms as are set
forth herein, and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and issuance
of the Shares and the Put Option and the potential issuance of the Conversion
Shares and the Put Option Shares shall be legally permitted by all laws and
regulations to which Purchaser, the Company and Axys are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company and Axys shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement, except for
such as may be properly obtained subsequent to the Closing.
(d) CORPORATE DOCUMENTS. The Company and Axys shall have
delivered to Purchaser or its counsel, copies of all corporate documents of the
Company and Axys, respectively, as Purchaser shall reasonably request.
(e) RESERVATION OF CONVERSION SHARES. The Conversion Shares
shall have been duly authorized and reserved for issuance by the Company and the
Put Option Shares shall have been duly authorized and reserved for issuance by
Axys.
(f) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser and its counsel,
and the Purchaser and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at the Closing and Axys' obligation to
issue the Put Option are subject to the satisfaction, on or prior to the
Closing, of the following conditions, any one or more of which may be waived in
writing by the Company:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by Purchaser in Section 5 hereof shall be true and correct in
all material respects at the date of the Closing, with the same force and effect
as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by Purchaser on or before the Closing, including but not
limited to the tender of the purchase price for the Shares.
7.
<PAGE> 8
(c) CONSENTS, PERMITS AND WAIVERS. The Company and Axys shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement, except for
such as may be properly obtained subsequent to the Closing.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and performed entirely in California.
7.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, and administrators of the parties hereto and
shall inure to the benefit of and be enforceable by each person who shall be a
holder of the Shares from time to time.
7.4 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements, except as specifically set forth herein and therein.
7.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified
and any provision hereof may be waived only upon the written consent of the
Company, the Purchaser and Axys.
7.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Restated
Articles, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring.
7.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Company, the Purchaser or Axys at the address as set forth
8.
<PAGE> 9
on the signature page hereof for such party or at such other address as a party
may designate by ten days advance written notice to the other parties hereto.
7.9 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
7.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.12 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as the identity of the parties hereto may require.
7.13 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
9.
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this SERIES A
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASER:
XYRIS CORPORATION THE NORTH AMERICAN NUTRITION &
AGRIBUSINESS FUND, L.P.
By: /s/ JERRY CAULDER By: NANA Management, L.P.
Jerry Caulder Its: General Partner
President
Address: 12626 High Bluff Drive, Suite 250 By: Bay City Capital LLC
San Diego California 92130 Its: Advisor and Attorney-In-Fact
Attn: President
FAX: (619) 794-5525 By: /s/ ROGER SALQUIST
-----------------------------
Name: Roger Salquist
---------------------------
Title:
--------------------------
Address:
750 Battery Street, Suite 600
San Francisco, California 94111
Attention: Roger Salquist
FAX: (415) 837-0996
PUT GRANTOR:
AXYS PHARMACEUTICALS, INC.
By:
Print Name:
Title:
Address: 180 Kimball Way
South San Francisco, CA 94080
Attn: Chief Financial Officer
FAX: (650) 829-1001
10.
<PAGE> 11
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT A
PUT OPTION SUBSCRIPTION FORM
To: Axys Pharmaceuticals, Inc.
180 South Kimball Way
South San Francisco, California 94080
Attn: Chief Financial Officer
THE NORTH AMERICAN NUTRITION & AGRIBUSINESS FUND, L.P., a Delaware
limited partnership ("NANAF"), the holder of the Put Option (the "Put Option")
described in Section 3 of that certain Series A Preferred Stock Purchase
Agreement dated May 14, 1999, by and among Xyris Corporation, a California
corporation ("Xyris"), NANAF and Axys Pharmaceuticals, Inc., a Delaware
corporation ("Axys"), hereby elects to exercise the right represented by the Put
Option to sell to Axys 1,201,201 shares of Series A Preferred Stock of Xyris
held by NANAF in exchange for that number of shares of Axys Common Stock having
an aggregate market value of $4,000,000, rounded down to the nearest whole
number of shares, at the "market price" as defined in the Put Option.
NANAF hereby covenants to cause a certificate representing such shares
of Common Stock to be delivered to Axys upon surrender of this Put Option
Subscription Form in accordance with the Put Option.
Dated: ____________________
THE NORTH AMERICAN NUTRITION &
AGRIBUSINESS FUND, L.P.,
a Delaware Limited Partnership
By: NANA Management, L. P.
Its: General Partner
By: Bay City Capital LLC
Its: Advisor and Attorney-In-Fact
By:
Name:
Title:
<PAGE> 12
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 13
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is entered into as
of the ___ day of __________, ____, by and among AXYS PHARMACEUTICALS, INC., a
Delaware corporation (the "COMPANY") and the persons listed on the signature
page(s) hereto.
RECITALS
WHEREAS, the Company proposes to sell and issue shares of its Common
Stock upon exercise of put options held by the purchasers of the Series A
Preferred Stock of Xyris Corporation (the "PUT OPTIONS") pursuant to certain
Series A Preferred Stock Purchase Agreements, among the Company, Xyris
Corporation and such purchasers (the "XYRIS PURCHASE AGREEMENTS").
WHEREAS, as a condition of entering into the Xyris Purchase Agreements,
the purchasers have requested that the Company extend to them certain
registration rights as set forth below on any shares of Company Common Stock
issued upon exercise of the Put Options.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and the Xyris Purchase Agreements, the parties mutually agree as
follows:
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FORM S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities
that have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.8 hereof.
"MATERIAL ADVERSE EVENT" means an occurrence having a consequence
that either (a) is materially adverse to the business, prospects or financial
condition of the Company or (b) has a reasonable likelihood of occurring and, if
it were to occur, would be reasonably likely to materially adversely affect the
business, prospects or financial condition of the Company.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the
2
<PAGE> 14
declaration or ordering of effectiveness of such registration statement.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company
issued to the purchasers of the Series A Preferred Stock of Xyris Corporation
(the "Series A Purchasers") in connection with the Xyris Purchase Agreements;
and (b) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such above-described securities. Notwithstanding the foregoing,
Registrable Securities shall not include any securities sold by a person to the
public pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned.
"REGISTRATION EXPENSES" means all expenses incurred by the Company
in complying with Section 2.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements not to exceed
twenty-five thousand dollars ($25,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or
any portion of its Registrable Securities unless and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement or such proposed disposition
is otherwise exempt from registration under the Securities Act; or
(ii) (A) The transferee has agreed in writing to be bound
by the terms of this Agreement, (B) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act.
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(iii) Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its shareholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, (D) to an entity of which a
majority of the equity and voting interest is owned by such Holder, directly or
indirectly (an "AFFILIATE"), or (E) to the Holder's family member or trust for
the benefit of an individual Holder; provided that in each case the transferee
will be subject to the terms of this Agreement to the same extent as if he were
an original Holder hereunder.
(b) Each certificate representing Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders
of Registrable Securities in writing at least twenty-one (21) days prior to the
filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each
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Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by it shall, within fifteen (15) days after the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.2 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders and any other
shareholders of the Company currently having registration rights on a pro rata
basis based on the total number of Registrable Securities held by the Holders
and the total number of registrable securities held by such other shareholders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall (i) reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
or (ii) reduce the amount of securities of the selling Holders included in the
registration below twenty-five percent (25%) of the total amount of securities
included in such registration, unless such registration does not include shares
of any other selling shareholders, in which event any or all of the Registrable
Securities of the Holders may be excluded in accordance with the immediately
preceding sentence. In no event will shares of any other selling shareholder
(other than those presently entitled to registration rights) be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities proposed to be sold
in the offering. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration. For any Holder which is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing person shall be deemed to be a single "Holder",
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
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(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.3 hereof.
2.3 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders of Registrable Securities a written request that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other holders of registrable
securities; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the registrable securities of any other holder or
holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.3:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than one million dollars ($1,000,000), or
(iii) if within thirty (30) days of receipt of a written
request from the Holders pursuant to this Section, the Company gives notice to
the Holders of the Company's intention to make a public offering within ninety
(90) days;
(iv) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period, or
(v) if the Company has already effected one (1)
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registration on Form S-3 for the Holders pursuant to this Section 2.3, or
(vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
Notwithstanding the foregoing, in the event that the Holder or Holders of
Registrable Securities request the withdrawal of a registration being made
pursuant to this Section 2.3 and, in such withdrawal request, the Holder(s)
state that it first learned (within seven (7) days of the date of such
withdrawal request) of a Material Adverse Event (which is specified in
reasonable detail in such withdrawal request) not known to the Holder(s) at the
time of its request for registration of their Registrable Securities pursuant to
this Section 2.3, then the Holder(s) shall retain its rights to request
registration pursuant to this Section 2.3 as if it had not previously requested
registration hereunder.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
2.4 EXPENSES OF REGISTRATION. Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration
under Section 2.2 or 2.3 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder, shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of shares so registered.
2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period set forth in
paragraph (a) above.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the
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Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.6 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Section 2 shall terminate and be of no further force and
effect two (2) years after the date of this Agreement. In addition, a Holder's
registration rights shall expire if all Registrable Securities held by and
issuable to such Holder (and its affiliates, partners, former partners, members
and former members) may be sold under Rule 144 during any ninety (90) day
period.
2.7 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2 or 2.3 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the
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registration of their Registrable Securities.
2.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 2.2.or 2.3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "VIOLATION") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.7(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration is being effected, indemnify and hold harmless the
Company, each of its directors, its officers and each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer, controlling
person, underwriter or other such Holder, or partner, director, officer or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder under an instrument duly executed
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by such Holder and stated to be specifically for use in connection with such
registration; and each such Holder will pay as incurred any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.7 exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.7, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.7.
(d) If the indemnification provided for in this Section 2.7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.
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(e) The obligations of the Company and Holders under this
Section 2.7 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by any of the Series A Purchasers to a transferee or assignee which is
an affiliate, subsidiary, parent, general partner, limited partner, retired
partner, member or retired member of such Series A Purchaser; provided, however,
(i) such Series A Purchaser shall, within ten (10) days after such transfer,
furnish to the Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights
are being assigned and (ii) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
2.10 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH
INFORMATION. Each Holder hereby agrees that such Holder shall not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock (or other securities) of the Company held by such Holder (other
than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the
Company not to exceed ninety (90) days following the effective date of a
registration statement of the Company filed under the Securities Act; provided
that all officers and directors of the Company enter into similar agreements.
Each Holder agrees to execute and deliver such other agreements as
may be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. In addition, if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the Company, each Holder
shall provide, within ten (10) days of such request, such information as may be
required by the Company or such representative in connection with the completion
of any public offering of the Company's securities pursuant to a registration
statement filed under the Securities Act. The obligations described in this
Section 2.10 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a SEC Rule 145 transaction
on Form S-4 or similar forms that may be promulgated in the future. The Company
may impose stop-transfer instructions with respect to the shares of Common Stock
(or other securities) subject to the foregoing restriction until the end of said
ninety (90) day period.
2.11 RULE 144 REPORTING. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
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(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144 of
the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.
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SECTION 3. MISCELLANEOUS
3.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated by the Xyris Purchase Agreements.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
3.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
3.4 ENTIRE AGREEMENT. This Agreement, the Xyris Purchase Agreements
and the side letters entered into in connection with the Xyris Purchase
Agreements between the Series A Purchasers who are parties hereto and the
Company (each a "SIDE LETTER") and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
3.5 SEVERABILITY. In the event one or more of the provisions of
this Agreement should, 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 this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
3.6 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may
be amended or modified only upon the written consent of the Company and each of
the holders of the Registrable Securities.
(b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the
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written consent of each of the holders of the Registrable Securities.
3.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
3.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or at
such other address as such party may designate by ten (10) days advance written
notice to the other parties hereto.
