<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
CV THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 8731 43-1570294
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
</TABLE>
--------------------------
3172 PORTER DRIVE
PALO ALTO, CA 94304
(415) 812-0585
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
LOUIS G. LANGE, M.D., PH.D.
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
CV THERAPEUTICS, INC.
3172 PORTER DRIVE
PALO ALTO, CA 94304
(415) 812-0585
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
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<S> <C>
ALAN C. MENDELSON, ESQ. DAVID J. SEGRE, ESQ.
DEBORAH A. MARSHALL, ESQ. ISSAC J. VAUGHN, ESQ.
COOLEY GODWARD LLP BRIDGET LOGTERMAN, ESQ.
FIVE PALO ALTO SQUARE HAROLD DEGRAFF, ESQ.
3000 EL CAMINO REAL WILSON, SONSINI, GOODRICH & ROSATI,
PALO ALTO, CA 94306-2155 PROFESSIONAL CORPORATION
(415) 843-5000 650 PAGE MILL ROAD
PALO ALTO, CA 94306
(415) 493-9300
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
--------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(o) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(2) REGISTRATION FEE
<S> <C> <C>
Common Stock, $.001 par value............................ $34,500,000 $11,897
</TABLE>
(1) Includes shares that the Underwriters have the option to purchase to cover
over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a).
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION
DATED SEPTEMBER , 1996
SHARES
[LOGO]
COMMON STOCK
(PAR VALUE $0.001 PER SHARE)
All of the shares of Common Stock (the "Common Stock") offered hereby
(the "Offering") are being sold by CV Therapeutics, Inc. ("CVT" or the
"Company").
Prior to this offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
for the Common Stock will be between $ and $ per share. See
"Underwriting" for factors to be considered in determining the initial public
offering price. The Company has applied for listing of the Common Stock on the
Nasdaq National Market under the symbol "CVTX."
See "Risk Factors" commencing on page 7 for certain information that should be
considered by prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
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Per Share $ $ $
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Total (3) $ $ $
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</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
See "Underwriting."
(2) Before deducting expenses of the Offering payable by the Company, estimated
at $ .
(3) The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional
shares of Common Stock on the same terms as set forth above solely to cover
over-allotments, if any. If such option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
The shares of Common Stock offered by this Prospectus are being offered by the
Underwriters, subject to prior sale, when, as and if delivered to and accepted
by the Underwriters, and subject to approval of certain legal matters by Wilson,
Sonsini, Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters. It is expected that delivery of the shares of Common Stock offered
hereby will be made against payment therefor on or about , 1996 at the
offices of J.P. Morgan Securities Inc., 60 Wall Street, New York, New York.
J.P. MORGAN & CO.
INVEMED ASSOCIATES, INC.
UBS SECURITIES
, 1996
<PAGE>
Graphical description of molecular cardiology platform
Graphical description of the integration
of market needs and molecular cardiology
CVT's product development programs are at an early stage. Products, if any,
resulting from such programs cannot be made available for commercial sale unless
and until regulatory approval is obtained. The Company will be required to
complete clinical trials to demonstrate the safety and efficacy of any potential
products prior to filing for regulatory approval.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
<PAGE>
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE "UNDERWRITING."
<PAGE>
No person has been authorized to give any information or to make any
representations not contained in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the Common Stock in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that there has
been no change in the affairs of the Company subsequent to the date hereof.
No action has been or will be taken in any jurisdiction by the Company or by any
Underwriter that would permit a public offering of the Common Stock or
possession or distribution of this Prospectus in any jurisdiction where action
for the purpose is required, other than in the United States. Persons into whose
possession this Prospectus comes are required by the Company and the
Underwriters to inform themselves about and to observe any restrictions as to
the offering of the Common Stock and the distribution of this Prospectus.
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
Prospectus Summary............................. 4
Risk Factors................................... 7
The Company.................................... 15
Use of Proceeds................................ 15
Dividend Policy................................ 15
Capitalization................................. 16
Dilution....................................... 17
Selected Consolidated Financial Data........... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 19
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PAGE
<S> <C>
Business....................................... 22
Management..................................... 37
Certain Transactions........................... 47
Principal Stockholders......................... 49
Description of Capital Stock................... 51
Shares Eligible for Future Sale................ 53
Underwriting................................... 55
Legal Matters.................................. 56
Experts........................................ 56
Additional Information......................... 56
Index to Consolidated Financial Statements..... F-1
</TABLE>
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
The Company intends to furnish its stockholders with annual reports containing
audited consolidated financial statements examined by its independent auditors
and will make available quarterly reports containing interim unaudited
consolidated financial statements for each of the first three quarters of each
fiscal year.
CV Therapeutics, Inc. and the CV Therapeutics logo are trademarks of the
Company. All brand names or trademarks appearing in this Prospectus are the
property of their respective holders.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. THE DISCUSSION IN THIS PROSPECTUS
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES
INCLUDING, BUT NOT LIMITED TO, THOSE SPECIFICALLY IDENTIFIED HEREIN. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HERE.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS
WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE
INDICATED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES (I) A 1-FOR-10 REVERSE
SPLIT OF THE COMPANY'S OUTSTANDING COMMON STOCK TO BE EFFECTED IN OCTOBER 1996;
(II) THE ISSUANCE OF 983,204 SHARES OF COMMON STOCK UPON THE EXERCISE OF CERTAIN
WARRANTS UPON THE CLOSING OF THE OFFERING; (III) THE CONVERSION OF ALL
OUTSTANDING SHARES OF PREFERRED STOCK INTO SHARES OF COMMON STOCK TO BE EFFECTED
UPON THE CLOSING OF THE OFFERING; AND (IV) NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION.
THE COMPANY
The Company is a biopharmaceutical company focused exclusively on the
application of molecular cardiology to the discovery, development and
commercialization of novel, small molecule drugs for the treatment of chronic
cardiovascular diseases. Molecular cardiology was developed, in part, by CVT
scientists and their academic collaborators and is based upon the application of
molecular biology and genetics to cardiovascular diseases. This discipline has
yielded new insights into the mechanisms underlying chronic cardiovascular
diseases and has enhanced the search for innovative cardiovascular drugs by
providing an increasing number of new molecular targets for drug discovery. To
date, CVT has discovered five compounds and completed the strategic in-license
of a sixth compound for treatment of chronic cardiovascular diseases.
Cardiovascular disease is the leading cause of death in the United States,
claiming more than 950,000 lives in 1993. The American Heart Association
projects the total cost of cardiovascular medications in the United States for
1996 at $11 billion.
Two of the Company's drug candidates, CVT-124 and ranolazine, are in clinical
trials. CVT-124, an adenosine A(1) receptor antagonist discovered by CVT, has
potential applications in the treatment of edema associated with congestive
heart failure ("CHF") and in the prevention and treatment of acute renal
failure. A Phase I/II study completed by the Company in the United States
indicated that CVT-124 is generally well tolerated and produces diuretic
activity in healthy volunteers. Approximately one-quarter of the 875,000
hospitalized CHF patients in the United States do not respond sufficiently to
currently available diuretics. The Company believes that these patients would
represent the initial target market for CVT-124 in this indication.
The Company's second compound in clinical trials, ranolazine, is a new compound
for the treatment of angina. Ranolazine was licensed from Syntex, (U.S.A.), Inc.
("Syntex"), an indirect subsidiary of Roche Holding Limited ("Roche"), in March
1996. Its novel metabolic mechanism of action was discovered, in part, by
cardiovascular researchers now at or associated with CVT. In Phase I and Phase
II clinical trials conducted by Syntex, an immediate release formulation of
ranolazine ("ranolazine IR") was administered to over 1200 patients. These
clinical trials have indicated that ranolazine IR improved exercise tolerance in
angina patients without adversely affecting heart rate or decreasing blood
pressure, a clinical profile absent from currently available drugs. Based on
these data, as well as Syntex pilot Phase II data from a sustained release
formulation of ranolazine ("ranolazine SR") for intermittent claudication, the
Company intends to commence further clinical trials of a sustained release
formulation of ranolazine. The Company believes ranolazine could particularly
benefit angina patients who also suffer from CHF or remain symptomatic despite
maximal doses of currently available anti-anginal drugs. In the United States,
approximately 6.7 million patients are currently diagnosed with angina. Based on
published studies, approximately one-third, or two million, are either diagnosed
with both angina and CHF or are resistant to currently available treatments. The
Company believes these approximately two million patients would represent the
initial target market for ranolazine.
The four other compounds discovered by the Company are in preclinical studies.
CVT-313 is a selective inhibitor of the cell cycle enzyme, cyclin-dependent
kinase 2 ("CDK2"). The Company believes that CVT-313 may be
4
<PAGE>
useful in a variety of cellular proliferative disorders, including the
prevention of restenosis, as an adjunct to arterial bypass grafting and as a
treatment for cardiomyopathy. CVT-634, an inhibitor of another cell cycle
regulating enzyme, is also being evaluated in animal models of chronic
cardiovascular disease. CVT-609 and CVT-429 are highly selective adenosine A(1)
receptor agonists which the Company believes may have potential activity in
treating certain common cardiac arrhythmias. The Company believes that compared
to current therapies, these compounds may offer an improved clinical profile for
immediate treatment of these arrhythmias including avoiding unwanted blood
pressure lowering effects.
In addition, the Company has discovered a novel inflammatory factor found in
human cardiovascular diseases, which it partnered to Bayer AG for continued
development.
BUSINESS STRATEGY
The Company's strategy is to become a leader in the development of novel,
cost-effective treatments for chronic cardiovascular diseases by leveraging its
expertise in molecular cardiology. The Company is developing products based on
small molecules designed to (i) utilize novel mechanisms of action, (ii) address
segments of the cardiovascular patient population which are either underserved
or not treatable by existing therapies, and (iii) offer the currently served
cardiovascular patient population the potential for improved efficacy with fewer
side effects than currently available drugs.
The Company believes that it can best utilize its internal resources by
concentrating its activities on discovery, preclinical evaluation and early
clinical phases of drug development. The Company intends to establish
partnerships with pharmaceutical companies for later stage clinical trials and
marketing and sales activities for its products. The Company believes that such
partnerships will enable the Company to more effectively and economically
develop and market its initial products.
DRUG DISCOVERY PLATFORM
CVT's drug discovery platform supports several programs, including those focused
on the adenosine A(1) receptor, the cell cycle and chronic inflammation in the
cardiovascular system. These programs have produced compounds currently in
clinical or preclinical development or outlicensed for use in third party drug
discovery programs. CVT's expertise in molecular cardiology and drug development
has been critical to the identification of these drug candidates.
The Company believes that its drug discovery platform allows it to efficiently
select novel, clinically relevant drug candidates that have a significant
probability of commercial potential. CVT first evaluates new targets with
respect to clinical relevance and suitability for small molecule inhibition. CVT
then utilizes a highly integrated, multidisciplinary approach to produce novel
small molecules as drug candidates for these targets. The Company combines
molecular modeling and combinatorial chemistry to assemble targeted libraries of
new chemical entities, an approach which the Company believes expedites the
identification of potential drug leads. The Company has developed a
comprehensive proprietary database correlating biological activity of candidate
drugs with their structures. From this database, CVT identifies final lead
compounds based on predetermined development criteria including potency,
specificity, manufacturability, and pharmacologic activity in animal and IN
VITRO models. The Company determines the proper selection of cell-based assays
and animal models of disease to enhance development of the drug candidate based
on its projected use in the clinical setting.
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
5
<PAGE>
THE OFFERING
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COMMON STOCK OFFERED........................ shares
COMMON STOCK OUTSTANDING AFTER THE shares (1)
OFFERING...................................
USE OF PROCEEDS............................. Research and development, including
preclinical testing, clinical trials and
certain milestone payments; repayment of
certain indebtedness; and working capital and
general corporate purposes.
PROPOSED NASDAQ NATIONAL MARKET SYMBOL...... "CVTX"
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED
INCEPTION (DEC. YEAR ENDED DECEMBER 31, JUNE 30,
11, 1990) TO DEC. --------------------------------- --------------------
IN THOUSANDS, EXCEPT PER SHARE DATA 31, 1992 1993 1994 1995 1995 1996
------------------ --------- ---------- ---------- --------- ---------
(UNAUDITED)
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
License revenue.................... $ - $ - $ - $ - $ - $ 250
Operating expenses:
Research and development......... 1,167 4,731 8,823 12,856 6,692 4,009
General and administrative....... 429 947 2,802 3,402 1,640 1,408
------- --------- ---------- ---------- --------- ---------
Total operating expenses........... 1,596 5,678 11,625 16,258 8,332 5,417
------- --------- ---------- ---------- --------- ---------
Loss from operations............... (1,596) (5,678) (11,625) (16,258) (8,332) (5,167)
Interest (income) expense, net..... 34 (161) (258) 466 115 229
------- --------- ---------- ---------- --------- ---------
Net loss......................... $ (1,630) $ (5,517) $ (11,367) $ (16,724) $ (8,447) $ (5,396)
------- --------- ---------- ---------- --------- ---------
------- --------- ---------- ---------- --------- ---------
Pro forma net loss per share (2)... $ (4.65) $ (2.42) $ (1.25)
---------- --------- ---------
---------- --------- ---------
Shares used in computing pro forma
net loss per share (2)............ 3,594 3,484 4,319
---------- --------- ---------
---------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
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<S> <C> <C>
JUNE 30, 1996
--------------------------
IN THOUSANDS ACTUAL AS ADJUSTED(3)
---------- --------------
(UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments..................................... $ 12,507
Working capital....................................................................... 7,402
Total assets.......................................................................... 18,208
Total debt and capital lease obligations.............................................. 5,193
Deficit accumulated during development stage.......................................... (40,657)
Total stockholders' equity............................................................ 10,328
</TABLE>
- ------------------------
(1) Based on shares outstanding as of June 30, 1996. Includes 983,204 shares to
be issued upon the exercise of certain outstanding warrants upon the closing of
this Offering. Excludes as of June 30, 1996: (i) 597,143 shares of Common Stock
issuable upon exercise of outstanding stock options at a weighted average
exercise price of $2.15 per share; (ii) 408,504 shares of Common Stock issuable
upon exercise of outstanding warrants at exercise prices ranging from $8.00 to
$25.00 per share and a weighted average exercise price of $20.92; and (iii)
168,000 shares of Common Stock available for future grant under the Company's
1992 Stock Option Plan, 1994 Equity Incentive Plan and Non-Employee Stock Option
Directors Plan (the "Stock Plans"). See "Management - Stock Plans" and
"Description of Capital Stock."
(2) See Note 1 of Notes to Consolidated Financial Statements for a description
of the shares used in calculating pro forma net loss per share.
(3) Adjusted to give effect to the receipt of the estimated net proceeds from
the sale of shares of Common Stock offered by the Company hereby at
an assumed initial public offering price of $ per share and the repayment of
a $2.0 million portion of a debt financing currently being negotiated with
entities associated with Hambrecht & Quist Group. See "Use of Proceeds."
6
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider, in addition to
the other information contained in this Prospectus, the following risk factors
in evaluating the Company and the Common Stock offered hereby.
UNCERTAINTIES RELATED TO EARLY STAGE OF DEVELOPMENT
The Company is a development stage company and must be evaluated in light of the
uncertainties and complications present in an early stage biopharmaceutical
company. In addition, all of the Company's products are at an early stage of
development. Since the Company's inception in 1990, substantially all of the
Company's resources have been dedicated to research and development, and the
Company has not generated any product revenue. Because all of the Company's
potential products are in research, preclinical or clinical development, product
revenues will not be realized for at least several years, if at all. Drug
discovery methods based upon molecular cardiology are relatively new, and there
can be no assurance that the Company will be able to employ these methods of
drug development successfully or that these methods will lead to the development
of commercially viable pharmaceutical products. Certain of the Company's
compounds within the Company's cell cycle, chronic inflammation and adenosine
A(1) receptor programs are in the early stages of research and development and
the Company does not expect to commence clinical trials for such new compounds
for several years. There can be no assurance that any of the Company's product
development efforts will be successfully completed, that any of the Company's
products will be proven to be safe and effective, that regulatory approvals will
be obtained at all or be as broad as sought, that the Company's products will be
capable of being produced in commercial quantities or that any products, if
introduced, will achieve market acceptance.
UNCERTAINTIES RELATED TO CLINICAL TRIALS
The Company's potential products are subject to the risks of failure inherent in
the development of pharmaceutical products. The Company currently has only two
products in clinical development, CVT-124 and ranolazine. The Company's product
candidates will require additional development, preclinical studies, clinical
trials and regulatory approval prior to commercialization. The results from
preclinical studies and early clinical trials may not be predictive of results
obtained in later clinical trials, and there can be no assurance that clinical
trials conducted by the Company will demonstrate sufficient safety and efficacy
to obtain the requisite approvals or that marketable products will result. For
example, in November 1995, based on unfavorable efficacy data from a Phase II
trial, the Company terminated its development program for the CVT-1 product for
treatment of primary hypercholesterolemia.
The rate of completion of the Company's clinical trials may be delayed by many
factors, including slower than anticipated patient enrollment, difficulty in
finding a sufficient number of patients fitting the appropriate trial profile or
in the acquisition of sufficient supplies of clinical trial materials or adverse
events occurring during the clinical trials. Completion of testing, studies and
trials may take several years, and the length of time varies substantially with
the type, complexity, novelty and intended use of the product. There can be no
assurance that the Company's drug discovery efforts will progress as expected or
that such efforts will lead to the discovery or development of any product. In
addition, data obtained from preclinical and clinical activities are susceptible
to varying interpretations, which could delay, limit or prevent regulatory
approval. Delays or rejections may be encountered based upon many factors,
including changes in regulatory policy during the period of product development.
No assurance can be given that any of the Company's development programs will be
successfully completed, that any investigational new drug ("IND") applications
will become effective or that additional clinical trials will be allowed by the
Food and Drug Administration ("FDA") or other regulatory authorities or that
clinical trials will commence as planned.
The Company's clinical development plan for ranolazine assumes that Phase I data
and data from several Phase II angina trials with ranolazine IR combined with
Phase I data and safety and tolerability data from a pilot Phase II trial for
intermittent claudication with ranolazine SR will be accepted by the FDA and
other regulatory authorities as a basis to initiate Phase III trials with
ranolazine SR. There can be no assurance that such clinical data will be
accepted by the FDA in support of initiation of such Phase III studies with
ranolazine SR for the treatment of angina or that the Company will not be
required or otherwise choose to conduct additional Phase II clinical trials of
ranolazine SR prior to commencement of Phase III clinical trials. As a result of
FDA reviews or
7
<PAGE>
complications that may arise in any phase of the clinical trial program, there
can be no assurance that the proposed schedules for IND and clinical protocol
submissions to the FDA, initiations of studies and completions of clinical
trials can be maintained. Any delays in the Company's clinical trials would have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business - Government Regulation."
DEPENDENCE ON COLLABORATIVE AND LICENSING ARRANGEMENTS
The Company's strategy for the research, development and commercialization of
its product candidates has required, and will continue to require, the Company
to enter into various arrangements with corporate and academic collaborators,
licensors, licensees and others, and the Company will therefore be dependent
upon the success of these parties in performing their responsibilities. The
Company is currently seeking a corporate partner for ranolazine prior to
conducting Phase III studies for treatment of angina. The Company may also seek
a corporate partner for CVT-124. There can be no assurance that the Company will
be able to enter into collaborative arrangements or license agreements on
acceptable terms, or at all, or that any or all of the contemplated benefits
from such collaborative arrangements or license agreements will be realized.
Failure to obtain such arrangements or agreements would result in delays in the
development of the Company's proposed products or the inability to proceed with
the development, manufacture or sale of products, or the loss of third party
licenses or could require the Company to fund development internally. If the
Company were required to fund development internally, its future capital
requirements would increase substantially. There can be no assurance that the
Company could obtain additional funds to meet such increased capital
requirements on acceptable terms, or at all.
Certain of the collaborative arrangements that the Company may enter into in the
future may place responsibility on the collaborative partner for preclinical
testing and clinical trials, for manufacturing and for preparation and
submission of applications for regulatory approval of potential pharmaceutical
products. The Company cannot control the amount and timing of resources which
its collaborative partners devote to the Company's programs or potential
products. Should a collaborative partner fail to develop or commercialize
successfully any product candidate to which it has rights, the Company's
business may be materially and adversely affected. There can be no assurance
that collaborators will not pursue other technologies or product candidates
either on their own or in collaboration with others.
Collaborative arrangements may also require the Company to expend funds and to
meet certain milestones, and there can be no assurance that the Company will be
successful in doing so. The Company's agreement with the University of Florida
Research Foundation, Inc. in the area of adenosine receptors requires the
Company to reach certain preclinical and clinical milestones within defined time
periods to maintain exclusive rights under the license. The Company's agreement
with Syntex for ranolazine requires it to make certain payments based on the
time and progress of development activities. Failure of the Company to meet its
obligations under its collaborative arrangements could result in a termination
of those arrangements and the loss of rights to the compounds under development
and could have a material adverse effect on the Company's business, financial
condition and results of operations.
There can be no assurance that disputes will not arise in the future with
respect to the ownership of rights to any technology developed with or by third
parties. These and other possible disagreements between collaborators and the
Company could lead to delays in the collaborative research, development or
commercialization of certain product candidates or could require or result in
litigation or arbitration, which would be time consuming and expensive, and
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business - Licenses and
Collaborations."
UNCERTAINTY OF FUTURE PROFITABILITY; ACCUMULATED DEFICIT
Since its inception, the Company has been engaged in research and development
activities and has generated no product revenues. As of June 30, 1996, the
Company had an accumulated deficit of approximately $40.7 million. The process
of developing the Company's products will require significant additional
research and development, preclinical testing and clinical trials, as well as
regulatory approval. These activities, together with the Company's general and
administrative expenses, are expected to result in operating losses for the
foreseeable future. The Company will not receive product revenues unless and
until it completes clinical trials with respect to one or
8
<PAGE>
more products and successfully commercializes such products. There can be no
assurance that the Company will generate revenues or achieve and sustain
profitability in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
NEED FOR ADDITIONAL FUTURE CAPITAL; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial additional funding after this Offering in
order to complete its research and development activities and commercialize any
potential products. The Company has financed its operations primarily through
the sale of preferred equity securities, equipment and leasehold improvement
financing and other debt financing. The Company has generated no product
revenue, and none is expected for at least several years. The Company
anticipates that its existing resources, including the proceeds of this
Offering, projected interest income, will enable the Company to maintain its
current and planned operations through 1998. However, there can be no assurance
that the Company will not require additional funding prior to such time. If the
Company is unable to establish and maintain additional corporate partnerships
for the development of CVT-124 and ranolazine, the Company's future capital
requirements will increase substantially. In addition, the Company's future
capital requirements will depend on many other factors, including scientific
progress in its research and development programs, the size and complexity of
such programs, the scope and results of preclinical studies and clinical trials,
the ability of the Company to establish and maintain corporate partnerships, the
time and costs involved in obtaining regulatory approvals, the costs involved in
filing, prosecuting and enforcing patent claims, competing technological and
market developments, the cost of manufacturing preclinical and clinical material
and other factors not within the Company's control. There can be no assurance
that such additional financing to meet the Company's capital requirements will
be available on acceptable terms or at all. Insufficient funds may require the
Company to delay, scale back or eliminate some or all of its research or
development programs or to lose rights under existing licenses or to relinquish
greater or all rights to product candidates at an earlier stage of development
or on less favorable terms than the Company would otherwise seek or may
adversely affect the Company's ability to operate as a going concern. If
additional funds are raised by issuing equity securities, substantial dilution
to existing stockholders may result. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
UNCERTAINTY OF MARKET ACCEPTANCE
The Company's future profitability is dependent on commercial acceptance of its
potential products. The Company believes that market acceptance of its potential
products will depend on the Company's ability to provide acceptable evidence of
the safety, efficacy and cost-effectiveness of its products, as well as the
marketing strength of the Company's corporate partners. In addition, third party
payors can indirectly affect the demand for the Company's potential products by
regulating the maximum amount of reimbursement that will be provided. There can
be no assurance that potential products developed by the Company will achieve
market acceptance among patients, physicians or third party payors, even if
necessary regulatory and reimbursement approvals are obtained. Failure to
achieve market acceptance would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -
Marketing and Sales" and "- Government Regulation."
INTENSE COMPETITION
The pharmaceutical and biopharmaceutical industries are subject to intense
competition and significant, rapid technological change. If regulatory approvals
are received, certain of the Company's potential products will compete with well
established, FDA approved proprietary and generic therapies that have generated
substantial sales over a number of years and which are reimbursed from
government health administration authorities and private health insurers. In
addition, CVT is aware of companies which are developing products that will
compete for the same disease markets as its potential products. Many of the
Company's competitors and potential competitors have substantially greater
product development capabilities and financial, scientific, marketing and sales
resources than the Company. Other companies may succeed in developing products
earlier than the Company, obtaining approvals for such products from the FDA
more rapidly than the Company and its corporate partners, or developing products
that are safer or more effective than those under development or proposed to be
developed by the Company and its corporate partners. There can be no assurance
that research and development by others will not render the Company's technology
or its potential products obsolete or non-competitive. In
9
<PAGE>
addition, there can be no assurance that the Company's competitors will not
develop more effective or more affordable products or achieve patent protection,
regulatory approval or product commercialization earlier than the Company. See
"Business - Competition."
UNCERTAINTY OF PATENT POSITION AND PROPRIETARY RIGHTS
The Company's success will depend to a significant degree on its ability to
obtain patents and licenses to patent rights, to maintain trade secrets and to
operate without infringing on the proprietary rights of others, both in the
United States and other countries. The Company has filed a number of United
States and foreign patent applications. In addition, in connection with its
corporate and academic collaborations, the Company has received licenses to a
number of issued patents and patent applications for CVT-124 and ranolazine. The
Company intends to continue to file applications as appropriate for patents
covering both its potential products and processes. There can be no assurance
that patents will issue from any of these applications, that any patent will
issue on technology arising from additional research or that patents that may
issue from such applications will be sufficient to protect the Company's
technology. Patent applications in the United States are maintained in secrecy
until a patent issues, and the Company cannot be certain that others have not
filed patent applications for technology covered by the Company's pending
applications or that the Company was the first to invent the technology that is
the subject of such patent applications. Competitors may have filed applications
for, or may have received patents and may obtain additional patents and
proprietary rights relating to, compounds, products or processes that block or
compete with those of the Company. If any of its competitors have filed patent
applications in the United States that claim technology also invented by the
Company, the Company may have to participate in interference proceedings
declared by the Patent and Trademark Office ("PTO") in order to determine
priority of invention and, thus, the right to a patent for the technology in the
United States, all of which could result in substantial cost to the Company. In
addition, litigation, which would result in substantial cost to the Company, may
be necessary to enforce any patents issued to the Company or to determine the
scope and validity of the proprietary rights of third parties. There can be no
assurance that any patents issued to the Company or to licensors from whom the
Company has licensed rights will not be challenged, invalidated or circumvented,
or that the rights granted thereunder will provide proprietary protection or
commercial advantage to the Company.
The commercial success of the Company will depend in part on the Company not
infringing patents issued to competitors and not breaching the licenses that
might cover technology used in the Company's potential products. Failure by the
Company to obtain a license to any technology required to commercialize its
potential products could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company also relies on trade secrets to develop and maintain its competitive
position. Although the Company protects its proprietary technology in part by
confidentiality agreements with its employees, consultants, collaborators,
advisors and corporate partners, there can be no assurance that these agreements
will not be breached, that the Company will have adequate remedies for any
breach or that the Company's trade secrets will not otherwise become known or be
discovered independently by its competitors. See "Business - Patents and
Proprietary Technology."
DEPENDENCE ON KEY PERSONNEL; NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND
CONSULTANTS
The Company is highly dependent on certain members of its management and
scientific staff. In addition, the Company relies on consultants and advisors.
The loss of any of these persons could have a material adverse effect on the
Company's business, financial condition and results of operations. In order to
pursue its research and product development plans, the Company will be required
to attract and retain additional qualified scientific and other personnel. There
can be no assurance that the Company will be successful in attracting and
retaining these skilled persons who generally are in high demand by
pharmaceutical and biopharmaceutical companies and by universities and other
research institutions. The failure to successfully attract and retain qualified
personnel, consultants and advisors may impede the achievement of development
objectives and have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, a substantial
portion of the stock options currently held by many of the Company's key
employees are vested and may be fully vested
10
<PAGE>
over the next several years before the Company achieves significant revenues or
profitability. The Company intends to grant additional options and provide other
forms of incentive compensation to attract and retain such key personnel. See
"Business - Scientific Advisory Board" and "Management."
LIMITED MANUFACTURING, MARKETING AND SALES EXPERIENCE
The Company has no experience in manufacturing, and currently lacks the
resources or capability to manufacture any of its potential products on a
clinical or commercial scale. The Company is currently, and will continue to be,
dependent on corporate partners, licensees or other third parties for the
manufacturing of clinical and commercial scale quantities of its products. There
can be no assurance that the Company will be able to maintain existing
agreements for manufacturing of clinical quantities of potential products, that
it will be able to enter into additional agreements with other third parties for
commercial scale manufacturing or that these parties will be able to develop
adequate manufacturing capabilities.
To date, the Company has no experience with sales, marketing or distribution.
The Company intends to rely on relationships with one or more pharmaceutical
companies with established distribution systems and direct sales forces to
market its products. In the event that the Company is unable to reach agreement
with one or more pharmaceutical companies to market its products, it may be
required to market its products directly and to develop a marketing and sales
force with technical expertise and with supporting distribution capability.
There can be no assurance that the Company will be able to establish in-house
sales and distribution capabilities or relationships with third parties, or that
it will be successful in commercializing any of its potential products. To the
extent that the Company enters into co-promotion or other licensing
arrangements, any revenues received by the Company will depend upon the efforts
of third parties, and there can be no assurance that such efforts will be
successful. See "Business - Marketing and Sales" and "- Manufacturing."
SIGNIFICANT GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL
The research, testing, manufacture and marketing of drug products is subject to
extensive regulation by numerous regulatory authorities in the United States and
other countries. Failure to comply with FDA or other applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions such as civil penalties, criminal prosecution, injunctions, product
seizure or detention, product recalls, total or partial suspension of
production, and FDA refusal to approve pending new drug applications ("NDAs") or
supplements to approved NDAs. The Company has not received regulatory approval
in the United States or any foreign jurisdiction for the commercial sale of any
of its products. The process of obtaining FDA and other required regulatory
approvals, including foreign approvals, often takes many years and can vary
substantially based upon the type, complexity and novelty of the products
involved. Furthermore, such approval process is extremely expensive and
uncertain. There can be no assurance that the Company's potential products will
be approved for marketing by the FDA. Even if regulatory approval of a product
is granted, there can be no assurance that the Company will be able to obtain
the labeling claims necessary or desirable for the promotion of those products.
FDA requirements prohibit the marketing or promotion of a drug for unapproved
indications. Furthermore, regulatory marketing approval may entail ongoing
requirements for postmarketing studies. If regulatory approval is obtained, the
Company will be subject to ongoing FDA obligations and continued regulatory
review. In particular, the Company or its third party manufacturer will be
required to adhere to regulations setting forth current Good Manufacturing
Practices ("cGMPs"), which require that the Company manufacture its products and
maintain its records in a prescribed manner with respect to manufacturing,
testing and quality control activities. Further, the Company or its third party
manufacturer must pass a preapproval inspection of its manufacturing facilities
by the FDA before obtaining marketing approval. Failure to comply with
applicable regulatory requirements may result in penalties such as restrictions
on a product's marketing or withdrawal of the product from the market. In
addition, identification of certain side effects after a drug is on the market
or the occurrence of manufacturing problems could cause subsequent withdrawal of
approval, reformulation of the drug, additional preclinical testing or clinical
trials and changes in labeling of the product.
Prior to the submission of an NDA, drugs developed by the Company must undergo
rigorous preclinical and clinical testing, which may take several years and the
expenditure of substantial resources. Before commencing clinical trials in
humans, the Company must submit to the FDA and receive clearance of an IND.
There can be no assurance that submission of an IND for future clinical testing
of any products under development or other
11
<PAGE>
future products of the Company would result in FDA permission to commence
clinical trials or that the Company will be able to obtain the necessary
approvals for future clinical testing in any foreign jurisdiction. Success in
preclinical studies or early stage clinical trials does not assure success in
later stage clinical trials. Data obtained from preclinical and clinical
activities are susceptible to varying interpretations which could delay, limit
or prevent regulatory approval. Further, there can be no assurance that if such
testing of products under development is completed, any such drug compounds will
be accepted for formal review by the FDA or any foreign regulatory body, or
approved by the FDA for marketing in the United States or by any such foreign
regulatory bodies for marketing in foreign jurisdictions. Future federal, state,
local or foreign legislation or administrative acts could also prevent or delay
regulatory approval of the Company's products. See "Business - Government
Regulation."
UNCERTAINTY OF PRODUCT PRICING AND REIMBURSEMENT
The ability of the Company and its potential corporate partners to market and
sell its potential products successfully will depend in part on the extent to
which reimbursement for the cost of such potential products and related
treatments will be available from government health administration authorities,
private health insurers and other organizations. Third party payors are
increasingly challenging the price of medical products and services. Significant
uncertainty exists as to the reimbursement status of newly-approved health care
products. In addition, for sales of the Company's products in Europe, the
Company will be required to seek reimbursement on a country-by-country basis. If
the Company or any potential corporate partners succeed in bringing any products
to market, there can be no assurance that these products will be considered cost
effective, that reimbursement will be available, or if available, that the
payors' reimbursement policies will not adversely affect the Company's or any
such potential corporate partner's ability to sell such products on a profitable
basis.
PRODUCT LIABILITY EXPOSURE; AVAILABILITY OF INSURANCE
The manufacture and sale of biopharmaceutical products involve an inherent risk
of product liability claims and associated adverse publicity. The Company
currently has only limited product liability insurance for clinical trials and
no commercial product liability insurance. There can be no assurance that it
will be able to maintain existing or obtain additional product liability
insurance on acceptable terms or with adequate coverage against potential
liabilities. Such insurance is expensive, difficult to obtain and may not be
available on acceptable terms, or at all. An inability to obtain sufficient
insurance coverage on reasonable terms or to otherwise protect against potential
product liability claims could prevent or inhibit the commercialization of the
Company's potential products. A successful product liability claim brought
against the Company in excess of its insurance coverage, if any, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business - Product Liability Insurance."
HAZARDOUS AND RADIOACTIVE MATERIALS; ENVIRONMENTAL MATTERS
The Company's research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials, and produce waste
products. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and waste products. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by such laws and regulations, the risk of contamination or
injury from these materials cannot be eliminated completely. In such event, the
Company could be held liable for any damages that result and any such liability
could exceed the resources of the Company. Although the Company believes that it
is in compliance in all material respects with applicable environmental laws and
regulations, there can be no assurance that it will not be required to incur
significant costs to comply with environmental laws and regulations in the
future, or that the Company's business, financial condition or results of
operations will not be materially adversely affected by current or future
environmental laws or regulations. See "Business - Government Regulation."
ABSENCE OF PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE
Prior to this Offering, there has been no public market for the Common Stock,
and there can be no assurance that an active market will develop or be
maintained. The initial public offering price will be negotiated between the
Company and the representatives of the Underwriters and may not be indicative of
future market prices. See "Underwriting" for information related to the method
of determining the initial public offering price. The market
12
<PAGE>
price of the shares of Common Stock, like that of the common stock of many other
biopharmaceutical companies, is likely to be highly volatile. Factors such as
the Company's operating results, developments in the Company's relationships
with corporate partners, developments affecting the Company's corporate
partners, announcements of results of preclinical studies and clinical trials by
the Company, its corporate partners or its competitors, negative regulatory
action or regulatory approval with respect to the Company or its competitors,
announcements of new products by the Company or its competitors, developments
related to patent or other proprietary rights by the Company or its competitors,
changes in the position of securities analysts with respect to the Common Stock,
and market conditions for biopharmaceutical or biotechnology stocks in general,
may cause the market price of the Common Stock to fluctuate, perhaps
substantially. In addition, in recent years the stock market in general, and the
shares of biopharmaceutical, biotechnology and healthcare companies in
particular, have experienced extreme price fluctuations. These broad market and
industry fluctuations may materially adversely affect the market price of the
Common Stock. In some future quarter the Company's operating results may be
below the expectations of public market analysts and investors, and, as a
result, the price of the Common Stock would likely be materially adversely
affected.
CONTROL BY EXISTING STOCKHOLDERS; ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER
PROVISIONS AND DELAWARE LAW
After this Offering, the Company's officers, directors and principal
stockholders will beneficially own approximately of the outstanding
shares of Common Stock. As a result, such persons may have the ability to
effectively control the Company and direct its affairs and business. Such
concentration of ownership may also have the effect of delaying, deferring or
preventing a change in control of the Company. In addition, the Company's Board
of Directors will have the authority to issue up to 5,000,000 shares of
Preferred Stock and to determine the price, rights, preferences and privileges
of those shares without any further vote or action by the stockholders. The
rights of the holders of Common Stock will be subject to, and may be materially
adversely affected by, the rights of the holders of any Preferred Stock that may
be issued in the future. The issuance of Preferred Stock could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. Furthermore, certain provisions of the
Company's Certificate of Incorporation may have the effect of delaying or
preventing changes in control or management of the Company, which could
adversely affect the market price of the Company's Common Stock. In addition,
the Company will be subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Delaware Law"), an anti-takeover law. See
"Principal Stockholders" and "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of substantial shares of Common Stock in the public market after the
Offering could adversely affect the market price of the Common Stock. Upon
completion of the Offering, the Company will have outstanding shares
of Common Stock. All of the shares sold in the Offering will be
freely transferable as of the date of this Prospectus by persons other than
"affiliates" of the Company without restriction or further registration under
the Securities Act of 1933, as amended (the "Securities Act"). The remaining
4,639,701 shares of Common Stock that will be outstanding upon completion of the
Offering (the "Restricted Shares") will be held by officers, directors,
employees, consultants and other stockholders of the Company. The Restricted
Shares were sold by the Company in reliance upon exemptions from the
registration requirements of the Securities Act and are "restricted securities"
under the Securities Act. Certain holders of Restricted Shares have agreed not
to sell their shares without the prior written consent of J.P. Morgan Securities
Inc. for a period of 180 days from the date of this Prospectus. Beginning 180
days after commencement of the Offering, approximately 1,215,562 Restricted
Shares that are subject to lock-up agreements (as described above) will become
eligible for sale in the public markets subject to Rule 144 and Rule 701 under
the Securities Act. The remaining approximately 905,746 Restricted Shares, which
are also subject to such lock-up agreements, will become eligible for sale under
Rule 144 at various dates thereafter as the holding period provisions of Rule
144 are satisfied. Additionally, approximately 1,240,685 Restricted Shares that
are not subject to lock-up agreements will become eligible for sale beginning 90
days after commencement of the Offering, and approximately 1,277,708 Restricted
Shares that are not subject to lock-up agreements will become eligible for sale
under Rule 144 at various times thereafter. As of September 1, 1996, 564,209
shares were issuable upon exercise of currently outstanding options, of which
240,940 were fully vested. Of such shares, 145,751 will be eligible for
13
<PAGE>
sale in the public markets beginning 180 days after commencement of the
Offering, and 95,189 will be eligible for sale beginning 90 days after
commencement of the Offering, subject, in some cases, to the volume, manner of
sale, notice and public information requirements of Rule 144. As of September 1,
1996, 405,504 shares were issuable upon exercise of currently outstanding
warrants (excluding the exercise of all outstanding warrants for Common Stock).
Of these shares, 77,123 will be eligible for sale in the public markets
beginning 180 days after commencement of the Offering, and 328,381 will be
eligible for sale beginning 90 days after commencement of the Offering, subject
to Rule 144. Certain holders of shares of Common Stock and securities
convertible into or exercisable for shares of Common Stock have certain
registration rights under a registration rights agreement among such holders and
the Company and certain other agreements. In addition, following completion of
the Offering, the Company intends to register under the Securities Act
approximately 1,630,500 shares of Common Stock subject to outstanding stock
options or reserved for issuance under the Company's Non-Employee Directors'
Stock Option Plan, 1994 Equity Incentive Plan, 1992 Stock Option Plan and
Employee Stock Purchase Plan. See "Management - Director Compensation,"
"Management - Stock Plans," "Shares Eligible for Future Sale" and "Description
of Capital Stock - Registration Rights of Certain Holders."
DILUTION; ABSENCE OF DIVIDENDS
The initial public offering price will be substantially higher than the book
value per share of Common Stock. Investors purchasing shares of Common Stock in
this Offering will therefore incur immediate, substantial dilution of $
per share in the net tangible book value of Common Stock. Additional
dilution will occur upon the exercise of outstanding options and warrants. See
"Dilution." The Company has never paid any cash dividends and does not
anticipate paying cash dividends in the foreseeable future. See "Dividend
Policy."
14
<PAGE>
THE COMPANY
The Company was incorporated in Delaware in December 1990 and changed its name
to CV Therapeutics, Inc. in June 1992. The Company's executive offices are
located at 3172 Porter Drive, Palo Alto, California 94304, and its telephone
number is (415) 812-0585.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be $ ($ if the over-allotment option
is exercised in full) at an assumed initial public offering price of $ per
share after deducting the estimated underwriting discount and estimated offering
expenses payable by the Company.
The Company anticipates using approximately $21.0 million of the net proceeds of
the Offering to fund research and development activities, including preclinical
testing, clinical trials in support of regulatory approvals and the payment of
development milestones. Approximately $2.0 million of the net proceeds of the
Offering will be used to repay a portion of a debt financing currently being
negotiated with entities associated with Hambrecht & Quist Group (the "$2.0
Million Tranche"). The $2.0 Million Tranche will bear interest at the rate of 9%
per year. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources." The balance of the net
proceeds of the Offering are expected to be used for working capital and general
corporate purposes. In addition, a portion of the net proceeds may be used for
the acquisition of complementary businesses, products or technologies. The
Company has no present understandings, commitments or agreements, nor is it
engaged in any negotiations, with respect to any acquisition. Pending
application of the net proceeds of the Offering as described above, the Company
intends to invest such proceeds in short-term, investment-grade,
interest-bearing financial instruments.
The Company anticipates that its existing resources, including the net proceeds
of the Offering, projected interest income and committed funding from its
existing corporate partnership, will enable the Company to maintain its current
and planned operations through 1998. The Company's forecast of the period of
time through which its financial resources will be adequate to support its
operations is a forward-looking statement that involves risks and uncertainties,
and actual results could vary as a result of a number of factors, including
those described in "Risk Factors" and elsewhere in this Prospectus.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital stock.
The Company currently intends to retain any future earnings to finance the
growth and development of its business and therefore does not anticipate paying
any cash dividends in the foreseeable future.
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<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1996, (i) the pro forma
capitalization of the Company giving effect to the conversion of all outstanding
shares of Preferred Stock into Common Stock, and (ii) the pro forma
capitalization as adjusted to give effect the issuance of 983,204 shares of
Common Stock upon the exercise of certain outstanding warrants upon the closing
of this Offering and to the receipt by the Company of the estimated net proceeds
from the sale of the shares of Common Stock offered hereby at an assumed initial
public offering price of $ per share, after deducting the estimated
underwriting discount and estimated offering expenses payable by the Company,
and the repayment of the $2.0 Million Tranche:
<TABLE>
<CAPTION>
----------------------
JUNE 30, 1996
----------------------
AS
IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA PRO FORMA ADJUSTED
---------- ----------
(UNAUDITED)
<S> <C> <C>
Total debt and capital lease obligations............................ $ 5,193 $ 5,193
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding, pro forma
and as adjusted.................................................. - -
Common stock, $0.001 par value; 30,000,000 shares
authorized; 3,629,682 shares issued and outstanding, pro forma;
shares issued and outstanding, as adjusted (1)............ 50,599
Warrants to purchase Common Stock................................. 704 704
Notes receivable issued for stock................................. (146) (146)
Deferred compensation............................................. (172) (172)
Deficit accumulated during the development stage.................. (40,657) (40,657)
---------- ----------
Total stockholders' equity........................................ 10,328
---------- ----------
Total capitalization............................................ $15,521 $
---------- ----------
---------- ----------
</TABLE>
- ------------------------
(1) Excludes as of June 30, 1996: (i) 597,143 shares of Common Stock issuable
upon exercise of outstanding stock options as at a weighted average exercise
price of $2.15 per share; (ii) 408,504 shares of Common Stock issuable upon
exercise of outstanding warrants at exercise prices ranging from $8.00 to $25.00
per share and a weighted average exercise price of $20.92 per share; and (iii)
168,000 shares of Common Stock reserved for issuance under the Stock Plans. See
"Management - Stock Plans" and "Description of Capital Stock."
16
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of June 30, 1996 was
approximately $10,328,000, or $2.85 per share of Common Stock. Pro forma net
tangible book value per share is determined by dividing the net tangible book
value (tangible assets less total liabilities) of the Company by the number of
shares of Common Stock outstanding at that date. Without taking into account any
other changes in the net tangible book value after June 30, 1996, other than to
give effect to the receipt by the Company of the estimated net proceeds from the
sale of the shares of Common Stock offered by the Company hereby at an
assumed initial public offering price of $ per share and the repayment of
the $2.0 Million Tranche, the pro forma net tangible book value of the Company
as of June 30, 1996 would have been $ , or $ per share. This
represents an immediate increase in the pro forma net tangible book value of
$ per share to existing stockholders and an immediate dilution of $
per share to new investors. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price $
Pro forma net tangible book value before the Offering $2.85
Increase attributable to new investors
----------
Pro forma net tangible book value after the Offering $
----------
Dilution to new investors
$
----------
----------
</TABLE>
The following table summarizes, on a pro forma basis as of June 30, 1996, after
giving effect to the issuance of 983,204 shares of Common Stock upon the
exercise of certain outstanding warrants upon closing of this Offering, the
difference between existing stockholders and purchasers of shares in the
Offering (at an assumed initial public offering price of $ per share and
before deducting the underwriting discount and estimated offering expenses
payable by the Company) with respect to the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid:
<TABLE>
<CAPTION>
----------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ---------- ---------- ---------- ----------
Existing stockholders 4,612,886 % $54,109,000 % $11.73
<S> <C> <C> <C> <C> <C>
New investors
---------- ---------- ---------- ----------
Total 100% 100%
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The foregoing computations exclude as of June 30, 1996: (i) 597,143 shares of
Common Stock issuable upon exercise of outstanding stock options, at a weighted
average exercise price of $2.15 per share; (ii) 408,504 shares of Common Stock
issuable upon exercise of outstanding warrants, at exercise prices ranging from
$8.00 to $25.00 per share and a weighted average exercise price of $20.92 per
share; and (iii) 168,000 shares of Common Stock available for future grant under
the Stock Plans. To the extent that options or warrants are exercised and shares
of Common Stock are issued, there will be further dilution to new investors. See
"Management - Stock Plans" and "Description of Capital Stock."
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data set forth below with respect to the Company's
consolidated statements of operations data for the years ended December 31,
1993, 1994 and 1995 and the consolidated balance sheet data at December 31, 1994
and 1995 are derived from the consolidated financial statements of the Company
included elsewhere in this Prospectus which have been audited by Ernst & Young
LLP, independent auditors. The consolidated statement of operations data for the
period from inception (December 11, 1990) to December 31, 1992 and the
consolidated balance sheet data at December 31, 1992 and 1993 are derived from
consolidated financial statements audited by Ernst & Young LLP not included in
this Prospectus. The consolidated statements of operations data for the six
months ended June 30, 1995 and 1996 and for the period from inception (December
11, 1990) to June 30, 1996 and the consolidated balance sheet data at June 30,
1996, are derived from unaudited consolidated financial statements that have
been prepared on the same basis as the audited consolidated financial statements
and in the opinion of management contain all adjustments, consisting only of
normal recurring adjustments, necessary for fair presentation of the financial
position at such date and the results of operations for such periods. The
historical results are not necessarily indicative of the results of operations
to be expected for the entire year. The data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and the
Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
INCEPTION INCEPTION
(DEC. 11, SIX MONTHS ENDED JUNE (DEC. 11,
1990) TO YEAR ENDED DECEMBER 31, 30, 1990) TO
DEC. 31, ------------------------------------- ------------------------ JUNE 30,
IN THOUSANDS, EXCEPT PER SHARE DATA 1992 1993 1994 1995 1995 1996 1996
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
License revenue......................... $ - $ - $ - $ - $ - $ 250 $ 250
Operating expenses:
Research and development.............. 1,167 4,731 8,823 12,856 6,692 4,009 31,586
General and administrative............ 429 947 2,802 3,402 1,640 1,408 8,988
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses................ 1,596 5,678 11,625 16,258 8,332 5,417 40,574
----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss from operations.................... (1,596) (5,678) (11,625) (16,258) (8,332) (5,167) (40,324)
Interest (income) expense, net.......... 34 (161) (258) 466 115 229 310
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net loss............................ $ (1,630) $ (5,517) $ (11,367) $ (16,724) $ (8,447) $ (5,396) $ (40,634)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Pro forma net loss per shares (1)....... $ (4.65) $ (2.42) $ (1.25)
----------- ----------- -----------
----------- ----------- -----------
Shares used in computing pro forma
net loss per share (1)................. 3,594 3,484 4,319
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------
AS OF DECEMBER 31,
------------------------------------------
IN THOUSANDS 1992 1993 1994 1995
--------- --------- --------- --------- AS OF
JUNE 30,
1996
---------
(UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and short term $ 4,030 $ 5,466 $ 9,743 $ 5,569 $ 12,507
investments..........................
Working capital....................... 3,904 5,196 7,686 271 7,402
Total assets.......................... 5,375 7,662 16,099 11,448 18,208
Long-term portion of debt and capital 500 938 4,085 6,967 5,193
lease obligations....................
Deficit accumulated during development (1,653) (7,170) (18,537) (35,261) (40,657)
stage................................
Total stockholders' equity............ 4,568 6,363 10,561 1,804 10,328
</TABLE>
- ------------------------
(1) See Note 1 of Notes to Consolidated Financial Statements for a description
of the shares used in calculating pro forma net loss per share.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this Prospectus contain forward-looking statements
which involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed in "Risk Factors."
OVERVIEW
CVT is a development stage biopharmaceutical company focused exclusively on the
application of molecular cardiology to the discovery, development and
commercialization of novel small molecule drugs for the treatment of chronic
cardiovascular disease. Since its inception in December 1990, substantially all
of the Company's resources have been dedicated to research and development. To
date, CVT has not generated any product revenue and does not expect to generate
any such revenues for at least several years. As of June 30, 1996, the Company
has an accumulated deficit of approximately $40.7 million. The Company expects
its source of revenue, if any, for the next several years to consist of payments
under future corporate partnerships. The process of developing the Company's
products will require significant additional research and development,
preclinical testing and clinical trials, as well as regulatory approval. These
activities, together with the Company's general and administrative expenses, are
expected to result in operating losses for the foreseeable future. The Company
will not receive product revenue unless it completes clinical trials and
successfully commercializes one or more of its products.
CVT is subject to risks common to biopharmaceutical companies, including risks
inherent in its research and development efforts and clinical trials, reliance
on collaborative partners, enforcement of patent and proprietary rights, the
need for future capital, potential competition and uncertainty of regulatory
approval. In order for a product to be commercialized, it will be necessary for
CVT and its collaborators to conduct preclinical tests and clinical trials,
demonstrate efficacy and safety of the Company's product candidates, obtain
regulatory clearances and enter into manufacturing, distribution and marketing
arrangements, as well as obtain market acceptance. There can be no assurance
that the Company will generate revenues or achieve and sustain profitability in
the future.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
REVENUES. The Company recognized revenues of $250,000 for the six months ended
June 30, 1996, compared to no revenues for the six months ended June 30, 1995.
The revenue in 1996 was attributed to a non-refundable, up-front fee earned from
a license agreement with the Company's corporate partner.
RESEARCH AND DEVELOPMENT EXPENSES. The Company's research and development
expenses decreased to $4.0 million for the six months ended June 30, 1996,
compared to $6.7 million for the six months ended June 30, 1995. The higher
expenses in 1995 were largely due to higher development expenditures associated
with the CVT-1 hypercholesterolemia program, which was terminated in late 1995
and for which minimal costs were incurred in 1996. In addition, research and
development expenses decreased in 1996 as a result of a decrease in research
personnel and related expenses resulting from a reduction in headcount in
November 1995, partially offset by a $750,000 license fee paid in March 1996 in
equity securities. Under a current license agreement, the Company may be
obligated to make milestone payments totaling $3.0 million to the licensor in
1997 unless the Company elects to terminate the agreement. In addition, the
Company expects research and development expenses to increase significantly over
the next several years as the Company expands research and product development
efforts and amortizes deferred compensation expense. See Note 8 of Notes to
Consolidated Financial Statements.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased to $1.4 million for the six months ended June 30, 1996, compared to
$1.6 million for the six months ended June 30, 1995. The Company
19
<PAGE>
expects general and administrative expense to increase in the future due to an
increase in the level of the Company's activities, additional expenses
associated with being a public company and amortization of deferred compensation
expense. See Note 8 of Notes to Consolidated Financial Statements.
INTEREST EXPENSE, NET. Interest expense, net increased to $229,000 for the six
months ended June 30, 1996, compared to $115,000 for the six months ended June
30, 1995, primarily as a result of higher average loan balances outstanding in
1996 as compared to 1995. The Company expects that interest expense, net will
increase in the quarter ending September 30, 1996, as a result of its current
negotiations to refinance its existing debt.
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
RESEARCH AND DEVELOPMENT EXPENSES. The Company's research and development
expenses increased to $12.9 million for the year ended December 31, 1995, from
$8.8 million for the year ended December 31, 1994, and $4.7 million for the year
ended December 31, 1993. Research and development expenses increased as a result
of higher development expenses primarily associated with the CVT-1 program which
was terminated in late 1995, along with higher expenses associated with the
hiring of additional personnel to support the Company's expanding research and
product development efforts.
GENERAL AND ADMINISTRATIVE EXPENSES. The Company's general and administrative
expenses increased to $3.4 million for the year ended December 31, 1995, from
$2.8 million for the year ended December 31, 1994, and $947,000 for the year
ended December 31, 1993, primarily as a result of costs associated with the
increasing level of the Company's activities, including increased headcount and
related expenses.
INTEREST EXPENSE, NET. Interest expense, net increased to $466,000 for the year
ended December 31, 1995, from interest (income), net $(258,000) for the year
ended December 31, 1994, and interest (income), net $(161,000) for the year
ended December 31, 1993. These changes relate primarily to increased debt
balances and decreased cash and investment balances.
The Company records and amortizes over the related vesting periods deferred
compensation representing the difference between the exercise price of options
granted and the deemed fair value of its Common Stock at the time of grant.
Options generally vest over four years. Deferred compensation of approximately
$172,000 was recorded in the six months ended June 30, 1996. Deferred
compensation associated with option grants in September 1996 of $1,212,000 will
be recorded in the quarter ending September 30, 1996.
The Company has not generated significant taxable income to date. At December
31, 1995, the net operating losses available to offset future taxable income for
federal income tax purposes were approximately $32.0 million. Because the
Company has experienced ownership changes, future utilization of the
carryforwards may be limited in any one fiscal year pursuant to Internal Revenue
Code regulations. The carryforwards expire at various dates beginning in 2007
through 2010 if not utilized. As a result of the annual limitation, a portion of
these carryforwards may expire before becoming available to reduce the Company's
federal income tax liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private placements of preferred equity securities, equipment and leasehold
improvement financing and other debt financing. As of June 30, 1996, the Company
had received approximately $50.2 million in net proceeds from the sale of equity
securities, $4.4 million from equipment and leasehold improvement financing with
Imperial Bank and Lease Management Services, Inc. (the "Equipment and Leasehold
Financings") and $4.0 million from a term loan with MMC/GATX Partnership No. 1
(the "MMC Term Loan").
Cash, cash equivalents and short-term investments at June 30, 1996 totalled
$12.5 million compared to $5.6 million at December 31, 1995. The increase in
1996 was due to receipt of the net proceeds from the sale of equity securities.
The Company's funds are currently invested in short-term, investment grade,
interest-bearing debt obligations.
Net cash used in operations for the six months ended June 30, 1996 was $4.3
million, compared to $6.9 million for the six months ended June 30, 1995. The
decrease in cash used was primarily a result of a decrease in development
expenses and reduced headcount and related expenses. Net cash used in operations
in 1995 was
20
<PAGE>
$14.3 million, compared to $10.3 million in 1994. Net cash used in operations
increased primarily due to the increase in development expenses, most of which
were related to clinical trials and other development expenditures for the CVT-1
program.
Through June 30, 1996, the Company had invested approximately $6.0 million in
property and equipment, of which approximately $4.4 million was financed through
the Equipment and Leasehold Financings. Minimum annual principal payments due
under the Equipment and Leasehold Financings are expected to total approximately
$1.7 million and $1.4 million in 1996 and 1997, respectively. Payments made
under the Equipment and Leasehold Financings were $875,000 in the six months
ended June 30, 1996 and $681,000 in the six months ended June 30, 1995. Annual
principal payments due under the MMC Term Loan are expected to total $2.0
million in 1996 and $2.0 million in 1997. The Company paid $1.3 million under
the MMC Term Loan for the six months ended June 30, 1996 and $109,000 for the
six months ended June 30, 1995.
The Company is currently negotiating a refinancing of the MMC Term Loan and the
Equipment and Leasehold Financings with $5.0 million debt financing from
entities associated with Hambrecht & Quist Group (the "H&Q Debt Financings"). Of
the H&Q Debt Financings, $3.0 million is expected to take the form of a term
loan which bears interest at the rate of 9% per annum, would be secured by all
of the assets of the Company and would be due in September 1999. The remaining
$2.0 million is expected to take the form of a term loan which bears interest at
the rate of 9% per annum and would be due 90 days after the issuance of the term
loan the ("$2.0 Million Tranche"). The Company will have the option to convert
the $2.0 million Tranche into an equipment lease at its election, which lease
would bear interest at the rate of 9% per annum and would be due in September
1999. The Company intends to use $2.0 Million of the net proceeds from the
Offering to repay the $2.0 million Tranche. In connection with the H&Q Debt
Financings, the Company intends to issue a warrant to purchase 84,500 shares of
Common Stock at an exercise price of $2.50 per share and a warrant to purchase
84,500 shares of Common Stock at an exercise price of $20.00 per share. The
warrants would expire in September 2001. See Note 10 to Consolidated Financial
Statements.
The Company will require substantial additional funding after this Offering in
order to complete its research and development activities and commercialize any
potential products. The Company currently estimates that its existing resources,
including the net proceeds from this Offering and projected interest income,
will enable the Company to maintain its current and planned operations through
1998. However, there can be no assurance that the Company will not require
additional funding prior to such time. The Company's forecast of the period of
time through which its financial resources will be adequate to support its
operations is a forward-looking statement that involves risks and uncertainties,
and actual results could vary as a result of a number of factors, including
those described in "Risk Factors" and elsewhere in this Prospectus. If the
Company is unable to establish corporate partnerships for development of CVT-124
and ranolazine, the Company's future capital requirements will increase
substantially. In addition, the Company's future capital requirements will
depend on many other factors, including scientific progress in its research and
development programs, the size and complexity of such programs, the scope and
results of preclinical studies and clinical trials, the ability of the Company
to establish and maintain corporate partnerships, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patent claims, competing technological and market developments, the
cost of manufacturing preclinical and clinical material and other factors not
within the Company's control. There can be no assurance that such additional
financing to meet the Company's capital requirements will be available on
acceptable terms or at all. Insufficient funds may require the Company to delay,
scale back or eliminate some or all of its research or development programs, to
lose rights under existing licenses or to relinquish greater or all rights to
product candidates at an earlier stage of development or on less favorable terms
than the Company would otherwise choose or may adversely affect the Company's
ability to operate as a going concern. If additional funds are raised by issuing
equity securities, substantial dilution to existing stockholders may result.
21
<PAGE>
BUSINESS
OVERVIEW
The Company is a biopharmaceutical company focused exclusively on the
application of molecular cardiology to the discovery, development and
commercialization of novel, small molecule drugs for the treatment of chronic
cardiovascular diseases. Molecular cardiology was developed, in part, by CVT
scientists and their academic collaborators and is based upon the application of
molecular biology and genetics to cardiovascular diseases. This discipline has
yielded new insights into the mechanisms underlying chronic cardiovascular
diseases and has enhanced the search for innovative cardiovascular drugs by
providing an increasing number of new molecular targets for drug discovery. To
date, CVT has discovered five compounds and completed the strategic in-license
of a sixth compound for treatment of chronic cardiovascular diseases.
Two of the Company's drug candidates, CVT-124 and ranolazine, are in clinical
trials. CVT-124, an adenosine A(1) receptor antagonist discovered by CVT, has
potential applications in the treatment of edema associated with congestive
heart failure ("CHF") and in the prevention and treatment of acute renal
failure. A Phase I/II study completed by the Company in the United States
indicated that CVT-124 is generally well tolerated and produces diuretic
activity in healthy volunteers. Approximately one-quarter of the 875,000
hospitalized CHF patients in the United States do not respond sufficiently to
currently available diuretics. The Company believes that these patients would
represent the initial target market for CVT-124 in this indication.
The Company's second compound in clinical trials, ranolazine, is a new compound
for the treatment of angina. Ranolazine was licensed from Syntex in March 1996.
Its novel metabolic mechanism of action of ranolazine was discovered, in part,
by cardiovascular researchers now at or associated with CVT. In Phase I and
Phase II clinical trials conducted by Syntex, ranolazine IR was administered to
over 1200 patients. These clinical trials have indicated that ranolazine IR
improved exercise tolerance in angina patients without adversely affecting heart
rate or decreasing blood pressure, a clinical profile absent from currently
available drugs. Based on these data, as well as Syntex pilot Phase II data with
ranolazine SR for intermittent claudication, the Company intends to commence
further clinical trials of a sustained release formulation of ranolazine. The
Company believes ranolazine could particularly benefit angina patients who also
suffer from CHF or remain symptomatic despite maximal doses of currently
available anti-anginal drugs. In the United States, approximately 6.7 million
patients are currently diagnosed with angina. Based on published studies,
approximately one-third, or two million, are either diagnosed with both angina
and CHF or are resistant to currently available treatments. The Company believes
these approximately two million patients would represent the initial target
market for ranolazine.
Four other compounds discovered by the Company are in preclinical studies.
CVT-313 is a selective inhibitor of the cell cycle enzyme, cyclin-dependent
kinase 2 ("CDK2"). The Company believes that CVT-313 may be useful in a variety
of cellular proliferative disorders, including the prevention of restenosis, as
an adjunct to arterial bypass grafting and as a treatment for cardiomyopathy.
CVT-634, an inhibitor of another cell cycle regulating enzyme, is also being
evaluated in animal models of chronic cardiovascular disease. CVT-609 and
CVT-429 are highly selective adenosine A(1) receptor agonists which the Company
believes may have potential activity in treating certain common cardiac
arrhythmias. The Company believes that compared to current therapies, these
compounds may offer an improved clinical profile for immediate treatment of
these arrhythmias without unwanted blood pressure lowering effects.
In addition, the Company has discovered a novel inflammatory factor found in
human cardiovascular diseases, which it partnered to Bayer AG for continued
development.
BACKGROUND
The cardiovascular system is comprised of the heart, the blood vessels, the
kidneys and the lungs. Together, the components of the cardiovascular system
deliver oxygen and other nutrients to the tissues of the body and remove waste
products. The heart propels blood through a network of arteries and veins. The
kidneys closely regulate the blood volume and the balance of electrolytes (such
as sodium, potassium and chloride) in the blood, and the lungs oxygenate the
blood and remove carbon dioxide. To accomplish these tasks, the cardiovascular
system must maintain adequate blood flow, or cardiac output. Cardiac output is
determined by such factors as heart rate and blood pressure, which in turn are
controlled by a variety of hormones such as adrenaline, angiotensin and
22
<PAGE>
adenosine. These hormones are small molecules which exert their effects by
binding to specific receptors on the surfaces of a variety of cell types in the
heart, lungs, blood vessels and kidneys. Any significant disruption of this
system results in cardiovascular disease.
Cardiovascular disease is the leading cause of death in the United States,
claiming more than 950,000 lives in 1993. The American Heart Association
projects the total cost of cardiovascular medications in the United States for
1996 at $11 billion.
Chronic cardiovascular diseases, including atherosclerosis (hardening of the
arteries), hypertension (high blood pressure) and others, may cause permanent
damage to the heart and blood vessels, leading to CHF, (4.7 million patients),
angina (6.8 million patients) and, heart attack (1.5 million patients). CHF
occurs when the heart becomes weakened and, as a result, can no longer maintain
adequate blood circulation throughout the body. The kidneys respond to this
decrease in blood flow by increasing the retention of salt and water, leading to
chronic symptoms such as shortness of breath and edema (fluid retention) in the
legs and lungs.Molecular cardiology has provided new insight into the mechanisms
underlying chronic cardiovascular diseases, thus creating the opportunity for
improved therapies.
Over the past twenty years, drugs such as nitrates, beta blockers, calcium
channel blockers and ACE inhibitors, have been developed to treat cardiovascular
diseases. These drugs have contributed to an increase in the survival of
patients who suffer from chronic cardiovascular disease; however, they also
cause a variety of undesirable side effects, including fatigue, depression,
impotence, headaches, palpitations and edema.
BUSINESS STRATEGY
The Company's strategy is to become a leader in the development of novel,
cost-effective treatments for chronic cardiovascular diseases by leveraging its
expertise in molecular cardiology. The Company is developing products based on
small molecules designed to (i) utilize novel mechanisms of action, (ii) address
segments of the cardiovascular patient population which are either underserved
or not treatable by existing therapies, and (iii) offer the currently served
cardiovascular patient population the potential for improved efficacy with fewer
side effects than available drugs.
The Company believes that it can best utilize its internal resources by
concentrating its activities on discovery, preclinical evaluation and early
clinical phases of drug development. The Company intends to establish
partnerships with pharmaceutical companies for later stage clinical trials and
marketing and sales activities for its products. The Company believes that such
partnerships will enable it to more effectively and economically develop and
market its initial products.
DRUG DISCOVERY PLATFORM
CVT's drug discovery platform supports several programs, including those focused
on the adenosine A(1) receptor, the cell cycle and chronic inflammation in the
cardiovascular system. These programs have produced compounds currently in
clinical or preclinical development or outlicensed for use in third party drug
discovery programs. CVT's expertise in molecular cardiology and drug development
has been critical to the identification of these drug candidates.
The Company believes that its drug discovery platform allows it to efficiently
select novel, clinically relevant drug candidates that have significant
probability of commercial potential. CVT first evaluates new targets with
respect to clinical relevance and suitability for small molecule inhibition. CVT
then utilizes a highly integrated, multidisciplinary approach to produce novel
small molecules as drug candidates for these targets. The Company combines
molecular modeling and combinatorial chemistry to assemble targeted libraries of
new chemical entities, an approach which the Company believes expedites the
identification of potential drug leads. The Company has developed a
comprehensive proprietary database correlating biological activity of candidate
drugs with their structures. From this database, CVT identifies final lead
compounds based on predetermined development criteria including potency,
specificity, manufacturability, and pharmacologic activity in animal and IN
VITRO models. The Company determines the proper selection of cell-based assays
and animal models of disease to enhance development of the drug candidate based
on its projected use in the clinical setting.
23
<PAGE>
PRODUCTS UNDER DEVELOPMENT
The Company's products under development include:
<TABLE>
<CAPTION>
PRODUCT TARGET INDICATION DEVELOPMENT STATUS(1)
- ---------- -------------------- --------------------------- --------------------------
<S> <C> <C> <C>
CVT-124 A(1) receptor Edema associated with CHF Phase I/II completed
(antagonist) Acute Renal Failure Phase I completed
RANOLAZINE Glucose metabolism Angina Phase II completed
Intermittent Claudication Pilot Phase II completed
CVT-609 A(1) receptor Supraventricular Preclinical
(agonist) Tachycardia
CVT-429 A(1) receptor Supraventricular Preclinical
(agonist) Tachycardia
CVT-313 CDK2 Restenosis, Arterial Bypass Preclinical
Graft, Cardomyopathy
CVT-634 Proteasomal protease Restenosis, Arterial Bypass Preclinical
Graft, Cardiomyopathy
</TABLE>
- ------------------------
(1) "Phase II" indicates initial efficacy testing in a limited patient
population.
"Phase I/II" indicates testing in humans for safety and preliminary indications
of biological activity.
"Phase I" indicates initial safety testing and pharmacological profiling in
humans.
"Preclinical" indicates lead compound selected for development which meets
predetermined criteria for potency, specificity, manufacturability, and
pharmacologic activity in animal and IN VITRO models.
CVT-124
The Company believes that CVT-124 is the most potent and selective adenosine
A(1) receptor antagonist reported to date. Preclinical studies and clinical
trials have shown statistically significant increases in sodium excretion in
response to CVT-124. Thus, the Company believes that CVT-124 has the potential
to be an effective new therapy for treatment of edema due to CHF and prevention
and treatment of acute renal failure and is developing it for these uses.
CVT-124 was identified in the Company's adenosine A(1) receptor program. This
program is focused on the development of agents that are highly selective for
the adenosine A(1) receptor and has produced both antagonists and agonists to
this class of receptors. The Company continues to explore additional
applications of the technology developed in the adenosine A(1) receptor program.
Adenosine is a naturally occurring hormone that modulates different functions of
the heart, brain, kidney and blood vessels. Its actions are mediated in these
organs by two classes of receptors, A(1) and A(2), that stimulate very different
physiological effects that can be separately targeted in drug development.
Adenosine A(1) receptors are located on the proximal tubules of the kidney where
they stimulate reabsorption of sodium and hence of water. The Company believes
that it was among the first to identify the presence of these adenosine A(1)
receptors in the proximal tubule of the kidney. In contrast to A(1) receptors,
adenosine A(2) receptors stimulate the dilation of blood vessels in the heart,
muscles and kidney thereby lowering blood pressure.
CVT has focused on creating an adenosine A(1) receptor antagonist specific
enough to avoid blocking the A(2) receptor and thus avoiding unintended side
effects. This concept was developed based on the Company's insight into the
newly discovered role of the A(1) receptor on the proximal tubule cell of the
kidney and its potential importance in treatment of edema states, such as CHF,
which are characterized by excessive accumulation of sodium and water in the
body.
24
<PAGE>
INDICATIONS
EDEMA ASSOCIATED WITH CONGESTIVE HEART FAILURE. Approximately 4.7 million
people in the United States suffer from CHF, with an estimated 400,000 new
diagnoses each year. These patients typically seek medical help because of
edema, an accumulation of fluid in the lungs and extremities. Approximately
875,000 patients require hospitalization each year in the United States for the
treatment of CHF, and it is the leading cause of hospital admissions among
patients over 65. Approximately one-quarter or 200,000 of these hospitalized
patients do not respond sufficiently to diuretic treatments. The Company
believes that these patients would represent the initial target market for
CVT-124 in this indication.
Edema fluid accumulates in the body because of adaptations by the kidney during
CHF. Each kidney is comprised of approximately one million tiny blood filtering
units called nephrons. (See Figure 1) Normally in each nephron, blood is
filtered at the renal glomerulus and sodium and water are reabsorbed by the
kidney at three locations further along the nephron. Fifty to seventy percent of
the filtered sodium is reabsorbed at the proximal tubule, the portion of the
nephron closest to the glomerulus. Up to 40% is reabsorbed at the loop of Henle,
and the remaining portion, usually less than 10%, is reabsorbed at the distal
tubule. The filtered, non-reabsorbed impurities wash out into the urine. In
patients suffering from CHF, blood flow through the kidney decreases because of
the poor pumping function of the heart. The kidney interprets this event as
blood loss and attempts to increase its retention of salt and water to maintain
blood pressure. It does this by shifting more (up to 99%) of its reabsorption of
sodium to the proximal tubule. The result is the harmful build-up of salt and
water in the body, leading to edema.
Graphical description of sodium reabsorption in the kidney
25
<PAGE>
Current treatment of CHF consists of therapy designed to improve the pumping
function of the heart combined with the administration of diuretics to eliminate
excess sodium and water from the body by blocking reabsorption in the kidney.
However, current diuretic therapies inhibit sodium reabsorption either at the
loop of Henle (furosemide) or the distal tubule (thiazides and spironolactone),
where as little as one percent of reabsorption of sodium can take place in
patients with advanced CHF. Since increasing amounts of sodium are reabsorbed
proximally as CHF worsens, distally acting drugs are correspondingly less
effective over time and patients become more symptomatic. Approximately one
quarter of hospitalized CHF patients do not respond to current diuretic
therapies due to excessive fluid reabsorption in the proximal tubule, and no
therapy currently exists which targets this site of the disease process. The
dosage for the most commonly prescribed diuretics for edema associated with CHF
are often increased as the disease progress, and therefore are increasingly
associated with toxic side effects, including potassium loss, which may lead to
an increased incidence of cardiac arrhythmias if potassium is not monitored and
replaced, and uric acid build-up which may lead to gout.
Preclinical studies conducted by the Company have indicated that CVT-124 acts as
a potent diuretic by blocking the adenosine A(1) receptors in the proximal
tubule that would ordinarily stimulate sodium reabsorption at that site. These
studies also indicated that CVT-124 acted at the distal tubule to reduce sodium
reabsorption and minimize potassium excretion. This combination of diuretic
mechanisms indicates a unique clinical profile as compared to currently
available drugs and suggests that CVT-124 may be particularly useful in the
treatment of edema associated with CHF on an acute and chronic basis.
Presentation of potential advantages of CVT over existing diuretics
CVT completed a double-blind, placebo-controlled Phase I/II trial of intravenous
CVT-124 in 30 healthy volunteers. Data from this trial support CVT-124's
combination of diuretic mechanisms. Statistically significant, dose-related
increases in sodium excretion were observed in response to CVT-124, amounting to
a doubling or more in the excretion of sodium compared to placebo. In contrast,
mean potassium excretion did not show clinically significant increases. Uric
acid excretion was also significantly increased by CVT-124 compared to placebo.
CVT-124 was generally well-tolerated.
ACUTE RENAL FAILURE. Acute renal failure is a decline in kidney function that
may require temporary or chronic therapy with dialysis procedures. Acute renal
failure is a complication of certain general medical conditions associated with
low blood flow and certain commonly used medications or diagnostic agents, such
as
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cyclosporine, gentamicin, amphotericin, cis-platinum, and radiocontrast dye used
in x-ray studies. Because the A(1) receptor may be relevant in this type of
kidney failure, CVT is planning clinical trials in acute renal failure to assess
the opportunity for its treatment and prevention by CVT-124.
FUTURE DEVELOPMENT OF CVT-124
While the Company's clinical trials to date have utilized an intravenous
formulation of CVT-124, the Company intends to develop CVT-124 in both
intravenous and oral formulations, both for the treatment of edema in fluid-
retaining states like CHF and for the treatment or prevention of acute renal
failure. There can be no assurance that CVT-124 will prove to be safe or
efficacious in humans or that CVT-124 will obtain FDA or other regulatory or
foreign marketing approval for any indication.
The Company is currently planning three clinical trials: a Phase II intravenous
trial in stable CHF (18-24 patients); a Phase II intravenous trial in renal
transplant patients with acute renal failure (30-40 patients); and a Phase I
trial to explore the feasibility of an oral formulation (6-8 patients). The
first of these trials is planned to begin in the first half of 1997. The
Company's current estimate of the commencement of various clinical trials
included in this Prospectus are forward-looking statements that involve risks
and uncertainties. The actual clinical trial dates could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the Company's success in completing preclinical development
and the other factors set forth under "Risk Factors" and elsewhere in this
Prospectus.
RANOLAZINE
Ranolazine is a patented compound which has been tested by Syntex in Phase I and
Phase II trials in patients with angina. The compound fits the Company's
criteria for development candidates as it is a small molecule which works
through a novel mechanism of action. The Company successfully obtained a license
for ranolazine from Syntex in March 1996, after the acquisition of Syntex by
Roche. The Company is developing ranolazine to treat angina because the Company
believes it does not impair blood pressure or heart rate and has an improved
tolerability profile.
Ranolazine acts by modulating the body's metabolism to shift the source of
energy for the heart from fatty acid toward glucose. Ranolazine decreases the
heart's oxygen demand for a given level of cardiac work because less oxygen is
required to produce an equivalent amount of energy from glucose than from fatty
acids. The Company believes this effect on muscle metabolism may also benefit
patients suffering from intermittent claudication.
INDICATIONS
ANGINA. Angina is a clinical syndrome manifested by chest pain caused by
myocardial ischemia (insufficient blood flow to the heart muscle) due to
blockage of the coronary arteries. Patients usually experience chest pain on
exertion which can become more severe over time. In the United States,
approximately 6.7 million patients are currently diagnosed with angina. Based on
published studies, over half of these patients are currently being treated with
multiple medications, including nitrates, beta blockers and calcium channel
blockers. These anti-anginal drugs accounted for over $3.0 billion in U.S. sales
in 1995. Based on published studies, approximately one-third, or two million, of
angina patients are either diagnosed with both angina and CHF or are resistant
to currently available treatments. The Company believes these approximately two
million patients would represent the initial target market for ranolazine.
All currently available drugs to treat angina reduce the heart's oxygen demand
by reducing cardiac work via hemodynamic mechanisms (reduction of pump function,
heart rate, and/or blood pressure). These hemodynamic effects can limit or
prevent the use of currently available drugs in patients whose blood pressure or
cardiac function is already decreased. These effects can be particularly
pronounced when these drugs are used in combination. Additional adverse effects
include lower extremity edema associated with calcium channel blockers,
impotence and depression associated with beta blockers and headaches associated
with nitrates. Consequently, for
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some patients, presently available medical treatment cannot provide complete
relief of angina without unacceptable adverse effects. The following table sets
forth the mechanisms through which anti-anginal drugs operate:
<TABLE>
<CAPTION>
MECHANISMS FOR ANTI-ANGINAL AGENTS
CHANGE IN CHANGE IN BLOOD
THERAPY HEART RATE PRESSURE MECHANISM
<S> <C> <C> <C>
Nitrates None down arrow Vasodilation
Beta Blockers down arrow down arrow Decreased Pump Function
Calcium Channel Blockers down arrow down arrow Decreased Pump Function, Vasodilation
Ranolazine None None Metabolic Modulation
</TABLE>
Ranolazine IR has been administered to over 200 healthy human volunteers and
over 1,200 patients with ischemic heart disease or CHF in clinical trials
conducted by Syntex. Placebo controlled ranolazine IR trials involving treadmill
testing in patients with chronic stable angina have demonstrated statistically
significant and clinically meaningful increases in (i) exercise time to onset of
angina, (ii) total exercise duration, and (iii) exercise time to onset of an
electrocardiographic change associated with insufficient blood flow to the heart
muscle. The anti-anginal effect of ranolazine IR was observed in these trials
regardless of whether the drug was given alone or in combination with beta
blockers or calcium channel blockers and were generally well tolerated without
significant incidence of adverse events.
In initial clinical trials, ranolazine IR was administered on a three times
daily schedule. To achieve a more commercially attractive product with a
twice-daily dosing schedule, Syntex developed ranolazine SR. In volunteer trials
conducted by Syntex, the SR formulation maintained ranolazine plasma
concentrations in the range associated with increased exercise times in the
stable angina trials of ranolazine IR.
Although CVT intends to pursue regulatory approval for treatment of all patients
with chronic angina, the Company believes angina patients who are resistant to
currently available treatments and those with angina and CHF would represent the
initial market for ranolazine.
INTERMITTENT CLAUDICATION. Intermittent claudication is a clinical syndrome
manifested by pain in the legs during exercise. Like angina, this syndrome is
caused by blockage or narrowing of arteries. These patients generally either
limit their activity or in severe cases undergo vascular surgery. Over two
million people in the United States suffer from intermittent claudication. Only
one drug is approved by the FDA to treat this condition in the United States,
and worldwide sales in 1995 were approximately $400 million.
A pilot trial of ranolazine SR in patients with intermittent claudication was
completed by Syntex in 1994. Ranolazine SR was generally well tolerated and
exhibited a trend toward prolongation of exercise duration and time to onset of
claudication. This clinical trial was not intended to be large enough to
demonstrate statistical significance. Further trials will be required to
demonstrate the utility of ranolazine SR for this indication.
DEVELOPMENT HISTORY OF RANOLAZINE
Following the acquisition of Syntex by Roche in 1994, ranolazine clinical
development was discontinued. Previously, Syntex had met with the FDA to
establish a Phase III clinical development program for ranolazine SR in both
angina and intermittent claudication and had begun enrollment in an angina Phase
III trial in late 1994.
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FUTURE DEVELOPMENT OF RANOLAZINE
CVT is actively seeking a corporate partner for the development of ranolazine,
prior to initiating new Phase III trials in angina which the Company currently
expects to involve several hundred patients. The Company's clinical development
plan for ranolazine assumes that Phase I data and several Phase II angina trials
with ranolazine IR combined with Phase I data and safety and tolerability data
from a pilot Phase II trial for intermittant claudication with ranolazine SR
will be accepted by the FDA to initiate Phase III trials with ranolazine SR.
There can be no assurance that such clinical data will be accepted by the FDA in
support of initiation of such Phase III trials with ranolazine SR or that the
Company will not be required or otherwise choose to conduct additional Phase II
clinical trials of ranolazine SR prior to commencement of Phase III clinical
trials. Commencement of the Phase III trials by Syntex in 1994 was based upon
Phase I and II ranolazine IR data combined with Phase I ranolazine SR data. The
Company has initiated pharmacological and mechanism studies and is engaged in
the transfer of manufacturing technology from Syntex. There can be no assurance
that the Company will obtain a corporate partner to initiate Phase III trials,
that ranolazine will obtain FDA or other regulatory or foreign marketing
approval for any indication.
CVT-609 AND CVT-429
CVT-609 and CVT-429 were designed and synthesized in the Company's adenosine
A(1) receptor program. The Company believes that CVT-609 and CVT-429 may have
potential application in treating supraventricular tachycardia, as well as
additional applications. Based on preclinical data, the Company believes CVT-609
and CVT-429 are among the most selective adenosine A(1) receptor agonists
reported. Preclinical studies conducted by the Company indicated that CVT-609
and CVT-429 slowed electrical impulses in the conduction tissue of the heart by
stimulating the adenosine A(1) receptor.
Supraventricular tachycardias (atrial fibrillation, atrial flutter and AV nodal
re-entrant tachycardias) are among the most common cardiac arrhythmias
complicating ischemic heart disease and cardiac surgical procedures, accounting
for over 300,000 new hospital admissions in the United States each year. They
originate in the atria as rapid and irregular heart beats that then spread to
the ventricles. The ventricular contractions stimulated by the atrial impulses
can be so fast and irregular that cardiac function can be severely compromised,
resulting in dangerously low blood pressure, fluid in the lungs, and ischemic
damage to the heart, brain and other organs.
Because of the severity of these conditions and the need to treat patients
quickly, intravenous therapies are typically used. Current medical therapies aim
to slow the heart to a normal rate but have significant limitations in the acute
care setting. Digitalis is effective in controlling heart rate, but requires a
long time to take effect, which can be dangerous in patients with a failing
heart. Calcium channel blockers, beta blockers and adenosine act quickly but are
themselves associated with hypotension and depressed cardiac function,
potentially exacerbating the condition of patients already experiencing cardiac
dysfunction as a complication of the tachycardia.
For the treatment of supraventricular tachycardia, selective stimulation of the
A(1) receptor is required to slow the heart rate without significant stimulation
of the A(2) receptor which would lower blood pressure. The Company has
identified CVT-609 and CVT-429 as candidates for clinical development of
intravenous agents and is proceeding with preclinical studies.
CVT-313 AND CVT-634
CVT-313 and CVT-634 were designed and synthesized in the Company's cell cycle
inhibitor program. The goal of this program is to develop a new class of
therapeutics that suppresses abnormal cellular proliferation, which contributes
to progressive cardiovascular diseases. Excessive proliferation of
cardiovascular connective tissue cells or vascular smooth muscle cells causes
the scarring and loss of function that is characteristic of chronic diseases of
the heart, vessels and kidneys. Several of the Company's scientists and
scientific advisors have been among the leaders in identifying the role of cell
proliferation in causing a variety of cardiovascular diseases. As part of its
drug discovery strategy, the Company has focused upon newly discovered enzymes
referred to collectively as the cell cycle enzymes that regulate cellular
proliferation. In particular, two important targets identified by the Company,
CDK2 and the proteasomal protease, may have different clinical applications. The
Company is continuing to explore other cell cycle regulatory enzymes as
potential targets in this program.
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CVT 313 is a novel compound which specifically inhibits CDK2, a critical
regulatory protein which participates in the control of the cell cycle. CDK2,
whose three dimensional structure was first determined by academic collaborators
of the Company, is central to cellular proliferation and was chosen as the
Company's first target in the cell cycle inhibitor program. Preclinical studies
have shown significant reduction of restenosis after vascular injury, both
confirming the appropriate selection of the target and identifying a potential
initial clinical application.
CVT-634, also identified in this program, has been shown to be a potent
inhibitor of proteasomal protease, which regulates both CDK2 activation and
macrophage activation. CVT-634 has been shown in preclinical studies to control
smooth muscle cell proliferation. This compound is undergoing further
preclinical testing.
CHRONIC ANTI-INFLAMMATORY INHIBITORS
CVT is seeking to address chronic inflammatory diseases of the cardiovascular
system by targeting macrophage infiltration into the heart and kidney. Activated
macrophages are a type of white blood cell found in lesions associated with
virtually all chronic cardiovascular diseases, including atherosclerotic plaque,
and are known to secrete growth factors which promote cellular proliferation and
scarring. The Company has discovered a novel inflammatory factor in this program
which has been partnered to Bayer AG for continued development.
LICENSES AND COLLABORATIONS
CVT has licensed certain chemical compounds from academic collaborators and
other companies and has applied its drug discovery strategies to analog and
optimize these structures and to identify applications for preclinical and
clinical development. Once these drug candidates enter clinical trials, the
Company intends to establish strategic partnerships to expedite development and
commercialization. For those programs which provide knowledge useful in the
identification of compounds with potential application outside of chronic
cardiovascular disease, the Company intends to find corporate partners at the
preclinical stage. The Company's licenses and collaborations currently in effect
include:
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION
In June 1994, the Company entered into a license agreement with the University
of Florida Research Foundation, Inc. ("UFRFI") under which the Company received
exclusive worldwide rights to develop adenosine A(1) receptor antagonists and
agonists for the detection, prevention and treatment of human and animal
diseases. In consideration for the license, the Company paid UFRFI an initial
license fee and is obligated to pay royalties based on net sales of products
which utilize the licensed technology. Pursuant to the agreement, the Company
must exercise commercially reasonable efforts to develop and commercialize one
or more products covered by the licensed technology and is obligated to meet
milestones in completing certain preclinical work. In the event the Company
fails to reach those milestones, UFRFI may convert the exclusive license into a
non-exclusive license. As part of the license agreement with UFRFI, the Company
entered into a research agreement with the University of Florida.
SYNTEX/ROCHE
In March 1996, the Company entered into a license agreement with Syntex for U.S.
and foreign patent rights to a compound having the generic name of ranolazine
for products treating angina and certain other cardiovascular indications. The
agreement provides for Syntex to also supply certain quantities of the compound
to the Company. The license agreement is exclusive and worldwide except for the
following countries which Syntex licensed exclusively to Kissei Pharmaceuticals,
Ltd. of Japan: Japan, Korea, China, Taiwan, Hong Kong, the Philippines,
Indonesia, Singapore, Thailand, Malaysia, Vietnam, Myanmar, Laos, Cambodia and
Brunei. Under the license agreement, the Company paid an initial license fee. In
addition, the Company is obligated to make payments on the achievement of
certain development milestones and to make royalty payments based on net sales
of products which utilize the licensed technology. The Company is required to
use commercially reasonable efforts to develop the compound for angina within
certain milestone guidelines. The license agreement also sets milestones within
which the Company must launch products in each country covered by the license or
lose exclusivity in such territories.
BAYER AG
In May 1996, the Company granted an exclusive worldwide license to Bayer AG for
a novel inflammatory factor for preclinical and clinical development for any
therapeutic, prophylactic or diagnostic use in humans or animals.
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In consideration of this license, Bayer AG paid the Company an initial fee and
agreed to make certain cash milestone payments related to the progress of
product development. Bayer AG is also obligated to pay the Company royalties
based on net sales of products which utilize the licensed technology. The
Company is responsible for the expenses of patent prosecution for the licensed
technology. Bayer AG may terminate the agreement for any reason upon written
notice to the Company.
MARKETING AND SALES
The Company currently has no sales, marketing or distribution capability. The
Company intends to rely on relationships with one or more pharmaceutical
companies with established distribution systems and direct sales forces to
market its products. In the event that the Company is unable to reach agreement
with one or more pharmaceutical companies to market its products, it may be
required to market its products directly and to develop a marketing and sales
force with technical expertise and with supporting distribution capability.
There can be no assurance that the Company will be able to establish in-house
sales and distribution capabilities or relationships with third parties, or that
it will be successful in commercializing any of its potential products. To the
extent that the Company enters into co-promotion or other licensing
arrangements, any revenues received by the Company will depend upon the efforts
of third parties, and there can be no assurance that such efforts will be
successful.
MANUFACTURING
CVT does not currently operate manufacturing facilities for clinical or
commercial production of its proposed products. The Company has no experience
in, and currently lacks the resources and capability to, manufacture any of its
proposed products on a commercial scale. Accordingly, the Company is, and will
continue to be, dependent on corporate partners, licensees or other third
parties for clinical and commercial scale manufacturing. The Company does have
experience in the transfer of synthetic technology from discovery to scale-up
manufacturing facilities, having successfully executed technology transfer for
the manufacture of clinical supplies of one orally administered agent and one
intravenously administered agent. CVT-124 is currently being manufactured to
supply clinical trials by a third party, and the Company is currently
negotiating with third party manufacturers for clinical scale production of
ranolazine. There can be no assurance that the Company will be able to reach
satisfactory agreements with its partners or third parties or that such parties
will be able to develop adequate manufacturing capabilities for commercial scale
quantities of products.
PATENTS AND PROPRIETARY TECHNOLOGY
Patents and other proprietary rights are important to the Company's business.
The Company's policy is to file patent applications and to protect technology,
inventions and improvements to inventions that are commercially important to the
development of its business. The Company also relies on trade secrets,
confidentiality agreements and other protective measures to protect its
technology and proposed products. The Company's failure to obtain patent
protection or otherwise protect its proprietary technology or proposed products
may have a material adverse effect on the Company's competitive position and
business prospects.
The Company owns four pending patent applications in the United States relating
to an inflammatory factor licensed to Bayer AG, CVT-609, CVT-313 and CVT-634, as
well as one foreign patent application with respect to the inflammatory factor
licensed to Bayer. In addition, the Company has acquired an exclusive license to
one United States issued patent, two United States patent applications and
related foreign patent applications related to CVT-124. The Company also has
acquired a license which is exclusive in certain territories to three United
States issued patents, one United States patent application and related foreign
patent applications related to ranolazine. The patent application process takes
several years and entails considerable expense. There is no assurance that
patents will issue from these applications or, if patents do issue, that the
claims allowed will be sufficient to protect the Company's technology. One of
the primary patents relating to ranolazine will expire in May 2003 unless the
Company is granted an extension based upon delays in the FDA approval process.
Patent applications in the United States are maintained in secrecy until a
patent issues, and the Company cannot be certain that others have not filed
patent applications for technology covered by the Company's pending applications
or that the Company was the first to invent the technology that is the subject
of such patent application. Competitors may have filed applications for, or may
have received patents and may obtain additional patents and proprietary rights
relating to, compounds, products or processes that block or compete with those
of
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the Company. There can be no assurance that third parties will not assert patent
or other intellectual property infringement claims against the Company with
respect to its products or technology or other matters. There may be third party
patents and other intellectual property relevant to the Company's products and
technology which are not known to the Company.
Patent litigation is becoming more widespread in the biopharmaceutical industry.
Litigation may be necessary to defend against or assert claims of infringement,
to enforce patents issued to the Company, to protect trade secrets or know-how
owned by the Company, or to determine the scope and validity of the proprietary
rights of third parties. Although no third party has asserted that the Company
is infringing such third party's patent rights or other intellectual property,
there can be no assurance that litigation asserting such claims will not be
initiated, that the Company would prevail in any such litigation, or that the
Company would be able to obtain any necessary licenses on reasonable terms, if
at all. Any such claims against the Company, with or without merit, as well as
claims initiated by the Company against third parties, can be time-consuming and
expensive to defend or prosecute and to resolve. If other companies prepare and
file patent applications in the United States that claim technology also claimed
by the Company, the Company may have to participate in interference proceedings
to determine priority of invention which could result in substantial cost to the
Company even if the outcome is favorable to the Company.
The Company also relies on trade secrets, confidentiality agreements and other
protective measures to protect its technology and proposed products. There can
be no assurance that third parties will not independently develop equivalent
proprietary information or techniques, will not gain access to the Company's
trade secrets or disclose such technology to the public, or that the Company can
maintain and protect unpatented proprietary technology. The Company typically
requires its employees, consultants, collaborators, advisors and corporate
partners to execute confidentiality agreements upon commencement of employment
or other relationships with the Company. There can be no assurance, however,
that these agreements will provide meaningful protection or adequate remedies
for the Company's technology in the event of unauthorized use or disclosure of
such information, or that the parties to such agreements will not breach such
agreements.
GOVERNMENT REGULATION
FDA REQUIREMENTS FOR DRUG COMPOUNDS. The research, testing, manufacture and
marketing of drug products are extensively regulated by numerous governmental
authorities in the United States and other countries. In the United States,
drugs are subject to rigorous regulation by the FDA. The federal Food, Drug and
Cosmetic Act, as amended (the "FDC Act"), and the regulations promulgated
thereunder, and other federal and state statutes and regulations, govern, among
other things, the research, development, testing, manufacture, storage,
recordkeeping, labeling, promotion and marketing and distribution of
pharmaceutical products. Failure to comply with applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions such as civil penalties, criminal prosecution, injunctions, product
seizure or detention, product recalls, total or partial suspension of product,
and FDA refusal to approval pending NDA applications or NDA supplements to
approved applications.
The steps ordinarily required before a new pharmaceutical product may be
marketed in the United States include: (i) preclinical laboratory tests, IN VIVO
preclinical studies and formulation studies; (ii) the submission to the FDA of
an IND, which must become effective before clinical testing may commence; (iii)
adequate and well-controlled clinical trials to establish the safety and
effectiveness of the drug for each indication; (iv) the submission of a NDA to
the FDA; and (v) FDA review and approval of the NDA prior to any commercial sale
or shipment of the drug. Preclinical tests include laboratory evaluation of
product chemistry and formulation, as well as animal studies to assess the
potential safety and efficacy of the product. Preclinical tests must be
conducted in compliance with Good Laboratory Practice regulations and compounds
for clinical use must be formulated according to cGMP requirements. The results
of preclinical testing are submitted to the FDA as part of an IND. A 30-day
waiting period after the filing of each IND is required prior to the
commencement of clinical testing in humans. If the FDA has not commented on or
questioned the IND within this 30-day period, clinical studies may begin. If the
FDA has comments or questions, the questions must be answered to the
satisfaction of the FDA before initial clinical testing can begin. In addition,
the FDA may, at any time, impose a clinical hold on ongoing
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clinical trials. If the FDA imposes a clinical hold, clinical trials cannot
commence or recommence without FDA authorization and then only under terms
authorized by the FDA. In some instances, the IND application process can result
in substantial delay and expense.
Clinical trials involve the administration of the investigational new drug to
healthy volunteers or patients under the supervision of a qualified principal
investigator. Clinical trials are conducted in accordance with Good Clinical
Practice regulations. Under protocols detailing the objectives of the study, the
parameters to be used in monitoring safety and the effectiveness criteria to be
evaluated. Each protocol must be submitted to the FDA as part of the IND.
Further, each clinical study must be conducted under the auspices of an
independent Institutional Review Board ("IRB") at the institution at which the
study will be conducted. The IRB will consider, among other things, ethical
factors, the safety of human subjects and the possible liability of the
institution. Clinical trials to support NDAs are typically conducted in three
sequential phases, but the phases may overlap. In Phase I, the initial
introduction of the drug into healthy human subjects or patients, the drug is
tested to assess metabolism, pharmacokinetics and pharmacological actions and
safety, including side effects associated with increasing doses. Phase II
usually involves studies in a limited patient population to (i) determine the
efficacy of the drug in specific, targeted indications, (ii) determine dosage
tolerance and optimal dosage and (iii) identify possible adverse effects and
safety risks. If a compound is found to be effective and to have an acceptable
safety profile in Phase II evaluations, Phase III trials are undertaken to
further evaluate clinical efficacy and to further test for safety within an
expanded patient population at geographically dispersed clinical study sites.
There can be no assurance that Phase I, Phase II or Phase III testing will be
completed successfully within any specified time period, if at all, with respect
to any of the Company's products subject to such testing.
After completion of the required clinical testing, generally an NDA is
submitted. FDA approval of the NDA is required before marketing may begin in the
United States. The NDA must include the results of extensive clinical and other
testing and the compilation of data relating to the product's chemistry,
pharmacology and manufacture, the cost of all of which is substantial. The FDA
reviews all NDAs submitted before it accepts them for filing and may request
additional information rather than accepting an NDA for filing. In such an
event, the NDA must be resubmitted with the additional information and, again,
is subject to review before filing. Once the submission is accepted for filing,
the FDA begins an in-depth review of the NDA. Under the FDC Act, the FDA has 180
days in which to review the NDA and respond to the applicant. The review process
is often significantly extended by FDA requests for additional information or
clarification regarding information already provided in the submission. The FDA
may refer the application to the appropriate advisory committee, typically a
panel of clinicians, for review, evaluation and a recommendation as to whether
the application should be approved. The FDA is not bound by the recommendation
of an advisory committee. If FDA evaluations of the NDA and the manufacturing
facilities are favorable, the FDA may issue either an approval letter or an
approvable letter, which usually contains a number of conditions that must be
met in order to secure final approval of the NDA. When and if those conditions
have been met to the FDA's satisfaction, the FDA will issue an approval letter,
authorizing commercial marketing of the drug for certain indications. As a
condition of NDA approval, the FDA may require postmarketing testing and
surveillance to monitor the drug's safety or efficacy. If the FDA's evaluation
of the NDA submission or manufacturing facilities is not favorable, the FDA may
refuse to approve the NDA or issue a not approvable letter, outlining the
deficiencies in the submission and often requiring additional testing or
information. Notwithstanding the submission of any requested additional data or
information in response to an approvable or not approvable letter, the FDA
ultimately may decide that the application does not satisfy the regulatory
criteria for approval. Once granted, product approvals may be withdrawn if
compliance with regulatory standards is not maintained or problems occur
following initial marketing.
MANUFACTURING. Each domestic drug manufacturing facility must be registered
with FDA. Domestic drug manufacturing establishments are subject to periodic
inspection by the FDA and must comply with cGMP. Further, the Company or its
third party manufacturer must pass a preapproval inspection of its manufacturing
facilities by the FDA before obtaining marketing approval of any products. To
supply products for use in the United States, foreign manufacturing
establishments must comply with cGMP and are subject to periodic inspection by
the FDA or corresponding regulatory agencies in countries under reciprocal
agreements with the FDA. Drug product manufacturing establishments located in
California must be licensed by the State of California in compliance with local
regulatory requirements, and other states may have comparable regulations. The
Company uses and will
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continue to use third party manufacturers to produce its products in clinical
and commercial quantities. There can be no guarantee that future FDA inspections
will proceed without any compliance issues requiring the expenditure of money or
other resources.
FOREIGN REGULATION OF DRUG COMPOUNDS. Whether or not FDA approval has been
obtained, approval of a product by comparable regulatory authorities may be
necessary in foreign countries prior to the commencement of marketing of the
product in such countries. The approval procedure varies among countries, can
involve additional testing, and the time required may differ from that required
for FDA approval. Although there are some procedures for unified filings for
certain European countries with the sponsorship of the country which first
granted marketing approval, in general each country has its own procedures and
requirements, many of which are time consuming and expensive. Thus, there can be
substantial delays in obtaining required approvals from foreign regulatory
authorities after the relevant applications are filed. In Europe, marketing
authorizations may be submitted to either a centralized, a decentralized or a
national level. The centralized procedure is mandatory for the approval of
biotechnology products and provides for the grant of a single marketing
authorization which is valid in all European Community member states. As of
January 1995, a mutual recognition procedure is available at the request of the
applicant for all medicinal products which are not subject to the centralized
procedure. The Company will choose the appropriate route of European regulatory
filing to accomplish the most rapid regulatory approvals. There can be no
assurance that the chosen regulatory strategy will secure regulatory approvals
on a timely basis or at all.
HAZARDOUS MATERIALS. The Company's research and development processes involve
the controlled use of hazardous materials, chemicals and radioactive materials
and produce waste products. The Company is subject to federal, state and local
laws and regulations governing the use, manufacture, storage, handling and
disposal of such materials and waste products. Although the Company believes
that its safety procedures for handling and disposing of such materials comply
with the standards prescribed by such laws and regulations, the risk of
accidental contamination or injury from these materials cannot be eliminated
completely. In the event of such an accident, the Company could be held liable
for any damages that result and any such liability could exceed the resources of
the Company. Although the Company believes that it is in compliance in all
material respects with applicable environmental laws and regulations, there can
be no assurance that it will not be required to incur significant costs to
comply with environmental laws and regulations in the future, or that the
operations, business or assets of the Company will not be materially adversely
affected by current or future environmental laws or regulations.
COMPETITION
The pharmaceutical and biopharmaceutical industries are subject to intense
competition and rapid and significant technological change. While several of
CVT's products target diseases for which there are presently no effective
therapies, CVT nevertheless is aware of companies which are developing products
that will compete for the same disease markets. For example, Kyowa Hakko Co.,
Ltd., Fujisawa Pharmaceutical, Japan and Discovery Therapeutics, Inc., are each
developing adenosine A(1) receptor antagonists. In addition, Sandoz and Glaxo
Wellcome P.L.C. both have adenosine A(1) receptor agonists under development. If
regulatory approvals are received, ranolazine may compete with several classes
of existing drugs for the treatment of angina, some of which are available in
generic form, including calcium channel blockers, beta blockers and nitrates.
There are also non-pharmacologic treatments such as coronary artery bypass
grafting ("CABG") and percutaneous transluminal coronary angioplasty ("PTCA").
However, for those patients who do not respond adequately to existing therapies
and remain symptomatic despite maximal treatment with existing anti-anginal
drugs and who are not candidates for CABG or PTCA, there is no currently
effective treatment. In refractory patients who are candidates for CABG or PTCA,
there is no effective pharmacologic treatment available. In the treatment of
intermittent claudication, ranolazine may compete with Trental, an FDA approved
drug developed by Hoechst Marion Roussel, Inc., beraprost, a prostaglandin being
developed by Bristol-Myers Squibb, Cilostazol, a prostaglandin E(1) derivative
being developed by Otsuka Pharmaceutical Co., Ltd., and L-carnitine, an amino
acid derivative being developed by Sigma Tau Pharmaceuticals, Inc.
CVT believes that the principal competitive factors in the markets for
ranolazine and CVT-124 will include the length of time to receive regulatory
approval, product performance, product price, product supply, marketing and
34
<PAGE>
sales capability and enforceability of patent and other proprietary rights. CVT
believes that it is or will be competitive with respect to these factors.
Nonetheless, because the Company's products are still under development, the
relative competitive position of the Company in the future is difficult to
predict.
The Company expects that the pharmaceutical and biopharmaceutical industries
will continue to experience rapid technological development which may render the
Company's potential products non-competitive or obsolete. Many current and
potential competitors have substantially greater product development
capabilities and financial, marketing, scientific, and human resources than the
Company. Other companies may succeed in developing products earlier than the
Company, obtaining approvals for such products from the FDA more rapidly than
the Company or developing products that are safer and more effective than those
under development or proposed to be developed by the Company. While the Company
will seek to expand its technological capabilities in order to remain
competitive, there can be no assurance that research and development by others
will not render its technology or potential products obsolete or non-competitive
or result in treatments or cures superior to any therapy developed by the
Company, or that therapy developed by the Company will be preferred to any
existing or newly developed technologies.
PRODUCT LIABILITY INSURANCE
The manufacture and sale of human therapeutic products involve an inherent risk
of product liability claims and associated adverse publicity. The Company has
only limited product liability insurance for clinical trials and no commercial
product liability insurance. There can be no assurance that it will be able to
maintain existing or obtain additional product liability insurance on acceptable
terms or with adequate coverage against potential liabilities. Such insurance is
expensive, difficult to obtain and may not be available in the future on
acceptable terms, or at all. An inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of the Company's
potential products. A product liability claim brought against the Company in
excess of its insurance coverage, if any, or a product withdrawal could have a
material adverse effect upon the Company's business, financial condition and
results of operations.
EMPLOYEES
As of September 1, 1996, CVT employed 39 individuals full-time, including 16 who
hold doctoral degrees. Of the Company's total work force, 27 employees are
engaged in or directly support research and development activities and 12 are
engaged in business development, finance and administrative activities. The
Company's employees are not represented by a collective bargaining agreement.
The Company believes its relations with its employees are good.
FACILITIES
The Company currently leases a 61,081 square foot building in Palo Alto,
California, of which approximately 33,783 square feet are subleased to two third
parties. The initial term of the lease expires in February 2002 with an option
to renew for five years, and the subleases expire in March 1997 and March 1998,
respectively. CVT believes that this facility will be adequate to meet the
Company's needs for the foreseeable future.
SCIENTIFIC ADVISORY BOARD
CVT's Scientific Advisory Board ("SAB") consists of academic and industry
experts in the fields of medicine, chemistry and molecular and cellular biology.
The SAB reviews and evaluates the Company's research programs and advises the
Company with respect to technical matters. Each SAB member has entered into a
consulting agreement with the Company specifying the terms and scope of the
advisory relationship. All SAB members own shares or have been granted options
to acquire Common Stock of the Company. All of the SAB members are employed by
employers other than the Company and may have other commitments and consulting
advisory contracts with other entities which may compete for such member's time
with their obligations to the Company. The Company's Scientific Advisory Board
includes the following individuals:
VICTOR J. DZAU, M.D. is Chairman of the Scientific Advisory Board. Dr. Dzau is
one of the world's leading researchers in the molecular and cellular biology of
cardiovascular diseases. Since September 1996, he has served as Chairman of the
Department of Medicine and Physician-in-Chief at the Brigham and Women's
Hospital in Boston, and as Hersey Professor of the Theory and Practice of
Medicine at Harvard Medical School. Between 1990 and September 1996, he served
as the William G. Irwin Professor of Medicine and chief of cardiovascular
35
<PAGE>
medicine at Stanford University School of Medicine. In early 1995, he was
promoted to Arthur L. Bloomfield Professor and Chairman of Medicine at Stanford.
Previously, Dr. Dzau held several clinical and research appointments in
cardiology at Massachusetts General Hospital and Harvard Medical School, where
he was a postdoctoral fellow. He received his M.D. degree from McGill
University.
STUART A. AARONSON, M.D. is director of the Deraid H. Ruttenburg Cancer Center
at Mount Sinai School of Medicine, New York City, and is a world renowned growth
factor researcher and tumor biologist. He has established the role of numerous
cytokines in the function of blood vessels. He obtained his M.D. degree from the
University of California, San Francisco.
CHRISTOPHER FIELDING, PH.D. has been a faculty member at the University of
California, San Francisco over the past two decades, where he has served as the
Neider Professor of Cardiovascular Physiology since 1985. A recognized expert in
the field of cholesterol metabolism, Dr. Fielding received his Ph.D. from the
University of London and completed postdoctoral work in cell metabolism at
Oxford University.
RICHARD J. HAVEL, M.D. is a professor of medicine, Chief of Metabolism and past
Director of the Cardiovascular Research Institute at the University of
California, San Francisco. As a leader in both basic lipid research and clinical
lipid investigations for several decades, Dr. Havel is known for his pioneering
research on lipoprotein metabolism and for designing and conducting clinical
investigations of lipid reduction and coronary atherosclerosis. He recently
served on the Executive Committee of the Adult Treatment Panel of the National
Cholesterol Education Program. Dr. Havel is a member of the National Academy of
Sciences and received his M.D. degree from the University of Oregon.
RICHARD M. LAWN, PH.D. has served on part-time basis as the Vice President,
Molecular Cardiology at CVT since 1992. Since 1990 has been a Professor of
Medicine in the Division of Cardiovascular Medicine, Stanford University School
of Medicine. From 1980 to 1990, Dr. Lawn served as a senior scientist and later
as a staff scientist at Genetech, Inc. He received his Ph.D. in molecular,
cellular and developmental biology from the University of Colorado.
JEFFREY M. LEIDEN, M.D., PH.D. is the Frederick H. Rawson Professor of Medicine
and Pathology, and Chief of the Section of Cardiology at the University of
Chicago and a former Howard Hughes medical investigator. He is a leading
researcher in the areas of transcriptional regulation during mammalian
development and the development of novel gene therapy approaches for
cardiovascular disease. Dr. Leiden received his M.D. and Ph.D. degrees from the
University of Chicago and completed his postdoctoral and cardiology fellowships
at the Brigham and Women's Hospital, Harvard University.
PETER SCHULTZ, PH.D. is a professor of chemistry at the University of
California, Berkeley. He is recognized as an expert in protein
structure/function and pioneered combinatorial methods and the development of
catalytic antibodies. Dr. Schultz has received numerous awards including the
National Science Foundation Alan T. Waterman Award, the American Chemical
Society Award in Pure Chemistry and the Wolf Price in Chemistry. He is a
founding scientific advisor of Affymax, N.V. In 1993, Dr. Schultz was elected to
the National Academy of Sciences. He received his Ph.D. from California
Institute of Technology and worked as a National Institutes of Health
postdoctoral fellow at the Massachusetts Institute of Technology.
ERIC J. TOPOL, M.D. is the Chairman, Department of Cardiology and the Director,
Joseph J. Jacobs Center for Thrombosis and Vascular Biology at the Cleveland
Clinic Foundation. A noted clinician and expert on ischemic/ atherosclerotic
heart disease, Dr. Topol is chairman of several large multicenter, randomized
clinical trials of specific interventional procedures and therapeutics. He has
also served as an advisor to the National Institutes of Health and currently
serves on the FDA's advisory panel on cardiology. Dr. Topol received his M.D.
degree from the University of Rochester and completed his cardiology fellowship
at Johns Hopkins University.
SIR JOHN VANE, D.SC., F.R.S. is the Director General of the William Harvey
Research Institute at St. Bartholomew's Hospital Medical College in London.
Prior to joining that institution, he spent 12 years as group research and
development director at the Wellcome Foundation, Ltd. He was awarded the Nobel
Prize in 1982 for his work in prostaglandins and for discovering the mode of
action of aspirin. Sir John was a research scientist for 18 years at the Royal
College of Surgeons of England. He is highly regarded for his continuing
research in the areas of cardiovascular disease and chronic inflammation. Sir
John holds both a D.Phil. and D.Sc. and is a Fellow of the Royal Society, the
Royal College of Physicians and the Royal College of Surgeons.
36
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company and their
ages as of September 1, 1996 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ --- ----------------------------------------------------------
<S> <C> <C>
Louis G. Lange, M.D., Ph.D. 48 Chairman of the Board and Chief Executive Officer
Kathleen A. Stafford 38 Chief Financial Officer
Michael M. Wick, M.D., Ph.D. 50 Senior Vice President, Research
George F. Schreiner, M.D., Ph.D. 47 Vice President, Medical Science and Preclinical Research
Andrew A. Wolff, M.D. 41 Vice President, Clinical Research and Development
Michael J. Sterns, D.V.M. 38 Director of Business Development
Samuel D. Colella (1)(2) 56 Director
Thomas L. Gutshall (2) 58 Director
Barbara J. McNeil, M.D., Ph.D. (2) 55 Director
J. Leighton Read, M.D. (1) 45 Director
Costa G. Sevastopoulos, Ph.D. (1) 53 Director
Isaac Stein (2) 49 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
LOUIS G. LANGE, M.D., PH.D., was a founder of the Company and has served as its
Chairman of the Board and Chief Executive Officer since August 1992. From July
1980 to August 1992, Dr. Lange served on the faculty of Washington University
School of Medicine, including as Chief of Cardiology at Jewish Hospital in St.
Louis, Missouri from May 1985 to August 1992, and as a full professor of
medicine from July 1990 until August 1992. Dr. Lange is internationally
recognized as an expert in the field of molecular mechanisms of cardiovascular
disease. He holds an M.D. from Harvard Medical School and a Ph.D. in
biochemistry from Harvard University.
KATHLEEN A. STAFFORD has served as Chief Financial Officer of the Company since
December 1995. From May 1995 to December 1995, Ms. Stafford served as a
consultant to the Company in the area of financial affairs. From January 1994 to
October 1994, Ms. Stafford served as a Vice President and the Chief Financial
Officer for ONYX Pharmaceuticals, Inc., a biotechnology company. From February
1989 until January 1994, Ms. Stafford served as Treasurer for Amgen, Inc., a
biopharmaceutical company. Ms. Stafford holds a B.S. in combined science from
Santa Clara University and an M.B.A. from Virginia Polytechnic Institute.
MICHAEL M. WICK, M.D., PH.D., has served as Senior Vice President, Research for
the Company since November 1995. From May 1995 to November 1995, Dr. Wick served
as Vice President, Biological Chemistry for the Company. From September 1990
until May 1995, he served as the Executive Director of Oncology-Immunology
Research and Discovery at Lederle Laboratories, American Cyanamid Inc., a
pharmaceutical company. In addition, from May 1994 to May 1995, he served as the
Executive Director of Clinical Research for Oncology and Chairman of the Joint
Immunex American Cyanamid Research and Development Committee. He holds an M.D.
from Harvard Medical School and a Ph.D. in chemistry from Harvard University.
GEORGE F. SCHREINER, M.D., PH.D., has served as Vice President, Medical Science
& Preclinical Research for the Company since January 1993. Dr. Schreiner has
also served as a consulting professor of medicine at Stanford University since
May 1993. From July 1989 to December 1992, he was an associate professor of
medicine and pathology and served as an associate physician at Washington
University School of Medicine in St. Louis. Dr. Schreiner holds an M.D. from
Harvard Medical School and a Ph.D. in immunology from Harvard University.
ANDREW A. WOLFF, M.D., has served as Vice President of Clinical Research and
Development for the Company since September 1996. From September 1994 to
September 1996, Dr. Wolff served as Vice President of Clinical Research for the
Company. From June 1993 until September 1994, Dr. Wolff served as the Executive
Director of Medical Research and New Molecules Clinical Programs Leader for
Syntex, a pharmaceutical and healthcare
37
<PAGE>
company. In addition, from August 1992 to February 1993, he served as the acting
Associate Director for Europe, Institute for Cardiovascular and Central Nervous
System Clinical Research, Maidenhead, England. From July 1990 until June 1993,
Dr. Wolff served as the Director, Department for Cardiovascular Therapy for
Syntex. Since June 1988, Dr. Wolff has served also as an assistant clinical
professor of medicine in the Cardiology Division of the University of
California, San Francisco. He holds an M.D. from the Washington University
Medical School.
MICHAEL J. STERNS, D.V.M., has served as the Director of Business Development
for the Company since February 1995. From March 1993 until February 1995, Dr.
Sterns served as the Senior Director, Business Development for Microcide
Pharmaceuticals, Inc., a biopharmaceutical company. From October 1990 to March
1993, he served as Director, Business Development for ALZA Corporation, a
pharmaceutical company. Dr. Sterns holds a D.V.M. from the University of
California at Davis and an M.B.A. from the University of California at Berkeley.
SAMUEL D. COLELLA has served as a director of the Company since October 1992.
Since November 1984, Mr. Colella has been a General Partner of Institutional
Venture Partners, a private venture capital firm. He currently serves as
Chairman of the Board of Directors of ONYX Pharmaceuticals, Inc. He also serves
as a director of Genta Incorporated, Imagyn Medical, Inc., Pharmacopeia, Inc.
and Vivus, Inc. Mr. Colella holds a B.S. in business and engineering from the
University of Pittsburgh and an M.B.A. from Stanford University.
THOMAS L. GUTSHALL has served as a director of the Company since December 1994.
Since August 1996, Mr. Gutshall has served as the Chief Executive Officer of
Cepheid Corporation, a diagnostics company. From January 1995 to September 1996,
he served as President and Chief Operating Officer of the Company. From June
1989 until December 1994, Mr. Gutshall served as an Executive Vice President at
Syntex Corporation, a pharmaceutical and healthcare company. Mr. Gutshall earned
a B.S. in chemical engineering from the University of Delaware and completed the
Executive Marketing Management Program at Harvard Business School.
BARBARA MCNEIL, M.D., PH.D., has served as a director of the Company since
December 1994. Since 1990, Dr. McNeil has served as the Ridley Watts Professor
of Health Care Policy at Harvard Medical School. In addition, since July 1988,
she has served as the Chair of the Department of Health Care Policy at Harvard
Medical School. Since 1983, she has been a professor of radiology at both
Harvard Medical School and Brigham and Women's Hospital in Boston. Dr. McNeil
holds an M.D. from Harvard Medical School and a Ph.D. in biological chemistry
from Harvard University.
J. LEIGHTON READ, M.D., has served as a director of the Company since September
1992. Dr. Read founded Aviron, a biopharmaceutical company, and has served as
its Chairman and Chief Executive Officer since April 1992. From July 1991 to
July 1993, Dr. Read was a principal with Interhealth Limited, an investment
partnership. From January 1989 to July 1991, Dr. Read served as a managing
director of Affymax N.V., a biopharmaceutical company, which he co-founded in
1989. Dr. Read holds a B.S. in biology and psychology from Rice University and
an M.D. from the University of Texas Health Science Center at San Antonio.
COSTA G. SEVASTOPOULOS, PH.D., has served as a director of the Company since
October 1992. Since May 1994, Dr. Sevastopoulos has been an independent
consultant and a limited partner of Delphi Ventures I and II, both venture
capital partnerships. From April 1988 to April 1994, he served as a general
partner of Delphi BioVentures, a venture capital partnership, which he
co-founded. Dr. Sevastopoulos currently serves as Chairman of the Board of
Directors of Metra Biosystems, Inc. He holds a B.S. in physics from the
University of Athens, Greece, an M.S. in electrical engineering from the
California Institute of Technology, an M.B.A. from the European Institute of
Business Administration in Fountainbleau, France, and a Ph.D. in biology from
the University of California at Berkeley.
ISAAC STEIN has served as a director of the Company since March 1995. Since its
inception, Mr. Stein has served as the President of Waverly Associates, Inc., a
private investment firm, which he founded in 1983. In addition, Mr. Stein
currently serves as Chairman of Stanford Health Services, is a director of
Stanford University Hospital and a Trustee of Stanford University. From February
1993 to February 1994, Mr. Stein served as a special assistant to the President
of Stanford University. From July 1990 to December 1992, he served as Chairman
of Esprit de Corp., an apparel company, and from March 1991 to February 1992, he
served as its acting President
38
<PAGE>
and Chief Executive Officer. Mr. Stein currently serves as a director of ALZA
Corporation and Raychem Corporation. Mr. Stein holds a B.A. in economics and
mathematics from Colgate University, an M.B.A. from Stanford Business School and
a J.D. from Stanford Law School.
BOARD COMPOSITION
The Company currently has authorized seven directors. These directors are
elected to serve until the next annual meeting of stockholders or until their
earlier resignation or removal. In accordance with the terms of the Company's
Restated Certificate of Incorporation, at such time as the Company is no longer
subject to Section 2115 of the California Corporations Code, the terms of office
of the Board of Directors will be divided into three classes: Class I, whose
term will expire at the annual meeting of stockholders to be held in 1997; Class
II, whose term will expire at the annual meeting of stockholders to be held in
1998; and Class III, whose term will expire at the annual meeting of
stockholders to be held in 1999. See "Description of Capital Stock - General."
The Class I directors are Mr. Gutshall and Dr. Sevastopoulos, the Class II
directors are Drs. McNeil and Read, and the Class III directors are Dr. Lange
and Messrs. Colella and Stein. At each annual meeting of stockholders after the
initial classification, the successors to directors whose term will then expire
will be elected to serve from the time of election and qualification until the
third annual meeting following election. In addition, the Company's Restated
Certificate of Incorporation provides that the authorized number of directors
may be changed only by resolution of the Board of Directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the directors. This classification of the Board of
Directors may have the effect of delaying or preventing changes in control or
management of the Company. Although directors of the Company may be removed for
cause by the affirmative vote of the holders of a majority of the voting power
of all the then-outstanding shares of voting stock of the Corporation, entitled
to vote at an election of directors (the "Voting Stock"), the Company's Restated
Certificate of Incorporation provides that holders of two-thirds of the Voting
Stock must vote to approve the removal of a director without cause.
BOARD COMMITTEES
The Audit Committee of the Company's Board of Directors consists of Messrs.
Colella, Gutshall and Stein and Dr. McNeil. The Audit Committee reviews the
internal accounting procedures of the Company and consults with and reviews the
services provided by the Company's independent auditors.
The Compensation Committee of the Company's Board of Directors currently
consists of Mr. Colella and Drs. Read and Sevastopoulos. The Compensation
Committee reviews and recommends to the Board the compensation and benefits of
all officers of the Company and reviews general policy relating to compensation
and benefits of employees of the Company. The Compensation Committee also
administers the issuance of stock options and other awards under the Company's
stock plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From the Company's inception through 1994, the Board of Directors made all
determinations with respect to executive officer compensation. In the fiscal
year ended December 31, 1995, a Compensation Committee consisting of Mr.
Colella, Dr. Lange, the Company's Chief Executive Officer, and Drs. Read and
Sevastopoulos, made all determinations relating to executive officer
compensation.
DIRECTOR COMPENSATION
The Company's directors currently do not receive cash compensation for service
on the Board of Directors or any committee thereof, but directors may be
reimbursed for reasonable expenses in connection with attendance at Board and
committee meetings.
In July 1994, the Board of Directors adopted and in July 1995, the stockholders
approved the Non-Employee Directors' Stock Option Plan (the "Directors' Plan").
The Directors' Plan was amended and restated in September 1996. The Company has
reserved 250,000 shares of Common Stock for issuance under the Directors' Plan.
The Directors' Plan provides for automatic grants of options to purchase shares
of Common Stock to non-employee directors of the Company ("Non-Employee
Directors"). Pursuant to the terms of the Directors' Plan, each Non-Employee
Director is automatically granted an option to purchase shares of Common Stock.
Commencing with the adoption of the Directors' Plan, each newly elected
Non-Employee Director was granted an option to purchase
39
<PAGE>
1000 shares of Common Stock, and on each anniversary of the adoption of the
Directors' Plan, each Non-Employee Director was granted an option to purchase
500 shares. These options vest at the rate of 1/36 per month. At the amendment
and restatement of the Directors' Plan, each Non-Employee Director was granted
an option to purchase 15,000 shares. Each subsequently elected Non-Employee
Director shall also be granted an option to purchase 15,000 shares at his or her
election. These options for 15,000 shares vest as to 33.33% of the shares 12
months from the date of grant, and at the rate of 1/36 per month thereafter, if
the Non-Employee Director provides services to the Company or its affiliates
through the applicable vesting date. In addition, at each annual meeting of the
Company's stockholders after the effectiveness of this Offering, each
Non-Employee Director will be granted an option to purchase 5,000 shares, which
will vest 12 months from the date of grant if the Non-Employee Director provides
services to the Company or its affiliates through such date. As of September 1,
1996, options to purchase 6,500 shares have been granted under the Directors'
Plan.
The exercise price of options granted under the Directors' Plan must equal the
fair market value of the Common Stock on the date of grant; provided, however,
that prior to the September 1996 amendment and restatement of the Directors'
Plan, the exercise price of options granted to any person possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of any of its affiliates was 110% of the fair market value on the date of grant.
No option granted under the Directors' Plan may be exercised after the
expiration of ten years from date it was granted. No option may be transferred
by the optionee other than by will or the laws of descent or distribution,
provided that an optionee may designate a beneficiary who may exercise the
option following the optionee's death. The Directors' Plan will terminate in
September 2006, unless earlier terminated by the Board.
Upon certain changes in control of Company, outstanding options shall be assumed
or substituted by the surviving corporation.
In July 1994, the Company entered into a Consulting Agreement for Individual
Consultants with Barbara J. McNeil, M.D., Ph.D., a director of the Company,
pursuant to which Dr. McNeil agreed to serve on the Board of Directors and to
provide other advice and consultation. Under the terms of the agreement, the
Company agreed to pay a fixed fee of $1,000 per day as compensation for Dr.
McNeil's services. In the fiscal year ended December 31, 1995, Dr. McNeil
received $10,000 as compensation for her services. The Company may terminate
this agreement for any reason upon written notice. In addition, in July 1994,
the Board of Directors of the Company granted Dr. McNeil an option to purchase
2,500 shares of Common Stock at an exercise price of $2.50 per share. The option
vests over a three year period. As a result of this option grant, Dr. McNeil did
not receive an initial option to purchase 1,000 shares of Common Stock pursuant
to the Directors' Plan upon joining the Board.
In March 1995, the Company entered into a Consulting Agreement for Individual
Consultants with Isaac Stein, a director of the Company, pursuant to which Mr.
Stein agreed to provide advice and consultation to the Company. As compensation
for his services in the fiscal year ended December 31, 1995, Mr. Stein received
$3,000 and an option to purchase 9,000 shares of Common Stock outside the
Directors' Plan at an exercise price of $2.50 per share. The option vests over a
three year period. The Company may terminate the agreement for any reason upon
written notice.
In September 1996, in consideration for consulting services, the Company granted
an option to purchase 10,000 shares of Common Stock to Mr. Stein and an option
to purchase 5,000 shares of Common Stock to Dr. Sevastopoulos, at an exercise
price of $2.50 per share. The option grants were made outside the Company's
option plans and vest over a three year period. In addition, the Company agreed
to pay Dr. Sevastopoulos $30,000 for consulting services rendered.
See "Management - Employment Agreements and Termination of Employment
Agreements" for description of the Separation and Consulting Agreement with
Thomas L. Gutshall.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted by the Delaware Law, the Company's Restated Certificate of
Incorporation provides that no director of the Company will be personally liable
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Company
40
<PAGE>
or to its stockholders, (ii) for acts or omissions not made in good faith or
which involved intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law, relating to prohibited dividends or
distributions or the repurchase or redemption of stock, or (iv) for any
transaction from which the director derives an improper personal benefit. In
addition, the Company's Restated Certificate of Incorporation provides that any
director or officer who was or is a party or is threatened to be made a party to
any action or proceeding by reason of his or her services to the Company will be
indemnified to the fullest extent permitted by the Delaware Law.
The Company has entered into indemnification agreements with each of its
directors and officers for the indemnification of and advancement of expenses to
such persons to the full extent permitted by law and the Company currently
maintains directors' and officers' liability insurance.
There is no pending litigation or proceeding involving a director or officer of
the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or officer.
EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company during the fiscal year ended December 31, 1995 to its Chief Executive
Officer and the Company's next four most highly compensated executive officers
during the fiscal year ended December 31, 1995 (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
----------------------------------------------------------
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
---------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS (#) COMPENSATION(1)
- --------------------------------- ------------- ------------- ------------- -------------
Louis G. Lange, M.D., Ph.D., $250,000 - 55,000 $30,000
Chairman of the Board and Chief
Executive Officer
<S> <C> <C> <C> <C>
George F. Schreiner, M.D., Ph.D. 159,750 - 12,800 26,625
Vice President, Medical Science
and Preclinical Research
Andrew W. Wolff, M.D. 175,500 $17,500 7,500 -
Vice President, Clinical
Research
and Development
Thomas L. Gutshall (2) 211,435 - 77,500 -
President and Chief Operating
Officer
Mark B. Hirsch (3) 182,500 - 23,600 -
Vice President, Corporate
Development
</TABLE>
- ------------------------------
(1) All Other Compensation consists of amounts forgiven on loan obligations.
(2) Mr. Gutshall terminated his employment in September 1996 but continues to
serve as a member of the Company's Board of Directors and as a consultant to
the Company.
(3) Mr. Hirsch terminated his employment with the Company in April 1996.
41
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
fiscal year ended December 31, 1995, to each of the Named Executive Officers:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
INDIVIDUAL GRANTS
----------------------------------------------
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED TO ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES PRICE APPRECIATION FOR
OPTIONS IN FISCAL EXERCISE OPTION TERM(3)
GRANTED YEAR PRICE EXPIRATION ----------------------
NAME (#) (%)(1) ($/SH)(2) DATE 5% ($) 10% ($)
- ---------------------- ---------- ---------- ---------- ---------- ---------- ----------
Louis G. Lange, M.D., 55,000(4) 14.00% $2.50 06/07/05
Ph.D.
<S> <C> <C> <C> <C> <C> <C>
George F. Schreiner, 12,800(4) 3.25 2.50 04/25/05
M.D., Ph.D.
Andrew A. Wolff, M.D. 2,500(4) 0.63 2.50 04/25/05
5,000(4) 1.27 2.50 12/06/05
Thomas L. Gutshall (5) 7,500 1.90 2.50 03/31/99
5,000 1.27 2.50 03/31/99
65,000 16.54 2.50 03/31/99
Mark B. Hirsch (6) 23,600 6.00 2.50 05/01/96
</TABLE>
- ------------------------------
(1) Based on an aggregate of options to purchase 392,986 shares of the Company's
Common Stock granted to employees and directors of, and consultants to, the
Company during fiscal year ended December 31, 1995, including the Named
Executive Officers.
(2) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board of
Directors.
(3) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated assuming that the assumed
initial public offering price of $ per share appreciates from the date of
grant at the indicated annual rate compounded annually for the entire term
of the option and the option is exercised and sold on the last day of its
term for the appreciated stock price. No gain to the optionee is possible
unless the stock price increases over the option term.
(4) Twenty-four percent of the option vests one year from the vesting
commencement date, with subsequent vesting at a rate of two percent each
month for 38 months. The option expires ten years from the date of grant or
earlier upon termination of employment.
(5) Mr. Gutshall's option for 7,500 shares is fully vested. Under Mr. Gutshall's
Separation and Consulting Agreement, (i) the 5,000 share option vested as to
2,000 shares through September 2, 1996 and 3,000 shares were repurchased by
the Company; (ii) the 65,000 share option vested as to 26,000 shares through
September 2, 1996, and 39,000 shares were canceled on September 2, 1996.
(6) In connection with the termination of Mr. Hirsch's employment, the option to
purchase 23,600 shares was canceled on May 1, 1996.
AGGREGATE OPTION EXERCISES IN FISCAL 1995 AND DECEMBER 31, 1995 OPTION VALUES
The following table sets forth for each of the Named Executive Officers the
shares acquired and the value realized on each exercise of stock options during
the fiscal year ended December 31, 1995 and the number and value of securities
underlying unexercised options held by the Named Executive Officers at December
31, 1995:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS AT
SHARES 31, 1995(#) DECEMBER 31, 1995($)(1)
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($)(1) UNEXERCISABLE(2) UNEXERCISABLE
- -------------------------------- ------------ -------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
Louis G. Lange, M.D., Ph.D. 15,000(3) 145,000/0
George F. Schreiner, M.D., Ph.D. 0 53,025/0
Andrew A. Wolff, M.D. 0 30,000/0
Thomas L. Gutshall 30,000(3) 47,500/0
Mark B. Hirsch 0 64,025/0
</TABLE>
- ------------------------------
(1) Value realized and value of unexercised in-the-money options is based on a
value of $ per share of the Company's Common Stock, the assumed initial
public offering price, even though at the time of grant the fair market
value of the Common Stock was determined by the Board of Directors to be
$2.50 per share. Amounts reflected are based on the assumed value minus the
exercise price multiplied by the number of shares acquired on exercise and
do not indicate that the optionee sold such stock.
42
<PAGE>
(2) As of December 31, 1995, of the 145,000, 53,025, 30,000, 47,500 and 12,400
option shares held by Louis G. Lange, M.D., Ph.D., George F. Schreiner,
M.D., Ph.D., Andrew A. Wolff, M.D., Thomas L. Gutshall and Mark B. Hirsch,
respectively, 99,750, 31,143, 24,375, 46,253 and 46,652 option shares,
respectively, were unvested and subject to repurchase by the Company, if
exercised.
(3) As of December 31, 1995, all of these shares were subject to repurchase by
the Company.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into a letter agreement with Mark B.
Hirsch. Pursuant to the agreement, the Company accepted Mr. Hirsch's resignation
as Vice President, Corporate Development effective October 31, 1995, but
retained Mr. Hirsch as an employee of the Company through April 30, 1996. Under
the terms of the agreement, Mr. Hirsch was compensated through April 30, 1996 at
the same compensation level in effect prior to his resignation.
In September 1996, the Company entered into a Separation and Consulting
Agreement with Thomas L. Gutshall. Pursuant to the agreement, the Company
accepted Mr. Gutshall's resignation as President and Chief Operating Officer
effective September 2, 1996. Mr. Gutshall agreed to continue to serve as a
member of the Company's Board of Directors and to serve as a consultant to the
Company through December 31, 1998. Under the terms of the agreement, Mr.
Gutshall will receive consulting fees starting at $8,750 per month in September
1996 and declining to $3,500 per month effective November 1, 1996 and continuing
at that rate thereafter. In addition, Mr. Gutshall's stock option grant for
5,000 shares vested as to 2,000 shares through September 2, 1996 and 3,000
shares were repurchased by the Company. His stock option grant for 65,000 shares
vested as to 26,000 shares through September 2, 1996 and 39,000 shares were
canceled on September 2, 1996.
Each officer and salaried employee has entered into a standard form of
Employment, Confidential Information and Invention Assignment Agreement which
provides that the employment is at-will, that the employee will not disclose any
confidential information of the Company received during the course of the
employment and that, with certain exceptions, the employee will assign to the
Company any and all inventions conceived or developed during the course of the
employment.
401(K) PLAN
As of October 1, 1993, the Company adopted a tax-qualified employee savings and
retirement plan (the "401(k) Plan") covering the Company's employees. Pursuant
to the 401(k) Plan, eligible employees may elect to reduce their current
compensation by up to the lesser of 15% of their annual compensation or the
statutorily prescribed annual limit ($9,500 in 1996) and have the amount of such
reduction contributed to the 401(k) Plan. The 401(k) Plan provides for
additional matching contributions by the Company in an amount determined by the
Company. To date, the Company has not provided any matching contributions. The
trustees under the 401(k) Plan, at the direction of each participant, invest the
assets of the 401(k) Plan in designated investment options. The 401(k) Plan is
intended to qualify under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"), so that contributions to the 401(k) Plan, and income
earned on the 401(k) Plan contributions, are not taxable until withdrawn, and so
that the contributions by the Company will be deductible when made.
STOCK PLANS
EQUITY INCENTIVE PLAN. The Company's 1994 Equity Incentive Plan (the "Incentive
Plan") was adopted by the Board of Directors in February 1994, approved by the
stockholders in March 1994, amended by the Board in February 1995 and April 1995
and subsequently approved by the stockholders in July 1995. The Incentive Plan
was amended in September 1996, subject to stockholder approval. There are
currently 800,000 shares of Common Stock authorized for issuance under the
Incentive Plan.
The Incentive Plan provides for the grant of incentive stock options under the
Code and stock appreciation rights appurtenant thereto, to employees (including
officers and employee-directors) and nonstatutory stock options, restricted
stock purchase awards and stock bonuses to employees, directors and consultants.
The Incentive Plan is administered by the Compensation Committee of the Board of
Directors, which has been delegated the Board's authority to administer the
Plan. The Compensation Committee determines recipients and types of awards to be
granted, including the exercise price, number of shares subject to the award and
the exercisability thereof.
The terms of stock options granted under the Incentive Plan generally may not
exceed 10 years. The exercise price for an incentive stock option cannot be less
than 100% of the fair market value of the Common Stock on
43
<PAGE>
the date of the option grant and the exercise price for a nonstatutory stock
option cannot be less than 85% of the fair market value of the Common Stock on
the date of option grant. Options granted under the Incentive Plan vest at the
rate specified in the option agreement. Options may include provisions allowing
exercise of any part or all of the options prior to full vesting. Any unvested
shares so purchased shall be subject to a repurchase right in favor of the
Company or to any other restriction the Board determines to be appropriate. No
stock option may be transferred by the optionee other than by will or the laws
of descent or distribution provided that a nonstatutory stock option may be
transferred pursuant to a domestic relations order and the Board of Directors
may grant a nonstatutory stock option that is transferable, and provided further
that an optionee may designate a beneficiary who may exercise the option
following the optionee's death. An optionee whose relationship with the Company
or any related corporation ceases for any reason (other than by death or
permanent and total disability) may exercise options in the period specified by
the Board following such cessation. Options may be exercised for up to twelve
months after an optionee's relationship with the Company and its affiliates
ceases due to disability, and up to eighteen months following an optionee's
death (unless such options expire sooner or later by their terms).
No incentive stock option may be granted to any person who, at the time of the
grant, owns (or is deemed to own) stock possessing more than 10% of the total
combined voting power of the Company or any affiliate of the Company, unless the
option exercise price is at least 110% of the fair market value of the stock
subject to the option on the date of grant, and the term of the option does not
exceed five years from the date of grant. To the extent an optionee would have
the right in any calendar year to exercise for the first time one or more
incentive stock options for shares having an aggregate fair market value (under
all plans of the Company and its affiliates and determined for each share as of
the date the option to purchase the shares was granted) in excess of $100,000,
any such excess options will be treated as nonstatutory stock options. No person
may be granted options and stock appreciation rights covering more than 100,000
shares of Common Stock per calendar year, provided that this limit shall not
apply until the expiration of the transition period under Section 162(m) of the
Code for privately held companies that become publicly held.
Shares subject to stock awards that have expired or otherwise terminated without
having been exercised in full (or vested in the case of restricted stock awards)
shall again become available for the grant of awards under the Incentive Plan.
Shares subject to exercised stock appreciation rights shall not again become
available for the grant of new awards.
The Board of Directors has the authority, with the consent of affected holders,
to reprice outstanding options and stock appreciation rights and to offer
optionees the opportunity to replace outstanding options or stock appreciation
rights with new options or stock appreciation rights for the same or a different
number of shares.
Restricted stock purchase awards granted under the Incentive Plan may be granted
pursuant to a repurchase option in favor of the Company in accordance with a
vesting schedule and at a price determined by the Board of Directors. Stock
bonuses may be awarded in consideration of past services without a purchase
payment. Rights under a stock bonus or restricted stock bonus agreement may not
be transferred except where such assignment is required by law or expressly
authorized by the terms of the applicable stock bonus or restricted stock
purchase agreement. Stock appreciation rights granted under the Incentive Plan
may be tandem rights, concurrent rights or independent rights.
Upon certain changes in control of the Company, not subject to Board approval,
outstanding options shall be fully vested and shall be assumed, substituted or
continued by the surviving corporation or parent thereof. In the event the
surviving corporation or its parent refuses to assume, substitute or continue
such options, then such options shall be terminated if not exercised prior to
the change of control.
As of September 1, 1996, options to purchase 509,314 shares of Common Stock had
been granted under the Incentive Plan, at a weighted average exercise price of
$2.48, 72,635 shares of Common Stock had been issued upon the exercise of
options, 9,931 of which were subject to repurchase, options to purchase 327,669
shares of Common Stock were outstanding and 399,696 shares remained available
for future grant. As of September 1, 1996, no restricted stock awards, stock
appreciation rights or stock bonuses had been granted under the Incentive Plan.
The Incentive Plan will terminate in September 2006 unless sooner terminated by
the Board of Directors.
44
<PAGE>
1992 STOCK OPTION PLAN. The Company's 1992 Stock Option Plan (the "1992 Stock
Plan") was adopted by the Board of Directors in November 1992, amended in March
1993 and September 1993, approved by its stockholders in November 1993 and
amended in September 1996, subject to stockholder approval. The Company has
reserved 345,000 shares of Common Stock for issuance under the 1992 Stock Plan.
The 1992 Stock Plan provides for grants of incentive stock options to employees
and nonstatutory stock options to employees, directors and consultants of the
Company. Shares subject to options which expire or otherwise terminate without
having been exercised may again be subject to options under the 1992 Stock Plan.
The 1992 Stock Plan is administered by the Compensation Committee of the Board
of Directors, which determines recipients and types of awards to be granted,
including the exercise price, number of shares subject to the award and the
exercisability thereof.
The term of a stock option granted under the 1992 Stock Plan generally may not
exceed 10 years. Options granted pursuant to the 1992 Stock Plan become
exercisable at a rate specified in the option agreement. Options may include
provisions allowing exercise of any part or all of the options prior to full
vesting. Any unvested shares so purchased shall be subject to a repurchase right
in favor of the Company or to any other restriction the Board determines to be
appropriate. The exercise price of options granted under the 1992 Stock Plan is
determined by the Board of Directors; provided that, in the case of an incentive
stock option, the exercise price cannot be less than 100% of the fair market
value of the Common Stock on the date of grant or, in the case of 10%
stockholders, not less than 110% of the fair market value of the Common Stock on
the date of grant, and in the case of a nonstatutory stock option, the exercise
price cannot be less than 85% of the fair market value of the Common Stock on
the date of grant. To the extent an optionee would have the right in any
calendar year to exercise for the first time one or more incentive stock options
for shares having an aggregate fair market value (under all plans of the Company
and its affiliates and determined for each share as of the date the option to
purchase the shares was granted) in excess of $100,000, any such excess options
will be treated as nonstatutory stock options. No option may be transferred by
the optionee other than by will or the laws of descent or distribution, provided
that an optionee may designate a beneficiary who may exercise the option
following the optionee's death. An optionee whose employment with the Company
ceases for any reason (other than by death or permanent and total disability)
may exercise options in the three month period following such termination
(unless such options terminate or expire sooner by their terms). The three month
post-termination exercise period is extended to 12 months for termination due to
death or disability.
Upon certain changes in control of the Company, not subject to Board approval,
outstanding options shall be fully vested and shall be assumed, substituted or
continued by the surviving corporation or parent thereof. In the event the
surviving corporation or its parent refuses to assume, substitute or continue
such options, then such options shall be terminated if not exercised prior to
the change of control.
As of September 1, 1996, options to purchase 386,066 shares of Common Stock had
been granted under the 1992 Stock Plan, at a weighted exercise price of $1.24,
80,428 shares of Common Stock had been issued upon the exercise of options,
3,400 of which were subject to repurchase, options to purchase 216,040 shares of
Common Stock were outstanding and 48,532 shares remained available for future
grant.
The 1992 Stock Plan will terminate in November 2002, unless terminated sooner by
the Board of Directors.
EMPLOYEE STOCK PURCHASE PLAN. In September 1996, the Company's Board of
Directors approved the Employee Stock Purchase Plan (the "Purchase Plan")
covering an aggregate of 150,000 shares of Common Stock. The Purchase Plan is
intended to qualify as an employee stock purchase plan within the meaning of
Section 423 of the Code. Under the Purchase Plan, the Board of Directors may
authorize participation by eligible employees, including officers, in periodic
offerings following the adoption of the Purchase Plan. The Offering period for
any Offering will be no more than 27 months.
Employees are eligible to participate if they are employed by the Company or an
affiliate of the Company designated by the Board of Directors provided that
employees who are not employed at least 20 hours per week or five months per
year may be excluded. Employees who participate in an Offering can have up to
15% (or such lower percentage specified by the Board of Directors) of their
earnings withheld pursuant to the Purchase Plan and applied, on specified dates
determined by the Board of Directors, to the purchase of shares of Common
45
<PAGE>
Stock. The price of Common Stock purchased under the Purchase Plan may not be
less than 85% of the lower of the fair market value of the Common Stock on the
commencement date of each Offering period or the relevant purchase date.
Employees may end their participation in an Offering at any time during the
Offering period, and participation will end automatically on termination of
employment with the Company. Rights under the Purchase Plan may not be
transferred by employees other than by will or the laws of descent or
distribution, provided that an employee may designate a beneficiary who may
receive shares and cash, if any, from the employee's account under the Purchase
Plan in the event of such employee's death.
In the event of certain changes of control, the Company and the Board of
Directors has discretion to provide that each right to purchase Common Stock
will be assumed or an equivalent right substituted by the successor corporation,
or the Board may shorten the Offering period and provide for all sums collected
by payroll deductions to be applied to purchase stock immediately prior to the
change in control.
The Board of Directors has not currently authorized an Offering under the
Purchase Plan.
The Purchase Plan will terminate at the Board's discretion.
46
<PAGE>
CERTAIN TRANSACTIONS
LOANS
The Company has provided Louis G. Lange, M.D., Ph.D., Chairman of the Board of
Directors and Chief Executive Officer, with several loans. In August 1992, the
Company provided a loan in the principal amount of $500,000 at an annual
interest rate of 7.0%, pursuant to a promissory note secured by a deed of trust
on Dr. Lange's residence (the "1992 Note"). In June 1993, the Company provided a
loan in the principal amount of $25,000 at an annual interest rate of 5.33%,
pursuant to a promissory note secured by a stock pledge of 2,500 shares of
Common Stock held by Dr. Lange. In June 1995, in connection with the exercise of
an option to purchase Common Stock, the Company provided a loan in the principal
amount of $37,500 at an annual interest rate of 7.31%, pursuant to a promissory
note secured by a pledge of 15,000 shares of Common Stock held by Dr. Lange. In
August 1996, the Company provided a loan to Dr. Lange in the principal amount of
$25,000, at an annual interest rate of 6.84%, pursuant to a promissory note
secured by a pledge of 2,500 shares of Common Stock held by Dr. Lange. As of
September 15, 1996, an aggregate principal amount of $587,500 remained
outstanding on the four notes.
In September 1996, the Company amended all four notes and pursuant to the terms
of each amended note, an interest rate of 6.53% compounded semi-annually
applies, and the outstanding principal amount is due on December 31, 2001. At
the same time, the Company forgave all interest due on the four loans as of
December 31, 1995 (estimated at $92,880). In addition, the Company will pay Dr.
Lange an amount necessary to compensate him for any taxes that he may incur due
to the interest forgiveness and the payment of this additional amount as well as
the following amounts for mortgage assistance: $50,000 in 1997, $40,000 in 1998,
$30,000 in 1999, $20,000 in 2000 and $10,000 in 2001.
In connection with the 1992 Note, the Company entered into a letter agreement of
Credit Terms and Conditions with Imperial Bank, dated August 11, 1992, pursuant
to which Imperial Bank provided a loan to the Company in the principal amount of
$500,000, at an annual interest rate equal to the greater of 2.0% per year in
excess of Imperial Bank's prime lending rate or $250. The loan was guaranteed by
Institutional Venture Partners V, L.P. ("IVP") pursuant to a Continuing
Guarantee dated August 11, 1992 (the "IVP Guarantee"). Mr. Colella, a director
of the Company, is a General Partner of IVP. In consideration for the IVP
Guarantee, Dr. Lange executed a Guaranty and Pledge Agreement dated August 18,
1992 in which he provided a guarantee of reimbursement and pledged shares in
favor of IVP. The Continuing Guarantee and the Guarantee and Pledge Agreement
were released upon the closing of the Company's sale of Series A Preferred
Stock.
Upon the closing of this Offering, Dr. Lange will sell a sufficient number of
shares of Common Stock at the price per share set in the Offering to the Company
to satisfy $150,000 of his $500,000 loan and the tax obligations arising from
such sale.
In August 1995, in connection with the exercise of an option to purchase 30,000
shares of Common Stock, the Company provided a loan to Michael M. Wick, M.D.,
Ph.D., Senior Vice President, Research, in the principal amount of $75,000, at
an annual interest rate of 6.56%, pursuant to a promissory note secured by a
pledge of 7,500 shares of Common Stock held by Dr. Wick. In December 1995, the
Company repurchased the 30,000 shares and canceled the note.
In June 1995, in connection with the exercise of an option to purchase Common
Stock, the Company provided a loan to Thomas L. Gutshall, a director of the
Company who then served as President and Chief Operating Officer, in the
principal amount of $62,500, at an annual interest rate of 7.31%, pursuant to a
promissory note secured by a pledge of 25,000 shares of Common Stock held by Mr.
Gutshall. In September 1996, pursuant to a Separation and Consulting Agreement,
the Company agreed to amend the note and pursuant to the terms of the amended
note, an interest rate of 6.53% compounded semi-annually applies, and the
outstanding principal amount is due on December 31, 2001. As of September 15,
1996, an aggregate principal amount of $62,500 remained outstanding on the note.
In November 1992, the Company provided two loans to George F. Schreiner, M.D.,
Ph.D., Vice President, Medical Science and Preclinical Research, both in the
principal amounts of $75,000, at an annual interest rate of 6.5%. The
outstanding principal amount and accrued interest on the first loan was forgiven
in three equal amounts on
47
<PAGE>
the last day of the year of 1993, 1994 and 1995. The second loan was made
pursuant to a promissory note secured by a deed of trust on Dr. Schreiner's
residence. The note was amended in September 1996 and pursuant to the terms of
the amended note, an interest rate of 6.53% compounded semi-annually applies,
and the outstanding principal amount of the second loan is due on December 31,
2001. As of September 15, 1996, an aggregate of $75,000 in principal amount
remained outstanding on the second loan. In December 1992, the Company provided
a third loan to Dr. Schreiner in the principal amount of $50,000, at an annual
interest rate of 6.5%, pursuant to a promissory note secured by a deed of trust
on Dr. Schreiner's residence (the "December Note"). Dr. Schreiner repaid the
outstanding principal amount and accrued interest on the December Note in May
1993.
OTHER TRANSACTIONS/RELATIONSHIPS
In May 1995, the Company entered into a Consulting Agreement with Kathleen A.
Stafford, Chief Financial Officer of the Company. As compensation for her
services under the agreement, Ms. Stafford received $1,900 per week as well as
an option to purchase 10,000 shares of Common Stock at an exercise price of
$2.50 per share, with vesting over a twenty-four month period. The agreement
terminated when Ms. Stafford became Chief Financial Officer on December 1, 1995,
but the option continues to vest.
In April 1993, the Company entered into a Collaborative Research and Development
Agreement with Genta Incorporated and Genta Jago Technologies B.V. (the "Genta
Agreement"). Mr. Colella, a director of the Company, is also a director of Genta
Incorporated. Pursuant to the terms of the Genta Agreement, the parties agreed
to engage in a five-year collaboration to design, develop and commercialize
certain products utilizing the technology which was the subject of a License
Agreement between the Company and Genta Incorporated on the one hand and the
Board of Trustees of the Leland Stanford Junior University on the other hand
(the "Stanford License"). The parties have terminated the collaboration effort,
and the Stanford License has been terminated.
In September 1996, the Company entered into indemnification agreements with its
directors and officers for the indemnification of, and advancement of expenses
to, such persons to the full extent permitted by law. The Company intends to
execute such agreements with its future directors and officers.
The Company believes that the foregoing transactions were in its best interest.
As a matter of policy the transactions were, and all future transactions between
the Company and any of its officers, directors or principal shareholders will
be, approved by a majority of the independent and disinterested members of the
Board of Directors, will be on terms no less favorable to the Company than could
be obtained from unaffiliated third parties and will be in connection with bona
fide business purposes of the Company.
48
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 1, 1996 and as adjusted
to reflect the sale of the Common Stock being offered hereby by: (i) each
stockholder who is known by the Company to own beneficially more than 5% of the
Common Stock; (ii) each Named Executive Officer of the Company; (iii) each
director of the Company; and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
-----------------------------------
SHARES BENEFICIALLY OWNED(1)
-----------------------------------
PERCENT PERCENT
PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL HOLDER NUMBER OFFERING OFFERING
- ------------------------------------------------------------------ --------- ----------- -----------
Samuel D. Colella (2) 609,000 12.99%
<S> <C> <C> <C>
Entities affiliated with Institutional Venture Management V (3) 607,500 12.96
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Entities affiliated with Delphi BioVentures II, L.P. (4) 380,495 8.17
3000 Sand Hill Road
Building 1, Suite 135
Menlo Park, CA 94025
BankAmerica Ventures (5) 375,000 8.08
950 Tower Lane, Suite 700
Foster City, CA 94404
Entities affiliated with Asset Management Associates, 1989, L.P.
(6) 332,375 7.14
2275 East Bayshore Road, Suite 150
Palo Alto, CA 94303
Entities affiliated with Sequoia Capital V (7) 284,872 6.13
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
Louis G. Lange, M.D., Ph.D. (8) 276,202 5.77
Thomas L. Gutshall (9) 85,339 1.81
George F. Schreiner, M.D., Ph.D. (10) 53,025 1.12
Barbara J. McNeil, M.D., Ph.D. (11) 2,999 *
J. Leighton Read, M.D. 7,721 *
Costa G. Sevastopoulos, Ph.D. (12) 792 *
Isaac Stein (13) 15,499 *
Andrew A. Wolff, M.D. (14) 30,000 *
Mark B. Hirsch 24,365 *
All directors and executive officers as a group (11 persons)(15) 1,174,952 23.36
</TABLE>
- ------------------------------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Beneficial ownership also
includes shares of stock subject to options and warrants currently
exercisable or convertible, or exercisable or convertible within 60 days of
the date of this table. Except as indicated by footnote, and subject to
community property laws where applicable, to the knowledge of the Company,
all persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock, shown as beneficially owned by
them. Percentage of beneficial ownership is based on 4,639,701 shares of
Common Stock outstanding as of September 1, 1996 and shares of Common
Stock outstanding after completion of this Offering (assuming the exercise
of all outstanding warrants for Common Stock and the conversion of all
outstanding Preferred Stock).
49
<PAGE>
(2) Includes 1,500 shares issuable upon the exercise of options, 625 of which
would be subject to repurchase by the Company as of November 1, 1996, if
issued. Also includes the shares identified in footnote (3) below. Mr.
Colella is a general partner of IVM, the general partner of IVP. Mr. Colella
disclaims beneficial ownership of the shares listed in footnote (3), except
to the extent of his pecuniary interests therein.
(3) Consists of 8,650 shares held by Institutional Ventures Management V., L.P.
("IVM"), 486,350 shares held by Institutional Venture Partners V., L.P.
("IVP"), 1,350 shares to be issued to IVM upon the exercise of an
outstanding warrant upon the closing of the Offering, 66,150 shares to be
issued to IVP upon the exercise of an outstanding warrant upon the closing
of the Offering, 775 shares issuable upon the exercise of outstanding
warrants held by IVM exercisable within 60 days of September 1, 1996 and
44,225 shares issuable upon the exercise of outstanding warrants held by IVP
exercisable within 60 days of September 1, 1996. Mr. Colella, a director of
the Company, is a general partner of IVM. IVM is the general partner of IVP.
Mr Colella disclaims beneficial ownership of the shares held by IVM and IVP,
except to the extent of his pecuniary interests therein.
(4) Consists of 1,764 shares held by Delphi BioInvestments II, L.P.
("BioInvestments"), 325,932 shares held by Delphi Ventures II, L.P.
("Ventures"), 204 shares to be issued to BioInvestments upon the exercise of
an outstanding warrant upon the closing of the Offering, 39,846 shares to be
issued to Ventures upon the exercise of an outstanding warrant upon the
closing of the Offering, 64 shares issuable upon the exercise of an
outstanding warrant held by BioInvestments exercisable within 60 days of
September 1, 1996 and 12,685 shares issuable upon the exercise of an
outstanding warrant held by Ventures exercisable within 60 days of September
1, 1996. Dr. Sevastopoulos, a director of the Company, is a limited partner
of Delphi Management Partners II, which is the general partner of
BioInvestments and Ventures. Dr. Sevastopoulos disclaims beneficial
ownership of the shares held by BioInvestments and Ventures, except to the
extent of his pecuniary interests therein.
(5) Consists of 15,000 shares held by BA Venture Partners II ("BA"), 135,000
shares held by BankAmerica Ventures ("BankAmerica"), 22,500 shares to be
issued to BA upon the exercise of an outstanding warrant upon the closing of
this Offering and 202,500 shares to be issued to BankAmerica upon the
exercise of an outstanding warrant held by BankAmerica upon the closing of
this Offering.
(6) Consists of 247,100 shares held by Asset Management Associates 1989, L.P.
("AMA"), 18,250 shares held by Asset Management Partners ("AMP"), 30,150
shares to be issued to AMA upon the exercise of an outstanding warrant upon
the closing of the Offering, 27,375 shares to be issued to AMP upon the
exercise of an outstanding warrant upon the closing of the Offering and
9,500 shares issuable upon the exercise of an outstanding warrant held by
AMA exercisable within 60 days of September 1, 1996.
(7) Consists of 246,652 shares held by Sequoia Capital V, 11,827 shares held by
Sequoia Technology Partners V, 5,000 shares held by Sequoia XXII, 4,000
shares held by Sequoia XXIII, 1,020 shares held by Sequoia XXIV, 750 shares
held by Sequoia 1995 L.L.C., 8,718 shares to be issued to Sequoia Capital V
upon the exercise of an outstanding warrant upon the closing of the
Offering, 281 shares to be issued to Sequoia Technology Partners V upon the
exercise of an outstanding warrant upon the closing of the Offering, 375
shares to be issued to Sequoia 1995 upon the exercise of an outstanding
warrant upon the closing of the Offering, 5,812 shares issuable upon the
exercise of an outstanding warrant held by Sequoia Capital V exercisable
within 60 days of September 1, 1996, 187 shares issuable upon the exercise
of an outstanding warrant held by Sequoia Technology Partners V exercisable
within 60 days of September 1, 1996 and 250 shares issuable upon the
exercise of an outstanding warrant held by Sequoia 1995 exercisable within
60 days of September 1, 1996.