3.9 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
3.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
3.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.12 JOINDER. At any time after the execution of this Agreement by
the Company and any Series A Purchaser, any other Series A Purchaser who is
entitled to the rights set forth in this Agreement may become a party to this
Agreement by signing a counterpart signature page to this Agreement and
delivering such counterpart signature page to the Company who shall send a copy
thereof to any other party to this Agreement. From and after the execution and
delivery to the Company of such counterpart signature page by a Series A
Purchaser, such Series A Purchaser shall be a party to this Agreement and shall
be entitled to all of the rights of a Holder under this Agreement.
14
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this REGISTRATION
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
AXYS PHARMACEUTICALS, INC. --------------------------------
By: By:
Title: Title:
--------------------------------- --------------------------
Address: 180 Kimball Way Address:
South San Francisco, CA 94080 ------------------------
Attn: Chief Financial Officer Attn:
FAX: (650) 829-1001 ---------------------------
FAX:
----------------------------
15
<PAGE> 1
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of June 4, 1999, by and among XYRIS CORPORATION, a California
corporation (the "Company"), MISSOURI SOYBEAN MERCHANDISING COUNCIL, a Missouri
not-for-profit corporation ("Purchaser"), and AXYS PHARMACEUTICALS, INC., a
Delaware corporation, as Put Grantor ("Axys").
RECITALS
WHEREAS, Purchaser desires to purchase 300,300 shares of Series A
Preferred Stock (the "Shares") by the Final Closing Date (as defined below) on
the terms and conditions set forth herein;
WHEREAS, the Company desires to issue and sell the Shares to Purchaser
and Axys desires to issue to Purchaser the Put Option (as defined below) for the
Shares on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Initial Closing (as
defined in Section 2 below), the Company shall have authorized (i) the sale and
issuance to Purchaser of the Shares and (ii) the issuance of 300,300 shares of
Common Stock (as defined in Section 4.2) upon conversion of the Shares (the
"Conversion Shares"). The Shares and the Conversion Shares shall have the
rights, preferences, privileges and restrictions set forth in the Amended and
Restated Articles of Incorporation of the Company, a complete and accurate copy
of which is attached as Exhibit A hereto (the "Restated Articles").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof,
at the Initial Closing and the Subsequent Closings (as defined in Section 2
below) the Company hereby agrees to issue and sell to Purchaser and Purchaser
agrees to purchase from the Company the Shares at a purchase price of three
dollars and thirty-three cents ($3.33) per share.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The initial closing of the sale and purchase of a
portion of the Shares under this Agreement (the "Initial Closing") shall take
place at 5:00 p.m. on June 7, 1999, at the offices of Cooley Godward, LLP, Five
Palo Alto Square, 3000 El Camino Real, Palo Alto, California or at such other
time or place as the Company and Purchaser may mutually agree (such date is
1.
<PAGE> 2
hereinafter referred to as the "Initial Closing Date"). Subsequent closings (the
"Subsequent Closings") shall occur on the dates that Purchaser makes further
payments for additional portions of the Shares, with the all payments in
connection with the purchase of the Shares to be made by no later than July 7,
1999. The last of the Subsequent Closings is referred to herein as the "Final
Closing."
2.2 DELIVERY. At the Final Closing, subject to the terms and
conditions hereof, the Company will deliver to Purchaser a certificate
representing the Shares, provided that Purchaser has paid the full purchase
price therefor by wire transfer or check made payable to the order of the
Company. At the Initial Closing, subject to the terms and conditions hereof,
Purchaser and Axys Pharmaceuticals, Inc. ("Axys") shall each execute and deliver
to each other the Side Letter (as defined in Section 3.5 hereof) and the Company
and Purchaser shall execute and deliver signature pages to the Amended and
Restated Shareholders Agreement dated as of May 14, 1999 between the Company,
Jerry Caulder, Axys and The Bay City Capital Fund I, L.P. (the "Shareholders
Agreement").
3. PUT OPTION.
3.1 Subject to the terms and conditions herein set forth, Axys
hereby grants Purchaser the right (the "Put Option") at any time after the
Trigger Date (as defined in Section 3.3 below) to require Axys to purchase from
Purchaser, the Shares in exchange for shares of Axys Common Stock, at its then
"market price," with an aggregate market value on the date immediately prior to
the day the Put Option is exercised equal to $1,000,000, rounded down to the
nearest whole number of shares (the "Put Option Shares"), on or prior to the
Expiration Date set forth in Section 3.4 below. For purposes of the Put Option,
the market price for Axys Common Stock shall be (i) if the Axys Common Stock is
then reported on The Nasdaq National Market or its successor, the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
in The Nasdaq National Market or its successor on the last market trading day
prior to exercise of the Put Option, (ii) if the Axys Common Stock is then
listed or admitted to trading on the New York Stock Exchange, the last sale
price, regular way (or, in case no such sale takes places on such day, the
average of the closing bid and asked prices, regular way) in either case as
reported in the consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange on the
last market trading day prior to exercise of the Put Option, (iii) if the Axys
Common Stock is not then reported on The Nasdaq National Market or then listed
or admitted to trading on the New York Stock Exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market) as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use on the
last market trading day prior to exercise of the Put Option, or (iv) in the
event none of the foregoing situations applies, the average of the closing bid
and asked prices, as furnished by a professional market maker making a market in
Axys Common Stock selected by the Axys Board of Directors, on the last market
trading day prior to exercise of the Put Option.
3.2 The Put Option shall be deemed to have been exercised
immediately prior to the close of business on the date of surrender to Axys of
the Put Option Subscription Form, attached hereto as Exhibit B.
2.
<PAGE> 3
3.3 The Put Option shall not be exercisable until August 2, 1999
(the "Trigger Date").
3.4 The Put Option shall terminate in full on February 2, 2001.
3.5 The Put Option shall not be transferable by Purchaser except to
an affiliate of Purchaser reasonably acceptable to Axys who is also a transferee
of the Shares and agrees in a writing reasonably acceptable to Axys to be bound
by the provisions of this Agreement pertaining to the Put Option and the Put
Option Shares, the Registration Rights Agreement and the side letter referred to
in Section 3.4 thereof (the "SIDE LETTER") to the same extent as Purchaser.
3.6 Upon the exercise of the Put Option and concurrent with the
issuance of the Put Option Shares within a reasonable time period (not to exceed
10 business days after Axys' receipt of the Put Option Subscription Form), Axys
shall execute the Registration Rights Agreement in the form attached as Exhibit
C (the "REGISTRATION RIGHTS AGREEMENT"). Purchaser shall provide such reasonable
cooperation as Axys requests in connection with the issuance of the Put Option
Shares.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AXYS.
(a) The Company hereby represents and warrants to Purchaser as of
the date of this Agreement as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF THE COMPANY.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. The Company has all
requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement, to issue and sell the Shares and
the Conversion Shares, to carry out the provisions of this Agreement and the
Restated Articles and to carry on its business as presently conducted and as
presently proposed to be conducted.
4.2 CAPITALIZATION; VOTING RIGHTS OF THE COMPANY. The authorized
capital stock of the Company, immediately prior to the Initial Closing, will
consist of 10,000,000 shares of Common Stock, no par value per share ("Common
Stock"), 650,000 shares of which are issued and outstanding as of the date of
this Agreement; 8,200,000 shares of Preferred Stock no par value per share, all
of which are designated Series A Preferred Stock, 7,702,702 of which are issued
and outstanding as of the date of this Agreement. All issued and outstanding
shares of the Company's Common Stock have been duly authorized and validly
issued. The rights, preferences, privileges and restrictions of the Shares are
as stated in the Restated Articles. The Conversion Shares have been or, prior to
the Initial Closing, will have been duly and validly reserved for issuance.
Other than as set forth in this Agreement and the agreements referred to in
Section 4.4 below; the Series A Stock Purchase Agreements between the Company,
Axys and Bay City Capital Fund I, dated June 1, 1998 and February 2, 1999,
respectively; the Series A Stock Purchase Agreement between the Company, Axys
and The North American Nutrition & Agribusiness Fund, L.P., dated May 14, 1999;
the Series A Preferred Stock Purchase Agreements between the Company and Axys
dated as of June 1, 1998 and February 2, 1999, respectively; the Common Stock
Purchase Agreement between the
3.
<PAGE> 4
Company and Jerry Caulder, dated as of April 30, 1998; the Shareholders
Agreement; and the Company's 1998 Equity Incentive Plan (pursuant to which
options to purchase 556,000 shares of Common Stock and 650,000 shares of Common
Stock pursuant to restricted stock grants are outstanding as of the date of this
Agreement), and other than as contemplated by or in connection with that certain
letter of intent dated January 22, 1999 between Global Agro, Inc. and the
Company; there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
shareholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. When issued in compliance
with the provisions of this Agreement and the Restated Articles, the Shares and
the Conversion Shares will be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances other than liens and encumbrances
created by or imposed upon Purchaser; provided, however, that the Shares and the
Conversion Shares may be subject to restrictions on transfer under the Company's
Bylaws or state and/or federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.
4.3 AUTHORIZATION; BINDING OBLIGATIONS OF THE COMPANY. All corporate
action on the part of the Company, its officers, directors and shareholders
necessary for the authorization of this Agreement, the performance of all
obligations of the Company hereunder at the Initial Closing and the Subsequent
Closings and the authorization, sale, issuance and delivery of the Shares
pursuant hereto and the Conversion Shares pursuant to the Restated Articles has
been taken or will be taken prior to the Initial Closing. The Agreement, when
executed and delivered, will be a valid and binding obligation of the Company
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; and (b) general
principles of equity that restrict the availability of equitable remedies.
4.4 AGREEMENTS; ACTION.
Except for the agreements referred to in Section 4.2 above,
agreements explicitly contemplated hereby and pursuant to the Employment
Agreement by and between the Company and Jerry Caulder, dated April 30, 1998, as
amended by Amendment No. 1 to Employment Agreement dated March 26, 1999, and
agreements between the Company and its employees with respect to the sale, or
the issuance of options and restricted stock awards providing for the sale, of
the Company's Common Stock, pursuant to the Company's 1998 Equity Incentive
Plan, there are no agreements, understandings or proposed transactions between
the Company and any of its officers, directors, affiliates or any affiliate
thereof.
4.5 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS.
Each employee, officer and consultant of the Company has executed a
Proprietary Information and Inventions Agreement in the form previously approved
by Axys and the other prior purchasers of the Company's Series A Preferred
Stock.
(b) Axys, as Put Grantor, hereby represents and warrants to Purchaser
as of the date of this Agreement as follows:
4.
<PAGE> 5
4.6 ORGANIZATION, GOOD STANDING AND QUALIFICATION OF AXYS. Axys is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Axys has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to issue and sell the Put Option and Put Option Shares, to carry
out the provisions of this Agreement relating to it as Put Grantor and to carry
on its business as presently conducted and as presently proposed to be
conducted.
4.7 CAPITALIZATION OF AXYS. The authorized capital stock of Axys,
as of March 31, 1999, consisted of 50,000,000 shares of Common Stock, $.001 par
value per share, 30,321,328 shares of which were then issued and outstanding;
10,000,000 shares of Preferred Stock $.001 par value per share, 500,000 of which
are designated as Series A Junior Participating Preferred Stock and none of
which were then issued and outstanding. All issued and outstanding shares of the
Company's Common Stock and the related Preferred Share Purchase Rights have been
duly authorized and validly issued. The rights, preferences, privileges and
restrictions of the shares of the Company's Common Stock and the related
Preferred Share Purchase Rights are as stated in Axys' public filings. The Put
Option Shares have been or, by the Initial Closing, will have been, duly and
validly reserved for issuance. When issued in compliance with the provisions of
this Agreement and Axys' public filings, the Put Option Shares will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances other than liens and encumbrances created by or imposed upon
Purchaser; provided, however, that the Put Option Shares may be subject to
restrictions on transfer under state and/or federal securities laws, as set
forth herein, or as otherwise required by such laws at the time a transfer is
proposed.
4.8 AUTHORIZATION; BINDING OBLIGATIONS OF AXYS. All corporate
action on the part of Axys, its officers, directors and stockholders necessary
for the authorization of this Agreement, the performance of all obligations of
Axys as Put Grantor hereunder at the Initial Closing and the Subsequent Closings
and the authorization, sale, issuance and delivery of the Put Option and the Put
Option Shares pursuant hereto has been taken or will be taken prior to the
Initial Closing. The Agreement, when executed and delivered, will be a valid and
binding obligation of Axys enforceable in accordance with its terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights;
and (b) general principles of equity that restrict the availability of equitable
remedies.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
Purchaser hereby represents and warrants to the Company as follows:
5.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out its provisions. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to the Initial Closing. Upon its execution and
delivery, this Agreement will be a valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, and (b) general
principles of equity that
5.
<PAGE> 6
restrict the availability of equitable remedies
5.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Shares, the Conversion Shares, the Put Option nor the Put Option Shares have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"). Purchaser also understands that the Shares and the Put Option are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon Purchaser's representations contained in this
Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) and
the Put Option (or the Put Option Shares) are registered pursuant to the
Securities Act, or an exemption from registration is available. Purchaser
understands that the Company has no present intention of registering the Shares,
the Conversion Shares, or any shares of its Common Stock and that Axys has no
present intention of registering the Put Option and only intends to register the
Put Option Shares pursuant to the terms and provisions of the Registration
Rights Agreement. Purchaser also understands that there is no assurance that any
exemption from registration under the Securities Act will be available and that,
even if available, such exemption may not allow Purchaser to transfer all or any
portion of the Shares or the Conversion Shares or the Put Option or the Put
Option Shares under the circumstances, in the amounts or at the times Purchaser
might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Shares, the Conversion Shares, the Put Option and the Put Option Shares for
Purchaser's own account for investment only, and not with a view towards their
distribution; provided that Purchaser may transfer the Shares and the Conversion
Shares to an affiliate of Purchaser reasonably acceptable to Axys, may transfer
the Put Option as provided herein and may transfer the Put Option Shares
(subject to the provisions of the Side Letter) as permitted by applicable law or
pursuant to the Registration Rights Agreement.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in this Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with the
directors of the Company. Purchaser has also had the opportunity to ask
questions of and receive answers from the Company and its management regarding
the terms and conditions of this investment.
6.
<PAGE> 7
(f) RULE 144. Purchaser acknowledges and agrees that the Shares
and the Put Option, and, if issued, the Conversion Shares and the Put Option
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
Purchaser has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act as in effect from time to time, which permits limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: the availability of certain
current public information about the Company, the resale occurring following the
required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.
5.3 TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees that
the Shares and the Put Option and, if issued, the Conversion Shares and the Put
Option Shares are subject to restrictions on transfer as set forth in the
Company's Bylaws.
6. CONDITIONS TO CLOSINGS.
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSINGS.
Purchaser's obligations to purchase the Shares and the Put Option at the Initial
Closing and the Subsequent Closing are subject to the satisfaction, at or prior
to the Initial Closing Date, of the following conditions, any one or more of
which may be waived in writing by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company and Axys in
Section 4 hereof shall be true and correct in all material respects as of the
Initial Closing Date with the same force and effect as if they had been made as
of the Initial Closing Date, with the exception that (i) the Company may have
entered into subsequent to the date hereof an agreement and plan of merger and
reorganization with Global Agro, Inc. pursuant to which the Company would be
obligated to issue shares of Series B Preferred Stock of the Company to the
stockholders of Global Agro, Inc. aggregating up to 27.5% of the outstanding
shares of the Company and restricted stock awards and stock options as
contemplated in such agreement, and the Company and Axys shall have performed
all obligations and conditions herein required to be performed or observed by it
on or prior to the Initial Closing.
(b) LEGAL INVESTMENT. On the Initial Closing Date, the sale and
issuance of the Shares and the Put Option and the potential issuance of the
Conversion Shares and the Put Option Shares shall be legally permitted by all
laws and regulations to which Purchaser, the Company and Axys are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company and Axys shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement, except for
such as may be properly obtained subsequent to the Closing.
(d) CORPORATE DOCUMENTS. The Company and Axys shall have
delivered to Purchaser or its counsel, copies of all corporate documents of the
Company and Axys, respectively, as Purchaser shall reasonably request.
7.
<PAGE> 8
(e) RESERVATION OF CONVERSION SHARES. The Conversion Shares
shall have been duly authorized and reserved for issuance by the Company and the
Put Option Shares shall have been duly authorized and reserved for issuance by
Axys.
(f) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Initial
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Purchaser and its
counsel, and the Purchaser and its counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
(g) SHAREHOLDERS AGREEMENT. The execution and delivery by the
Company of a counterpart signature page to the Shareholders Agreement as
contemplated by Section 8.8 of the Shareholders Agreement.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at the Initial Closing and the
Subsequent Closings and Axys' obligation to issue the Put Option are subject to
the satisfaction, on or prior to the Initial Closing, of the following
conditions, any one or more of which may be waived in writing by the Company:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by Purchaser in Section 5 hereof shall be true and correct in
all material respects at the date of the Initial Closing, with the same force
and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by Purchaser on or before the Initial Closing, including but
not limited to the tender of the purchase price for the Shares.
(c) CONSENTS, PERMITS AND WAIVERS. The Company and Axys shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement, except for
such as may be properly obtained subsequent to the Initial Closing.
(d) SHAREHOLDERS AGREEMENT. The execution and delivery by the
Purchaser of a counterpart signature page to the Shareholders Agreement as
contemplated by Section 8.8 of the Shareholders Agreement.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and performed entirely in California.
7.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by Purchaser and the
closings of
8.
<PAGE> 9
the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, and administrators of the parties hereto and
shall inure to the benefit of and be enforceable by each person who shall be a
holder of the Shares from time to time.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits hereto and the
letter dated March 29, 1999, from Jerry Caulder on behalf of the Company to the
Purchaser constitute the full and entire understanding and agreement between the
parties with regard to the subject matter hereof and no party shall be liable or
bound to any other in any manner by any representations, warranties, covenants
and agreements, except as specifically set forth herein and therein.
7.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified
and any provision hereof may be waived only upon the written consent of the
Company, the Purchaser and Axys.
7.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Restated
Articles, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring.
7.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Company, the Purchaser or Axys at the address as set forth on the signature page
hereof for such party or at such other address as a party may designate by ten
days advance written notice to the other parties hereto.
7.9 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
9.
<PAGE> 10
7.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.12 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as the identity of the parties hereto may require.
7.13 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
10.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this SERIES A
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASER:
XYRIS CORPORATION MISSOURI SOYBEAN
MERCHANDISING COUNCIL
By: /s/ JERRY CAULDER By: /s/ DAVID M. HAGGARD
Jerry Caulder Name: David M. Haggard
President Its: Chairman
Address: 12626 High Bluff Drive, Address: P. O. Box 104778
Suite 250 3337 Emerald Lane
San Diego California 92130 Jefferson City, Missouri 65110
Attn: President Attention: Dale K. Ludwig,
FAX: (619) 794-5525 Executive Director
FAX: (573) 635-5122
PUT GRANTOR:
AXYS PHARMACEUTICALS, INC.
By:
Print Name:
Title:
Address: 180 Kimball Way
South San Francisco, CA 94080
Attn: Chief Financial Officer
FAX: (650) 829-1001
11.
<PAGE> 12
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
SEE ATTACHED
<PAGE> 13
ARTICLES OF AMENDMENT
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
AGXYS
The undersigned certify that:
1. They are the President and the Secretary, respectively, of Agxys, a
California corporation.
2. The language of "ARTICLE 1. NAME" of the Amended and Restated Articles
of Incorporation, which now reads "The name of the corporation is Agxys" is
amended to read "The name of the corporation is Xyris Corporation".
3. The foregoing amendments of the Amended and Restated Articles of
Incorporation has been duly approved by the board of directors of this
corporation.
4. The foregoing amendment of the Amended and Restated Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902, California Corporations Code. The total number of
each class of outstanding shares of the corporation is 300,000 shares of Common
Stock and 2,200,000 shares of Series A Preferred Stock. The number of shares
voting in favor of the amendment equaled or exceeded the vote required. The
percentage required was more than 50%.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
DATED: July 2, 1998.
/s/ JERRY CAULDER
--------------------------------
Jerry Caulder
President
/s/ ROGER SALQUIST
-------------------------------
Roger Salquist
Secretary
OFFICE OF THE SECRETARY OF STATE
<PAGE> 14
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AGXYS
Jerry Caulder and Roger Salquist certify that:
A. They are the President and Secretary, respectively, of Agxys, a
California corporation (the "corporation").
B. The Articles of Incorporation of this corporation are amended and
restated to read as follows:
ARTICLE 1. NAME
The name of the corporation is Agxys.
ARTICLE 2. PURPOSE
The purpose of this corporation is to engage in any lawful acts of
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business
or the practice of a profession permitted to be incorporated by the California
Corporation Code (the "Code").
ARTICLE 3. AUTHORIZED CAPITAL
The corporation is authorized to issue two (2) classes of shares,
designated as "Common Stock" and "Preferred Stock," respectively. The total
number of shares of Common Stock which this corporation is authorized to issue
is 10,000,000 and the total number of shares of Preferred Stock which this
corporation is authorized to issue is
<PAGE> 15
8,200,000. All of the shares of Preferred Stock are designated as "Series A
Preferred Stock" (the "Series A Preferred").
ARTICLE 4. RIGHTS, PREFERENCES, PRIVILEGES
AND RESTRICTIONS OF CAPITAL STOCK
The relative rights, preferences, privileges, and restrictions granted
to or imposed upon the respective classes of the shares of capital stock or the
holders thereof are as follows:
1. DIVIDEND PREFERENCE.
The holders of Series A Preferred shall be entitled to receive, out of
funds legally available therefor, dividends at an annual rate of 6% of the
Original Series A Issue Price (as defined in Section 2(a)(i) below) for each
outstanding share of Series A Preferred (as adjusted for combinations,
consolidations, subdivisions, or stock splits with respect to such shares) held
by them, payable when and if declared by the Board of Directors, in preference
and priority to the payment of dividends on any shares of Common Stock (other
than those payable solely in Common Stock or involving the repurchase of shares
of Common Stock from terminated employees, officers, directors, or consultants
pursuant to contractual arrangements). In the event dividends are paid to the
holders of Series A Preferred that are less than the full amounts to which such
holders are entitled pursuant to this Section 1, such holders shall share
ratably in the total amount of dividends paid according to the respective
amounts due such holder if such dividends were paid in full. After payment of
dividends to the holders of Series A Preferred,
2
<PAGE> 16
dividends may be declared and distributed among all holders of Common Stock;
provided, however, that no dividend may be declared and distributed among
holders of Common Stock at a rate greater than the rate at which dividends are
paid to the holders of Series A Preferred based on the number of shares of
Common Stock into which such shares of Series A Preferred are convertible (as
adjusted for stock splits and the like) on the date such dividend is declared.