(8) Includes 145,000 shares issuable upon the exercise of options, 80,116 of
which would be subject to repurchase by the Company as of November 1, 1996,
if issued and 1,875 shares to be issued upon the exercise of an outstanding
warrant upon the closing of the Offering.
(9) Includes 50,714 shares issuable upon the exercise of options, 40,000 of
which would be subject to repurchase by the Company as of November 1, 1996,
if issued. Also includes 2,250 shares held in the Gutshall Family Trust,
1,875 shares to be issued to the Gutshall Family Trust upon the exercise of
an outstanding warrant upon the closing of the Offering and 500 shares
issuable upon the exercise of an outstanding warrant held in the Gutshall
Family Trust exercisable within 60 days of September 1, 1996.
(10) Consists of 53,025 shares issuable upon the exercise of options, 19,702 of
which would be subject to repurchase by the Company as of November 1, 1996,
if issued.
(11) Includes 500 shares issuable upon the exercise of options, 319 of which
would be subject to repurchase by the Company as of November 1, 1996, if
issued.
(12) Includes 500 shares issuable upon the exercise of options, 319 of which
would be subject to repurchase by the Company as of November 1, 1996, if
issued.
(13) Includes 500 shares issuable upon the exercise of options, 319 of which
would be subject to repurchase by the Company as of November 1, 1996, if
issued. Also includes 2,500 shares held in The Stein 1995 Revocable Trust,
1,875 shares to be issued to The Stein 1995 Revocable Trust upon the
exercise of an outstanding warrant upon the closing of the Offering and 625
shares issuable upon the exercise of an outstanding warrant held in The
Stein 1995 Revocable Trust exercisable within 60 days of September 1, 1996.
(14) Consists of 30,000 shares issuable upon the exercise of options, 19,350 of
which would be subject to repurchase by the Company as of November 1, 1996,
if issued.
(15) Includes 345,364 shares issuable upon the exercise of options and warrants
held by all directors and executive officers that are exercisable within 60
days from September 1, 1996, 180,750 of which would be subject to repurchase
by the Company as of November 1,1996, if issued. Also includes 1,875, 1,875,
1,875, 3,750 and 1,875 shares to be issued to Dr. Lange, the Gutshall Family
Trust, The Stein 1995 Revocable Trust, Ms. Stafford and Dr. Wick,
respectively, upon the exercise of outstanding warrants upon the closing of
the Offering. See footnotes (2) (8) (9) (10) (11) (12) (13) and (14).
50
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Upon the closing of this Offering, the authorized capital stock of the Company
will consist of 30,000,000 shares of Common Stock, $.001 par value, and
5,000,000 shares of Preferred Stock, $.001 par value.
The Company may be subject to Section 2115 of the California Corporations Code
("Section 2115"). Section 2115 provides that, regardless of a company's legal
domicile, certain provisions of California corporate law will apply to that
company if the Company meets certain requirements relating to its property,
payroll and sales in California and if more than one-half of its outstanding
voting securities are held of record by persons having addresses in California.
Section 2115 limits the ability of the Company to, among other things, elect a
classified board of directors. The Company will not be subject to Section 2115
(i) at such time as the Company is qualified for trading as a national market
security on the Nasdaq system and has 800 stockholders as of the record date of
its most recent annual meeting or (ii) at the end of any income year during
which a certificate of state connections pursuant to Section 2108 of the
California Corporations Code shall have been filed showing that less than
one-half of its outstanding voting securities are held of record by persons
having addresses in California or that one of the other tests of Section 2115 is
not met. The Company expects that it will no longer be subject to Section 2115
by the record date of its 1997 annual meeting of stockholders.
COMMON STOCK
As of September 1, 1996, there were 4,639,701 shares of Common Stock outstanding
(assuming the exercise of all outstanding warrants for Common Stock and the
conversion of all outstanding Preferred Stock upon the closing of this Offering)
held of record by approximately 220 stockholders.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. The holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, holders of the Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities. Holders of Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are, and all shares of
Common Stock to be outstanding upon completion of this Offering will be, fully
paid and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 5,000,000 shares of Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and the number of shares
constituting any series or the designation of such series, without any further
vote or action by stockholders. The issuance of Preferred Stock could adversely
affect the voting power of holders of Common Stock and the likelihood that such
holders will receive dividend payments and payments upon liquidation and could
have the effect of delaying, deferring or preventing a change in control of the
Company. The Company has no present plan to issue any shares of Preferred Stock.
WARRANTS
As of September 1, 1996, the Company had outstanding warrants to purchase
401,754 shares of Common Stock at exercise prices ranging from $2.50 to $25.00
per share (including warrants to purchase Series A, B, D and E Preferred Stock,
convertible into Common Stock upon the closing of this Offering). In addition,
in December 1995, the Company issued a warrant to purchase 2,500 units at a
price of $.50 per unit to Cooley Godward LLP, the Company's counsel, with each
unit consisting of 1 share of Common Stock and one warrant to purchase 1/2 share
of Common Stock at an exercise price of $20.00 per share. Each warrant contains
provisions for the adjustment of the exercise price and the aggregate number of
shares issuable upon the exercise of the warrant under certain circumstances,
including stock dividends, stock splits, reorganizations and reclassifications.
51
<PAGE>
Each warrant may be exercised, without the payment of cash, for a number of
shares of Common Stock determined pursuant to a net issue exercise formula
contained in the warrant. Each warrant holder has certain registration rights.
See "Description of Capital Stock - Registration Rights of Certain Holders."
Generally, the warrants expire at various times from September 1997 to April
2005.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
Following this Offering, holders of 4,218,577 shares of Common Stock (assuming
the exercise of all outstanding warrants for Common Stock and the conversion of
all outstanding Preferred Stock upon the closing of this Offering) and warrants
to purchase 405,504 shares of Common Stock will be entitled to certain rights
with respect to the registration of their shares under the Securities Act. These
rights are provided under the terms of an Investors' Rights Agreement, dated May
29, 1996, and certain other agreements (the "Agreements"). Pursuant to the terms
of the Agreements, if the Company proposes to register any of its securities
under the Securities Act, either for its own account or the account of others,
the holders are entitled to notice of such registration and are entitled to
include, at the Company's expense, their shares of Common Stock; provided, among
other conditions, that the underwriters of any Offering have the right to limit
the number of such shares included in such registration or exclude such shares
entirely. The holders may also require the Company, on no more than one occasion
over any twelve month period, at the Company's expenses, to register all or a
portion of their shares of Common Stock on Form S-3 when such form becomes
available to the Company, subject to certain conditions and limitations.
Further, holders of 4,218,577 shares of Common Stock and warrants to purchase
365,504 shares of Common Stock may require the Company, beginning 180 days after
the date of the Prospectus, on not more than two occasions, to file a
registration statement under the Securities Act at the Company's expense with
respect to their shares of Common Stock, and the Company is required to use its
best efforts to effect such registration, subject to certain conditions and
limitations. All rights described in this paragraph terminate at such time as
such shares of Common Stock may be sold in the public market.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware Law, an
anti-takeover law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of Section 203, a
"business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock.
The Company's Restated Certificate of Incorporation and Restated Bylaws also
require that, effective upon the closing of this Offering, any action required
or permitted to be taken by stockholders of the Company must be effected at a
duly called annual or special meeting of the stockholders and may not be
effected by a consent in writing. In addition, special meetings of the
stockholders of the Company may be called only by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer of the Company or by any
person or persons holding shares representing at least 10% of the outstanding
capital stock. The Company's Restated Certificate of Incorporation also provides
for a classified Board which will be instituted at such time as the Company is
no longer subject to Section 2115 and specifies that the authorized number of
directors may be changed only by resolution of the Board of Directors. See
"Management - Board Composition." These provisions may have the effect of
deterring hostile takeovers or delaying changes in control or management of the
Company.
TRANSFER AGENT AND REGISTRAR
Norwest Bank Minnesota, N.A. has been appointed as the transfer agent and
registrar for the Company's Common Stock.
52
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have shares of Common
Stock outstanding, assuming the exercise of all outstanding warrants for Common
Stock and the conversion of all outstanding Preferred Stock but no exercise of
other outstanding warrants and options. Of these shares, the shares sold
in this Offering will be freely transferable without restriction under the
Securities Act unless they are held by "affiliates" of the Company as that term
is defined in Rule 144 under the Securities Act. The remaining 4,639,701 shares
of Common Stock (the "Restricted Shares") held by officers, directors,
employees, consultants and other stockholders of the Company were sold by the
Company in reliance on exemptions from the registration requirements of the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act and may not be sold publicly unless they are registered
under the Securities Act or are sold pursuant to Rule 144 or another exemption
from registration.
The officers, directors, employees and certain stockholders of the Company have
agreed not to sell their shares without the prior written consent of J.P. Morgan
Securities Inc. for a period of 180 days from the date of this Prospectus.
Beginning 180 days after commencement of this Offering, approximately 1,215,562
Restricted Shares that are subject to lock-up agreements (as described below
under "Underwriting") will become eligible for sale in the public market subject
to Rule 144 and Rule 701 under the Securities Act. The remaining approximately
905,746 Restricted Shares, which are also subject to such lock-up agreements,
will have been held for less than two years or, in the case of affiliates, for
less than three years, upon the expiration of such lock-up agreements and will
become eligible for sale under Rule 144 at various dates thereafter as the
holding period provisions of Rule 144 are satisfied. Additionally, approximately
1,240,685 Restricted Shares that are not subject to lock-up agreements will
become eligible for sale in the public market 90 days after the Offering and
approximately 1,277,708 Restricted Shares that are not subject to lock-up
agreements will become eligible for sale under Rule 144 at various dates
thereafter.
In general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned Restricted Shares for at least
two years, including persons who may be deemed "affiliates" of the Company, is
entitled to sell, within any three month period commencing 90 days after this
Offering, a number of shares that does not exceed the greater of 1% of the
number of shares of Common Stock then outstanding (approximately shares
immediately after this Offering, assuming no exercise of the Underwriters' over-
allotment option) or the average weekly trading volume of the Common Stock as
reported through the Nasdaq National Market during the four calendar weeks
preceding the filing of a Form 144 with respect to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about the
Company. In addition, a person who is not deemed to have been an affiliate of
the Company at any time during the 90 days preceding a sale, and who has
beneficially owned for at least three years the shares proposed to be sold,
would be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above.
Under Rule 701 under the Securities Act, any employee, officer or director of or
consultant to the Company, who is not an affiliate of the Company, and who
purchased shares pursuant to a written compensatory plan or contract, including
the Company's stock option plans, is entitled to sell such shares without having
to comply with the public information, holding period, volume limitation or
notice provisions of Rule 144, and affiliates of the Company are permitted to
sell such shares without having to comply with the Rule 144 holding period
restrictions, in each case commencing 90 days after this Offering.
The Company presently intends to file a registration statement under the
Securities Act on Form S-8 to register approximately 1,630,500 shares of Common
Stock subject to outstanding stock options or reserved for issuance under the
Incentive Plan, the 1992 Stock Plan and the Directors' Plan (the "Plans") as
well as stock options granted outside the Plans and shares reserved for issuance
under the Purchase Plan. As of September 1, 1996, 564,209 shares were issuable
upon exercise of currently outstanding options of which 240,940 were fully
vested. Taking into account the effect of the lock-up agreements with the
holders of options, 145,751 of these shares will be eligible for sale in the
public markets beginning 180 days after commencement of this Offering, subject,
in the case of sales by affiliates, to the volume, manner of sale, notice and
public information requirements of
53
<PAGE>
Rule 144. In addition, 95,189 of these shares which were not subject to lock-up
agreements will be eligible for sale in the public markets beginning 90 days
after commencement of this Offering, subject to Rule 144. See "Management -
Stock Plans" and "Management - Directors' Compensation."
As of September 1, 1996, 405,504 shares were issuable upon exercise of currently
outstanding warrants (excluding the exercise of all outstanding warrants for
Common Stock) and, taking into account the effect of the lock-up agreements with
the holders of warrants, 77,123 of these shares will be eligible for sale in the
public markets beginning 180 days after commencement of this Offering, subject
to Rule 144. In addition, 328,381 of these shares which were not subject to
lock-up agreements will be eligible for sale in the public markets beginning 90
days after commencement of this Offering, subject to Rule 144.
The holders of 4,218,577 shares of Common Stock, assuming the exercise of
outstanding warrants for Common Stock and the conversion of all outstanding
Preferred Stock upon the closing of this Offering, and the holders of warrants
exercisable for 405,504 additional shares of Common Stock are entitled to
certain rights with respect to the registration of such shares under the
Securities Act. See "Description of Capital Stock - Registration Rights of
Certain Holders." Registration of such shares under the Securities Act would
result in such shares becoming freely tradable without restriction under the
Securities Act (except for shares purchased by affiliates of the Company)
immediately upon the effectiveness of such registration. If certain of such
holders, by exercising their demand registration rights, cause a larger number
of securities to be registered and sold in the public market, such sales could
have an adverse effect on the market price for the Common Stock. If the Company
were to include in a Company-initiated registration any Registrable Securities
pursuant to the exercise of piggyback registration rights, such sales may have
an adverse effect on the Company's ability to raise needed capital.
Prior to this Offering, there has been no public market for the Common Stock of
the Company. No predictions can be made of the effect if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of a substantial amount of
such shares by existing stockholders or by stockholders purchasing in the
Offering could have a negative impact on the market price of the Common Stock.
54
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus (the "Underwriting Agreement"), the
Underwriters named below, for whom J.P. Morgan Securities Inc., Invemed
Associates, Inc. and UBS Securities LLC are acting as representatives (the
"Representatives"), have severally agreed to purchase, and the Company has
agreed to sell them, the respective numbers of shares of Common Stock set forth
opposite their names below. Under the terms and conditions of the Underwriting
Agreement, the Underwriters are obligated to take and pay for all such shares of
Common Stock, if any are taken. Under certain circumstances, the commitments of
nondefaulting Underwriters may be increased as set forth in the Underwriting
Agreement.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------------------------------------------------- ------------
<S> <C>
J.P. Morgan Securities Inc.................................................
Invemed Associates, Inc....................................................
UBS Securities LLC.........................................................
------------
Total..................................................................
------------
------------
</TABLE>
The Underwriters propose initially to offer the Common Stock directly to the
public at the price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of per share.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of per share to certain other dealers. After the initial public
offering of the Common Stock, the public offering price and such concession may
be changed.
The Company has granted to the Underwriters an option, expiring at the close of
business on the 30th day after the date of this Prospectus, to purchase up to
additional shares of Common Stock at the initial public offering price,
less the underwriting discount. The Underwriters may exercise such option solely
for the purpose of covering over-allotments, if any. To the extent the
Underwriters exercise the option, each Underwriter will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage of
such additional shares as the number set forth next to such Underwriter's name
in the preceding table bears to the total number of shares of Common Stock
offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company's officers, directors and certain other stockholders of the Company
have agreed, subject to certain exceptions, not to, directly or indirectly, (i)
sell, grant any option to purchase or otherwise transfer or dispose of any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock or file a registration statement under
the Securities Act with respect to the foregoing or (ii) enter into any swap or
other agreement or transaction that transfers, in whole or in part, the economic
consequence of ownership of the Common Stock, without the prior written consent
of J.P. Morgan Securities Inc., for a period of 180 days after the date of this
Prospectus. The foregoing does not prohibit the Company's issuance of shares
pursuant to the exercise of the Underwriters over-allotment option or under the
Incentive Plan, the 1992 Stock Plan, the Directors' Plan or the Purchase Plan.
The Company is not aware that any party to such agreement has requested a
consent from J.P. Morgan Securities Inc., and J.P. Morgan Securities Inc. has
advised the Company that it has no current intention to give such consent,
although there can be no assurance that it will not do so.
The Underwriters have advised the Company that they do not expect that sales to
accounts over which they exercise discretionary authority will exceed 5% of the
shares offered hereby.
55
<PAGE>
Prior to this Offering, there has been no public market for the Common Stock.
The initial public offering price for the shares of Common Stock offered hereby
will be determined through negotiations among the Company and the Underwriters.
Among the factors to be considered in making such determination are the history
of and the prospects for the industry in which the Company operates, an
assessment of the Company's management, the present operations of the Company,
the historical results of operations of the Company, the prospects for future
earnings of the Company, the general conditions of the securities markets at the
time of the Offering and the prices of similar securities of generally
comparable companies.
There can be no assurance that an active trading market will develop for the
Common Stock or that the Common Stock will trade in the public market subsequent
to the Offering at or above the initial public offering price.
From time to time in the ordinary course of their respective businesses, the
Representatives and their respective affiliates may in the future provide
investment banking and other financial services to the Company and its
affiliates.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP ("Cooley"), Palo Alto, California. Certain legal
matters in connection with this Offering will be passed upon for the
Underwriters by Wilson Sonsini Goodrich & Rosati, a Professional Corporation,
Palo Alto, California. As of the date of this Prospectus, Cooley owns a warrant
to purchase 2,500 units at a price of $.50 per unit with each unit consisting of
1 share of Common Stock and one warrant to purchase 1/2 share of Common Stock at
an exercise price of $20.00 per share. GC&H Investments, a general partnership
formed by the partners of Cooley for investment purposes, owns 3,000 shares of
the Company's Common Stock, 1,875 shares issuable upon the exercise of an
outstanding warrant upon the closing of the Offering and a warrant to purchase
875 shares of Series E Preferred Stock, convertible into 875 shares of the
Company's Common Stock. GC&H Partners, another general partnership formed by the
partners of Cooley for investment purposes, owns 15,761 shares of the Company's
Common Stock. Alan C. Mendelson and Deborah A. Marshall, partners at Cooley, are
Secretary and Assistant Secretary of the Company, respectively.
EXPERTS
The consolidated financial statements of CV Therapeutics, Inc. as of December
31, 1994 and 1995 and for each of the three years in the period ended December
31, 1995 appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the Common Stock offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and such Common Stock, reference is made to the
Registration Statement and the exhibits and schedules thereto filed as a part
thereof. Statements contained herein as to the contents of any documents are not
necessarily complete. In each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement, and each such
statement is qualified in its entirety by such reference. Copies of the
Registration Statement, including exhibits and schedules filed therewith, may be
inspected without charge at the Commission's principal office in Washington,
D.C. or obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company
intends to distribute to its stockholders annual reports containing audited
financial statements and will make available copies of quarterly reports for the
first three quarters of each fiscal year containing unaudited interim financial
information.
56
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors.......................................................... F-2
Consolidated Balance Sheets................................................................................ F-3
Consolidated Statements of Operations...................................................................... F-4
Consolidated Statement of Stockholders' Equity............................................................. F-5
Consolidated Statements of Cash Flows...................................................................... F-7
Notes to Consolidated Financial Statements................................................................. F-9
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
CV Therapeutics, Inc.
We have audited the accompanying consolidated balance sheets of CV Therapeutics,
Inc. (a development stage company) as of December 31, 1994 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995 and for
the period from inception (December 11, 1990) to December 31, 1995 (not
separately presented herein). These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of CV
Therapeutics, Inc. (a development stage company) at December 31, 1994 and 1995,
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995 and for the period from
inception (December 11, 1990) to December 31, 1995 (not separately presented
herein) in conformity with generally accepted accounting principles.
Palo Alto, California
February 23, 1996, except for
Note 10, as to which the date is
, 1996
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon completion of the
1-for-10 reverse stock split and the closing of the Hambrecht & Quist loan
described in Note 10 to the consolidated financial statements.
ERNST & YOUNG LLP
Palo Alto, California
September 25, 1996
F-2
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
------------------------------------------
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
-------------------- JUNE 30, JUNE 30,
1994 1995 1996 1996
--------- --------- --------- ---------
IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,742 $ 5,569 $ 10,484
Short-term investments 6,001 - 2,023
Other current assets 266 221 455
--------- --------- ---------
Total current assets 10,009 5,790 12,962
Notes receivable from officers and
employees 650 625 625
Property and equipment, net 4,487 4,120 3,591
Intangible and other assets, net
of accumulated amortization of
$45, $60 and $68 at December 31,
1994 and 1995, and June 30, 1996,
respectively 953 913 1,030
--------- --------- ---------
$ 16,099 $ 11,448 $ 18,208
--------- --------- ---------
--------- --------- ---------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 205 $ 405 $ 799
Accrued liabilities 731 1,549 1,165
Current portion of long-term
debt 1,201 3,341 3,329
Current portion of capital lease
obligation 186 224 267
--------- --------- ---------
Total current liabilities 2,323 5,519 5,560
Long-term portion of long-term
debt 2,322 3,250 1,592
Long-term portion of capital lease
obligation 376 152 5
Accrued rent 517 723 723
Commitments
Stockholders' equity:
Preferred stock (pro forma),
$0.001 par value, 5,000,000
shares authorized, none issued
and outstanding - - - $ -
Convertible preferred stock,
$0.001 par value, 42,000,000
preferred shares authorized
(none pro forma), issuable in
series; 21,549,445, 25,471,045
and 32,382,015 convertible
preferred shares issued and
outstanding at December 31,
1994 and 1995, and June 30,
1996, respectively; at amounts
paid in; aggregate liquidation
preference of $37,516 and
$51,338 at December 31, 1995
and June 30, 1996, respectively 28,591 36,388 50,130 -
Common stock, $0.001 par value,
30,000,000 shares authorized;
254,197, 368,081 and 391,497
shares issued and outstanding
at December 31, 1994 and 1995,
and June 30, 1996, (3,629,682 -
pro forma) respectively, less
95,000 shares held in treasury;
at amounts paid in 37 258 469 50,599
Warrants to purchase preferred
stock
(common stock - pro forma) 495 544 704 704
Notes receivable from officers (25) (125) (146) (146)
Deferred compensation - - (172) (172)
Deficit accumulated during the
development stage (18,537) (35,261) (40,657) (40,657)
--------- --------- --------- ---------
Total stockholders' equity 10,561 1,804 10,328 $ 10,328
--------- --------- --------- ---------
---------
$ 16,099 $ 11,448 $ 18,208
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes.
F-3
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED INCEPTION
YEAR ENDED DECEMBER 31, JUNE 30, (DECEMBER 11,
------------------------------- -------------------- 1990)
1993 1994 1995 1995 1996 JUNE 30, 1996
--------- --------- --------- --------- --------- ----------------
<CAPTION>
IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
License revenue $ - $ - $ - $ - $ 250 $ 250
Operating expenses:
Research and development 4,731 8,823 12,856 6,692 4,009 31,586
General and
administrative 947 2,802 3,402 1,640 1,408 8,988
--------- --------- --------- --------- --------- ----------------
Total operating expenses 5,678 11,625 16,258 8,332 5,417 40,574
--------- --------- --------- --------- --------- ----------------
Loss from operations (5,678) (11,625) (16,258) (8,332) (5,167) (40,324)
Interest income 182 526 416 249 219 1,387
Interest expense (21) (268) (882) (364) (448) (1,697)
--------- --------- --------- --------- --------- ----------------
Net loss $ (5,517) $ (11,367) $ (16,724) $ (8,447) $ (5,396) $(40,634)
--------- --------- --------- --------- --------- ----------------
--------- --------- --------- --------- --------- ----------------
Pro forma net loss per
share $ (4.65) $ (2.42) $ (1.25)
--------- --------- ---------
--------- --------- ---------
Shares used in computing
pro forma net loss per
share 3,594 3,484 4,319
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes.
F-4
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM INCEPTION (DECEMBER 11, 1990) TO JUNE 30, 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
CONVERTIBLE
PREFERRED STOCK
--------------------
WARRANTS DEFICIT
SHARES TO NOTES ACCUMULATED
--------- COMMON STOCK PURCHASE RECEIVABLE DURING THE
IN THOUSANDS, EXCEPT SHARE AND PER -------------------- PREFERRED FROM DEFERRED DEVELOPMENT
SHARE AMOUNTS AMOUNT AMOUNT STOCK OFFICERS COMPENSATION STAGE
--------- SHARES --------- ---------- ---------- ---------- ----------
---------
Issuance of common stock to founders at
$0.01 per share in January 1991 for
cash - - 250,000 $ 2 - - - -
Issuance of common stock to investors
and consultants at $0.60 per share in
April 1992 for cash - - 28,500 17 - - - -
Issuance of Series A convertible
preferred stock at $0.80 per share to
investors in October 1992 for cash and
conversion of bridge loans of $1,198,
net of $2 of issuance costs 7,746,973 6,195 - - - - - -
Issuance of common stock to investors
at $0.60 per share in October and
November 1992 for cash and conversion
of bridge loans of $5 - - 12,036 7 - - - -
Repurchase of the Company's common
stock from investors at $0.60 per
share in November 1992 for cash - - (40,000) - - - - (23)
Repurchase of the Company's common
stock at $0.60 per share in November
1992 in exchange for a warrant to
purchase 250,000 shares of Series A
preferred stock at $0.80 per share - - (25,000) (15) 15 - - -
Net loss - - - - - - - (1,630)
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Balances at December 31, 1992 7,746,973 6,195 225,536 11 15 - - (1,653)
Issuance of common stock to investors
at approximately $0.80 per share in
April 1993 for cash, net of repurchase - - 10,938 9 - - - -
Sale of warrant in April 1993 to Genta
to purchase 1,000,000 shares of Series
B preferred stock at $2.50 per share,
for cash - - - - 480 - - -
Issuance of Series C convertible
preferred stock at $1.25 per share to
investors in July 1993 for cash, net
of $34 of issuance costs 5,505,865 6,848 - - - - - -
Notes receivable from officers for
exercise of certain stock options - - - - - (25) - -
Net loss - - - - - - - (5,517)
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Balances at December 31, 1993 13,252,838 13,043 236,474 20 495 (25) - (7,170)
Exercise of stock options at $0.80,
$2.00 and $2.50 per share during the
year for cash - - 17,723 17 - - - -
Issuance of Series D preferred stock at
$2.00 per share to investors in March
and April 1994 for cash, net of $1,045
of issuance costs 8,296,607 15,548 - - - - - -
Net loss - - - - - - - (11,367)
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Balances at December 31, 1994 (carried
forward) 21,549,445 $28,591 254,197 $ 37 $ 495 (25) - $(18,537)
<CAPTION>
<S> <C>
TOTAL
IN THOUSANDS, EXCEPT SHARE AND PER STOCKHOLDERS'
SHARE AMOUNTS EQUITY
----------
Issuance of common stock to founders at
$0.01 per share in January 1991 for
cash $ 2
Issuance of common stock to investors
and consultants at $0.60 per share in
April 1992 for cash 17
Issuance of Series A convertible
preferred stock at $0.80 per share to
investors in October 1992 for cash and
conversion of bridge loans of $1,198,
net of $2 of issuance costs 6,195
Issuance of common stock to investors
at $0.60 per share in October and
November 1992 for cash and conversion
of bridge loans of $5 7
Repurchase of the Company's common
stock from investors at $0.60 per
share in November 1992 for cash (23)
Repurchase of the Company's common
stock at $0.60 per share in November
1992 in exchange for a warrant to
purchase 250,000 shares of Series A
preferred stock at $0.80 per share -
Net loss (1,630)
----------
Balances at December 31, 1992 4,568
Issuance of common stock to investors
at approximately $0.80 per share in
April 1993 for cash, net of repurchase 9
Sale of warrant in April 1993 to Genta
to purchase 1,000,000 shares of Series
B preferred stock at $2.50 per share,
for cash 480
Issuance of Series C convertible
preferred stock at $1.25 per share to
investors in July 1993 for cash, net
of $34 of issuance costs 6,848
Notes receivable from officers for
exercise of certain stock options (25)
Net loss (5,517)
----------
Balances at December 31, 1993 6,363
Exercise of stock options at $0.80,
$2.00 and $2.50 per share during the
year for cash 17
Issuance of Series D preferred stock at
$2.00 per share to investors in March
and April 1994 for cash, net of $1,045
of issuance costs 15,548
Net loss (11,367)
----------
Balances at December 31, 1994 (carried
forward) $ 10,561
</TABLE>
See accompanying notes.
F-5
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
PERIOD FROM INCEPTION (DECEMBER 11, 1990) TO JUNE 30, 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
CONVERTIBLE
PREFERRED STOCK
--------------------
WARRANTS DEFICIT
SHARES TO NOTES ACCUMULATED
--------- COMMON STOCK PURCHASE RECEIVABLE DURING THE
IN THOUSANDS, EXCEPT SHARE AND PER -------------------- PREFERRED FROM DEFERRED DEVELOPMENT
SHARE AMOUNTS AMOUNT AMOUNT STOCK OFFICERS COMPENSATION STAGE
--------- SHARES --------- ---------- ---------- ---------- ----------
---------
Balances at December 31, 1994 (brought
forward) 21,549,445 $28,591 254,197 $ 37 $ 495 $ (25) - $(18,537)
Exercise of stock options at $0.80,
$2.00 and $2.50 per share during the
year for cash - - 143,884 296 - - - -
Issuance of units consisting of one
share of Series E preferred stock
and one warrant to purchase half of
one share of Series E preferred
stock at $2.00 per share. In October
and November 1995, 3,921,600 units
were issued at $2.00 per unit for
cash, net of $46 of issuance costs 3,921,600 7,797 - - - - - -
Issuance of warrant in December 1995
to the Company's counsel to purchase
25,000 units consisting of one share
of Series E preferred stock and one
warrant to purchase half of one
share of Series E preferred stock at
$2.00 per share at $0.05 per unit
for legal services rendered - - - - 49 - - -
Repurchase of the Company's common
stock from investors at $2.50 per
share in December 1995 in exchange
for cancellation of a promissory
note - - (30,000) (75) - - - -
Notes receivable issued to officers
for exercise of certain stock
options - - - - - (100) - -
Net loss - - - - - - - (16,724)
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Balances at December 31, 1995 25,471,045 36,388 368,081 258 544 (125) - (35,261)
Exercise of stock options at prices
ranging from $0.80 to $2.50 per
share for cash (unaudited) - - 23,416 39 - - - -
Issuance of units consisting of one
share of Series E preferred stock
and one warrant to purchase one-half
of one share of Series E preferred
stock for $2.00 per share. In March,
1996 375,000 units were sold at
$2.00 per unit in consideration for
an up-front license fee owed to
Syntex (U.S.A.) Inc (unaudited) 375,000 750 - - - - - -
Issuance of units consisting of one
share of Series G convertible
preferred stock and one warrant to
purchase 0.15 of one share of common
stock at $20.00 per share. In March
and May 1996, 6,535,970 units were
sold for $2.00 per unit in cash, net
of $80,000 of issuance cost
(unaudited) 6,535,970 12,992 - - - - - -
Value ascribed to warrant as a result
of change in measurement date for
accounting purposes (unaudited) - - - - 160 - - -
Notes receivable from officers for
exercise of certain stock options
(unaudited) - - - - - (21) - -
Deferred compensation related to
grants of certain stock options
(unaudited) - - - 172 - - (172) -
Net loss (unaudited) - - - - - - - (5,396)
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Balances at June 30, 1996 (unaudited) 32,382,015 $ 50,130 391,497 $ 469 $ 704 $ (146) $ (172) $(40,657)
--------- --------- --------- --------- ---------- ---------- ---------- ----------
--------- --------- --------- --------- ---------- ---------- ---------- ----------
<CAPTION>
<S> <C>
TOTAL
IN THOUSANDS, EXCEPT SHARE AND PER STOCKHOLDERS'
SHARE AMOUNTS EQUITY
----------
Balances at December 31, 1994 (brought
forward) $ 10,561
Exercise of stock options at $0.80,
$2.00 and $2.50 per share during the
year for cash 296
Issuance of units consisting of one
share of Series E preferred stock
and one warrant to purchase half of
one share of Series E preferred
stock at $2.00 per share. In October
and November 1995, 3,921,600 units
were issued at $2.00 per unit for
cash, net of $46 of issuance costs 7,797
Issuance of warrant in December 1995
to the Company's counsel to purchase
25,000 units consisting of one share
of Series E preferred stock and one
warrant to purchase half of one
share of Series E preferred stock at
$2.00 per share at $0.05 per unit
for legal services rendered 49
Repurchase of the Company's common
stock from investors at $2.50 per
share in December 1995 in exchange
for cancellation of a promissory
note (75)
Notes receivable issued to officers
for exercise of certain stock
options (100)
Net loss (16,724)
----------
Balances at December 31, 1995 1,804
Exercise of stock options at prices
ranging from $0.80 to $2.50 per
share for cash (unaudited) 39
Issuance of units consisting of one
share of Series E preferred stock
and one warrant to purchase one-half
of one share of Series E preferred
stock for $2.00 per share. In March,
1996 375,000 units were sold at
$2.00 per unit in consideration for
an up-front license fee owed to
Syntex (U.S.A.) Inc (unaudited) 750
Issuance of units consisting of one
share of Series G convertible
preferred stock and one warrant to
purchase 0.15 of one share of common
stock at $20.00 per share. In March
and May 1996, 6,535,970 units were
sold for $2.00 per unit in cash, net
of $80,000 of issuance cost
(unaudited) 12,992
Value ascribed to warrant as a result
of change in measurement date for
accounting purposes (unaudited) 160
Notes receivable from officers for
exercise of certain stock options
(unaudited) (21)
Deferred compensation related to
grants of certain stock options
(unaudited) -
Net loss (unaudited) (5,396)
----------
Balances at June 30, 1996 (unaudited) $ 10,328
----------
----------
</TABLE>
See accompanying notes.
F-6
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
----------------------------------------------------------------
INCEPTION
(DECEMBER
SIX MONTHS ENDED 11, 1990)
YEAR ENDED DECEMBER 31, JUNE 30, TO JUNE
------------------------------- -------------------- 30,
IN THOUSANDS 1993 1994 1995 1995 1996 1996
--------- --------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (5,517) $(11,367) $(16,724) $ (8,447) $ (5,396) $(40,634)
Adjustments to
reconcile net loss
to net cash used in
operating
activities:
Depreciation and
amortization 167 672 1,102 536 539 2,521
Forgiveness of
notes receivable 75 25 25 - - 200
Issuance of stock
warrant for legal
services received - - 49 - - 49
Issuance of
preferred stock
and warrant for
payment of license
fee - - - - 750 750
Change in assets
and liabilities:
Other current
assets (155) 19 45 (104) (234) (455)
Intangible and
other assets (164) (739) 24 19 35 (938)
Accounts payable,
accrued rent and
other accrued
liabilities 55 1,091 1,224 1,105 10 2,687
--------- --------- --------- --------- --------- ---------
Net cash used in
operating activities (5,539) (10,299) (14,255) (6,891) (4,296) (35,820)
--------- --------- --------- --------- --------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of
short-term
investments - (51,900) (1,202) - (2,023) (55,125)
Maturity of
short-term
investments (93) 45,899 7,203 6,001 - 53,102
Capital expenditures - (4,067) (719) (688) (2) (5,293)
Notes receivable from
officers and
employees - - - - - (825)
Cash received from
disposal of asset - 5 - - - 5
--------- --------- --------- --------- --------- ---------
Net cash provided by
(used in) investing
activities (93) (10,063) 5,282 5,313 (2,025) (8,136)
--------- --------- --------- --------- --------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES
Payments on capital
lease obligation (44) (150) (186) - (104) (484)
Borrowings under
long-term debt (200) 3,571 4,148 4,737 - 8,219
Repayments of
long-term debt - (348) (1,080) (1,052) (1,670) (3,297)
Proceeds from
issuances of common
stock (and bridge
loans subsequently
converted into
common stock), net
of repurchases (16) 17 121 97 18 166
Proceeds from
issuance of warrant 480 - - - - 480
Proceeds from bridge
loans - - - - - 1,198
Proceeds from
issuance of
convertible
preferred stock 6,848 15,548 7,797 - 12,992 48,182
Payments to
stockholders to
repurchase the
Company's common
stock - - - - - (24)
--------- --------- --------- --------- --------- ---------
Net cash provided by
financing activities 7,068 18,638 10,800 3,782 11,236 54,440
--------- --------- --------- --------- --------- ---------
Net (decrease)
increase in cash and
cash equivalents 1,436 (1,724) 1,827 2,204 4,915 10,484
Cash and cash
equivalents at
beginning of period 4,030 5,466 3,742 3,742 5,569 -
--------- --------- --------- --------- --------- ---------
Cash and cash
equivalents at end
of period $ 5,466 $ 3,742 $ 5,569 $ 5,946 $ 10,484 $ 10,484
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
F-7
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------
INCEPTION
(DECEMBER
SIX MONTHS ENDED 11, 1990)
YEAR ENDED DECEMBER 31, JUNE 30, TO JUNE
------------------------------- -------------------- 30,
IN THOUSANDS 1993 1994 1995 1995 1996 1996
--------- --------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
SUPPLEMENTAL
DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid for
interest $ 50 $ 287 $ 883 $ 348 $ 448 $ 1,951
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Conversion of bridge
loans into Series A
convertible
preferred stock $ - $ - $ - $ - $ - $ 1,198
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Conversion of bridge
loans into common
stock $ - $ - $ - $ - $ - $ 5
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Acquisition of
property and
equipment under
capital leases $ 683 $ 73 $ - $ - $ - $ 756
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Notes receivable from
officers in
connection with
exercise of certain
stock options $ 25 $ - $ 100 $ 100 $ 21 $ 146
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
See accompanying notes.
F-8
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
CV Therapeutics, Inc. (the "Company"), a development stage biopharmaceutical
company, was incorporated in the State of Delaware on December 11, 1990 to focus
exclusively on the application of molecular cardiology to the discovery,
development and commercialization of novel, small molecule drugs for the
treatment of chronic cardiovascular diseases. The Company's primary activities
since incorporation have been establishing its offices and research facilities,
recruiting personnel, conducting research and development, performing business
and financial planning and raising capital.
Since inception, the Company has accumulated a deficit of approximately $40.7
million. Management expects to incur additional losses to complete product
development, and commercialization, as necessary, and recognizes the need to
raise additional funds from outside sources. In March and May 1996 the Company
successfully consummated an equity financing transaction which raised
approximately $13.0 million and is in the process of negotiating a refinancing
of its existing debt obligations (see Note 10). Management believes that it will
be able to obtain additional funds through either public or private equity or
debt financings, collaborative and other arrangements with corporate partners or
from other sources. If adequate funds are not available, the Company may be
required to reduce its level of spending, or eliminate one or more of its
research and development programs.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, CV Therapeutics International, which was
incorporated in December 1993 in the Cayman Islands. All significant
intercompany balances have been eliminated.
INTERIM FINANCIAL INFORMATION
The financial information at June 30, 1996 and for the six months ended June 30,
1995 and 1996 is unaudited but includes all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a fair
presentation of the financial position at such date and the operating results
and cash flows for those periods. Results for the six months ended June 30, 1996
are not necessarily indicative of results for the entire year.
RESEARCH AND DEVELOPMENT
Research and development expenses consist of costs incurred for independent
research and development. These costs include direct and research-related
overhead expenses.
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investments with a maturity from date of
purchase of three months or less to be cash equivalents. Cash equivalents
consist primarily of money market funds. All other liquid investments are
classified as short-term investments. Short-term investments in 1994 consist
primarily of auction market preferred stock, money market capital notes, and
bank notes. The Company limits its concentration of risk by diversifying its
investments among a variety of issuers.
Management determines the appropriate classification of investment securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. At December 31, 1994, all investment securities are designated as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses reported in stockholders' equity. The
amortized cost of debt securities in this category is adjusted for amortization
of premiums and accretion of discounts to maturity. Such amortization is
included in interest income.
F-9
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The cost of securities sold is based on the specific identification method.
Interest and dividends on securities classified as available-for-sale are
included in interest income.
Realized gains and losses and declines in value judged to be other than
temporary for available-for-sale securities are included in the statement of
operations. There have been no such transactions through December 31, 1995.
DEPRECIATION AND AMORTIZATION
Property and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets, generally three to five years.
Leasehold improvements are amortized over the lesser of the lease term or the
estimated useful lives of the related assets, generally two to three years.
Organization costs are amortized over a period of five years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NET LOSS PER SHARE
Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
are excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission ("SEC") Staff Accounting
Bulletins, common and common equivalent shares issued during the 12-month period
prior to the initial filing of the proposed offering at prices below the assumed
public offering price have been included in the calculation as if they were
outstanding for all periods presented (using the treasury stock method for stock
options at the estimated public offering price).
Historical net loss per share information is as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
IN THOUSANDS, EXCEPT PER ------------------------------- --------------------
SHARE AMOUNTS 1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
Net loss per share $(4.33) $(8.84) $(12.18) $(6.36) $(3.82)
<S> <C> <C> <C> <C> <C>
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Shares used in computing net
loss per share 1,273 1,286 1,373 1,329 1,414
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
Pro forma net loss per share has been computed as described above and also gives
effect to the conversion of convertible preferred shares not included above that
will automatically convert upon completion of the Company's initial public
offering (using the if-converted method) from the original date of issuance.
UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY
If the offering contemplated by this Prospectus is consummated, all of the
convertible preferred stock outstanding as of the closing date will
automatically be converted into 3,238,185 shares of common stock, based on the
shares of convertible preferred stock outstanding as of June 30, 1996. Pro forma
stockholders' equity at June 30, 1996, as adjusted for the conversion of
preferred stock, is disclosed on the balance sheet.
STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 123 is effective for fiscal years
F-10
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
beginning after December 15, 1995. Under SFAS 123, stock-based compensation
expense is measured using either the intrinsic-value method as prescribed by
Accounting Principle Board Opinion No. 25 or the fair-value method described in
SFAS 123. The Company plans to implement SFAS 123 in 1996 using the
intrinsic-value method; accordingly, there will be no effect upon adopting SFAS
123 on the Company's financial position or results of operations.
2. LICENSE AND COLLABORATION AGREEMENTS
GENTA INCORPORATED
In January 1993, the Company, along with Genta Incorporated (collectively
referred to as "Licensees"), entered into a worldwide license agreement with the
Board of Trustees of the Leland Stanford Junior University ("Stanford"). Under
the terms of the agreement, Stanford granted the Licensees rights with respect
to certain patents to make, use and sell products for the treatment of coronary
restenosis and other vascular and associated human conditions. In consideration
for these patent rights, the Licensees paid a $100,000 licensing fee upon
signing the agreement. The Licensees provided for certain nonrefundable annual
royalties and nonrefundable milestone royalties over the term of the agreement,
and royalties on net sales of licensed products.
On June 28, 1996, the Company and Stanford agreed upon the terms pursuant to
which the January 1993 license agreement referred to above was terminated.
GENTA/GENTA JAGO TECHNOLOGIES B.V.
On April 9, 1993, the Company entered into a five-year research and development
collaboration with Genta, Incorporated ("Genta") and Genta Jago Technologies
B.V. ("GJT") to design, develop and commercialize certain products utilizing the
technology which is the subject of the Stanford license agreement described
above. The agreement obligated the Company, Genta and GJT to jointly fund
certain research costs.
In connection with this agreement, Genta acquired a warrant to purchase
1,000,000 shares of the Company's Series B preferred stock at $2.50 per share
(100,000 shares of common stock at $25.00 per share on an as-if converted
basis). The purchase price for the warrant was $0.48 per underlying share or
$480,000 (100,000 shares of common stock at $4.80 on an as-if converted basis).
The warrant is exercisable immediately and expires on April 7, 2003.
As stated above, in June 1996, the Company and Stanford agreed upon the terms
pursuant to which the license terminated and, consequently, there are no further
obligations to perform under this collaboration agreement. Although the
agreements with Genta and GJT have not been terminated, the Company believes
that neither party is currently pursuing the collaborative research.
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
In June 1994, the Company entered into a license agreement with the University
of Florida Research Foundation, Inc. ("UFRFI") under which the Company received
exclusive worldwide rights with respect to certain patents to develop adenosine
A(1) receptor antagonists and agonists for the detection, prevention and
treatment of human and animal diseases. In consideration for the license, the
Company paid UFRFI an initial license fee and is obligated to pay royalties
based on net sales of products which utilize the licensed technology.
Pursuant to the agreement, the Company must exercise commercially reasonable
efforts to develop and commercialize one or more products covered by the
licensed technology and is obligated to meet milestones in completing certain
preclinical work. In the event the Company fails to reach those milestones,
UFRFI may convert the exclusive license into a non-exclusive license. As part of
the license agreement with UFRFI, the Company entered into a research agreement
with the University of Florida.
F-11
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
2. LICENSE AND COLLABORATION AGREEMENTS (CONTINUED)
SYNTEX (U.S.A.) INC.
In March 1996, the Company entered a license agreement with Syntex (U.S.A.) Inc.
("Syntex"), which is an indirect subsidiary of Roche Holding Limited, pursuant
to which the Company was granted an exclusive license in certain territories
under Syntex patents and know-how for the sale of products incorporating the
licensed technology, in exchange for an up front license fee, milestone payments
and royalties. In consideration for the up front license fee of $750,000, the
Company issued to Syntex 375,000 shares of Series E preferred stock and a five
year warrant to purchase 187,500 shares of Series E preferred stock at $2.00 per
share (18,750 shares of common stock at $20.00 per share on an as-if converted
method).
BAYER AG
On May 7, 1996, the Company entered a License Agreement with Bayer AG in the
area of inflammatory diseases. Pursuant to this agreement, the Company has
granted Bayer AG an exclusive worldwide license under the Company's patents and
know-how to research, develop and market products incorporating the licensed
technology. In exchange for the license, the Company received an up front
non-refundable license fee and is entitled to receive milestone payments and
royalties in the future.
3. INVESTMENTS
The following is a summary of available-for-sale securities:
<TABLE>
<CAPTION>
-------------------------------
ESTIMATED FAIR VALUE
-------------------------------
DECEMBER 31,
-------------------- JUNE 30,
IN THOUSANDS 1994 1995 1996
--------- --------- ---------
Cash equivalents:
<S> <C> <C> <C>
Money market funds $1,072 $5,701 $10,011
Commercial paper 1,983 -
--------- --------- ---------
3,055 5,701 10,011
Short-term investments:
U. S. government bonds - - 2,023
Auction market preferred stock 4,000 - -
Money market capital notes 1,000 - -
Bank notes 1,001 - -
--------- --------- ---------
$9,056 $5,701 $12,034
--------- --------- ---------
--------- --------- ---------
</TABLE>
As of December 31, 1995 and June 30, 1996, the difference between the fair value
and the amortized cost of available-for-sale securities was insignificant.
As of December 31, 1994, the average portfolio duration was approximately three
months and the contractual maturity of the investments did not exceed one year.
Excluded from short-term investments above is $700,000, $713,000 and $713,000 of
certificates of deposit at December 31, 1994, 1995, and June 30, 1996,
respectively, held as collateral against loans and which is included in
"Intangibles and other assets" on the balance sheet.
F-12
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
-------------------------------
DECEMBER 31,
-------------------- JUNE 30,
IN THOUSANDS 1994 1995 1996
--------- --------- ---------
Machinery and equipment $ 2,220 $ 2,407 $ 2,404
<S> <C> <C> <C>
Furniture and fixtures 425 556 562
Leasehold improvements 2,662 3,064 3,063
--------- --------- ---------
5,307 6,027 6,029
Less accumulated depreciation and amortization (820) (1,907) (2,438)
--------- --------- ---------
--------- --------- ---------
$ 4,487 $ 4,120 $ 3,591
--------- --------- ---------
--------- --------- ---------
</TABLE>
Property and equipment include $756,000 recorded under capital leases at
December 31, 1994, 1995, and June 30, 1996. Accumulated amortization related to
leased assets totaled $275,000, $500,000 and $622,000 at December 31, 1994 and
1995, and June 30, 1996, respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following
<TABLE>
<CAPTION>
-------------------------------------
DECEMBER 31,
------------------------- JUNE 30,
IN THOUSANDS 1994 1995 1996
------------- ---------- ----------
Corporate term loan at 15.03%, interest
only until December 31, 1995, followed
by monthly installments through
December 31, 1997 $ - $4,000 $3,000
<S> <C> <C> <C>
Bank term loan at prime, plus 3.0%,
which is subject to periodic reset, due
in monthly installments through
December 31, 1997 1,714 1,143 857
Bank term loan at prime, plus 2.5%,
which is subject to periodic reset, due
in monthly installments through
December 31, 1997 1,436 1,226 920
Bank note at prime, plus 2%, which is
subject to periodic reset, due in
quarterly installments through June 30,
1997 250 150 100
Other 123 72 44
------ ---------- ----------
3,523 6,591 4,921
Less current portion (1,201) (3,341) (3,329)
------ ---------- ----------
Long-term portion $ 2,322 $3,250 $1,592
------ ---------- ----------
------ ---------- ----------
</TABLE>
The indebtedness to banks is secured by interests in equipment, furniture and
fixtures.
The carrying value of the corporate term loan approximates fair value at
December 31, 1995 and June 30, 1996. The fair value of the corporate term loan
was estimated using discounted cash flow analysis, based on the incremental
borrowing rates currently available to the Company for borrowings with similar
terms and maturity.
F-13
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
6. LEASES
The Company leases certain equipment and furniture under noncancelable capital
leases. The Company leases its facilities under noncancelable operating leases.
The facilities lease expires February 2002 and includes an option to renew the
lease for an additional five years. In October 1995, the Company entered into a
noncancelable sublease agreement whereby it leased additional space to two
separate companies for eight months and 17 months, respectively. Aggregate
future minimum rentals to be received as of December 31, 1995 totaled $487,000.
Following is a schedule of future minimum lease payments at December 31, 1995,
net of sublease rentals in 1996 and 1997:
<TABLE>
<CAPTION>
------------------------
OPERATING CAPITAL
IN THOUSANDS LEASES LEASES
----------- -----------
Year ending December 31,
<S> <C> <C>
1996 $ 653 $ 264
1997 1,069 159
1998 1,193 -
1999 1,244 -
2000 1,254 -
Thereafter 1,499 -
----------- -----
Total minimum payments required $ 6,912 423
-----------
-----------
Less amount representing interest (47)
-----
Present value of future lease payments 376
Less current portion (224)
-----
Noncurrent portion $ 152
-----
-----
</TABLE>
Rent expense, net of sublease rentals, for the years ended December 31, 1993,
1994 and 1995, for the six months ended June 30, 1995 and 1996 and for the
periods from inception (December 11, 1990) to June 30, 1996 was approximately
$123,000, $662,000, $840,000, $386,000, $247,000 and $1,899,000, respectively.
7. RELATED PARTY TRANSACTIONS
During 1992 and 1993, the Company issued loans to certain of the Company's
officers and employees related to relocation, purchases of stock and other
purposes of which loans aggregating $675,000, $750,000 and $771,000 were
outstanding at December 31, 1994 and 1995, and June 30, 1996, respectively.
These loans bear interest at 5.33% to 7.31% per annum. The amounts are repayable
from December 31, 1997 to June 8, 2005. As of June 30, 1996 loans for $625,000
are secured by personal residences, and loans for the remaining $146,000 are
secured by the individuals' common stock. As of December 31, 1994, 1995 and June
30, 1996, loans for $25,000, $125,000 and $146,000 related to the purchase of
common stock. These notes issued in connection with the purchase of common stock
have been included in stockholders' equity.
F-14
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
8. STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
Preferred stock as of June 30, 1996 consists of the following ($0.001 par
value):
<TABLE>
<CAPTION>
----------------------------------
SHARES
SHARES ISSUED AND LIQUIDATION
AUTHORIZED OUTSTANDING PREFERENCE
---------- ---------- ----------
Series A 8,000,000 7,746,973 6,197,578
<S> <C> <C> <C>
Series B 1,000,000 - -
Series C 6,000,000 5,505,865 6,882,331
Series D 12,500,000 8,296,607 16,593,214
Series E 7,500,000 4,296,600 8,593,200
Series G 7,000,000 6,535,970 13,071,940
---------- ---------- ----------
Total 42,000,000 32,382,015 51,338,263
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Preferred stockholders are entitled to noncumulative dividends at the rate of
$0.08, $0.25, $0.125, $0.20, $0.20 and $0.20 per annum, for each share of Series
A, Series B, Series C, Series D, Series E and Series G preferred stock
outstanding, respectively, if declared by the board of directors, payable in
preference to common stock dividends. No dividends have been declared or paid by
the Company.
The liquidation preference includes all declared but unpaid dividends. After
payment has been made to the preferred stockholders, holders of the common stock
and preferred stock shall receive the remaining assets. Such assets shall be
distributed ratably among such holders in proportion to the shares of stock held
by them.
Each share of preferred stock votes equally with shares of common stock on an
"if-converted" basis at any annual or special meeting of the Company, and may
act by written consent in the same manner as the common stock. Series A, Series
B (if and when issued) Series C, Series D, Series E and Series G preferred
stockholders have the right of first refusal with respect to additional equity
financings the Company undertakes.
Each share of preferred stock is convertible at any time at the option of the
holder. After giving effect to the reverse stock split in 1996, the
conversion ratio was 1-for-10. Conversion of the preferred stock is automatic
upon the closing of an initial public offering with gross proceeds in excess of
$10,000,000. See Note 10. The Company has reserved 3,238,185 shares of its
common stock for the conversion of its outstanding preferred stock.
If the Company issues stock for a price per share less than the Series E
conversion price, then the Series E and Series G conversion prices shall be
reduced to the amount equal to the consideration per share for which such
additional shares of stock are issued. This provision shall terminate upon the
first to occur of the closing of an initial public offering in excess of
$10,000,000 or a merger, reorganization or sale of substantially all of the
assets of the Company or the closing of the Company's next financing of at least
$5,000,000.
COMMON STOCK
In November 1992, the Company repurchased 40,000 shares of its common stock from
its founders for $0.60 per share. The original purchase price was recorded as a
reduction to common stock, at stated cost, and the excess over the original
purchase price, or $23,600, was recorded in the caption "deficit accumulated
during the development stage."
F-15
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
1992 STOCK OPTION PLAN
The Company has reserved 345,000 common shares for issuance under its revised
1992 Stock Option Plan which provides for common stock options to be granted to
employees (including consultants, officers, and directors). The exercise price
of each incentive stock option shall be not less than the 100% of the fair value
of the stock subject to the option on the date the option is granted. The
exercise price of each nonstatutory stock option shall be not less than 85% of
the fair value of the stock subject to the option on the date the option is
granted. All options are to have a term not greater than 10 years from the date
of grant. Options are exercisable upon vesting, which is generally ratable over
a five-year period, unless otherwise approved by the board of directors.
1994 EQUITY INCENTIVE PLAN
In February 1994, the Company's board of directors adopted the 1994 Equity
Incentive Plan. Under the Plan, up to 500,000 shares of the Company's common
stock may be granted to employees of and consultants to the Company and its
affiliates. The Plan allows for the grant of incentive stock options,
nonstatutory stock options, stock bonuses, rights to purchase restricted stock
and stock appreciation rights. Options granted under this plan expire no later
than 10 years from the date of grant. The exercise price of each incentive stock
option shall be not less than 100% of the fair value of the stock subject to the
option on the date the option is granted. The exercise price of each
nonstatutory option shall be not less than 85% of the fair value of the stock
subject to the option on the date the option is granted. The vesting provisions
of individual options may vary but in each case will provide for vesting of at
least 20% of the total number of shares subject to the option per year.
NON-EMPLOYEE DIRECTOR'S STOCK OPTION PLAN
In September 1994, the Company's board of directors adopted the Non-Employee
Director's Stock Option Plan. Under the Plan, options for up to 20,000 shares of
common stock may be granted to directors of the Company who is not otherwise an
employee of or consultant to the Company or of any affiliate of the Company.
Options granted under this plan expire no later than 10 years from the date of
grant. The exercise price of each option shall be the fair value of the stock
subject to such option on the date such option is granted. The options generally
vest in increments over a period of three years from the date of grant.
Outside of Stock Option Plans, from May 1993 through June 1995 the Company
granted options to purchase 85,500 shares of Common Stock to employees and
consultants. The exercise prices ranged from $0.80 to $2.50 per share, which
exercise prices represent the fair value of common stock at the respective grant
dates. The stock option terms vary between the individual grants and were
approved by the board of directors.
F-16
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
The following table summarizes option activity under all plans:
<TABLE>
<CAPTION>
-----------------------------------------------
OUTSTANDING OPTIONS
SHARES -----------------------------------
IN THOUSANDS, EXCEPT PER AVAILABLE NUMBER OF PRICE PER AGGREGATE
SHARE AMOUNTS FOR GRANT SHARES SHARE PRICE
---------- ---------- ----------- ----------
Shares authorized 299 - $ - -
<S> <C> <C> <C> <C>
Options granted (184) 184 0$.80-$0-88 $ 150
---------- ---------- ----------
Balance at December 31,
1992 115 184 0$.80-$0.88 150
Shares authorized 74 - $ - -
Options granted (123) 123 0$.80-$1.30 120
Options canceled 9 (9) $ 0.80 (7)
Options exercised - - $ 0.80 -
---------- ---------- ----------
Balance at December 31,
1993 75 298 0$.80-$1.30 263
Shares authorized 238 - $ - -
Options granted (230) 230 2$.00-$2.50 542
Options canceled 9 (9) 0$.80-$2.00 (8)
Options exercised - (18) 0$.80-$2.50 (17)
---------- ---------- ----------
Balance at December 31,
1994 92 501 0$.80-$2.50 780
Shares authorized 340 - $ - -
Options granted (393) 393 $ 2.50 982
Options canceled 40 (40) 0$.80-$2.50 (62)
Options exercised - (144) 0$.80-$2.50 (296)
---------- ---------- ----------- ----------
Balance at December 31,
1995 79 710 0$.80-$2.50 1,404
Options granted (52) 52 $ 2.50 129
Options canceled 141 (141) $ 2.50 (211)
Options exercised - (24) 0$.80-$2.50 (39)
---------- ---------- ----------- ----------
Balance at June 30, 1996 168 597 0$.80-$2.50 $1,283
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
At December 31, 1994 and 1995 and June 30, 1996, options to purchase 144,679,
203,613 and 330,809 common shares were exercisable, respectively. At June 30,
1996, the Company has reserved 950,500 shares of authorized common stock for
issuance under all plans.
In March and June 1996, options to purchase 8,835 and 40,505 shares were granted
at $2.50 per share. Deferred compensation of $172,000 was recorded on these
option grants based on the deemed fair value of common stock of approximately
$6.25. The fair value of common stock was determined by the Company's board of
directors. In September 1996, the Company granted options to purchase a total of
176,250 shares at an exercise price of $2.50 per share, resulting in additional
deferred compensation of $1,212,000 based on the deemed fair value of
approximately $9.40. This amount will be recorded in the quarter ending
September 30, 1996.
WARRANTS
In connection with the sale of Series A preferred stock, the Company acquired
25,000 shares of its common stock from an investor for $0.60 per share by
issuing a warrant to purchase 250,000 shares of the Company's Series A preferred
stock at $0.08 per share (25,000 shares of common stock at $0.80 per share on an
as-if-converted
F-17
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
basis). This warrant is exercisable immediately and expires at the earlier of
September 8, 1997 or an initial public offering in excess of $7,500,000 at an
offering price of not less than $5.00 per share as adjusted for any stock
dividends, stock split, recapitalization or consolidation of the Company's
common stock. As of December 31, 1995, 25,000 shares of common stock have been
reserved for the exercise of this warrant.
In connection with the equipment lease entered into in 1993, the Company issued
a warrant to purchase 2,812 shares of the Company's common stock at $8.00 per
share. This warrant is exercisable immediately and expires at the earlier of
March 18, 1999 or an initial public offering in excess of $7,500,000 or a merger
or consolidation of the Company with or into another corporation or entity. As
of December 31, 1995, 2,812 shares of the Company's common stock have been
reserved for the exercise of the warrant.
In connection with the 1993 facility lease, the Company issued warrants to
purchase 30,000 shares of the Company's Series C preferred stock at $1.25 per
share (3,000 shares of common stock at $12.50 per share on an as-if-converted
basis). The warrants expired in August, 1996.
In connection with the sale of Series D preferred stock, the Company issued
warrants to purchase 219,266 shares of the Company's Series D preferred stock at
$2.00 per share (21,926 shares of common stock at $20.00 per share on an
as-if-converted basis). In June 1996, the warrant agreement was amended to
change the exercise price of the warrants from $25.00 per share to $8.90 per
share, in exchange for the elimination of certain loan covenants. This change in
terms resulted in a new measurement date for the warrants for accounting
purposes, and, therefore, a value of $160,000 has been recorded in June 1996
based on the deemed fair value at that date. The value will be amortized over
the remaining life of the loan. The warrants are exercisable immediately and
expire on March 23, 1999. As of December 31, 1995, 21,926 shares of common stock
have been reserved for the exercise of the warrants.
In connection with the corporate term loan obtained in April 1995, the Company
issued warrants to purchase 400,000 shares of the Company's Series D preferred
stock at $2.50 per share (40,000 shares of common stock at $25.00 per share on
an as-if-converted basis). The warrant is exercisable immediately and expires on
April 24, 2005. As of December 31, 1995, 40,000 shares of common stock have been
reserved for the exercise of the warrant.
In connection with the sale of Series E preferred stock, the Company issued
warrants to purchase 1,960,800 shares of the Company's Series E preferred stock
at $2.00 per share (196,078 shares of common stock at $20.00 per share on an
as-if-converted basis). The warrants are exercisable immediately and expire at
the earlier of September 7, 2000, an initial public offering of common stock at
an offering price of not less than $5.00 per share as adjusted for any stock
dividends, combinations or stock split with respect to such stock or a merger,
reorganization or sale of substantially all of the assets of the Company. As of
December 31, 1995, 196,078 shares of common stock have been reserved for the
exercise of the warrants.
In 1995, the Company issued its corporate attorneys a warrant to purchase 25,000
units consisting of one share of the Company's Series E preferred stock (2,500
shares of common stock on an as-if converted basis) and one warrant to purchase
half of one share of Series E preferred stock for $2.00 per share (1,250 shares
of common stock at $20.00 per share on an as-if-converted basis). The warrant
was issued in lieu of payment for legal services rendered totaling $48,750 and
is separately disclosed in the statement of stockholders' equity. The warrant is
exercisable immediately and expires at the earlier of December 2000 or upon the
consummation of a qualified initial public offering, as defined in the related
agreement. Shares of common stock totaling 3,750 have been reserved for issuance
upon exercise of the warrant.
F-18
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
8. STOCKHOLDERS' EQUITY (CONTINUED)
In connection with the sale of Series G preferred stock in March and May 1996,
the Company issued warrants to purchase 980,392 shares of common stock at $2.50
per share. The G warrants expire March 28, 1999 or at the closing of a qualified
initial public offering, as defined in the related agreement.
9. INCOME TAXES
As of December 31, 1995, the Company had federal net operating loss
carryforwards of approximately $32,000,000. The Company also had research and
development tax credit carryforwards of approximately $1,200,000. The difference
between the federal net operating loss carryforwards and the accumulated deficit
relates to losses generated by the Company's wholly owned subsidiary, CV
Therapeutics, International. The net operating loss and credit carryforwards
will expire at various dates beginning on 2007 through 2010, if not utilized.
Utilization of the net operating losses and credits may be subject to an annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code of 1986 and similar state provisions. The annual limitation may
result in the expiration of net operating losses and credits before utilization.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amount used for income tax purposes. Significant components of the
Company's deferred tax assets as of December 31 are as follows:
<TABLE>
<CAPTION>
-----------------------
DECEMBER 31,
-----------------------
IN THOUSANDS 1994 1995
----------- ----------
Net operating loss carryforward $ 5,400 $11,600
<S> <C> <C>
Research credits (expiring 2007-2010) 800 1,700
Capitalized research and development 800 800
Other, net - 100
----------- ----------
Total deferred tax assets 7,000 14,200
Valuation allowance for deferred tax assets (7,000) (14,200)
----------- ----------
Total $ - $ -
----------- ----------
----------- ----------
</TABLE>
The valuation allowance increased by $4,000,000, during the year ended December
31, 1994.
10. SUBSEQUENT EVENTS
In September 1996, the board of directors authorized management of the Company
to file a registration statement with the SEC permitting the Company to sell
shares of its common stock to the public. If the initial public offering is
closed under the terms presently anticipated, all of the preferred stock
outstanding will automatically convert into 3,238,185 shares of common stock.
Unaudited pro forma stockholders' equity, as adjusted for the assumed conversion
of the preferred stock, is set forth on the balance sheet.
Also in September 1996, the board of directors of the Company authorized a
1-for-10 reverse stock split, in which ten shares of common stock were exchanged
for one share of common stock. Following stockholder approval, the stock split
was effected on 1996. Effective upon the closing of the initial public
offering, the Company will become authorized to issue 5,000,000 shares of $0.001
par value preferred stock and 30,000,000 shares of $0.001 par value common
stock. In addition, upon stockholders' approval in 1996, the Company
amended its articles of incorporation to reflect the elimination of certain
anti-dilutive
F-19
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
10. SUBSEQUENT EVENTS (CONTINUED)
provisions in the Company's restated and as amended certificate of
incorporation. All par value, share and per share amounts, as well as the
dividend and liquidation preferences for preferred stock, included in the
accompanying financial statements have been retroactively adjusted to reflect
the reverse stock split.
In September 1996, the board of directors adopted the Employee Stock Purchase
Plan, the amended and restated Non-Employee Directors' Stock Option Plan and the
amended and restated 1992 Stock Option Plan and the amended and restated 1994
Equity Incentive Plan. In 1996, the stockholders approved such plans. A total
of shares of common stock have been reserved for issuance thereunder.
On August 25, 1996, a promissory note was executed in favor of the Company by an
officer, for $25,000, bearing interest at 6.84%, per annum. The principal is due
and payable on August 25, 2001. The note is secured by a pledge of shares of the
Company's common stock.
The Company is currently negotiating a refinancing of the MMC Term Loan and the
Equipment and Leasehold Financings with $5.0 million debt financing from
entities associated with Hambrecht & Quist Group (the "H&Q Debt Financings"). Of
the H&Q Debt Financings, $3.0 million is expected to take the form of a term
loan which bears interest at the rate of 9% per annum, would be secured by all
of the assets of the Company and would be due in September 1999. The remaining
$2.0 million is expected to take the form of a term loan which bears interest at
the rate of 9% per annum and would be due 90 days after the issuance of the term
loan the ("$2.0 million Tranche"). The Company will have the option to convert
the $2.0 million Tranche into an equipment lease at its election, which lease
would bear interest at the rate of 9% per annum and would be due in September
1999. The Company intends to use $2.0 million of the net proceeds from the
Offering to repay the $2.0 million Tranche. In connection with the H&Q Debt
Financings, the Company intends to issue a warrant to purchase 84,500 shares of
Common Stock at an exercise price of $2.50 per share and a warrant to purchase
84,500 shares of Common Stock at an exercise price of $20.00 per share. The
warrants would expire in September 2001.
F-20
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the registrant in connection with the
distribution of the Common Stock being registered. All amounts are estimated,
except the SEC Registration Fee, the NASD Filing Fee and the Nasdaq National
Market Filing Fee:
<TABLE>
<S> <C>
SEC Registration Fee 11,897
NASD Filing Fee 3,950
Nasdaq National Market Filing Fee *
Blue Sky Fees and Expenses 15,000
Accounting Fees 140,000
Legal Fees and Expenses 325,000
Transfer Agent and Registrar Fees 10,000
Directors and Officers Insurance 175,000
Printing and Engraving 175,000
Miscellaneous *
Total $ *
---------
---------
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 14 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation provides that directors
of the Registrant shall not be personally liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director, to
the fullest extent permitted by the General Corporation Law of the State of
Delaware. The Registrant's Restated Bylaws provide for indemnification of
officers and directors to the full extent and in the manner permitted by
Delaware law. Section 145 of the Delaware General Corporation Law makes
provision for such indemnification in terms sufficiently broad to cover officers
and directors under certain circumstances for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act").
The Registrant has entered into indemnification agreements with each officer and
director which provide indemnification under certain circumstances for acts and
omissions which may not be covered by any directors' and officers' liability
insurance.
The form of Underwriting Agreement, to filed as Exhibit 1.1 to the Registration
Statement, provides for indemnification of the Registrant and its controlling
persons against certain liabilities under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since September 1, 1993, the Company has sold and issued the following
unregistered securities:
(1) Since September 1, 1993, the Company has granted stock options to
purchase 1,278,890 shares of Common Stock to a total of 123 employees,
consultants and non-employee directors at a weighted average exercise price
of $2.07 per share pursuant to the 1992 Stock Plan, the Incentive Plan, the
Directors' Plan, as well as outside these plans.
(2) In September 1993, the Company issued warrants to purchase 3,000 shares
of Series C Preferred Stock, convertible into 3,000 shares of Common Stock,
at an exercise price of $12.50 per share to two accredited investors. Both
warrants have expired.
(3) In March and April 1994, the Company issued and sold 829,657 shares of
Series D Preferred Stock, convertible into 829,657 shares of Common Stock,
to a total of 94 accredited investors, including one director and two
officers, for cash in the aggregate amount of $16,593,214. In connection
with the private placement, the Company paid commissions to the placement
agent equal to $802,251.18 and issued warrants to purchase 21,926 shares of
Series D Preferred Stock at an exercise price of $20.00 per share.
II-1
<PAGE>
(4) In April 1995, the Company issued warrants to purchase 10,000 and
40,000 shares of Series D Preferred Stock, convertible into 10,000 and
40,000 shares of Common Stock, at an exercise price of $25.00 per share to
two accredited investors pursuant to the terms of a Loan and Security
Agreement, dated April 24, 1995, as amended March 8, 1996. These warrants
were amended and restated in August 1996 to purchase 10,000 and 30,000
shares of Series D Preferred Stock, convertible into 10,000 and 30,000
shares of Common Stock, at an exercise price of $8.90 per share.
(5) In September and November 1995, the Company issued and sold 392,159
shares of Series E Preferred Stock, convertible into 392,159 shares of
Common Stock, and warrants to purchase 196,078 shares of Series E Preferred
Stock, convertible into 196,078 shares of Common Stock at an exercise price
of $20.00 per share to a total of 37 accredited investors, including one
director and one individual who was an officer and a director, for cash in
the aggregate amount of $7,843,200.
(6) In December 1995, the Company issued a warrant to purchase 2,500 units
at a price of $.50 per unit, with each unit consisting of 1 share of Series
E Preferred Stock convertible into 2,500 shares of Common Stock, and one
warrant to purchase 1/2 share of Series E Preferred Stock, convertible into
1,250 shares of Common Stock, at an exercise price of $20.00 per unit to
Cooley Godward LLP, in connection with cancellation of accounts payable.
(7) In March 1996, the Company issued and sold 37,500 shares of Series E
Preferred Stock, convertible into 37,500 shares of Common Stock, and
warrants to purchase 18,750 shares of Series E Preferred Stock, convertible
into 18,750 shares of Common Stock, at an exercise price of $20.00 per share
to an accredited investor pursuant to the terms of a License Agreement dated
March 27, 1996.
(8) In March and May 1996, the Company issued and sold 653,592 shares of
Series G Preferred Stock, convertible into 653,592 shares of Common Stock,
and warrants to purchase 980,392 shares of Common Stock, convertible into
980,392 shares of Common Stock, at an exercise price of $2.50 per share to a
total of 64 accredited investors, including one director, three officers and
two individuals who were officers and directors, for cash in the aggregate
amount of $13,071,940.
The share amounts set forth give effect to the Company's 1-for-10 reverse stock
split to be effected in October 1996 and assume the conversion of the Preferred
Stock that will be effected upon the closing of the Offering. The sales and
issuances of securities in the transactions described in paragraphs (2)-(8) were
deemed to be exempt from registration under the Securities Act by virtue of
Section 4(2), Regulation D or Regulation S promulgated thereunder. With respect
to the grant of stock options described in paragraph (1), an exemption from
registration was unnecessary in that none of the transactions involved a "sale"
of securities as such term is used in Section 2(3) of the Securities Act.
Appropriate legends are affixed to the stock certificate issued in the
aforementioned transactions. Similar legends were imposed in connection with any
subsequent sales of any such securities. All recipients received adequate
information about the Company or had access, through employment or other
relationships, to such information.
ITEM 16 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<C> <S>
1.1+ Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
3.2 Bylaws of the Registrant.
3.3 Certificate of Amendment of the Restated Certificate of Incorporation of the
Registrant to be effective upon stockholder approval.
3.4 Restated Certificate of Incorporation of the Registrant to be effective upon closing
of the Offering.
3.5 Restated Bylaws of the Registrant to be effective upon the closing of the Offering.
4.1 Reference is made to Exhibits 3.1 through 3.5.
4.2+ Specimen Common Stock Certificate.
5.1+ Opinion of Cooley Godward LLP as to legality of the Common Stock.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.1 1992 Stock Option Plan, as amended.
10.2 1994 Equity Incentive Plan, as amended.
10.3 Non-Employee Directors' Stock Option Plan, as amended.
10.4 Form of Incentive Stock Option Grant.
10.5 Form of Non-Incentive Stock Option Grant.
10.6 Employee Stock Purchase Plan.
10.7+ Promissory Note between Registrant and Louis G. Lange, M.D., Ph.D., dated September
1996.
10.8+ Promissory Note between Registrant and George F. Schreiner, M.D., Ph.D., dated
September 1996.
10.9+ Separation and Consulting Agreement between Registrant and Thomas L. Gutshall, dated
September 1996.
10.10 Form of Indemnification Agreement between Registrant and its directors and officers.
10.11 Amended and Restated Investor Rights Agreement between the Registrant and the
stockholders named therein, dated May 29, 1996.
10.12 Form of Series A Preferred Stock Warrant, and amendment thereto.
10.13 Amended and Restated Series B Preferred Stock Warrant to Genta Incorporated.
10.14 Form of Series D Preferred Stock Warrant to Alex Brown & Sons Incorporated.
10.15 Form of Amended and Restated Series D Preferred Stock Warrant.
10.16 Form of Series E Preferred Stock Warrant.
10.17 Series E Preferred Stock Warrant to Cooley Godward LLP.
10.18 Series E Preferred Stock Warrant to Syntex (U.S.A.) Inc.
10.19 Form of Common Stock Warrant.
10.20 Common Stock Warrant to Lease Management Services, Inc.
10.21 License Agreement between the Registrant and University of Florida Research
Foundation, Inc., dated June 27, 1994.*
10.22 Research Agreement between the Registrant and University of Florida, dated June 27,
1994.*
10.23 License Agreement between Registrant and Syntex (U.S.A.) Inc., dated March 27, 1996.*
10.24 License Agreement between Registrant and Bayer AG, dated May 7, 1996.*
10.25 Lease Agreement between Registrant and Matadero Creek, dated August 6, 1993 and
addendum thereto; Letter Amendment to Lease Agreement, dated June 30, 1994 and
Second Amendment to Lease Agreement, dated June 30, 1994.
11.1 Statement re computation of net loss per share.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-6).
23.2+ Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule
</TABLE>
- ------------------------
+ To be filed by amendment.
* Confidential treatment is being sought for portions of this exhibit.
(b) Financial Statement Schedules
Consolidated Schedules are omitted because they are not applicable, or because
the information is included in the Financial Statements or the Notes thereto.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
A. The Registrant hereby undertakes to provide to the underwriters at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
B. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
C. The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CV Therapeutics,
Inc. has duly caused this Registration Statement to be signed on its behalf, by
the undersigned, thereunto duly authorized, in the City of Palo Alto, County of
Santa Clara, State of California, on September 25 , 1996.
CV THERAPEUTICS, INC.
By: ______/S/____LOUIS G. LANGE, M.D.,
PH.D._____________________________
Louis G. Lange, M.D., Ph.D.
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Louis G. Lange, M.D., Ph.D., and Kathleen A. Stafford,
and each of them, his or her attorneys-in-fact, each with the power of
substitution, for him or her and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same Offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of
1933, and all post-effective amendments thereto, and to file the same, with all
exhibits thereto in all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that such attorneys-in-fact and agents or any of
them, or his, her or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ---------------------------------- ---------------------
<C> <S> <C>
Chairman of the Board & Chief
/S/LOUIS G. LANGE, M.D., PH.D. Executive Officer (Principal September 25, 1996
Louis G. Lange, M.D., Ph.D. Executive Officer)
/S/KATHLEEN A. STAFFORD Chief Financial Officer (Principal
Kathleen A. Stafford Financial and Accounting Officer) September 25, 1996
/S/SAMUEL D. COLELLA
Samuel D. Colella Director September 25, 1996
/S/THOMAS L. GUTSHALL
Thomas L. Gutshall Director September 25, 1996
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ---------------------------------- ---------------------
<C> <S> <C>
/S/BARBARA J. MCNEIL, M.D., PH.D.
Barbara J. McNeil, M.D., Ph.D. Director September 25, 1996
/S/COSTA G. SEVASTOPOULOS, PH.D.
Costa G. Sevastopoulos, Ph.D. Director September 25, 1996
/S/J. LEIGHTON READ, M.D.
J. Leighton Read, M.D. Director September 25, 1996
/S/ISAAC STEIN
Isaac Stein Director September 25, 1996
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBIT
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- --------- -------------------------------------------------------------------------------------------
<C> <S> <C>
1.1+ Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
3.2 Bylaws of the Registrant.
3.3 Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant to
be effective upon stockholder approval.
3.4 Restated Certificate of Incorporation of the Registrant to be effective upon closing of the
Offering.
3.5 Restated Bylaws of the Registrant to be effective upon the closing of the Offering.
4.1 Reference is made to Exhibit 3.1 through 3.5.
4.2+ Specimen Common Stock Certificate.
5.1+ Opinion of Cooley Godward LLP as to legality of the Common Stock.
10.1 1992 Stock Option Plan, as amended.
10.2 1994 Equity Incentive Plan, as amended.
10.3 Non-Employee Directors' Stock Option Plan, as amended.
10.4 Form of Incentive Stock Option Grant.
10.5 Form of Non-Incentive Stock Option Grant.
10.6 Employee Stock Purchase Plan.
10.7+ Promissory Note between Registrant and Louis G. Lange, M.D., Ph.D., dated September 1996.
10.8+ Promissory Note between Registrant and George F. Schreiner, M.D., Ph.D., dated September
1996.
10.9+ Separation and Consulting Agreement between Registrant and Thomas L. Gutshall, dated
September 1996.
10.10 Form of Indemnification Agreement between Registrant and its directors and officers.
10.11 Amended and Restated Investor Rights Agreement between the Registrant and the stockholders
named therein, dated May 29, 1996.
10.12 Form of Series A Preferred Stock Warrant, and amendment thereto.
10.13 Amended and Restated Series B Preferred Stock Warrant to Genta Incorporated.
10.14 Form of Series D Preferred Stock Warrant to Alex Brown & Sons Incorporated.
10.15 Form of Amended and Restated Series D Preferred Stock Warrant.
10.16 Form of Series E Preferred Stock Warrant.
10.17 Series E Preferred Stock Warrant to Cooley Godward LLP.
10.18 Series E Preferred Stock Warrant to Syntex (U.S.A.) Inc.
10.19 Form of Common Stock Warrant.
10.20 Common Stock Warrant to Lease Management Services, Inc.
10.21 License Agreement between the Registrant and University of Florida Research Foundation,
Inc., dated June 27, 1994.*
10.22 Research Agreement between Registrant and University of Florida, dated June 27, 1994.*
10.23 License Agreement between Registrant and Syntex (U.S.A.) Inc., dated March 27, 1996.*
10.24 License Agreement between Registrant and Bayer AG, dated May 7, 1996.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- --------- -------------------------------------------------------------------------------------------
10.25 Lease Agreement between Registrant and Matadero Creek, dated August 6, 1993 and addendum
thereto; Letter Amendment to Lease Agreement, dated June 30, 1994 and Second Amendment to
Lease Agreement, dated June 30, 1994.