The dividends payable to the holders of the Series A Preferred shall not be
cumulative, and no right shall accrue to the holders of the Series A Preferred
by reason of the fact that dividends on the Series A Preferred are not declared
or paid in any previous fiscal year of the corporation, whether or not the
earnings of the corporation in that previous fiscal year were sufficient to pay
such dividends in whole or in part. In the event that the corporation shall have
declared but unpaid dividends outstanding immediately prior to, and in the event
of, a conversion of Series A Preferred (as provided in Section 4 hereof), the
corporation shall, at the option of the corporation, pay in cash to the
holder(s) of the Series A Preferred subject to conversion the full amount of any
such dividends or allow such dividends to be converted into Common Stock in
accordance with, and pursuant to the terms specified in, Section 4 hereof.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution, or winding up of the
corporation, whether voluntary or not, or the sale, lease, assignment, transfer,
conveyance or disposal of all or substantially all of the assets of the
corporation, or the acquisition of this corporation by another entity by means
of consolidation, corporate reorganization or merger, or other transaction or
series of related transactions in which more than 50% of
3
<PAGE> 17
the outstanding voting power of this corporation is disposed of (each a
"Liquidation Event"), distributions to the shareholders of the corporation shall
be made in the following manner:
(i) Each holder of Series A Preferred shall be entitled to receive,
prior and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of the Common Stock, by reason of their
ownership of such stock, the greater of (x) $3.33 (the "Original Series A Issue
Price") multiplied by two per share, and (y) the amount that would have been
received upon the conversion of the Series A Preferred, (each as adjusted for
combinations, consolidations, subdivisions, or stock splits with respect to such
shares) for each share of Series A Preferred then held by such holder, plus an
amount equal to all declared but unpaid dividends on such shares of Series A
Preferred (collectively, the "Series A Preference"). If, upon the occurrence of
a Liquidation Event, the assets and funds available to be distributed among the
holders of the Series A Preferred shall be insufficient to permit the payment to
such holders of the full preferential amount, then the entire assets and funds
of the corporation legally available for distribution to such holders shall be
distributed ratably based on the total preferential amount due each such holder
under this Section 2(a).
(b) Each holder of Series A Preferred shall be deemed to have consented to
distributions made by the corporation in connection with the repurchase of
shares of Common Stock issued to or held by officers, directors, or employees
of, or consultants to, the corporation or its subsidiaries upon termination of
their employment or services
4
<PAGE> 18
pursuant to agreements (whether now existing or hereafter entered into)
providing for the right of said repurchase between the corporation and such
persons.
(c) The value of securities and property paid or distributed pursuant to
this Section 2 shall be computed at fair market value at the time of payment to
the corporation or at the time made available to shareholders, all as determined
by the Board of Directors in the good faith exercise of its reasonable business
judgment, provided that (i) if such securities are listed on any established
stock exchange or a national market system, their fair market value shall be the
closing sales price for such securities as quoted on such system or exchange (or
the largest such exchange) for the date the value is to be determined (or if
there are no sales for such date, then for the last preceding business day on
which there were sales), as reported in the Wall Street Journal or similar
publication, and (ii) if such securities are regularly quoted by a recognized
securities dealer but selling prices are not reported, their fair market value
shall be the mean between the high bid and low asked prices for such securities
on the date the value is to be determined (or if there are no quoted prices for
such date, then for the last preceding business day on which there were quoted
prices).
(d) Nothing hereinabove set forth shall affect in any way the right of
each holder of Series A Preferred to convert such shares at any time and from
time to time into Common Stock in accordance with Section 4 hereof.
3. VOTING RIGHTS.
(a) Except as otherwise required by law or hereunder, the holder of each
share of Common Stock issued and outstanding shall have one vote and the holder
of each
5
<PAGE> 19
share of Series A Preferred shall be entitled to the number of votes equal to
the number of shares of Common Stock into which such share of Series A Preferred
could be converted at the record date for determination of the shareholders
entitled to vote on such matters, or, if no such record date is established, at
the date such vote is taken or any written consent of shareholders is solicited,
such votes to be counted together with all other shares of stock of the
corporation having general voting power and not separately as a class.
Fractional votes by the holders of Series A Preferred shall not, however, be
permitted and any fractional voting rights shall (after aggregating all shares
into which shares of Series A Preferred held by each holder could be converted)
be rounded to the nearest whole number (with one-half being rounded upward).
Holders of Common Stock and Series A Preferred shall be entitled to notice of
any shareholders' meeting in accordance with the Bylaws of the corporation.
4. CONVERSION RIGHTS.
The holders of Series A Preferred shall have conversion rights
as follows:
(a) RIGHT TO CONVERT. Each share of Series A Preferred shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the corporation or any transfer agent
for such Series A Preferred, as follows:
(i) Each share of Series A Preferred shall be convertible
into such number of fully-paid and non-assessable shares of Common Stock as is
determined by dividing the Original Series A Issue Price by the then applicable
Conversion Price for such Series A Preferred, determined as hereinafter
provided, in effect at the time of conversion. The price at which shares of
Common Stock shall be deliverable upon
6
<PAGE> 20
conversion of the Series A Preferred (the "Series A Conversion Price") shall
initially be the Original Series A Issue Price. The initial Series A Conversion
Price shall be subject to adjustment as provided in accordance with Section 4(d)
of this Article 4.
(b) AUTOMATIC CONVERSION. Each share of Series A Preferred shall
automatically be converted into shares of Common Stock at the then effective
applicable Conversion Price upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the corporation to the public with aggregate proceeds to the
corporation in excess of $15,000,000 (before deduction for underwriters
commissions and expenses) and a per share price permitting the listing of such
stock on the National Association of Securities Dealers, Inc. National Market
(or any successor thereto) (such event is an "Automatic Conversion"). In the
event of an Automatic Conversion of the Series A Preferred upon a public
offering as aforesaid, the person(s) entitled to receive the Common Stock
issuable upon such conversion of such Series A Preferred shall not be deemed to
have converted such Series A Preferred until immediately prior to the closing of
such sale of securities.
(c) MECHANICS OF CONVERSION. No fractional shares of Common Stock shall be
issued upon the conversion of Series A Preferred. In lieu of any fractional
shares to which the holder would otherwise be entitled, the corporation shall
pay cash equal to such fraction multiplied by the then effective Series A
Conversion Price. Before any holder of Series A Preferred shall be entitled to
convert the same into full shares of
<PAGE> 21
Common Stock and to receive certificates therefor, such holder shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Series A Preferred, and shall give
written notice to the corporation at such office that such holder elects to
convert the same; provided, however, that in the event of an Automatic
Conversion pursuant to Section 4(b), the outstanding shares of Series A
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the corporation or its transfer agent, and provided
further that the corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such Automatic Conversion
unless the certificates evidencing such shares of Series A Preferred are either
delivered to the corporation or its transfer agent as provided above, or the
holder notifies the corporation or its transfer agent that such certificates
have been lost, stolen, or destroyed and executes an agreement satisfactory to
the corporation to indemnify the corporation from any loss incurred by it in
connection with such certificates. The corporation shall, as soon as practicable
after such delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series A
Preferred, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid and a check payable to
the holder in the amount of any cash amounts payable as the result of a
conversion into fractional shares of Common Stock. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such
8
<PAGE> 22
surrender of the shares of Series A Preferred to be converted, or in the case
of an Automatic Conversion, on the date of closing of the offering, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
(d) ADJUSTMENTS TO CONVERSION PRICE.
(i) ADJUSTMENTS FOR DIVIDENDS, SPLITS, SUBDIVISIONS,
COMBINATIONS, OR CONSOLIDATION OF COMMON STOCK. In the event the outstanding
shares of Common Stock shall be increased by a stock dividend payable in Common
Stock, stock split, subdivision, or other similar transaction occurring after
the filing of these Amended and Restated Articles of Incorporation, into a
greater number of shares of Common Stock, the Series A Conversion Price then in
effect shall, concurrently with the effectiveness of such event, be decreased
in proportion to the percentage increase in the outstanding number of shares of
Common Stock. In the event the outstanding shares of Common Stock shall be
decreased by a reverse stock split, combination, consolidation, or other
similar transaction occurring after the filing of these Amended and Restated
Articles of Incorporation into a lesser number of shares of Common Stock, the
Series A Conversion Price then in effect shall, concurrently with the
effectiveness of such event, be increased in proportion to the percentage
decrease in the outstanding number of shares of Common Stock.
(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. In the event the
corporation at any time or from time to time makes, or fixes a record date for
the determination of
<PAGE> 23
holders of Common Stock entitled to receive, any distribution payable in
securities of the corporation other than shares of Common Stock and other than
as otherwise adjusted in this Section 4, then and in each such event provision
shall be made so that the holders of Series A Preferred shall receive upon
conversion thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the corporation which they
would have received had their Series A Preferred been converted into Common
Stock on the date of such event and had they thereafter, during the period from
the date of such event to and including the date of conversion, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this Section 4 with
respect to the rights of the holders of the Series A Preferred.
(iii) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the
Common Stock issuable upon conversion of the Series A Preferred shall be changed
into the same or a different number of shares of any other class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares provided for above), the Series A
Conversion Price then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately adjusted such that
the Series A Preferred shall be convertible into, in lieu of the number of
shares of Common Stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock equivalent
to the number of shares of Common Stock that would have been subject to
10
<PAGE> 24
receipt by the holders upon conversion of such Series A Preferred immediately
before that change.
(iv) ADJUSTMENTS ON ISSUANCE OF ADDITIONAL STOCK. If the
corporation shall issue "Additional Stock" (as defined below) for a
consideration per share less than the Series A Conversion Price in effect on
the date and immediately prior to such issue, then and in such event, the
Series A Conversion Price shall be reduced concurrently with such issue, to a
price (calculated to three decimal places) determined by multiplying such
Series A Conversion Price by a fraction (i) the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of Common Stock which the aggregate consideration
received by the corporation for the total number of Additional Stock so issued
(or deemed to be issued) would purchase at such Series A Conversion Price; and
(ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of
Additional Stock so issued; provided that for purposes of this Section
4(d)(iv), all shares of Common Stock issuable upon conversion of the
outstanding Series A Preferred Stock, all shares of Common Stock issuable upon
exercise of outstanding stock options, all shares of Common Stock reserved for
issuance under the corporation's current employee equity incentive plan, and
all shares of Common Stock issuable upon exercise or conversion of any other
outstanding security or debt instrument of the corporation shall be deemed to
be Common Stock outstanding. For purposes of this subsection (iv) "Additional
Stock" shall mean all Common Stock issued by the
11
<PAGE> 25
corporation after the date on which the first share of Series A Preferred was
issued (the "Series A Original Issue Date") other than Common Stock issued or
issuable at any time (a) upon conversion of the Preferred Stock, (b) up to
1,500,000 shares of Common Stock to officers, directors, and employees of, and
consultants to, the corporation after the Series A Original Issue Date as
designated and approved by the Board of Directors; (c) as a dividend or
distribution with respect to the Series A Preferred; (d) in connection with
equipment leasing or bank financing transactions approved by the corporation's
Board of Directors; or (e) as described in subparagraphs (i), (ii), and (iii) of
this Section 4(d).
For the purpose of making any adjustment in the Series A Conversion Price
as provided above, the consideration received by the corporation for any issue
or sale of Common Stock will be computed:
(1) to the extent it consists of cash, as the amount of cash
received by the corporation before deduction of any offering
expenses payable by the corporation and any underwriting or
similar commissions, compensation, or concessions paid or allowed
by the corporation on connection with such issue or sale;
(2) to the extent it consists of property other than cash, at the
fair market value of that property as determined in good faith by
the corporation's Board of Directors; and
12
<PAGE> 26
(3) if Common Stock is issued or sold together with other
stock or securities or other assets of the corporation
for consideration which covers both, as the portion of
the consideration so received that may be reasonably
determined in good faith by the Board of Directors to be
allocable to such Common Stock.
If the corporation (1) grants any rights or options to subscribe for,
purchase, or otherwise acquire shares of Common Stock, or (2) issues or sells
any security convertible into shares of Common Stock, then, in each case, the
price per share of Common Stock issuable on the exercise of the rights or
options or the conversion of the securities will be determined by dividing the
total amount, if any, received or receivable by the corporation as
consideration for the granting of the rights or options or the issue or sale of
the convertible securities, plus the minimum aggregate amount of additional
consideration payable to the corporation on exercise or conversion of the
securities, by the maximum number of shares of Common Stock issuable on the
exercise of conversion. Such granting or issue or sale will be considered to be
an issue or sale for cash of the maximum number of shares of Common Stock
issuable on exercise or conversion at the price per share determined under this
subsection, and the Series A Conversion Price will be adjusted as above
provided to reflect (on the basis of that determination) the issue or sale. No
further adjustment of such Series A Conversion Price will be made as a result of
13
<PAGE> 27
the actual issuance of shares of Common Stock on the exercise of any such
rights or options or the conversion of any such convertible securities.
Upon the redemption or repurchase of any such securities or the
expiration or termination of the right to convert into, exchange for, or
exercise with respect to, Common Stock, the Series A Conversion Price will be
readjusted to such price as would have been obtained had the adjustment made
upon their issuance been made upon the basis of the issuance of only the number
of such securities as were actually converted into, exchanged for, or exercised
with respect to, Common Stock. If the purchase price or conversion or exchange
rate provided for in any such security changes at any time, then, upon such
change becoming effective, the Series A Conversion Price then in effect will be
readjusted forthwith to such price as would have been obtained had the
adjustment made upon the issuance of such securities been made upon the basis
of (1) the issuance of only the number of shares of Common Stock theretofore
actually delivered upon the conversion, exchange or exercise of such
securities, and the total consideration received therefor, and (2) the granting
or issuance, at the time of such change, of any such securities then still
outstanding for the consideration, if any, received by the corporation therefor
and to be received on the basis of such changed price or rate.
(e) NO IMPAIRMENT. Except as provided in Section 6 of this Article
4, the corporation will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or
14
<PAGE> 28
performance of any of the terms to be observed or performed hereunder by
the corporation but will at all times in good faith assist in the carrying out
of all the provisions of this Section 4 and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of
the holders of the Preferred Stock against impairment.
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this Section 4, the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred 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 of any holder of Series
A Preferred, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the applicable
Conversion Price for such series of Series A Preferred at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of such Series
A Preferred.
(g) ISSUE TAXES. The corporation shall pay any and all issue and other
taxes (other than income taxes) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of Series A
Preferred pursuant hereto; provided, however, that the corporation shall not be
obligated to pay any transfer taxes
15
<PAGE> 29
resulting from any transfer requested by any holder in connection with any such
conversion.
(h) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Series A Preferred, the
corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to its Articles of
Incorporation.
(i) STATUS OF CONVERTED STOCK. In case any Series A Preferred shall be
converted pursuant to this Section 4, the shares to converted shall resume the
status of authorized but unissued shares of Preferred Stock undesignated as to
series.
5. REDEMPTION RIGHTS.
The Series A Preferred shall be nonredeemable.
6. COVENANTS.
(i) During such time as Axys Pharmaceuticals, Inc., a Delaware
corporation ("Axys"), is the registered holder of at least 50% of the votes of
the
16
<PAGE> 30
corporation, calculated as provided in Section 3(a) of this Article 4, and in
addition to any other rights provided by law, this corporation shall not,
without first obtaining the affirmative vote or written consent of both Axys
and the holders of an additional 3% of the votes of the corporation not being
held by Axys, calculated in the manner as provided in Section 3(a) of this
Article 4:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Articles of Incorporation or Bylaws if such action would alter or
change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, Series A Preferred;
(b) authorize or issue shares of any class or series of stock having any
preference or priority as to dividends or redemption rights, liquidation
preferences, conversion rights, or voting rights, superior to or on a parity
with any preference or priority of Series A Preferred;
(c) authorize or issue any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having option rights to
purchase, any shares of stock of this corporation having any preference or
priority as to dividends or redemption rights, liquidation preferences,
conversion rights, or voting rights, superior to or on a parity with any
preference or priority of Series A Preferred;
(d) reclassify any shares of capital stock of this corporation into
shares having any preference or priority as to dividends or redemption rights,
liquidation preferences,
<PAGE> 31
conversion rights, or voting rights, superior to or on a parity with any
preference or priority of Series A Preferred;
(e) apply any of its assets to the redemption, retirement, purchase or
acquisition, directly or indirectly, through subsidiaries (as defined in Section
425 of the Internal Revenue Code of 1986 (the "Tax Code")) or otherwise, of any
shares of any class or series of Common Stock, except from employees, advisors,
officers, directors and consultants of, and persons performing services for,
this corporation or its subsidiaries on terms approved by the Board of Directors
upon termination of employment or association;
(f) do any act or thing which would result in taxation of the holders of
shares of the Series A Preferred under Section 305 of the Tax Code (or any
comparable provision of the Tax Code as hereafter from time to time amended);
(g) engage in any transaction or series of related transactions
constituting a Liquidation Event (excluding a voluntary dissolution, the
approval of which shall be as governed by Section 1900 of the Code);
(h) increase or decrease the authorized number of shares of Series A
Preferred; or
(i) make any change in the size of the Board of Directors of the
corporation.
7. RESIDUAL RIGHTS.
All rights accruing to the outstanding shares of the corporation not
expressly provided for to the contrary herein shall be vested in the Common
Stock. The Common Stock shall not be redeemable.
18
<PAGE> 32
ARTICLE 5. LIMITATION OF DIRECTORS' LIABILITY
The liability of directors of the corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law. If, after the
effective date of this Article, California law is amended in a manner which
permits a corporation to limit the monetary or other liability of its directors
in such case to a greater extent than is permitted on such effective date, the
reference in this Article to "California law" shall to that extent be deemed to
refer to California as so amended.
ARTICLE 6. INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND OTHER AGENTS
1. INDEMNIFICATION OF DIRECTORS.
The corporation shall, to the maximum extent and in a manner permitted by
the Code, indemnify each of its Directors against expenses (as defined in
Section 317(a) of the Code), judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding (as defined
in Section 317(a) of the Code), arising by reason of the fact that such person
is or was a Director of the corporation. For purposes of this Article 6, a
"Director" of the corporation includes any person (i) who is or was a Director
of the corporation, (ii) who is or was serving at the request of the corporation
as a director of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was a director of a corporation
which was a predecessor corporation of the corporation or of another enterprise
at the request of such predecessor corporation.
19
<PAGE> 33
2. INDEMNIFICATION OF OTHERS.
The corporation shall have the power, to the extent and in the
manner permitted by the Code, to indemnify each of its employees, officers, and
agents (other than Directors) against expenses (as defined in Section 317(a) of
the Code), judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding (as defined in Section
317(a) of the Code), arising by reason of the fact that such person is or was
an employee, officer, or agent of the corporation. For purposes of this Article
6, an "employee" or "officer" or "agent" of the corporation (other than a
Director) includes any person (i) who is or was an employee, officer, or agent
of the corporation, (ii) who is or was serving at the request of the
corporation as an employee, officer, or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or (iii)
who was an employee, officer or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
3. PAYMENT OF EXPENSES IN ADVANCE.
Expenses and attorneys' fees incurred in defending any civil or criminal
action or proceeding for which indemnification is required pursuant to Section
1 of this Article 6, or if otherwise authorized by the Board of Directors,
shall be paid by the corporation in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or on behalf of the
indemnified party to repay such amount if it shall ultimately be determined
that the indemnified party is not entitled to be indemnified as authorized in
this Article 6.
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<PAGE> 34
4. INDEMNITY NOT EXCLUSIVE.
The indemnification provided by this Article 6 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any Bylaw, agreement, vote of shareholders or Directors or
otherwise, both as to action in an official capacity and as to action in
another capacity while holding such office. The rights to indemnity hereunder
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 person.
5. INSURANCE INDEMNIFICATION.
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a Director, officer, employee or agent of
the corporation against any liability asserted against or incurred by such
person in such capacity or arising out of that person's status as such, whether
or not the corporation would have the power to indemnify that person against
such liability under the provisions of this Article 6.
6. CONFLICTS.
No indemnification or advance shall be made under this Article 6, except
where such indemnification or advance is mandated by law or the order, judgment
or decree of any court of competent jurisdiction, in any circumstance where it
appears:
(a) That it would be inconsistent with a provision of these Articles, a
resolution of the shareholders or an agreement in effect at the time of the
accrual of the alleged
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<PAGE> 35
cause of the action asserted in the proceeding in which the expenses were
incurred or other amounts were paid, which prohibits or otherwise limits
indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by
a court in approving a settlement.
7. RIGHT TO BRING SUIT.
If a claim under this Article is not paid in full by the corporation
within 90 days after a written claim has been received by the corporation
(either because the claim is denied or because no determination is made), the
claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and if successful in whole or in part,
the claimant shall also be entitled to be paid the expenses of prosecuting such
claim. The corporation shall be entitled to raise as a defense to any such
action that the claimant has not met the standards of conduct that make it
permissible under the Code for the corporation to indemnify the claimant for
the claim. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its shareholders) to have a
determination prior to the commencement of such action that indemnification of
the claimant is permissible in the circumstances because he or she has met the
applicable standard of conduct, if any, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or
its shareholders) that the claimant has not met the applicable standard of
conduct, shall be a defense to such action or create a presumption for the
purposes of such action that the claimant has not met the applicable standard
of conduct.
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<PAGE> 36
8. INDEMNITY AGREEMENTS.
The Board of Directors is authorized to enter into a contract with any
Director, officer, employee or agent of the corporation, or any person who 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, including employee benefit plans, or any person who was a Director,
officer, employee or agent of a corporation which was a predecessor corporation
of the corporation or of another enterprise at the request of such predecessor
corporation, providing for indemnification rights equivalent to or, if the Board
of Directors so determines and to the extent permitted by applicable law,
greater than, those provided for in this Article 6.
9. AMENDMENT, REPEAL OR MODIFICATION.
Any amendment, repeal or modification of any provision of this Article
6 shall not adversely affect any right or protection of a Director or agent of
the corporation existing at the time of such amendment, repeal or modification.
10. AMENDMENT OF CALIFORNIA LAW.
If, after the effective date of this Article, California law is
amended in a manner which permits a corporation to authorize indemnification of,
or advancement of such defense expenses to, its directors or other persons, in
any such case to a greater degree than is permitted on such effective date, the
references in this Article to "California law" shall to that extent be deemed to
refer to California as so amended
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<PAGE> 37
C. The foregoing Amended and Restated Articles of Incorporation has been
duly approved by the Board of Directors.
D. The foregoing Amended and Restated Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance with Section
902 of the Code. The corporation has two classes of stock outstanding. The
total number of outstanding shares of Common Stock of this corporation is
300,000 and the total number of outstanding shares of Preferred Stock of the
corporation is none. The number of shares voting in favor of the amendment and
restatement equaled or exceeded the vote required, such required vote being more
than 50% of the outstanding shares of Common Stock.
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<PAGE> 38
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Executed at San Francisco, California.
Date: June 1, 1999
/s/ JERRY CAULDER
---------------------------------------
Jerry Caulder, President
/s/ ROGER SALQUIST
---------------------------------------
Roger Salquist, Secretary
[SEAL]
<PAGE> 39
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT B
PUT OPTION SUBSCRIPTION FORM
To: Axys Pharmaceuticals, Inc.
180 South Kimball Way
South San Francisco, California 94080
Attn: Chief Financial Officer
MISSOURI SOYBEAN MERCHANDISING COUNCIL, a Missouri not-for-profit
corporation ("MSMC"), the holder of the Put Option (the "Put Option") described
in Section 3 of that certain Series A Preferred Stock Purchase Agreement dated
June 4, 1999, by and among Xyris Corporation, a California corporation
("Xyris"), MSMC and Axys Pharmaceuticals, Inc., a Delaware corporation ("Axys"),
hereby elects to exercise the right represented by the Put Option to sell to
Axys 300,300 shares of Series A Preferred Stock of Xyris held by MSMC in
exchange for that number of shares of Axys Common Stock having an aggregate
market value of $1,000,000, rounded down to the nearest whole number of shares,
at the "market price" as defined in the Put Option.
MSMC hereby covenants to cause a certificate representing such
shares of Preferred Stock to be delivered to Axys upon surrender of this Put
Option Subscription Form in accordance with the Put Option.
Dated: ____________________
MISSOURI SOYBEAN MERCHANDISING COUNCIL,
a Missouri not-for-profit corporation
By:
Name:
Title:
<PAGE> 40
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 41
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is entered into as
of the ___ day of __________, ____, by and among AXYS PHARMACEUTICALS, INC., a
Delaware corporation (the "COMPANY") and the persons listed on the signature
page(s) hereto.