<C> <S> <C>
11.1 Statement re computation of net loss per share.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-6).
23.2+ Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule
</TABLE>
- ------------------------
+ To be filed by amendment.
* Confidential treatment is being sought for portions of this exhibit.
<PAGE>
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
CV THERAPEUTICS, INC.
CV THERAPEUTICS, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify as
follows:
FIRST: The name of the corporation is CV THERAPEUTICS, INC. The
corporation was originally incorporated under the name of CHOLESTEREX, INC.
SECOND: The Certificate of Incorporation of the corporation was filed by
the Secretary of State on December 11, 1990. The Restated Certificate of
Incorporation of the corporation was filed by the Secretary of State on March
29, 1996 (the "Restated Certificate").
THIRD: The following amendment to the Restated Certificate was duly
adopted in accordance with the provisions of Sections 141(f) and 242 of the
General Corporation Law of the State of Delaware (the "General Corporation Law")
by resolutions duly adopted by the Board of Directors of this Corporation and
was approved by the stockholders as provided in Section 228 of the General
Corporation Law, and written notice has been given to the stockholders as
provided in Section 228(d) of the General Corporation Law.
FOURTH: Sections A and B of Article Fourth of the Restated Certificate are
hereby deleted in their entirety and replaced with the following:
"A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the Corporation is authorized to issue is one hundred ten
million (110,000,000) shares. Sixty-eight million (68,000,000) shares shall be
Common Stock, each having a par value of one tenth of one cent ($.001). Forty-
two million (42,000,000) shares shall be Preferred Stock, each having a par
value of one tenth of one cent ($.001).
B. Eight million (8,000,000) of the authorized shares of Preferred Stock
are hereby designated "Series A Preferred Stock" (the "Series A Preferred").
One million (1,000,000) of the authorized shares of Preferred Stock are hereby
designated "Series B Preferred Stock" (the "Series B Preferred"). Six million
(6,000,000) of the authorized shares of Preferred Stock are hereby designated
"Series C Preferred Stock" (the "Series C Preferred"). Twelve million, five
hundred thousand (12,500,000) of the authorized shares of Preferred Stock are
hereby designated "Series D Preferred Stock" (the "Series D Preferred"). Seven
million five hundred thousand (7,500,000) of the authorized shares of Preferred
Stock are hereby designated "Series E Preferred Stock" (the "Series E
Preferred"). Seven million (7,000,000) of the authorized shares of Preferred
Stock are hereby designated "Series G Preferred Stock" (the "Series G
Preferred")."
FIFTH: Section C.1.(vi) of Article Fourth of the Restated Certificate is
hereby deleted in its entirety and replaced with the following:
<PAGE>
"(vi) with respect to the Series G Preferred, $.20 per annum on each
outstanding share of Series G Preferred (as adjusted for any stock dividends,
combinations or splits with respect to such shares)."
IN WITNESS WHEREOF, CV THERAPEUTICS, INC. has caused this Restated
Certificate of Incorporation to be signed by its Chief Executive Officer and
attested to by its Secretary this 23rd day of May, 1996.
CV THERAPEUTICS, INC.
By: /s/ Louis G. Lange
---------------------------
Louis G. Lange, M.D., Ph.D.
Chief Executive Officer
ATTEST:
/s/ Alan C. Mendelson
- ----------------------
Alan C. Mendelson
Secretary
2.
<PAGE>
BYLAWS
OF
CV THERAPEUTICS, INC.
(a Delaware corporation)
As Amended February 4, 1994
As Amended December 8, 1994
As Amended March 31, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Offices
Section 1. Registered Office........................................ 1.
Section 2. Other Offices............................................ 1.
ARTICLE II
Corporate Seal
Section 3. Corporate Seal........................................... 1.
ARTICLE III
Stockholders' Meetings
Section 4. Place of Meetings........................................ 1.
Section 5. Annual Meeting........................................... 2.
Section 6. Special Meetings......................................... 3.
Section 7. Notice of Meetings....................................... 4.
Section 8. Quorum................................................... 4.
Section 9. Adjournment and Notice of Adjourned Meetings............. 4.
Section 10. Voting Rights............................................ 5.
Section 11. Beneficial Owners of Stock............................... 5.
Section 12. List of Stockholders..................................... 5.
Section 13. Action without Meeting................................... 6.
Section 14. Organization............................................. 6.
ARTICLE IV
Directors
Section 15. Number and Term of Office................................ 7.
Section 16. Powers................................................... 7.
Section 17. Vacancies................................................ 8.
Section 18. Resignation.............................................. 8.
Section 19. Removal.................................................. 8.
Section 20. Meetings................................................. 8.
Section 21. Quorum and Voting........................................ 9.
Section 22. Action without Meeting...................................10.
Section 23. Fees and Compensation....................................10.
Section 24. Committees...............................................10.
Section 25. Organization.............................................11.
<PAGE>
ARTICLE V
Officers
Section 26. Officers Designated......................................11.
Section 27. Tenure and Duties of Officers............................12.
Section 28. Delegation of Authority..................................13.
Section 29. Resignations.............................................13.
Section 30. Removal..................................................13.
ARTICLE VI
Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation
Section 31. Execution of Corporate Instruments.......................14.
Section 32. Voting of Securities Owned by the Corporation............14.
ARTICLE VII
Shares of Stock
Section 33. Form and Execution of Certificates.......................15.
Section 34. Lost Certificates........................................15.
Section 35. Transfers................................................15.
Section 36. Fixing Record Dates......................................15.
Section 37. Registered Stockholders..................................16.
ARTICLE VIII
Other Securities of the Corporation
Section 38. Execution of Other Securities............................17.
ARTICLE IX
Dividends
Section 39. Declaration of Dividends.................................17.
Section 40. Dividend Reserve.........................................17.
ARTICLE X
Fiscal Year
Section 41. Fiscal Year..............................................18.
ii.
<PAGE>
ARTICLE XI
Indemnification
Section 42. Indemnification of Directors, Officers, Employees and Other
Agents..................................................................18.
ARTICLE XII
Notices
Section 43. Notices....................................................21.
ARTICLE XIII
Amendments
Section 44. Amendments.................................................23.
ARTICLE XIV
Right of First Refusal
Section 45. Right of First Refusal.....................................23.
ARTICLE XV
Loans to Officers
Section 46. Loans to Officers..........................................26.
iii.
<PAGE>
BYLAWS
OF
CV THERAPEUTICS, INC.
(a Delaware corporation)
As Amended March 31, 1995
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent. (Del.
Code Ann., tit. 8, Section 131)
Section 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business in St. Louis, Missouri, at such place
as may be fixed by the Board of Directors, and may also have offices at such
other places, both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require. (Del. Code Ann., tit. 8, Section 122(8))
ARTICLE II
CORPORATE SEAL
Section 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise. (Del. Code Ann., tit. 8,
Section 122(3))
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof. (Del. Code Ann., tit. 8, Section
211(a))
1.
<PAGE>
Section 5. ANNUAL MEETING. (a) The annual meeting of the stockholders
of the corporation, for the purpose of election of Directors and for such other
business as may lawfully come before it, shall be held on such date and at such
time as may be designated from time to time by the Board of Directors. (Del.
Code Ann., tit. 8, Section 211(b))
(b)At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days in advance of the date of the corporation's proxy statement
released to stockholders in connection with the previous year's annual meeting
of stockholders; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received a reasonable time before the solicitation is made. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting: (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address, as
they appear on the corporation's books, of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder, (iv) any material interest of the
stockholder in such business and (v) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, in his capacity as a proponent to a
stockholder proposal. Notwithstanding the foregoing, in order to include
information with respect to a stockholder proposal in the proxy statement and
form of proxy for a stockholder's meeting, stockholders must provide notice as
required by the regulations promulgated under the Securities and Exchange Act of
1934, as amended. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any annual meeting except in accordance with the
procedures set forth in this paragraph (b). The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this paragraph (b), and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted. (Del. Code Ann., tit. 8: Section 211(b))
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as Directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of Directors at the meeting who complies with the
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notice procedures set forth in this paragraph (c). Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation in
accordance with the provisions of paragraph (b) of this Section 5. Such
stockholder's notice shall set forth (i) as to each person, if any, whom the
stockholder proposes to nominate for election or re-election as a Director:
(A) the name, age, business address and residence address of such person,
(B) the principal occupation or employment of such person, (C) the class and
number of shares of the corporation which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and (E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement, if any, as a nominee and to serving as a Director
if elected); and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this Section 5. At the
request of the Board of Directors, any person nominated by a stockholder for
election as a Director shall furnish to the Secretary of the corporation that
information required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
Director of the corporation unless nominated in accordance with the procedures
set forth in this paragraph (c). The chairman of the meeting shall, if the
facts warrant, determine and declare at the meeting that a nomination was not
made in accordance with the procedures prescribed by these Bylaws, and if he
should so determine, he shall so declare at the meeting and the defective
nomination shall be disregarded. (Del. Code Ann., tit. 8, Sections 212, 214).
Section 6. SPECIAL MEETINGS. (a) Special meetings of the stockholders
of the corporation may be called, for any purpose or purposes, by (i) the
Chairman of the Board, (ii) the President, (iii) the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption) or (iv) by the holders of shares entitled to cast not less than ten
percent (10%) of the votes at the meeting, and shall be held at such place, on
such date, and at such time as they or he shall fix.
(b) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
time of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the Chairman of the Board, the
President, any Vice President, or the Secretary of the corporation. No business
may be transacted at such special meeting otherwise than specified in such
notice. The officer receiving the request shall cause notice to be promptly
given to the stockholders entitled to vote, in accordance with the provisions of
Section 7 of these Bylaws, that a meeting will be held not less than thirty-five
(35) nor more than sixty (60) days after the receipt of the request. If the
notice is not given within twenty (20) days after the receipt of the request,
the person or persons
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requesting the meeting may give the notice. Nothing contained in this
paragraph (b) shall be construed as limiting, fixing, or affecting the time when
a meeting of stockholders called by action of the Board of Directors may be
held.
Section 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given. (Del. Code Ann., tit. 8, Sections 222, 229)
Section 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be counted to determine a quorum at
such meeting. In the absence of a quorum any meeting of stockholders may be
adjourned, from time to time, either by the chairman of the meeting or by vote
of the holders of a majority of the shares represented thereat, but no other
business shall be transacted at such meeting. The stockholders present at a
duly called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws, all actions taken by the
holders of a majority of the voting power represented at any meeting at which a
quorum is present shall be valid and binding upon the corporation; provided,
however, that Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of Directors. Where a separate vote by a class or classes
is required, a majority of the outstanding shares of such class or classes,
present in person or represented by proxy, shall constitute a quorum entitled to
take action with respect to that vote on that matter and the affirmative vote of
the majority (plurality, in the case of the election of Directors) of shares of
such class or classes present in person or represented by proxy at the meeting
shall be the act of such class. (Del. Code Ann., tit. 8, Section 216)
Section 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting
of stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
represented thereat. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is
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taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting. (Del. Code
Ann., tit. 8, Section 222(c))
Section 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Except
as may be otherwise provided in the Certificate of Incorporation or these
Bylaws, each stockholder shall be entitled to one vote for each share of capital
stock held by such stockholder. Every person entitled to vote or execute
consents shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent, which proxy shall be filed with the Secretary at or before the meeting at
which it is to be used. An agent so appointed need not be a stockholder. No
proxy shall be voted after three (3) years from its date of creation unless the
proxy provides for a longer period. All elections of Directors shall be by
written ballot, unless otherwise provided in the Certificate of Incorporation.
(Del. Code Ann., tit. 8, Sections 211(e), 212(b))
Section 11. BENEFICIAL OWNERS OF STOCK. (a) If shares or other
securities having voting power stand of record in the names of two (2) or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two (2) or more persons
have the same fiduciary relationship respecting the same shares, unless the
Secretary is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1)
votes, the act of the majority so voting binds all; (c) if more than one (1)
votes, but the vote is evenly split on any particular matter, each faction may
vote the securities in question proportionally, or may apply to the Delaware
Court of Chancery for relief as provided in the General Corporation Law of
Delaware, Section 217(b). If the instrument filed with the Secretary shows that
any such tenancy is held in unequal interests, a majority or even-split for the
purpose of this subsection (c) shall be a majority or even-split in interest.
(Del. Code Ann., tit. 8, Section 217(b))
(b) Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held. Persons whose stock is pledged shall be entitled to
vote, unless in the transfer by the pledgor on the books of the corporation he
has expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent such stock and vote thereon. (Del. Code
Ann., tit. 8, Section 217(a)).
Section 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open
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to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present. (Del. Code
Ann., tit. 8, Section 219(a))
Section 13. ACTION WITHOUT MEETING. (a) Any action required by statute
to be taken at any annual or special meeting of the stockholders, or any action
which may be taken at any annual or special meeting of the stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, are signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the Corporation in the manner herein
required, written consents signed by a sufficient number of stockholders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
(Del. Code Ann., tit. 8, Section 228)
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General Corporation Law of Delaware if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written notice and written consent
have been given as provided in Section 228 of the General Corporation Law of
Delaware.
(d) Notwithstanding the foregoing, no such action by written consent
may be taken following the effectiveness of the registration of any class of
securities of the corporations under the Securities Exchange Act of 1934, as
amended.
Section 14. ORGANIZATION. (a) At every meeting of stockholders, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or, if the President is absent, the most senior Vice
President present, or in the absence of any such officer, a chairman of the
meeting chosen by a majority in interest of the stockholders entitled to vote,
present in person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President, shall act as
secretary of the meeting.
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(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies, and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless, and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. NUMBER AND TERM OF OFFICE. The number of Directors which
shall constitute the whole of the Board of Directors shall not be less than four
(4) nor more than a maximum of seven (7) and that the number of Directors
presently authorized is seven (7). The number of authorized Directors may be
modified from time to time by amendment of this Section 15 in accordance with
the provisions of Section 44 hereof. Except as provided in Section 17, the
Directors shall be elected by the stockholders at their annual meeting in each
year and shall hold office until the next annual meeting and until their
successors shall be duly elected and qualified. Directors need not be
stockholders unless so required by the Certificate of Incorporation. If for any
cause, the Directors shall not have been elected at an annual meeting, they may
be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws. No
reduction of the authorized number of Directors shall have the effect of
removing any Director before the Director's term of office expires, unless such
removal is made pursuant to the provisions of Section 19 hereof. (Del. Code
Ann., tit. 8, Sections 141(b), 211(b), (c))
Section 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation. (Del. Code Ann., tit. 8, Section 141(a))
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Section 17. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, although less than a quorum, or by a sole
remaining Director, and each Director so elected shall hold office for the
unexpired portion of the term of the Director whose place shall be vacant and
until his successor shall have been duly elected and qualified. A vacancy in
the Board of Directors shall be deemed to exist under this Section 17 in the
case of the death, removal or resignation of any Director, or if the
stockholders fail at any meeting of stockholders at which Directors are to be
elected (including any meeting referred to in Section 19 below) to elect the
number of Directors then constituting the whole Board of Directors. (Del. Code
Ann., tit. 8, Section 223(a), (b))
Section 18. RESIGNATION. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When
one or more Directors shall resign from the Board of Directors, effective at a
future date, a majority of the Directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified. (Del. Code Ann., tit. 8,
Sections 141(b), 223(d))
Section 19. REMOVAL. At a special meeting of stockholders called for
the purpose in the manner hereinabove provided, subject to any limitations
imposed by law or the Certificate of Incorporation, the Board of Directors, or
any individual Director, may be removed from office, with or without cause, and
a new Director or Directors elected by a vote of stockholders holding a majority
of the outstanding shares entitled to vote at an election of Directors. (Del.
Code Ann., tit. 8, Section 141(k))
Section 20. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately after the annual meeting of stockholders and at the
place where such meeting is held. No notice of an annual meeting of the Board
of Directors shall be necessary and such meeting shall be held for the purpose
of electing officers and transacting such other business as may lawfully come
before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been determined by the Board of Directors. (Del. Code
Ann., tit. 8, Section 141(g))
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(c) SPECIAL MEETINGS. Unless otherwise restricted by the Certificate
of Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
President or a majority of the Directors. (Del. Code Ann., tit. 8, Section
141(g))
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting. (Del. Code
Ann., tit. 8, Section 141(i))
(e) NOTICE OF MEETINGS. Written notice of the time and place of all
special meetings of the Board of Directors shall be given at least one (1) day
before the date of the meeting. Notice of any meeting may be waived in writing
at any time before or after the meeting and will be waived by any Director by
attendance thereat, except when the Director attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. (Del. Code
Ann., tit. 8, Section 229)
(f) WAIVER OF NOTICE. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the Directors not present shall sign a written waiver of
notice, or a consent to holding such meeting, or an approval of the minutes
thereof. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in any
written waiver of notice or consent unless so required by the Certificate of
Incorporation or these Bylaws. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
(Del. Code Ann., tit. 8, Section 229)
Section 21. QUORUM AND VOTING. (a) Unless the Certificate of
Incorporation requires a greater number and except with respect to
indemnification questions arising under Section 42 hereof, for which a quorum
shall be one-third of the exact number of Directors fixed from time to time in
accordance with Section 15 hereof, but not less than one (1), a quorum of the
Board of Directors shall consist of a majority of the exact number of Directors
fixed from time to time in accordance with Section 15 of these Bylaws, but not
less than one (1); provided, however, at any meeting whether a quorum be present
or otherwise, a majority of the Directors present may adjourn from time to time
until the time fixed for the next regular meeting of the Board of Directors,
without notice other than by announcement at the meeting. (Del. Code Ann.,
tit. 8, Section 141(b))
(b) At each meeting of the Board of Directors at which a quorum is
present all questions and business shall be determined by a vote of a majority
of the Directors present, unless a different vote be required by law, the
Certificate of Incorporation or these Bylaws. (Del. Code Ann., tit. 8, Section
141(b))
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Section 22. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee. (Del. Code Ann., tit. 8, Section 141(f))
Section 23. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor. (Del. Code
Ann., tit. 8, Section 141(h))
Section 24. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors, appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and specifically granted by
the Board of Directors, shall have and may exercise when the Board of Directors
is not in session all powers of the Board of Directors in the management of the
business and affairs of the corporation, including, without limitation, the
power and authority to declare a dividend or to authorize the issuance of stock,
except such committee shall not have the power or authority to amend the
Certificate of Incorporation, to adopt an agreement of merger or consolidation,
to recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, to recommend to the
stockholders of the corporation a dissolution of the corporation or a revocation
of a dissolution or to amend these Bylaws. (Del. Code Ann., tit. 8, Section
141(c))
(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors, and shall have such powers and perform such duties as
may be prescribed by the resolution or resolutions creating such committees, but
in no event shall such committee have the powers denied to the Executive
Committee in these Bylaws. (Del. Code Ann., tit. 8, Section 141(c))
(c) TERM. The members of all committees of the Board of Directors
shall serve a term coexistent with that of the Board of Directors which shall
have appointed such committee. The Board of Directors, subject to the
provisions of subsections (a) or (b) of this Section 24, may at any time
increase or decrease the number of members of a committee or terminate the
existence of a committee. The membership of a committee member shall terminate
on the date of his death or voluntary resignation from the committee or from the
Board of
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Directors. The Board of Directors may at any time for any reason remove any
individual committee member and the Board of Directors may fill any committee
vacancy created by death, resignation, removal or increase in the number of
members of the committee. The Board of Directors may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee, and, in addition, in the
absence or disqualification of any member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member. (Del. Code Ann., tit. 8, Section 141(c))
(d) MEETINGS. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 24 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any Director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of
any committee may be waived in writing at any time before or after the meeting
and will be waived by any Director by attendance thereat, except when the
Director attends such special meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. A majority of the authorized number
of members of any such committee shall constitute a quorum for the transaction
of business, and the act of a majority of those present at any meeting at which
a quorum is present shall be the act of such committee. (Del. Code Ann.,
tit. 8, Sections 141(c), 229)
Section 25. ORGANIZATION. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 26. OFFICERS DESIGNATED. The officers of the corporation shall
be the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Chief Financial Officer or Treasurer, all of
whom shall be elected at the annual organizational meeting of the Board of
Directors. The order of the seniority of the Vice Presidents shall be
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in the order of their nomination, unless otherwise determined by the Board of
Directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may assign
such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation
at any one time unless specifically prohibited therefrom by law. The salaries
and other compensation of the officers of the corporation shall be fixed by or
in the manner designated by the Board of Directors. (Del. Code Ann., tit. 8,
Sections 122(5), 142(a), (b))
Section 27. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors. (Del. Code Ann., tit. 8, Section 141(b), (e))
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 27. (Del. Code Ann., tit. 8, Section 142(a))
(c) DUTIES OF PRESIDENT. The President shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. The
President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. (Del. Code Ann., tit. 8, Section
142(a))
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in the order of
their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of President is
vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
(Del. Code Ann., tit. 8, Section 142(a))
(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors, and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these
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Bylaws of all meetings of the stockholders, and of all meetings of the Board of
Directors and any committee thereof requiring notice. The Secretary shall
perform all other duties given him in these Bylaws and other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors shall designate from time to time. The
President may direct any Assistant Secretary to assume and perform the duties of
the Secretary in the absence or disability of the Secretary, and each Assistant
Secretary shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors or the President shall designate from time to time. (Del. Code Ann.,
tit. 8, Section 142(a))
(f) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The Chief
Financial Officer or Treasurer shall keep or cause to be kept the books of
account of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form and as often
as required by the Board of Directors or the President. The Chief Financial
Officer or Treasurer, subject to the order of the Board of Directors, shall have
the custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time. The President
may direct any Assistant Treasurer to assume and perform the duties of the Chief
Financial Officer or Treasurer in the absence or disability of the Chief
Financial Officer or Treasurer, and each Assistant Treasurer shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time. (Del. Code Ann., tit. 8, Section 142(a))
Section 28. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
Section 29. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer. (Del. Code Ann., tit. 8, Section 142(b))
Section 30. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the vote or written consent of a majority
of the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 31. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation. (Del. Code
Ann., tit. 8, Sections 103(a), 142(a), 158)
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the
corporate signature, but not requiring the corporate seal, may be executed as
aforesaid or in such other manner as may be directed by the Board of Directors.
(Del. Code Ann., tit. 8, Sections 103(a), 142(a), 158)
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount. (Del. Code
Ann., tit. 8, Sections 103(a), 142(a), 158).
Section 32. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the President, or any Vice President.
(Del. Code Ann., tit. 8, Section 123)
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ARTICLE VII
SHARES OF STOCK
Section 33. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Where such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued. (Del. Code Ann., tit. 8, Section 158)
Section 34. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
(Del. Code Ann., tit. 8, Section 167)
Section 35. TRANSFERS. (a) Transfers of record of shares of stock of the
corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares. (Del. Code Ann.,
tit. 8, Section 201, tit. 6, Section 8-401(1))
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware. (Del. Code Ann., tit. 8,
Section 160 (a))
Section 36. FIXING RECORD DATES. (a) In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix, in
advance, a record date, which record date shall not
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precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting. If no record date
is fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given, or
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix, in advance, a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. (Del. Code Ann., tit. 8, Section 213)
Section 37. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
(Del. Code Ann., tit. 8, Sections 213(a), 219)
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 38. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 33), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signatures of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed
or attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or on any such interest coupon, shall have ceased
to be such officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.
ARTICLE IX
DIVIDENDS
Section 39. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation. (Del. Code Ann., tit. 8, Sections 170, 173)
Section 40. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created. (Del.
Code Ann., tit. 8, Section 171)
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ARTICLE X
FISCAL YEAR
Section 41. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 42. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its Directors and executive officers to the fullest extent not
prohibited by the Delaware General Corporation Law; PROVIDED, HOWEVER, that the
corporation may limit the extent of such indemnification by individual contracts
with its Directors and executive officers; and, PROVIDED, FURTHER, that the
corporation shall not be required to indemnify any Director or executive officer
in connection with any proceeding (or part thereof) initiated by such person or
any proceeding by such person against the corporation or its Directors,
officers, employees or other agents unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized by the Board of
Directors of the corporation or (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law.
(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the Delaware General Corporation Law.
(c) GOOD FAITH.
(1) For purposes of any determination under this Bylaw, a
Director or executive officer shall be deemed to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe that his conduct was unlawful, if his action
is based on information, opinions, reports and statements, including financial
statements and other financial data, in each case prepared or presented by:
(i) one or more officers or employees of the
corporation whom the Director or executive officer believed to be reliable and
competent in the matters presented;
(ii) counsel, independent accountants or other
persons as to matters which the Director or executive officer believed to be
within such person's professional competence; and
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(iii) with respect to a Director, a committee of
the Board upon which such Director does not serve, as to matters within such
Committee's designated authority, which committee the Director believes to merit
confidence; so long as, in each case, the Director or executive officer acts
without knowledge that would cause such reliance to be unwarranted.
(2) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, that
he had reasonable cause to believe that his conduct was unlawful.
(3) The provisions of this paragraph (c) shall not be deemed to
be exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the Delaware
General Corporation Law.
(d) EXPENSES. The corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by any Director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made (1) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to the
proceeding, or (2) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
(e) ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances to Directors and executive
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a Director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. [The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim.] 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 Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of
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Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
(f) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its Directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law.
(g) SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a Director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(h) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(i) AMENDMENTS. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(j) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(k) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
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(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Bylaw with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
(4) References to a "director," "officer," "employee," or
"agent" of the corporation shall include, without limitation, situations where
such person is serving at the request of the corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
(5) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
Section 43. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent. (Del. Code Ann., tit. 8, Section
222)
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(b) NOTICE TO DIRECTORS. Any notice required to be given to any
Director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such Director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such Director.
(c) ADDRESS UNKNOWN. If no address of a stockholder or Director be
known, notice may be sent to the office of the corporation required to be
maintained pursuant to Section 2 hereof.
(d) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained. (Del. Code Ann., tit. 8, Section 222)
(e) TIME NOTICES DEEMED GIVEN. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing and all
notices given by facsimile, telex or telegram shall be deemed to have been given
as of the sending time recorded at time of transmission.
(f) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action
or meeting which shall be taken or held without notice to any such person with
whom communication is unlawful shall have the same force and effect as if such
notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
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(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom
(i) notice of two consecutive annual meetings, and all notices of meetings or of
the taking of action by written consent without a meeting to such person during
the period between such two consecutive annual meetings, or (ii) all, and at
least two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve month period, have been mailed addressed to such
person at his address as shown on the records of the Corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph. (Del. Code Ann, tit. 8, Section 230)
ARTICLE XIII
AMENDMENTS
Section 44. AMENDMENTS. Except as otherwise set forth in paragraph (i) of
Section 42 of these Bylaws, these Bylaws may be amended or repealed and new
Bylaws adopted by the stockholders entitled to vote. The Board of Directors
shall also have the power, if such power is conferred upon the Board of
Directors by the Certificate of Incorporation, to adopt, amend or repeal Bylaws
(including, without limitation, the amendment of any Bylaw setting forth the
number of Directors who shall constitute the whole Board of Directors). (Del.
Code Ann., tit. 8, Sections 109(a), 122(6))
ARTICLE XIV
RIGHT OF FIRST REFUSAL
Section 45. RIGHT OF FIRST REFUSAL. No stockholder shall sell, assign,
pledge, or in any manner transfer any of the shares of stock of the corporation
or any right or interest therein, whether voluntarily or by operation of law, or
by gift or otherwise, except by a transfer which meets the requirements
hereinafter set forth in this Bylaw:
(a) If the stockholder receives from anyone a bona fide offer
acceptable to the stockholder to purchase any of his shares of stock, then the
stockholder shall first give written notice thereof to the corporation. The
notice shall name the proposed transferee and state the number of shares to be
transferred, the price per share and all other terms and conditions of the
offer.
23.
<PAGE>
(b) For fifteen (15) days following receipt of such notice, the
corporation shall have the option to purchase all of the shares (but not less
than all) specified in the notice at the price and upon the terms set forth in
such bona fide offer; provided, however, that, with the consent of the
stockholder, the corporation shall have the option to purchase a lesser portion
of the shares specified in the notice. In the event the corporation elects to
purchase all the shares, or, with consent of the stockholder, a lesser portion
of the shares, it shall give written notice to the selling stockholder of its
election and settlement for said shares shall be made as provided below in
paragraph (d).
(c) In the event that the corporation does not elect to acquire all
of the shares specified in the selling stockholder's notice, the Secretary of
the corporation shall, within fifteen (15) days of receipt of said selling
stockholder's notice, give written notice thereof to the stockholders of the
corporation other than the selling stockholder. Said written notice shall state
the number of shares that the corporation has elected to purchase and the number
of shares remaining available for purchase (which shall be the same as the
number contained in said selling stockholder's notice, less any such shares that
the corporation has elected to purchase). Each of the other stockholders shall
have the option to purchase that proportion of the shares available for purchase
as the number of shares owned by each of said other stockholders bears to the
total issued and outstanding shares of the corporation, excepting those shares
owned by the selling stockholder. A stockholder electing to exercise such
option shall, within ten (10) days after mailing of the corporation's notice,
give notice to the corporation specifying the number of shares such stockholder
will purchase. Within such ten-day period, each of said other stockholders
shall give written notice stating how many additional shares such stockholder
will purchase if additional shares are made available. Failure to respond in
writing within said ten-day period to the notice given by the Secretary of the
corporation shall be deemed a rejection of such stockholder's right to acquire a
proportionate part of the shares of the selling stockholder. In the event one
or more stockholders do not elect to acquire the shares available to them, said
shares shall be allocated on a pro rata basis to the stockholders who requested
shares in addition to their pro rata allotment.
(d) In the event the corporation and/or stockholders, other than the
selling stockholder, elect to acquire any of the shares of the selling
stockholder as specified in said selling stockholder's notice, the Secretary of
the corporation shall so notify the selling stockholder and settlement thereof
shall be made in cash within thirty (30) days after the Secretary of the
corporation receives said selling stockholder's notice; provided that if the
terms of payment set forth in said selling stockholder's notice were other than
cash against delivery, the corporation and/or its other stockholders shall pay
for said shares on the same terms and conditions set forth in said selling
stockholder's notice.
(e) In the event the corporation and/or its other stockholders do not
elect to acquire all of the shares specified in the selling stockholder's
notice, said selling stockholder may, within the sixty-day period following the
expiration of the option rights granted to the corporation and other
stockholders herein, sell elsewhere the shares specified in said selling
stockholder's notice which were not acquired by the corporation and/or its other
stockholders, in accordance with the provisions of paragraph (d) of this bylaw,
provided that said sale shall
24.
<PAGE>
not be on terms and conditions more favorable to the purchaser than those
contained in the bona fide offer set forth in said selling stockholder's notice.
All shares so sold by said selling stockholder shall continue to be subject to
the provisions of this Bylaw in the same manner as before said transfer.
(f) Anything to the contrary contained herein notwithstanding, the
following transactions shall be exempt from the provisions of this Bylaw:
(1) A stockholder's transfer of any or all shares held either
during such stockholder's lifetime or on death by will or intestacy to such
stockholder's immediate family. "Immediate family" as used herein shall mean
spouse, lineal descendant, father, mother, brother, or sister of the stockholder
making such transfer and shall include any trust established primarily for the
benefit of the stockholder or his immediate family.
(2) A stockholder's bona fide pledge or mortgage of any shares
with a commercial lending institution, provided that any subsequent transfer of
said shares by said institution shall be conducted in the manner set forth in
this Section 45.
(3) A stockholder's transfer of any or all of such stockholder's
shares to the corporation or to any other stockholder of the corporation.
(4) A stockholder's transfer of any or all of such stockholder's
shares to a person who, at the time of such transfer, is an officer or director
of the corporation.
(5) A corporate stockholder's transfer of any or all of its
shares pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital reorganization of the
corporate stockholder, or pursuant to a sale of all or substantially all of the
stock or assets of a corporate stockholder.
(6) A corporate stockholder's transfer of any or all of its
shares to any or all of its stockholders.
(7) A transfer by a stockholder which is a limited or general
partnership to any or all of its partners.
In any such case, the transferee, assignee, or other recipient shall
receive and hold such stock subject to the provisions of this Bylaw, and there
shall be no further transfer of such stock except in accordance with this Bylaw.
(g) The provisions of this Section 45 may be waived with respect to
any transfer either by the corporation, upon duly authorized action of its Board
of Directors, or by the stockholders, upon the express written consent of the
owners of a majority of the voting power of the corporation (excluding the votes
represented by those shares to be sold by the selling stockholder). This
Section 45 may be amended or repealed either by a duly authorized
25.
<PAGE>
action of the Board of Directors or by the stockholders, upon the express vote
or written consent of the owners of a majority of the voting power of the
corporation.
(h) Any sale or transfer, or purported sale or transfer, of
securities of the corporation shall be null and void unless the terms,
conditions, and provisions of this Bylaw are strictly observed and followed.
(i) The foregoing right of first refusal shall terminate on either of
the following dates, whichever shall first occur:
(1) On December 11, 2000; or
(2) Upon the date securities of the corporation are first
offered to the public pursuant to a registration statement filed with, and
declared effective by, the United States Securities and Exchange Commission
under the Securities Act of 1933, as amended.
(j) The certificates representing shares of stock of the corporation
shall bear on their face the following legend so long as the foregoing right of
first refusal remains in effect:
"The shares represented by this certificate are subject to a
right of first refusal option in favor of the corporation and its
other stockholders, as provided in the bylaws of the corporation."
(Del. Code Ann., tit. 8, Section 160(a))
ARTICLE XV
LOANS TO OFFICERS
Section 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance
may be with or without interest and may be unsecured, or secured in such manner
as the Board of Directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in this Section 46 shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute. (Del. Code Ann., tit. 8,
Section 143)
26.
<PAGE>
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
CV THERAPEUTICS, INC.
CV THERAPEUTICS, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify as
follows:
FIRST: The name of the corporation is CV THERAPEUTICS, INC. The
corporation was originally incorporated under the name of CHOLESTEREX, INC.
SECOND: The Certificate of Incorporation of the corporation was filed by
the Secretary of State on December 11, 1990. The Restated Certificate of
Incorporation of the corporation was filed by the Secretary of State on March
29, 1996 (the "Restated Certificate").
THIRD: The following amendment to the Restated Certificate was duly
adopted in accordance with the provisions of Sections 141(f) and 242 of the
General Corporation Law of the State of Delaware (the "General Corporation Law")
by resolutions duly adopted by the Board of Directors of this Corporation and
was approved by the stockholders as provided in Section 228 of the General
Corporation Law, and written notice has been given to the stockholders as
provided in Section 228(d) of the General Corporation Law.
FOURTH: Sections A and B of Article Fourth of the Restated Certificate are
hereby deleted in their entirety and replaced with the following:
"A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the Corporation is authorized to issue is one hundred ten
million (110,000,000) shares. Sixty-eight million (68,000,000) shares shall be
Common Stock, each having a par value of one tenth of one cent ($.001). Forty-
two million (42,000,000) shares shall be Preferred Stock, each having a par
value of one tenth of one cent ($.001).
B. Eight million (8,000,000) of the authorized shares of Preferred Stock
are hereby designated "Series A Preferred Stock" (the "Series A Preferred").
One million (1,000,000) of the authorized shares of Preferred Stock are hereby
designated "Series B Preferred Stock" (the "Series B Preferred"). Six million
(6,000,000) of the authorized shares of Preferred Stock are hereby designated
"Series C Preferred Stock" (the "Series C Preferred"). Twelve million, five
hundred thousand (12,500,000) of the authorized shares of Preferred Stock are
hereby designated "Series D Preferred Stock" (the "Series D Preferred"). Seven
million five hundred thousand (7,500,000) of the authorized shares of Preferred
Stock are hereby designated "Series E Preferred Stock" (the "Series E
Preferred"). Seven million (7,000,000) of the authorized shares of Preferred
Stock are hereby designated "Series G Preferred Stock" (the "Series G
Preferred")."
FIFTH: Section C.1.(vi) of Article Fourth of the Restated Certificate is
hereby deleted in its entirety and replaced with the following:
<PAGE>
"(vi) with respect to the Series G Preferred, $.20 per annum on each
outstanding share of Series G Preferred (as adjusted for any stock dividends,
combinations or splits with respect to such shares)."
IN WITNESS WHEREOF, CV THERAPEUTICS, INC. has caused this Restated
Certificate of Incorporation to be signed by its Chief Executive Officer and
attested to by its Secretary this 23rd day of May, 1996.
CV THERAPEUTICS, INC.
By: /s/ Louis G. Lange
---------------------------
Louis G. Lange, M.D., Ph.D.
Chief Executive Officer
ATTEST:
/s/ Alan C. Mendelson
- ----------------------
Alan C. Mendelson
Secretary
2.
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CV THERAPEUTICS, INC.
Louis G. Lange, M.D., Ph.D. does hereby certify:
1. He is the Chairman of the Board and Chief Executive Officer of CV
Therapeutics, Inc., a corporation organized and existing under the laws of the
state of Delaware. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on December 11, 1990.
2. The Certificate of Incorporation of this Corporation is hereby amended
and restated as follows:
I.
The name of this corporation is CV Therapeutics, Inc.
II.
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent of the Corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
III.
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. The Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is thirty-five
million (35,000,000) shares. Thirty million (30,000,000) shares shall be Common
Stock, each having a par value of one tenth of one cent ($.001). Five million
(5,000,000) shares shall be Preferred Stock, each having a par value of one
tenth of one cent ($.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the
1.
<PAGE>
qualifications, limitations or restrictions of any wholly unissued series of
Preferred Stock, and to establish from time to time the number of shares
constituting any such series or any of them; and to increase or decrease the
number of shares of any series subsequent to the issuance of shares of that
series, but not below the number of shares of such series then outstanding. In
case the number of shares of any series shall be decreased in accordance with
the foregoing sentence, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution originally fixing
the number of shares of such series.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
(1) The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
(2) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, following the
date on which the corporation is no longer subject to Section 2115 of the
California Corporations Code (the "Qualifying Record Date"), the directors shall
be divided into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first
annual meeting of stockholders following the Qualifying Record Date, the term of
office of the Class I directors shall expire and Class I directors shall be
elected for a full term of three years. At the second annual meeting of
stockholders following the Qualifying Record Date, the term of office of the
Class II directors shall expire and Class II directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following
the Qualifying Record Date, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders, directors shall be elected
for a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
(3) Subject to the rights of the holders of any series of Preferred
Stock, the Board of Directors or any individual director may be removed from
office at any time (i) with
<PAGE>
cause by the affirmative vote of the holders of a majority of the voting power
of all the then-outstanding shares of voting stock of the corporation, entitled
to vote at an election of directors (the "Voting Stock") or (ii) without cause
by the affirmative vote of the holders of at least sixty-six and two-thirds
percent (66 2/3%) of the voting power of all the then-outstanding shares of the
Voting Stock.
(4) Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
B.
(1) Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the Voting Stock. The Board of Directors shall
also have the power to adopt, amend, or repeal Bylaws.
(2) The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
(3) No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws and following the closing of the Initial Public Offering no action
shall be taken by the stockholders by written consent.
(4) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (iv) by the holders of the shares entitled to cast
not less that ten percent (10%) of the votes at the meeting, and shall be held
at such place, on such date, and at such time as the Board of Directors shall
fix.
(5) Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
3.
<PAGE>
VI.
A. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General corporation Law, as so amended.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
The foregoing Amended and Restated Certificate of Incorporation has been
duly approved by the Board of Directors.
The foregoing Amended and Restated Certificate of Incorporation has been
duly approved by the vote of the stockholders in accordance with Sections 242
and 245 of the Delaware General Corporation Law. The total number of
outstanding shares of the Corporation entitled to vote on the amendment was
share of Common Stock, shares of Series A Preferred Stock,
shares of Series C Preferred Stock, shares of Series D
Preferred Stock, shares of Series E Preferred Stock and
shares of Series G Preferred Stock. The number of shares voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote required
was more than 50% of the Common Stock and more than 50% of the Preferred Stock
each voting
4.
<PAGE>
separately as a separate class and more than 50% of the Common Stock and
Preferred Stock voting together as a single class on an as-converted basis.
I further declare under penalty of perjury under the laws of the state of
Delaware that the matters set forth in this Amended and Restated Certificate of
Incorporation are true and correct.
------------------------------
Louis G. Lange, M.D., Ph.D.
Chairman of the Board and
Chief Executive Officer
5.
<PAGE>
RESTATED BYLAWS
OF
CV THERAPEUTICS, INC.
(A DELAWARE CORPORATION)
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I OFFICES....................................................... 1.
Section 1. Registered Office........................................ 1.
Section 2. Other Offices............................................ 1.
ARTICLE II CORPORATE SEAL................................................ 1.
Section 3. Corporate Seal........................................... 1.
ARTICLE III STOCKHOLDERS' MEETINGS........................................ 1.
Section 4. Place of Meetings........................................ 1.
Section 5. Annual Meeting........................................... 2.
Section 6. Special Meetings......................................... 3.
Section 7. Notice of Meetings....................................... 4.
Section 8. Quorum................................................... 4.
Section 9. Adjournment and Notice of Adjourned Meetings............. 5.
Section 10. Voting Rights............................................ 5.
Section 11. Joint Owners of Stock.................................... 5.
Section 12. List of Stockholders..................................... 6.
Section 13. Action Without Meeting................................... 6.
Section 14. Organization............................................. 7.
ARTICLE IV DIRECTORS..................................................... 7.
Section 15. Number and Term of Office................................ 7.
Section 16. Powers................................................... 7.
Section 17. Classes of Directors..................................... 8.
Section 18. Vacancies................................................ 8.
Section 19. Resignation.............................................. 8.
Section 20. Removal.................................................. 9.
Section 21. Meetings................................................. 9.
(a) Annual Meetings.......................................... 9.
(b) Regular Meetings......................................... 9.
(c) Special Meetings......................................... 9.
(d) Telephone Meetings....................................... 9.
(e) Notice of Meetings....................................... 9.
(f) Waiver of Notice.........................................10.
Section 22. Quorum and Voting........................................10.
Section 23. Action Without Meeting...................................10.
Section 24. Fees and Compensation....................................10.
Section 25. Committees...............................................11.
(a) Executive Committee......................................11.
(b) Other Committees.........................................11.
(c) Term.....................................................11.
i.
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
(d) Meetings.................................................12.
Section 26. Organization.............................................12.
ARTICLE V OFFICERS......................................................12.
Section 27. Officers Designated......................................12.
Section 28. Tenure and Duties of Officers............................13.
(a) General..................................................13.
(b) Duties of Chairman of the Board of Directors.............13.
(c) Duties of President......................................13.
(d) Duties of Vice Presidents................................13.
(e) Duties of Secretary......................................13.
(f) Duties of Chief Financial Officer........................14.
Section 29. Delegation of Authority..................................14.
Section 30. Resignations.............................................14.
Section 31. Removal..................................................14.
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION........................14.
Section 32. Execution of Corporate Instruments.......................15.
Section 33. Voting of Securities Owned by the Corporation............15.
ARTICLE VII SHARES OF STOCK...............................................15.
Section 34. Form and Execution of Certificates.......................15.
Section 35. Lost Certificates........................................16.
Section 36. Transfers................................................16.
Section 37. Fixing Record Dates......................................16.
Section 38. Registered Stockholders..................................18.
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION...........................18.
Section 39. Execution of Other Securities............................18.
ARTICLE IX DIVIDENDS.....................................................18.
Section 40. Declaration of Dividends.................................18.
Section 41. Dividend Reserve.........................................19.
ARTICLE X FISCAL YEAR...................................................19.
Section 42. Fiscal Year..............................................19.
ARTICLE XI INDEMNIFICATION...............................................19.
ii.
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
Section 43. Indemnification of Directors, Executive Officers, Other
Officers, Employees and Other Agents.....................19.
(a) Directors and Officers...................................19.
(b) Employees and Other Agents...............................19.
(c) Expenses.................................................20.
(d) Enforcement..............................................20.
(e) Non-Exclusivity of Rights................................21.
(f) Survival of Rights.......................................21.
(g) Insurance................................................21.
(h) Amendments...............................................21.
(i) Saving Clause............................................21.
(j) Certain Definitions......................................21.
ARTICLE XII NOTICES.......................................................23.
Section 44. Notices..................................................23.
(a) Notice to Stockholders...................................23.
(b) Notice to directors......................................23.
(c) Affidavit of Mailing.....................................23.
(d) Time Notices Deemed Given................................23.
(e) Methods of Notice........................................23.
(f) Failure to Receive Notice................................23.
(g) Notice to Person with Whom Communication Is Unlawful.....23.
(h) Notice to Person with Undeliverable Address..............24.
ARTICLE XIII AMENDMENTS....................................................24.
Section 45. Amendments...............................................24.
ARTICLE XIV LOANS TO OFFICERS.............................................25.
Section 46. Loans to Officers........................................25.
ARTICLE XV MISCELLANEOUS.................................................25.
Section 47. Annual Report............................................25.
iii.
<PAGE>
BYLAWS
OF
CV THERAPEUTICS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Wilmington, County of New
Castles
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
1.
<PAGE>
SECTION 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the corporation, for
the purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an annual meeting, business must be: (A) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (B) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the corporation.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the corporation not later than the close
of business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; PROVIDED, HOWEVER, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b), and, if he
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should so determine, he shall so declare at the meeting that any such business
not properly brought before the meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 5. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to serving as a
director if elected); and (ii) as to such stockholder giving notice, the
information required to be provided pursuant to paragraph (b) of this Section 5.
At the request of the Board of Directors, any person nominated by a stockholder
for election as a director shall furnish to the Secretary of the corporation
that information required to be set forth in the stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in
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previously authorized directorships at the time any such resolution is presented
to the Board of Directors for adoption) or (iv) by the holders of shares
entitled to cast not less than ten percent (10%) of the votes at the meeting,
and shall be held at such place, on such date, and at such time as the Board of
Directors, shall fix.
(b) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
general nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than thirty-five (35) nor more than one hundred twenty
(120) days after the date of the receipt of the request. Upon determination of
the time and place of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within
sixty (60) days after the receipt of the request, the person or persons
requesting the meeting may set the time and place of the meeting and give the
notice. Nothing contained in this paragraph (b) shall be construed as limiting,
fixing, or affecting the time when a meeting of stockholders called by action of
the Board of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a
quorum, any meeting of stockholders may be adjourned, from time to time, either
by the chairman of the meeting or by vote of the holders of a majority of the
shares represented thereat, but no other business shall be transacted at such
meeting. The stockholders present at a duly called or convened meeting, at
which a quorum is present, may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum. Except as otherwise provided by law, the Certificate of Incorporation
or these Bylaws, all action taken by the holders of a majority of
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the vote cast, excluding abstentions, at any meeting at which a quorum is
present shall be valid and binding upon the corporation; PROVIDED, HOWEVER, that
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Where a separate vote by a class or classes or series is
required, except where otherwise provided by the statute or by the Certificate
of Incorporation or these Bylaws, a majority of the outstanding shares of such
class or classes or series, present in person or represented by proxy, shall
constitute a quorum entitled to take action with respect to that vote on that
matter and, except where otherwise provided by the statute or by the Certificate
of Incorporation or these Bylaws, the affirmative vote of the majority
(plurality, in the case of the election of directors) of the votes cast,
including abstentions, by the holders of shares of such class or classes or
series shall be the act of such class or classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting
of stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken.
At the adjourned meeting, the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) days or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is
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held in unequal interests, a majority or even-split for the purpose of
subsection (c) shall be a majority or even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Unless otherwise provided in the Certificate of Incorporation, any
action required by statute to be taken at any annual or special meeting of the
stockholders, or any action which may be taken at any annual or special meeting
of the stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation in the manner herein
required, written consents signed by a sufficient number of stockholders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General Corporation Law of the State of Delaware if such
action had been voted on by stockholders at a meeting thereof, then the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
notice and written consent have been given as provided in Section 228 of the
General Corporation Law of Delaware.
(d) Notwithstanding the foregoing, no such action by written consent
may be taken following the closing of the initial public offering pursuant to an
effective
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registration statement under the Securities Act of 1933, as amended (the "1933
Act"), covering the offer and sale of Common Stock of the corporation (the
"Initial Public Offering").
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of
directors of the corporation shall be fixed in accordance with the Certificate
of Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
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SECTION 17. CLASSES OF DIRECTORS.
Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, following the date
on which the corporation is no longer subject to Section 2115 of the California
Corporations Code (the "Qualifying Record Date"), the directors shall be divided
into three classes designated as Class I, Class II and Class III, respectively.
Directors shall be assigned to each class in accordance with a resolution or
resolutions adopted by the Board of Directors. At the first annual meeting of
stockholders following the Qualifying Record Date, the term of office of the
Class I directors shall expire and Class I directors shall be elected for a full
term of three years. At the second annual meeting of stockholders following the
Qualifying Record Date, the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders following the Qualifying Record
Date, the term of office of the Class III directors shall expire and Class III
directors shall be elected for a full term of three years. At each succeeding
annual meeting of stockholders, directors shall be elected for a full term of
three years to succeed the directors of the class whose terms expire at such
annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 18. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A
vacancy in the Board of Directors shall be deemed to exist under this Bylaw in
the case of the death, removal or resignation of any director.
SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When
one or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen
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shall hold office for the unexpired portion of the term of the Director whose
place shall be vacated and until his successor shall have been duly elected and
qualified.
SECTION 20. REMOVAL.
Subject to the rights of the holders of any series of Preferred Stock,
the Board of Directors or any individual director may be removed from office at
any time (i) with cause by the affirmative vote of the holders of a majority of
the voting power of all the then-outstanding shares of voting stock of the
corporation, entitled to vote at an election of directors (the "Voting Stock")
or (ii) without cause by the affirmative vote of the holders of at least sixty-
six and two-thirds percent (66 2/3%) of the voting power of all the then-
outstanding shares of the Voting Stock.
SECTION 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the Certificate
of Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or any two of the directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
facsimile, telegraph or telex, during normal business hours, at least twenty-
four (24) hours before the date and time of the meeting, or sent in writing to
each director by first class mail, charges prepaid, at least three (3) days
before the date of the meeting. Notice of any meeting may be
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waived in writing at any time before or after the meeting and will be waived by
any director by attendance thereat, except when the director attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.
SECTION 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater number
and except with respect to indemnification questions arising under Section 43
hereof, for which a quorum shall be one-third of the exact number of directors
fixed from time to time in accordance with the Certificate of Incorporation, a
quorum of the Board of Directors shall consist of a majority of the exact number
of directors fixed from time to time by the Board of Directors in accordance
with the Certificate of Incorporation; PROVIDED, HOWEVER, at any meeting whether
a quorum be present or otherwise, a majority of the directors present may
adjourn from time to time until the time fixed for the next regular meeting of
the Board of Directors, without notice other than by announcement at the
meeting.
(b) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative vote
of a majority of the directors present, unless a different vote be required by
law, the Certificate of Incorporation or these Bylaws.
SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
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SECTION 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, including without limitation the power or authority
to declare a dividend, to authorize the issuance of stock and to adopt a
certificate of ownership and merger, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation.
(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors and shall have such powers and perform such duties as may
be prescribed by the resolution or resolutions creating such committees, but in
no event shall such committee have the powers denied to the Executive Committee
in these Bylaws.
(c) TERM. Each member of a committee of the Board of Directors shall
serve a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to the provisions of subsections (a)
or (b) of this Bylaw may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified
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from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of
any committee may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat, except when the
director attends such special meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. A majority of the authorized number
of members of any such committee shall constitute a quorum for the transaction
of business, and the act of a majority of those present at any meeting at which
a quorum is present shall be the act of such committee.
SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of
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the officers of the corporation shall be fixed by or in the manner designated by
the Board of Directors.
SECTION 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.
(c) DUTIES OF PRESIDENT. The President shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. Unless
some other officer has been elected Chief Executive Officer of the corporation,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each
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Assistant Secretary shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner and shall render statements of the financial affairs
of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order
of the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors or the President shall
designate from time to time. The President may direct the Treasurer or any
Assistant Treasurer, or the Controller or any Assistant Controller to assume and
perform the duties of the Chief Financial Officer in the absence or disability
of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and
each Controller and Assistant Controller shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time.
SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
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SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All
other instruments and documents requiring the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any
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officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set forth
on the face or back a statement that the corporation will furnish without charge
to each stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
SECTION 36. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation shall
be made only upon its books by the holders thereof, in person or by attorney
duly authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
SECTION 37. FIXING RECORD DATES.
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(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; PROVIDED, HOWEVER,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) Prior to the Initial Public Offering, in order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than 10 days after the date upon which the resolution fixing
the record date is adopted by the Board of Directors. Any stockholder of record
seeking to have the stockholders authorize or take corporate action by written
consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall promptly, but in
all events within 10 days after the date on which such a request is received,
adopt a resolution fixing the record date. If no record date has been fixed by
the Board of Directors within 10 days of the date on which such a request is
received, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
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determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; PROVIDED, HOWEVER, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be
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declared by the Board of Directors pursuant to law at any regular or special
meeting. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Certificate of Incorporation.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS AND OFFICERS. The corporation shall indemnify its
directors and officers to the fullest extent not prohibited by the Delaware
General Corporation Law; PROVIDED, HOWEVER, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
officers; and, PROVIDED, FURTHER, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized by the Board of
Directors of the corporation, (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).
(b) EMPLOYEES AND OTHER AGENTS. The corporation shall have power to
indemnify its employees and other agents as set forth in the Delaware General
Corporation Law.
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(c) EXPENSES. The corporation shall advance to any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer, of
the corporation, or is or was serving at the request of the corporation as a
director or executive officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to an
officer of the corporation (except by reason of the fact that such officer is or
was a director of the corporation in which event this paragraph shall not apply)
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding, or (ii) if such quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation.
(d) ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and and
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between the
corporation and the director or officer. Any right to indemnification or
advances granted by this Bylaw to a director or officer shall be enforceable by
or on behalf of the person holding such right in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied, in
whole or in part, or (ii) no disposition of such claim is made within ninety
(90) days of request therefor. The claimant in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the expense of
prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an officer of the
corporation (except in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such executive
officer is or was a director of the corporation) for advances, the corporation
shall be entitled to raise a defense as to any such action clear and convincing
evidence that such person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the corporation, or
with respect to any criminal action or proceeding that such person acted without
reasonable cause to believe that his conduct was lawful. Neither the failure of
the corporation (including its Board of
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Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct. In
any suit brought by a director or officer to enforce a right to indemnification
or to an advancement of expenses hereunder, the burden of proving that the
director or officer is not entitled to be indemnified, or to such advancement of
expenses, under this Article XI or otherwise shall be on the corporation.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law.
(f) SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(h) AMENDMENTS. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
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(i) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony
in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
(ii) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees,
fines, amounts paid in settlement or judgment and any other costs and
expenses of any nature or kind incurred in connection with any proceeding.
(iii) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Bylaw with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(iv) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer,
employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(v) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this Bylaw.
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ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such director.
(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.
(d) TIME NOTICES DEEMED GIVEN. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing, and all
notices given by facsimile, telex or telegram shall be deemed to have been given
as of the sending time recorded at time of transmission.
(e) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(f) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is
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unlawful, the giving of such notice to such person shall not be required and
there shall be no duty to apply to any governmental authority or agency for a
license or permit to give such notice to such person. Any action or meeting
which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.
(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom
(i) notice of two consecutive annual meetings, and all notices of meetings or of
the taking of action by written consent without a meeting to such person during
the period between such two consecutive annual meetings, or (ii) all, and at
least two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS.
Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may
be altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the Voting Stock. The Board of Directors shall also
have the power to adopt, amend, or repeal Bylaws.
24.
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ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance
may be with or without interest and may be unsecured, or secured in such manner
as the Board of Directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in these Bylaws shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute.
ARTICLE XV
MISCELLANEOUS
SECTION 47. ANNUAL REPORT.
(a) Subject to the provisions of paragraph (b) of this Bylaw, the
Board of Directors shall cause an annual report to be sent to each stockholder
of the corporation not later than one hundred twenty (120) days after the close
of the corporation's fiscal year. Such report shall include a balance sheet as
of the end of such fiscal year and an income statement and statement of changes
in financial position for such fiscal year, accompanied by any report thereon of
independent accounts or, if there is no such report, the certificate of an
authorized officer of the corporation that such statements were prepared without
audit from the books and records of the corporation. When there are more than
100 stockholders of record of the corporation's shares, as determined by
Section 605 of the California Corporations Code, additional information as
required by Section 1501(b) of the California Corporations Code shall also be
contained in such report, provided that if the corporation has a class of
securities registered under Section 12 of the 1934 Act, that Act shall take
precedence. Such report shall be sent to stockholders at least fifteen (15)
days prior to the next annual meeting of stockholders after the end of the
fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of record of
the corporation's shares, the requirement of sending of an annual report to the
stockholders of the corporation is hereby expressly waived.
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Exhibit 10.1
CV THERAPEUTICS, INC.
1992 STOCK OPTION PLAN
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS ON SEPTEMBER 23, 1996
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to purchase common stock of the Company ("Common
Stock").
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company, to
secure and retain the services of new Employees, Directors and Consultants, and
to provide incentives for such persons to exert maximum efforts for the success
of the Company.
(c) The Company intends that the Options issued under the Plan shall, in
the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
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(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means CV Therapeutics, Inc., a Delaware corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render services and who is compensated for such
services, provided that the term "Consultant" shall not include Directors who
are paid only a director's fee by the Company or who are not compensated by the
Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the
employment or relationship as a Director or Consultant is not interrupted or
terminated with the Company or any Affiliate. The Board, in its sole
discretion, may determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; PROVIDED, HOWEVER, that for purposes of Incentive Stock
Options, any such leave may not exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; or (ii) transfers between locations of the Company
or between the Company, Affiliates or its successor.
(h) "DIRECTOR" means a member of the Board.
(i) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
2.
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(j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(l) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:
(i) If the Common Stock is listed on any established stock exchange,
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in Common Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(o) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
3.
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(p) "OPTION" means a stock option granted pursuant to the Plan.
(q) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(r) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
(s) "PLAN" means this 1992 Stock Option Plan.
(t) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how the Option shall be
granted; whether the Option will be an Incentive Stock Option or a Nonstatutory
Stock Option; the provisions of each Option granted (which need not be
identical), including the time or times such Option may be exercised in whole or
in part; and the number of shares for which an Option shall be granted to each
such person.
(2) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the
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exercise of this power, may correct any defect, omission or inconsistency in the
Plan or in any Option Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in Section 11.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"). If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate three hundred forty five thousand (345,000) shares of
the Company's common stock (after taking into account the 1:10 reverse split
adopted by the Board in September 1996). If any Option shall for any reason
expire or otherwise terminate without having been exercised in full, the stock
not purchased under such Option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5.
<PAGE>
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted only to Employees, Directors or
Consultants.
(b) No person shall be eligible for the grant of an Option if, at the time
of grant, such person owns (or is deemed to own pursuant to Section 424(d) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its Affiliates
unless the exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of such stock at the date of grant and the
Option is not exercisable after the expiration of five (5) years from the date
of grant.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Incentive Stock Option on the date the Incentive Stock
Option is granted. The exercise price of each Nonstatutory Stock Option
shall be not less than eighty-five percent (85%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted.
6.
<PAGE>
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company,
(B) according to a deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common stock
of the Company) with the person to whom the Option is granted or to whom the
Option is transferred pursuant to subsection 6(d), or (C) in any other form of
legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) TRANSFERABILITY. An Option shall not be transferable except by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person. The
person to whom the Option is granted may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionee, shall thereafter be entitled to exercise
the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the
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Option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the Option
became vested but was not fully exercised. During the remainder of the term of
the Option (if its term extends beyond the end of the installment periods), the
option may be exercised from time to time with respect to any shares then
remaining subject to the Option. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum number of shares as to
which an Option may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or
any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need
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not be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or Disability), the
Optionee may exercise his or her Option, but only within such period of time as
is determined by the Board, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the case of an Incentive Stock Option, the Board shall determine such period
of time (in no event to exceed three (3) months from the date of termination)
when the Option is granted. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within twelve
(12) months from the date of such termination (or such shorter period specified
in the Option Agreement), and only to the extent that the Optionee was entitled
to exercise it at the date of such termination (but in no
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event later than the expiration of the term of such Option as set forth in the
Option Agreement). If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within twelve (12) months following the
date of death (or such shorter period specified in the Option Agreement) (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated
to exercise the option upon the Optionee's death pursuant to subsection 6(f),
but only within the period ending on the earlier of (i) the date twelve (12)
months following the date of death (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement, but only to the extent the Optionee was
entitled to exercise the Option at the date of death. If, at the time of death,
the Optionee was not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance or by designation does not
exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the
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Option as to any part or all of the shares subject to the Option prior to the
full vesting of the Option. Any unvested shares so purchased may be subject to
a repurchase right in favor of the Company or to any other restriction the Board
determines to be appropriate.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2)
authorizing the Company to withhold shares from the shares of the common stock
otherwise issuable to the participant as a result of the exercise of the Option;
or (3) delivering to the Company owned and unencumbered shares of the common
stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available at
all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; PROVIDED, HOWEVER,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.
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8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(b) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate (or
to continue acting as a Director or Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or relationship as a
Director or Consultant of any Employee, Director, Consultant or Optionee with or
without cause.
(c) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options granted
after 1986 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
12.
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10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan and outstanding Options will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan and
the class(es) and number of shares and price per share of stock subject to
outstanding Options.
(b) In the event of a Change in Control not approved by the Board, each
outstanding Option under the Plan shall become fully vested, and the
Company's right of repurchase shall lapse with respect to shares received
upon exercise of an Option prior to full vesting, notwithstanding the terms
of the Option or any early exercise stock purchase agreement, immediately
prior to the consummation of such Change in Control.
In addition, following the consummation of a Change in Control, to the
extent permitted by applicable law: (i) any surviving corporation or a parent
of such surviving corporation shall assume any Options outstanding under the
Plan or shall substitute similar Options for those outstanding under the Plan or
(ii) such Options shall continue in full force and effect, unless (iii) the
surviving corporation or parent of the surviving corporation refuses to assume
or continue any Options outstanding under the Plan, or to substitute similar
options for those outstanding under the Plan. If the surviving corporation or
parent of the surviving corporation refuses to assume or continue any Options
outstanding under the Plan, or to substitute similar options for those
outstanding under the Plan, then the time during which any outstanding Options
may be exercised shall be accelerated, the Optionees shall be given reasonable
opportunity to
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exercise such Options prior to the consummation of the Change in Control, and
such Options shall be terminated if not exercised prior to the consummation of
the Change in Control.
For purposes of this Plan, "Change in Control" means: (i) a sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, greater stock
voting power); (iii) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a reverse
merger in which stockholders immediately before the merger have, immediately
after the merger, greater stock voting power); or (iv) any transaction or series
of related transactions in which in excess of 50% of the Company's voting power
is transferred.
(c) In the event of the proposed dissolution or liquidation of the
Company, each outstanding Option shall terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
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(b) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(c) Rights and obligations under any Option granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on November 11, 2002. No Options
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, and if required, an appropriate
permit has been issued by the Commissioner of Corporations of the State of
California.
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CV THERAPEUTICS, INC.
1994 EQUITY INCENTIVE PLAN
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS ON SEPTEMBER 23, 1996
APPROVED BY THE STOCKHOLDERS ON , 1996
1. PURPOSES.
(a) The purpose of the 1994 Equity Incentive Plan (the "Plan") is to
provide a means by which employees of and consultants to the Company, and its
Affiliates, may be given an opportunity to benefit from increases in value of
the common stock of the Company ("Common Stock") through the granting of (i)
Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses,
(iv) rights to purchase restricted stock, and (v) stock appreciation rights, all
as defined below.
(b) The Company, by means of the Plan, seeks to retain the services
of persons who are now Employees or Directors of or Consultants to the Company,
to secure and retain the services of new Employees, Directors and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to paragraph 6 hereof, including
Incentive Stock Options and Nonstatutory Stock Options, (ii) stock bonuses or
rights to purchase restricted stock granted pursuant to paragraph 7 hereof, or
(iii) Stock Appreciation Rights granted pursuant to paragraph 8 hereof. All
Options shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and in such form as issued pursuant to
Section 6, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
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(e) "COMPANY" means CV Therapeutics, Inc., a Delaware corporation.
(f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" means
a right granted pursuant to subsection 8(b)(ii) of the Plan.
(g) "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated by the Company or any Affiliate. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave; provided, however, that for purposes of Incentive Stock Options
and Stock Appreciation Rights appurtenant thereto, any such leave may not exceed
ninety (90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract (including certain Company policies) or statute; or
(ii) transfers between locations of the Company or between the Company,
Affiliates or its successor.
(i) "COVERED EXECUTIVE" means each Employee, Director or Consultant
subject to Section 16 of the Exchange Act with respect to the Company or each
Employee, Director or Consultant who would be subject to Section 16 of the
Exchange Act with respect to the Company if equity securities of the Company had
been registered under Section 12 of the Exchange Act.
(j) "DIRECTOR" means a member of the Board.
(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of the
common stock of the Company determined as follows:
(i) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in Common Stock) on the last market trading day prior to
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the day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT"
means a right granted under subsection 8(b)(iii) of the Plan.
(p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933 ("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
(v) "PLAN" means this 1994 Equity Incentive Plan.
(w) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
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(x) "STOCK APPRECIATION RIGHT" means any of the various types of
rights which may be granted under Section 8 of the Plan.
(y) "STOCK AWARD" means any right granted under the Plan, including
any Option, any stock bonus, any right to purchase restricted stock, and any
Stock Appreciation Right.
(z) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. The Stock Award Agreement is subject to the terms
and conditions of the Plan.
(aa) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right
granted under subsection 8(b)(i) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how Stock Awards shall be
granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory
Stock Option, a stock bonus, a right to purchase restricted stock, a Stock
Appreciation Right, or a combination of the foregoing; the provisions of each
Stock Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive stock pursuant to a Stock Award;
whether a person shall be permitted to receive stock upon exercise of an
Independent Stock Appreciation Right; and the number of shares with respect to
which Stock Awards shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section
14.
(c) The Board may delegate administration of the Plan to a committee
or committees ("Committee") of one or more members of the Board. In the
discretion of the Board, a Committee may consist solely of two or more Outside
Directors, in accordance with Code Section 162(m), or solely of two or more Non-
Employee Directors, in accordance with
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Rule 16b-3. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate eight hundred thousand (800,000) shares of the
Company's common stock (after taking into account the 1:10 reverse split adopted
by the Board in September 1996). If any Stock Award shall for any reason expire
or otherwise terminate without having been exercised in full (or vested in the
case of Restricted Stock), the stock not acquired under such Stock Award shall
again become available for the Plan. Shares subject to Stock Appreciation
Rights exercised in accordance with Section 8 of the Plan shall not be available
for subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be granted
only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Subject to the provisions of Section 12 relating to adjustments
upon changes in the Common Stock, no person shall be eligible to be granted
Options and Stock Appreciation Rights covering more than one hundred thousand
(100,000) shares of the Company's common stock (after taking into account the
1:10 reverse split adopted by the Board in September 1996) in any calendar
year. This subsection 5(c) shall not apply until (i) the earliest of: (A) the
first material modification of the Plan (including any increase to the number
of shares reserved for issuance under the Plan in accordance with Section 4);
(B) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (C) the expiration of the Plan; or (D) the first meeting of
stockholders at which directors are to be elected that occurs after the close
of the third calendar year following the calendar year in which occurred the
first registration of an equity security under Section 12 of the Exchange
Act; or (ii) such other date required by Section 162(m) of the Code and the
rules and regulations promulgated thereunder.
5.
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6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of the grant or
exercise of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted or to
whom the Option is transferred pursuant to subsection 6(d), or (C) in any other
form of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option may be
transferred to the extent provided in the Option Agreement; provided that if the
Option Agreement does not expressly permit the transfer of a Nonstatutory Stock
Option, the Nonstatutory Stock Option shall not be transferable except by will,
by the laws of descent and distribution or pursuant to a domestic relations
order satisfying the requirements of Rule 16b-3, and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a domestic relations order. The person to whom the
Option is granted may, by delivering written notice to the Company, in a
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form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions
on the time or times when it may be exercised (which may be based on performance
criteria) as the Board may deem appropriate. The provisions of this subsection
6(e) are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.
(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board and only to the extent that the
Optionee was entitled to exercise it at the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of
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such termination (or such shorter or longer period specified in the Option
Agreement), and only to the extent that the Optionee was entitled to exercise it
at the date of such termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). If, at the date
of termination, the Optionee is not entitled to exercise his or her entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified herein, the Option shall terminate, and
the shares covered by such Option shall revert to the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within eighteen (18) months following the
date of death (or such shorter or longer period specified in the Option
Agreement) (but in no event later than the expiration of the term of such Option
as set forth in the Option Agreement), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee was entitled to exercise the Option at the date
of death. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to the Plan. If, after death, the Optionee's estate or a
person who acquired the right to exercise the Option by bequest or inheritance
does not exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee, Director
or Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a repurchase right in favor of the Company or to
any other restriction the Board determines to be appropriate. Should the right
of repurchase be assigned by the Company, the assignee shall pay the Company
cash equal to the difference between the original purchase price and the stock's
Fair Market Value if the original price is less than the stock's Fair Market
Value.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2)
authorizing the Company to withhold shares from the shares of the common stock
otherwise issuable to the participant as a result of the exercise of the Option;
or (3) delivering to the Company owned and unencumbered shares of the common
stock of the Company.
(l) RE-LOAD OPTIONS. Without in any way limiting the authority of
the Board or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation) to include
as part of any Option Agreement a provision entitling the Optionee to a further
Option (a "Re-Load Option") in the event the Optionee exercises the Option
evidenced by the Option agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms and conditions
of the Option Agreement. Any such Re-Load Option (i) shall be for a number of
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shares equal to the number of shares surrendered as part or all of the exercise
price of such Option; (ii) shall have an expiration date which is the same as
the expiration date of the Option the exercise of which gave rise to such Re-
Load Option; and (iii) shall have an exercise price which is equal to one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Re-Load Option on the date of exercise of the original Option or, in the
case of a Re-Load Option which is an Incentive Stock Option and which is granted
to a 10% stockholder (as described in subparagraph 5(c)), shall have an exercise
price which is equal to one hundred ten percent (110%) of the Fair Market Value
of the stock subject to the Re-Load Option on the date of exercise of the
original Option and shall have a term not to exceed five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory
Stock Option, as the Board or Committee may designate at the time of the grant
of the original Option, provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive Stock
Options described in subparagraph 12(d) of the Plan and in Section 422(d) of the
Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load
Option shall be subject to the availability of sufficient shares under
subparagraph 4(a) and shall be subject to such other terms and conditions as the
Board or Committee may determine.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement. Notwithstanding the foregoing, the
Board or the Committee may determine that eligible participants in the Plan may
be awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted
stock purchase agreement shall be assignable by any participant under the Plan,
either voluntarily or by operation of law, except where such assignment is
required by law or expressly authorized by the terms of the applicable stock
bonus or restricted stock purchase agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to
a stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be
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acceptable to the Board or the Committee in their discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.
8. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights to
Employees or Directors of or Consultants to, the Company or its Affiliates under
the Plan. Each such right shall entitle the holder to a distribution based on
the appreciation in the Fair Market Value per share of a designated amount of
stock.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(i) TANDEM STOCK APPRECIATION RIGHTS. Tandem Rights will be
granted appurtenant to an Option and will require the holder to elect between
the exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution equal to the
excess of (A) the Fair Market Value (on the date of Option surrender) of vested
shares of stock purchasable under the surrendered Option over (B) the aggregate
exercise price payable for such shares.
(ii) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights
will be granted appurtenant to an Option and may apply to all or any portion of
the shares of stock subject to the underlying Option and will be exercised
automatically at the same time the Option is exercised for those shares. The
appreciation distribution to which the holder of such concurrent right shall be
entitled upon exercise of the underlying Option shall be in an amount equal to
the excess of (A) the aggregate Fair Market Value (at date of exercise) of the
vested shares purchased under the underlying Option with such concurrent rights
over (B) the aggregate exercise price paid for those shares.
(iii) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights
may be granted independently of any Option and will entitle the holder upon
exercise to an
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appreciation distribution equal in amount to the excess of (A) the aggregate
Fair Market Value (at the date of exercise) of a number of shares of stock equal
to the number of vested share equivalents exercised at such time (as described
in subsection 7(c)(iii)(B)) over (B) the aggregate Fair Market Value of such
number of shares of stock at the date of grant.
(c) The terms and conditions applicable to each Tandem Right,
Concurrent Right and Independent Right shall be as follows:
(i) TANDEM RIGHTS.
(A) Tandem Rights may be tied to either Incentive Stock
Options or Nonstatutory Stock Options. Each such right shall, except as
specifically set forth below, be subject to the same terms and conditions
applicable to the particular Option to which it pertains. If Tandem Rights are
granted appurtenant to an Incentive Stock Option, they shall satisfy any
applicable Treasury Regulations so as not to disqualify such Option as an
Incentive Stock Option under the Code.
(B) The appreciation distribution payable on the exercised
Tandem Right shall be in cash in an amount equal to the excess of (I) the Fair
Market Value (on the date of the Option surrender) of the number of shares of
stock covered by that portion of the surrendered Option in which the optionee is
vested over (II) the aggregate exercise price payable for such vested shares.
(ii) CONCURRENT RIGHTS.
(A) Concurrent Rights may be tied to any or all of the
shares of stock subject to any Incentive Stock Option or Nonstatutory Stock
Option grant made under the Plan. A Concurrent Right shall, except as
specifically set forth below, be subject to the same terms and conditions
applicable to the particular Option grant to which it pertains.
(B) A Concurrent Right shall be automatically exercised at
the same time the underlying Option is exercised with respect to the particular
shares of stock to which the Concurrent Right pertains.
(C) The appreciation distribution payable on an exercised
Concurrent Right shall be in cash in an amount equal to such portion as shall be
determined by the Board or the Committee at the time of the grant of the excess
of (I) the aggregate Fair Market Value (on the Exercise Date) of the vested
shares of stock purchased under the underlying Option which have Concurrent
Rights appurtenant to them over (II) the aggregate exercise price paid for such
shares.
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(iii) INDEPENDENT RIGHTS.
(A) Independent Rights shall, except as specifically set
forth below, be subject to the same terms and conditions applicable to
Nonstatutory Stock Options as set forth in Section 6. They shall be denominated
in share equivalents.
(B) The appreciation distribution payable on the exercised
Independent Right shall be in an amount equal to the excess of (I) the aggregate
Fair Market Value (on the date of the exercise of the Independent Right) of a
number of shares of Company stock equal to the number of share equivalents in
which the holder is vested under such Independent right, and with respect to
which the holder is exercising the Independent Right on such date, over (II) the
aggregate Fair Market Value (on the date of the grant of the Independent Right)
of such number of shares of Company stock.
(C) The appreciation distribution payable on the exercised
Independent Right may be paid, in the discretion of the Board or the Committee,
in cash, in shares of stock or in a combination of cash and stock. Any shares
of stock so distributed shall be valued at Fair Market Value on the date the
Independent Right is exercised.
(iv) TERMS APPLICABLE TO TANDEM RIGHTS, CONCURRENT RIGHTS AND
INDEPENDENT RIGHTS.
(A) To exercise any outstanding Tandem, Concurrent or
Independent Right, the holder must provide written notice of exercise to the
Company in compliance with the provisions of the instrument evidencing such
right.
(B) If a Tandem, Concurrent, or Independent Right is
granted to an individual who is at the time subject to Section 16(b) of the
Exchange Act (a "Section 16(b) Insider"), then the instrument of grant shall
incorporate all the terms and conditions at the time necessary to assure that
the subsequent exercise of such right shall qualify for the safe-harbor
exemption from short-swing profit liability provided by Rule 16b-3 promulgated
under the Exchange Act (or any successor rule or regulation).
(C) No limitation shall exist on the aggregate amount of
cash payments the Company may make under the Plan in connection with the
exercise of Tandem, Concurrent or Independent Rights.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the consent
of any adversely affected holders of Options and/or Stock Appreciation Rights,
the cancellation of any outstanding Options and/or any Stock Appreciation Rights
under the Plan and the grant in substitution therefor of new Options and/or
Stock Appreciation Rights under the Plan covering the same or different numbers
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of shares of stock, but having an exercise price per share not less than:
eighty-five percent (85%) of the Fair Market Value for a Nonstatutory Stock
Option, one hundred percent (100%) of the Fair Market Value in the case of an
Incentive Stock Option or, in the case of an Incentive Stock Option held by a
10% stockholder (as described in subsection 5(c)), not less than one hundred ten
percent (110%) of the Fair Market Value per share of stock on the new grant
date. Notwithstanding the foregoing, the Board or the Committee may grant an
Option and/or Stock Appreciation Right with an exercise price lower than that
set forth above if such Option and/or Stock Appreciation Right is granted as
part of a transaction to which section 424(a) of the Code applies.
(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the maximum award of
Options and Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(d) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original and
the substituted Options and Stock Appreciation Rights shall be counted against
the maximum awards of Options and Stock Appreciation Rights permitted to be
granted pursuant to subsection 5(d) of the Plan. The provisions of this
subsection 9(b) shall be applicable only to the extent required by Section
162(m) of the Code.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards up to the number of shares of stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock under the Stock Awards; provided, however, that
this undertaking shall not require the Company to register under the Securities
Act either the Plan, any Stock Award or any stock issued or issuable pursuant to
any such Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel
for the Company deems necessary for the lawful issuance and sale of stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell stock under such Stock Awards unless and until such authority is
obtained.
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
13.
<PAGE>
12. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant,
Optionee, or other holder of Stock Awards any right to continue in the employ of
the Company or any Affiliate (or to continue acting as a Director or Consultant)
or shall affect the right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant of any Employee,
Director, Consultant or Optionee with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
13. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan and outstanding Stock Awards will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards. The conversion of any convertible
securities of the Company shall not be treated as a transaction "without the
receipt of consideration by the Company."
(b) In the event of a Change in Control not approved by the Board,
each outstanding Option under the Plan shall become fully vested, and the
Company's right of repurchase shall lapse with respect to shares received
upon exercise of an Option prior to full vesting, notwithstanding the terms
of the Option or any early exercise stock purchase agreement, immediately
prior to the consummation of such Change in Control.
14.
<PAGE>
In addition, following the consummation of a Change in Control, to the
extent permitted by applicable law: (i) any surviving corporation or a parent
of such surviving corporation shall assume any Options outstanding under the
Plan or shall substitute similar Options for those outstanding under the Plan or
(ii) such Options shall continue in full force and effect, unless (iii) the
surviving corporation or parent of the surviving corporation refuses to assume
or continue any Options outstanding under the Plan, or to substitute similar
options for those outstanding under the Plan. If the surviving corporation or
parent of the surviving corporation refuses to assume or continue any Options
outstanding under the Plan, or to substitute similar options for those
outstanding under the Plan, then the time during which any outstanding Options
may be exercised shall be accelerated, the Optionees shall be given reasonable
opportunity to exercise such Options prior to the consummation of the Change in
Control, and such Options shall be terminated if not exercised prior to the
consummation of the Change in Control.
For purposes of this Plan, "Change in Control" means: (i) a sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, greater stock
voting power); (iii) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a reverse
merger in which stockholders immediately before the merger have, immediately
after the merger, greater stock voting power); or (iv) any transaction or series
of related transactions in which in excess of 50% of the Company's voting power
is transferred.
14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan
and, subject to (c) below, outstanding Stock Awards. However, except as
provided in Section 13 relating to adjustments upon changes in stock, no
amendment shall be effective unless approved by the stockholders of the Company
to the extent stockholder approval is necessary for the Plan to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(c) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
15.
<PAGE>
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the Stock Award was
granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercisable unless and until the
Plan has been approved by the stockholders of the Company.
16.
<PAGE>
CV THERAPEUTICS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS ON SEPTEMBER 23, 1996
APPROVED BY SHAREHOLDERS ON , 1996
----------------
1. PURPOSE.
(a) The purpose of the Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of CV Therapeutics, Inc.
(the "Company") who is not otherwise an employee of or consultant to the Company
or of any Affiliate of the Company (each such person being hereafter referred to
as a "Non-Employee Director") will be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
1.
<PAGE>
(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate two hundred fifty thousand (250,000)
shares of the Company's common stock (after taking into account the 1:10 reverse
split adopted by the Board in September 1996). If any option granted under the
Plan shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who is a Non-Employee Director on the date this amendment
and restatement of the Plan is adopted by the Board automatically shall be
granted an option to purchase fifteen thousand (15,000) shares of the Company's
common stock (after taking into
2.
<PAGE>
account the 1:10 reverse split adopted by the Board in September 1996) on the
terms and conditions set forth herein.
(b) Each person who is, after the date this amendment and restatement of
the Plan is adopted by the Board, elected for the first time to be a Non-
Employee Director automatically shall, upon the date of such person's initial
election to be a Non-Employee Director by the Board or stockholders of the
Company, be granted an option to purchase fifteen thousand (15,000) shares of
the Company's common stock (after taking into account the 1:10 reverse split
adopted by the Board in September 1996) on the terms and conditions set forth
herein.
(c) At each annual meeting of the shareholders following the effectiveness
of the initial public offering of the Company's common stock, each person then
serving as a Non-Employee Director automatically shall be granted an option to
purchase five thousand (5,000) shares of the Company's common stock (after
taking into account the 1:10 reverse split adopted by the Board in September
1996) on the terms and conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") ten (10) years from the date of grant. If the optionee's service as a
Director of the Company terminates for any reason or for no reason, the option
shall terminate on the earlier of the Expiration Date or the date three
(3) months following the date of termination of service; PROVIDED, HOWEVER, that
if such termination of service is due to the optionee's death, the option shall
terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee's death. In any and all circumstances, an
option may be exercised following termination of the optionee's service
3.
<PAGE>
as a Non-Employee Director of the Company only as to that number of shares as to
which it was exercisable on the date of termination of such service under the
provisions of subparagraph 6(e).
(b) Subject to subparagraph 4(b), the exercise price of each option shall
be the fair market value of the stock subject to such option on the date such
option is granted.
(c) Payment of the exercise price of each option is due in full in cash
upon any exercise when the number of shares being purchased upon such exercise
is less than 1,000 shares; but when the number of shares being purchased upon an
exercise is 1,000 or more shares, the optionee may elect to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash at the time of
exercise; or
(ii) Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of shares of common stock of the Company already owned by
the optionee, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interest, which common stock shall be valued at its fair market
value on the date preceding the date of exercise; or
(iii) Payment by a combination of the methods of payment specified
in subparagraph 6(c)(i) and 6(c)(ii) above.
Notwithstanding the foregoing, this option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which results in the receipt of cash (or check) by the Company prior to the
issuance of shares of the Company's common stock.
4.
<PAGE>
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by such person's
guardian or legal representative. The person to whom the Option is granted may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionee,
shall thereafter be entitled to exercise the Option.
(e) Each option shall become exercisable as follows: the initial grants
described in Sections 5(a) and 5(b) shall become exercisable ("vest") as to
thirty-three and thirty-three one hundredths percent (33.33%) twelve (12) months
from the date of grant and then at the rate of two and seventy-seven one
hundreths percent (2.77%) per month over the next twenty-four (24) months; and
the annual grants described in Section 5(c) shall be fully vested twelve (12)
months from the date of grant; provided that the optionee has, during the entire
period prior to such vesting date, continuously served as a Non-Employee
Director or as an employee of or consultant to the Company or any Affiliate of
the Company, whereupon such option shall become fully exercisable in accordance
with its terms with respect to that portion of the shares represented by that
installment.
(f) The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 6(d), as a condition of exercising any such
option: (i) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if
5.
<PAGE>
(i) the issuance of the shares upon the exercise of the option has been
registered under a then-currently-effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), or (ii), as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then-applicable
securities laws.
(g) Notwithstanding anything to the contrary contained herein, an option
may not be exercised unless the shares issuable upon exercise of such option are
then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
(h) The Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that any optionee
not sell or otherwise transfer or dispose of any shares of common stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the
Company filed under the Securities Act as may be requested by the Company or the
representative of the underwriters.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of
6.
<PAGE>
stock upon exercise of the options granted under the Plan; PROVIDED, HOWEVER,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any option granted under the Plan, or any stock
issued or issuable pursuant to any such option. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any Non-
Employee Director with or without cause.
(c) No Non-Employee Director, individually or as a member of a group, and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest
7.
<PAGE>
in or to any option reserved for the purposes of the Plan except as to such
shares of common stock, if any, as shall have been reserved for him pursuant to
an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall be
a condition precedent to the Company's obligation to issue or transfer shares to
a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.
(e) As used in this Plan, fair market value means, as of any date, the
value of the common stock of the Company determined as follows:
(i) If the common stock of the Company is listed on any established
stock exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of common stock of the Company shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in common stock of the Company) on the last
market trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board deems reliable;
(ii) In the absence of such markets for the common stock of the
Company, the Fair Market Value shall be determined in good faith by the Board.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock
8.
<PAGE>
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan and outstanding options will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan and
the class(es) and number of shares and price per share of stock subject to
outstanding options.
(b) In the event of: (1) a merger or consolidation in which the Company
is not the surviving corporation; (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (3) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged, any
surviving corporation, other than the Company, shall assume any options
outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan or, if the Company is the surviving corporation, such
options shall continue in full force and effect.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will increase the number of shares which may be
issued under the Plan.
9.
<PAGE>
(b) Rights and obligations under any option granted before any amendment
of the Plan shall not be altered or impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten years from the date the Board
approves this amendment and restatement of the Plan. No options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) This amendment and restatement of the Plan shall become effective upon
adoption by the Board of Directors, subject to the condition subsequent that
this amendment and restatement of the Plan is approved by the stockholders of
the Company. Following the effective date of this amendment and restatement,
options shall not be granted under the terms of the Plan in effect prior to such
effective date.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
10.
<PAGE>
INCENTIVE STOCK OPTION
[ ], OPTIONEE:
-------------------
CV THERAPEUTICS, INC. (the "Company"), pursuant to its 1994 Equity
Incentive Plan (the "Plan") has this day granted to you, the optionee named
above, an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers).
Definition of terms:
Number of Option Shares:
Exercise Price per Share:
Vesting Start Date:
Option Grant Date:
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
equal to the Option Shares. Subject to the provisions contained herein, this
option shall be vested and exercisable on the following vesting schedule:
[varies]. In any event, this option will be fully vested in the event of a
Change in Control described in the Plan.
On all exercises, fractions of shares shall be rounded to the lowest
number.
2. (a) The exercise price of this option is equal to the Exercise Price
Per Share, being not less than the fair market value of the Common Stock on
Option Grant Date.
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:
1.
<PAGE>
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise;
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance of Common Stock.
3. (a) Subject to the provisions of this option you may elect at any
time during your Continuous Status as an Employee, Director or Consultant (as
defined in the Plan), to exercise the option as to any part or all of the shares
subject to this option at any time during the term hereof, including without
limitation, a time prior to the date of earliest exercise ("vesting") stated in
paragraph 1 hereof; PROVIDED, HOWEVER, that:
(i) a partial exercise of this option shall be deemed to
cover first vested shares and then the earliest vesting installment of unvested
shares;
(ii) any shares so purchased from installments which have
not vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Early Exercise Stock Purchase Agreement
prescribed by the Company;
(iii) you shall enter into an Early Exercise Stock Purchase
Agreement in the form prescribed by the Company with a vesting schedule that
will result in the same vesting as if no early exercise had occurred; and
(iv) this option shall not be exercisable under this
paragraph 3 to the extent such exercise would cause the aggregate fair market
value of any shares subject to incentive stock options granted you by the
Company or any affiliate (valued as of their grant date) which would become
exercisable for the first time during any calendar year to exceed $100,000.
(b) The election provided in this paragraph 3 to purchase shares upon
the exercise of this option prior to the vesting dates shall cease upon
termination of your Continuous Status as an Employee, Director or Consultant and
may not be exercised after the date thereof.
4. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
5. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Securities Act of 1933 (the "Act") or, if such shares
are not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Act.
6. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on [___________]
(which date
2.
<PAGE>
shall be no more than ten (10) years from the Option Grant Date). In no event
may this option be exercised on or after the date on which it terminates. This
option shall terminate prior to the expiration of its term as follows: three
(3) months after the termination of your Continuous Status as an Employee,
Director or Consultant for any reason or for no reason unless:
(a) such termination of Continuous Status as an Employee, Director or
Consultant is due to your permanent and total disability (within the meaning of
Section 422(c)(6) of the Code), in which event the option shall terminate on the
earlier of the termination date set forth above or twelve (12) months following
such termination; or
(b) such termination of Continuous Status as an Employee, Director or
Consultant is due to your death, in which event the option shall terminate on
the earlier of the termination date set forth above or eighteen (18) months
after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of Continuous Status as an
Employee, Director or Consultant.
However, this option may be exercised following termination of employment
only as to that number of shares as to which it was vested on the date of such
termination under the provisions of paragraph 1 of this option.
7. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise;
(ii) you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of this option that occurs within two (2) years after
the date of this option grant or
3.
<PAGE>
within one (1) year after such shares of Common Stock are transferred upon
exercise of this option; and
(iii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. For purposes of this restriction you
will be deemed to own securities which (i) are owned directly or indirectly by
you, including securities held for your benefit by nominees, custodians, brokers
or pledgees; (ii) may be acquired by you within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for your brothers or sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which you are a shareholder, partner or beneficiary, but only
to the extent of your proportionate interest therein as a shareholder, partner
or beneficiary thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you. By
delivering written notice to the Company, in a form satisfactory to the Company,
you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise this option.
9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.
10. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of the Plan relating to
option provisions, and is further subject to all interpretations, amendments,
rules and regulations which may from time to time be promulgated and adopted
4.
<PAGE>
pursuant to the Plan. In the event of any conflict between the provisions of
this option and those of the Plan, the provisions of the Plan shall control.
Dated the Option Grant Date.
Very truly yours,
CV THERAPEUTICS, INC.
By
-------------------------
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1994 Equity Incentive Plan
Notice of Exercise
Early Exercise Stock Purchase Agreement
5.
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE
---------------
(Initial)
OTHER
-----------------------------------
-----------------------------------
-----------------------------------
---------------------------------------------
[ [, OPTIONEE
--------------
Address:
-----------------------------------
-----------------------------------
6.
<PAGE>
NONSTATUTORY STOCK OPTION
[ ], OPTIONEE:
CV THERAPEUTIC, INC. (the "Company"), pursuant to its 1994 Equity Incentive
Plan (the "Plan") has this day granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is not intended to qualify and will not be treated as an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants.
Definition of terms:
Number of Option Shares:
Exercise Price per Share:
Vesting Start Date:
Option Grant Date:
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
equal to the Option Shares. Subject to the limitations contained herein, this
option shall be vested and exercisable on the following vesting schedule:
[varies]. In any event, this option shall be fully vested in the event of a
Change in Control described in the Plan.
2. (a) The exercise price of this option is equal to the Exercise Price
Per Share, being not less than 85% of the fair market value of the Common Stock
on the Option Grant Date.
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:
1.
<PAGE>
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise;
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance of Common Stock;
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment
permitted by subparagraph 2(b)(i) through 2(b)(iii) above.
3. (a) Subject to the provisions of this option you may elect at any
time during your Continuous Status as an Employee, Director or Consultant with
the Company or an affiliate thereof, to exercise the option as to any part or
all of the shares subject to this option at any time during the term hereof,
including without limitation, a time prior to the date of earliest exercise
("vesting") stated in paragraph 1 hereof; PROVIDED, HOWEVER, that:
(i) a partial exercise of this option shall be deemed to
cover first vested shares and then the earliest vesting installment of unvested
shares;
(ii) any shares so purchased from installments which have
not vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Early Exercise Stock Purchase Agreement
prescribed by the Company; and
(iii) you shall enter into an Early Exercise Stock Purchase
Agreement prescribed by the Company with a vesting schedule that will result in
the same vesting as if no early exercise had occurred.
(b) The election provided in this paragraph 3 to purchase shares upon
the exercise of this option prior to the vesting dates shall cease upon
termination of your employment with the Company or an affiliate thereof and may
not be exercised after the date thereof.
4. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
5. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the
2.
<PAGE>
Securities Act of 1933 (the "Act") or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
6. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on [ ],
(which date shall be no more than ten (10) years from the Option Grant Date).
In no event may this option be exercised on or after the date on which it
terminates. This option shall terminate prior to the expiration of its term as
follows: three (3) months after the termination of your Continuous Status as an
Employee, Director or Consultant for any reason or for no reason unless:
(a) such termination of Continuous Status as an Employee, Director or
Consultant is due to your permanent and total disability (within the meaning of
Section 422(c)(6) of the Code), in which event the option shall terminate on
the earlier of the termination date set forth above or twelve (12) months
following such termination of Continuous Status as an Employee, Director or
Consultant.
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of Continuous Status as an
Employee, Director or Consultant.
However, this option may be exercised following termination of employment
only as to that number of shares as to which it was vested and exercisable on
the date of such termination of Continuous Status as an Employee, Director or
Consultant under the provisions of paragraph 1 of this option.
7. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
6(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an
arrangement providing for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of: (1) the exercise of
this option; (2) the lapse of any substantial
3.
<PAGE>
risk of forfeiture to which the shares are subject at the time of exercise; or
(3) the disposition of shares acquired upon such exercise; and
(ii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. For purposes of this restriction you
will be deemed to own securities which (i) are owned directly or indirectly by
you, including securities held for your benefit by nominees, custodians, brokers
or pledgees; (ii) may be acquired by you within sixty (60) days of the Effective
Date; (iii) are owned directly or indirectly, by or for your brothers or sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; or
(iv) are owned, directly or indirectly, by or for a corporation, partnership,
estate or trust of which you are a shareholder, partner or beneficiary, but only
to the extent of your proportionate interest therein as a shareholder, partner
or beneficiary thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
8. This option is not transferable, except by will or by the laws of
descent and distribution [or pursuant to a domestic relations order], and is
exercisable during your life only by you [or a transferee pursuant to the
domestic relations order]. By delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to exercise this option.
9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company. In the event that this option is granted to you in
connection with the performance of services as a consultant or director,
references to employment, employee and similar terms shall be deemed to include
the performance of services as a consultant or a director, as the case may be,
PROVIDED, HOWEVER, that no rights as an employee shall arise by reason of the
use of such terms.
10. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated
4.
<PAGE>
and adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the Option Grant Date.
Very truly yours,
CV THERAPEUTICS, INC.
By
------------------------------
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1994 Equity Incentive Plan
Notice of Exercise
Early Exercise Stock Purchase Agreement
5.
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE
-----------------
(Initial)
OTHER
-------------------------------
-------------------------------
-------------------------------
------------------------------------
[ ], OPTIONEE
---------------------
Address:
--------------------------
--------------------------
6.
<PAGE>
CV THERAPEUTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
Adopted September 23, 1996
Approved by the Stockholders on _____________, 1996
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of CV Therapeutics, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
1.
<PAGE>
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate one hundred fifty thousand
(150,000) shares of the Company's common stock (the "Common Stock") (after
taking into account the 1:10 reverse split adopted by the Board in September
1996). If any right granted under the Plan shall for any reason terminate
without having been exercised, the Common Stock not purchased under such right
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all employees granted rights to purchase
stock under the Plan shall
2.
<PAGE>
have the same rights and privileges. The terms and conditions of an Offering
shall be incorporated by reference into the Plan and treated as part of the
Plan. The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of this Plan by
reference in the document comprising the Offering or otherwise) the period
during which the Offering shall be effective, which period shall not exceed
twenty-seven (27) months beginning with the Offering Date, and the substance of
the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
3.
<PAGE>
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of
this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined by the Board for each Offering) during the
period which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under
4.
<PAGE>
the Offering would exceed any such maximum aggregate number, the Board or the
Committee shall make a pro rata allocation of the shares available in as nearly
a uniform manner as shall be practicable and as it shall deem to be equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings (as defined
by the Board for each Offering) during the Offering. The payroll deductions
made for each participant shall be credited to an account for such participant
under the Plan and shall be deposited with the general funds of the Company. A
participant may reduce (including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in
the Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated
5.
<PAGE>
employee all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such compliance,
no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if
any, such deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
6.
<PAGE>
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights hereunder are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange
7.
<PAGE>
Act of 1934, as amended (the "Exchange Act") or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,
or comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors, then, as determined by the Board in its sole discretion
(i) any surviving or acquiring corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated payroll
deductions may be used to purchase Common Stock immediately prior to the
transaction described above and the participants' rights under the ongoing
Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule
16b-3")); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee
stock purchase plan treatment under Section 423 of the Code or to comply
with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or rights granted under the Plan comply
with the requirements of Section 423 of the Code.
8.
<PAGE>
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is suspended
or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the same day that the Company's initial
public offering of shares of common stock becomes effective (the "Effective
Date"), but no rights granted under the Plan shall be exercised unless and until
the Plan has been approved by the stockholders of the Company within twelve (12)
months before or after the date the Plan is adopted by the Board or the
Committee, which date may be prior to the Effective Date.
<PAGE>
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this......day of.........., 1996 by
and between CV Therapeutics, Inc., a Delaware corporation (the "Corporation"),
and..............("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in his/her
capacity as.................of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as................of
the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as............
after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists,
as............of the Corporation or as a director, officer or other fiduciary of
an affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; PROVIDED,
HOWEVER, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent may have assumed apart from
this Agreement) and that the Corporation or any affiliate shall have no
obligation under this Agreement to continue Agent in any such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such
1.
<PAGE>
amendment permits the Corporation to provide broader indemnification rights than
the Bylaws or the Code permitted prior to adoption of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees), witness
fees, damages, judgments, fines and amounts paid in settlement and any other
amounts that Agent becomes legally obligated to pay because of any claim or
claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Agent by
the Corporation under the non-exclusivity provisions of the Code and Section 43
of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Corporation
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
(b) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;
(e) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
2.
<PAGE>
(f) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the Corporation, (iii) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the Code, or (iv) the proceeding is initiated pursuant to
Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this Agreement
to indemnification by the Corporation for a portion of the expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay in
connection with any action, suit or proceeding referred to in Section 3 hereof
even if not entitled hereunder to indemnification for the total amount thereof,
and the Corporation shall indemnify Agent for the portion thereof to which Agent
is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless
(i) the employment of counsel by Agent has been authorized by the Corporation,
(ii) Agent shall
3.
<PAGE>
have reasonably concluded that there may be a conflict of interest between the
Corporation and Agent in the conduct of the defense of such action or (iii) the
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which cases the fees and expenses of Agent's separate
counsel shall be at the expense of the Corporation. The Corporation shall not
be entitled to assume the defense of any action, suit or proceeding brought by
or on behalf of the Corporation or as to which Agent shall have made the
conclusion provided for in clause (ii) above; and
(c) the Corporation shall not be liable to indemnify Agent under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent, which shall not be unreasonably withheld. The
Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Agent shall be enforceable by or on behalf of Agent in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. Agent, in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the expense of
prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of
Directors or its stockholders) to have made a determination prior to the
commencement of such enforcement action that indemnification of Agent is proper
in the circumstances, nor an actual determination by the Corporation (including
its Board of Directors or its stockholders) that such indemnification is
improper shall be a defense to the action or create a presumption that Agent is
not entitled to indemnification under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote
4.
<PAGE>
of stockholders or directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office.
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of the
Corporation or to serve at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and shall inure to the
benefit of Agent's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute but one and the same Agreement. Only
one such counterpart need be produced to evidence the existence of this
Agreement.
17. HEADINGS. The headings of the sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given
(i) upon delivery if delivered by hand to the party to whom such communication
was directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
5.
<PAGE>
(a) If to Agent, at the address indicated on the signature page
hereof.
(b) If to the Corporation, to
CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
or to such other address as may have been furnished to Agent by the Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
[NAME]
By:
-------------------------------------
Title:
----------------------------------
AGENT
----------------------------------------
Address:
----------------------------------------
----------------------------------------
6.
<PAGE>
CV THERAPEUTICS, INC.
------------------------
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
------------------------
May 29, 1996
<PAGE>
CV THERAPEUTICS, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1 - AMENDMENT AND RESTATEMENT........................................ 1
1.1 Amendment and Restatement...................................... 1
SECTION 2 - DEFINITIONS...................................................... 2
2.1 "Commission"................................................... 2
2.2 "Exchange Act"................................................. 2
2.3 "Holder"....................................................... 2
2.4 "Initiating Holders"........................................... 2
2.5 "register," "registered" and "registration".................... 2
2.6 "Registrable Securities"....................................... 2
2.7 "Securities Act" .............................................. 2
2.8 "Shares" ...................................................... 2
SECTION 3 - REGISTRATION RIGHTS.............................................. 3
3.1 Demand Registration............................................ 3
3.2 Company Registration........................................... 5
3.3 Expenses of Registration....................................... 6
3.4 Registration Procedures........................................ 7
3.5 Indemnification................................................ 8
3.6 Information by Holder.......................................... 9
3.7 Rule 144 Reporting............................................. 9
3.8 Stand-Still Agreement.......................................... 10
3.9 Form S-3....................................................... 10
3.10 Transfer of Registration Rights................................ 11
3.11 Termination of Registration Rights............................. 11
SECTION 4 - COVENANTS........................................................ 11
4.1 Basic Financial Information.................................... 12
4.2 Inspection..................................................... 12
4.3 Reservation of Common Stock.................................... 13
4.4 Sales of Stock to Employees.................................... 13
SECTION 5 - RIGHT OF FIRST REFUSAL........................................... 13
5.1 Right of First Refusal......................................... 13
5.2 New Securities................................................. 13
5.3 Required Notices............................................... 14
5.4 Company's Right to Sell........................................ 14
i
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
5.5 Expiration of Right of First Refusal........................... 14
5.6 Assignment..................................................... 14
SECTION 6 - MISCELLANEOUS.................................................... 15
6.1 Governing Law.................................................. 15
6.2 Successors and Assigns......................................... 15
6.3 Entire Agreement............................................... 15
6.4 Notices........................................................ 15
6.5 Delays or Omissions............................................ 15
6.6 Counterparts................................................... 16
6.7 Severability................................................... 16
6.8 Amendments..................................................... 16
6.9 Titles and Subtitles........................................... 16
INDEX OF EXHIBITS
Exhibit A Schedule of Investors
Exhibit B Schedule of Founders
Exhibit C Schedule of Purchasers
ii
<PAGE>
CV THERAPEUTICS, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is
entered into as of May 29, 1996, by and among CV THERAPEUTICS, INC., a Delaware
corporation (the "Company"), with its principal place of business at 3172 Porter
Drive, Palo Alto, California 94304, the current investors of the Company listed
on EXHIBIT A attached hereto (the "Current Investors"), the founders listed on
EXHIBIT B attached hereto (the "Founders") and the purchasers of Series G
Preferred Stock of the Company who are signatories to this Agreement (the
"Purchasers") as set forth in EXHIBIT C attached hereto. The Current Investors
and Purchasers are hereafter referred to as the "Investors."
RECITALS
WHEREAS, the Company has entered into an Investor Rights Agreement dated
October 2, 1992, as amended April 9, 1993, and as further amended on each of
July 30, 1993, March 23, 1994, September 8, 1995, and March 29, 1996 (the
"Original Agreement"), with the Founders and the Current Investors;
WHEREAS, in connection with the Company's issuance of Series G Preferred
Stock (the "Series G Preferred") pursuant to the Amended and Restated Series G
Preferred Stock and Common Stock Warrant Purchase Agreement dated May 29, 1996
(the "Series G Purchase Agreement") by and among the Company and the Purchasers,
dated this date, the Company wishes to amend the Original Agreement and grant to
the Purchasers the registration, information and other rights set forth in this
Agreement; and
WHEREAS, the Company, the Current Investors and the Founders desire to
consolidate the rights granted under the Original Agreement with those granted
hereunder.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth in this Agreement and in the
agreements pursuant to which the Investors acquired their securities in the
Company, the parties mutually agree as follows:
SECTION 1
AMENDMENT AND RESTATEMENT
1.1 AMENDMENT AND RESTATEMENT. Effective upon the first closing of the
sale and issuance of the Series G Preferred pursuant to the Series G Purchase
Agreement, all provisions of, rights granted and covenants made in the Original
Agreement, and any other agreement between the Company, the Current Investors
and the Founders, are hereby waived, released and terminated in their entirety
and shall have no further force or effect whatsoever. The rights and
1
<PAGE>
covenants of this Agreement set forth the sole and entire agreement among the
Company, the Investors and the Founders on the subject matter and supersede any
and all rights granted or covenants made under any prior agreement.
SECTION 2
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
2.1 "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
2.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
2.3 "HOLDER" shall mean (a) any Investor holding or having the right to
acquire Registrable Securities, and (b) any other person holding or having the
rights to acquire Registrable Securities to whom registration rights have been
transferred pursuant to Section 3.10 of this Agreement.
2.4 "INITIATING HOLDERS" shall mean any Holder or Holders of not less
than fifty percent (50%) of the then outstanding Registrable Securities.
2.5 The terms "REGISTER," "REGISTERED" AND "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
2.6 "REGISTRABLE SECURITIES" means shares of the Company's Common Stock
(a) issued or issuable pursuant to the conversion of the Shares, or (b) issued
as (or issuable upon the conversion or exercise of any warrant, right, or any
other security issued as) a dividend or other distribution with respect to, or
in exchange or in replacement of, the Shares or such Common Stock.
2.7 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
2.8 "SHARES" shall mean (i) the Series A Preferred Stock issued pursuant
to the Series A Preferred Stock Purchase Agreement dated October 2, 1992; (ii)
the Series A Preferred Stock issued or issuable pursuant to the Series A
Preferred Stock Purchase Warrants dated October 2, 1992; (iii) the Series B
Preferred Stock issued or issuable pursuant to the Series B Warrant dated
April 8, 1992; (iv) the Series C Preferred Stock issued pursuant to the Series C
Preferred Stock Purchase Agreement dated July 22, 1993; (v) the Series D
Preferred Stock issued pursuant to
2
<PAGE>
the Series D Preferred Stock Purchase Agreement dated March 23, 1994; (vi) the
Series D Preferred Stock issued or issuable pursuant to the Series D Warrants
issued to Alex. Brown & Sons Incorporated dated March 23, 1994 and April 24,
1994; (vii) the Series E Preferred Stock issued pursuant to the Series E
Preferred Stock Agreement dated September 8, 1995; (viii) the Series E Preferred
Stock issued or issuable pursuant to the Series E Warrants dated September 8,
1995, November 8, 1995, December 21, 1995 and March 27, 1996; (ix) the Series G
Preferred Stock issued pursuant to the Series G Purchase Agreement; and (x) the
Common Stock issued or issuable pursuant to the Common Stock Warrants issued to
the Purchasers pursuant to the Series G Purchase Agreement.
SECTION 3
REGISTRATION RIGHTS
The Company hereby grants each of the Holders the registration rights set
forth in this Section 3, with respect to the Registrable Securities owned by
such Holders:
3.1 DEMAND REGISTRATION.
(a) DEMAND FOR REGISTRATION. If the Company shall receive from
Initiating Holders a written demand that the Company effect any registration
(other than a registration on Form S-3 or any related form of registration
statement, such a demand being provided for under Section 3.9 hereof) with
respect to Registrable Securities where the aggregate offering price to the
public would be at least five million dollars (US$5,000,000), the Company shall:
(i) promptly (but in any event within ten (10) days) give
written notice of the demand for registration to all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
demanded and as would permit or facilitate the sale and distribution of all or
such portion of such Initiating Holders' Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities
of any Holder or Holders joining in such request as are specified in a written
request received by the Company within twenty (20) days after notice is given
pursuant to Section 3.1(a)(i); provided that the Company shall not be obligated
to take any action to effect any such registration, qualification or compliance
pursuant to this Section 3.1(a):
(A) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
3
<PAGE>
(B) before the earlier of (1) September 30, 1998 or
(2) one hundred eighty (180) days after the effective date of a registration
statement for the Company's initial registered public offering;
(C) within the one hundred eighty (180) day period
immediately following the effective date of any registration statement
pertaining to an underwritten public offering of securities of the Company for
its own account (other than registration on Form S-4 relating solely to a
Commission Rule 145 transaction, or a registration relating solely to employee
benefit plans);
(D) after the Company has effected two (2)
registrations pursuant to this Section 3.1(a) and such registrations have been
declared or ordered effective; or
(E) if at the time of the request to register
Registrable Securities the Company gives notice to the Initiating Holders within
thirty (30) days of such request that it is engaged in or has fixed plans to
commence within ninety (90) days of the time of the request a firmly
underwritten registered public offering.
Subject to the foregoing clauses (A) through (E) and to Section 3.1(c),
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request of the Initiating Holders.
(b) UNDERWRITING. If the Initiating Holders intend to distribute
the Registrable Securities covered by their demand by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 3.1(a) and the Company shall include such information in the written
notice referred to in Section 3.1(a)(i). In such event, the right of any Holder
to registration pursuant to Section 3.1(a) 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 requested (unless
otherwise mutually agreed by a majority in interest of the Holders and such
Holder) to the extent provided herein.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) 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 this
Section 3.1, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten and so advises the Company
in writing, then the Company shall so advise all Holders (except those Holders
who have indicated to the Company their decision not to distribute any of their
Registrable Securities through such underwriting) and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all such Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities owned by such
Holders (including as owned all shares of Common Stock issuable upon conversion
or exercise of convertible securities and warrants) at the time of filing the
registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
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If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. The Registrable Securities so withdrawn
from such underwriting shall also be withdrawn from such registration; PROVIDED,
HOWEVER, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriter),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities in the same proportion used above in determining the underwriter
limitation.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account or the
account of others in such registration if the underwriter so agrees and if the
number of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited.
(c) DELAY OF REGISTRATION. If the Company shall furnish to the
Initiating Holders a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore essential to defer the filing of such registration
statement, then the Company may direct that such request for registration be
delayed for a period not in excess of one hundred twenty (120) days, such right
to delay a request to be exercised by the Company not more than once in any
one-year period.
3.2 COMPANY REGISTRATION.
(a) COMPANY REGISTRATION. If at any time or from time to time,
the Company shall determine to register any of its Common Stock, for its own
account or for the account of others, other than the Company's initial public
offering, a registration relating solely to employee benefit plans, a Rule 145
transaction, a registration pursuant to Section 3.1 hereof or a registration on
any registration form which does not include substantially the same information
as would be required to be included in a registration statement covering the
sale of Registrable Securities, the Company will:
(i) promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests by any Holder or Holders, received by the Company within twenty (20)
days after such written notice is given, requesting inclusion in such
registration.
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(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3.2(a)(i). In such event, the right of any Holder to
registration pursuant to Section 3.2 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 (together with the Company and the other holders
distributing their securities through such underwriting) 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 this Section 3.2, if the underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may exclude some or all the Registrable Securities from such
registration and underwriting, provided that not less than twenty percent (20%)
(based on aggregate market values) of the securities included in such
registration and underwriting shall be Registrable Securities. The Company
shall so advise all Holders (except those Holders who have indicated to the
Company their decision not to distribute any of their Registrable Securities
through such underwriting), and the number of shares of the Registrable
Securities that may be included in the registration and underwriting shall be
allocated among such Holders in proportion, as nearly as practicable, to the
respective amounts of the Registrable Securities owned by such Holders
(including as owned all shares of Common Stock issuable upon conversion or
exercise of convertible securities and warrants) at the time of filing of the
registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
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. Any Registrable Securities so withdrawn from such underwriting
shall also be withdrawn from such registration; PROVIDED, HOWEVER, that, if by
the withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other Holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriter), then the Company may, at
its discretion, offer to any Holders who have included Registrable Securities in
the registration the right to include additional Registrable Securities.
3.3 EXPENSES OF REGISTRATION. All expenses incurred in connection with
any registration pursuant to Sections 3.1, 3.2 and 3.9 (excluding underwriters'
discounts and commissions) shall be borne by the Company, including without
limitation all registration and qualification fees, printers' and accounting
fees, fees and disbursements of counsel for the Company and reasonable fees and
expenses of a single counsel for the Holders; PROVIDED, HOWEVER, that such fees
and expenses for Holders' counsel shall not exceed $20,000. The Company shall
not, however, be required to pay for expenses of any registration proceeding
begun pursuant to Sections 3.1 or 3.9, the request of which has been
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to have been registered (unless the withdrawal is based
upon material adverse information concerning the Company of which the Holders
were not aware at the time of their request). In each such case, such
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expenses shall be borne by the Holders of Registrable Securities requesting such
registration in proportion to the number of shares for which registration was
requested.
3.4 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 3,
the Company shall, as expeditiously as possible:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its diligent best efforts to
cause such registration statement to become effective and to keep such
registration statement effective for up to one hundred twenty (120) days.
(b) Prepare and file with the Commission 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.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when an amended 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) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Section 2, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 3, if such securities are being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purposes of such registration,
in form and substance as is
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customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities, and (ii) a letter dated such date, from the independent
accountants of the Company, in form and substance as is customarily given by
independent accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
3.5 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of such Holder's
officers, directors, partners and agents, and each person controlling such
Holder, with respect to which registration, qualification or compliance has been
effected pursuant to this Section 3, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened arising out of
or based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other similar document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, or (ii) any violation (or
alleged violation) by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, partners and agents, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement (or alleged untrue statement) or omission (or
alleged omission) based upon written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each legal counsel and independent accountant of the
Company, each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act, and each other such Holder, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected, each of
its directors, officers, and partners and agents and each person controlling
such other Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) including any of the foregoing incurred in
settlement of any litigation commenced or threatened arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other
similar document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance,
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or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances under which they were made, and will reimburse
the Company, its directors, officers, legal counsel, accountants, underwriters,
control persons and such other Holders and each such Holder's directors,
officers, partners, agents and control persons for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, as incurred, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
PROVIDED, HOWEVER, that the obligations of each Holder hereunder shall be
limited to an amount equal to the proceeds received by each such Holder of
Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 3.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The Indemnified Party may participate in such
defense at the Indemnified Party's expense; PROVIDED, HOWEVER, that the
Indemnifying Party shall bear the expense of such defense of the Indemnified
Party if representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest. The failure of
any Indemnified Party to give notice as provided herein shall relieve the
Indemnifying Party of its obligations under this Section 3.5 only to the extent
that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation. 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.
3.6 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 3.
3.7 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
Registrable Securities to the public without registration, after such time as a
public market exists for the Common Stock of the Company, the Company agrees to:
(a) Use its best efforts to facilitate the sale of the Registrable
Securities to the public, without registration under the Securities Act,
pursuant to Rule 144 under the Securities
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Act, provided that this shall not require the Company to file reports under the
Securities Act and the Exchange Act at any time prior to the Company's being
otherwise required to file such reports.
(b) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
ninety (90) days after the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities to the
general public.
(c) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act, as amended.
(d) Furnish to a Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and 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 so filed by the Company as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to sell
Registrable Securities without registration.
3.8 STAND-STILL AGREEMENT. Each Holder hereby agrees that for a period
of not less than ninety (90) days and up to a maximum of one hundred eighty
(180) days following the effective date of the first registration statement of
the Company covering Common Stock (or other securities) to be sold on its behalf
in an underwritten public offering, it shall not, to the extent requested by the
Company and the underwriter(s) of the public offering, sell or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company held by it at any time during such period except
securities included in such registration; PROVIDED, HOWEVER, that all persons
who are officers or directors of the Company on the effective date of such
registration statement and who hold securities of the Company or options to
acquire securities of the Company enter into similar agreements providing for a
"stand-still" period of equal duration.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the securities held by the Holders (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
3.9 FORM S-3. The Company shall use its best efforts to qualify for
registration on Form S-3 (or any comparable or successor form or forms) and to
that end the Company shall register (whether or not required by law to do so)
its Common Stock under the Exchange Act within twelve (12) months following the
effective date of the first registration of any securities of the Company on
Form S-1 or any comparable or successor form or forms. After the Company has
qualified for the use of Form S-3, the Holders of Registrable Securities shall
have, in addition to the rights contained in the foregoing provisions of this
Section 3, the right to request unlimited registrations on Form S-3 (but not
more than one in any twelve (12) month
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period) under this Section 3.9 (requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of such shares by such Holder or Holders); provided that
Holders of at least two percent (2%) of the Registrable Securities request such
registration; and provided further that the Company shall not be required to
effect a registration pursuant to this Section 3.9 if (a) the Holder or Holders
requesting registration propose to dispose of shares of Registrable Securities
which they reasonably anticipate will have an aggregate disposition price (after
deduction of underwriting discounts and commissions) of less than one million
dollars ($1,000,000) or (b) in the event that the conditions set forth in
Section 3.1(c) apply (but subject to the limitations set forth therein).
The Company shall give notice to all Holders of Registrable Securities of
the receipt of a request for registration pursuant to this Section 3.9 and shall
provide a reasonable opportunity for other Holders to participate in the
registration. Subject to the foregoing, the Company will use its best efforts
to effect promptly the registration of all shares of Registrable Securities on
Form S-3, as the case may be, to the extent requested by the Holder or Holders
thereof for purposes of disposition.
3.10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted under Sections 3.1, 3.2 and 3.9 may be assigned or
otherwise conveyed by any Holder to its shareholders, partners or former
partners (or their estates), to the Holder's family members or a trust for the
Holder's or their benefit, to any affiliates of the Holder, or to any transferee
who thereby acquires at least two hundred and fifty thousand (250,000) (as
presently constituted, subject to adjustment for stock dividends, stock splits,
reverse stock splits, etc.) shares of Registrable Securities; provided in each
case, that the Company is given written notice by the transferor at the time of
or within a reasonable time after said transfer, stating the name and address of
said transferee and said transferee's agreement to be bound by the provisions of
this Agreement.
3.11 TERMINATION OF REGISTRATION RIGHTS. All rights provided for in this
Section 3 expire six (6) years after the closing of the Company's initial public
offering. In addition, a Holder's registration rights shall expire if all
Registrable Securities held by and issuable to such Holder may be sold under
Rule 144 during any three-month period.
SECTION 4
COVENANTS
Until such time as the Company shall (a) close its first sale of Common
Stock of the Company to the public pursuant to a registration statement filed
with and declared effective by the Commission under the Securities Act or (b)
first become subject to the periodic reporting requirements of the Exchange Act,
or any successor statute and any applicable rules promulgated thereunder by the
Commission, the Company hereby covenants and agrees as follows:
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4.1 BASIC FINANCIAL INFORMATION.
(a) So long as any Investor or any subsidiary, affiliate or
partner of such Investor shall own any shares of Registrable Securities, to
furnish to such Investor as soon as practicable after the end of each fiscal
year, and in any event within ninety (90) days thereafter, consolidated and
consolidating balance sheets of the Company and its subsidiaries, if any, as at
the end of such fiscal year, and consolidated and consolidating statements of
operations and consolidated and consolidating statements of cash flows of the
Company and its subsidiaries, if any, for such fiscal year, prepared in
accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a report and opinion thereon (except as to
the consolidating balance sheets and statements of operations and cash flows) by
nationally recognized independent certified public accountants selected by the
Company's Board of Directors and by a copy of such accountants' management
letter prepared in connection therewith.
(b) So long as such Investor or any subsidiary, affiliate or
partner of such Investor shall own at least five hundred thousand (500,000)
shares of Registrable Securities (as presently constituted, subject to
adjustment for stock dividends, stock splits, reverse stock splits, etc.), to
furnish, as soon as practicable after the end of each month, but in any event
within thirty (30) days thereafter, the Company's unaudited consolidated and
consolidating balance sheet as of the end of such month and its unaudited
statement of operations and cash flows for such months, all in reasonable
detail, setting forth in each case in comparative form the figures as budgeted
for such month and prepared in accordance with generally accepted accounting
principles and certified by the principal financial or accounting officer of the
Company. For the purposes of this Section 4.1(b), the partners, retired
partners and shareholders of any Investor that is a partnership or corporation,
shall be deemed to be a single Investor for determining whether such five
hundred thousand (500,000) share threshold level has been met and for purposes
of receiving reports hereunder.
(c) The rights granted pursuant to this Section 4.1 may not be
assigned or otherwise conveyed by any Investor or by any subsequent transferee
of any such rights without the written consent of the Company, which consent
shall not be unreasonably withheld; provided that the Company may refuse such
written consent if the proposed transferee is a competitor of the Company; and
provided further, that no such written consent shall be required if the transfer
is in connection with the transfer of Registrable Securities to any partner or
retired partner of any Investor that is a general or limited partnership or to
any such partner's estate, or to any transferee who will own at least five
hundred thousand (500,000) shares after the transfer (unless such transferee is
a competitor of the Company).
4.2 INSPECTION. The Company shall permit each Investor, its attorney,
or its other representative to visit and inspect the Company's properties, to
examine the Company's books of account and other records, to make copies or
extracts therefrom and to discuss the Company's affairs, finances and accounts
with its officers, management employees and independent accountants, all at such
reasonable times and as often as such Investor may reasonably request; PROVIDED,
HOWEVER, that the Company shall not be obligated pursuant to this Section 4.2 to
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provide trade secret or confidential information or to provide information to
any person who the Company reasonably believes is a competitor of the Company.
4.3 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all shares of Common Stock issuable upon such conversion.
4.4 SALES OF STOCK TO EMPLOYEES. The Company agrees that all sales of
Common Stock to officers, directors, employees and consultants will be subject
to a repurchase option in favor of the Company, exercisable in the event that
such person's service relationship with the Company is terminated, and will vest
over a five (5) year period. Vesting shall commence on the date of employment,
with one-fifth of the Common Stock granted vesting on the first anniversary of
such date, and the remaining four-fifths vesting in equal monthly installments
thereafter; PROVIDED, HOWEVER, that such vesting may be changed or modified as
the Company's Board of Directors may, by a resolution of a majority of the
Board, deem appropriate from time to time.
SECTION 5
RIGHT OF FIRST REFUSAL
5.1 RIGHT OF FIRST REFUSAL. The Company hereby grants to each Investor
the right of first refusal to purchase, pro rata, all or any part of New
Securities (as defined in Section 5.2) which the Company may, from time to time,
propose to sell and issue. A pro rata share, for purposes of this right of
first refusal, is the ratio that the sum of the number of shares of Registrable
Securities then held by each Investor (including as held all shares of Common
Stock issued or issuable upon conversion of outstanding Preferred Stock and
excluding shares of Common Stock issuable upon exercise of outstanding warrants
to purchase Common and Preferred Stock) bears to the sum of the total number of
shares of Common Stock then outstanding and the number of shares of Common Stock
issuable upon conversion of the then outstanding Preferred Stock.
5.2 NEW SECURITIES. Except as set forth below, "New Securities" shall
mean any shares of capital stock of the Company including Common and Preferred
Stock, whether now authorized or not, and rights, options or warrants to
purchase said shares of Common or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into said shares of Common or
Preferred Stock. Notwithstanding the foregoing, New Securities does not include
(a) securities offered to the public generally pursuant to a registration
statement or pursuant to Regulation A under the Securities Act, (b) securities
issued pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets or other reorganization
whereby the Company or its stockholders own not less than fifty-one percent
(51%) of the voting power of the surviving or successor corporation, (c) shares
of the Company's Common Stock or related options convertible into such Common
Stock issued to employees, officers, advisors and directors of, and consultants,
customers, and vendors to, the Company, pursuant to a Board-approved stock
option plan or equity or incentive plan or any arrangement approved by a
majority of the Board of Directors of the Company, (d) any
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borrowings, direct or indirect, from financial institutions by the Company,
whether or not presently authorized, including any type of loan or payment
evidenced by any type of debt instrument, provided such borrowings are not
contingent upon the Company's issuance to the relevant lender of its equity
securities, including warrants, options or other rights to purchase capital
stock (except equipment lease transactions), and are not convertible into
capital stock of the Company, (e) securities issued to vendors or customers or
to other persons in similar commercial situations with the Company, if such
issuance is approved by the Board of Directors, (f) securities issued in
connection with obtaining lease financing, whether issued to a lessor, guarantor
or other person, if such issuance is approved by the Board of Directors, (g)
securities issued in connection with corporate partnering transactions, if such
issuance is approved by the Board of Directors, (h) securities issued pursuant
to any rights or agreements including without limitation convertible securities,
options and warrants, provided that the rights of first refusal established by
this Section 5 were applicable with respect to or otherwise exempted from the
initial sale or grant by the Company of such rights or agreements, and (i) stock
issued in connection with any stock split, stock dividend or recapitalization by
the Company.
5.3 REQUIRED NOTICES. In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Investor written notice of its
intention, describing the type of New Securities, the price and the general
terms upon which the Company proposes to issue the same. Each Investor shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase up to its pro rata share of such New Securities for the price and upon
the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
5.4 COMPANY'S RIGHT TO SELL. In the event an Investor fails to exercise
the right of first refusal within said twenty (20) day period, the Company shall
have ninety (90) days thereafter to sell or enter into an agreement (pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of said agreement) to sell the New
Securities not elected to be purchased by the Investors at the price and upon
general terms no more favorable to the purchasers of such securities than
specified in the Company's notice. In the event the Company has not sold within
said 90-day period or entered into an agreement to sell New Securities within
said 90-day period (or sold and issued New Securities in accordance with the
foregoing within sixty (60) days from the date of said agreement), the Company
shall not thereafter issue or sell any New Securities, without first offering
such securities to the Investors in the manner provided above.
5.5 EXPIRATION OF RIGHT OF FIRST REFUSAL. The right of first refusal
granted under this Section 5 shall expire upon the closing of the first firmly
underwritten sale of Common Stock of the Company to the public, which sale is
effected pursuant to a registration statement filed with and declared effective
by the Commission under the Securities Act.
5.6 ASSIGNMENT. The right of first refusal set forth in this Section 5
is nonassignable by an Investor except to any wholly-owned subsidiary or
constituent partner who acquires at least fifty thousand (50,000) shares
(appropriately adjusted for stock dividends, stock splits, reverse stock splits,
etc.).
14
<PAGE>
SECTION 6
MISCELLANEOUS
6.1 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, made and to be performed entirely within the State of
California.
6.2 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.
6.3 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
6.4 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery; upon confirmed transmission by telecopy or telex;
or upon deposit with the United States Post Office, by first-class mail, postage
prepaid, addressed (a) if to an Investor, at such Investor's address as set
forth on EXHIBIT A or the signature page hereto, or at such other address as
such Investor shall have furnished to the Company in writing, (b) if to any
other Holder of Registerable Securities, at such address as such Holder shall
have furnished the Company in writing, or, until any such Holder so furnishes an
address to the Company, then to and at the address of the last Holder of such
Registerable Securities who has so furnished an address to the Company, (c) if
to a Founder, at such Founder's address as set forth on EXHIBIT B, or at such
other address as such Founder shall have furnished to the Company in writing, or
(d) if to the Company, at the address set forth above, or at such address as the
Company shall have furnished to each Investor, each such other Holder and each
Founder in writing.
6.5 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any Investor or Founder 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 an acquiescence therein, or of any similar breach,
default or noncompliance thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Investor of any breach,
default or noncompliance under this Agreement, or any waiver on the part of any
Investor 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, or by law or otherwise
afforded to any Investor, shall be cumulative and not alternative.
15
<PAGE>
6.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
6.7 SEVERABILITY. In the case any provision of this 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.
6.8 AMENDMENTS. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the Holders of a majority of the number of shares of Registrable
Securities (including as owned all shares of Common Stock issuable upon
conversion or exercise of convertible securities or warrants) outstanding as of
the date of such amendment or waiver. Each Investor acknowledges that by the
operation of this Section the Holders of a majority of the outstanding
Registrable Securities have the right and power to diminish or eliminate all
rights of such Investor under this Agreement.
6.9 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
16
<PAGE>
The foregoing Amended and Restated Investor Rights Agreement is hereby
executed as of the date first above written.
CV THERAPEUTICS, INC.
By: /s/ Louis G. Lange, M.D.
-----------------------------
Louis G. Lange, M.D., Ph.D.
Chief Executive Officer
Address: 3172 Porter Drive
Palo Alto, CA 94304
Facsimile No. (415) 858-0390
PURCHASERS:
<PAGE>
EXHIBIT A
SCHEDULE OF CURRENT INVESTORS
ABS Employee's Venture Fund Limited Partnership
Attn: Terry Russo
135 East Baltimore Street
Baltimore, MD 21202
Dr. Thomas H. Adams & Barbara J. Adams, Joint Tenants
3550 General Atomics Court
San Diego, CA 92121
Ashbury Partners
Ashbury Partners II
Ashbury Partners III
Ashbury Partners IV
c/o Peter Craddock
22 Marsh Drive
Mill Valley, CA 94941
Asset Management Associates 1989, L.P.
2275 East Bayshore Road
Suite 150
Palo Alto, CA 94303
Attn: Craig Taylor
ASSU Venture, FCPR
Attn: Dominique Bellanger
Direction des Gestions et du Conseil
No. 1 Blvd. Haussmann
Paris 75009
France
Banexi Ventures
Attn: Christine Panier
12, rue Chaucet
Chargee de Mission
Paris 75009
France
Debra Catz Bannister
27101 Byrne Park Lane
Los Altos, CA 94022
Bryan Bernat
Larry Bernat
366 Royal Valley Dr.
St. Louis, MO 63141
Giancarla Berti
Two East 70th Street
New York, NY 10021
Roger K. Bowers
Bonita L. Bowers
1274 Regency Drive
San Jose, CA 95129
Brenton Associates
Attn: Julius Mandel
P.O. Box 5991
Baltimore, MD 21208
John Byrn Caple
3345 Fillmore Street
San Francisco, CA 94123
A-1
<PAGE>
Clariden Bank
Attn: Tony Lifleri
c/o Swiss American Securities
One Wall Street - 5th Flr.
New York, NY 10005
Edward Cohen
Marla S. Cohen
17 Vouga Lane
St. Louis, MO 63131
Paula J. Brooks, Trustee FBO
Camberly Cook Irrevocable Trust
620 Bridge Way Lane
Naples, FL 33963
Paula J. Brooks, Trustee FBO
Chadwick Cook Irrevocable Trust
620 Bridge Way Lane
Naples, FL 33963
Robert E. Cook
P.O. Box 1536
Park City, UT 84060
Peter Craddock
22 Marsh Drive
Mill Valley, CA 94941
Dr. Gary D. Cumberland
3100 Brittany Trace
Pensacola, Florida 32504
John D. Cumberland
Beatrice Y. Cumberland
9229 Southview Lane
St. Louis, MO 63123
Christopher J. da Cunha
3710 Sacramento Street
San Francisco, CA 94118
Jack B. Dane
1719 Green St.
San Francisco, CA 94123
Carroll Dawbarn
6426 Roselawn Road
Richmond, VA 23226
James A. Delaney
Declaration of Trust
633 Ardsley Road
Winnetka, IL 60093
Delphi BioVentures II, L.P.
Delphi BioInvestments II, L.P.
3000 Sand Hill Road
Building 1, Suite 135
Menlo Park, CA 94025
Attention: James Bochnowski
Deltec Asset Management Corporation
c/o John Gordon
535 Madison Avenue
New York, NY 10022
Patricia Donchin
56 Cervantes Boulevard
Apartment 4
San Francisco, CA 94123
Essex Special Growth Opportunities Fund, L.P.
Attn: Susan Stickells
125 High Street
Boston, MA 02110-2702
A-2
<PAGE>
Paul R. Farago
Trustee for Paul R. Farago Living Trust
2815 SW Patton Lane
Portland, OR 97231
Howard Fine
2211 Maryland Ave.
Baltimore, MD 21218
Dana H. and Wendy W. Frank
7115 Bristol Road
Baltimore, MD 21212
Mathew M. Frank
2995 Woodside Road, Suite 400
Woodside, CA 94062
Frazier & Company L.P.
Two Union Square
601 Union Street, #2110
Seattle, WA 98101
Frazier Healthcare Investments, L.P.
Attn: Nadar Maini
Two Union Square
601 Union Street, #2110
Seattle, WA 98101
GC&H Partners
One Maritime Plaza
20th Floor
San Francisco, CA 94111
Attn: Jeanne Meyer
Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121
James J. Geraghty
c/o Alex Brown & Sons
135 E. Baltimore Street
Baltimore, MD 21202
Wilson T. Gildee
Charitable Remainder Trust
2212 Tufton Ridge Road
Reisterstown, MD 21136
Guarantee & Trust Co., Trustee for Benefit of E. W. Proctor III
620 33rd Avenue East
Seattle, WA 99112
Guarantee & Trust Co., Trustee for Benefit of K. A. Proctor
620 33rd Avenue East
Seattle, WA 99112
H & Q Healthcare Investors
50 Rowes Wharf
Fourth Floor
Boston, MA 02110
H & Q Life Science Investors
50 Rowes Wharf
Fourth Floor
Boston, MA 02110
Thomas C. Hashem
Carolyn F. Hashem
100 Hamilton Street
Saugus, MA 01906
H. Franklin Herlong
13203 Beaver Dam Road
Hunt Valley, MD 21030
A-3
<PAGE>
Mark B. Hirsch
Julia J. Hirsch
520 Eucalyptus Avenue
Hillsborough, CA 94010
Institutional Venture Partners V
Institutional Venture Management V
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Attn: Samuel D. Colella
Barbara B. Kaiser
29 Campo Bello Way
Menlo Park, CA 94025
Sheldon A. Kalish
124 Slade Avenue
Suite 109
Baltimore, MD 21208
Alex and Wendy Karahalios
6882 N. La Place
Tucson, AZ 85715-1031
Scott A. Karns and Rita M. Karns
1754 Brentwood Avenue
Upland, CA 91784
John Kryzanowski
c/o Alex Brown & Co.
101 California Street
46th Floor
San Francisco, CA 94111
Kummell Investments Limited
Jay Levine
c/o 2-20 Paterson Street, 22nd Floor
Causeway Bay
Hong Kong
Louis G. Lange
c/o CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Lynn I. Larson
688 2nd Avenue
San Francisco, CA 94116
Richard M. Lawn
1927 - 8th Avenue
San Francisco, CA 94116
Lease Management Services, Inc.
2500 Sand Hill Road
Suite 101
Menlo Park, CA 94025
Amy P. MacLaughlin and Harold A. MacLaughlin as tenants by the entirety
1112 Byrn Mawr Road
Baltimore, MD 21210
Milan Mandaric
c/o Senses International
2363 Bering Drive
San Jose, CA 95131
Robert Stephen Martin
11705 Woodland Drive
Lutherville, MD 21090
A-4
<PAGE>
Duane R. Mason & Anne P. Mason,
Tenants in Common
80 Greenland Circle
Rural Route Three
South Dennis, MA 02660-2403
Lee F. Meier
22 Crane Drive
San Anselmo, CA 94960
Meier Mitchell & Co. Profit Sharing Plan
& Trust FBO
James V. Mitchell
Four Orinda Way
Suite 200 B
Orinda, CA 94563
Mack C. Mitchell, Jr.
718 Chapel Ridge Road
Lutherville, MI 21093
Natio Vie Developpement, FCPR
Attn: Mr. Dominique Bellanger
No. 1, Blvd. Haussmenn
Paris 75009
France
Donald D. Notman, Jr.
c/o Alex Brown & Sons
135 East Baltimore Street
13th Floor
Baltimore, MD 21202
Eric Oppenheimer
P.O. Box 279
Ojo Caliente, NM 87549
Jurg Pfister
1500 Oak Avenue
Los Altos, CA 94024
Piper Jaffray Healthcare
Fund Limited Partnership
222 South Ninth Street
15th Floor
Minneapolis, MN 55402-3804
Attn: Buzz Benson
E.W. Proctor, III
620 33rd Avenue East
Seattle, WA 99112
J. Leighton Read
c/o Aviron
1450 Rollins Road
Burlingame, CA 94010
Dayton Reardan
9 Corte Granada
Moraga, CA 94556
C. John Schoof II
930 Tahoe Blvd. #802
Suite 161
Incline Village, NV 89451
R. Randolph Scott
315 Wildflower Park Lane
Mountain View, CA 94043
George E. Schreiner
P.O. Box 199
Great Falls, VA 22056
A-5
<PAGE>
Schroders Incorporated
Schroders Ventures Limited Partnership
Schroder Ventures U.S. Trust
787 Seventh Avenue
29th Floor
New York, NY 10019
Attn: Roe Pace
Schroder Ventures
Jeffrey J. Collinson
c/o Collinson Howe Venture Partners
1055 Washington Blvd.
Stamford, CT 06901
James P. Scopa and Anne Kenner, Joint Tenants
2533 Washington Street
San Francisco, CA 94115
Sequoia XXIV
Sequoia Capital V
Sequoia Technology Partners V
Sequoia Venture Partners
Attn: Pierre Lamond
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
Denis A. Seynhaeve
220 Wardour Drive
Annapolis, MD 21401
Helen Shukert Trust
60 San Felipe Way
San Francisco, CA 94127
C.V. Sofinnova Ventures Partners II
c/o Sofinnova Inc.
One Market Plaza
Stewart Tower, Suite 2630
San Francisco, CA 94105
Attn: Alix Marduel, M.D.
Helen G. Spilburg
5333 South Main, Apt 107
Sylvania, OH 43560
James G. Spilburg
Jean W. Spilburg
7025 Altara Drive
Sylvania, OH 43560
Kathleen Stafford
c/o CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Stanford University
c/o Stanford Management Co.
2770 Sand Hill Road
Menlo Park, CA 94025
Attn: Carol Gilmer
St. Francis Growth Fund
St. Francis High School
1855 Miramonte Ave.
Mountain View, CA 94040
Attn: Ron Clacagno
Isaac Stein
c/o Waverly Associates
525 University Avenue
Palo Alto, CA 94301
A-6
<PAGE>
Herb Sucherman
705 Ross Avenue
Dallas, TX 75202
William R. Sullivan and
Barbara A. Sullivan, J.T.
c/o Sky Alland, Inc.
6740 Alexander Bell Drive
Columbia, MD 21046
Technology Funding Medical Partners I, L.P.
Technology Funding Partners III, L.P.
Technology Funding Venture Partners IV, An Aggressive Growth Fund, L.P.
Technology Funding Venture Partners V, An Aggressive Growth Fund, L.P.
Gail Mulcahy
Technology Funding
2000 Alameda de las Pulgas
Suite 250
San Mateo, CA 94403
Antonio Tomasello and David Tomasello
AV Cristobal Colon
Costa Azul PH-B
Cumana - Sucre State
Venezuela
U.S.A. Fund Limited Partnership
Attn: Marc Blum
100 Garrett Bldg.
233 E. Redwood Street
Baltimore, MD 21202
David Volk
1801 Broadway Street
Apartment 602
San Francisco, CA 94107
Vulcan Ventures, Inc.
Attn: Ruth Kunath
110 110th Avenue NE
Suite 550
Bellevue, WA 98004
Warwick International Ltd.
Attn: Roger Maurer
P.O. Box 901
2089
Luxembourg
Branco Weiss
Hallwylstrasse 71
Zurich 8036
Switzerland
Zesiger Capital Group, LLC
Attn: Mary Estabil
320 Park Avenue
New York, NY 10022
A-7
<PAGE>
EXHIBIT B
SCHEDULE OF FOUNDERS
NAME AND ADDRESS
Louis G. Lange, M.D., Ph.D.
c/o CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
John D. McDonnell
Allegretti & Witcoff Ltd.
10 South Wacker Drive
Chicago, IL 60606
Peter G. Milner, Ph.D.
c/o CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Curtis A. Spilburg
c/o CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
A-8
<PAGE>
EXHIBIT C
SCHEDULE OF PURCHASERS
Advent Partners Limited Partnership
Advent Performance Materials Limited Partnership
Rovent II Limited Partnership
c/o Advent International Corporation Funds
Attn: Jason Fisherman
101 Federal Street
Boston, MA 02110
Asset Management Partners
Attn: Craig C. Taylor
2275 East Bayshore Rd., Suite 150
Palo Alto, CA 94303
BankAmerica Ventures
BA Venture Partners II
Attn: Anchie Y. Kuo, M.D.
950 Tower Lane, Suite 700
Foster City, CA 94404
Banexi Holding Corp.
Attn: Ms. Christine Panier
12, rue Chaucet
Chargee de Mission
Paris 75009
France
Curran Partners
John Curran
237 Park Avenue
9th Floor
New York, NY 10017
Flynn Family 1994 Trust
c/o Mark Flynn, Trustee
1865 Camino A Los Cerros
Menlo Park, CA 94025
Frazier Healthcare Investments, L.P.
Attn: Alan Frazier
601 Union St., Suite 2110
Seattle, WA 98101
GC&H Investments
Attn: Jeanne Meyer
One Maritime Plaza, 20th Floor
San Francisco, CA 9411-3580
Gutshall Family Trust
Thomas L. Gutshall, Trustee
c/o CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Kummell Investments Limited
Attn: Terrance M. Morris
200 Putnam Street, Suite 600
Marietta, OH 45750
Tracy T. Lefteroff
800 E. Charleston Road, Unit 9
Palo Alto, CA 94303
Recombinant Capital, Inc.
Attn: Mark Edwards
220 Montgomery St., Suite 1616
San Francisco, CA 94104
C-1
<PAGE>
George E. Schreiner, M.D.
P.O. Box 199
Great Falls, VA 22056
Schroders Incorporated
Schroder Ventures (Collinson Howe)
Mr. Jeffrey J. Collinson
c/o Collinson Howe Venture Partners
1055 Washington Boulevard
Fifth Floor
Stamford, CT 06901
Schroder Ventures Limited Partnership
Schroder Ventures U.S. Trust
c/o Nicola Lawson
Schroders (Bermuda) Limited
22 Church Street
Hamilton, HMII Bermuda
The Sears Living Trust
Lowell Sears, Trustee
Sears Capital Management
70 Cheyenne Point
Portola Valley, CA 94028
Denis Seynhaeve
220 Wardour Drive
Annapolis, MD 21401
Jane Shaw
One Larch Drive
Atherton, CA 94027
C.V. Sofinnova Ventures Partners II
c/o Sofinnova, Inc.
Attn: Alix Marduel, M.D.
One Market Plaza
Stewart Tower, #2630
San Francisco, CA 94105
Stein 1995 Revocable Trust
Isaac Stein and Madeline Johnson Stein, Trustees
525 University Avenue, Suite 415
Palo Alto, CA 94301
Craig C. Taylor
c/o Asset Management Associates
2275 East Bayshore, Suite 150
Palo Alto, CA 94303
Vulcan Ventures, Inc.
Attn: Ruth Kunath
110 110th Avenue NE, Suite 550
Bellevue, WA 96004
Branco Weiss
Hallwylstrasse 71
Zurich CH-8026
Switzerland
Michael Wick
16 Beresford Road
Chestnut Hill, MA 02167
C-2
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. ANY TRANSFER
OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT
AND AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR IN THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY
IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY LAWS.
CV THERAPEUTICS, INC.
SERIES A PREFERRED STOCK PURCHASE WARRANT
NO. WA-______ October 2, 1992
CV Therapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received,_________________, or any transferee
who has received this warrant (the "Warrant") in compliance with applicable law
(the "Holder"), is entitled, on the terms set forth below, to purchase from the
Company, on or before the Expiration Date (as defined in Section 13 below)
__________________________________ ( ) shares of Series A Preferred Stock
of the Company at a price of $0.80 per share, subject to adjustment as provided
below (the "Exercise Price").
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any time
or from time to time on any business day prior to or on the Expiration Date, for
the full or any lesser number of shares of Series A Preferred Stock purchasable
hereunder, by surrendering this Warrant to the Company at its principal office,
with a duly executed Subscription Form (in substantially the form attached
hereto), together with payment of the sum obtained by multiplying the number of
shares of Series A Preferred Stock to be purchased by the Exercise Price then in
effect. Promptly after such exercise, the Company shall issue and deliver to or
upon the order of the Holder a certificate or certificates for the number of
shares of Series A Preferred Stock issuable upon such exercise, and the Company
will pay all taxes in connection with the issue thereof. All shares of Series A
Preferred Stock which may be issued upon exercise of this Warrant will, upon
issuance by the Company in accordance with the terms of this Warrant, be validly
issued, fully paid and non-assessable, and free from all taxes and liens with
respect to the issuance thereof. To the extent permitted by law, this Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided herein, even if
the Company's stock transfer books are at that time closed, and the Holder shall
be treated for all purposes as the holder of record of the Series A Preferred
Stock to be issued upon such exercise as of the close of business on such date.
Upon any partial exercise, the Company will issue to or upon the order of the
Holder a new Warrant for the number of shares of Series A Preferred Stock as to
which this Warrant has not been exercised.
1.
<PAGE>
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election in which event the
Company shall issue to the Holder a number of shares of Series A Preferred Stock
computed using the following formula:
X = Y (A - B)
---------
A
Where X = the number of shares of Series A Preferred Stock to be
issued to the Holder
Y = the number of shares of Series A Preferred Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being canceled
(at the date of such calculation)
A = the fair market value of one share of the Company's Series A
Preferred Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, fair market value of one share of Series
A Preferred Stock shall be determined by the Company's Board of Directors in
good faith; provided, however, that where there is a public market for the
Company's Common Stock, the fair market value per share shall be the product of
(i) the average of the closing bid and asked prices of the Company's Common
Stock quoted in the Over-The-Counter Market Summary or the closing price quoted
on the NASDAQ National Market System or on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western Edition of
the WALL STREET JOURNAL (or, if not so reported, as otherwise reported by the
NASDAQ System) for the ten (10) trading days prior to the date of determination
of fair market value and (ii) the number of shares of Common Stock into which
each share of Series A Preferred Stock is convertible at the time of such
exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Series A Preferred Stock subject to
this Warrant shall be subject to adjustment from time to time as follows:
3.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Series A Preferred Stock, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately
2.
<PAGE>
reduced, and conversely, in case the outstanding shares of Series A Preferred
Stock of the Company shall be combined into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased.
(b) Upon each adjustment of the Exercise Price as provided in
Section 3.1(a) above, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares of
Series A Preferred Stock (calculated to the nearest whole share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
3.2 ADJUSTMENT FOR STOCK DIVIDENDS. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Series A Preferred Stock
or securities convertible into shares of Series A Preferred Stock, the Exercise
Price and the number of shares to be obtained upon exercise of this Warrant
shall be proportionately adjusted to reflect the issuance of any shares of
Series A Preferred Stock or convertible securities, as the case may be, issuable
in payment of such dividend or distribution.
3.3 ADJUSTMENT FOR REORGANIZATIONS. In case, at any time prior to
the Expiration Date of any capital reorganization, this Warrant shall, after
such reorganization, be exercisable so that upon exercise the Holder shall
procure, in lieu of each share of Series A Preferred Stock, the kind and amount
of shares of stock, other securities, money or property receivable upon such
reorganization, by the holder of one share issuable upon exercise of this
Warrant had this Warrant been exercised immediately prior to such
reorganization. The provisions of this Section 3.3 shall similarly apply to
successive reorganizations.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of shares of Series A Preferred Stock subject to this Warrant need be
made if such adjustment would result in a change in the Exercise Price of less
than one cent ($0.01) or a change in the number of subject shares of less than
one-hundredth (1/100th) of a share. Any adjustment less than these amounts
which is not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative basis, amounts to
an adjustment of at least these amounts.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon written request at any time of the Holder, furnish or cause to be
furnished to the
3.
<PAGE>
Holder a like certificate setting forth (a) such adjustments and readjustments,
(b) the then effective Exercise Price and number of shares of Series A Preferred
Stock subject to the Warrant, and (c) the then effective amount of securities
(other than Series A Preferred Stock) and other property, if any, which would be
received upon exercise of the Warrant.
4. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or through reorganization, consolidation, merger, dissolution,
issue or sale of securities, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.
5. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Series A Preferred Stock
and other stock, securities and property as from time to time are receivable
upon the exercise of this Warrant. If at any time the number of authorized but
unissued shares of Series A Preferred Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series A Preferred Stock to such number of
shares as shall be sufficient for such purposes.
6. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or (c) the first fully underwritten public offering of the
Company's Common Stock such as will cause this Warrant to expire, the Company
shall mail to each Holder at least twenty (20) days prior to the record date
specified therein a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend or distribution and a description
of such dividend or distribution, (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, (iii) the closing
date of the fully underwritten public offering, and (iv) the date, if any, that
is to be fixed as to when the holders of record of Series A Preferred Stock (or
other securities at that time receivable upon exercise of the Warrant) shall be
entitled to exchange their shares of Series A Preferred Stock (or such other
stock or securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.
4.
<PAGE>
7. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company at its principal office, the Company, at its expense, will issue and
deliver a new Warrant or Warrants calling in the aggregate for the same number
of shares of Series A Preferred Stock, in the denomination or denominations
requested, to or on the order of such Holder upon payment by such Holder of any
applicable transfer taxes; provided that any transfer of the Warrant shall be
subject to the conditions on transfer set forth herein.
8. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,or
(in the case of mutilation) upon surrender and cancellation hereof, the Company,
at its expense, shall issue a replacement.
9. NOTICES. All notices and other communications from the Company to the
Holder shall be mailed by first-class, registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the last Holder
who has furnished an address to the Company in writing. Notice shall be deemed
given three (3) days after deposit in the mails as aforesaid or upon delivery if
personally delivered.
10. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
12. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
13. EXPIRATION DATE. This Warrant will be wholly void and of no effect
after 5:00 p.m. (San Francisco time) on the date (the "Expiration Date") which
is the earlier of (a) December 31, 1995, (b) the closing date of the first
registration statement under the Securities Act of 1933, as amended (the "Act")
covering any fully underwritten public offering of Common Stock of the Company
at an offering price of at least $5.00 per share (as appropriate adjusted for
any stock dividend, stock split, recapitalization or consolidation of the Common
Stock) and resulting in the receipt by the Company of at least $7,500,000 in
gross proceeds (before payment of underwriting discounts and commissions), or
(c) the effective date of a merger, reorganization or sale of all or
substantially all of the Company's assets following which the stockholders of
the Company immediately prior to such transaction own less than fifty percent
(50%) of the voting securities of the surviving corporation (or its parent, if
any); provided that, if the last day
5.
<PAGE>
on which this Warrant may be exercised, or on which it may be exercised at a
particular Exercise Price, is a Sunday or a legal holiday or a day on which
banking institutions doing business in the City of San Francisco are authorized
by law to close, this Warrant may be exercised prior to 5:00 p.m. (San Francisco
time) on the next succeeding full business day with the same force and effect
and at the same Exercise Price as if exercised on such last day specified
herein.
14. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Series A Preferred Stock issuable
upon exercise hereof under the Act and applicable state securities laws. The
Holder by acceptance hereof represents that the Holder understands that neither
this Warrant nor the Series A Preferred Stock issuable upon exercise hereof (or
shares of any security into which such Series A Preferred Stock may be
converted) has been registered with the Securities and Exchange Commission nor
under any state securities law, and that neither this Warrant nor the Series A
Preferred Stock issuable upon exercise hereof (or shares of any security into
which such Series A Preferred Stock may be converted) can be sold or transferred
unless registered under the Act and under any applicable state securities laws,
or unless an exemption from such registration is available. By acceptance
hereof, the Holder represents and warrants that (a) it is acquiring the Warrant
(and the shares of Series A Preferred Stock issuable upon exercise thereof) for
its own account for investment purposes and not with a view to distribution, (b)
has received all such information as the Holder deems necessary and appropriate
to enable the Holder to evaluate the financial risk inherent in making an
investment in the Company, and satisfactory and complete information concerning
the business and financial condition of the Company in response to all inquiries
in respect thereof, (c) the Holder's acquisition of shares upon exercise hereof
will be a highly speculative investment, (d) the Holder is able, without
impairing its financial condition, to hold such shares for an indefinite period
of time and to suffer a complete loss of the Holder's investment, and (e) the
Holder has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of acquisition of this Warrant
and the shares issuable upon exercise hereof and of making an informed
investment decision with respect thereto. Each certificate representing shares
of Series A Preferred Stock issued upon exercise of this Warrant shall have
conspicuously endorsed on its face, at the time of its issuance, such legends as
counsel to the Company deems necessary or appropriate, including without
limitation the legend set forth on the top of the face page of this Warrant.
6.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By:
------------------------------------
Louis G. Lange, M.D., Ph.D.
President and Chief Executive
Officer
7.
<PAGE>
SUBSCRIPTION FORM
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder,_______________ full shares of the Series A Preferred Stock of CV
Therapeutics, Inc. provided for therein, (2) makes payment in full of the
purchase price of such shares, (3) requests that certificates for such shares be
issued in the name of
----------------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
(Please print name and address)
Dated:
--------------------
Signature:
--------------------
8.
<PAGE>
AMENDMENT NUMBER ONE TO
SERIES A PREFERRED STOCK PURCHASE WARRANT
This AMENDMENT NUMBER ONE to that certain SERIES A PREFERRED STOCK PURCHASE
WARRANT issued to INSTITUTIONAL VENTURE PARTNERS V (the "Warrantholder") by CV
THERAPEUTICS, INC., a Delaware corporation (the "Company") dated as of October
2, 1992 (the "Warrant"), is made and entered into as of September 8, 1995, by
and among the Company and the Warrantholder (the "Amendment").
RECITALS
A. The Company and the Warrantholder entered into that certain Warrant
described above pursuant to which the Warrantholder is entitled, on the terms
set forth therein, to purchase from the Company, on or before the Expiration
Date (as defined therein) two hundred and forty six thousand two hundred and
fifty (246,250) shares of Series A Preferred Stock of the Company at a price of
$0.80 per share, subject to adjustment as provided in the Warrant.
B. The Company desires that the Warrantholder purchase shares of Series E
Preferred Stock of the Company and the Warrantholder desires to do so provided
that the date set forth in subparagraph (a) of Section 13 of the Warrant be
changed from "December 31, 1995" to "September 8, 1997."
In consideration of the foregoing and the mutual promises and covenants set
forth herein, the parties hereto agree that the Warrant is amended as follows:
1. EXTEND THE TERM OF THE WARRANT.
1.1 Subparagraph (a) of Section 13 of the Warrant is hereby amended to
read as follows:
"(a) September 8, 1997,"
2. NO OTHER AMENDMENT, ETC.
2.1 Except as set forth herein, all terms of the Warrant shall continue in
full force and effect.
2.2 This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall constitute one
instrument.
1.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
One to the Warrant effective as of the date first above written.
THE COMPANY:
CV THERAPEUTICS, INC.
By: /s/ Louis G. Lange
--------------------------------
Louis G. Lange, M.D., Ph.D.
President and Chief Executive Officer
THE WARRANTHOLDER:
INSTITUTIONAL VENTURE PARTNERS V
By: /s/ Sam Colella
--------------------------------
Name:
Title:
2.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. ANY TRANSFER
OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT
AND AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR IN THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY
IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY LAWS.
CV THERAPEUTICS, INC.
AMENDED AND RESTATED
SERIES B PREFERRED STOCK PURCHASE WARRANT
No. WB-1 March 23, 1994
WHEREAS, CV Therapeutics, Inc. (the "Company") has previously issued a
warrant for 1,000,000 shares of the Company's Series B Preferred Stock to Genta
Incorporated ("Genta"), dated April 8, 1993 (the "Warrant); and
WHEREAS, the Company and Genta desire to amend and restate the Warrant on
the terms set forth below and to cancel the Warrant dated April 8, 1993;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth below, the parties hereby agree
as follows:
CV Therapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Genta Incorporated, a Delaware corporation
("Genta"), or any transferee who has received this warrant (the "Warrant") in
compliance with applicable law and the terms hereof (the "Holder"), is entitled,
on the terms set forth below, to purchase from the Company, on or before the
Expiration Time (as defined in Section 17 below) one million (1,000,000) shares
of Series B Preferred Stock of the Company at a price of $2.50 per share,
subject to adjustment as provided below (the "Exercise Price").
This Warrant is being issued pursuant to that certain Collaborative
Research and Development Agreement, dated April 9, 1993, between the Company and
Genta.
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any
time or from time to time on any business day prior to or on the Expiration Time
(as defined in Section 17 below), for the full or any lesser number of shares of
Series B Preferred Stock purchasable
<PAGE>
hereunder, by surrendering this Warrant to the Company at its principal office,
with a duly executed Subscription Form (in substantially the form attached
hereto), together with payment of the sum obtained by multiplying the number of
shares of Series B Preferred Stock to be purchased by the Exercise Price then in
effect. Promptly after such exercise, the Company shall issue and deliver to or
upon the order of the Holder a certificate or certificates for the number of
shares of Series B Preferred Stock issuable upon such exercise, and the Company
will pay all taxes in connection with the issue thereof. All shares of Series B
Preferred Stock which may be issued upon exercise of this Warrant will, upon
issuance by the Company in accordance with the terms of this Warrant, be validly
issued, fully paid and non-assessable, and free from all taxes, liens and
encumbrances with respect to the issuance thereof (except as set forth in the
Company's Restated Certificate of Incorporation (the "Certificate") or bylaws
and any restrictions on sale set forth therein or pursuant to the Investor
Rights Agreement (as defined in Section 4 below) or federal or state securities
laws). To the extent permitted by law, this Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date of its
surrender for exercise as provided herein, even if the Company's stock transfer
books are at that time closed, and the Holder shall be treated for all purposes
as the holder of record of the Series B Preferred Stock to be issued upon such
exercise as of the close of business on such date. Upon any partial exercise,
the Company will issue to or upon the order of the Holder a new Warrant for the
number of shares of Series B Preferred Stock as to which this Warrant has not
been exercised.