RECITALS
WHEREAS, the Company proposes to sell and issue shares of its Common
Stock upon exercise of put options held by the purchasers of the Series A
Preferred Stock of Xyris Corporation (the "PUT OPTIONS") pursuant to certain
Series A Preferred Stock Purchase Agreements, among the Company, Xyris
Corporation and such purchasers (the "XYRIS PURCHASE AGREEMENTS").
WHEREAS, as a condition of entering into the Xyris Purchase Agreements,
the purchasers have requested that the Company extend to them certain
registration rights as set forth below on any shares of Company Common Stock
issued upon exercise of the Put Options.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and the Xyris Purchase Agreements, the parties mutually agree as
follows:
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FORM S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities
that have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.8 hereof.
"MATERIAL ADVERSE EVENT" means an occurrence having a consequence
that either (a) is materially adverse to the business, prospects or financial
condition of the Company or (b) has a reasonable likelihood of occurring and, if
it were to occur, would be reasonably likely to materially adversely affect the
business, prospects or financial condition of the Company.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the
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<PAGE> 42
declaration or ordering of effectiveness of such registration statement.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company
issued to the purchasers of the Series A Preferred Stock of Xyris Corporation
(the "Series A Purchasers") in connection with the Xyris Purchase Agreements;
and (b) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such above-described securities. Notwithstanding the foregoing,
Registrable Securities shall not include any securities sold by a person to the
public pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned.
"REGISTRATION EXPENSES" means all expenses incurred by the Company
in complying with Section 2.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements not to exceed
twenty-five thousand dollars ($25,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or
any portion of its Registrable Securities unless and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement or such proposed disposition
is otherwise exempt from registration under the Securities Act; or
(ii) (A) The transferee has agreed in writing to be bound
by the terms of this Agreement, (B) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act.
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<PAGE> 43
(iii) Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its shareholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, (D) to an entity of which a
majority of the equity and voting interest is owned by such Holder, directly or
indirectly (an "AFFILIATE"), or (E) to the Holder's family member or trust for
the benefit of an individual Holder; provided that in each case the transferee
will be subject to the terms of this Agreement to the same extent as if he were
an original Holder hereunder.
(b) Each certificate representing Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders
of Registrable Securities in writing at least twenty-one (21) days prior to the
filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each
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<PAGE> 44
Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by it shall, within fifteen (15) days after the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.2 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders and any other
shareholders of the Company currently having registration rights on a pro rata
basis based on the total number of Registrable Securities held by the Holders
and the total number of registrable securities held by such other shareholders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall (i) reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
or (ii) reduce the amount of securities of the selling Holders included in the
registration below twenty-five percent (25%) of the total amount of securities
included in such registration, unless such registration does not include shares
of any other selling shareholders, in which event any or all of the Registrable
Securities of the Holders may be excluded in accordance with the immediately
preceding sentence. In no event will shares of any other selling shareholder
(other than those presently entitled to registration rights) be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities proposed to be sold
in the offering. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration. For any Holder which is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing person shall be deemed to be a single "Holder",
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
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<PAGE> 45
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.3 hereof.
2.3 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders of Registrable Securities a written request that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other holders of registrable
securities; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the registrable securities of any other holder or
holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.3:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than one million dollars ($1,000,000), or
(iii) if within thirty (30) days of receipt of a written
request from the Holders pursuant to this Section, the Company gives notice to
the Holders of the Company's intention to make a public offering within ninety
(90) days;
(iv) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period, or
(v) if the Company has already effected one (1)
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<PAGE> 46
registration on Form S-3 for the Holders pursuant to this Section 2.3, or
(vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
Notwithstanding the foregoing, in the event that the Holder or Holders of
Registrable Securities request the withdrawal of a registration being made
pursuant to this Section 2.3 and, in such withdrawal request, the Holder(s)
state that it first learned (within seven (7) days of the date of such
withdrawal request) of a Material Adverse Event (which is specified in
reasonable detail in such withdrawal request) not known to the Holder(s) at the
time of its request for registration of their Registrable Securities pursuant to
this Section 2.3, then the Holder(s) shall retain its rights to request
registration pursuant to this Section 2.3 as if it had not previously requested
registration hereunder.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
2.4 EXPENSES OF REGISTRATION. Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration
under Section 2.2 or 2.3 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder, shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of shares so registered.
2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period set forth in
paragraph (a) above.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the
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<PAGE> 47
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.6 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Section 2 shall terminate and be of no further force and
effect two (2) years after the date of this Agreement. In addition, a Holder's
registration rights shall expire if all Registrable Securities held by and
issuable to such Holder (and its affiliates, partners, former partners, members
and former members) may be sold under Rule 144 during any ninety (90) day
period.
2.7 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2 or 2.3 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the
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<PAGE> 48
registration of their Registrable Securities.
2.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 2.2.or 2.3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "VIOLATION") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.7(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration is being effected, indemnify and hold harmless the
Company, each of its directors, its officers and each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer, controlling
person, underwriter or other such Holder, or partner, director, officer or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder under an instrument duly executed
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<PAGE> 49
by such Holder and stated to be specifically for use in connection with such
registration; and each such Holder will pay as incurred any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.7 exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.7, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.7.
(d) If the indemnification provided for in this Section 2.7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.
10
<PAGE> 50
(e) The obligations of the Company and Holders under this
Section 2.7 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by any of the Series A Purchasers to a transferee or assignee which is
an affiliate, subsidiary, parent, general partner, limited partner, retired
partner, member or retired member of such Series A Purchaser; provided, however,
(i) such Series A Purchaser shall, within ten (10) days after such transfer,
furnish to the Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights
are being assigned and (ii) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
2.10 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH
INFORMATION. Each Holder hereby agrees that such Holder shall not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock (or other securities) of the Company held by such Holder (other
than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the
Company not to exceed ninety (90) days following the effective date of a
registration statement of the Company filed under the Securities Act; provided
that all officers and directors of the Company enter into similar agreements.
Each Holder agrees to execute and deliver such other agreements as
may be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. In addition, if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the Company, each Holder
shall provide, within ten (10) days of such request, such information as may be
required by the Company or such representative in connection with the completion
of any public offering of the Company's securities pursuant to a registration
statement filed under the Securities Act. The obligations described in this
Section 2.10 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a SEC Rule 145 transaction
on Form S-4 or similar forms that may be promulgated in the future. The Company
may impose stop-transfer instructions with respect to the shares of Common Stock
(or other securities) subject to the foregoing restriction until the end of said
ninety (90) day period.
2.11 RULE 144 REPORTING. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
11
<PAGE> 51
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144 of
the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.
12
<PAGE> 52
SECTION 3. MISCELLANEOUS
3.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated by the Xyris Purchase Agreements.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
3.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
3.4 ENTIRE AGREEMENT. This Agreement, the Xyris Purchase Agreements
and the side letters entered into in connection with the Xyris Purchase
Agreements between the Series A Purchasers who are parties hereto and the
Company (each a "SIDE LETTER") and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
3.5 SEVERABILITY. In the event one or more of the provisions of
this Agreement should, 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 this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
3.6 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may
be amended or modified only upon the written consent of the Company and each of
the holders of the Registrable Securities.
(b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the
13
<PAGE> 53
written consent of each of the holders of the Registrable Securities.
3.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
3.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or at
such other address as such party may designate by ten (10) days advance written
notice to the other parties hereto.
3.9 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
3.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
3.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.12 JOINDER. At any time after the execution of this Agreement by
the Company and any Series A Purchaser, any other Series A Purchaser who is
entitled to the rights set forth in this Agreement may become a party to this
Agreement by signing a counterpart signature page to this Agreement and
delivering such counterpart signature page to the Company who shall send a copy
thereof to any other party to this Agreement. From and after the execution and
delivery to the Company of such counterpart signature page by a Series A
Purchaser, such Series A Purchaser shall be a party to this Agreement and shall
be entitled to all of the rights of a Holder under this Agreement.
14
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have executed this REGISTRATION
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
AXYS PHARMACEUTICALS, INC. --------------------------------
By: By:
Title: Title:
--------------------------------- --------------------------
Address: 180 Kimball Way Address:
South San Francisco, CA 94080 ------------------------
Attn: Chief Financial Officer Attn:
FAX: (650) 829-1001 ---------------------------
FAX:
----------------------------
15
<PAGE> 1
EXHIBIT 10.111
FOURTH AMENDMENT TO EXPANSION LEASE
THIS FOURTH AMENDMENT TO EXPANSION LEASE ("Amendment"), dated and
effective as of March 31, 1999 (the "Effective Date"), is entered into by and
between SEQUANA THERAPEUTICS, INC., a California corporation, doing business as
AXYS PHARMACEUTICALS, INC. ("Tenant"), and ARE-11099 NORTH TORREY PINES, LLC, a
Delaware limited liability company, successor-in-interest to ALEXANDRIA REAL
ESTATE EQUITIES, INC., formerly HEALTH SCIENCE PROPERTIES, INC., a Maryland
corporation ("Landlord") in connection with the following:
A. Landlord and Tenant are parties to that certain Expansion Lease,
dated as of November 20, 1995, as amended by that certain First Amendment to
Expansion Lease dated as of October __, 1996, by that certain Second Amendment
to Expansion Lase dated as of May 20, 1997, and by that certain Third Amendment
to Expansion Lease ("Third Amendment") dated as of August 24, 1998 (as amended,
the "Lease"), pursuant to which Tenant leases from Landlord certain premises
(the "Demised Premises") in a building located at 11099 North Torrey Pines Road,
La Jolla, California (the "Building"), and more particularly described in the
Lease. All capitalized terms used but not otherwise defined herein shall have
the meanings given them in the Lease.
B. Landlord has agreed to provide a tenant improvement allowance to
Tenant for a portion of the Demised Premises, conditioned upon Tenant repaying
such tenant improvement allowance over the remainder of the term of the Lease,
and Tenant has agreed to accept such tenant improvement allowance upon such
condition.
C. Landlord and Tenant now desire to amend the Lease to reflect
Landlord's provision of the tenant improvement allowance to and the amortized
repayment thereof by Tenant upon the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and the mutual covenants contained
herein, the parties hereto hereby agree as follows:
1. AMENDMENTS TO LEASE.
1.1 Section 4.6 of the Lease is hereby amended by (i) adding the
title "Tenant Improvement Allowances:" at the beginning of such section (after
the number of the section), (ii) renumbering the existing text of Section 4.6 as
Section 4.6(a), (iii) changing all existing references in the Lease from "Tenant
Improvements" to "Suite 160 & 210 Tenant Improvements," (iv) changing all
existing references in the Lease from "TI Allowance" to "Suite 160 & 210 TI
Allowance," and (v) adding the following as Section 4.6(b):
"(b) Landlord shall provide Tenant with a tenant improvement
allowance (the "Suite 100 TI Allowance") of up to Three Hundred Thousand Dollars
($300,000) for tenant improvements which Tenant desires to make to Suite 100
(the "Suite 100 TI's"). Such amount shall be paid by Landlord to Tenant in one
lump sum payment upon: (i) lien free completion of the Suite 100 TI's, (ii)
Tenant's acceptance thereof from the contractor or contractors performing such
work, and (iii) presentation to Landlord of lien waivers, receipts for payment
and such other evidence of the payment in full of all costs and expenses of the
Suite 100 TI's as Landlord shall reasonably request. If the total cost of the
Suite 100 TI's exceeds the Suite 100 TI Allowance, the overage shall be the sole
responsibility of Tenant, and shall be at Tenant's sole cost and expense. Except
for the payment of the Suite 100 TI Allowance and as set forth in the Third
Amendment, Landlord shall have no obligation or liability of any kind with
respect to the Suite 100 TI's, which shall be subject to all of the approvals
and conditions described in Article 17 hereof with respect to Alterations
undertaken by Tenant."