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election in which event the
Company shall issue to the Holder a number of shares of Series B Preferred Stock
computed using the following formula:
X = Y (A - B)
-------
A
Where X = the number of shares of Series B Preferred Stock to be
issued to the Holder
Y = the number of shares of Series B Preferred Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the number of shares purchased under the
Warrant being canceled (at the date of such calculation)
A = the fair market value of one share of the Company's Series B
Preferred Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
2.
<PAGE>
For purposes of the above calculation, fair market value of one share of Series
B Preferred Stock shall be determined by the Company's Board of Directors in
good faith; provided, however, that where there is a public market for the
Company's Common Stock, the fair market value per share shall be the product of
(i) the average of the closing prices (or bid prices if there are no such
closing prices) of the Company's Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on the NASDAQ National Market System
or on the primary national securities exchange on which the Common Stock is then
listed, whichever is applicable, as published in the Western Edition of the WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by the NASDAQ
System) for the ten (10) trading days prior to the date of determination of fair
market value and (ii) the number of shares of Common Stock into which each share
of Series B Preferred Stock is convertible at the time of such exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Series B Preferred Stock subject to
this Warrant shall be subject to adjustment from time to time as follows:
3.1 ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If at any time the
Company:
i. pays a dividend or makes a distribution on its Series B
Preferred Stock in shares of its Series B Preferred Stock;
ii. subdivides its outstanding shares of Series B Preferred
Stock into a greater number of shares;
iii. combines its outstanding shares of Series B Preferred Stock
into a smaller number of shares;
iv. makes a distribution on its Series B Preferred Stock in
shares of its capital stock other than Series B Preferred
Stock; or
v. issues by reclassification of its Series B Preferred Stock
any shares of its capital stock;
then the Exercise Price in effect immediately prior to such action shall be
adjusted so that the Holder may receive upon exercise of the Warrant and payment
of the same aggregate consideration the number of shares of capital stock of the
Company which the Holder would have owned immediately following such action if
the Holder had exercised the Warrant immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification. The foregoing
provisions of this Section 3.1 shall similarly
3.
<PAGE>
apply to the stock or securities of any other corporation which are at the time
receivable upon exercise of this Warrant.
3.2 ADJUSTMENT FOR OTHER DISTRIBUTIONS. If at any time the Company
distributes to all holders of its Series B Preferred Stock any of its assets or
debt securities, the Exercise Price following the record date shall be adjusted
in accordance with the following formula:
M-F
E' = E X ---
M
where: E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to the adjustment.
M = the fair market value (as defined in Section 2 above) per
share of Series B Preferred Stock on the record date of the
distribution.
F = the aggregate fair market value (as conclusively determined
by the Board of Directors of the Company) on the record date
of the assets or debt securities divided by the number of
outstanding shares of Series B Preferred Stock.
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. In the
event that such distribution is not actually made, the Exercise Price shall
again be adjusted to the Exercise Price as determined without giving effect to
the calculation provided hereby.
This subsection does not apply to cash dividends or cash distributions paid
out of consolidated current or retained earnings as shown on the books of the
Company and paid in the ordinary course of business. The foregoing provisions
of this Section 3.2 shall similarly apply to the stock or securities of any
other corporation which are at the time receivable upon exercise of this
Warrant.
3.3 RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR MERGER.
Subject to the provisions of Section 17, which shall govern the transactions
described therein, in the event of any reclassification, capital reorganization
or other change of outstanding shares of Series B Preferred Stock of the Company
(other than a change in the par value of the Series B Preferred Stock) or in the
event of any consolidation or merger of the Company with or into another
corporation (other than a merger in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of
4.
<PAGE>
outstanding shares of Series B Preferred Stock issuable upon exercise of this
Warrant) or in the event of any sale, lease, transfer or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, the Company shall cause effective provisions to be
made so that the Holder shall have the right thereafter, by exercising this
Warrant, to purchase the kind and amount of shares of stock and other securities
and property (including cash) receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale, lease, transfer or
conveyance by a holder of the number of shares of Series B Preferred Stock that
might have been received upon exercise of this Warrant immediately prior to such
reclassification, capital reorganization, change, consolidation, merger, sale,
lease, transfer or conveyance. Any such provision shall include provisions for
adjustments in respect of such shares of stock and other securities and property
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section 3.3
shall similarly apply to successive reclassifications, capital reorganizations
and changes of shares of Series B Preferred Stock and to successive
consolidations, mergers, sales, leases, transfers or conveyances. In the event
that in connection with any such capital reorganization, or reclassification,
change, consolidation, merger, sale, lease, transfer or conveyance, additional
shares of Series B Preferred Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for, or of, a security of the
Company other than Series B Preferred Stock, any such issue shall be treated as
an issue of Series B Preferred Stock covered by the provisions of Section 3.1.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of shares of Series B Preferred Stock subject to this Warrant need be
made if such adjustment would result in a change in the Exercise Price of less
than five cents ($0.05) (the "Adjustment Threshold Amount") or a change in the
number of subject shares of less than one (1) share. Any adjustment which is
less than the Adjustment Threshold Amount and not made shall be carried forward
and shall be made, together with any subsequent adjustments, at the time when
(a) the aggregate amount of all such adjustments is equal to at least the
Adjustment Threshold Amount or (b) the Warrant is exercised.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon written request at any time of the Holder, furnish or cause to be
furnished to the Holder a like certificate setting forth (a) such adjustments
and readjustments, (b) the then effective Exercise Price and number of shares of
Series B Preferred Stock subject to the Warrant, and (c) the then effective
amount of securities (other than Series B Preferred Stock) and other property,
if any, which would be received upon exercise of the Warrant.
5.
<PAGE>
4. REGISTRABLE SECURITIES. Upon exercise of this Warrant for shares of
Series B Preferred Stock of the Company, any of the Company's Common Stock
issued or issuable pursuant to the conversion of such Series B Preferred
Stock shall be deemed to be "Registrable Securities" for purposes of that
certain Amended and Restated Investor Rights Agreement, dated as of March 23,
1994, among the Company and the persons named therein (the "Investor Rights
Agreement"), and the holder of such shares shall have all the rights, subject
to all the obligations, of a holder of Registrable Securities pursuant to the
Investor Rights Agreement, and shall be treated for all purposes as a holder
of Registrable Securities under and subject to the terms of the Investor
Rights Agreement.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares of Series B Preferred Stock purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised in accordance with
its terms.
6. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.
7. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of exercise (as determined in good
faith by the Board of Directors of the Company).
8. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Series B Preferred Stock
and other stock, securities and property as from time to time are receivable
upon the exercise of this Warrant. If at any time the number of authorized but
unissued shares of Series B Preferred Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series B Preferred Stock to such number of
shares as shall be sufficient for such purposes. The Company further covenants
that all shares that may be issued upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will be
free from all taxes, liens and charges in respect of the issue of such shares
(other than taxes in
6.
<PAGE>
respect of any transfer occurring contemporaneously with such exercise and
payment or otherwise specified herein). The Company agrees that its issuance of
the Warrant shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for shares of Series B Preferred Stock (and shares of Common Stock
issuable upon conversion of such Series B Preferred Stock) upon the exercise of
the Warrant and covenants that all such shares, when issued, sold and delivered
in accordance with the terms of the Warrant for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer set
forth in this Warrant, the Investor Rights Agreement and applicable state and
federal securities laws.
9. AMENDMENTS TO SERIES B PREFERRED STOCK; ETC.
9.1 AMENDMENTS; ETC. Notwithstanding Section 5 hereof, while this
Warrant, or any portion thereof, remains outstanding, the Company shall not,
without the prior written approval of the Holder, amend or repeal or waive any
provision of the Certificate relating to the rights preferences and privileges
of the Series B Preferred Stock.
9.2 ADJUSTMENTS TO CONVERSION PRICE. The Holder shall have the
benefit of any adjustments to the Series B Conversion Price pursuant to Section
4 of Article IV of the Certificate.
10. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution or (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any
other person, or any voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall mail to each Holder at least
fifteen (15) days, or such longer period as is required by law, prior to the
record date, a notice specifying (i) the date on which any such record is to
be taken for the purpose of such dividend or distribution and a description
of such dividend or distribution, (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up is expected to become effective, and
(iii) the date, if any, that is to be fixed as to when the holders of record
of Series B Preferred Stock (or other securities at that time receivable upon
exercise of the Warrant) shall be entitled to exchange their shares of Series
B Preferred Stock (or such other stock or securities) for securities or other
property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.
11. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company
7.
<PAGE>
at its principal office, the Company, at its expense, will issue and deliver a
new Warrant or Warrants calling in the aggregate for the same number of shares
of Series B Preferred Stock, in the denomination or denominations requested, to
or on the order of such Holder upon payment by such Holder of any applicable
transfer taxes; provided that any transfer of the Warrant shall be subject to
the conditions on transfer set forth herein.
12. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,
or (in the case of mutilation) upon surrender and cancellation hereof, the
Company, at its expense, shall issue a replacement.
13. NOTICES. Except as provided in Section 10 above, all notices and
other communications from the Company to the Holder shall be mailed by overnight
courier or by first-class, registered or certified mail, postage prepaid, to the
address furnished to the Company in writing by the last Holder who has furnished
an address to the Company in writing. Notice shall be deemed given one (1) day
after deposit with an overnight courier service, three (3) days after deposit in
the mails as aforesaid or upon delivery if personally delivered.
14. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
15. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
16. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
17. EXPIRATION TIME. This Warrant will be wholly void and of no effect
after the time (the "Expiration Time") which is the earlier of (a) 5:00 p.m.
(San Francisco time) April 7, 2003, (b) the effective time of a merger or
reorganization following which the stockholders of the Company immediately prior
to such transaction own after such transaction less than fifty percent (50%) of
the equity securities of the surviving corporation (or its parent, if any), or
(c) the effective time of a sale of all or substantially all of the assets of
the Company.
18. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Series B Preferred Stock issuable
upon exercise hereof under the Act and applicable state securities laws. The
Holder by acceptance hereof represents that the Holder understands that neither
this Warrant nor the Series B Preferred Stock issuable upon exercise hereof (or
shares of any security into which such Series B Preferred Stock
8.
<PAGE>
may be converted) has been registered with the Securities and Exchange
Commission nor under any state securities law. By acceptance hereof, the Holder
represents and warrants that (a) it is acquiring the Warrant (and the shares of
Series B Preferred Stock or other securities issuable upon exercise hereof) for
its own account for investment purposes and not with a view to distribution, (b)
has received all such information as the Holder deems necessary and appropriate
to enable the Holder to evaluate the financial risk inherent in making an
investment in the Company, and satisfactory and complete information concerning
the business and financial condition of the Company in response to all inquiries
in respect thereof, (c) the Holder's acquisition of shares upon exercise hereof
will be a highly speculative investment, (d) the Holder is able, without
impairing its financial condition, to hold such shares for an indefinite period
of time and to suffer a complete loss of the Holder's investment, and (e)
the Holder has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of acquisition of this
Warrant and the shares issuable upon exercise hereof and of making an informed
investment decision with respect thereto. Each certificate representing shares
of Series B Preferred Stock or other securities issued upon exercise of this
Warrant shall have conspicuously endorsed on its face, at the time of its
issuance, such legends as counsel to the Company deems necessary or appropriate,
including without limitation the legend set forth on the top of the face page of
this Warrant. In addition to those restrictions on transfer imposed by the Act
and other applicable securities laws, this Warrant may not be sold or
transferred unless to (i) an underwriter acceptable to the Company for immediate
exercise by such underwriter in connection with a fully underwritten public
offering of the Company's Common Stock underlying this Warrant, (ii) any entity
who acquires the Holder or substantially all of its assets, or (iii) an
Affiliate of the Holder (as that term is defined in Rule 144(a)(1) of the Act).
9.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By: /s/ Jay Shukert
------------------------------------
Jay Shukert
Vice President, Finance
Acknowledged and Agreed:
GENTA INCORPORATED
By: /s/ Howard Sampson
---------------------------
Print Name: Howard Sampson
-------------------
Title: V.P., CFO
------------------------
10.
<PAGE>
SUBSCRIPTION FORM
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder,_______________ full shares of the Series B Preferred Stock of CV
Therapeutics, Inc. provided for therein, (2) makes payment in full of the
purchase price of such shares, (3) requests that certificates for such shares be
issued in the name of
----------------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
(Please print name and address)
Dated:
-------------------------- ---------------------------------
By:
------------------------------
---------------------------------
Title
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. ANY TRANSFER
OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT
AND AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR IN THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY
IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY LAWS.
CV THERAPEUTICS, INC.
SERIES D PREFERRED STOCK PURCHASE WARRANT
No. WD
---- --------------
CV Therapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Alex. Brown & Sons Incorporated ("Alex.
Brown") or any transferee who has received this warrant (the "Warrant") in
compliance with applicable law and the terms hereof (Alex. Brown and any such
transferee are herein referred to as "the "Holder"), is entitled, on the terms
set forth below, to purchase from the Company, on or before the Expiration Time
(as defined in Section 16 below) ____________________ (_____) shares of Series D
Preferred Stock of the Company at a price of $2.00 per share, subject to
adjustment as provided below (the "Exercise Price").
This Warrant is being issued in connection with the engagement of Alex.
Brown as placement agent for the Company's Series D Preferred Stock financing.
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any
time or from time to time on any business day prior to or on the Expiration
Time, for the full or any lesser number of shares of Series D Preferred Stock
purchasable hereunder, by surrendering this Warrant to the Company at its
principal office, with a duly executed Subscription Form (in substantially the
form attached hereto), together with payment of the sum obtained by multiplying
the number of shares of Series D Preferred Stock to be purchased by the Exercise
Price then in effect. Promptly after such exercise, the Company shall issue and
deliver to or upon the order of the Holder a certificate or certificates for the
number of shares of Series D Preferred Stock issuable upon such exercise, and
the Company will pay all taxes in connection with the issue thereof. All shares
of Series D Preferred Stock which may be issued upon exercise of this Warrant
will, upon issuance by the Company in accordance with the terms of this Warrant,
be validly issued, fully paid and non-assessable, and free from all taxes, liens
and encumbrances with respect to the issuance thereof (except as set forth in
the Company's Restated Certificate of Incorporation (the "Certificate") or
bylaws and any restrictions on sale set forth therein or pursuant to federal or
state securities laws or that certain Investor Rights Agreement (as defined in
Section 4 below)). To the extent permitted by law, this Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided herein, even if the Company's stock
transfer books are at that time closed,
<PAGE>
and the Holder shall be treated for all purposes as the holder of record of the
Series D Preferred Stock to be issued upon such exercise as of the close of
business on such date. Upon any partial exercise, the Company will issue to or
upon the order of the Holder a new Warrant for the number of shares of Series D
Preferred Stock as to which this Warrant has not been exercised.
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election in which event the
Company shall issue to the Holder a number of shares of Series D Preferred Stock
computed using the following formula:
X = Y (A - B)
---------
A
Where X = the number of shares of Series D Preferred Stock to be
issued to the Holder
Y = the number of shares of Series D Preferred Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the number of Shares purchased under the
Warrant being canceled (at the date of such calculation)
A = the fair market value of one share of the Company's Series D
Preferred Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, fair market value of one share of Series
D Preferred Stock shall be determined by the Company's Board of Directors in
good faith; provided, however, that where there is a public market for the
Company's Common Stock, the fair market value per share shall be the product of
(i) the average of the closing prices (or bid prices if there are no such
closing prices) of the Company's Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on the NASDAQ National Market System
or on the primary national securities exchange on which the Common Stock is then
listed, whichever is applicable, as published in the Western Edition of the WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by the NASDAQ
System) for the ten (10) trading days prior to the date of determination of fair
market value and (ii) the number of shares of Common Stock into which each share
of Series D Preferred Stock is convertible at the time of such exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Series D Preferred Stock subject to
this Warrant shall be subject to adjustment from time to time as follows:
2.
<PAGE>
3.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Series D Preferred Stock, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Series D Preferred Stock of the Company shall be combined
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased.
(b) Upon each adjustment of the Exercise Price as provided in
Section 3.1(a) above, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares of
Series D Preferred Stock (calculated to the nearest whole share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
3.2 ADJUSTMENT FOR STOCK DIVIDENDS. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Series D Preferred Stock
or securities convertible into shares of Series D Preferred Stock, the Exercise
Price and the number of shares to be obtained upon exercise of this Warrant
shall be proportionately adjusted to reflect the issuance of any shares of
Series D Preferred Stock or convertible securities, as the case may be, issuable
in payment of such dividend or distribution.
3.3 RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification or capital reorganization of outstanding shares of Series D
Preferred Stock of the Company, or in case of any reorganization, consolidation
or merger of the Company with or into another corporation (other than a merger
with another corporation in which merger the Company is the continuing
corporation and which does not result in any reclassification or capital
reorganization of outstanding shares of Series D Preferred Stock or other
securities issuable upon exercise of this warrant) or in case of any sale, lease
or conveyance to another corporation of all or substantially all of the assets
of the Company, the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the Holder hereof shall have the
right thereafter by exercising the Warrant at any time prior to the Expiration
Time, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification or capital reorganization and
reorganization, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section 3.3 shall similarly apply to successive
reclassifications or capital reorganizations of shares of Series D Preferred
Stock and to successive reorganizations, consolidations, mergers, sales or
conveyances. In the event that in connection with any such capital
reorganization or reclassification, reorganization, consolidation, merger, sale
or conveyance, additional shares of Series D Preferred Stock shall be issued in
exchange, conversion, substitution or payment, in whole or in part, for a
security of the Company other
3.
<PAGE>
than Series D Preferred Stock, any such issue shall be treated as an issue of
Common stock covered by the provisions of Sections 3.1 and 3.2 hereof.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of shares of Series D Preferred Stock subject to this Warrant need be
made if such adjustment would result in a change in the Exercise Price of less
than five cents ($0.05) (the "Adjustment Threshold Amount") or a change in the
number of subject shares of less than one (1) share. Any adjustment less than
these amounts which is not made shall be carried forward and shall be made
together with any subsequent adjustments, at the time when (a) the aggregate
amount of all such adjustments is equal to at least the Adjustment Threshold
Amount or (b) the Warrant is exercised.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon written request at any time of the Holder, furnish or cause to be
furnished to the Holder a like certificate setting forth (a) such adjustments
and readjustments, (b) the then effective Exercise Price and number of shares of
Series D Preferred Stock subject to the Warrant, and (c) the then effective
amount of securities (other than Series D Preferred Stock) and other property,
if any, which would be received upon exercise of the Warrant.
4. REGISTRABLE SECURITIES. Upon exercise of this Warrant for shares of
Series D Preferred Stock of the Company, any of the Company's Common Stock
issued or issuable pursuant to the conversion of such Series D Preferred Stock
shall be deemed to be "Registrable Securities" for purposes of that
certain Amended and Restated Investor Rights Agreement, dated as of March 23,
1994 among the Company and the persons named therein (the "Investor Rights
Agreement"), and the holder of such shares shall have all the rights, subject to
all the obligations, of a holder of Registrable Securities pursuant to the
Investor Rights Agreement, and shall be treated for all purposes as a holder of
Registrable Securities under and subject to the terms of the Investor Rights
Agreement.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares of Series D Preferred Stock purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised in accordance with
its terms.
6. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as
4.
<PAGE>
may be necessary or appropriate in order to protect the rights of the Holder
against dilution or other impairment.
7. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of exercise (as determined in
accordance with Section 2 hereof).
8. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Series D Preferred Stock
and other stock, securities and property as from time to time are receivable
upon the exercise of this Warrant. If at any time the number of authorized but
unissued shares of Series D Preferred Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series D Preferred Stock to such number of
shares as shall be sufficient for such purposes. The Company further covenants
that all shares that may be issued upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will be
free from all taxes, liens and charges in respect of the issue of such shares
(other than taxes in respect of any transfer occurring contemporaneously with
such exercise and payment or otherwise specified herein). The Company agrees
that its issuance of the Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Series D Preferred Stock (and
shares of Common Stock issuable upon conversion of such Series D Preferred
Stock) upon the exercise of the Warrant and covenants that all such shares, when
issued, sold and delivered in accordance with the terms of the Warrant for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth in this Warrant, the Investor Rights
Agreement and applicable state and federal securities laws.
9. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution or (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, the Company shall mail to each Holder at least fifteen (15)
days, or such longer period as is required by law, prior to the record date, a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (ii) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (iii) the date, if any, that is to be fixed as
to when the holders of record of Series D Preferred Stock (or other securities
at that time receivable upon exercise of the Warrant) shall be entitled to
exchange their shares of Series D Preferred Stock (or such other stock or
securities) for securities or other
5.
<PAGE>
property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.
10. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company at its principal office, the Company, at its expense, will issue and
deliver a new Warrant or Warrants calling in the aggregate for the same number
of shares of Series D Preferred Stock, in the denomination or denominations
requested, to or on the order of such Holder upon payment by such Holder of any
applicable transfer taxes; provided that any transfer of the Warrant shall be
subject to the conditions on transfer set forth herein.
11. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,or
(in the case of mutilation) upon surrender and cancellation hereof, the Company,
at its expense, shall issue a replacement.
12. NOTICES. Except as provided in Section 9 above, all notices and other
communications from the Company to the Holder shall be mailed by overnight
courier or by first-class, registered or certified mail, postage prepaid, to the
address furnished to the Company in writing by the last Holder who has furnished
an address to the Company in writing. Notice shall be deemed given one (1) day
after deposit with an overnight courier service, three (3) days after deposit in
the mails as aforesaid or upon delivery if personally delivered.
13. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
14. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
15. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
16. EXPIRATION TIME. This Warrant will be wholly void and of no effect
after 5:00 p.m. (San Francisco time) April 25, 1999 (the "Expiration Time");
provided that, if the last day on which this Warrant may be exercised, or on
which it may be exercised at a particular Exercise Price, is a Sunday or a legal
holiday or a day on which banking institutions doing business in the City of San
Francisco are authorized by law to close, this Warrant may be exercised prior to
5:00 p.m. (San Francisco time) on the next succeeding full business day with the
same force and effect and at the same Exercise Price as if exercised on such
last day specified herein.
17. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Series D Preferred Stock issuable
upon exercise
6.
<PAGE>
hereof under the Act and applicable state securities laws. The Holder by
acceptance hereof represents that the Holder understands that neither this
Warrant nor the Series D Preferred Stock issuable upon exercise hereof (or
shares of any security into which such Series D Preferred Stock may be
converted) has been registered with the Securities and Exchange Commission nor
under any state securities law, and that neither this Warrant nor the Series D
Preferred Stock issuable upon exercise hereof (or shares of any security into
which such Series D Preferred Stock may be converted) can be sold or transferred
unless registered under the Act and under any applicable state securities laws,
or unless an exemption from such registration is available. By acceptance
hereof, the Holder represents and warrants that (a) it is acquiring the Warrant
(and the shares of Series D Preferred Stock or other securities issuable upon
exercise hereof) for its own account for investment purposes and not with a view
to distribution, (b) has received all such information as the Holder deems
necessary and appropriate to enable the Holder to evaluate the financial risk
inherent in making an investment in the Company, and satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof, (c) the Holder's acquisition of
shares upon exercise hereof will be a highly speculative investment, (d) the
Holder is able, without impairing its financial condition, to hold such shares
for an indefinite period of time and to suffer a complete loss of the Holder's
investment, and (e) the Holder has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
acquisition of this Warrant and the shares issuable upon exercise hereof and of
making an informed investment decision with respect thereto. Each certificate
representing shares of Series D Preferred Stock or other securities issued upon
exercise of this Warrant shall have conspicuously endorsed on its face, at the
time of its issuance, such legends as counsel to the Company deems necessary or
appropriate, including without limitation the legend set forth on the top of the
face page of this Warrant. In addition to those restrictions on transfer
imposed by the Act and other applicable securities laws, this Warrant may not be
sold or transferred unless to (i) an underwriter acceptable to the Company for
immediate exercise by such underwriter in connection with a fully underwritten
public offering of the Company's Common Stock underlying this Warrant, (ii) any
entity who acquires the Holder or substantially all of its assets, or (iii) an
Affiliate of the Holder (as that term is defined in Rule 144(a)(1) of the Act).
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By:
-------------------------------
Jay Shukert
Vice President Finance
7.
<PAGE>
SUBSCRIPTION FORM
-----------------
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder, ______________ full shares of the Series D Preferred Stock of CV
Therapeutics, Inc. provided for therein, (2) makes payment in full of the
purchase price of such shares, (3) requests that certificates for such shares be
issued in the name of
----------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------
----------------------------------------------------------------
(Please print name and address)
Dated:
-------------------------
Signature:
-------------------------
By:
------------------------------
Title:
---------------------------
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
CV THERAPEUTICS. INC.
AMENDED AND RESTATED
WARRANT TO PURCHASE SHARES
OF SERIES D PREFERRED STOCK
THIS CERTIFIES THAT, for value received, and its
assignees (and any such assignee will then be a holder with respect to this
Warrant) are entitled to subscribe for and purchase shares of the
fully paid and nonassessable Series D Preferred Stock (as adjusted pursuant to
Section 4 hereof, the "Shares") of CV THERAPEUTICS, INC., a Delaware corporation
(the "Company"), at the price of $0.89 per share (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is hereto referred to as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, (a) the term "Series Preferred" shall mean the Company's presently
authorized Series D Preferred Stock, and any stock into or for which such Series
D Preferred Stock may hereafter be converted or exchanged, (b) the term "Date of
Grant" shall mean April 24, 1995 and (c) the term "Other Warrants" shall mean
any other warrants issued by the Company in connection with the transaction with
respect to which this Warrant was issued, and any warrant issued upon transfer
or partial exercise of this Warrant. The term "Warrant" as used herein shall be
deemed to include Other Warrants unless the context clearly requires otherwise.
This Warrant is amended and restated as of August 12, 1996, and replaces and
supersedes that certain Warrant to Purchase shares of Series D
Preferred Stock executed as of April 12, 1995, which shall be deemed
canceled and of no further force and effect upon the execution and delivery
hereof.
1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through ten (10) years after the Date of Grant.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder
1.
<PAGE>
hereof, in whole or in part and from time to time, at the election of the holder
hereof, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as Exhibit A duly completed and
executed) at the principal office of the Company and by the payment to the
Company, by certified or bank check, or by wire transfer to an account
designated by the Company (a "Wire Transfer") of an amount equal to the then
applicable Warrant Price multiplied by the number of Shares then being
purchased, or (b) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-1 duly completed and executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by certified or
bank check or by Wire Transfer from the proceeds of the sale of shares to be
sold by the holder in such public offering of an amount equal to the then
applicable Warrant Price per share multiplied by the number of Shares then being
purchased or (c) exercise of the right provided for in Section 10.2 hereof. The
person or persons in whose name(s) any certificate(s) representing shares of
Series Preferred shall be issuable upon exercise of this Warrant shall be deemed
to have become the holder(s) of record of, and shall be treated for all purposes
as the record holder(s) of, the shares represented thereby (and such shares
shall be deemed to have been issued) immediately prior to the close of business
on the date or dates upon which this Warrant is exercised. In the event of any
exercise of the rights represented by this Warrant, certificates for the shares
of stock so purchased shall be delivered to the holder hereof as soon as
possible and in any event within thirty (30) days after such exercise and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Series Preferred
to provide for the exercise of the rights represented by this Warrant and a
sufficient number of shares of its Common Stock to provide for the conversion of
the Series Preferred into Common Stock.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) RECLASSIFICATION OR MERGER. In case of any reclassification or
change of securities of the class issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in case
of any merger of the Company with or into another corporation (other than a
merger with another corporation in which the Company is the
2.
<PAGE>
acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as the
case may be, shall duly execute and deliver to the holder of this Warrant a new
Warrant (on substantially the same terms as provided by this Warrant), so that
the holder of this Warrant shall have the right to receive, at a total purchase
price not to exceed that payable upon the exercise of the unexercised portion of
this Warrant, and in lieu of the shares of Series Preferred theretofore issuable
upon exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of the number of shares of Series Preferred then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4 and, in the case of a new Warrant issuable after conversion of
the authorized shares of the Series Preferred into shares of Common Stock or
after the amendment of the terms of the antidilution protection of the Series
Preferred, shall provide for antidilution protection that shall be as nearly
equivalent as may be practicable to the antidilution provisions applicable to
the Series Preferred on the Date of Grant. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers and
transfers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its outstanding shares of Series Preferred, the Warrant Price shall be
proportionately decreased in the case of a subdivision or increased in the case
of a combination, effective at the close of business on the date the subdivision
or combination becomes effective.
(c) STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. If the Company at any
time while this Warrant is outstanding and unexpired shall (i) pay a dividend
with respect to Series Preferred payable in Series Preferred, or (ii) make any
other distribution with respect to Series Preferred (except any distribution
specifically provided for in Sections 4(a) and 4(b)), of Series Preferred, then
the Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of shares of Series Preferred outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Series Preferred outstanding immediately after such dividend
or distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price, the number of Shares of Series Preferred purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
3.
<PAGE>
5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant. In addition, whenever the conversion price or
conversion ratio of the Series Preferred shall be adjusted, the Company shall
make a certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the
conversion price or ratio of the Series Preferred after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without
regard to Section 13 hereof, by first class mail, postage prepaid) to the holder
of this Warrant.
6. FRACTIONAL SHARES. No fractional shares of Series Preferred will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Series Preferred on the date of exercise as reasonably determined
in good faith by the Company's Board of Directors.
7. COMPLIANCE WITH ACT; DISPOSITION OF WARRANT OR SHARES OF SERIES
PREFERRED.
(a) COMPLIANCE WITH ACT. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the shares of Series Preferred to be
issued upon exercise hereof and any Common Stock issued upon conversion thereof
are being acquired for investment and that such holder will not offer, sell or
otherwise dispose of this Warrant, or any shares of Series Preferred to be
issued upon exercise hereof or any Common Stock issued upon conversion thereof
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws. Upon exercise of this Warrant, unless the Shares being acquired
are registered under the Act and any applicable state securities laws or an
exemption from such registration is available, the holder hereof shall confirm
in writing to the Company that the shares of Series Preferred so purchased (and
any shares of Common Stock issued upon conversion thereof) are being acquired
for investment and not with a view toward distribution or resale in violation of
the Act and shall confirm such other matters related thereto as may be
reasonably requested by the Company. This Warrant and all shares of Series
Preferred issued upon exercise of this Warrant and all shares of Common Stock
issued upon conversion thereof (unless registered under the Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
4.
<PAGE>
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT
REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS
OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED,
DIRECTLY OR INDIRECTLY."
Said legend shall be removed by the Company, upon the request of a holder
of the applicable security, at such time as the restrictions on the transfer of
the applicable security shall have terminated. In addition, in connection with
the issuance of this Warrant, the holder specifically represents to the Company
by acceptance of this Warrant as follows:
(1) The holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.
(2) The holder understands that this Warrant has not been registered under
the Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the holder's investment intent
as expressed hereto.
(3) The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available. The holder is aware of the provisions of
Rule 1 44, promulgated under the Act. The holder also understands that, except
as provided m paragraph 9 hereof, the Company is under no obligation to register
and qualify this Warrant.
(b) DISPOSITION OF WARRANT OR SHARES. With respect to any offer,
sale or other disposition of this Warrant or any shares of Series Preferred
acquired pursuant to the exercise of this Warrant prior to registration of such
Warrant or shares, the holder hereof agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of such holder's counsel, or other evidence, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act
as then in effect or any federal or state securities law then in effect) of this
Warrant or such shares of Series Preferred or Common Stock and indicating
whether or not under the Act certificates for this Warrant or such shares of
Series Preferred to be sold or otherwise disposed of require any restrictive
legend as to applicable restrictions on transferability in order to ensure
compliance with such law. Promptly upon receiving such written notice and
reasonably satisfactory opinion or other evidence, if so requested, the Company,
as promptly as practicable but no later than fifteen (15) days after receipt of
the written notice, shall notify such holder that
5.
<PAGE>
such holder may sell or otherwise dispose of this Warrant or such shares of
Series Preferred or Common Stock, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this
Section 7(b) that the opinion of counsel for the holder or other evidence is not
reasonably satisfactory to the Company, the Company shall so notify the holder
promptly with details thereof after such determination has been made.
Notwithstanding the foregoing, this Warrant or such shares of Series Preferred
or Common Stock may, as to such federal laws, be offered, sold or otherwise
disposed of in accordance with Rule 144 or 144A under the Act, provided that the
Company shall have been furnished with such information as the Company may
reasonably request to provide a reasonable assurance that the provisions of Rule
144 or 144A have been satisfied. Each certificate representing this Warrant or
the shares of Series Preferred thus transferred (except a transfer pursuant to
Rule 144 or 144A) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with such laws, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
(c) APPLICABILITY OF RESTRICTIONS. Neither any restrictions of any
legend described in this Warrant nor the requirements of Section 7(b) above
shall apply to any transfer of, or grant of a security interest in, this Warrant
(or the Series Preferred or Common Stock obtainable upon exercise thereof) or
any part hereof (i) to a partner of the holder if the holder is a partnership,
(ii) to a partnership of which the holder is a partner, or (iii) to any
affiliate of the holder if the holder is a corporation; PROVIDED, HOWEVER, in
any such transfer, if applicable, the transferee shall on the Company's request
agree in writing to be bound by the terms of this Warrant as if an original
signatory hereto.
8. RIGHTS AS SHAREHOLDERS; INFORMATION. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Series Preferred or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the forgoing the Company will
transmit to the holder of this Warrant such information, documents and reports
as are generally distributed to the holders of any class or series of the
securities of the Company concurrently with the distribution thereof to the
shareholders.
9. REGISTRATION RIGHTS. The Company grants registration rights to the
holder of this Warrant for any Common Stock of the Company obtained upon
conversion of the Series Preferred for which this Warrant is exercisable,
comparable to the registration rights granted to the investors in that certain
Amended and Restated Investor Rights Agreement dated as of May 29, 1996 (the
"Registration Rights Agreemere"), with the following exceptions and
clarifications:
6.
<PAGE>
(1) The holder will have no demand registration rights.
(2) The holder will be subject to the same provisions regarding
indemnification as contained in the Registration Rights
Agreement.
(3) The registration rights are freely assignable by the holder of
this Warrant.
(4) The holder of this Warrant, by acceptance hereof, agrees that
such holder will not, without the prior written consent of the
lead underwriter of the imtial public offering of the Common
Stock of the Company pursuant to a Registration Statement on form
S-1 (or its successor) filed under the Act, directly or
indirectly offer to sell, contract to sell (including without
limitation, any short sale), grant any option for the sale of,
acquire any option to dispose of, or otherwise dispose of any
Shares or Common Stock issuable upon conversion thereof for a
period of 180 days following the day on which the Registration
Statement on Form S-1 to be filed on behalf of the Company in
connection with the Public Offering shall become effective by
order of the Securities and Exchange Commission.
The holder of this Warrant agrees that upon the request of the Company, it will
become a party to the Registration Rights Agreement and upon becoming a party
thereto, the foregoing provisions of this Section 9 shall be of no further force
and effect; PROVIDED, HOWEVER, that notwithstanding anything to the contrary set
forth in the Registration Rights Agreement, the registration rights granted to
the holder of this Warrant thereunder shall be freely assignable in connection
with the transfer of the Series Preferred.
10. ADDITIONAL RIGHTS.
10.1 SECONDARY SALES. The Company will promptly provide the holder of this
Warrant with notice of any offer (of which it has knowledge) to acquire from the
Company's security holders more than ten percent (10%) of the total voting power
of the Company.
10.2 RIGHT TO CONVERT WARRANT INTO STOCK; NET ISSUANCE.
(a) RIGHT TO CONVERT. In addition to and without limiting the fights
of the holder under the terms of this Warrant, the holder shall have the right
to convert this Warrant or any portion hereof (the "Conversion Right") into
shares of Series Preferred (or Common Stock if the Series Preferred has been
automatically converted into Common Stock) as provided in this Section 10.2 at
any time or from time to time dunng the term of this Warrant. Upon exercise of
the Conversion Right with respect to a particular number of shares subject to
this Warrant (the "Converted Warrant Shares"), the Company shall deliver to the
holder (without payment by the holder of any exercise price or any cash or other
consideration) (X) that number of shares of fully paid and nonassessable Series
Preferred (or
7.
<PAGE>
Common Stock if the Series Preferred has been automatically converted into
Common Stock) equal to the quotient obtained by dividing the value of this
Warrant (or the specified portion hereof) on the Conversion Date (as defined in
subsection (b) hereof), which value shall be determined by subtracting (A) the
aggregate Warrant Price of the Converted Warrant Shares immediately prior to the
exercise of the Conversion Right from (B) the aggregate fair market value of the
Converted Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Conversion Date (as hereto defined) by (Y) the
fair market value of one share of Series Preferred (or Common Stock if the
Series Preferred has been automatically converted into Common Stock) on the
Conversion Date (as hereto defined).
Expressed as a formula, such conversion (assuming the Series Preferred has
been automatically converted into Common Stock) shall be computed as follows:
X = B - A
-----
Y
Where: X = the number of shares of Common Stock that may be issued to
holder
Y = the fair market value of one share of Common Stock
A = the aggregate Warrant Price (i.e., Converted Warrant Shares
x Warrant Price)
B = the aggregate fair market value (i.e., fair market value x
Converted Warrant Shares)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of Section 9 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
(b) METHOD OF EXERCISE. The Conversion Right may be exercised by the
holder by the surrender of this Warrant at the principal office of the Company
together with a written statement speci ,fying that the holder thereby intends
to exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in Section 10.2(a) hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), and, at the election of the holder
hereof, may be made contingent upon the closing of the sale of the Company's
Common Stock to the public in a public offering pursuant to a Registration
Statement under the Act (a "Public Offering"). Certificates for the shares
issuable upon exercise of the Conversion Right and, if
8.
<PAGE>
applicable, a new warrant evidencing the balance of the shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder within thirty (30) days following the Conversion Date.
Any conversion from Series Preferred to Common Stock shall be in the ratio of
one (1) share of Common Stock for each share of Series Preferred (as adjusted
herein and in the Charter (as defined in Section 11)). On the Date of Grant,
each share of the Series Preferred represented by this Warrant is convertible
into one share of Common Stock.
(c) DETERMINATION OF FAIR MARKET VALUE. For purposes of this
Section 10.2, "fair market value" of a share of Series Preferred (or Common
Stock if the Series Preferred has been automatically converted into Common
Stock) as of a particular date (the "Determination Date") shall mean:
(i) If the Conversion Right is exercised in connection with and
contingent upon a Public Offering, and if the Company's Registration Statement
relating to such Public Offering has been declared effective by the SEC, then
the imtial "Price to Public" specified in the final prospectus with respect to
such offering.
(ii) If the Conversion Right is not exercised in connection with
and contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange, the fair market value of the
Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30 business day period ending five
business days prior to the Determination Date, and the fair market value of
the Series Preferred shall be deemed to be such fair market value of the
Common Stock multiplied by the number of shares of Common Stock into which
each share of Series Preferred is then convertible;
(B) If traded over-the-counter, the fair market value of the Common
Stock shall be deemed to be the average of the closing bid prices of the
Common Stock over the 30 business day period ending five business days
prior to the Determination Date, and the fair market value of the Series
Preferred shall be deemed to be such fair market value of the Common Stock
multiplied by the number of shares of Common Stock into which each share of
Series Preferred is then convertible; and
(C) If there is no public market for the Common Stock, then fair
market value shall be determined by mutual agreement of the holder of this
Warrant and the Company.
11. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company
and is a valid and binding obligation of the Company enforceable in accordance
with its
9.
<PAGE>
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and the rules of law or principles at equity governing
specific performance, injunctive relief and other equitable remedies;
(b) The Shares have been duly authorized and reserved for issuance by
the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Series Preferred and the holders thereof are as set forth in
the Company's Certificate of Incorporation, a true and complete copy of which is
attached hereto as Exhibit B (the "Charter");
(d) The shares of Common Stock issuable upon conversion of the Shares
have been duly authorized and reserved for issuance by the Company and, when
issued in accordance with the terms of the Charter will be validly issued, fully
paid and nonassessable;
(e) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Charter or by-laws, do
not and will not contravene any law, governmental rule or regulation, judgment
or order applicable to the Company, and do not and will not conflict with or
contravene any provision of, or constitute a default under, any indenture,
mortgage, material contract or other instrument of which the Company is a party
or by which it is bound or require the consent or approval of, the giving of
notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby;
and
(f) There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, will have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant.
12. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrmnent in writing
signed by the party against which enforcement of the same is sought.
13. NOTICES. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered personally, or shall be sent by certified or
registered mail, postage prepaid, to each such holder at its address as shown on
the books of the Company or to the Company at the address indicated therefor on
the signature page of this Warrant or at such other address as the Company shall
have notified the holder.
10.
<PAGE>
14. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets and all of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof.
15. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an mdernnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver to the holder a new Warrant or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.
16. DESCRINTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
17. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California without regard to conflicts of laws principles.
18. SURVIVAL OF RENRESENTATIONS. Warranties and Ageements. All
representations and warranties of the Company and the holder hereof contained
herein shall sundye the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contamed herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
19. REMEDIES. In case any one or more of the covenants and agreements
contamed in this Warrant shall have been breached, the holders hereof (m the
case of a breach by the Company), or the Company (in the case of a breach by a
holder),. may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contamed in this Warrant.
20. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the fights of the
holder of this Warrant against impairment.
11.
<PAGE>
21. SEVERABILITY. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
22. RECOVERY OF LITIGATION COSTS. If any legal action or other proceeding
is brought for the enforcement of this Warrant, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Warrant, the prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12.
<PAGE>
23. ENTIRE AGREEMENT; MODIFICATION. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained hereto
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter hereto.
CV THERAPEUTICS, INC.
By:
------------------------------------
Title:
---------------------------------
Address:
3172 Porter Drive
Palo Alto, California 94304
13.
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: CV THERAPEUTICS, INC.
1. The undersigned hereby:
- elects to purchase shares of Series D Preferred Stock of
CV THERAPEUTICS, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of
such shares in full, or
- elects to exercise its net issuance rights pursuant to Section
10.2 of the attached Warrant with respect to _______ Shares of
Series D Preferred Stock.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
---------------------
(Name)
---------------------
---------------------
(Address)
3. The undersigned represents that the aLoresaid shares are being
acquired for the account ot the undersigned for investment and not with a view
to, or for resale in connection with the distribution thereoL and that the
undersigned has no present inetention of distributing or such shares, all except
as in compliance with applicable securities laws.
------------------------
14.
<PAGE>
(Signature)
- ------------------------- ---------------------------------------
(Date) (Print Name)
15.
<PAGE>
EXHIBIT A-1
NOTICE OF EXERCISE
To: CV THERAPEUTICS, INC. (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S , filed , 19 , the undersigned
hereby:
- elects to purchase shares of Series D Preferred Stock of the
Company (or such lesser number of shares as may be sold on behalf of
the undersigned at the Closing) pursuant to the terms of the attached
Warrant, or
- elects to exercise its net issuance fights pursuant to Section 10.2 of
the attached Warrant with respect to Shares of Series D
Preferred Stock.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
---------------------------------------
(Signature)
- ------------------------- ---------------------------------------
(Date) (Print Name)
16.
<PAGE>
EXHIBIT B
CHARTER
17.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
AS REQUIRED BY BLUE SKY LAWS COVERING SUCH TRANSFER, OR IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY IN ORDER
FOR SUCH TRANSFER TO COMPLY WITH THE SECURITIES ACT AND BLUE SKY LAWS.
CV THERAPEUTICS, INC.
SERIES E PREFERRED STOCK PURCHASE WARRANT
No. 1995-WE-... _______________
CV THERAPEUTICS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, ... or any transferee who has received this
warrant (the "Warrant") in compliance with applicable law and the terms hereof
(the "Holder"), is entitled, on the terms set forth below, to purchase from the
Company, on or before the Expiration Time (as defined in Section 15 below) ...
(...) shares of Series E Preferred Stock of the Company at a price of $2.00 per
share, subject to adjustment as provided below (the "Exercise Price").
This Warrant is being issued in connection with the Company's Series E
Preferred Stock financing. This Warrant is one of a series of Warrants (the
"Warrants") issued pursuant to that certain Series E Preferred Stock and Warrant
Purchase Agreement dated as of September 8, 1995, by and among the Company and
the purchasers listed therein, copies of which are on file at the principal
office of the Company.
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any
time or from time to time on any business day prior to or on the Expiration
Time, for the full or any lesser number of shares of Series E Preferred Stock
purchasable hereunder, by surrendering this Warrant to the Company at its
principal office, with a duly executed Subscription Form (in substantially the
form attached hereto), together with payment of the sum obtained by multiplying
the number of shares of Series E Preferred Stock to be purchased by the Exercise
Price then in effect. Promptly after such exercise, the Company shall issue and
deliver to or upon the order of the Holder a certificate or certificates for the
number of shares of Series E Preferred Stock issuable upon such exercise, and
the Company will pay all taxes in connection with the issue thereof. All shares
of Series E Preferred Stock which may be issued upon exercise of this Warrant
will, upon issuance by the Company in accordance with the terms of this Warrant,
be validly issued, fully paid and non-assessable, and free from all taxes, liens
and encumbrances with respect to the issuance thereof (except as set forth in
the Company's Restated Certificate of Incorporation or bylaws and any
restrictions on sale set forth therein or pursuant to federal or state
securities laws). To the extent permitted by law, this Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided herein, even if the Company's stock
transfer books are at that
<PAGE>
time closed, and the Holder shall be treated for all purposes as the holder of
record of the Series E Preferred Stock to be issued upon such exercise as of the
close of business on such date. Upon any partial exercise, the Company will
issue to or upon the order of the Holder a new Warrant for the number of shares
of Series E Preferred Stock as to which this Warrant has not been exercised.
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election, in which event the
Company shall issue to the Holder a number of shares of Series E Preferred Stock
computed using the following formula:
X = Y (A - B)
---------
A
Where X = the number of shares of Series E Preferred Stock to be
issued to the Holder
Y = the number of shares of Series E Preferred Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the number of Shares purchased under the
Warrant being canceled (at the date of such calculation)
A = the fair market value of one share of the Company's Series E
Preferred Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, the fair market value of one share of
Series E Preferred Stock shall be determined by the Company's Board of Directors
in good faith; PROVIDED, HOWEVER, that where there is a public market for the
Company's Common Stock, the fair market value per share shall be the product of
(i) the average of the closing prices (or bid prices if there are no such
closing prices) of the Company's Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on The Nasdaq National Market System
or on the primary national securities exchange on which the Common Stock is then
listed, whichever is applicable, as published in the Western Edition of the Wall
Street Journal (or, if not so reported, as otherwise reported by The Nasdaq
System) for the ten (10) trading days prior to the date of determination of fair
market value and (ii) the number of shares of Common Stock into which each share
of Series E Preferred Stock is convertible at the time of such exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Series E Preferred Stock subject to
this Warrant shall be subject to adjustment from time to time as follows:
2.
<PAGE>
3.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Series E Preferred Stock, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Series E Preferred Stock of the Company shall be combined
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased.
(b) Upon each adjustment of the Exercise Price as provided in
Section 3.1(a) above, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares of
Series E Preferred Stock (calculated to the nearest whole share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
3.2 ADJUSTMENT FOR STOCK DIVIDENDS. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Series E Preferred Stock
or securities convertible into shares of Series E Preferred Stock, the Exercise
Price and the number of shares to be obtained upon exercise of this Warrant
shall be proportionately adjusted to reflect the issuance of any shares of
Series E Preferred Stock or convertible securities, as the case may be, issuable
in payment of such dividend or distribution.
3.3 ADJUSTMENT FOR REORGANIZATIONS. In case, at any time prior to
the Expiration Time of any capital reorganization, this Warrant shall, after
such reorganization, be exercisable so that upon exercise the Holder shall
procure, in lieu of each share of Series E Preferred Stock, the kind and amount
of shares of stock, other securities, money or property receivable upon such
reorganization by the holder of one share issuable upon exercise of this Warrant
had this Warrant been exercised immediately prior to such reorganization. The
provisions of this Section 3.3 shall similarly apply to successive
reorganizations.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of shares of Series E Preferred Stock subject to this Warrant need be
made if such adjustment would result in a change in the Exercise Price of less
than five cents ($0.05) (the "Adjustment Threshold Amount") or a change in the
number of subject shares of less than one (1) share. Any adjustment less than
these amounts which is not made shall be carried forward and shall be made
together with any subsequent adjustments, at the time when (a) the aggregate
amount of all such adjustments is equal to at least the Adjustment Threshold
Amount or (b) the Warrant is exercised.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and
3.
<PAGE>
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon written request at any time of the Holder, furnish or
cause to be furnished to the Holder a like certificate setting forth (a) such
adjustments and readjustments, (b) the then effective Exercise Price and number
of shares of Series E Preferred Stock subject to the Warrant, and (c) the then
effective amount of securities (other than Series E Preferred Stock) and other
property, if any, which would be received upon exercise of the Warrant.
4. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares of Series E Preferred Stock purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised in accordance with
its terms.
5. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.
6. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of exercise (as determined in good
faith by the Board of Directors of the Company).
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Series E Preferred Stock
and other stock, securities and property as from time to time are receivable
upon the exercise of this Warrant. If at any time the number of authorized but
unissued shares of Series E Preferred Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series E Preferred Stock to such number of
shares as shall be sufficient for such purposes. The Company further covenants
that all shares that may be issued upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will be
free from all taxes, liens and charges in respect of the issue of such shares
(other than taxes in respect of any transfer occurring contemporaneously with
such exercise and payment or otherwise specified herein). The Company agrees
that its issuance of the Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Series E Preferred Stock (and
shares of Common Stock issuable upon conversion of such Series E Preferred
Stock) upon the exercise of the Warrant and covenants that all such shares, when
issued, sold and delivered in accordance with the terms of the Warrant for the
consideration expressed herein, will be duly
4.
<PAGE>
and validly issued, fully paid and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer set forth in this
Warrant, that certain Amended and Restated Investor Rights Agreement dated as of
September 8, 1995, between the Company and certain holders of the Company's
Preferred Stock, and applicable state and federal securities laws.
8. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or (c) the first fully underwritten public offering of the
Company's Common Stock such as will cause this Warrant to expire, the Company
shall mail to each Holder at least fifteen (15) days, or such longer period as
is required by law, prior to the record date or the closing date of the first
fully underwritten public offering specified therein, a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(ii) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, (iii) the closing date of the fully underwritten public
offering, and (iv) the date, if any, that is to be fixed as to when the holders
of record of Series E Preferred Stock (or other securities at that time
receivable upon exercise of the Warrant) shall be entitled to exchange their
shares of Series E Preferred Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
9. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company at its principal office, the Company, at its expense, will issue and
deliver a new Warrant or Warrants calling in the aggregate for the same number
of shares of Series E Preferred Stock, in the denomination or denominations
requested, to or on the order of such Holder upon payment by such Holder of any
applicable transfer taxes; provided that any transfer of the Warrant shall be
subject to the conditions on transfer set forth herein.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,
or (in the case of mutilation) upon surrender and cancellation hereof, the
Company, at its expense, shall issue a replacement.
11. NOTICES. Except as provided in Section 8 above, all notices and other
communications from the Company to the Holder shall be mailed by overnight
courier, by first-class, registered or certified mail, postage prepaid, to the
address furnished to the Company in
5.
<PAGE>
writing by the last Holder who has furnished an address to the Company in
writing or confirmed facsimile. Notice shall be deemed given one (1) day after
deposit with an overnight courier service, upon receipt of confirmed facsimile,
three (3) days after deposit in the mails as aforesaid or upon delivery if
personally delivered.
12. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
14. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
15. EXPIRATION TIME. This Warrant will be wholly void and of no effect
after the time (the "Expiration Time") which is the earlier of (a) 5:00 p.m.
(San Francisco time) November 7, 2000; (b) the closing of the first underwritten
public offering of Common Stock of the Company pursuant to a registration
statement under the Securities Act of 1933, as amended (the "Act"), at a per
share price of five dollars ($5.00) or greater (as adjusted for any stock
dividends, combinations or splits with respect to such stock); or (c) a merger,
reorganization or sale of substantially all of the assets of the Company at a
price per share of five dollars $5.00 or greater (as adjusted for any stock
dividends, combinations or splits with respect to such stock) in which the
stockholders of the Company immediately prior to the transaction possess less
than 50% of the voting securities of the surviving entity (or its parent, if
any), provided that, if the last day on which this Warrant may be exercised, or
on which it may be exercised at a particular Exercise Price, is a Sunday or a
legal holiday or a day on which banking institutions doing business in the city
of San Francisco are authorized by law to close, this Warrant may be exercised
prior to 5:00 p.m. (San Francisco time) on the next succeeding full business day
with the same force and effect and at the same Exercise Price as if exercised on
such last day specified herein.
16. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Series E Preferred Stock issuable
upon exercise hereof under the Act and applicable state securities laws. The
Holder by acceptance hereof represents that the Holder understands that neither
this Warrant nor the Series E Preferred Stock issuable upon exercise hereof (or
shares of any security into which such Series E Preferred Stock may be
converted) has been registered with the Securities and Exchange Commission nor
under any state securities law, and that neither this Warrant nor the Series E
Preferred Stock issuable upon exercise hereof (or shares of any security into
which such Series E Preferred Stock may be converted) can be sold or transferred
unless registered under the Act and under any applicable state securities laws,
or unless an exemption from such registration is available. By acceptance
hereof, the Holder represents and warrants that (a) the Holder is acquiring the
Warrant (and the shares of Series E Preferred Stock or other securities issuable
upon exercise hereof) for
6.
<PAGE>
Holder's own account for investment purposes and not with a view to
distribution, (b) the Holder has received all such information as the Holder
deems necessary and appropriate to enable the Holder to evaluate the financial
risk inherent in making an investment in the Company, and satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof, (c) the Holder's
acquisition of shares upon exercise hereof will be a highly speculative
investment, (d) the Holder is able, without impairing its financial condition,
to hold such shares for an indefinite period of time and to suffer a complete
loss of the Holder's investment, and (e) the Holder has such knowledge and
experience in financial and business matters that the Holder is capable of
evaluating the merits and risks of acquisition of this Warrant and the shares
issuable upon exercise hereof and of making an informed investment decision with
respect thereto. Each certificate representing shares of Series E Preferred
Stock or other securities issued upon exercise of this Warrant shall have
conspicuously endorsed on its face, at the time of its issuance, such legends as
counsel to the Company deems necessary or appropriate, including without
limitation the legend set forth on the top of the face page of this Warrant. In
addition to those restrictions on transfer imposed by the Act and other
applicable securities laws, this Warrant may not be sold or transferred unless
to (i) an underwriter acceptable to the Company for immediate exercise by such
underwriter in connection with a fully underwritten public offering of the
Company's Common Stock underlying this Warrant, (ii) any entity who acquires the
Holder or substantially all of its assets, or (iii) an Affiliate of the Holder
(as that term is defined in Rule 144(a)(1) of the Act).
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By:
------------------------------------
Thomas L. Gutshall
President
7.
<PAGE>
SUBSCRIPTION FORM
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder, _______________ full shares of the Series E Preferred Stock of CV
Therapeutics, Inc. provided for therein, (2) makes payment in full of the
purchase price of such shares, (3) requests that certificates for such shares be
issued in the name of
----------------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
(Please print name and address)
Dated:
----------------------
Signature: ----------------------
By:
------------------------------
8.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
AS REQUIRED BY BLUE SKY LAWS COVERING SUCH TRANSFER, OR IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY IN ORDER
FOR SUCH TRANSFER TO COMPLY WITH THE SECURITIES ACT AND BLUE SKY LAWS.
WARRANT TO PURCHASE UNITS OF
CV THERAPEUTICS, INC.
No. 1995 WE-42 December 21, 1995
CV THERAPEUTICS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, COOLEY GODWARD CASTRO HUDDLESON & TATUM or
any transferee who has received this warrant (the "Warrant") in compliance with
applicable law and the terms hereof (the "Holder"), in consideration for
cancellation of payments on the outstanding balance due to Holder for services
rendered to the Company in the amount of $48,750, is entitled, on or before the
Expiration Time (as defined in Section 15 below), to purchase from the Company
up to an aggregate of twenty-five thousand (25,000) units (the "Units") at a
price of five cents ($0.05) per Unit, subject to adjustment as provided below
(the "Exercise Price"), with each Unit consisting of one (1) share of Series E
Preferred Stock of the Company (the "Series E Preferred Stock") and one (1)
warrant to purchase one-half share of Series E Preferred Stock (a "Series E
Warrant"), at an exercise price of two dollars $2.00 per share.
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any time
or from time to time on any business day prior to or on the Expiration Time, for
the full or any lesser number of Units purchasable hereunder, by surrendering
this Warrant to the Company at its principal office, with a duly executed
Subscription Form (in substantially the form attached hereto), together with
payment of the sum obtained by multiplying the number of Units to be purchased
by the Exercise Price then in effect. Promptly after such exercise, the Company
shall issue and deliver to or upon the order of the Holder a certificate or
certificates for the number of shares of Series E Preferred Stock and Series E
Warrants (in substantially the form attached hereto as Exhibit A) issuable upon
such exercise. All shares of Series E Preferred Stock and Series E Warrants
that may be issued upon exercise of this Warrant will, upon issuance by the
Company in accordance with the terms of this Warrant, be validly issued, fully
paid and non-assessable, and free from all taxes, liens and encumbrances with
respect to the issuance thereof (except as set forth in the Company's Restated
Certificate of Incorporation or bylaws and any restrictions on sale set forth
therein or pursuant to federal or state securities laws). To the extent
permitted by law, this Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided herein, even if the Company's stock transfer books are at
that time closed, and the Holder shall be treated for all
1.
<PAGE>
purposes as the holder of record of the Series E Preferred Stock and Series E
Warrants to be issued upon such exercise as of the close of business on such
date. Upon any partial exercise, the Company will issue to or upon the order of
the Holder a new Warrant for the number of Units as to which this Warrant has
not been exercised.
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive a number of Units equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder a number of Units computed
using the following formula:
X = Y (A - B)
-------
A
Where X = the number of Units to be issued to the Holder
Y = the number of Units purchasable under the Warrant or, if
only a portion of the Warrant is being exercised, the number
of Units purchased under the Warrant being canceled (at the
date of such calculation)
A = the fair market value of one share of the Company's Series E
Preferred Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, the fair market value of one share of
Series E Preferred Stock shall be determined by the Company's Board of Directors
in good faith; PROVIDED, HOWEVER, that where there is a public market for the
Company's Common Stock, the fair market value per share shall be the product of
(i) the average of the closing prices (or bid prices if there are no such
closing prices) of the Company's Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on The Nasdaq National Market System
or on the primary national securities exchange on which the Common Stock is then
listed, whichever is applicable, as published in the Western Edition of the Wall
Street Journal (or, if not so reported, as otherwise reported by The Nasdaq
System) for the ten (10) trading days prior to the date of determination of fair
market value and (ii) the number of shares of Common Stock into which each share
of Series E Preferred Stock is convertible at the time of such exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of Units subject to this Warrant shall be subject
to adjustment from time to time as follows:
2.
<PAGE>
3.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Series E Preferred Stock, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Series E Preferred Stock of the Company shall be combined
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased.
(b) Upon each adjustment of the Exercise Price as provided in
Section 3.1(a) above, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of Units
(calculated to the nearest whole Unit) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Units
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
3.2 ADJUSTMENT FOR STOCK DIVIDENDS. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Series E Preferred Stock
or securities convertible into shares of Series E Preferred Stock, the Exercise
Price and the number of Units to be obtained upon exercise of this Warrant shall
be proportionately adjusted to reflect the issuance of any shares of Series E
Preferred Stock or convertible securities, as the case may be, issuable in
payment of such dividend or distribution.
3.3 ADJUSTMENT FOR REORGANIZATIONS. In case, at any time prior to
the Expiration Time of any capital reorganization, this Warrant shall, after
such reorganization, be exercisable so that upon exercise the Holder shall
procure, in lieu of each share of Series E Preferred Stock and Series E Warrant,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reorganization by the holder of one Unit issuable upon
exercise of this Warrant had this Warrant been exercised immediately prior to
such reorganization. The provisions of this Section 3.3 shall similarly apply
to successive reorganizations.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of Units subject to this Warrant need be made if such adjustment
would result in a change in the Exercise Price of less than one cent ($0.01)
(the "Adjustment Threshold Amount") or a change in the number of subject Units
of less than one (1) Unit. Any adjustment less than these amounts which is not
made shall be carried forward and shall be made together with any subsequent
adjustments, at the time when (a) the aggregate amount of all such adjustments
is equal to at least the Adjustment Threshold Amount or (b) the Warrant is
exercised.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
3.
<PAGE>
shall, upon written request at any time of the Holder, furnish or cause to be
furnished to the Holder a like certificate setting forth (a) such adjustments
and readjustments, (b) the then effective Exercise Price and number of Units
subject to the Warrant, and (c) the then effective amount of securities (other
than Series E Preferred Stock and Series E Warrants to purchase Series E
Preferred Stock) and other property, if any, which would be received upon
exercise of the Warrant.
4. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares of Series E Preferred Stock purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised in accordance with
its terms.
5. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.
6. ELIMINATION OF FRACTIONAL INTERESTS. No fractional share of Series E
Preferred Stock shall be issued upon exercise of this Warrant or a Series E
Warrant. The Company shall, in lieu of issuing any fractional share of Series E
Preferred Stock, pay the Holder entitled to such fraction a sum in cash equal to
the fair market value of such fraction on the date of exercise (as determined in
good faith by the Board of Directors of the Company). The Company shall not be
required to issue Series E Warrants representing fractions of shares of stock.
Solely with respect to the issuance of Series E Warrants upon exercise of this
Warrant, fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of stock.
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Series E Preferred Stock
and other stock, securities and property as from time to time are receivable
upon the exercise of this Warrant. If at any time the number of authorized but
unissued shares of Series E Preferred Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series E Preferred Stock to such number of
shares as shall be sufficient for such purposes. The Company further covenants
that all shares that may be issued upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will be
free from all taxes, liens and charges in respect of the issue of such shares
(other than taxes in respect of any transfer occurring contemporaneously with
such exercise and payment or otherwise specified herein). The Company agrees
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock
4.
<PAGE>
certificates to execute and issue the necessary certificates for shares of
Series E Preferred Stock (and shares of Common Stock issuable upon conversion of
such Series E Preferred Stock) and Series E Warrants upon the exercise of this
Warrant and covenants that all such shares and Series E Warrants, when issued,
sold and delivered in accordance with the terms of this Warrant for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth in this Warrant and applicable state and
federal securities laws.
8. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or (c) the first fully underwritten public offering of the
Company's Common Stock such as will cause this Warrant to expire, the Company
shall mail to each Holder at least fifteen (15) days, or such longer period as
is required by law, prior to the record date or the closing date of the first
fully underwritten public offering specified therein, a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(ii) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, (iii) the closing date of the fully underwritten public
offering, and (iv) the date, if any, that is to be fixed as to when the holders
of record of Series E Preferred Stock (or other securities at that time
receivable upon exercise of this Warrant) shall be entitled to exchange their
shares of Series E Preferred Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
9. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company at its principal office, the Company, at its expense, will issue and
deliver a new Warrant or Warrants calling in the aggregate for the same number
of Units in the denomination or denominations requested, to or on the order of
such Holder upon payment by such Holder of any applicable transfer taxes;
provided that any transfer of the Warrant shall be subject to the conditions on
transfer set forth herein.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,
or (in the case of mutilation) upon surrender and cancellation hereof, the
Company, at its expense, shall issue a replacement.
11. NOTICES. Except as provided in Section 8 above, all notices and other
communications from the Company to the Holder shall be mailed by overnight
courier, by first-class, registered or certified mail, postage prepaid, to the
address furnished to the Company in
5.
<PAGE>
writing by the last Holder who has furnished an address to the Company in
writing or confirmed facsimile. Notice shall be deemed given one (1) day after
deposit with an overnight courier service, upon receipt of confirmed facsimile,
three (3) days after deposit in the mails as aforesaid or upon delivery if
personally delivered.
12. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
14. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
15. EXPIRATION TIME. This Warrant will be wholly void and of no effect
after the time (the "Expiration Time") which is the earlier of (a) 5:00 p.m.
(San Francisco time) December , 2000; (b) the closing of the first
underwritten public offering of Common Stock of the Company pursuant to a
registration statement under the Securities Act of 1933, as amended (the "Act"),
at a per share price of five dollars ($5.00) or greater (as adjusted for any
stock dividends, combinations or splits with respect to such stock); or (c) a
merger, reorganization or sale of substantially all of the assets of the Company
at a price per share of five dollars $5.00 or greater (as adjusted for any stock
dividends, combinations or splits with respect to such stock) in which the
stockholders of the Company immediately prior to the transaction possess less
than 50% of the voting securities of the surviving entity (or its parent, if
any), provided that, if the last day on which this Warrant may be exercised, or
on which it may be exercised at a particular Exercise Price, is a Sunday or a
legal holiday or a day on which banking institutions doing business in the city
of San Francisco are authorized by law to close, this Warrant may be exercised
prior to 5:00 p.m. (San Francisco time) on the next succeeding full business day
with the same force and effect and at the same Exercise Price as if exercised on
such last day specified herein.
16. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Series E Preferred Stock and
Series E Warrants issuable upon exercise hereof under the Act and applicable
state securities laws. The Holder by acceptance hereof represents that the
Holder understands that neither this Warrant nor the Series E Preferred Stock
and Series E Warrants issuable upon exercise hereof (or shares of any security
into which the Series E Preferred Stock may be converted) has been registered
with the Securities and Exchange Commission nor under any state securities law,
and that neither this Warrant nor the Series E Preferred Stock and Series E
Warrants issuable upon exercise hereof (or shares of any security into which the
Series E Preferred Stock may be converted) can be sold or transferred unless
registered under the Act and under any applicable state securities laws, or
unless an exemption from such registration is available. By acceptance hereof,
the Holder represents and warrants that (a) the Holder is acquiring the Warrant
(and the shares of Series E Preferred Stock and Series E Warrants or other
securities issuable upon exercise hereof) for
6.
<PAGE>
Holder's own account for investment purposes and not with a view to
distribution, (b) the Holder has received all such information as the Holder
deems necessary and appropriate to enable the Holder to evaluate the financial
risk inherent in making an investment in the Company, and satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof, (c) the Holder
understands that Holder's acquisition of Series E Preferred Stock and Series E
Warrants upon exercise hereof will be a highly speculative investment, (d) the
Holder is able, without impairing its financial condition, to hold such Series E
Preferred Stock and Series E Warrants for an indefinite period of time and
to suffer a complete loss of the Holder's investment, and (e) the Holder has
such knowledge and experience in financial and business matters that the Holder
is capable of evaluating the merits and risks of acquisition of this Warrant and
the Series E Preferred Stock and Series E Warrants issuable upon exercise hereof
and of making an informed investment decision with respect thereto. Each
certificate representing shares of Series E Preferred Stock or other securities
and each Series E Warrant issued upon exercise of this Warrant shall have
conspicuously endorsed on its face, at the time of its issuance, such legends as
counsel to the Company deems necessary or appropriate, including without
limitation the legend set forth on the top of the face page of this Warrant. In
addition to those restrictions on transfer imposed by the Act and other
applicable securities laws, this Warrant may not be sold or transferred unless
to (i) an underwriter acceptable to the Company for immediate exercise by such
underwriter in connection with a fully underwritten public offering of the
Company's Common Stock underlying this Warrant, (ii) any entity who acquires the
Holder or substantially all of its assets, or (iii) an Affiliate of the Holder
(as that term is defined in Rule 144(a)(1) of the Act).
17. REGISTRATION RIGHTS. The Company shall undertake to amend that
certain Amended and Restated Investor Rights Agreement, dated September 8, 1995,
by and among the Company and those certain parties identified therein (the
"Rights Agreement"), in accordance with the provisions of Section 6.8 of such
agreement, to include the Holder as a party thereto and to include the Series E
Preferred Stock purchasable upon exercise of this Warrant and the Series E
Warrants as "Shares" under Section 2.8 of the Rights Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By: /s/ Thomas L. Gutshall
------------------------------------
Thomas L. Gutshall
President
7.
<PAGE>
SUBSCRIPTION FORM
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder, Units of CV Therapeutics, Inc. provided for therein,
(2) makes payment in full of the purchase price of such Units, (3) requests that
certificates and warrants of such Units be issued in the name of
----------------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
(Please print name and address)
Dated:
----------------------
Signature: ----------------------
By:
------------------------------
8.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
AS REQUIRED BY BLUE SKY LAWS COVERING SUCH TRANSFER, OR IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY IN ORDER
FOR SUCH TRANSFER TO COMPLY WITH THE SECURITIES ACT AND BLUE SKY LAWS.
CV THERAPEUTICS, INC.
SERIES E PREFERRED STOCK PURCHASE WARRANT
No. 1996-WE-43 March 27, 1996
CV THERAPEUTICS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Syntex (U.S.A.) Inc. or any transferee who
has received this warrant (the "Warrant") in compliance with applicable law and
the terms hereof (the "Holder"), is entitled, on the terms set forth below, to
purchase from the Company, on or before the Expiration Time (as defined in
Section 15 below) One Hundred Eighty Seven Thousand Five Hundred (187,500)
shares of Series E Preferred Stock of the Company at a price of $2.00 per share,
subject to adjustment as provided below (the "Exercise Price").
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any
time or from time to time on any business day prior to or on the Expiration
Time, for the full or any lesser number of shares of Series E Preferred Stock
purchasable hereunder, by surrendering this Warrant to the Company at its
principal office, with a duly executed Subscription Form (in substantially the
form attached hereto), together with payment of the sum obtained by multiplying
the number of shares of Series E Preferred Stock to be purchased by the Exercise
Price then in effect. Promptly after such exercise, the Company shall issue and
deliver to or upon the order of the Holder a certificate or certificates for the
number of shares of Series E Preferred Stock issuable upon such exercise, and
the Company will pay all taxes in connection with the issue thereof. All shares
of Series E Preferred Stock which may be issued upon exercise of this Warrant
will, upon issuance by the Company in accordance with the terms of this Warrant,
be validly issued, fully paid and non-assessable, and free from all taxes, liens
and encumbrances with respect to the issuance thereof (except as set forth in
the Company's Restated Certificate of Incorporation or bylaws and any
restrictions on sale set forth therein or pursuant to federal or state
securities laws). To the extent permitted by law, this Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided herein, even if the Company's stock
transfer books are at that time closed, and the Holder shall be treated for all
purposes as the holder of record of the Series E Preferred Stock to be issued
upon such exercise as of the close of business on such date. Upon any partial
exercise, the Company will issue to or upon the order of the Holder a new
Warrant for the number of shares of Series E Preferred Stock as to which this
Warrant has not been exercised.
<PAGE>
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election, in which event the
Company shall issue to the Holder a number of shares of Series E Preferred Stock
computed using the following formula:
X = Y (A - B)
---------
A
Where X = the number of shares of Series E Preferred Stock to be
issued to the Holder
Y = the number of shares of Series E Preferred Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the number of Shares purchased under the
Warrant being canceled (at the date of such calculation)
A = the fair market value of one share of the Company's Series E
Preferred Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, the fair market value of one share of
Series E Preferred Stock shall be determined by the Company's Board of Directors
in good faith; PROVIDED, HOWEVER, that where there is a public market for the
Company's Common Stock, the fair market value per share shall be the product of
(i) the average of the closing prices (or bid prices if there are no such
closing prices) of the Company's Common Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on The Nasdaq National Market System
or on the primary national securities exchange on which the Common Stock is then
listed, whichever is applicable, as published in the Western Edition of the Wall
Street Journal (or, if not so reported, as otherwise reported by The Nasdaq
System) for the ten (10) trading days prior to the date of determination of fair
market value and (ii) the number of shares of Common Stock into which each share
of Series E Preferred Stock is convertible at the time of such exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Series E Preferred Stock subject to
this Warrant shall be subject to adjustment from time to time as follows:
3.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Series E Preferred Stock, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Series E Preferred Stock of the
2.
<PAGE>
Company shall be combined into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased.
(b) Upon each adjustment of the Exercise Price as provided in
Section 3.1(a) above, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares of
Series E Preferred Stock (calculated to the nearest whole share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
3.2 ADJUSTMENT FOR STOCK DIVIDENDS. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Series E Preferred Stock
or securities convertible into shares of Series E Preferred Stock, the Exercise
Price and the number of shares to be obtained upon exercise of this Warrant
shall be proportionately adjusted to reflect the issuance of any shares of
Series E Preferred Stock or convertible securities, as the case may be, issuable
in payment of such dividend or distribution.
3.3 ADJUSTMENT FOR REORGANIZATIONS. In case, at any time prior to
the Expiration Time of any capital reorganization, this Warrant shall, after
such reorganization, be exercisable so that upon exercise the Holder shall
procure, in lieu of each share of Series E Preferred Stock, the kind and amount
of shares of stock, other securities, money or property receivable upon such
reorganization by the holder of one share issuable upon exercise of this Warrant
had this Warrant been exercised immediately prior to such reorganization. The
provisions of this Section 3.3 shall similarly apply to successive
reorganizations.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of shares of Series E Preferred Stock subject to this Warrant need be
made if such adjustment would result in a change in the Exercise Price of less
than five cents ($0.05) (the "Adjustment Threshold Amount") or a change in the
number of subject shares of less than one (1) share. Any adjustment less than
these amounts which is not made shall be carried forward and shall be made
together with any subsequent adjustments, at the time when (a) the aggregate
amount of all such adjustments is equal to at least the Adjustment Threshold
Amount or (b) the Warrant is exercised.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon written request at any time of the Holder, furnish or cause to be
furnished to the Holder a like certificate setting forth (a) such adjustments
and readjustments, (b) the then effective Exercise Price and number of shares of
Series E Preferred Stock subject to the Warrant, and (c) the then effective
amount of securities (other than Series E Preferred Stock) and other property,
if any, which would be received upon exercise of the Warrant.
3.
<PAGE>
4. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares of Series E Preferred Stock purchasable hereunder until, and only
to the extent that, this Warrant shall have been exercised in accordance with
its terms.
5. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.
6. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of exercise (as determined in good
faith by the Board of Directors of the Company).
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Series E Preferred Stock
and other stock, securities and property as from time to time are receivable
upon the exercise of this Warrant. If at any time the number of authorized but
unissued shares of Series E Preferred Stock shall not be sufficient to effect
the exercise of this Warrant, the Company will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Series E Preferred Stock to such number of
shares as shall be sufficient for such purposes. The Company further covenants
that all shares that may be issued upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will be
free from all taxes, liens and charges in respect of the issue of such shares
(other than taxes in respect of any transfer occurring contemporaneously with
such exercise and payment or otherwise specified herein). The Company agrees
that its issuance of the Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Series E Preferred Stock (and
shares of Common Stock issuable upon conversion of such Series E Preferred
Stock) upon the exercise of the Warrant and covenants that all such shares, when
issued, sold and delivered in accordance with the terms of the Warrant for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth in this Warrant, that certain Amended and
Restated Investor Rights Agreement dated as of September 8, 1995, between the
Company and certain holders of the Company's Preferred Stock, and applicable
state and federal securities laws.
4.
<PAGE>
8. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or (c) the first fully underwritten public offering of the
Company's Common Stock such as will cause this Warrant to expire, the Company
shall mail to each Holder at least fifteen (15) days, or such longer period as
is required by law, prior to the record date or the closing date of the first
fully underwritten public offering specified therein, a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(ii) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, (iii) the closing date of the fully underwritten public
offering, and (iv) the date, if any, that is to be fixed as to when the holders
of record of Series E Preferred Stock (or other securities at that time
receivable upon exercise of the Warrant) shall be entitled to exchange their
shares of Series E Preferred Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
9. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company at its principal office, the Company, at its expense, will issue and
deliver a new Warrant or Warrants calling in the aggregate for the same number
of shares of Series E Preferred Stock, in the denomination or denominations
requested, to or on the order of such Holder upon payment by such Holder of any
applicable transfer taxes; provided that any transfer of the Warrant shall be
subject to the conditions on transfer set forth herein.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,
or (in the case of mutilation) upon surrender and cancellation hereof, the
Company, at its expense, shall issue a replacement.
11. NOTICES. Except as provided in Section 8 above, all notices and other
communications from the Company to the Holder shall be mailed by overnight
courier, by first-class, registered or certified mail, postage prepaid, to the
address furnished to the Company in writing by the last Holder who has furnished
an address to the Company in writing or confirmed facsimile. Notice shall be
deemed given one (1) day after deposit with an overnight courier service, upon
receipt of confirmed facsimile, three (3) days after deposit in the mails as
aforesaid or upon delivery if personally delivered.
12. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
5.
<PAGE>
13. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
14. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
15. EXPIRATION TIME. This Warrant will be wholly void and of no effect
after the time (the "Expiration Time") which is the earlier of (a) 5:00 p.m.
(San Francisco time) March 26, 2001; (b) the closing of the first underwritten
public offering of Common Stock of the Company pursuant to a registration
statement under the Securities Act of 1933, as amended (the "Act"), at a per
share price of five dollars ($5.00) or greater (as adjusted for any stock
dividends, combinations or splits with respect to such stock); or (c) a merger,
reorganization or sale of substantially all of the assets of the Company at a
price per share of five dollars $5.00 or greater (as adjusted for any stock
dividends, combinations or splits with respect to such stock) in which the
stockholders of the Company immediately prior to the transaction possess less
than 50% of the voting securities of the surviving entity (or its parent, if
any), provided that, if the last day on which this Warrant may be exercised, or
on which it may be exercised at a particular Exercise Price, is a Sunday or a
legal holiday or a day on which banking institutions doing business in the city
of San Francisco are authorized by law to close, this Warrant may be exercised
prior to 5:00 p.m. (San Francisco time) on the next succeeding full business day
with the same force and effect and at the same Exercise Price as if exercised on
such last day specified herein.
16. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Series E Preferred Stock issuable
upon exercise hereof under the Act and applicable state securities laws. The
Holder by acceptance hereof represents that the Holder understands that neither
this Warrant nor the Series E Preferred Stock issuable upon exercise hereof (or
shares of any security into which such Series E Preferred Stock may be
converted) has been registered with the Securities and Exchange Commission nor
under any state securities law, and that neither this Warrant nor the Series E
Preferred Stock issuable upon exercise hereof (or shares of any security into
which such Series E Preferred Stock may be converted) can be sold or transferred
unless registered under the Act and under any applicable state securities laws,
or unless an exemption from such registration is available. By acceptance
hereof, the Holder represents and warrants that (a) the Holder is acquiring the
Warrant (and the shares of Series E Preferred Stock or other securities issuable
upon exercise hereof) for Holder's own account for investment purposes and not
with a view to distribution, (b) the Holder has received all such information as
the Holder deems necessary and appropriate to enable the Holder to evaluate the
financial risk inherent in making an investment in the Company, and satisfactory
and complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof, (c) the Holder's
acquisition of shares upon exercise hereof will be a highly speculative
investment, (d) the Holder is able, without impairing its financial condition,
to hold such shares for an indefinite period of time and to suffer a complete
loss of the Holder's investment, and (e) the Holder has such knowledge and
experience in financial and business matters that the Holder is capable of
evaluating the merits and risks of acquisition of this Warrant and the shares
issuable upon exercise hereof and of
6.