<PAGE> 2
1.2 Section 5.2 of the Lease is hereby amended in its entirety,
effective from and after the Effective Date, to read as follows:
"5.2 In addition to Basic Annual Rent, Tenant agrees to pay to Landlord as
additional rent ("Additional Rent") at times hereinafter specified in this
Lease (i) Tenant's pro rata share ("Tenant's Pro Rata Share"), as set forth in
Section 2.1.6 and as may be subsequently amended, of Operating Expenses as
provided in Article 7, (ii) commencing June 1, 1999, tenant improvement rent
equal to the actual amount of the Suite 100 TI Allowance actually paid by
Landlord, fully amortized, with interest at a rate of 13% per annum, in 31
equal monthly installments commencing June 1, 1999 and ending December 1, 2001
($11,445.04 per month if the full $300,000 Suite 100 TI Allowance is used by
Tenant), and (iii) any other amounts that Tenant assumes or agrees to pay under
the provisions of this Lease that are owed to Landlord, including without
limitation the cost of utilities not paid by Tenant directly to the supplier
and any and all other sums that may become due by reason of any default of
Tenant or failure on Tenant's part to comply with the agreements, terms,
covenants and conditions of this Lease to be performed by Tenant, after notice
and lapse of applicable cure period."
2. MISCELLANEOUS:
2.1 This Amendment shall be deemed to have been executed and
delivered within the State of California, and the rights and obligations of the
parties hereto shall be construed and enforced in accordance with, and governed
by, the laws of the State of California.
2.2 This Amendment is the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions. This Amendment may
be amended only by an agreement in writing, signed by the parties hereto.
2.3 This Amendment is binding upon and shall inure to the benefit
of the parties hereto, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, assigns, heirs,
successors in interest and shareholders.
2.4 Each party has cooperated in the drafting and preparation of this
Amendment. Hence, in any construction to be made of this Amendment, the same
shall not be construed against any party.
2.5 Each term of this Amendment is contractual and not merely a
recital.
2.6 This Amendment may be executed in counterparts, and when each
party has signed and delivered at least one such counterpart, each counterpart
shall be deemed an original, and, when taken together with other signed
counterparts, shall constitute one Amendment, which shall be binding upon and
effective as to all parties.
2.7 The unenforceability of a portion of this Amendment shall not
affect the enforceability of the remainder of this Amendment.
2.8 The parties will execute all such further and additional
documents as shall be reasonable, convenient, necessary or desirable to carry
out the provisions of this Amendment.
2.9 Except as specifically amended or modified by this Amendment, the
Lease (including, without limitation, the First Amendment, the Second Amendment,
and the Third Amendment) remains in full force and effect.
<PAGE> 3
2.10 EACH PARTY ACKNOWLEDGES THAT IT HAS HAD ADEQUATE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL OF ITS CHOOSING IN CONNECTION WITH THE EXECUTION
HEREOF AND HAS DONE SO OR VOLUNTARILY ELECTED NOT TO DO SO.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
"Tenant"
SEQUANA THERAPEUTICS, INC., a California
corporation, d/b/a Axys Pharmaceuticals, Inc.
By: /s/ Daniel H. Petree
----------------------------------------------
Its: President and CEO
---------------------------------------------
"Landlord"
ARE - 11099 NORTH TORREY PINES, LLC, a Delaware
limited liability company
By: ALEXANDRIA REAL ESTATE EQUITIES, INC., a
Maryland corporation
By: /s/ Lynn Anne Shapiro
----------------------------------------------
Its: General Counsel
---------------------------------------------
<PAGE> 1
EXHIBIT 10.112
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "Amendment") is entered into as of
December 1, 1998 (the "Effective Date"), by and between ARE-JOHN HOPKINS COURT,
LLC, a Delaware limited liability company ("Landlord"), and SEQUANA
THERAPEUTICS, INC., a California corporation doing business as Axys
Pharmaceuticals, Inc. ("Tenant"), in connection with the following:
A. Landlord and Tenant have previously entered into that certain Lease
dated January 7, 1998 (the "Lease"), pursuant to which Tenant leases
from Landlord certain portions of the property commonly known as 3550
John Hopkins Court, San Diego, California, and more particularly
described in the Lease. All capitalized terms used but not otherwise
defined herein shall have the meanings given such terms in the Lease.
B. Landlord and Tenant desire to amend the Lease on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:
1. Amendments to Lease. Effective as of the Effective Date, the Lease is amended
as follows:
a. Section 2.1.4 is deleted in its entirety.
b. Section 2.1.5 is deleted in its entirety.
c. Section 2.1.7 is deleted in its entirety and replaced with the
following:
"2.1.7 (a) As used herein, "Term Commencement Date" shall mean
April 1, 1999.
(b) As used herein, "Term Expiration Date" shall mean
December 31, 1999."
d. Section 2.1.10(a) is deleted in its entirety and replaced with the
following:
"(a) Address for Rent Payment
ARE-John Hopkins Court, LLC
135 N. Los Robles Avenue, Suite 250
Pasadena, California 91101
Attention: Accounts Receivable"
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED.
<PAGE> 2
e. Section 2.1.10(b) is deleted in its entirety and replaced with the
following:
"(b) Address for Notices to Landlord
ARE-John Hopkins Court, LLC
135 N. Los Robles Avenue, Suite 250
Pasadena, California 91101
Attention: General Counsel"
f. Section 2.1.10(c) is deleted in its entirety and replaced with the
following:
"(c) Address for Notices to Tenant:
Axys Pharmaceuticals, Inc.
180 Kimball Way
South San Francisco, California 94080
Attention: Mr. Frederick J. Ruegsegger
With a copy to:
Axys Pharmaceuticals, Inc.
180 Kimball Way
South San Francisco, California 94080
Attention: William J. Newell, Esq."
g. Section 2.1.13 is deleted in its entirety and replaced with the following:
"2.1.13 As used herein, "Leasehold Improvement Allowance" shall mean
$0.00."
h. Section 2.1.14 is deleted in its entirety.
i. The following shall be added as a new Section 3.3 to the Lease:
"3.3 At any time during the Term, Landlord shall have the right to
terminate this Lease by delivering written notice of such termination
(the "Termination Notice") to Tenant not less than 7 business days
prior to the effective date of such termination (the "Termination
Date") as set forth in such Termination Notice. Upon the Termination
Date, any amounts of Rent due and owing from Tenant to Landlord,
including,without limitation, any then unpaid portion of Basic Annual
Rent (as hereinafter defined), shall be immediately due and payable."
j. Each of Sections 4.1, 4.2, 4.3 and 4.5 is hereby deleted in its entirety.
2
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED.
<PAGE> 3
k. So long as Tenant is not in default under the Lease (as amended by this
Amendment, including the provisions of paragraph 2, below) beyond any
applicable cure periods, Section 5.1 shall be deleted in its entirety and
replaced with the following:
"5.1 Tenant agrees to pay Landlord rent in the total amount of $[*]
("Basic Annual Rent") for the term of the Lease. Basic Annual Rent
shall be payable as follows:
(a) Concurrent with the execution and delivery of the First
Amendment to Lease by and between Landlord and Tenant ("First
Amendment"), Tenant shall pay to Landlord the amount of
[*] (First Installment of Basic Annual Rent").
(b) Commencing on April 1, 1999, and on the first day of each month
thereafter until the Term Expiration Date, Tenant shall pay to
Landlord the amount of [*] (each such payment, a "Monthly
Rental Installment of Basic Annual Rent").
(c) In the event this Lease is terminated by Landlord pursuant to
Section 3.3 of this Lease, any and all portions of Basic Annual
Rent not then paid to Landlord shall immediately become due and
payable. Tenant's obligation to pay Basic Annual Rent shall
survive the early termination of this Lease."
l. Section 6.1 is deleted in its entirety.
m. Section 7.2 is deleted in its entirety and replaced with the following:
"7.2 Tenant shall pay to Landlord on the first day of each month from the
Term Commencement Date through the earlier to occur of (i) the
Termination Date, or (ii) the Term Expiration Date, as Additional
Rent, [*] Any amount due under this Section 7.2 for any period which
is less than a full month shall be prorated (based on a 30 day month)
for such fractional month."
n. Section 7.3 is deleted in its entirety.
3
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED.
<PAGE> 4
o. Section 7.4 is deleted in its entirety and replaced with the
following:
"7.4 Tenant shall not be responsible for Operating Expenses
attributable to the time period prior to the Term Commencement
Date. The responsibility of Tenant for Operating Expenses
shall continue until the earlier to occur of (i) the
Termination Date, or (ii) the Term Expiration Date."
p. Section 10.4 is deleted in its entirety.
q. Section 14.1 is deleted in its entirety and replaced with the
following:
"14.1 Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect
to the condition of the Demised Premised, the Building or the
Project, or with respect to the suitability of any of the
foregoing for the conduct of Tenant's business."
r. Section 17.1 is deleted in its entirety and replaced with the
following:
"17.1 Tenant shall make no alterations, additions or improvements in
or to the Demised Premises."
s. Each of Sections 17.2, 17.3, 17.4, 17.5, 17.7, 17.10 and 17.11 is
deleted in its entirety.
t. Section 22.1 is deleted in its entirety and replaced with the
following:
"22.1 In the event of a partial or total destruction of the Building
by fire or other casualty, this Lease shall terminate as of
the date of such destruction and (i) any amounts of Rent due
and owing from Tenant to Landlord, including, without
limitation, any then unpaid portion of Basic Annual Rent shall
be immediately due and payable, and (ii) the responsibility of
Tenant for Operating Expenses shall terminate as of the date
of such destruction."
u. Each of Sections 22.2, 22.3, 22.4, 22.5, 22.6, and 22.7 is deleted
in its entirety.
v. Section 23.1 is deleted in its entirety and replaced with the
following:
"23.1 In the event of a whole or partial taking of the Building for
any public or quasi-public purpose by any lawful power or
authority by exercise of the right of appropriation,
condemnation or eminent domain, or a sale to prevent such
taking, this Lease shall terminate as of the date of such
taking or sale and (i) and amounts of Rent due and owing from
Tenant to Landlord, including, without limitation, any then
unpaid portion of Basic
4
<PAGE> 5
Annual Rent shall be immediately due and payable, and (ii) the
responsibility of Tenant for Operating Expenses shall terminate as of
the date of such taking or sale."
w. Section 23.2 is deleted in its entirety and replaced with the following:
"23.2 Any award for a whole or partial taking of the Building for any public
or quasi-public purpose by any lawful power or authority by exercise
of the right of appropriation, condemnation or eminent domain shall
belong to Landlord."
x. Each of Sections 23.3 and 23.4 is deleted in its entirety.
y. Section 24.4(a) is deleted in its entirety.
z. Section 24.4(b) is deleted in its entirety and replaced with the following:
"(b) The failure of Tenant to make any payment of Rent as and when due,
where such failure shall continue for a period of 5 days after
Tenant's actual receipt of written notice of delinquency from
Landlord."
aa. Section 25.1 is deleted in its entirety and replaced with the following:
"25.1 Tenant shall not, either voluntarily or by operation of law, directly
or indirectly, sell, hypothecate, assign, pledge, encumber or
otherwise transfer this Lease, or sublet the Demised Premises or any
part hereof, or permit or suffer the Demised Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's
employees."
bb. Each of Sections 25.4, 25.5, 25.6, 25.8 and 25.10 is deleted in its
entirety.
cc. Section 43.11 is deleted in its entirety and replaced with the following:
"43.11 Notices. Any notice, consent, demand, bill, statement or other
communication required or permitted to be given hereunder (each, a
"Notice") must be in writing and shall be given by reputable overnight
courier and shall be deemed received on the required delivery date set
forth on such courier's mailing label for such Notice. All Notices
shall be addressed to Tenant or Landlord, as applicable, at the
addresses set forth for each party in Section 2.1.10, above."
dd. Section 45.1 is deleted in its entirety.
ee. Each of Sections 46.1, 46.2, 46.3, 46.4 and 46.5 is deleted in its
entirety.