<PAGE>
making an informed investment decision with respect thereto. Each certificate
representing shares of Series E Preferred Stock or other securities issued upon
exercise of this Warrant shall have conspicuously endorsed on its face, at the
time of its issuance, such legends as counsel to the Company deems necessary or
appropriate, including without limitation the legend set forth on the top of the
face page of this Warrant. In addition to those restrictions on transfer
imposed by the Act and other applicable securities laws, this Warrant may not be
sold or transferred unless to (i) an underwriter acceptable to the Company for
immediate exercise by such underwriter in connection with a fully underwritten
public offering of the Company's Common Stock underlying this Warrant, (ii) any
entity who acquires the Holder or substantially all of its assets, or (iii) an
Affiliate of the Holder (as that term is defined in Rule 144(a)(1) of the Act).
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By: /s/ Thomas L. Gutshall
------------------------------------
Thomas L. Gutshall
President
7.
<PAGE>
SUBSCRIPTION FORM
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder, _________________ full shares of the Series E Preferred Stock of
CV Therapeutics, Inc. provided for therein, (2) makes payment in full of the
purchase price of such shares, (3) requests that certificates for such shares
be issued in the name of
----------------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
(Please print name and address)
Dated:
---------------------------
Signature:
---------------------------
By:
------------------------------
8.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
AS REQUIRED BY BLUE SKY LAWS COVERING SUCH TRANSFER, OR IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS UNNECESSARY IN ORDER
FOR SUCH TRANSFER TO COMPLY WITH THE SECURITIES ACT AND BLUE SKY LAWS.
CV THERAPEUTICS, INC.
COMMON STOCK PURCHASE WARRANT
No. 1996-WC-
---------- --------------
CV THERAPEUTICS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, _____________ or any transferee who has
received this warrant (the "Warrant") in compliance with applicable law and the
terms hereof (the "Holder"), is entitled, on the terms set forth below, to
purchase from the Company, on or before the Expiration Time (as defined in
Section 15 below) ____________ (_________) shares of Common Stock of the Company
at a price of $0.25 per share, subject to adjustment as provided below (the
"Exercise Price").
This Warrant is being issued in connection with the Company's Series G
Preferred Stock and Common Stock Warrant financing. This Warrant is one of a
series of Warrants (the "Warrants") issued pursuant to that certain Series G
Preferred Stock and Common Stock Warrant Purchase Agreement dated as of
_______________, by and among the Company and the purchasers listed therein,
copies of which are on file at the principal office of the Company.
1. EXERCISE OF WARRANT. The Holder may exercise this Warrant at any time or
from time to time on any business day prior to or on the Expiration Time, for
the full or any lesser number of shares of Common Stock purchasable hereunder,
by surrendering this Warrant to the Company at its principal office, with a duly
executed Subscription Form (in substantially the form attached hereto), together
with payment of the sum obtained by multiplying the number of shares of Common
Stock to be purchased by the Exercise Price then in effect. Promptly after such
exercise, the Company shall issue and deliver to or upon the order of the Holder
a certificate or certificates for the number of shares of Common Stock issuable
upon such exercise, and the Company will pay all taxes in connection with the
issue thereof. All shares of Common Stock which may be issued upon exercise of
this Warrant will, upon issuance by the Company in accordance with the terms of
this Warrant, be validly issued, fully paid and non-assessable, and free from
all taxes, liens and encumbrances with respect to the issuance thereof (except
as set forth in the Company's Restated Certificate of Incorporation or bylaws
and any restrictions on sale set forth therein or pursuant to federal or state
securities laws). To the extent permitted by law, this Warrant shall be deemed
to have been exercised immediately prior to the close of
1.
<PAGE>
business on the date of its surrender for exercise as provided herein, even if
the Company's stock transfer books are at that time closed, and the Holder shall
be treated for all purposes as the holder of record of the Common Stock to be
issued upon such exercise as of the close of business on such date. Upon any
partial exercise, the Company will issue to or upon the order of the Holder a
new Warrant for the number of shares of Common Stock as to which this Warrant
has not been exercised.
2. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election, in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:
X = Y (A - B)
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the number of Shares purchased under the Warrant
being canceled (at the date of such calculation)
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, the fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; PROVIDED, HOWEVER, that where there is a public market for the Company's
Common Stock, the fair market value per share shall be the product of (i) the
average of the closing prices (or bid prices if there are no such closing
prices) of the Company's Common Stock quoted in the Over-The-Counter Market
Summary or the closing price quoted on The Nasdaq National Market System or on
the primary national securities exchange on which the Common Stock is then
listed, whichever is applicable, as published in the Western Edition of the Wall
Street Journal (or, if not so reported, as otherwise reported by The Nasdaq
System) for the ten (10) trading days prior to the date of determination of fair
market value and (ii) the number of shares of Common Stock into which each share
of Common Stock is convertible at the time of such exercise.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Common Stock subject to this Warrant
shall be subject to adjustment from time to time as follows:
2.
<PAGE>
3.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Common Stock, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased.
(b) Upon each adjustment of the Exercise Price as provided in
Section 3.1(a) above, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares of
Common Stock (calculated to the nearest whole share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
3.2 ADJUSTMENT FOR STOCK DIVIDENDS. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Common Stock or
securities convertible into shares of Common Stock, the Exercise Price and the
number of shares to be obtained upon exercise of this Warrant shall be
proportionately adjusted to reflect the issuance of any shares of Common Stock
or convertible securities, as the case may be, issuable in payment of such
dividend or distribution.
3.3 ADJUSTMENT FOR REORGANIZATIONS. In case, at any time prior to
the Expiration Time of any capital reorganization, this Warrant shall, after
such reorganization, be exercisable so that upon exercise the Holder shall
procure, in lieu of each share of Common Stock, the kind and amount of shares of
stock, other securities, money or property receivable upon such reorganization
by the holder of one share issuable upon exercise of this Warrant had this
Warrant been exercised immediately prior to such reorganization. The provisions
of this Section 3.3 shall similarly apply to successive reorganizations.
3.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price and/or
the number of shares of Common Stock subject to this Warrant need be made if
such adjustment would result in a change in the Exercise Price of less than five
cents ($0.05) (the "Adjustment Threshold Amount") or a change in the number of
subject shares of less than one (1) share. Any adjustment less than these
amounts which is not made shall be carried forward and shall be made together
with any subsequent adjustments, at the time when (a) the aggregate amount of
all such adjustments is equal to at least the Adjustment Threshold Amount or
(b) the Warrant is exercised.
3.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 3, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment and
3.
<PAGE>
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon written request at any time of the Holder, furnish or
cause to be furnished to the Holder a like certificate setting forth (a) such
adjustments and readjustments, (b) the then effective Exercise Price and number
of shares of Common Stock subject to the Warrant, and (c) the then effective
amount of securities (other than Common Stock) and other property, if any, which
would be received upon exercise of the Warrant.
4. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares of Common Stock purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised in accordance with its
terms.
5. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.
6. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of exercise (as determined in good
faith by the Board of Directors of the Company).
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, all such shares of Common Stock and other
stock, securities and property as from time to time are receivable upon the
exercise of this Warrant. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the exercise of this
Warrant, the Company will use its best efforts to take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes. The Company further covenants that all shares that may be
issued upon exercise of the rights represented by this Warrant and payment of
the Exercise Price, all as set forth herein, will be free from all taxes, liens
and charges in respect of the issue of such shares (other than taxes in respect
of any transfer occurring contemporaneously with such exercise and payment or
otherwise specified herein). The Company agrees that its issuance of the
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of the Warrant and
covenants that all such shares, when issued, sold and delivered in accordance
with the terms of the Warrant for the consideration expressed herein, will be
duly and validly issued, fully paid
4.
<PAGE>
and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth in this Warrant, that certain Amended and
Restated Investor Rights Agreement dated as of March 29, 1996, between the
Company and certain holders of the Company's Preferred Stock, and applicable
state and federal securities laws.
8. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or (c) the first fully underwritten public offering of the
Company's Common Stock such as will cause this Warrant to expire, the Company
shall mail to each Holder at least fifteen (15) days, or such longer period as
is required by law, prior to the record date or the closing date of the first
fully underwritten public offering specified therein, a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(ii) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, (iii) the closing date of the fully underwritten public
offering, and (iv) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities at that time receivable upon
exercise of the Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
9. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant (in
negotiable form, if not surrendered by the Holder named on the face hereof) to
the Company at its principal office, the Company, at its expense, will issue and
deliver a new Warrant or Warrants calling in the aggregate for the same number
of shares of Common Stock, in the denomination or denominations requested, to or
on the order of such Holder upon payment by such Holder of any applicable
transfer taxes; provided that any transfer of the Warrant shall be subject to
the conditions on transfer set forth herein.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,
or (in the case of mutilation) upon surrender and cancellation hereof, the
Company, at its expense, shall issue a replacement.
11. NOTICES. Except as provided in Section 8 above, all notices and other
communications from the Company to the Holder shall be mailed by overnight
courier, by first-class, registered or certified mail, postage prepaid, to the
address furnished to the Company in writing by the last Holder who has furnished
an address to the Company in writing or confirmed facsimile. Notice shall be
deemed given one (1) day after deposit with an overnight courier
5.
<PAGE>
service, upon receipt of confirmed facsimile, three (3) days after deposit in
the mails as aforesaid or upon delivery if personally delivered.
12. CHANGE; WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. HEADINGS. The headings in this Warrant are for purposes of
convenience of reference only, and shall not be deemed to constitute a part
hereof.
14. GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of California as applied to contracts entered
into between California residents and to be performed entirely in the State of
California.
15. EXPIRATION TIME. This Warrant will be wholly void and of no effect
after the time (the "Expiration Time") which is the earlier of (a) 5:00 p.m.
(San Francisco time) March 28, 1999; (b) the closing of the first underwritten
public offering of Common Stock of the Company pursuant to a registration
statement under the Securities Act of 1933, as amended (the "Act"); or (c) a
merger, reorganization or sale of substantially all of the assets of the Company
in which the stockholders of the Company immediately prior to the transaction
possess less than 50% of the voting securities of the surviving entity (or its
parent, if any), provided that, if the last day on which this Warrant may be
exercised, or on which it may be exercised at a particular Exercise Price, is a
Sunday or a legal holiday or a day on which banking institutions doing business
in the city of San Francisco are authorized by law to close, this Warrant may be
exercised prior to 5:00 p.m. (San Francisco time) on the next succeeding full
business day with the same force and effect and at the same Exercise Price as if
exercised on such last day specified herein.
16. TRANSFER RESTRICTIONS. The Company is relying upon an exemption from
registration of this Warrant and the shares of Common Stock issuable upon
exercise hereof under the Act and applicable state securities laws. The Holder
by acceptance hereof represents that the Holder understands that neither this
Warrant nor the Common Stock issuable upon exercise hereof has been registered
with the Securities and Exchange Commission nor under any state securities law,
and that neither this Warrant nor the Common Stock issuable upon exercise hereof
(or shares of any security into which such Common Stock may be converted) can be
sold or transferred unless registered under the Act and under any applicable
state securities laws, or unless an exemption from such registration is
available. By acceptance hereof, the Holder represents and warrants that
(a) the Holder is acquiring the Warrant (and the shares of Common Stock or other
securities issuable upon exercise hereof) for Holder's own account for
investment purposes and not with a view to distribution, (b) the Holder has
received all such information as the Holder deems necessary and appropriate to
enable the Holder to evaluate the financial risk inherent in making an
investment in the Company, and satisfactory and complete information concerning
the business and financial condition of the Company in response to all inquiries
in respect thereof, (c) the Holder's acquisition of shares upon exercise hereof
will be a highly speculative investment, (d) the Holder is able, without
impairing its financial condition, to hold
6.
<PAGE>
such shares for an indefinite period of time and to suffer a complete loss of
the Holder's investment, and (e) the Holder has such knowledge and experience in
financial and business matters that the Holder is capable of evaluating the
merits and risks of acquisition of this Warrant and the shares issuable upon
exercise hereof and of making an informed investment decision with respect
thereto. Each certificate representing shares of Common Stock or other
securities issued upon exercise of this Warrant shall have conspicuously
endorsed on its face, at the time of its issuance, such legends as counsel to
the Company deems necessary or appropriate, including without limitation the
legend set forth on the top of the face page of this Warrant. In addition to
those restrictions on transfer imposed by the Act and other applicable
securities laws, this Warrant may not be sold or transferred unless to (i) an
underwriter acceptable to the Company for immediate exercise by such underwriter
in connection with a fully underwritten public offering of the Company's Common
Stock underlying this Warrant, (ii) any entity who acquires the Holder or
substantially all of its assets, or (iii) an Affiliate of the Holder (as that
term is defined in Rule 144(a)(1) of the Act).
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered on the date first set forth above.
CV THERAPEUTICS, INC.
By:
------------------------------------
7.
<PAGE>
SUBSCRIPTION FORM
[To be executed if holder desires to exercise the Warrant]
The undersigned, holder of this Warrant, (1) hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase
thereunder, ______________ full shares of the Common Stock of CV Therapeutics,
Inc. provided for therein, (2) makes payment in full of the purchase price of
such shares, (3) requests that certificates for such shares be issued in the
name of
----------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
(Please insert social security or other identifying number)
and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:
----------------------------------------------------------------
----------------------------------------------------------------
(Please print name and address)
Dated:
-------------------------
Signature:
-------------------------
By:
------------------------------
8.
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. NO SALE-OR DISPOSITION MAY BE EFFECTED EXCEPT IN-COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION.
CV THERAPEUTICS, INC.
WARRANT TO PURCHASE 28,125 SHARES OF COMMON STOCK
March 18, 1993
THIS CERTIFIES THAT, for value received, Lease Management Services, Inc.,
("Holder") is entitled to subscribe for and purchase up to Twenty-eight
Thousand One Hundred and Twenty-five (28,125) shares of the fully paid and
nonassessable Common Stock ("the Shares") of CV Therapeutics, Inc., a
Delaware corporation (the "Company"), at the Warrant Price (as hereinafter
defined), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, the term "Common Stock" shall mean
the Company's presently authorized Common Stock, and any stock into which
such Common Stock may hereafter be exchanged.
1. WARRANT PRICE. The Warrant Price shall initially be Eighty Cents ($.80)
per share, subject to adjustment as provided in Section 5 below.
2. CONDITIONS TO EXERCISE. The purchase right represented by this Warrant
may be exercised at any time, or from time to time, in whole or in part
during the term commencing on the date hereof and ending on the earlier of:
(a) 5:00 P.M. California time on the sixth annual anniversary of this
Warrant Agreement; or
(b) 5:00 P.M. California time on the day prior to the effectiveness of
a registration statement filed in a bona fide firm commitment
underwriting under the Securities Act of 1933, as amended, covering any
of the Company's securities (as that term is defined under the
Securities Act of 1933, as then in effect) with aggregate gross proceeds
to the Company, at the public offering price, of at least $7,500,000;
provided that the Company shall notify the registered Holder of this
Warrant of the proposed registration of its securities on the date that
the registration statement is filed, but in any event at least 30 days
prior to the effectiveness of such registration, such notice to set
forth the proposed date of effectiveness of the subject registration
statement; or
1
<PAGE>
LMSI/CV Therapeutics, Inc. Warrant
Page 2 of __
(c) the effective date of the merger of the Company with or into, the
consolidation of the Company with, or the sale by the Company of all or
substantially all of its assets to another corporation or other entity
(other than such a transaction wherein the shareholders of the Company
retain or obtain a majority of the voting capital stock of the
surviving, resulting, or purchasing corporation); provided that the
Company shall notify the registered Holder of this Warrant of the
proposed effective date of the merger, consolidation, or sale at least
60 days prior to the effectiveness thereof.
In the event that, although the Company shall have given notice of a
transaction pursuant to subparagraph (b) or (c) hereof, the transaction
does not close on approximately the day specified by the Company, unless
otherwise elected by the Holder any exercise of the Warrant subsequent to
the giving of such notice shall be rescinded and the Warrant shall again
be exercisable until terminated in accordance with this Paragraph 2.
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF SHARES; ISSUANCE OF NEW WARRANT.
(a) CASH EXERCISE. Subject to Section 2 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole
or in part, by the surrender of this Warrant (with a duly executed Notice of
Exercise in the form attached hereto) at the principal office of the Company
(as set forth in Section 17 below) and by payment to the Company, by check,
of an amount equal to the then applicable Warrant Price per share multiplied
by the number of shares then being purchased. In the event of any exercise of
the rights represented by this Warrant, certificates for the shares of stock
so purchased shall be in the name of, and delivered to, the Holder hereof, or
as such Holder may direct (subject to the terms of transfer contained herein
and upon payment by such Holder hereof of any applicable transfer taxes).
Such delivery shall be made within 10 days after exercise of the Warrant and
at the Company's expense and, unless this Warrant has been fully exercised or
expired, a new Warrant having terms and conditions substantially identical to
this Warrant and representing the portion of the Shares, if any, with respect
to which this Warrant shall not have been exercised, shall also be issued to
the Holder hereof within 10 days after exercise of the Warrant.
(b) NET ISSUE EXERCISE. In lieu of exercising this Warrant pursuant to
Section 3(a), Holder may elect to receive shares equal to the value of this
Warrant (or of any portion thereof remaining unexercised) by surrender of
this Warrant at the principal office of the Company together with notice of
such election, in which event the Company shall issue to Holder the number of
shares of the Company's Common Stock computed using the following formula:
2
<PAGE>
LMSI/CV Therapeutics, Inc. Warrant
Page 3 of __
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under this Warrant
(at the date of such calculation).
A = the fair market value of one share of the Company's Common Stock (at
the date of such calculation).
B = Warrant exercise price (as adjusted to the date of such calculation).
(c) FAIR MARKET VALUE. For purposes of this Section 3, Fair Market
Value of one share of the Company's Common Stock shall mean:
(i) In the event of an Initial Public Offering pursuant to Section
2(b), the per share Fair Market Value for the Common Stock shall be the
Offering Price at which the underwriters sell Common Stock to the
public; or
(ii) If the Common Stock is traded on NASDAQ or Over-The-Counter or on
an exchange, the per share Fair Market Value for the Common Stock will
be the average of the closing bid and asked prices of the Common Stock
quoted in the Over-The-Counter Market Summary or the closing price
quoted on any exchange on which the Common Stock is listed, whichever is
applicable, as published in the Western Edition of The Wall Street
Journal for the ten (10) trading days prior to the date of determination
of Fair Market Value; or
(iii) If the Company shall be subject to a merger, acquisition or
other consolidation in which the Company is not the surviving entity,
pursuant to Section 2(c), the per share Fair Market Value for the Common
Stock shall be the value received per share of Common Stock by all
Holders of the Common Stock as determined by the Board of Directors; or
(iv) In any other instance, the per share Fair Market Value for the
Common Stock shall be as determined by the Board of Directors in its
reasonable business judgment.
In the event of 3(c) (iii) or 3(c) (iv), above, the Company's Board of
Directors shall prepare a certificate, to be signed by an authorized
Officer of the Company, setting forth in reasonable detail the basis for
and method of determination of the per share Fair Market Value of the
Common Stock. The Board will also certify to the Holder
3
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LMSI/CV Therapeutics, Inc. Warrant
Page 4 of __
that this per share Fair Market Value will be applicable to all holders
of the Company's Common Stock. Such certification must be made to Holder
at least thirty (30) business days prior to the proposed effective date
of the merger, consolidation, sale, or other triggering event as defined
in 3(c) (iii) and 3(c) (iv).
(d) AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, it shall be automatically exercised in accordance with Sections
3(b) and 3(c) hereof (even if not surrendered) immediately before: (i) its
expiration, (ii) the consummation of a Public Offering of the Company's
Common Stock pursuant to Section 2(b), or (iii) the consummation of any
consolidation or merger of the Company, or any sale or transfer of a majority
of a company's assets pursuant to Section 2(c).
4. REPRESENTATIONS AND WARRANTIES OF HOLDER AND RESTRICTIONS ON TRANSFER
IMPOSED BY THE SECURITIES ACT OF 1933.
(a) Representations and Warranties by Holder. The Holder represents and
warrants to the Company with respect to this purchase as follows:
(i) The Holder has substantial experience in evaluating and investing
in private placement transactions of securities of companies similar to
the Company so that the Holder is capable of evaluating the merits and
risks of its investment in the Company and has the capacity to protect
its interests.
(ii) The Holder is acquiring the Warrant and the Shares of Common Stock
issuable upon exercise of the Warrant (collectively the "Securities")
for investment for its own account and not with a view to, or for resale
in connection with, any distribution thereof. The Holder understands
that the Securities have not been registered under the Act by reason of
a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the investment
intent as expressed herein. In this connection, the Holder understands
that, in the view of the Securities and Exchange Commission (the
"SEC"), the statutory basis for such exemption may be unavailable if
this representation was predicated solely upon a present intention to
hold the Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease
in the market price of the Securities or for a period of one year or any
other fixed period in the future.
(iii) The Holder acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available. The Holder is aware of
the provisions of Rule 144 promulgated under the Act ("Rule 144")
which permits limited resale of securities purchased in a private
4
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LMSI/CV Therapeutics, Inc. Warrant
Page 5 of __
placement subject to the satisfaction of certain conditions, including,
in case the securities have been held for less than three years, the
existence of a public market for the shares, the availability of certain
public information about the Company, the resale occurring not less than
two years after a party has purchased and paid for the security to be
sold, the sale being through a "broker's transaction" or in a
transaction directly with a "market maker" (as provided by Rule
144(f)) and the number of shares or other securities being sold during
any three-month period not exceeding specified limitations.
(iv) The Holder further understands that at the time the Holder wishes
to sell the Securities there may be no public market upon which such a
sale may be effected, and that even if such a public market exists, the
Company may not be satisfying the current public information
requirements of Rule 144, and that in such event, the Holder may be
precluded from selling the Securities under Rule 144 unless a) a
three-year minimum holding period has been satisfied and b) the Holder
was not at the time of the sale nor at any time during the three-month
period prior to such sale an affiliate of the Company.
(v) The Holder has had an opportunity to discuss the Company's
business, management and financial affairs with its management and an
opportunity to review the Company's facilities. The Holder understands
that such discussions, as well as the written information issued by the
Company, were intended to describe the aspects of the Company's business
and prospects which it believes to be material but were not necessarily
a thorough or exhaustive description.
(b) LEGENDS. Each certificate representing the Securities shall be endorsed
with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS
OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
The Company need not register a transfer of Securities unless the conditions
specified in the foregoing legend are satisfied. The Company may also
instruct its transfer agent not to
5
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LMSI/CV Therapeutics, Inc. Warrant
Page 6 of __
register the transfer of any of the Shares unless the conditions specified in
the foregoing legend are satisfied.
(c) REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. The legend relating to the
Act endorsed on a certificate pursuant to paragraph 4(b) of this Warrant and
the stop transfer instructions with respect to the Securities represented by
such certificate shall be removed and the Company shall issue a certificate
without such legend to the Holder of the Securities if (i) the Securities are
registered under the Act and a prospectus meeting the requirements of Section
10 of the Act is available or (ii) the Holder provides to the Company an
opinion of counsel for the Holder reasonably satisfactory to the Company, or
a no-action letter or interpretive opinion of the staff of the SEC reasonably
satisfactory to the Company, to the effect that public sale, transfer or
assignment of the Securities may be made without registration and without
compliance with any restriction such as Rule 144.
5. CONDITION OF TRANSFER OR EXERCISE OF WARRANT. It shall be a condition
to any transfer or exercise of this Warrant that at the time of such transfer
or exercise, the Holder shall provide the Company with a representation in
writing that the Holder or transferee is acquiring this Warrant and the
shares of Common Stock to be issued upon exercise, for investment purposes
only and not with a view to any sale or distribution, or a statement of
pertinent facts covering any proposed distribution. As a further condition to
any transfer of this Warrant or any or all of the shares of Common Stock
issuable upon exercise of this Warrant, other than a transfer registered
under the Act, the Company must have received a legal opinion, in form and
substance satisfactory to the Company and its counsel, reciting the pertinent
circumstances surrounding the proposed transfer and stating that such
transfer is exempt from the registration and prospectus delivery requirements
of the Act. Each certificate evidencing the shares issued upon exercise of
the Warrant or upon any transfer of the shares (other than a transfer
registered under the Act or any subsequent transfer of shares so registered)
shall, at the Company's option, contain a legend in form and substance
satisfactory to the Company and its counsel, restricting the transfer of the
shares to sales or other dispositions exempt from the requirements of the Act.
As further condition to each transfer, the transferee shall receive and
accept a Warrant, of like tenor and date, executed by the Company.
6. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens,
and charges with respect to the issue thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company will at
all times have authorized, and reserved for issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by
.this Warrant.
6
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LMSI/CV Therapeutics, Inc. Warrant
Page 7 of __
7. ADJUSTMENT FOR CERTAIN EVENTS. In the event of changes in the
outstanding Common Stock by reason of stock dividends, split-ups,
recapitalizations, reclassifications, mergers, consolidations, combinations
or exchanges of shares, separations, reorganizations, liquidations, or the
like, the number and class of shares available under the Warrant in the
aggregate and the Warrant Price shall be correspondingly adjusted, as
appropriate, by the Board of Directors of the Company. The adjustment shall
be such as will give the Holder of this Warrant upon exercise for the same
aggregate Warrant Price the total number, class and kind of shares as he
would have owned had the Warrant been exercised prior to the event and had he
continued to hold such shares until after the event requiring adjustment.
8. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be adjusted
pursuant to Section 7 hereof, the Company shall prepare a certificate signed
by its chief financial officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which
such adjustment was calculated, and the Warrant Price and number of shares
issuable upon exercise of the Warrant after giving effect to such adjustment,
and shall cause copies of such certificate to be mailed (by certified or
registered mail, return receipt required, postage prepaid) within thirty (30)
days of such adjustment to the Holder of this warrant as set forth in Section
18 hereof.
9. "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that for a period
of 180 days following the effective date of the first registration statement
of the Company covering common stock (or other securities) to be sold on its
behalf in an underwritten public offering, it will not, to the extent
requested by the Company and any underwriter, sell or otherwise transfer or
dispose of (other than to donees or transferees who agree to be similarly
bound) any of the Shares at any time during such period except common stock
included in such registration; provided, however, that all officers and
directors of the Company who hold securities of the Company or options to
acquire securities of the Company and all other persons with registration
rights enter into similar agreements.
10. TRANSFERABILITY OF WARRANT. This Warrant is transferable on the books
of the Company at its principal office by the registered Holder hereof upon
surrender of this Warrant properly endorsed, subject to compliance with
applicable federal and state securities laws. The Company shall issue and
deliver to the transferee a new Warrant representing the Warrant so
transferred. Upon any partial transfer, the Company will issue and deliver to
Holder a new Warrant with respect to the Warrant not so transferred. Holder
shall not have any right to transfer any portion of this Warrant to any
direct competitor of the Company.
11. NO FRACTIONAL SHARES. No fractional share of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such
fractional share the Company shall make a cash payment therefor upon the
basis of the Warrant Price then in effect.
7
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LMSI/CV Therapeutics, Inc. Warrant
Page 8 of __
12. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge
to the Holder for any United States or state of the United States documentary
stamp tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder.
13. NO SHAREHOLDER RIGHTS UNTIL EXERCISE. This Warrant does not entitle the
Holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
14. REGISTRY OF WARRANT. The Company shall maintain a registry showing the
name and address of the registered Holder of this Warrant. This Warrant may
be surrendered for exchange or exercise, in accordance with its terms, at
such office or agency of the Company, and the Company and Holder shall be
entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
15. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft,
or destruction, of indemnity reasonably satisfactory to it, and, if
mutilated, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant, having terms and conditions substantially
identical to this Warrant, in lieu hereof.
upon surrender and cancellation of this Warrant, the Company will execute and
deliver a new Warrant, having terms and conditions substantially identical to
this Warrant, in lieu hereof.
16. MISCELLANEOUS.
(a) ISSUE DATE. The provisions of this Warrant shall be construed and
shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof.
(b) SUCCESSORS. This Warrant shall be binding upon any successors or
assigns of the Company.
(c) GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
(d) HEADINGS. The headings used in this Warrant are used for
convenience only and are not to be considered in construing or
interpreting this Warrant.
8
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LMSI/CV Therapeutics, Inc. Warrant
Page 9 of __
(e) Saturdays, Sundays, Holidays. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in
the State of California, then such action may be taken or such right may
be exercised on the next succeeding day not a legal holiday.
17. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder hereof against impairment.
18. ADDRESSES. Any notice required or permitted hereunder shall be in
writing and shall be mailed by overnight courier, registered or certified
mail, return receipt required, and postage pre-paid, or otherwise delivered
by hand or by messenger, addressed as set forth below, or at such other
address as the Company or the Holder hereof shall have furnished to the other
party.
If to the Company: CV Therapeutics, Inc.
1615 Plymouth Street
Mountain View, CA 94043
Attn: Louis G. Lange, CEO
If to the Holder: Lease Management Services, Inc.
2500 Sand Hill Road, Suite 101
Menlo Park, CA 94025
Attn: Barbara B. Kaiser, Sr. VP/GM
9
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LMSI/CV Therapeutics, Inc. Warrant
Page 10 of __
IN WITNESS WHEREOF, CV THERAPEUTICS, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated as of March ___, 1993.
CV THERAPEUTICS, INC.
By: Louis G. Lange
------------------------------
Chief Executive officer
SIGNATURE: /s/ Louis G. Lange
------------------------
10
<PAGE>
NOTICE OF EXERCISE
TO: CV THERAPEUTICS, INC.
1. The undersigned Warrantholder ("Holder") elects to acquire shares
of the Common Stock of CV Therapeutics, Inc. (the "Company"), pursuant
to the terms of the Stock Purchase Warrant dated March __, 1993 (the
"Warrant").
2. The Holder exercises its rights under the Warrant as forth below:
( ) The Holder elects to purchase ________ shares of Common
Stock as provided in Section 3(a) (c) and tenders herewith
a check in the amount of $_________ as payment of the
purchase price.
( ) The Holder elects to convert the purchase rights into shares
of Common Stock as provided in Section 3(b) (c) of the
Warrant.
3. The Holder surrenders the Warrant with this Notice of Exercise.
4. The Holder represents that it is acquiring the aforesaid shares of
Common Stock for investment and not with a view to, or for resale in
connection with, distribution and that the Holder has no present
intention of distributing or reselling the shares.
5. Please issue a certificate representing the shares of Common Stock
in the name of the Holder or in such other name as is specified below:
Name:
Address:
Taxpayer I.D.:
---------------------------------
(Holder)
By: ----------------------------
Title: -------------------------
Date: --------------------------
<PAGE>
LICENSE AGREEMENT
BETWEEN
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
AND
CV THERAPEUTICS, INC.
JUNE 27, 1994
<PAGE>
TABLE OF CONTENTS
PAGE
Article I - Definitions...................................................... 1
Article II - Grant........................................................... 4
Article III - Due Diligence.................................................. 5
Article IV - Royalties....................................................... 6
Article V - Reports And Records.............................................. 8
Article VI - Patent Prosecution and Infringement............................ 9
Article VII - Product Liability.............................................. 10
Article VIII - Confidentiality............................................... 11
Article IX - Export Controls................................................. 12
Article X - Non-Use Of Names................................................. 12
Article XI - Assignment...................................................... 12
Article XII - Term and Termination........................................... 12
Article XIII - Payments, Notices And Other Communications.................... 14
Article XIV - Miscellaneous Provisions....................................... 15
APPENDIX A...................................................................A-1
i
<PAGE>
LICENSE AGREEMENT
This Agreement is made and entered into this 27th day of June, 1994, (the
Effective Date) by and between THE UNIVERSITY OF FLORIDA RESEARCH FOUNDATION,
INC., a not-for-profit corporation duly organized and existing under the laws of
the State of Florida and having its principal office at 223 Grinter Hall,
Gainesville, Florida 32611-2037 (hereinafter referred to UFRFI), and CV
THERAPEUTICS, INC., a corporation duly organized under the laws of Delaware and
having its principal office at 1615 Plymouth Street, Mountain View, CA 94043
(hereinafter referred to as Licensee).
WITNESSETH
WHEREAS, UFRFI is the owner of certain "Patent Rights" (as later defined
herein) by assignment from the University of Florida (hereinafter referred to as
University) and the University of South Florida relating to UFRFI Case No.1195
"Adenosine Receptors" invented by Dr. Luiz Belardinelli, Dr. Stephen Baker and
Dr. Ray Olsson and has the right to grant licenses under said Patent Rights;
WHEREAS, said Patent Rights were invented pursuant to an American Heart
Association sponsored research grant;
WHEREAS, Dr. Belardinelli and Dr. Baker are employees of the University of
Florida and Dr. Olsson is an employee of the University of South Florida;
WHEREAS, UFRFI desires to have the Patent Rights and Know-How utilized in
the public interest and is willing to grant a license thereunder;
WHEREAS, Licensee desires to obtain a license under the Patent Rights and
Know-How in order to develop, market and sell Licensed Products as provided
herein;
WHEREAS, Licensee and the University of Florida have entered into a
Research Agreement of even date herewith providing for certain additional
research and the parties have agreed that any inventions within the scope of
such research program shall be included in the Patent Rights and Know-How
licensed hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein the parties hereto agree as follows:
ARTICLE I- DEFINITIONS
For the purposes of this Agreement, the following words and phrases shall
have the following meanings:
1.
<PAGE>
1.1 "FIELD OF USE" shall mean the detection, prevention and treatment of
human and animal diseases and disorders relating adenosive receptors and analogs
thereof.
1.2 "JOINT INVENTIONS" shall mean individually and collectively all
inventions, improvements and/or discoveries, patentable or unpatentable, which
are conceived and/or made jointly by one or more employee of either of the
Universities and one or more employee of Licensee as a result of the Project
Work relating to adenosine receptors or analogs thereof, whether conceived or
made in connection with the Project Work or otherwise. For the purposes of this
Agreement, the "making" of inventions shall be governed by U.S. laws of
inventorship.
1.3 "JOINT PATENTS" shall mean individually and collectively any and all
United States and foreign patent applications and any and all issued United
States Letters Patent and foreign patents which are conceived and/or made
jointly by one or more employee of either of the Universities and one or more
employee of Licensee which pertain to Joint Inventions.
1.4 "KNOW-HOW" shall mean any and all technical data, information, or
knowledge related to or described in the Patent Rights or created or discovered
in the course of the Project Work. Upon the reasonable request of Licensee to
Dr. Belardinelli or Dr. Baker for other information relating to the manufacture,
marketing, registration, purity, quality, potency, safety, and efficacy of the
Licensed Products, including without limitation, any University Inventions and
Joint Inventions, UFRFI shall provide such information provided that the
Licensee shall reimburse UFRFI for out-of-pocket expenses, if any, associated
with providing such information. Said information provided by Dr. Belardinelli
or Dr. Baker to Licensee shall be deemed Know-How for purposes of this
Agreement.
1.5 "LICENSEE" shall mean all of the following:
(a) a related company of Licensee, the voting stock of which is
directly or indirectly at least fifty percent (50%) owned or
controlled by Licensee;
(b) an organization which directly or indirectly controls more
than fifty percent (50%) of the voting stock of Licensee;
and
(c) an organization, the majority ownership of which is directly
or indirectly common to the ownership of Licensee.
1.6 A "LICENSED PRODUCT" shall mean any product or part thereof which:
(a) is covered in whole or in part by an issued, unexpired claim
or a pending claim contained in the Patent Rights in the
country in which such product or part thereof is made, used
or sold; or
(b) is manufactured by using a process which is covered in whole
or in part by an issued, unexpired claim or a pending claim
contained in the Patent
2.
<PAGE>
Rights in the country in which any such process is used or in
which such product or part thereof is used or sold; or
(c) is derived from any of the Know-How not otherwise includable
in the Patent Rights; and
(d) is sold, manufactured or used in any country under this
Agreement.
1.7 "NET SALES" shall mean Licensee's billings and its sublicensees'
receipts (except as provided below) for Licensed Products sold hereunder less
the sum of the following:
(a) discounts allowed in amounts customary in the trade;
(b) sales taxes, tariff duties and/or use taxes directly imposed
and with reference to particular sales;
(c) outbound transportation prepaid or allowed; and
(d) amounts allowed or credited on returns.
No deductions shall be made for commissions paid to individuals whether they be
with independent sales agencies or regularly employed by Licensee and on its
payroll, or for cost of collections. If Licensee receives royalties from any
sublicensee on the basis of such sublicensee's billings for Licensed Products,
it shall pay royalties UFRFI on the basis of such sublicensee's billings.
1.8 "PATENT RIGHTS" shall mean all of the following intellectual
property owned or controlled by UFRFI:
(a) the United States patent application listed in Appendix A
and any foreign patent applications thereof;
(b) United States and foreign patents issued from such
applications and from divisionals and continuations of these
applications;
(c) claims of U.S. and foreign continuation-in-part
applications, and of the resulting patents, which are
directed to subject matter specifically described in the
U.S. and foreign applications listed in Appendix A;
(d) any reissues of United States patents described in (a), (b)
or (c) above.
The Patent Rights shall include, without limitation, any University
Patents and UFRFI's rights under any Joint Patents.
3.
<PAGE>
1.9 "PROJECT WORK" shall mean that research work to be performed by
University pursuant to the Research Agreement.
1.10 "RESEARCH AGREEMENT" shall mean that agreement attached hereto as
Exhibit B.
1.11 "UNIVERSITIES" shall mean individually and collectively the
University of Florida and the University of South Florida.
1.12 "UNIVERSITY INVENTIONS" shall mean individually and collectively all
inventions, improvements and/or discoveries, patentable or unpatentable, which
are conceived and/or made by one or more employees of the Universities, during
the course of the Project Work, including without limitation, all inventions,
improvements and/or discoveries relating to adenosine receptors or analogs
thereof made by Dr. Belardinelli, Dr. Baker and/or one or more of employees of
the University of Florida working directly for either Dr. Belardinelli or Dr.
Baker during the period beginning with the Effective Date and terminating on the
first anniversary of the Effective Date.
1.13 "UNIVERSITY PATENTS" shall mean individually and collectively any
and all United States and foreign patent applications and any and all issued
United States Letters Patent and foreign patents owned solely by Universities
which pertain to University Inventions.
ARTICLE II - GRANT
2.1 UFRFI hereby grants to Licensee the exclusive, worldwide right and
license, under the Patent Rights and Know-How and in the Field of Use, subject
to the terms and conditions of this Agreement to make, have made, use and sell
the Licensed Products.
2.2 Licensee agrees that Licensed Products sold in the United States
shall be manufactured substantially in the United States if said Licensed
Products were invented in whole or in part with federal government research
support. Licensee further agrees that it shall abide by all rights and
limitations of U.S. Code, Title 35, Chapter 38, and implementing regulations
thereof, for all patent applications and patents invented in whole or in part
with federal money.
2.3 In order to establish exclusivity for Licensee, UFRFI hereby
represents that it has not, and agrees that it shall not, grant any other
license under the Patent Rights and Know-How and in the Field of Use to make,
have made, use and sell Licensed Products during the term of this Agreement.
2.4 UFRFI reserves the right for the Universities to practice under the
Patent Rights and Know-How and to use and distribute to third parties the
tangible property described in the Patent Rights and Know-How solely for its own
noncommercial research purposes.
2.5 Licensee shall have the right to enter into sublicensing agreements
for the rights, privileges and licenses granted hereunder. However, Licensee
shall notify UFRFI in writing
4.
<PAGE>
within ten (10) business days of the initiation of license negotiations with all
potential sublicensees.
2.6 Licensee hereby agrees that every sublicensing agreement to which it
shall be a party and which shall relate to the rights, privileges and license
granted hereunder shall contain a statement setting forth the date upon which
Licensee's exclusive rights, privileges and license hereunder shall terminate.
2.7 Licensee agrees that the terms of any sublicense granted hereunder
shall be consistent with the terms of this Agreement. Licensee further agrees
to attach copies of the following provisions of this Agreement to sublicense
agreements: I (Definitions); II (Grant); V (Reports and Records); VI (Patent
Prosecution and Infringement); VII (Product Liability); IX (Export Controls); X
(Non-Use of Names); XII (Termination) and XIV (Miscellaneous).
2.8 Licensee agrees to forward to UFRFI a copy of any and all sublicense
agreements within thirty (30) days of the execution of such sublicense
agreements and further agrees to forward to UFRFI annually a copy of such
reports received by Licensee from its sublicensees during the preceding twelve
(12) month period under the sublicenses as shall be pertinent to a royalty
accounting under said sublicense agreements.
2.9 Licensee shall not receive from sublicenses anything of value in
lieu of cash payments in consideration for any sublicense under this Agreement,
without the express prior written consent of UFRFI.
2.10 The license granted hereunder shall not be construed to confer any
rights upon Licensee by implication, estoppel or otherwise as to any technology
not specifically set forth herein.
ARTICLE III - DUE DILIGENCE
3.1 Licensee shall use commercially reasonable efforts to develop and
commercialize, one or more Licensed Products to market through a thorough and
diligent program for the exploitation of the right and license granted in this
Agreement and to create, supply and service as extensive a market for Licensed
Products as is reasonably possible in order to maximize its sale of Licensed
Products.
3.2 In addition, Licensee shall adhere to the following milestones:
(a) Licensee shall deliver to UFRFI on or before [
] a project plan showing the projected amount
of money, number and kind of personnel and time budgeted and
planned for each phase of development of the Licensed
Products and Licensed Processes and shall provide similar
reports to UFRFI on an annual basis on or before the
ninetieth (90th) day following the close of Licensee's
fiscal year. The parties acknowledge
5.
<PAGE>
that the Licensed Products relate to pharmaceutical and
diagnostic products which typically require long periods for
development and with respect to which estimates are subject to
substantial uncertainty as to time, technology and funding
requirements.
(b) Licensee shall permit an in-plant inspection by UFRFI on or
before June 27, 1995, and thereafter permit in-plant
inspections at regular intervals with at least twelve (12)
months between each such inspection. All such inspections
shall be on reasonable notice to Licensee and during normal
business hours.
(c) Licensee shall notify UFRFI of any outside preclinical and
clinical studies to be performed relating to the Licensed
Products and UFRFI shall have thirty (30) days from such
notice in which to submit to Licensee a proposal for
participation; after such thirty (30) day period, Licensee
shall have the right to solicit proposals from any third
party.
(d) Licensee (or any of its sublicensees) shall file, or have
filed on its behalf, an investigational new drug application
in the U.S. within one (1) year following completion of the
Project Work and after completion of any other necessary and
sufficient preclinical safety and efficacy studies,
manufacturing, quality control and clinical investigation
documentation. Licensee agrees that it will complete such
safety and efficacy studies within one (1) year following
completion of the Project Work.
(e) Licensee (or any of its sublicensees) will promote market
and sell a Licensed Product in a country in the Territory
within [ ] of receipt of all
governmental approvals necessary for the commercial sale of
such Licensed Product.
3.3 If Licensee fails to perform in accordance with Paragraphs 3.1 and
3.2, UFRFI shall have the right, effective upon thirty (30) days written notice
to Licensee, during which period Licensee may cure such default, to convert the
license granted under Paragraph 2.1 to a non-exclusive license.
3.4 If Licensee has not commenced clinical trials relating to the
Licensed Products by [ ] then, UFRFI may, but shall not be
obligated to, terminate this Agreement upon [ ] days written notice to
Licensee.
ARTICLE IV - ROYALTIES
4.1 Licensee shall pay license fees, royalties and sublicense fees to
UFRFI as follows:
6.
<PAGE>
(a) [
] which said [ ]
shall be [
].
(b) [
]
PROVIDED, HOWEVER, [
] such
[ ] shall be [
].
(c) [
] excluding [
].
Upon request from UFRFI, Licensee shall provide [
].
4.2 No [ ] shall be [
] under this Agreement.
4.3 [ ] shall be paid in United States dollars in
Gainesville, Florida or at such other place as UFRFI may reasonably designate
consistent with the laws and regulations controlling in any foreign country. If
any currency conversion shall be required in connection with the payment of [
] hereunder, such conversion shall be made by using the exchange rate
prevailing at the Chase Manhattan Bank (N.A.) on the last business day of the
calendar quarterly reporting period to which such royalty payments relate.
4.4 In the event the [ ] set forth herein are higher than the [
] permitted by the law or regulations of a particular country, the [
] for sales in such country shall be equal to the [
] under such law or regulations. Notice of said event shall be provided to
UFRFI. An authorized representative of Licensee shall notify UFRFI, in writing,
within thirty (30) days of discovering that [ ] are approaching or
have reached the [ ], and shall provide UFRFI with written
documentation regarding the laws or regulations establishing such maximum.
4.5 In the event that any taxes, withholding or otherwise, are levied by
any taxing authority in connection with accrual or payment of any royalties
payable by Licensee under this Agreement, and Licensee determines in good faith
that it must pay such taxes, Licensee shall have the right to pay such taxes to
the local tax authorities on behalf of UFRFI and payment of the net amount due
after reduction by the amount of such taxes, shall fully satisfy Licensee's
royalty obligations under this Agreement. Licensee shall provide UFRFI with
appropriate receipts or other documentation supporting such payment. Licensee
shall inform UFRFI in
7.
<PAGE>
writing, within thirty (30) days of notification that taxes will or have been
levied by a taxing authority.
ARTICLE V - REPORTS AND RECORDS
5.1 Licensee shall keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of showing the
amounts payable to UFRFI hereunder. Said books of account shall be kept at
Licensee's principal place of business or the principal place of business of the
appropriate division of Licensee to which this Agreement relates. Said books
and the supporting data shall be open at all reasonable times for five (5) years
following the end of the calendar year to which they pertain, to the inspection
of UFRFI or its agents for the purpose of verifying Licensee's royalty statement
or compliance in other respects with this Agreement.
5.2 Licensee, within ninety (90) days after March 31, June 30, September
30 and December 31, of each year, shall deliver to UFRFI true and accurate
reports, giving such particulars of the business conducted by Licensee and its
sublicensees during the preceding three-month period under this Agreement as
shall be pertinent to a royalty accounting hereunder. These shall include at
least the following;
(a) [
], if any.
(b) [ ].
(c) [ ].
(d) [ ].
(e) [ ].
(f) [
].
5.3 With each such report submitted, Licensee shall pay to UFRFI the
royalties due and payable under this Agreement. If no royalties shall be due,
Licensee shall so report.
5.4 On or before the ninetieth (90th) day following the close of
Licensee's fiscal year, Licensee shall provide UFRFI with [
].
5.5 The [ ] and [
] set forth in this Agreement shall, if overdue, bear interest until
payment at the monthly rate of [ ]
8.
<PAGE>
[ ]. The payment of such interest shall not foreclose UFRFI from
exercising any other rights it may have as a consequence of the lateness of any
payment.
ARTICLE VI - PATENT PROSECUTION AND INFRINGEMENT
6.1 During the term of this Agreement, [ ] will be responsible for
filing, prosecuting and maintaining patent applications with respect to the
Patent Rights, at its own expense. [ ] will retain patent counsel of its
choosing but reasonably acceptable to [ ] in connection with the
performance of [ ] obligations under this Section 6.1 and shall
designate [ ] as an additional client with respect to such representation.
As an additional client, [ ] shall be entitled to receive copies of
correspondence and filings with the U.S. Patent and Trademark office and foreign
equivalents and to be consulted regarding such patent applications.
6.2 [ ] will cooperate with [ ] in the preparation, filing,
prosecution and maintenance of patents and patent applications with respect to
the Patent Rights by disclosing such information as may be necessary and by
promptly executing such documents as [ ] may reasonably request to effect
such efforts.
6.3 If [ ] wishes to file a patent application with respect to any
invention claimed in the Patent Rights in any jurisdiction in which no
application has yet been filed, [ ] will so notify [ ] in writing,
upon receipt of which [ ] will have ninety (90) days to file such patent
application. If [ ] declines or fails to file such patent application, [
] may file and prosecute such patent application, at [ ] own expense.
In such event, [ ] will have no rights under Section 2.1 to practice the
invention disclosed in such patent application in such jurisdiction.
6.4 If [ ] intends to abandon all claims under all patent
applications contained in the Patent Rights in a particular jurisdiction, it
will notify [ ] within ninety (90) days of its proposed abandonment, but no
later than thirty (30) days prior to any deadline for filing any response or
taking any action necessary to maintain such application. Upon receipt of such
notice [ ] may, by written notice to [ ], elect to continue the
prosecution of such application. The costs and expenses associated such
prosecution will be borne solely by [ ]; provided, however, that if [ ]
obtains issuance of any such patent application, [ ] shall reimburse [
] for such costs and expenses. [ ] determination to abandon any patent
application hereunder will have no force and effect upon the license granted
with respect to such patent application pursuant to Section 2.1.
6.5 For so long as [
] shall be responsible, solely at its expense, for
defending and enforcing the Patent Rights. However, [ ] shall receive
notice of and shall have the right, at its expense, to participate in the
protection and defense of the Patent Rights. [ ] shall have the right to
settle and compromise any dispute with third parties, with the prior written
consent of [ ], which consent shall not be unreasonably withheld. All
costs, fees and expenses incurred in connection
9.
<PAGE>
with the defense and enforcement of the Patent Rights shall be borne by [
] , provided, however, that [
] and [
] in connection therewith. Said [ ] shall begin no
earlier than the date [
]. Any [
] pursuant to this
Article VI. [
] To the extent that [
] shall be entitled to [
] under this
Agreement.
[ ] agrees to cooperate reasonably in any such litigation initiated by [
] including participating as a necessary party, supplying essential
documentary evidence and making essential witnesses in [ ] employment
available.
6.6 If [ ] does not, within ninety (90) days after receiving
notice or otherwise becoming aware of a third party infringement of any of the
Patent Rights, take appropriate action to address such third party infringement,
then [ ] may take such legally permissible action as it deems necessary or
appropriate to enforce the Patent Rights and restrain such infringement. In
such event, all costs, fees and expenses incurred in connection with the defence
and enforcement of the Patent Rights shall be borne by [ ]. [ ]
agrees to cooperate reasonably in any such litigation initiated by [ ]
including participating as a necessary party, supplying essential documentary
evidence and making essential witnesses in [ ] 's employment available.
If [ ] shall prevail in such proceeding, either by way of judgment or
settlement or compromise, any amounts recovered by [ ] shall be divided
equally between the parties, net of expenses incurred in connection therewith,
with the payment made promptly after such receipt of such amounts.
6.7 If [ ] has a [ ] under this Agreement,
the parties shall discuss [ ].
ARTICLE VII - PRODUCT LIABILITY
7.1 Licensee shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold UFRFI, the USF Research Foundation Inc.
and the Universities, their trustees, officers, employees and affiliates,
harmless against all claims and expenses, including legal expenses and
reasonable attorneys' fees, whether arising from a third party claim or
resulting from UFRFI's enforcing this indemnification clause against Licensee,
arising out of the death of or injury to any person or persons or out of any
damage to property and against any other claim, proceeding, demand, expense and
liability of any kind whatsoever resulting from the production, manufacture,
sale, use, consumption or advertisement of the Licensed Product(s) or arising
from any obligation of Licensee hereunder.
10.
<PAGE>
7.2 Licensee shall obtain and carry in full force and effect liability
insurance, in amounts customary in the biotechnology industry, which shall
protect Licensee, UFRFI and the USF Research Foundation Inc. in regard to events
covered by Paragraph 7.1 above.
7.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, UFRFI
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR
PENDING.
ARTICLE VIII - CONFIDENTIALITY
8.1 Anything in this Agreement to the contrary notwithstanding, any and
all knowledge, know-how, practices, process or other information of any kind and
in any form (hereinafter referred to as "Confidential Information") disclosed or
submitted, either orally, in writing or in other tangible or intangible form
which is designated as Confidential Information, to either party by the other
shall be received and maintained by the receiving party in strict confidence and
shall not be disclosed to any third party. Furthermore, neither party shall use
the said Confidential Information for any purpose other than those purposes
specified in this Agreement. The parties may disclose Confidential Information
to the minimum number of its employees reasonably requiring access thereto for
the purposes of this Agreement provided, however, that prior to making any such
disclosures each such employee shall be apprised of the duty and obligation to
maintain Confidential Information in confidence and not to use such information
for any purpose other than in accordance with the terms and conditions of this
Agreement.
8.2 Nothing contained herein will in any way restrict or impair either
parties right to use, disclose, or otherwise deal with any Confidential
Information which at the time of its receipt:
(a) Is generally available in the public domain, or thereafter
becomes available to the public through no act of the receiving party; or
(b) Was independently known prior to receipt thereof, or made
available to such receiving party as a matter of lawful right by a third party.
8.3 Each party may disclose any Confidential Information to the extent
that such party has been advised by counsel that such disclosure is necessary
for such party to comply with laws or regulations, provided that the party
proposing to make such disclosure shall give the other party reasonable advance
notice of such disclosure and shall use its best efforts to secure confidential
treatment of such Information to be disclosed.
8.4 The obligations of this Article VIII shall continue until the later
of the term of this Agreement and for a period of five (5) years thereafter or
for so long as any Confidential
11.
<PAGE>
Information not otherwise includable in the Patent Rights or Know-How is being
utilized in connection with any Licensed Product.
8.5 Each party agrees that remedies at law may be inadequate to protect
against breach of this Article VIII, and hereby agrees to the granting of
injunctive relief, without proof of actual damages.
ARTICLE IX - EXPORT CONTROLS
Licensee hereby agrees that it shall not sell, transfer, export or reexport
any Licensed Products or related information in any form, or any direct products
of such information, except in compliance with all applicable laws, including
the export laws of any U.S. government agency and any regulations thereunder,
and will not sell, transfer, export or reexport any such Licensed Products or
information to any persons or any entities with regard to which there exist
grounds to suspect or believe that they are violating such laws. Licensee shall
be solely responsible for obtaining all licenses, permits or authorizations
required from the U.S. and any other government for any such export or reexport.
To the extent not inconsistent with this Agreement, UFRFI agrees to provide
Licensee with such assistance as it may reasonably request in obtaining such
licenses, permits or authorization.
ARTICLE X - NON-USE OF NAMES
Licensee shall not use the names of the Universities or UFRFI nor of any of
their employees, nor any adaptation thereof, in any advertising, promotional or
sales literature without prior written consent obtained from UFRFI in each case,
except that Licensee may state that it is licensed by UFRFI under one or more of
the patents and/or applications comprising the Patent Rights. The parties agree
to issue a mutually agreed press release on or after the Effective Date.
ARTICLE XI - ASSIGNMENT
Licensee shall have the right to assign its rights or obligations under
this Agreement in connection with a merger or similar reorganization or the sale
of all or substantially all of the assets to which this Agreement pertains, or
otherwise with the prior written consent of UFRFI. This Agreement shall be
binding upon and inure to the benefit of the successors and permitted assigns of
Licensee. Any assignment not in accordance with this Agreement shall be void.
ARTICLE XII - TERM AND TERMINATION
12.1 Unless sooner terminated as provided herein, this Agreement will
expire on the later of the date on which the last to expire of the Patent Rights
shall expire or [ ] from the first commercial sale of a Licensed
Product. Upon such expiration of this Agreement, Licensee shall have a fully
paid-up worldwide right and license under the Patents and Know-How for any
purpose.
12.
<PAGE>
12.2 If Licensee shall cease to carry on its business, this Agreement
shall terminate upon notice by UFRFI.
12.3 In the event either party files for bankruptcy or a receiver is
appointed, this Agreement may immediately thereafter be terminated at the option
of the other party.
12.4 Should Licensee fail to pay UFRFI [ ] due
and payable hereunder, UFRFI shall have the right to terminate this Agreement on
[ ] notice, unless Licensee shall pay UFRFI within the [
] period, all such royalties and fees and interest due and
payable. Upon the expiration of the [ ] period, if
Licensee shall not have paid all such royalties and fees and interest due and
payable, the rights, privileges and license granted hereunder shall terminate.
12.5 Upon any material breach or default of this Agreement by Licensee,
other than under Sections 3.1, 3.2 and 3.4 and those occurrences set out in
Paragraphs 12.2 and 12.4 hereinabove, which shall always take precedence in that
order over any material breach or default referred to in this Paragraph 12.5,
UFRFI shall have the right to terminate this Agreement and the rights,
privileges and license granted hereunder by [ ] notice to
Licensee. Such termination shall become effective unless (i) Licensee shall
have cured any such breach or default prior to the expiration of the [
] period or (ii) Licensee shall have demonstrated substantial efforts to cure
such breach or default, which efforts shall be reasonably satisfactory to UFRFI.
12.6 Licensee shall have the right to [
].
12.7 UFRFI may [
].
12.8 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination. Licensee and any sublicensee
thereof may, however, after the effective date of such termination, sell all
Licensed Products, and complete Licensed Products in the process of manufacture
at the time of such termination and sell the same, provided that Licensee shall
pay to UFRFI the royalties thereon as required by Article IV of this Agreement
and shall submit the reports required by Article V hereof on the sales of
Licensed Products.
12.9 Upon termination of this Agreement for any reason, any sublicensee
not then in default under its sublicense agreement with Licensee shall [
] on [
] and otherwise with the [ ]
hereunder, provided, however, that [
]:
13.
<PAGE>
(i) [ ] or
(ii) [
];
or [ ].
12.10 Upon termination of this Agreement for any reason, all intellectual
property rights licensed hereunder, including without limitation all Patent
Rights and rights in and to the Know-How, University Patents and University
Inventions shall [ ](except to the extent assumed by
sublicensees pursuant to Section 12.9) and [ ] shall have no further
right to or continuing interest herein. In addition, upon termination of this
Agreement, to the extent that [
].
ARTICLE XIII - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
Any payment, notice or other communication pursuant to this Agreement shall
be sufficiently made or given on the date of mailing if sent to such party by
certified first class mail or air courier, postage prepaid, addressed to it at
its address below or at it shall designate by written notice given to the other
party:
In the case of UFRFI:
President
University of Florida Research Foundation, Inc.
223 Grinter Hall
Gainesville, Florida 32611
With a copy to:
Director
Office of Patent, Copyright and Technology Licensing
186 Grinter Hall
Gainesville, Florida 32611
All payments to:
Director
Office of Patent, Copyright and Technology Licensing
186 Grinter Hall
Gainesville, Florida 32611
14.
<PAGE>
PLEASE MAKE ALL CHECKS PAYABLE TO:
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
In the case of Licensee:
CV Therapeutics, Inc.
1615 Plymouth Street
Mountain View, CA 94043
Attention: President and CEO
ARTICLE XIV - MISCELLANEOUS PROVISIONS
14.1 Each party represents and warrants that it has the authority to
enter into this Agreement and that the execution, delivery and performance of
this Agreement do not conflict with any agreement or understanding, either
written or oral, to which it is a party or to which it is otherwise bound.
14.2 This Agreement shall be construed, governed, interpreted and applied
in accordance with the laws of the State of Florida, U.S.A., except that
questions affecting the construction and effect of any Patent Rights shall be
determined by the law of the country in which the patent was granted.
14.3 The parties hereto acknowledge that this Agreement sets forth the
entire agreement and understanding of the parties hereto as to the subject
matter hereof, and shall not be subject to any change or modification except by
the execution of a written instrument subscribed to by the parties hereto.
14.4 If any term, covenant or condition of this Agreement or the
application thereof to any party or circumstance shall, to any extent, be held
to be invalid or unenforceable, then (i) the remainder of this Agreement, or the
application of such term, covenant or condition to Parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Agreement shall be
valid and be enforced to the fullest extent permitted by law; and (ii) the
parties hereto covenant and agree to renegotiate any such term, covenant or
application thereof in good faith in order to provide a reasonably acceptable
alternative to the term, covenant or condition of this Agreement or the
application thereof that is invalid or unenforceable, it being the intent of the
Parties that the basic purposes of this Agreement are to be effectuated.
14.5 Licensee agrees to mark the Licensed Products sold in the United
States with all applicable United States patent numbers. All Licensed Products
shipped to or sold in other countries shall be marked in such a manner as to
conform with the patent laws and practice of the country of manufacture or sale.
15.
<PAGE>
14.6 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals and
duly executed this Agreement the day and year set forth below.
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
By /s/ Karen Holbrook
-----------------------------
Name
------------------------------------
Title President
-----------------------------------
Date 7/6/94
------------------------------------
CV THERAPEUTICS, INC.
By /s/ Louis G. Lange
--------------------------------------
Name
------------------------------------
Title Chief Executive Officer
-----------------------------------
Date 8/30/94
- ----------------------------------------
16.
<PAGE>
APPENDIX A
[
]
U.S.S.N. [ ]
By [ ]
Filed [ ]
A-1
<PAGE>
RESEARCH AGREEMENT
This AGREEMENT entered into this 27th day of June, 1994 (the "Effective
Date"), by and between CV Therapeutics, Inc., having its principal office at
1615 Plymouth St., Mountain View, CA 94043 (hereinafter referred to as
"Sponsor"), and the UNIVERSITY OF FLORIDA, a non-profit educational institution
of the State of Florida located in Gainesville, Florida (hereinafter referred to
as the "University").
WITNESSETH:
WHEREAS, Sponsor desires the research assistance of certain technically
qualified persons having access to certain facilities and equipment;
WHEREAS, Sponsor desires to fund said research entitled "Adenosine
Receptor" attached hereto as Appendix A;
WHEREAS, Sponsor has entered into a License Agreement with the University
of Florida Research Foundation, Inc. ("UFRFI") dated June 27, 1994, for the
Field of Use described as human pharmaceuticals. UFRFI and the University of
Florida, an educational institution having its principal office at 223 Grinter
Hall, Gainesville, Florida 32611 (hereinafter referred to as "University"), have
agreed that the research described herein shall be conducted by University;
WHEREAS, University is willing to cooperate with and assist Sponsor by
furnishing such personnel, and facilities as may be required;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
I DEFINITIONS:
As used herein, the following terms shall have the following meanings:
1.1 "CONTRACT PERIOD" is [ ] through [ ],
which shall be extended through [ ], unless Sponsor has also
terminated the License Agreement, during which the University shall perform the
Project Work.
1.2 "LICENSE AGREEMENT" shall mean that certain License Agreement dated
June 27, 1994, to which this Research Agreement is attached.
1.3 "PROJECT DESCRIPTION" shall mean the description of the Project
Work, including budget, as described in Appendix A.
1
<PAGE>
1.4 "PROJECT WORK" shall mean the research work, as described in
Appendix A hereof to be performed by University under this Agreement.
1.5 "RESEARCHER(S)" shall mean individually and collectively Dr. Luiz
Belardinelli (hereinafter referred to as the "Principal Investigator"), Dr.
Stephen Baker, graduate students, other professional personnel and/or other
employees of University participating in the actual performance of the Project
Work.
1.6 "SPONSOR" shall mean the Licensee defined and described in the
License Agreement between Licensee and UFRFI.
II RESEARCH WORK
2.1 University shall perform the Project Work substantially in
accordance with the terms and conditions of this Agreement.
2.2 University agrees that Dr. Belardinelli shall act as the Principal
Investigator for the Project Work. If Dr. Belardinelli leaves University, or
terminates his involvement in this Agreement, University shall use its best
efforts to find a replacement acceptable to Licensee. If University fails to do
so, Licensee shall have the right to terminate this Agreement on thirty (30)
days written notice.
2.3 The parties acknowledge that certain portions of the Project Work
may be performed by Dr. Ray Olsson at the University of South Florida under a
subcontract of this Agreement. University shall not subcontract the Project
Work to any other third party without the prior written consent of Sponsor,
which consent shall not be unreasonably withheld. University agrees that any
such subcontract shall provide that any University Patents and University
Inventions conceived pursuant to such subcontract shall be assigned to
University and shall be subject to the License Agreement.
III REPORTS AND CONFERENCES
3.1 University shall disclose to Sponsor, on a semi-annual basis and in
writing, all of the results of the Project Work including but not limited to all
University Inventions, Joint Inventions, know-how, data, conclusions, results,
observations, procedures and the like; all of which shall be deemed to be
subject to Sponsor's license under the Patent Rights and Know-How pursuant to
the License Agreement. Sponsor shall disclose to University, on a semi-annual
basis and in writing, all of its results of the Project Work including but not
limited to all Joint Inventions, know-how, data, conclusions, results,
observations, procedures and the like.
3.2 If requested by Sponsor, during the term of this Agreement,
representatives of the University will meet with representatives of Sponsor at
times and places mutually agreed upon to discuss the progress and results, as
well as ongoing plans, or changes therein, of the Project Work to be performed
hereunder. Sponsor will reimburse the University for reasonable travel and
living expenses incurred in connection with such meetings.
2
<PAGE>
IV RESEARCH FUNDING
4.1 Subject to the terms and conditions of this Agreement, Sponsor
shall support the Project Work by a [
] payable as follows:
4.1.1 Commencing on [ ], Sponsor
shall pay the University [
] and
4.1.2 At [ ], commencing on [
] Sponsor shall pay the University [
].
4.2 Such grant amount shall cover both [ ] and shall be
allocated according to the Project Description. Unless otherwise agreed in
writing, the total costs to Sponsor for the Project Work shall not exceed [
].
4.3 Should this Agreement be terminated pursuant to Section IX hereof
prior to its expiration, Sponsor shall [
] provided, however, that Sponsor shall [
] which shall include [ ] and [
]. After [
], any obligation of [
]. In addition, if this Agreement is [
].
V PUBLICITY
5.1 Sponsor shall not use the names of the University or UFRFI nor of
any of their employees, nor any adaptation thereof, in any advertising,
promotional or sales literature without prior written consent obtained from
UFRFI in each case, except that Sponsor may state that it is licensed by UFRFI
under one or more of the patents and/or applications comprising the Patent
Rights. The parties agree to issue a mutually press release, on or after the
Effective Date.
VI PUBLICATIONS
6.1 Sponsor recognizes that under University academic policy, the
results of a University research project must be publishable and agrees that
Researchers engaged in the Project Work shall be permitted to present at
symposia, national or regional professional meetings and to publish in journals,
theses or dissertations, or otherwise of their own choosing, methods and results
of Project Work or any of the University Inventions or Joint Inventions,
provided, however, that Sponsor shall have been furnished copies of any proposed
publication
3
<PAGE>
or presentation at least forty (40) days in advance of the submission of such
proposed publication or presentation to a journal, editor or other third party.
Sponsor shall have thirty (30) days, after receipt of said copies, to object to
such proposed presentation or proposed publication either because there is
patentable subject matter which needs protection and/or there is Confidential
Information of Sponsor contained in the proposed publication or presentation.
In the event that Sponsor makes such objection, the said Researcher(s) shall
refrain from making such publication or presentation for a maximum of three (3)
months in order for the University to file patent application(s) with the United
States Patent and Trademark Office and/or foreign patent office(s) directed to
the patentable subject matter contained in the proposed publication or
presentation.
VII CONFIDENTIALITY
7.1 Anything in this Agreement to the contrary notwithstanding, any and
all knowledge, know-how, practices, process or other information of any kind and
in any form (hereinafter referred to as "Confidential Information") disclosed or
submitted, either orally, in writing or in other tangible or intangible form
which is designated as Confidential Information, to either party by the other
shall be received and maintained by the receiving party in strict confidence and
shall not be disclosed to any third party. Furthermore, neither party shall use
the said Confidential Information for any purpose other than those purposes
specified in this Agreement. The parties may disclose Confidential Information
to the minimum number of its employees reasonably requiring access thereto for
the purposes of this Agreement provided, however, that prior to making any such
disclosures each such employee shall be apprised of the duty and obligation to
maintain Confidential Information in confidence and not to use such information
for any purpose other than in accordance with the terms and conditions of this
Agreement.
7.2 Nothing contained herein will in any way restrict or impair either
parties right to use, disclose, or otherwise deal with any Confidential
Information which at the time of its receipt:
7.2.1 Is generally available in the public domain, or thereafter
becomes available to the public through no act of the receiving party; or
7.2.2 Was independently known prior to receipt thereof, or made
available to such receiving party as a matter of lawful right by a third party.
7.3 Each party may disclose any Confidential Information to the extent
that such party has been advised by counsel that such disclosure is necessary
for such party to comply with laws or regulations, provided that the party
proposing to make such disclosure shall give the other party reasonable advance
notice of such disclosure and shall use its best efforts to secure confidential
treatment of such Information to be disclosed.
7.4 The obligations of this Article VII shall continue until the later
of the term of this Agreement and for a period of five (5) years thereafter or
for so long as any Confidential
4
<PAGE>
Information not otherwise includable in the Patent Rights or Know-How is being
utilized in connection with any Licensed Product.
7.5 Each party agrees that remedies at law may be inadequate to protect
against breach of this Article VII, and hereby agrees to the granting of
injunctive relief, without proof of actual damages.
VIII INVENTIONS IMPROVEMENTS AND DISCOVERIES
8.1 University will promptly notify Sponsor of any University
Inventions and Joint Inventions and Sponsor will promptly notify Licensee of any
Joint Inventions. This obligation shall survive any termination of this
Agreement.
8.2 All rights and title to University Inventions arising under Project
Work and conceived and/or made by one or more employees of University shall
belong to University. The University and Sponsor shall own jointly all
University Inventions arising under Project Work and conceived and/or made
jointly by University and Sponsor. For the purposes of this Agreement, the
"making" of inventions shall be governed by U.S. laws of inventorship. All the
University's right and title to such University Inventions is hereby assigned to
UFRFI and shall be subject to the terms and conditions of this Agreement and the
License Agreement.
8.3 Rights to inventions, improvements and/or discoveries, whether
patentable or not, relating to Project Work made solely by employees of Sponsor
shall belong to Sponsor, and such invention, improvements and/or discoveries
shall not be subject to the terms and conditions of this Agreement or the
License Agreement.
IX TERM AND TERMINATION
9.1 This Agreement shall become effective upon the Effective Date and
shall continue until [ ] unless sooner terminated in accordance
with the provisions of this Section IX. Sponsor shall extend this Agreement
until [ ] unless Sponsor has also [
].
9.2 Notwithstanding anything to the contrary in this Agreement, Sponsor
shall [
] In such event, Sponsor
shall have the obligations set forth in Section 4.3.
9.3 In the event that either party hereto shall commit any breach of or
default in any of the terms or conditions of this Agreement, and also shall fail
to remedy such default or breach within [ ] after receipt of
written notice thereof from the other party hereto, the party giving notice may,
at its option and in addition to any other remedies which it may have at law or
in equity, terminate this Agreement by sending notice of termination in
writing to the other party to such effect, and such termination shall be
effective as of the date of the receipt of such notice.
5
<PAGE>
9.4 Termination of this Agreement by either party for any reason shall
not affect the rights and obligations of the parties accrued prior to the
effective date of termination of this Agreement. No termination of this
Agreement, however effectuated, shall release the parties hereto from their
rights and obligations under Sections III, IV, V, VI, VII, or VIII.
X MISCELLANEOUS
10.1 The parties recognize that inventions, copyrightable works or other
proprietary information may arise from research sponsored in whole or in part by
agencies of the federal government. The parties hereto agree that any such
developments shall be governed by the provisions of Public Law 96-517, or as
amended, during the term of this Agreement.
10.2 In the performance of all services hereunder:
10.2.1 UFRFI shall be deemed to be and shall be an independent
contractor and as such University shall not be entitled to any benefits
applicable to employees of Sponsor;
10.2.2 University and UFRFI shall comply with all governmental laws
and regulations, such as EPA, OSHA and like regulations, which are applicable to
the University and its performance of the Project Work hereunder;
10.2.3 Neither party is authorized or empowered to act as agent for
the other for any purpose and shall not on behalf of the other enter into any
contract, warranty or representation as to any matter. Neither shall be bound
by the acts or conduct of the other.
XI INDEMNITY/INSURANCE
11.1 University warrants and represents that, as part of the State of
Florida, University is self-funded for liability insurance under Chapter 284,
FLORIDA STATUTES, such protection being applicable to officers, employees and
agents while acting within the scope of their employment by University and
University has no liability insurance policy as such that can extend protection
to any other person.
11.2 Each party hereby assumes any and all risks of personal injury and
property damage attributable to the negligent acts or omissions of that party
and the officers, employees and agents thereof.
11.3 The parties further agree that nothing contained herein shall be
construed or interpreted as denying to either party any remedy or defense
available to such party under the laws of the State of Florida; the consent of
the State of Florida or its agents and agencies to be sued by reason hereon; or
as a waiver of sovereign immunity of the State of Florida beyond the waiver
provided in Section 768.28, FLORIDA STATUTES (1991).
6
<PAGE>
XII GOVERNING LAW
12.1 This Agreement shall be governed and interpreted in accordance with
the internal law of the State of Florida without regard to its conflict of laws.
XIII ASSIGNMENT
13.1 Sponsor shall have the right to assign its rights or obligations
under this Agreement in connection with a merger or similar reorganization or
the sale of all or substantially all of the assets to which this Agreement
pertains, or otherwise with the prior written consent of University. This
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of Sponsor. Any assignment not in accordance with this
Agreement shall be void.
XIV AGREEMENT MODIFICATION
14.1 Any agreement changing the terms of this Agreement in any way shall
be valid only if the change is made in writing and approved by authorized
representatives of the parties hereto.
XV NOTICES
15.1 Notices, invoices, communications and payments hereunder shall be
deemed made if given by registered or certified mail, postage prepaid, and
addressed to the party to receive such notice, invoice or communication at the
address given below, or such other address as may hereafter be designated by
notice IN writing:
If to Sponsor: CV Therapeutics, Inc.
1615 Plymouth Street
Mountain View, CA 94043
Attention:
If to UFRFI: Karen A. Holbrook
President
University of Florida Research Foundation, Inc.
223 Grinter Hall
Gainesville, Florida 32611-2037
Technical Matter: Luiz Belardinelli, M.D.
Professor of Medicine University of Florida
P.O. Box 100277
Gainesville, Florida 32610
7
<PAGE>
PAYMENTS SHALL BE MADE IN UNITED STATES DOLLARS TO THE UNIVERSITY OF
FLORIDA RESEARCH FOUNDATION, INC. AT THE FOLLOWING ADDRESS:
223 Grinter Hall
Gainesville, Florida 32611-2037
The date of giving any notice, invoice or other communication, and the date of
making any such payment, provided that such payment is received, shall be the
date on which such envelope is deposited with the appropriate U.S. Post Office.
The postal service receipt showing the date of such deposit shall be PRIMA FACIE
evidence of these facts.
XVI ENTIRE AGREEMENT
16.1 This Agreement represents the entire understanding between the
parties, and supersedes and merges all understanding between the parties, and
supersedes and merges all other agreements, express or implied, discussions or
understandings between the parties with respect to the subject matter hereof. It
shall be interpreted in conjunction and consistent with the License Agreement to
which this is an Exhibit.
IN WITNESS WHEREOF, the parties have caused these presents to be executed
in duplicate as of the day and year first above written.
CV THERAPEUTICS, INC. UNIVERSITY OF FLORIDA
By: /s/ Louis G. Lange By: /s/ Karen A. Holbrook
---------------------------- ------------------------
Title: Chief Executive Officer Title: President
8
<PAGE>
APPENDIX A
PROJECT DESCRIPTION
There are 3 main areas of work that the University of Florida Scientists are
committed to under the UFDRI/CVT License Agreement. The budgets for this work
is detailed below.
1. [ ] Dr. Belardinelli, Dr. Baker, and the University of
Florida will undertake certain [
]. CVT will provide [
] and the University of Florida Scientists will [
].
2. [ ] University of Florida will work in
conjunction with CVT Chemists to develop [
]. In particular the [
]. CVT
and University of Florida Scientists will work together [
]. These [ ] may be the subject of [
].
3. [ ] The scope of the [
] will be undertaken initially by [ ]
and [ ] with [
] will carry out additional
experiments
to develop [
].
The primary workload for [ ] will be to [
]
University of Florida Scientists [ ]. While these are
the immediate goals of the CVT/University of Florida collaboration it is
anticipated that within the time frame of the agreements we shall [
].
<PAGE>
BUDGET FOR
APPENDIX A
Total: [ ]
Budgeted for research contract for years [ ] and [ ] to be paid by
CV Therapeutics to University of Florida investigators (Belardinelli and Baker).
1. Personnel [ ] at [ ] [ ]
2. Supplies and animals [ ]
3. Indirect cost [ ]
TOTAL [ ]
/s/ Luiz Belardinelli, M.D. /s/ Stephen P. Baker, Ph.D.
---------------------------- ----------------------------
Professor of Medicine Chairman, Department of
Pharmacology
<PAGE>
LICENSE AGREEMENT
THIS LICENSE AGREEMENT made and effective as of March 27, 1996 between
SYNTEX (U.S.A.) INC., 3401 Hillview Avenue, Palo Alto, California 94303
(hereinafter referred to as "Syntex") and CV THERAPEUTICS, INC., 3172 Porter
Drive, Palo Alto, California 94304 (hereinafter referred to as "CVT").
RECITALS
WHEREAS, Syntex has developed a compound having the generic name of
ranolazine, with the Syntex code number RS-43285-193 (the "Compound" as
hereinafter defined) and is the owner of patent rights and know-how relating to
the Compound;
WHEREAS, Syntex desires to have CVT develop and register in specified
countries (the "CVT Territory" as hereinafter defined) pharmaceutical products
containing the Compound for the treatment of angina pectoris, and, at CVT's
discretion, certain other Cardiovascular Indications (as hereinafter defined);
1.
<PAGE>
WHEREAS, CVT desires to develop, manufacture, and commercialize Licensed
Products (as hereinafter defined) in the CVT Territory either by itself or with
another party (the "CVT Partner") with whom CVT will collaborate in developing
and/or marketing such products and to receive the right and license under the
Syntex Patents and Know-How (as hereinafter defined) to make, have made, use,
sell, offer for sale and import in the CVT Territory Licensed Products under
CVT's trademark;
WHEREAS, Syntex is willing to grant in the CVT Territory the above-
mentioned rights and license to CVT under Syntex Patents and Know-How relating
to the Licensed Products;
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS.
The following terms as used in this License Agreement shall have the
meanings respectively set forth in this Article:
1.1 "AFFILIATED COMPANY" or "AFFILIATE" shall mean
(a) an organization fifty percent (50%) or more of the voting
stock, or comparable ownership interest, of which is owned and/or controlled
directly or indirectly by either party to this Agreement;
(b) an organization that directly or indirectly owns and/or
controls fifty percent (50%) or more of the voting stock, or comparable
ownership interest, of either party of this Agreement;
2.
<PAGE>
(c) an organization that is directly or indirectly under common
control with either party to this Agreement through common share holdings.