5
<PAGE> 6
2. Abatement of Lease Provisions. So long as Tenant is not then in default
under Sections 5, 7, 10, 13, 16, 17, 19, 24, 25, 29 or 41 of the Lease (as such
sections may be amended by this Amendment), Tenant shall have no obligations
under, and shall not be in default under the Lease for failure to perform
pursuant to the terms of, Sections 9, 18, 21.3, 21.4, 21.5, 21.6 and 21.8.
3. Forbearance by Landlord. So long as Tenant is not in default under the
Lease (as amended by this Amendment), Landlord shall not commence any legal
action against Tenant for any defaults under the Lease by Tenant occurring prior
to the Effective Date. Concurrent with the final payment of Basic Annual Rent
by Tenant, Landlord and Tenant shall execute the Agreement of Mutual General
Releases attached hereto as Exhibit A.
4. MISCELLANEOUS:
a. This Amendment shall not be effective unless and until Tenant shall
have delivered to Landlord the First Installment of Basic Annual Rent.
b. This Amendment shall be deemed to have been executed and delivered
within the State of California, and the rights and obligations of the
parties hereto shall be construed and enforced in accordance with,
and governed by, the laws of the State of California.
c. This Amendment is the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions. This
Amendment may be amended only by an agreement in writing, signed by
the parties hereto.
d. This Amendment is binding upon and shall inure to the benefit of the
parties hereto, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, assigns,
heirs, successors in interest and shareholders.
e. Each party has cooperated in the drafting and preparation of this
Amendment. Hence, in any construction to be made of this Amendment,
the same shall not be construed against any party.
f. Each term of this Amendment is contractual and not merely a recital.
g. This Amendment may be executed in counterparts, and when each party
has signed and delivered at least one such counterpart, each
counterpart shall be deemed an original, and, when taken together
with other signed counterparts, shall constitute one Amendment, which
shall be binding upon and effective as to all parties.
6
<PAGE> 7
h. The unenforceability of a portion of this Amendment shall not affect the
enforceability of the remainder of this Amendment.
i. The parties will execute all such further and additional documents as
shall be reasonable, convenient, necessary or desirable to carry out the
provisions of this Amendment.
i. Except as specifically amended or modified by this Amendment, the Lease
remains in full force and effect.
j. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD ADEQUATE OPPORTUNITY TO CONSULT
WITH LEGAL COUNSEL OF ITS CHOOSING IN CONNECTION WITH THE EXECUTION
HEREOF AND HAS DONE SO, OR VOLUNTARILY ELECTED NOT TO DO SO.
[SIGNATURES ON FOLLOWING PAGE]
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
[STAMP]
APPROVED AS TO "Tenant"
LEGAL FORM
LEGAL AFFAIRS AXYS PHARMACEUTICALS, INC., a California
[Illegible corporation
Initials]
By: /s/ Frederick J. Ruegsegger
------------------------------------
Its: Sr. VP & CFO
------------------------------------
"Landlord"
ARE - JOHN HOPKINS COURT, a Delaware limited
liability company
BY: ARE-QRS CORP., a Maryland corporation,
managing member
By: /s/ Lynn Anne Shapiro
------------------------------------
Its: General Counsel
------------------------------------
8
<PAGE> 9
Schedule 1
Estimated Operating Expense Budget
9
<PAGE> 10
SCHEDULE 1
3550 JOHNS HOPKINS COURT, SAN DIEGO, CA
ESTIMATED BUDGET OF OPERATING EXPENSES
AXYS PHARMACEUTICALS, INC.
[*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED.
<PAGE> 11
Exhibit A
Agreement of Mutual General Releases
(Attached).
10
<PAGE> 12
AGREEMENT OF MUTUAL GENERAL RELEASES
THIS AGREEMENT OF MUTUAL GENERAL RELEASES (this "Agreement") is made
as of __________________________, ____, by and between ARE - JOHN HOPKINS COURT,
LLC, a Delaware limited liability company ("ARE"), and SEQUANA THERAPEUTICS,
INC., a California corporation doing business as Axys Pharmaceuticals, Inc.
("Sequana") with respect to the following facts:
A. ARE and Sequana previously entered into that certain Lease dated
January 7, 1998, as amended by that certain First Amendment to Lease dated
December 1, 1998 (as amended, the "Lease"), pursuant to which Sequana leased
from ARE certain portions of the property commonly known as 3550 John Hopkins
Court, San Diego, California, and more particularly described in the Lease. All
capitalized terms used but not otherwise defined herein shall have the meanings
given such terms in the Lease.
B. Certain disputes arose between ARE and Sequana in connection with
Sequana' performance of its obligations under the Lease (the "Lease Disputes").
C. Pursuant to the terms of the First Amendment to Lease, (i) ARE
agreed to release Sequana from any liability or claim in connection with the
Lease Dispute so long as Sequana fully performed under the terms of the First
Amendment to Lease, and (ii) Sequana agreed to release ARE from any liability or
claim in connection with the Lease Dispute so long as ARE executed a release in
favor of Sequana.
D. Concurrent with the execution of this Agreement, Sequana shall
deliver to ARE any and all amounts of Rent due and owning to ARE, including,
without limitation, all unpaid amounts of Basic Annual Rent, and the Lease
shall terminate.
NOW THEREFORE, for good and valuable consideration, the adequacy of
which is acknowledged, ARE and Sequana agree as follows:
1. Except as to the representations, warranties and obligations set
forth in and arising from this Agreement, ARE, on behalf of itself and each of
its predecessors, successors, licensees, transferees, legal representatives,
trustees, beneficiaries, assigns, employees, servants, affiliates, and alter
egos, hereby fully and forever releases and discharges Sequana, and each of its
predecessors, successors, licensees, transferees, legal representatives,
trustees, beneficiaries, assigns, shareholders, directors, officers, partners,
employees, servants, subsidiaries, divisions, administrators, affiliates, alter
egos and parent corporations, from any and all, known or unknown, anticipated or
unanticipated, suspected or unsuspected, or fixed, conditional or contingent
actions or causes of action at law or in equity, suits, debts, demands, claims,
contracts, covenants, liens, liabilities, losses, costs, expenses (including,
without limitation, attorneys' fees) or damages of every kind, nature and
description, arising out of or relating to the Lease and the Lease Disputes.
<PAGE> 13
2. Except as to the representations, warranties and obligations set
forth in and arising from this Agreement, Sequana, on behalf of itself and each
of its predecessors, successors, licensees, transferees, legal representatives,
trustees, beneficiaries, assigns, employees, servants, affiliates, and alter
egos, hereby fully and forever releases and discharges ARE, and each of its
predecessors, successors, licensees, transferees, legal representatives,
trustees, beneficiaries, assigns, shareholders, directors, officers, partners,
employees, servants, subsidiaries, division, administrators, affiliates, alter
egos and parent corporations, from any and all, known or unknown, anticipated or
unanticipated, suspected or unsuspected, or fixed, conditional or contingent
actions or causes of action at law or in equity, suits, debts, demands, claims,
contracts, covenants, liens, liabilities, losses, costs, expenses (including,
without imitation, attorney's fees) or damages of every kind, nature and
description, arising out of or relating to the Lease and Lease Disputes.
3. With respect to the covenants contained in Paragraphs 1 and 2 of
this Agreement, each of the parties hereto expressly understands and agrees
that this Agreement fully and finally releases and forever resolves the matters
released and discharged in Paragraphs 1 and 2, including those which may be
unknown, unanticipated and/or unsuspected. Each of the parties hereto
acknowledges that it is aware that it or its agents or employees may hereafter
discover facts in addition to or different from those which it now knows or
believes to exist with respect to the subject matter of this Agreement, but that
it is its intention hereby fully, finally and forever to settle and release all
of the claims, disputes and differences known or unknown, suspected or
unsuspected, which now exist, may exist or heretofore have existed between or
among the parties, except as otherwise expressly provided herein. Upon the
advice of legal counsel, each of the parties hereto hereby expressly waives all
benefits under Section 1542 of the California Civil Code, as well as under any
other statues or common law principles of similar effect of this or any other
jurisdiction, to the extent that such benefits may contravene the provisions of
Paragraphs 1 and 2 of this Agreement. Each of the parties hereto acknowledges
that it has read and understands Section 1542 of the California Civil Code,
which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
EACH OF THE PARTIES HERETO, BEING AWARE OF SUCH CODE SECTION, HEREBY
EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER AS WELL AS UNDER ANY
OTHER STATUTES OR COMMON LAW PRINCIPALS OF SIMILAR EFFECT.
INITIALED BY ARE: INITIALED BY SEQUANA:
<PAGE> 14
4. Each of the parties hereto represents and warrants that it has not
assigned or otherwise transferred (voluntarily, involuntarily or by operation
of law) any right, title or interest in any claim which it has, may have or may
have had and which is the subject of this Agreement. Each of the parties hereto
agrees to indemnify, save and hold forever harmless the entities and persons
released by such party under this Agreement from any claims, liabilities,
demand, damages, costs and expenses, including attorneys' fees, incurred as a
result of any person or entity asserting any such claim pursuant to any such
assignment or transfer. It is the intention of the parties hereto that this
indemnity does not require payment as a condition precedent to recovery.
5. Each of the parties hereto warrants, represents and agrees that in
executing this Agreement:
a. It has received independent legal advice from its attorneys with
respect to each aspect of this Agreement;
b. It is not relying upon any representation or statement made by or
on behalf of any of the entities and persons released by such
party with respect to any aspect of this Agreement;
c. It assumes the risk of any mistake of fact with regard to any
aspect of this Agreement; and
d. It carefully has read and considered this Agreement in it
entirety and fully understands its contents and the significance
of each of its aspects.
6. No promise or inducement of any nature has been made other than those
set forth in this Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended or modified except by a written instrument executed by all
of the parties hereto.
7. This Agreement shall be binding upon and shall inure to the benefit
of the assignees, licensees, successors and transferees of the entities and
persons releases hereunder, whether by license, sale, merger, reverse merger,
sale of stock, insolvency, sale of assets, operation of law, or, without
limitation, otherwise.
8. If any action at law or in equity is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees in addition to any other relief to which that party
may be entitled.
9. If any provision of this Agreement is found, determined, and/or
adjudicated to be illegal, invalid or unenforceable, such finding shall in no
way affect the legality, validity or enforceability of the remaining provisions
of this Agreement, which shall be interpreted as if the illegal, invalid or
unenforceable provision had been omitted.
3
<PAGE> 15
10. This Agreement may be executed in counterparts and each signed
counterpart shall constitute a duplicate original.
11. This Agreement shall be governed and constructed in accordance with
the applicable laws of the State of California.
Executed as of the date first written above.
"Sequana"
SEQUANA THERAPEUTICS, INC., a California
corporation doing business as
Axys Pharmaceuticals, Inc.
By: _________________________________
Its:_________________________________
"ARE"
ARE-JOHN HOPKINS COURT, a Delaware
limited liability company
BY: ARE-QRS CORP., a Maryland
Corporation, managing member
By: __________________________
Its:__________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS AND STATEMENTS OF CASH
FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED UNE 30, 1998, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES
THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 23,025
<SECURITIES> 29,330
<RECEIVABLES> 4,148
<ALLOWANCES> 0
<INVENTORY> 996
<CURRENT-ASSETS> 60,650
<PP&E> 54,938
<DEPRECIATION> (32,462)
<TOTAL-ASSETS> 89,421
<CURRENT-LIABILITIES> 23,139
<BONDS> 0
0
0
<COMMON> 290,944
<OTHER-SE> 39,979
<TOTAL-LIABILITY-AND-EQUITY> 89,421
<SALES> 5,335
<TOTAL-REVENUES> 20,131
<CGS> 1,450
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 40,418
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,011
<INCOME-PRETAX> (20,961)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,961)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,961)
<EPS-BASIC> (0.69)
<EPS-DILUTED> (0.69)
</TABLE>