1.2 "CARDIOVASCULAR INDICATIONS" shall mean the treatment and
prevention of any disorders of the heart, blood vessels, or kidney and disorders
due to ischemia or hypoxia of any organ or tissue except the brain.
1.3 "COMPOUND" shall mean the chemical substance having the chemical
name ( )N-(2,6-dimethylphenyl)-4-[2-hydroxy-3-(2-methoxyphenoxy)propyl]-1-
piperazine acetamide dihydrochloride. The Compound has the generic name
ranolazine, further identified by Syntex's code number RS-43285-193.
1.4 "CVT KNOW-HOW" shall mean all materials and information developed
relating to the mechanism of action, all preclinical and clinical research, and
processes and inventions useful for the formulation, development, manufacture,
delivery or use of the Licensed Products, that are owned and/or controlled by
CVT.
1.5 "CVT PATENT RIGHTS" shall mean all patents and patent applications,
both foreign and domestic, including without limitation all provisionals,
divisionals, continuations, continuations-in-part, substitutions, extensions,
reissues, renewals, supplementary protection certificates and inventors'
certificates, owned and/or controlled by CVT that cover inventions or
discoveries relating to the Licensed Products.
1.6 "CVT PATENTS AND KNOW-HOW" shall mean CVT Patent Rights and CVT
Know-How.
3.
<PAGE>
1.7 "CVT TERRITORY" shall mean all countries in the world, excluding
Japan, Korea, China, Taiwan, Hong Kong, the Phillipines, Indonesia, Singapore,
Thailand, Malaysia, Vietnam, Myanmar, Laos, Cambodia and Brunei.
1.8 "LICENSED COMPOUND(S)" shall mean the Compound and any other
compound claimed in U.S. Patent No. 4,567,264 granted January 28, 1986 and in
European Patent No. 126,449, granted December 23, 1987.
1.9 "LICENSED PRODUCT(S)" shall mean human therapeutic product(s)
containing any Licensed Compound as an active ingredient for the treatment of
angina pectoris and, at CVT's discretion, certain other Cardiovascular
Indications, in such formulations and modes of administration as determined by
CVT.
1.10 "NET SALES" shall mean the gross sales of the Licensed Product
invoiced by CVT, its Affiliates, the CVT Partner and other sublicensees, as the
case may be, to non-Affiliated third parties, less [
], as computed on [
] (hereinafter referred to as "adjusted gross
sales"). From the adjusted gross sales [
]
4.
<PAGE>
[ ].
1.11 "SYNTEX KNOW-HOW" shall mean all materials and information
developed relating to the mechanism of action, all preclinical and clinical
research, and processes and inventions useful for the formulation, development,
manufacture, delivery or use of the Licensed Products, that are owned and/or
controlled by Syntex as of the effective date of this Agreement and thereafter
acquired during and in the course of performance of the Agreement to the extent
that Syntex is free to disclose without restriction. Information received by
Syntex from the Third Party Licensee will be expressly excluded from Syntex
Know-How. Syntex shall not license such information to another third party in
the CVT Territory for use in Cardiovascular Indications.
1.12 "SYNTEX PATENT RIGHTS" shall mean all patents and patent
applications, both foreign and domestic, including without limitation all
provisionals, divisionals, substitutions, continuations, continuations-in-part,
extensions, reissues, renewals, supplementary protection certificates and
inventors' certificates, that are owned and/or controlled by Syntex and that
cover inventions or discoveries relating to the Licensed Products. As of the
effective date of this Agreement, Syntex Patent Rights shall mean those patents
and applications set out in Appendix A attached hereto.
1.13 "SYNTEX PATENTS AND KNOW-HOW" shall include Syntex Patent Rights
and Syntex Know-How.
5.
<PAGE>
1.14 "THIRD PARTY LICENSEE" shall mean the third party to which Syntex
has granted a license of rights to the Compound in the countries outside the CVT
Territory as of the effective date of this Agreement, or any future licensee of
Syntex of the Compound or other compounds encompassed by the Licensed Products
outside of the CVT Territory.
2. GRANT OF RIGHTS.
2.1 Syntex herewith grants to CVT under the Syntex Patent Rights and
Syntex Know-How for the Cardiovascular Indications:
(a) an exclusive right and license to develop and register the
Licensed Product(s) in the CVT Territory for angina pectoris and, at CVT's
discretion, certain other Cardiovascular Indications; and
(b) an exclusive right and license to make, have made, use,
offer for sale, sell and import the Licensed Product(s) in the CVT Territory for
angina pectoris and, at CVT's discretion, certain other Cardiovascular
Indications.
No rights are granted pursuant to the foregoing license under the Syntex
Patent Rights and Know-how to any compounds other than the Licensed Compounds.
2.2 The exclusiveness as per Section 2.1 above shall be valid against
Syntex in the CVT Territory, unless specifically provided for to the contrary
under this Agreement.
6.
<PAGE>
2.3 CVT shall be permitted to extend its right and license obtained
under this Agreement to its Affiliates and to grant sublicenses to third parties
in the CVT Territory. Unless expressly stated to the contrary, all references
in this Agreement to sublicensees of CVT shall include the CVT Partner. CVT
shall inform Syntex in writing of the identity of its sublicensees, including
the CVT Partner, and any Affiliates to which it has extended rights, promptly
after such parties have obtained such rights.
2.4 If at any time CVT or the CVT Partner for reasons of seeking a
marketing partner decides that it desires to sublicense its rights granted in
Section 2.1 to a third party in a given country of the CVT Territory, CVT or the
CVT Partner, as the case may be, shall give Syntex written notice to such effect
identifying the country or countries. [
]
as the case may be,
by written notice that [
] provided, however, that the foregoing shall not
apply to [ ]
7.
<PAGE>
[ ] as the case may be, [
]. Such agreement shall be on commercially reasonable terms, which
may include, without limitation, [
] as the case may be, shall then be
8.
<PAGE>
[ ].
2.5 Any registrations, and any other validations, notifications, or
like procedures, and compliance therewith, required by any authority in the CVT
Territory with respect to the right and license granted to CVT pursuant to this
Agreement shall be the sole responsibility of CVT and shall be at the sole
expense of CVT. CVT shall indemnify and hold Syntex harmless from any claim
against Syntex arising from or relating to CVT's failure to comply with the
foregoing.
3. DISCLOSURE.
3.1 (a) Following execution of this Agreement, Syntex shall provide
CVT all written Syntex Know-How in its possession relevant to the Compound to
the extent available. Syntex shall use reasonable efforts to arrange for a
complete disclosure and demonstration of all technology and know-how in its
possession worldwide relating to the Compound that is necessary or useful for
the manufacture of Licensed Products (in bulk and finished form under Good
Laboratory Practice ("GLP) and Good Manufacturing Practice "(GMP") conditions
for clinical or commercial use) by CVT or a CVT sublicensee or subcontractor, by
personnel of Syntex or other knowledgeable ex-Syntex personnel accessible to
Syntex, to the extent such personnel will be available.
(b) Upon reasonable notice to Syntex, Syntex shall use
reasonable efforts to make available up to [ ] Syntex employees to
facilitate the transfer of Syntex Know-How relating to bulk manufacture of the
Compound, including a walk-through of a process batch, and demonstrate the
manufacturing process at a
9.
<PAGE>
single site, either in North America or Europe, and up to two Syntex employees
to facilitate the transfer of formulation know-how, including the walk-through
of a pilot batch, at a single manufacturing site designated by CVT as its prime
manufacturing site in the United States or Europe; provided, however, that
Syntex shall not be obligated to make available more than a total of [ ]
employees. In either case, Syntex shall not be obligated to maintain such
employees on site after successful walk-through and batch preparation, and in no
event longer than [ ]. Travel and related out-of-pocket expenses
of Syntex employees in rendering the foregoing services at sites remote from the
Syntex facilities shall be paid for by CVT. All Syntex obligations under this
Section 3.1b) shall cease [ ].
(c) Syntex shall grant permission, upon written request and
reasonable notice by CVT, for ex-Syntex personnel and ex-Syntex consultants,
as the case may be, to disclose and discuss Syntex's proprietary information
on the Compound to CVT or the CVT Partner solely in furtherance of the
purposes of this Agreement. Syntex will pay up to a maximum total of
[ ] for the reasonable costs (including consulting fees
and reasonable travel expenses), in the aggregate, of all ex-Syntex personnel
and of the two, [ ]consultants [ ]
when providing the foregoing services to CVT and the CVT Partner, and CVT
shall be solely responsible for payment of any such costs in excess of that
amount and the costs of any other consultants of CVT.
(d) Syntex's obligations in accordance with this Article III,
including making employees available for telephone consultations, with respect
to transfer of written information and associated documentation relating to pre-
clinical and
10.
<PAGE>
clinical activities and IND matters shall cease [ ] from the
effective date of this Agreement.
3.2 CVT shall provide periodic progress reports of the significant
results of the development of the Licensed Products and CVT's progress in
meeting the milestone timetable set out in Appendix B, in such form and detail
as Syntex may reasonably require.
3.3 If Syntex has been granted rights under an agreement pursuant to
Section 2.4 above, it is understood that CVT shall then make available to Syntex
any know-how, information, data, etc. (including the registration file prepared
by CVT or the CVT Partner for registration approval) in CVT's or the CVT
Partner's possession for Syntex's marketing of the Licensed Product in that
portion of the CVT Territory where Syntex has been granted rights to sell
Licensed Product(s). In such case, the provisions of Section 2.5 shall not
apply to that portion of the CVT Territory where Syntex has been granted rights
to sell Licensed Product(s).
4. DEVELOPMENT, REGISTRATION AND MARKETING
4.1 All development and clinical trials required for regulatory
approval in CVT Territory will be conducted by CVT or the CVT Partner, at the
sole expense of CVT or the CVT Partner. CVT and the CVT Partner will have the
right to subcontract any part of its development and clinical trial obligations
in the CVT Territory.
11.
<PAGE>
4.2 Syntex shall, upon execution of this Agreement, exercise reasonable
efforts to introduce CVT to the Third Party Licensee.
4.3 Syntex shall endeavor to provide access by CVT to all consultants
who have been involved in the development of the Compound by Syntex and whom CVT
desires to retain for the purposes of this Agreement, to the extent such
consultants are available and willing to work with CVT. Subject to
Section 3.1c), all costs and expenses associated with retaining such consultants
shall be borne by CVT.
4.4 All processes, inventions, formulations, proprietary information,
know-how, and patents resulting from CVT's development program, including
formulation and manufacturing information (the "Results") developed pursuant to
the licenses granted to CVT hereunder shall be owned by CVT.
4.5 Subject to Section 11.4, CVT shall use commercially reasonable
efforts to develop the Compound for the treatment of angina pectoris within
milestone/time guidelines set out in Appendix B hereto, or as later mutually
agreed to in writing by duly authorized officers of the parties hereto. CVT
shall notify Syntex before the lapse of a time limit contained in the
milestone/time guidelines that the completion of a particular trial or the
filing of a certain document has been delayed, and if CVT can competently
demonstrate that such delay was due to valid reasons beyond CVT's control and
that CVT has undertaken reasonable efforts to overcome such adverse
circumstances, then in such a case Syntex shall, upon consultation with CVT,
extend the respective time limit for a reasonable period. Notwithstanding the
foregoing, Syntex shall not be obligated to extend any time limit for reaching a
particular milestone set
12.
<PAGE>
forth under the Milestone Payments more than once, and failure to meet the
milestone in question by such an extended time limit, unless the amount set
forth for payment upon reaching the milestone is paid on or before expiration of
the extended time limit, shall be deemed a material breach of the Agreement by
CVT.
4.6 Subject to Section 11.4, CVT shall use commercially reasonable
efforts consistent with accepted pharmaceutical business practices and legal
requirements to promote, market, distribute and sell the Licensed Products with
the same standard of effort used by CVT in the marketing of its own products of
similar market potential. CVT and any sublicensee of CVT shall launch Licensed
Product(s) in each country of the CVT Territory within [ ] of
receiving marketing approval, or pricing approval if required, whichever is
later, for the Licensed Product in question.
4.7 With regard to any countries in the CVT Territory for which CVT is
acting through an Affiliate or sublicensee, CVT's Affiliated Company or
sublicensee of CVT, as the case may be, shall observe commercially reasonable
efforts comparable to the ones set forth above.
4.8 Upon [ ] prior written notice, but in any event not
earlier than [ ] after launch of a Licensed Product in a country in
question, Syntex may [
] in a given country of the CVT Territory in the event CVT, or the
responsible CVT Affiliate or sublicensee [ ] in
each such country as set forth above, unless, within such [ ]
period, CVT or the responsible CVT Affiliate or sublicensee shall have
13.
<PAGE>
[ ] or shall have [ ] and [
] in the country
in question, all to the reasonable satisfaction of Syntex.
4.9 CVT undertakes to inform Syntex of:
(a) the date of filing the application for the registration of
each Licensed Product in a given country of the CVT Territory;
(b) the date of obtaining product approval (or equivalent
authorization) from the relevant authority in each country of the CVT Territory;
(c) the date of the first sale of the Licensed Product in each
country of the CVT Territory; and
(d) any events which might be material to Syntex in connection
with a possible extension of the patent protection term. In this regard, CVT
shall cooperate with Syntex in filing for and obtaining patent extensions and
supplementary or complementary protection certificates in any country of the
Territory, if and when available, including supplementary protection
certificates in European Union (EU) countries and European Free Trade Area
(EFTA) countries, patent extensions in the United States of America, and
administrative protection, such as so-called pipeline protection in certain
countries of the CVT Territory. Such cooperation shall include, without
limitation, providing to Syntex, within one (1) month of receipt by CVT, CVT's
Affiliated Companies, recognized distributors and sublicensees, a copy of every
marketing authorization for
14.
<PAGE>
a Licensed Product issued by either an EU or an EFTA country, and in addition,
within one (1) month of availability of the document, a copy of the official
journal page from each EU or EFTA country giving the marketing approval number
and date of authorization for each approved Licensed Product, and a summary of
the characteristics of the Licensed Product for that country, for the purpose of
applying for supplementary protection certificates under EEC (European Economic
Community) Directive 1768/2, which Syntex shall have the right to do in its sole
discretion, and providing information and signing of documents as required.
4.10 As soon as practicable after execution of this Agreement, but in
any event within [ ] days of the effective date, Syntex shall
initiate transfer of ownership of and responsibility for all the pending
Investigational New Drug applications, IND 30,205 (oral tablets and caps) and
IND 43,735 (sustained-release tablets) ("INDs"), relating to the Compound that
have been filed with the United States Food and Drug Administration ("FDA") by
sending the appropriate communication to the FDA. Syntex shall render
reasonable assistance with respect to matters dealing with the transfer of the
IND consistent with its obligations in Article III. After transfer of ownership
of the INDs to CVT, CVT shall be solely responsible for all matters relating to
the INDs.
5. PAYMENTS, REPORTS, TIME OF PAYMENTS
5.1 In consideration of the rights and license granted under this
Agreement, CVT shall make the following payments to Syntex:
15.
<PAGE>
LICENSE FEE
(a) Subject to Section 5.1 c) below, CVT shall pay Seven
Hundred and Fifty Thousand Dollars ($750,000) upon execution of this Agreement.
MILESTONE PAYMENTS
(b) CVT will pay Syntex following additional amounts in
milestone payments upon the first occurrence of each of following six milestones
in the CVT Territory as follows:
(1) Subject to Section 5.1 c) below, [
]
upon [
];
(2) [ ] upon [ ];
(3) [ ] upon [ ];
(4) [ ] upon [ ];
(5) [ ] upon [ ];
and
16.
<PAGE>
(6) [ ] upon [
]. For the purposes hereof, [ ] shall mean
[
] and [
] shall
mean [
].
"Commencement" of a clinical trial shall mean the first date on which a Licensed
Product is shipped to an investigator for the clinical trial.
(c) In lieu of payment in cash of the Seven Hundred and Fifty
Thousand Dollars ($750,000) [
] License Fee, CVT may issue Syntex
[ ]
that number of shares of its Series E Preferred Stock equally: Seven Hundred
Fifty Thousand Dollars ($750,000) divided by the Conversion Price (as that
term is defined in CVT's Restated Certificate of Incorporation) of the Series
E Preferred Stock then in effect.
Any such payment made in Series E Preferred Stock pursuant to
this subsection shall be made on the same terms as, and pursuant to, that
certain Series E Purchase Agreement dated September 8, 1995 among CVT and the
purchases of Series E Preferred Stock and shall also entitle Syntex to
receive warrants of Series E Preferred Stock, based on the formula described
in the Purchase Agreement, attached hereto as Exhibit A. The Series E
Preferred Stock issued to Syntex shall be entitled to the rights, preferences
and privileges set forth in CVT's current Restated Certificate of
Incorporation as described to Syntex as of the effective date hereof. The
Series E Preferred Stock issuable [ ](excluding the Warrants) shall be
deemed issued and outstanding for the purpose of obtaining stockholder
approval of any amendment to the Restated Certificate of Incorporation and
CVT shall receive an appropriate number of Series E shares and warrants for
issuance to Syntex.
17.
<PAGE>
as set forth above.
5.2 CVT shall pay the following royalties to Syntex on Net Sales of the
Licensed Products. Such royalties shall be paid on a product-by-product and
country-by-country basis according to the following rates:
(a) For Net Sales of a Licensed Product as to which Syntex
Patents and Know-How cover the manufacture, use, sale, offer for sale, or import
of the Licensed Product a rate of [ ].
(b) For sales of a Licensed Product in a country of the CVT
Territory in which competition by products having the same active compound as
the Licensed Product exceeds [ ] in terms of unit sales,
based on IMS data or equivalent independent survey, a royalty reduced to [
] of the rate shown in Section 5.2 (a) above for as long as such
competition continues to exceed [ ].
5.3 The obligation to pay royalties to Syntex hereunder shall be
imposed only once with respect to the same unit of the Licensed Product.
18.
<PAGE>
5.4 No royalties shall accrue on the sales of CVT to CVT's Affiliated
Companies or sublicensees of CVT on any transactions between such entities.
Royalties shall accrue only on sales of the Licensed Product from CVT,
Affiliated Companies of CVT or sublicensees of CVT to third parties that are not
Affiliates of those entities.
5.5 In the event that CVT shall grant a sublicense to a third party,
including, without limitation, the CVT Partner, all of the terms and conditions
of this Agreement shall apply to such sublicensee to the same extent as they
apply to CVT. CVT guarantees the performance of all obligations so imposed on
its sublicensees under this Agreement and will itself pay and account to Syntex
for all royalties due under this Agreement which may accrue by reason of the
action or operations of any of CVT's sublicensees.
5.6 CVT shall pay to Syntex the royalties due hereunder, including any
royalties due from the sales of Licensed Product by CVT's Affiliates or
sublicensees on a quarterly basis, within [ ] of such royalty
computation period, that is to say up to the last working day of the months of [
] respectively of each year. The royalty shall
be paid to Syntex in U.S. Dollars and computed in accordance with Section 5.7
and Section 5.8, and CVT shall submit to Syntex, together with each royalty
payment, a written royalty statement containing at least the following
information:
(a) the quantity of each Licensed Product subject to royalty
sold (by country) by CVT, its Affiliates and sublicensees;
(b) total adjusted gross sales for each Product subject to
royalty (by country);
(c) total royalties payable to Syntex (by country); and
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(d) any relevant information related to matters stated in
Section 5.9.
Any compensation payment that is not paid on or before the date such
payment is due under this Agreement shall bear interest, to the extent permitted
by applicable law, at the average one month London Interbank Offered Rate
(LIBOR) for the currency and time such a payment is overdue. The payment of
such interest shall not affect the rights defined in Section 11.3.
5.7 With respect to each quarter, monthly adjusted gross sales in the
currency of the country of sale will be converted to U.S. Dollars at an exchange
rate that is the average of the daily exchange rate for the U.S. Dollar and the
currency of the country of sale as quoted by The Wall Street Journal, or a
comparable publication acceptable to the parties if it ceases to exist, for the
corresponding month in which the adjusted gross sales are made and then
aggregated in U.S. Dollars for the quarter in question. From that quarterly
aggregate amount in U.S. Dollars, a lump sum of [ ] shall be
deducted to obtain the Net Sales aggregate amount of the quarter in question.
5.8 CVT shall keep accurate books and records setting forth the gross
sales, adjusted gross sales, Net Sales, the amount of royalties payable to
Syntex as provided for herein, for each country with regard to the Licensed
Product sold by CVT, CVT's Affiliated Companies or sublicensees of CVT. Such
books and records shall be retained by CVT at its principal place of business
for at least the three (3) years immediately following the calendar year to
which each shall pertain. Abstracts thereof shall be made independently from
CVT by CVT's public accountants and shall be made available for audit, all at
the request and expense of Syntex by an independent certified public accountant
or accounting firm appointed by Syntex and acceptable to CVT; provided, however,
that if the
20.
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audit on behalf Syntex is conducted at the same time as the regular, annual
audit of CVT, the expense of such audit shall be borne by CVT. CVT shall not
unreasonably withhold acceptance of an independent certified public accountant
or accounting firm appointed by Syntex. In the event that such audit shall
indicate that in any calendar year the royalties which should have been paid by
CVT are at least [ ] greater than those which were actually paid
by CVT, then CVT shall pay the cost of such audit.
5.9 Any tax required to be withheld by CVT under the laws of any
country for the account of Syntex shall be promptly paid by CVT for and on
behalf of Syntex to the appropriate governmental authority, and CVT shall
furnish Syntex with proof of payment of such tax. Any such tax actually paid on
Syntex's behalf shall be deducted from royalty payments due Syntex.
6. SUPPLY OF COMPOUND.
6.1 Subject to (i) existing quantities of bulk Compound, granulated,
formulated Compound and tableted, formulated Compound in Syntex's possession and
(ii) Syntex's commitment to provide certain quantities of such materials to
Syntex's Third Party Licensee, Syntex shall provide to CVT (x) at no charge, any
combination of free goods consisting of bulk Compound, granulated, formulated
Compound and tableted, formulated Compound having a total value of [
] as calculated based on the
prices listed on Appendix C hereto, and (y) at CVT's expense, such other agreed
to quantities of bulk Compound, granulated, formulated Compound and tableted,
formulated Compound in Syntex's possession at the prices set forth in Appendix
C. CVT shall order and complete
21.
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the purchase of the foregoing materials that it desires to purchase and specify
those materials that it wishes to receive as free goods as soon as practicable,
but in no event later that [ ] after the effective date, and Syntex
shall not be obligated to supply any material ordered or specified thereafter.
The materials to be provided hereunder are provided "as is", and Syntex hereby
disclaims any representation or warranty that the materials provided hereunder
will be suitable for use in any manner whatsoever or have adequate dating for
use, including, without limitation, for use in clinical trials, or that such
materials will meet the requirements of any analysis required to establish
extended dating for the materials provided. In the event that the materials
provided need to be reanalyzed to establish extended dating or for any other
reason, or such materials have to reworked or otherwise manipulated, CVT shall
be solely responsible for all of the costs and expenses associated therewith and
relating thereto. Title and risk of loss shall pass to CVT upon delivery by
Syntex to a common carrier, F.C.A. (Incoterms, 1990), Syntex's storage facility.
Thereafter, subject to Syntex's obligations under Article III, CVT and the CVT
Partner will be solely responsible to procure the necessary quantities of
Compound for the development and manufacture of the Licensed Product.
6.2 CVT acknowledges that [
] including, without limitation, [
]. CVT shall be responsible for and pay any transportation costs, duties,
fines, taxes, penalties, forfeitures or other charges of any kind ("Costs")
associated with the
22.
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supply by Syntex of any Compound pursuant to Section 6.1 and shall indemnify and
hold harmless Syntex and any Syntex Affiliates from any such Costs. Any costs,
expenses or penalties of any kind associated with the import of any quantity of
the Compound into the United States, [ ]
after the effective date of this Agreement shall be totally included with the
Costs for which the foregoing indemnity and hold harmless apply.
6.3 Subject to Syntex's obligations under Article III, CVT and the CVT
Partner shall be solely responsible for manufacturing the Compound and Licensed
Products. CVT shall be entitled to procure from any appropriate source the
Compound necessary to develop and manufacture the Licensed Product for marketing
purposes.
7. LICENSED PRODUCT LIABILITY/DISCLAIMER OF WARRANTIES.
7.1 CVT shall indemnify, and holds harmless, Syntex, its Affiliates,
directors, employees and agents from all costs and expenses of any kind,
including reasonable attorneys fees, arising from any claim relating to the use
of the Syntex Know-How and the Syntex Patent Rights, or the use, manufacture,
promotion, marketing and sale of the Compound or any Licensed Products by CVT,
its Affiliates, its sublicensees, distributors and customers.
7.2 Syntex hereby disclaims any warranties, whether express or implied,
of any kind, including, without limitation, any warranty of merchantability or
fitness for any particular purpose, with respect to any Compound or other
materials in whatever form provided to CVT hereunder, or that the Compound or a
Licensed
23.
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Product can be successfully developed by use of the Syntex Know-How, or that
clinical or commercial quantities of the Compound or Licensed Product can be
produced by use of the Syntex Know-How, or that the Syntex Patent Rights are or
will be valid or can be or will be enforceable, or that the use of the Syntex
Know-How or practice of the invention of the Syntex Patent Rights will not
infringe the intellectual property rights of a third party; provided, however,
that as of the effective date of this Agreement to the best of the knowledge of
Syntex there are no facts that on their face would render the Syntex Patent
Rights invalid or unenforceable and Syntex has received no claims with respect
thereto.
8. MAINTENANCE AND ENFORCEMENT OF SYNTEX PATENT RIGHTS.
8.1 Syntex agrees to prosecute and maintain, [
] all of the patents and patent applications included within Syntex Patent
Rights. At Syntex's request, CVT shall cooperate, in all reasonable ways in
connection with the prosecution of all patent applications included within
Syntex Patent Rights. Syntex shall advise CVT promptly of any significant
developments in the prosecution of Syntex Patent Rights in the CVT Territory, in
particular of the issuance of or rejection of or of opposition to or of protest
of any patent or application within Syntex Patent Rights. Should Syntex decide
that it is no longer interested in maintaining or prosecuting Syntex Patent
Rights or part thereof, it shall promptly advise CVT thereof and, at the request
of CVT, Syntex shall assign free of charge such Syntex Patent Rights or part
thereof to CVT. Upon assignment of such Syntex Patent Rights or part thereof,
CVT will thereafter prosecute and maintain such Syntex Patent Rights [
] to the extent that CVT desires to do so.
24.
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8.2 Each party will advise the other promptly upon its becoming aware
of any third party infringement of Syntex Patent Rights. In the event of an
infringement of Syntex Patent Rights by a product that would be or is
competitive with a Licensed Product under active development or being sold by
CVT, the parties agree with the following:
(a) to consult with each other to attempt to agree on whether
legal action should be taken against the infringer, and also to establish the
proportion in which they will participate in the costs and expenses of the
action, if taken, and in any recoveries or awards resulting therefrom; and
(b) in the event Syntex does not agree to bring suit or to
participate in a suit against any such infringer, CVT shall have the right to
take such action at its own expense and deduct up to [ ] of its
reasonable litigation expenses from future royalties or milestone payments due
to Syntex, provided that such deduction does not reduce the royalties or
milestone payments payable in any quarter below [ ] of the
royalties or milestone payments otherwise due in such quarter, and, upon
receiving a recovery or award from such suit, such recovery and award shall be
used first to reimburse CVT for its reasonable litigation expenses actually
incurred, then to reimburse Syntex for the amounts of any unpaid royalties or
milestone payments, and any remainder of the recovery and award shall be
retained by CVT for its own benefit and use; and
(c) in any such infringement suit Syntex shall, at the request
of CVT render all reasonable assistance in the prosecution of such suit.
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9. RETAINED RIGHTS.
Syntex retains all rights to make, have made, use, import, offer to sell,
and sell the Licensed Compounds and to use the know-how encompassed in the
Syntex Patents and Know-How in the CVT Territory for non-Cardiovascular
Indications. CVT herewith grants to Syntex a non-exclusive, royalty-bearing
right and license in the CVT Territory under any CVT Patents and Know-How to
exercise such rights. For so long as Syntex is selling any product covered by a
claim of the CVT Patent Rights, Syntex shall pay CVT a royalty equal to [
] of Net Sales, as defined in Section 1.10, with respect to sales by Syntex,
its Affiliates or sublicensees; provided, however, that if CVT jointly owns CVT
Patent Rights with a third party and payments would be due such third party upon
Syntex's use of the CVT Patent Rights, the parties shall negotiate in good faith
a commercially reasonable royalty rate that reflects payments due such third
party.
10. CONFIDENTIAL INFORMATION.
10.1 CVT shall keep the Syntex Know-How in strict confidence and shall
not use Syntex Know-How except for the purposes of this Agreement. Any
information disclosed pursuant to the Confidentiality Agreement between the
parties dated November 7, 1994 shall be considered Syntex Know-How and governed
by the terms of this Agreement.
10.2 Both CVT and Syntex agree to keep in strict confidence all other
know-how as well as other information and data of confidential nature received
from the
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other party under this Agreement and not to make any use thereof other than
provided under this Agreement.
10.3 The confidentiality obligations as per this Article 10 shall not
apply to the extent that the Syntex Know-How or other know-how or information
and data are required by appropriate authorities to be submitted for purposes of
registration of the Licensed Product; provided, however, that to the extent
possible such submissions shall be made on a confidential basis. The
confidentiality and non-use obligations under this Article 10 shall extend for
the term of this Agreement and five (5) years thereafter.
10.4 The obligation of confidentiality and non-use as set forth in this
Article 10 shall not apply:
(a) to information and data which, at the time of disclosure,
was known by the recipient party or an Affiliated Company, or which after
disclosure was independently developed by the recipient party or an Affiliated
Company without use of such information and data, and which can be so
demonstrated by the records of the recipient party or an Affiliated Company, as
the case may be; and/or
(b) are public knowledge at the date of disclosure to the
recipient party; and/or
(c) become public knowledge at a later date without any fault of
the recipient party or an Affiliated Company; and/or
27.
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(d) are disclosed to the recipient party or an Affiliated
Company by a third-party having the right to do so.
10.5 Nothing in this Article 10 or this Agreement shall be construed to
prevent either party from disclosing to its Affiliated Companies information and
data obtained from the other party during this Agreement, provided that such
information is used in a manner consistent with this Agreement, and further
provided that said Affiliated Companies are bound by a like confidentiality
obligation with respect to such information.
11. TERM AND TERMINATION.
11.1 This Agreement shall be effective as of the date first written
above.
11.2 This Agreement shall have a duration on a country-by-country and
product-by-product basis of the later of (i) [ ] from the date of
first commercial sale of the Licensed Product in a given country of the CVT
Territory or (ii) a duration corresponding to the duration of the Syntex Patent
Rights having one or more claims covering a Licensed Product, or its use or
manufacture, in a given country, whichever is longer. Following expiration of
the term as set forth above, CVT shall retain a non-exclusive, fully-paid
license under the Syntex Know-How to manufacture, use, sell and offer for sale
Licensed Products for Cardiovascular Indications within the CVT Territory.
11.3 Failures by one party to comply with any of its respective
obligations contained in this Agreement shall entitle the other party to give
the party in default written notice of such default. If such default is not
remedied within [ ]
28.
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[ ] after receipt of such notice (or thirty (30) days in the event of
non-payment), the notifying party shall be entitled to terminate this Agreement
by giving notice with immediate effect. The right of either party to terminate
this Agreement as provided hereinabove shall not be affected in any way by its
waiver of or failure to take actions with respect to any previous default. In
such cases of breach by CVT, all licenses from CVT to Syntex as set forth below
in Section 11.4 for the case of an early termination shall be royalty free, and
CVT shall provide to Syntex all of the information required by Section 11.4 in
the event of early termination or breach of this Agreement by CVT. If there is
any BONA FIDE dispute between the parties regarding the right of termination
based on failure by CVT to make a milestone or royalty payment when due, the
disputed milestone or royalty payment, as the case may be, shall be paid into an
interest bearing account by CVT where it shall remain during the pendency of the
dispute, and upon resolution of the dispute, paid, with accumulated interest, to
the prevailing party.
11.4 CVT shall have the right to terminate the Agreement at any time
provided that CVT gives notice to Syntex at least [
] prior to such termination and under the condition that CVT further informs
Syntex together with the notice of termination that, in its reasonable business
judgment based on scientific, medical, economic or other valid business reasons,
CVT has determined not to carry out further development or marketing of the
Licensed Products. In the event of such an early termination, the licenses
granted hereunder by Syntex shall revert to Syntex. In addition, CVT shall grant
Syntex an exclusive license, with the right to sublicense, to the CVT Patents
and Know-How directly related to and solely usable in connection with the
Compound and the Licensed Products to make, have made, use,
29.
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import, offer to sell and sell the Compound and the Licensed Products. All other
CVT Patents and Know-How shall be licensed non-exclusively to Syntex solely for
use in connection with the Licensed Products as set forth above. Licenses under
the CVT Patents shall be royalty bearing on commercially reasonable terms not to
exceed, in the aggregate, [ ] of Net Sales, as defined in Section 1.10,
with respect to sales by Syntex, its Affiliates or sublicensees, of Licensed
Products. All CVT Know-How in CVT's possession or under its control relating to
the Licensed Products including without limitation the documents necessary to
obtain or maintain the registration authorization of the relevant authorities in
the CVT Territory, shall be made available to Syntex free of charge.
11.5 This Agreement shall survive the acquisition or change of control
of either company, provided that in the case of CVT the acquiring entity will
expressly assume all rights and obligations contained in this Agreement and such
entity further undertakes to use its commercially reasonable efforts consistent
with accepted pharmaceutical business practices and legal requirements to
promote, market, distribute and sell the Licensed Products with the same
standard of effort as used in the marketing of its own products of similar
market potential.
11.6 In the event of a conversion of the exclusive right and license of
CVT into a non-exclusive right and license because of a failure of CVT to comply
with its efforts obligation pursuant to Section 4.3, the provisions of Section
11.4 for early termination by CVT shall apply MUTATIS MUTANDIS, with the
exception that Syntex shall receive a royalty-free, non-exclusive license.
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11.7 Neither of the undersigned parties shall be liable for failure to
perform its obligations under this Agreement, where such failure was
occasioned by contingencies beyond its control, including without limitation,
strikes or work stoppages, lock-outs, riots, wars, delay of carriers, Acts of
God, including without limitation, fire, floods, storms, and earthquakes,
acts or failures to act by government or governmental agencies or
instrumentalities (Force Majeure). Each party will notify the other
immediately, should any such contingencies occur. Such notice shall set
forth the obligations that the notifying party is unable to perform and shall
also specify the contingencies which it contends provide a basis under this
Section 11.7 for such non-performance. Nothing herein shall relieve a party
from the obligation to pay promptly, in U.S. dollars, all payments that may
be due under this Agreement.
11.8 In the event of termination of the licenses to CVT, any licenses
granted to a CVT Partner shall survive and this Agreement may be assumed by the
CVT Partner for the CVT Partner's portion of the CVT Territory, subject to
adequate assurances to Syntex of such CVT Partner's ability to perform CVT's
obligations hereunder. The agreement between CVT and the CVT Partner shall
provide that if this Agreement is not assumed by the CVT Partner, then the
agreement between CVT and the CVT Partner shall be terminated and the CVT
Partner's patent rights and know-how relating to the Licensed Products will be
licensed to Syntex, with the right to sublicense, with delivery of the necessary
information to enable Syntex to exercise the license and continue the
development, marketing and sale of Licensed Products in the CVT Partner's
portion of the CVT Territory under the same terms as Syntex's license to the CVT
Patents and Know-How pursuant to Section 11.4 as in the case of CVT's
termination; provided, however, that if the CVT Partner has acquired
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technology from a third party that the CVT Partner is not permitted to transfer
to Syntex, then there would not be an obligation on CVT to obtain agreement to
license such technology. In such event, CVT and the CVT Partner will render
reasonable assistance to Syntex in its attempts to obtain access to that third
party technology. Furthermore, should CVT have acquired licenses from third
parties under technology relating to Licensed Products for which CVT has the
right to sublicense, CVT shall grant sublicenses to Syntex upon the same
financial terms as CVT's licenses, unless the licenses are available from the
third party directly to Syntex on the same or more favorable financial terms.
11.9 Either party shall have the right to terminate this Agreement if
the other party becomes insolvent or unable to pay its debts or perform its
obligations as they mature, or makes an assignment for the benefit of creditors,
or is the subject of a petition or other document seeking relief under any
bankruptcy law, filed by or against a party, that is not discharged with
prejudice within sixty (60) days thereafter, such termination to be effective
upon the delivery of written notice to the insolvent or bankruptcy party.
12. MISCELLANEOUS.
12.1 CVT shall not assign or transfer, in whole or in part, this
Agreement or any rights thereunder without the prior written consent of Syntex.
12.2 In the event of the permitted assignment or transfer by CVT of this
Agreement or any part thereof, or in the event of any sublicense granted by CVT,
the assignee, transferee or sublicensee shall agree to be bound by the terms of
this Agreement and CVT shall guarantee the performance and obligations thereof.
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12.3 Syntex shall have the right to assign or transfer, in whole or in
part, this Agreement or any rights thereunder, or delegate any of its
obligations, to any Affiliate of Syntex and such Affiliate shall agree to be
bound by the terms and conditions of this Agreement, and Syntex shall guarantee
the performance and obligations thereof. Promptly after any such assignment or
transfer, Syntex shall provide CVT with written notice of the assignment or
transfer and the identity of the assignee or transferee.
12.4 This Agreement contains the entire understanding between the
parties relating to the subject matter hereof and supersedes any and all prior
agreements, understandings and arrangements, whether written or oral, between
the parties, including the Confidentiality Agreement dated November 7, 1994 and
the Heads of Agreement dated December 21, 1995. No amendments, changes,
modifications or alterations of the terms and conditions of this Agreement shall
be binding upon either party hereto unless in writing and signed by both
parties.
12.5 All titles and captions in this Agreement are for convenience only
and shall not be interpreted as having any substantive meaning.
12.6 Both parties hereby expressly state that it is the intention of
neither party to violate any rule, law and regulations. If any of the
provisions of this Agreement are held to be void or unenforceable, then such
void or unenforceable provisions shall be replaced by valid and enforceable
provisions which will achieve as far as possible the economic business
intentions of the parties.
12.7 Unless required by law or regulation, each party shall refrain from
making any public announcement or disclosure of the terms and conditions of this
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Agreement without the prior written consent of the other party, which consent
shall not unreasonably be withheld; provided, however, CVT may publicize certain
aspects of the Agreement at time of signing, subject to prior written approval
by Syntex.
12.8 No failure or delay on the part of a party in exercising any right
hereunder shall operate as a waiver of, or impair, any such right. No single or
partial exercise of any such right shall preclude any other or further exercise
thereof or the exercise of any other right. Any waiver on the part of either
party hereto of any right hereunder shall be effective only if made in writing
and shall not constitute or imply a waiver of any other right or a subsequent
waiver.
12.9 The indemnities of Section 2.5, Section 6.2 and Section 7.1 and the
provisions of Section 5.6, Section 5.7 (for one year), Article X (for the term
set forth in Section 10.3), Section 11.4 and Article XIV shall survive
termination or expiration of this Agreement.
13. NOTICES.
Any notice required to be given hereunder shall be considered properly
given if sent in English by registered air-mail, telecopier, telex or by
personal courier delivery to the respective address of each party as follows:
for Syntex: Syntex (U.S.A.) Inc.
P.O.Box 10850
3401 Hillview Avenue
Palo Alto, California U.S.A.
Attention: President
34.
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Facsimile: (415) 354-2595
with a copy to: F. Hoffmann-La Roche Ltd
P.O.Box, CH-4070 Basel
Switzerland
Attention: Corporate Law
Facsimile: 41-61-68-81396
and in the case
of notice regarding
CVT's stock, Attention: Corporate Finance
35.
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for CVT: CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, California 94304
Attention: Thomas L. Gutshall
President & COO
Facsimile: (415) 858-0388
or to such other address as a party may designate in a notice given in
accordance with this Article 13.
14. GOVERNING LAW AND ARBITRATION.
14.1 This Agreement shall be governed by the laws of California (without
regard for the choice of law provisions of California or any other
jurisdiction).
14.2 In the event of any controversy or claim arising out of or relating
to any provision of this Agreement or the breach thereof, the parties shall try
to settle those conflicts amicably between themselves. Should they fail to
agree, any controversy, dispute or claim which may arise out of or in connection
with this Agreement, or the breach, termination or validity thereof, shall be
settled by final and binding arbitration pursuant to the Rules of the American
Arbitration Association as hereinafter provided:
(a) The arbitration tribunal shall consist of three arbitrators.
Each party shall nominate in the request for arbitration and the answer thereto
one arbitrator and the two arbitrators so named will then jointly appoint the
third arbitrator as chairman of the arbitration tribunal. If one party fails to
nominate its arbitrator or if the parties' arbitrators cannot agree on the
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person to be named to be chairman within sixty (60) days, the American
Arbitration Association shall make the necessary appointments for arbitrator or
chairman.
(b) The place of arbitration shall be in Palo Alto, California
and the arbitration proceedings shall be held in English. The arbitrators shall
apply the law of California as set out in Section 14.1. The arbitrators shall
have no power to award punitive damages or any multiple of damages assessed.
CV THERAPEUTICS, INC. SYNTEX (U.S.A.) INC.
By: /s/ Thomas L. Gutshall By: /s/ David R. Austin
------------------------ ---------------------------
Thomas L. Gutshall David R. Austin
President and COO Vice President
Date: 3/27/96 Date: 3/27/96
------------------------ -------------------------
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APPENDIX A
Case [
]
Case [
]
Case [ ]
<PAGE>
STATUS OF CASE 23550 APPENDIX A
Run Date: 19 Mar 1996 PAGE 1 OF 10
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STATUS OF CASE 23550 APPENDIX A
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STATUS OF CASE 23550 APPENDIX A
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STATUS OF CASE 23550 APPENDIX A
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STATUS OF CASE 23550 APPENDIX A
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STATUS OF CASE 23550 APPENDIX A
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6.
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STATUS OF CASE 23550 APPENDIX A
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7.
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STATUS OF CASE 23550 APPENDIX A
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8.
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STATUS OF CASE 23550 APPENDIX A
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9.
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STATUS OF CASE 23550 APPENDIX A
Run Date: 19 Mar 1996 PAGE 10 OF 10
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10.
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APPENDIX B
[ [
MILESTONE _______________] ]
[ ]
<PAGE>
APPENDIX C
Description Unit Price to CVT/Unit
[ ]
<PAGE>
Exhibit A
CV THERAPEUTICS, INC.
SERIES E PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
SEPTEMBER 8, 1995
<PAGE>
CV THERAPEUTICS, INC.
SERIES E PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of September 8, 1995 (the "Agreement"),
by and among CV THERAPEUTICS, INC., a Delaware corporation (the "Company"), with
its principal office at 3172 Porter Drive, Palo Alto, California 94304, each of
the purchasers who are signatories hereto and any other purchasers who are made
a party to this Agreement pursuant to paragraph 2.1 hereof (individually, a
"Purchaser" and collectively, the "Purchasers"), as set forth in the Schedule of
Purchasers, attached hereto as EXHIBIT A.
AGREEMENT
In consideration of the mutual promises, representations, warranties and
conditions set forth in the Agreement, the Company and each Purchaser, severally
and not jointly, agrees as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF THE SHARES AND WARRANTS. The Company has authorized,
or before the Closing, as defined in paragraph 2.1 hereof, will have authorized,
the issuance and sale of: (a) up to 5,000,000 shares of its Series E Preferred
Stock (the "Shares") and (b) warrants (the "Warrants") to purchase up to
2,500,000 shares of the Company's Series E Preferred Stock with an exercise
price of $2.00 per share (the "Warrant Shares"), at a purchase price of $2.00
per Share and Warrant Share (a "Unit"). As used herein, a Unit is comprised of
one share of Series E Preferred Stock and one Warrant, in substantially the form
set forth in EXHIBIT B hereto, to purchase one-half of a share of Series E
Preferred Stock.
1.2 SALE OF SHARES AND WARRANTS. In reliance upon the Purchasers'
representations and warranties contained in Section 4 hereof and subject to the
terms and conditions set forth herein, the Company hereby agrees to sell to each
Purchaser, at a price per Unit of $2.00, the aggregate number of Shares and
Warrants set forth below such Purchaser's signature on such Purchaser's
signature page hereto. The total amount of common stock of the Company (the
"Common Stock") and other securities issuable upon conversion of the Shares and
the Warrant Shares is hereinafter referred to as the "Conversion Stock." The
Shares, Warrants, Warrant Shares and the Conversion Stock are hereinafter
collectively referred to as the "Securities."
1.3 PURCHASE OF SHARES AND WARRANTS. In reliance upon the representations
and warranties of the Company contained herein, and subject to the terms and
conditions set forth herein, each Purchaser hereby agrees to purchase, at a
price per Unit of $2.00, the number of Shares and Warrants set forth below such
Purchaser's signature on such Purchaser's signature page hereto. Each
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Purchaser shall, severally and not jointly, be liable for only the purchase of
the Shares and the Warrants indicated on such Purchaser's signature page hereto.
1.4 FURTHER ISSUANCE. The Purchasers agree that the Company shall be
entitled to issue and sell any shares of Series E Preferred Stock (or securities
convertible into Series E Preferred Stock) not previously issued and sold at the
Closings (as hereinafter defined), in connection with any corporate partnering,
collaboration, lease financing or similar transaction.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The first closing for the purchase and sale of the
Units hereunder will be on September 8, 1995 (the "First Closing") at the
offices of Cooley Godward Castro Huddleson & Tatum, Five Palo Alto Square, Palo
Alto, California 94306, or at such other time and place as the Company and the
Purchasers shall agree upon (the "First Closing Date"). Additional closings
("Additional Closings") may be held from time to time following the First
Closing and on or before October 31, 1995 at such time (a "Closing Date") and
place as the Company may elect. At or prior to any such Additional Closing, the
Purchaser or Purchasers at such Additional Closing shall execute counterpart
copies of this Agreement and any related agreements or other documents required
to be executed hereunder, dated as of the date of such Additional Closing, and
shall thereupon become parties hereto and thereto for all purposes and be added
to the Schedule of Purchasers. The First Closing and any Additional Closing
shall be referred to collectively as the "Closings" and singularly as a
"Closing."
2.2 DELIVERY. At each Closing, the Company will deliver to each Purchaser
a stock certificate and a Warrant registered in such Purchaser's name
representing the number of Shares and Warrants, respectively, purchased by such
Purchaser as set forth on such Purchaser's signature page hereto. At each
Closing, each Purchaser will pay the purchase price, in an amount equal to $2.00
times the number of Units being purchased by such Purchaser, by check, wire
transfer, cancellation of indebtedness, or a combination thereof, at the option
of the Purchaser. No Warrants will be issued for fractional shares.
2.3 SUBSEQUENT CHANGE IN TERMS. If, after the First Closing, the Company
shall sell any of the Units at any Additional Closing upon terms more beneficial
to the Purchasers than those at any previous Closing, then the Company shall
offer such terms to the Purchasers from any previous Closing and shall take
appropriate actions to amend any document or agreement to carry out this
covenant.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
EXHIBIT C, the Company hereby represents and warrants to the Purchasers as
follows:
3.1 ORGANIZATION; GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of Delaware and is in good standing
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under such laws. The Company has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted. The Company is qualified to do
business as a foreign corporation in any jurisdiction where the failure to be so
qualified would have a material adverse impact on the business or financial
condition of the Company.
3.2 CORPORATE POWER. The Company will have at each Closing Date all
requisite legal and corporate power to execute and deliver this Agreement and
the Amended and Restated Investor Rights Agreement of even date herewith, in
substantially the form attached hereto as EXHIBIT D (the "Investor Rights
Agreement"), to sell and issue the Shares, the Warrants and the Warrant Shares
and Conversion Stock and to carry out and perform its obligations under the
terms of this Agreement and the Investor Rights Agreement, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity and except as the indemnification agreements of the Company
in Section 3 of the Investor Rights Agreement may be legally unenforceable.
3.3 SUBSIDIARIES. Other than CV Therapeutics International, a corporation
organized under the laws of the Cayman Islands (the "Subsidiary"), the Company
has no subsidiaries or affiliated companies and does not otherwise own or
control, directly or indirectly, any other corporation, association or business
entity. The Company owns all of the outstanding capital stock of the
Subsidiary.
3.4 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to the First Closing, will consist of 60,000,000 shares of
Common Stock, of which 3,940,497 are issued and outstanding, and 35,000,000
shares of preferred stock (the "Preferred Stock") of which (a) 8,000,000 are
designated Series A Preferred Stock (the "Series A Preferred"), 7,746,973 of
which are issued and outstanding, (b) 1,000,000 are designated Series B
Preferred Stock (the "Series B Preferred"), none of which are issued and
outstanding, (c) 6,000,000 are designated Series C Preferred Stock (the "Series
C Preferred"), 5,505,865 of which are issued and outstanding, (d) 12,500,000 are
designated Series D Preferred Stock (the "Series D Preferred"), 8,296,607 of
which are issued and outstanding, and (e) 7,500,000 are designated Series E
Preferred Stock, none of which are issued and outstanding. The conversion
prices of the Series A Preferred, Series B Preferred, Series C Preferred and
Series D Preferred are $0.80, $1.25, $1.25 and $2.00 per share, respectively.
The Company has reserved (a) 28,125 shares of Common Stock, (b) 250,000 shares
of Series A Preferred, (c) 1,000,000 shares of Series B Preferred, (d) 30,000
shares of Series C Preferred, and (e) 719,266 shares of Series D Preferred for
issuance upon exercise of outstanding stock purchase warrants. In addition, the
Company has reserved 6,621,327 shares of Common Stock for issuance upon exercise
of outstanding stock options. All of the issued and outstanding shares of
Common Stock and Preferred Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with
applicable federal and state securities laws. Except as described herein and in
the Investor Rights Agreement, there are no other options, warrants, conversion
privileges or other rights (including preemptive rights) or agreements presently
outstanding to purchase or otherwise acquire any
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authorized but unissued shares of capital stock or other securities of the
Company. The Company is not aware of any voting agreements among its
stockholders. In addition, the total number of shares reserved under the
Company's Non-Employee Director Stock Option Plan, 1992 Stock Option Plan and
1994 Equity Incentive Plan is 200,000, 3,450,000 and 5,000,000, respectively.
3.5 AUTHORIZATION. All corporate action on the part the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement and the Investor Rights Agreement by the
Company, the authorization, sale, issuance and delivery of the Securities, and
the performance of the Company's obligations hereunder and thereunder has been
taken. The Securities, when issued in compliance with the provisions of this
Agreement, the Warrants and the Certificate (as defined below), will be validly
issued, fully paid and nonassessable, and free of any liens or encumbrances
created by the Company, except for restrictions created by this Agreement, the
Investor Rights Agreement and the Warrants, and will be issued in compliance
with all applicable federal and state securities laws. The issuance of the
Securities, when issued pursuant to this Agreement, the Warrants and the
Certificate, are not subject to any preemptive rights or rights of first refusal
that have not been satisfied or waived, other than rights created by this
Agreement and the Investor Rights Agreement.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation of
any term of its Restated Certificate of Incorporation in the form attached
hereto as EXHIBIT E (the "Certificate") or Bylaws or in any material respect of
any term or provision of any material mortgage, indenture, contract, agreement,
instrument, judgment or decree, and is not in violation of any order, statute,
rule or regulation applicable to the Company, the violation of which would have
a material adverse effect on the Company's business or properties. The
execution, delivery and performance of and compliance with this Agreement and
the Investor Rights Agreement and the issuance of the Securities, will not
result in any such violation, or be in conflict with, or constitute a default
under, or result in the creation of, any mortgage, pledge, lien, encumbrance or
charge upon any of the existing properties or assets of the Company.
3.7 NO CONFLICT WITH LAW OR DOCUMENTS. The execution, delivery and
consummation of this Agreement and the Investor Rights Agreement and the
transactions contemplated hereby and thereby will not: (a) conflict with any
provisions of the Certificate or Bylaws, as amended, of the Company or of the
Subsidiary; (b) result in any violation of or default or loss of a benefit
under, or permit the acceleration of any obligation under (in each case, upon
the giving of notice, the passage of time, or both), any mortgage, indenture,
lease, agreement or other instrument, permit, franchise license, judgement,
order, decree, law, ordinance, rule or regulation applicable to the Company, the
Subsidiary or their respective properties.
3.8 GOVERNMENTAL CONSENT. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement and the Investor Rights Agreement or the offer, sale or
issuance of the Securities, or the consummation of any other transaction
contemplated hereby or thereby, except filings as have been made prior to the
Closings, except that any notices of sale required to be filed with the
Securities and Exchange Commission under Regulation
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D of the Securities Act of 1933, as amended (the "Securities Act"), or such
post-closing filings as may be required under other applicable state or federal
securities laws, which filings, if required, will be accomplished in a timely
manner, as required by such laws.
3.9 FINANCIAL STATEMENTS. The Company has provided to each Purchaser (a)
audited financial statements (consisting of a consolidated balance sheet as at
December 31, 1994, and consolidated statement of operations, consolidated
statement of stockholders' equity and consolidated statement of cash flows for
the year then ended, and (b) unaudited financial statements (consisting of a
consolidated balance sheet as at June 30, 1995, and statement of operations and
consolidated statement of cash flows for the six months then ended)
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated.
3.10 CERTAIN TRANSACTIONS. Since June 30, 1995, neither the Company nor
its Subsidiary has (a) mortgaged, pledged or subjected to lien, charge or any
other encumbrance any of its assets, tangible or intangible, (b) sold, assigned
or transferred any of its assets or canceled any debts or obligations except in
the ordinary course of business, consistent with past practices, (c) suffered
any extraordinary losses, or waived any rights of substantial value, (d) entered
into any material transaction other than in the ordinary course of business,
consistent with past practices, or (e) otherwise had any change in its
condition, financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or in the
aggregate has been materially adverse, and excepted further that the Company
continues to incur losses consistent with its past practices.
3.11 MATERIAL CONTRACTS AND COMMITMENTS.
(a) Except for agreements explicitly contemplated by this Agreement
and the Investor Rights Agreement, there are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors or
holders of ten percent (10%) or more of the outstanding voting securities of the
Company.
(b) Except as set forth in the Financial Statements, there are no
agreements, understandings, instruments, contracts or proposed transactions to
which the Company is a party or by which it is bound, other than contracts with
vendors, suppliers and customers entered into in the ordinary course of
business, that involve (i) obligations (contingent or otherwise) of, or payments
to the Company in excess of $100,000, or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from the Company, or
(iii) provisions restricting the development, manufacture or distribution of the
Company's products or services.
(c) Except as set forth in the Financial Statements, the Company (i)
is not obligated to repay any indebtedness for money borrowed or incurred any
other liabilities outside the ordinary course of business individually in excess
of $25,000 or, in the case of indebtedness and/or liabilities individually less
than $25,000 in excess of $50,000 in the aggregate, (ii) is not a creditor with
respect to any loans or advances to any person, other than ordinary advances for
travel expenses, or (ii) since
5
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June 30, 1995, has not sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business. For the purposes of this subsection, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities the Company
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of determining the individual minimum dollar amounts.
(d) The Company is not engaged in any current active discussions (i)
with any representative of any corporation or corporations regarding the merger
of the Company with or into any such corporation or corporations, (ii) with any
corporation, partnership, association or other business entity or any individual
regarding the sale, conveyance or disposition of all or substantially all of the
assets of the Company or a transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the Company is
disposed of, or (iii) regarding any other form of liquidation, dissolution or
winding up of the Company.
3.12 CHANGES. Since June 30, 1995, there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not had,
in the aggregate, a materially adverse effect on the Company and other than that
the Company continues to incur losses.
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business presently is conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or of a material
debt owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business
presently is conducted and as it is proposed to be conducted);
(e) any material change or amendment to any material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any material change in any compensation arrangement or agreement
with any employee;
(g) any declaration or setting aside for payment or other
distribution in respect of any of the Company's capital stock, or any agreement
or obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire shares of its capital stock; or
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(h) to the Company's knowledge, any change in the Company's prospects
or any other event or condition of any character that might materially and
adversely affect the assets, properties, financial condition, operating results
or business of the Company (as such business presently is conducted and as it is
proposed to be conducted).
3.13 TITLE. The Company has good and marketable title to its properties
and assets, and has good title to all its leasehold interests, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(a) those resulting from taxes not delinquent, (b) minor liens and encumbrances,
which do not in any case, or in the aggregate, materially detract from the value
of the property subject thereto or materially impair the operations of the
Company, when taken as a whole, and (c) those that otherwise have arisen in the
ordinary course of business.
3.14 LITIGATION. There are no material actions, suits, proceedings or
investigations pending or overtly threatened against the Company that question
the validity of this Agreement or the Investor Rights Agreement or the right of
the Company to enter into either of them, or to consummate the transactions
contemplated hereby or thereby, or which could reasonably be expected to result,
either individually or in the aggregate, in any material adverse change in the
assets, condition or prospects of the Company, nor is the Company aware that
there is a basis for any of the foregoing. The Company is not a party to any
order, writ, injunction, judgment, or decree of any court or governmental agency
or instrumentality. There is no action, suit, proceeding, or investigation by
the Company currently pending or that the Company presently intends to initiate.
3.15 REGISTRATION RIGHTS. Except as set forth in the Investor Rights
Agreement, the Company is not under any obligation to register any of its
presently outstanding securities or any of its securities which may hereafter be
issued.
3.16 TAX RETURNS. The Company has filed all federal, state and other tax
returns that are required to be filed. All taxes shown to be due and payable on
such returns, any assessments imposed, and all other taxes due and payable by
the Company on or before the First Closing have been or will be paid prior to
the time they would become delinquent.
3.17 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or subject
to any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, which could have
a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and is it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The employment of each
officer and employee of the Company is terminable at the will of the Company and
no employee has been granted the right to any material compensation following
the termination of employment with the Company.
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3.18 INSURANCE. The Company has in full force and effect fire, casualty
and liability insurance policies, which to the best of the Company's knowledge
are in such amounts and with such coverage as are carried by companies similar
to the Company.
3.19 PATENTS AND TRADEMARKS. To the best of its knowledge, the Company
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information, and
proprietary rights (collectively, "Intellectual Property") necessary for its
business as now conducted and as proposed to be conducted without any conflict
with, or infringement of the rights of, others. There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any material options, licenses, or agreements
of any kind with respect to the Intellectual Property rights of any other person
or entity, other than such licenses or agreements arising from the purchase of
"off the shelf" or standard products. The Company has not received any
communications alleging that the Company has violated or, by conducting is
business as proposed, would violate any of the Intellectual Property rights of
any other person or entity; provided, however, there can be no assurance that
the Company's manufacture and sale of any of its products will not infringe
third-party patents or that patents owned or licensed by the Company will cover
products sold by the Company.
3.20 DISCLOSURE. No statement by the Company contained in this Agreement
and the attached exhibits, and any written statement or certificate furnished or
to be furnished to the Purchasers pursuant to this Agreement or in connection
with the transactions contemplated hereby (when read together) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. To its knowledge the
Company has provided the Purchasers with all the information they have
reasonably requested in connection with their decision to purchase the Shares
and Warrants hereunder.
3.21 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Each employee of
the Company has executed a Proprietary Information and Inventions Agreement
substantially in the form or forms which have been delivered to special counsel
for the Purchasers.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS; RESTRICTIONS ON TRANSFER.
4.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser,
severally and not jointly, represents and warrants to the Company with respect
to the purchase of the Shares and the Warrants as follows:
(a) DUE AUTHORIZATION, EXECUTION, DELIVERY AND PERFORMANCE. All
action on the part of Purchaser for the authorization, execution, delivery and
performance by Purchaser of this Agreement and the Investor Rights Agreement has
been taken.
(b) INVESTMENT INTENT. Purchaser is acquiring the Shares and the
Warrants for investment for such Purchaser's own account and not with a view to,
or for resale in connection with, any distribution. The Purchaser understands
that the Shares and the Warrants to be purchased have not
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been registered under the Act by reason of a specific exemption from the
registration provisions of the Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.
(c) RESTRICTED SECURITIES. Purchaser acknowledges that the
Securities must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from such registration is available. The
Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, in case
the Purchaser has held the Securities for less than three years or is an
affiliate of the Company, among other things: the availability of certain
current public information about the Company, the resale occurring not less than
two years after the Securities were purchased from the Company or an affiliate
of the Company, the sale being through a "broker's transaction" or in
transactions directly with a "market maker," and the number of shares being sold
during any three-month period not exceeding specified limitations.
(d) NO PUBLIC MARKET. Purchaser understands that no public market
now exists for any of the securities issued by the Company and there can be no
assurance that a public market will ever exist for the Securities.
(e) RECEIPT OF AND ACCESS TO INFORMATION. Purchaser has been
furnished with such materials and has been given access to such information
relating to the Company as it or its qualified representative has requested and
has been afforded the opportunity to ask questions regarding the Company and the
Shares and Warrants, all as Purchaser has found necessary to make an informed
investment decision.
4.2 LEGENDS. Each certificate representing the Securities shall be
endorsed with the following legend (in addition to any legend required by
applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR ITS SUCCESSOR RULE UNDER THE SECURITIES
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
The Company will not register a transfer of the Securities unless the conditions
specified in the foregoing legend are satisfied, and the Company may instruct
its transfer agent not to register the transfer of any of the Securities unless
the conditions specified in the foregoing legend are satisfied. Notwithstanding
the foregoing, the Company shall not require a Purchaser to furnish an opinion
of its counsel in connection with a proposed transfer of Securities to a partner
of the Purchaser unless, in the
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view of the Company's counsel, such an opinion is needed to confirm compliance
with applicable securities laws.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT EACH CLOSING. The
Purchasers' obligations to purchase the Shares and the Warrants at each Closing
are subject to the fulfillment on or prior to each Closing of the following
conditions, any of which may be waived in writing in whole or in part by the
Purchasers:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by the Company herein shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of the same date; and the Company shall have performed all
obligations and conditions herein required to be performed or observed by it on
or prior to such Closing Date.
(b) NECESSARY CONSENTS AND WAIVERS OBTAINED. The Company shall have
obtained all consents and waivers necessary for consummation of the transactions
contemplated by this Agreement which need to be obtained prior to such Closing.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required prior to the Closing in
connection with the lawful sale and issuance of the Shares and the Warrants
pursuant to this Agreement shall have been duly obtained and shall be effective
on and as of such Closing Date.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered to the
Purchasers a certificate or certificates, executed by an officer of the Company,
dated the Closing Date, certifying to the fulfillment of the conditions
specified in subparagraphs (a), (b) and (c) of this Section 5.1.
(e) RESTATED CERTIFICATE OF INCORPORATION. The Restated Certificate
of Incorporation, substantially in the form attached hereto as Exhibit E shall
have been filed with the Secretary of State of the State of Delaware.
(f) INVESTOR RIGHTS AGREEMENT. The Company and the Purchasers shall
have entered into the Investor Rights Agreement, substantially in the form
attached hereto as Exhibit D.
(g) LEGAL OPINION. Purchasers shall have received from Cooley
Godward Castro Huddleson & Tatum, counsel to the Company, an opinion letter
addressed to the Purchasers, dated the Closing Date, substantially in form
attached hereto as EXHIBIT F.
5.2 CONDITION TO COMPANY'S OBLIGATIONS AT EACH CLOSING. The Company's
obligation to sell and issue the Shares and the Warrants at each Closing is
subject to the fulfillment to the
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Company's satisfaction on or prior to each Closing Date of the following
conditions, any of which may be waived in writing in whole or in part by the
Company:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by the Purchasers on the First Closing Date shall be true and
correct when made and shall be true and correct on such Closing Date with the
same force and effect as if they had been made on and as of the same date, and
the Purchasers shall have performed all obligations and conditions herein
required to be performed or observed by them on or prior to such Closing Date.
(b) NECESSARY CONSENTS AND WAIVERS OBTAINED. The Company shall have
obtained all consents and waivers necessary for consummation of the transactions
contemplated by this Agreement which need to be obtained prior to such Closing.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the lawful
sale and issuance of the Shares and the Warrants pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of such Closing
Date.
(d) PERFORMANCE OF OBLIGATIONS. Each Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by such Purchaser on or before such Closing Date, and each
Purchaser shall have delivered payment to the Company in respect of its purchase
of Shares and Warrants.
(e) INVESTOR RIGHTS AGREEMENT. The Company and the Purchasers shall
have entered into the Investor Rights Agreement, substantially in the form
attached hereto as Exhibit D.
6. MISCELLANEOUS.
6.1 WAIVERS AND AMENDMENTS. With the written consent of the record
holders of a majority of the Securities then outstanding, the obligations of the
Company and the rights of the holders of the Securities under this Agreement may
be waived (either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely), and
with the same consent of the record holders of a majority of the Securities then
outstanding, the Company, when authorized by resolution of its Board of
Directors, may enter into a supplementary agreement for the purpose of adding
any provision to or changing in any manner or eliminating any provision of this
Agreement. Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by a signed statement in
writing. Any such waiver or supplementary agreement shall be binding on all
holders of Securities.
6.2 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 to be performed entirely within
California.
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6.3 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchasers and the
Closings of the transactions contemplated hereby.
6.4 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.
6.5 ENTIRE AGREEMENT. This Agreement and the other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
6.6 SEVERABILITY OF THIS AGREEMENT. In case any provision of this
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.
6.7 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.
6.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Purchasers, upon any breach
or default 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 or
default, or any acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character by the Purchasers of any breach or default under this
Agreement, or any waiver by the Purchasers of any provisions or conditions of
this Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to the Purchasers, shall be
cumulative and not alternative.
6.9 PAYMENT OF FEES AND EXPENSES. The Company and each Purchaser shall
bear its own expenses incurred on its behalf with respect to this Agreement and
the transactions contemplated hereby; PROVIDED, HOWEVER, that the Company shall
pay the reasonable fees and expenses of one special counsel to the Purchasers at
the Closing, up to a maximum of $5,000. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement or the
Certificate, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
6.10 NOTICES. Any notice or report required in this Agreement or permitted
to be given shall be given in writing and shall be deemed effective upon
personal delivery, confirmed facsimile or upon deposit in the United States
mail, first-class, postage prepaid and addressed (a) if to a Purchaser, at such
Purchaser's address set forth on such Purchaser's signature page hereto, or at
such other address as such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any
12
<PAGE>
Securities, at such address as such holder shall have furnished the Company in
writing, or, until any such holder furnishes an address to the Company, then to
and at the address of the last holder of such Securities who has so furnished an
address to the Company, (c) if to the Company, one copy should be sent to its
address set forth on the cover page of this Agreement and addressed to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Purchasers.
6.11 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.
IN WITNESS WHEREOF, the parties hereto have executed this Series E
Preferred Stock Purchase Agreement as of the date first set forth above.
CV THERAPEUTICS, INC.
By:
--------------------------------
Louis G. Lange, M.D.
Chief Executive Officer
PURCHASERS:
13
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
[OMITTED]
<PAGE>
EXHIBIT B
FORM OF WARRANT
SEE EXHIBIT 10.18
<PAGE>
EXHIBIT C
SCHEDULE OF EXCEPTIONS
[OMITTED]
<PAGE>
EXHIBIT D
FORM OF AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SEE EXHIBIT 10.11
<PAGE>
EXHIBIT E
FORM OF RESTATED CERTIFICATE OF INCORPORATION
SEE EXHIBIT 3.1
<PAGE>
EXHIBIT F
FORM OF OPINION OF COOLEY GODWARD CASTRO HUDDLESON & TATUM
[OMITTED]
<PAGE>
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is dated May 07, 1996 by and
between CV THERAPEUTICS, INC., a California corporation, having its principal
place of business at 3172 Porter Drive, Palo Alto, California ("CVT"), and BAYER
AG, a German corporation having its principal place of business at D 51368
Leverkusen, Germany ("BAYER").
Each of BAYER and CVT are sometimes referred to herein as the "PARTY" or,
collectively, as the "PARTIES".
RECITALS
WHEREAS, CVT has discovered [ ]
([ ] CTX), as the available representative), has performed certain
research, and owns certain proprietary rights thereon.
WHEREAS, BAYER is a leader in the research, development, marketing,
manufacture and distribution of therapeutic pharmaceutic products; and
1.
<PAGE>
WHEREAS, CVT and BAYER desire to establish a contractual relationship to
grant an exclusive license to BAYER to research, develop, manufacture and market
CTX, its derivatives and/or modulators of the principle.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, the PARTIES agree as follows:
DEFINITIONS
Capitalized words used in this Agreement shall have the meanings ascribed
in the following definitions, unless otherwise stated or defined in the
Agreement.
1. DEFINITIONS
1.1 "AFFILIATE" means any entity controlled by, controlling, or under
common control with a PARTY and shall include without limitation any company
fifty percent (50%) or more of whose voting stock or participating profit
interest is owned or controlled, directly or indirectly, by a PARTY, and any
entity which owns or controls, directly or indirectly, fifty percent (50%) or
more of the voting stock of a PARTY. Where the laws of jurisdiction in which
such entity operates prohibits the ownership by a PARTY of 50%, an AFFILIATE
shall mean an entity that is controlled by, controlling, or under common control
with a PARTY at a maximum level of ownership allowed by such jurisdiction.
1.2 "BAYER PATENT" means all PATENTS that claim or cover COMPOUNDS or
PRODUCTS, the manufacture, use, sale,offer for sale or import of COMPOUNDS, or
methods or materials useful for discovering, identifying, or
2.
<PAGE>
assaying for COMPOUNDS, the manufacture, use, sale, offer for sale or import of
PRODUCTS, where such PATENTS cover inventions made solely by employees or agents
of BAYER or an AFFILIATE of BAYER.
1.3 "COMPOUND" means
(a) [ ] (CTX), and/or
(b) modulators [
] of CTX
and/or
(c) any composition of matter that is discovered, identified or
synthesized by or on behalf of BAYER or an AFFILIATE regarding the FIELD and
which is covered by valid claims of the CVT PATENT and/or identified only by
using and applying the CVT KNOW HOW within the FIELD.
1.4 "CONFIDENTIAL INFORMATION" means each PARTY's confidential
information, inventions, additional Know-How or data relating to COMPOUNDS, CTX,
KNOW HOW, including but not limited to identifying, developing, manufacturing
COMPOUNDS and/or PRODUCTS, BAYER's reporting and other business information and
plans, whether in oral, written graphic or electronic form. CONFIDENTIAL
INFORMATION disclosed orally shall be reduced to writing by the disclosing PARTY
and delivered to the other PARTY within thirty (30) days after disclosure.
3.
<PAGE>
1.5 "CONTROL" means possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement,
other arrangement with or any rights of any THIRD PARTY.
1.6 "CTX" means [
] covered by the FIELD and CVT PATENT.
1.7 "CVT KNOW HOW" means all KNOW HOW information, results, procedures
including but not limited to the identification and development of COMPOUNDS and
to the isolation and purification of CTX, [
] and corresponding
information for the use and handling thereof and/or useful for the
identification and development of COMPOUNDS that CVT owns or CONTROLS on the
EFFECTIVE DATE and that will be owned and will be CONTROLLED by CVT. CVT KNOW
HOW shall exclude CVT PATENTS.
1.8 "CVT PATENTS" means all PATENTS owned or CONTROLLED by CVT or an
affiliate of CVT that claim or cover COMPOUNDS, the manufacture or use of
COMPOUNDS and PRODUCTS and/or methods or materials useful for discovering,
identifying, purifying, evaluating or assaying of COMPOUNDS, where such PATENTS
cover inventions made by employees or agents of CVT or made by CVT's cooperation
partners in the FIELD, as identified in Annex 2.
1.9 "EFFECTIVE DATE" means May 07, 1996.
4.
<PAGE>
1.10 "FIELD" means the use of the PRINCIPLE for any therapeutic and/or
prophylactic and/or diagnostic use in human or animals.
1.11 "KNOW HOW" means all intangible Know-How, inventions (whether or not
patentable), data, preclinical results, information, and any physical, chemical
or biological material or any replication of any part of such material.
1.12 "NET SALES" shall mean gross sales of PRODUCT sold by BAYER, its
AFFILIATES and sublicensees to THIRD PARTIES (including any unaffiliated THIRD
PARTY's distributors), less, to the extent included in gross sales, the total of
(a) ordinary and customary trade discounts actually allowed,
(b) credits, rebates, returns (including, but not limited to,
wholesaler and retailer returns) actually allowed,
(c) excise taxes, other consumption taxes, customs duties and
compulsory payments to governmental authorities paid, and
(d) amounts equivalent to 5 % of said gross sales as an
allowance for expenses such as transportation, insurance and the like.
1.13 "PATENT" means
(a) valid and enforceable Letters Patent in any and all
countries including without limitation any extension - Supplemental Protection
Certificates
5.
<PAGE>
(SPC), registration, confirmation, reissue, continuation-in-part, division, or
renewal thereof, and
(b) pending applications for any of the foregoing.
1.14 "PRINCIPLE" means the [ ]
exemplified as the activities of CTX, and modulators [
].
1.15 "PRODUCT" means any pharmaceutical product identified and developed
under this Agreement covered by the FIELD containing CTX or any other COMPOUND
as active ingredient, representing the PRINCIPLE.
1.16 "PRODUCT DEVELOPMENT" means the performance of the non-clinical and
clinical investigations necessary to and directly in support of obtaining
REGULATORY APPROVAL for marketing a PRODUCT.
1.17 "REGULATORY APPROVAL" means any approvals (including price and
reimbursement approvals), licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
government entity, necessary for the manufacture, use, storage, import,
transport or sale, of PRODUCTS in a country.
1.18 "SUBLICENSE REVENUES" means all revenues from THIRD PARTIES as
consideration for the sale of PRODUCTS.
1.19 "TERRITORY" means the entire world.
6.
<PAGE>
1.20 "THIRD PARTY" means any entity other than CVT or BAYER and their
respective AFFILIATES.
1.21 "THIRD PARTY ROYALTIES" means royalties payable to a THIRD PARTY in
respect of the PRINCIPLE, COMPOUND and the manufacture or sale of PRODUCTS.
2. LICENSE GRANT
2.1 CVT hereby grants BAYER a license under CVT PATENTS and CVT KNOW HOW
to identify, have identified and develop, have developed COMPOUNDS and to
develop, have developed, make, have made use, have used, sell, have sold, offer,
have offered for sale, import and have imported COMPOUNDS and/or PRODUCTS
subject to the terms and conditions of this Agreement. Such license shall be
exclusive, unlimited and worldwide. BAYER shall have the right to sublicense
its rights hereunder to its AFFILIATES and to THIRD PARTIES.
2.2 EXCLUSIVITY.
2.2.1 RIGHTS IN USE
Subject to and conditioned upon the provisions of this Agreement, the
rights, licenses and privileges granted pursuant to Article 2.1 shall be
exclusive to
7.
<PAGE>
BAYER. Without limiting the generality of the foregoing, CVT covenants that
during the term of this Agreement, neither CVT nor its AFFILIATES shall grant to
any THIRD PARTY any right, license or privilege to identify, develop, make, have
made COMPOUNDS and/or to develop, use or sell PRODUCTS, or to otherwise use or
exploit CVT PATENTS and CVT KNOW HOW.
2.2.2 CONTROL
Regarding CVT PATENTS, CVT KNOW HOW and CTX, CVT herewith expressly
confirms to own and CONTROL exclusively all rights, which will be exclusively
licensed to BAYER. CVT further expressly confirms that CVT. owns and CONTROLS
exclusively all rights, know how experiences, cell lines as defined under CVT
KNOW HOW which was developed at CVT's cooperation partners including but not
limited to the University of Kansas and the Washington University. CVT further
confirms that- to the best of their knowledge - there are not any rights with
any THIRD PARTY regarding the PRINCIPLE.
8.
<PAGE>
2.2.3 THIRD PARTY ROYALTIES
If under this Agreement BAYER becomes aware of technology and/or know how
of a THIRD PARTY that at BAYER's discretion would be valuable or necessary to
the discovery, development or commercialization of PRODUCTS, BAYER is free to
acquire such rights at its sole discretion. In the event of an acquisition of
any such THIRD PARTY right or know how which would result in payment of
royalties or other license fee to a THIRD PARTY, the PARTIES will share such
compensation to the offering THIRD PARTY:
Of any such license fee, CVT will pay [ ] out of the milestone payment
foreseen in section 4.3.5., but only up to a maximum of [ ]
of that milestone. The contribution of CVT to this license fee shall be
deducted by BAYER from the milestone foreseen in section 4.3.5. In case of an
obligation by BAYER to pay running royalties to such licensor, CVT will
contribute [ ] out of CVT royalties received from BAYER under
this Agreement, but limited to a maximum of [ ] of CVT's
royalties received from BAYER.
2.3 RIGHTS TO SUBLICENSE
(i) BAYER shall have the sole right to sublicense to THIRD
PARTIES all or any portion of the rights to CVT PATENTS and CVT KNOW HOW and/or
CTX granted to BAYER pursuant to this Agreement;
9.
<PAGE>
(ii) BAYER shall have the sole right to sublicense all or any
portion of the rights to the CVT PATENTS, the CVT KNOW HOW and CTX, granted to
BAYER pursuant to this Agreement to any or all of its AFFILIATES.
(iii) BAYER agrees that all sublicenses granted by BAYER hereunder
shall expressly bind sublicensees to the terms of sections 3.2, 4.4, 5.4, 9, and
all other relevant obligations of this Agreement. In the event BAYER grants
sublicenses, BAYER shall pay all royalties to CVT through and under the sole
responsibility of BAYER as if SUBLICENSE REVENUES were NET SALES of BAYER;
(iv) Any sublicenses granted by BAYER shall provide for the
termination of the sublicenses upon termination of this Agreement.
(v) During the term of this Agreement, BAYER shall inform CVT on
all sublicenses granted by BAYER hereunder.
2.4 SUBCONTRACTING
Notwithstanding anything herein provided for to the contrary, BAYER shall
be allowed to (i) sub-contract in whole or in part COMPOUND and PRODUCT
development to THIRD PARTIES, (ii) appoint sales agents and distributors to
market PRODUCT, and (iii) sub-contract the manufacturing of COMPOUND and/or
PRODUCT with THIRD PARTIES on BAYER's discretion or with BAYER's AFFILIATES.
BAYER shall provide for the corresponding confidentiality and restriction-of-use
obligations to apply to those subcontracting THIRD PARTIES according to Article
9.
10.
<PAGE>
3. DISCLOSURE OF INFORMATION
3.1 As soon as possible after the EFFECTIVE DATE, CVT shall disclose or
cause its AFFILIATES to disclose and/or deliver to BAYER all CVT PATENTS,
COMPOUND, COMPOUND specifications, CTX, CTX specifications, CVT KNOW HOW, to
enable and support BAYER to identify, develop COMPOUNDS and to manufacture, have
manufactured, and commercialize PRODUCTS in the FIELD on the terms and subject
to the conditions of this Agreement.
3.2 During the term of this AGREEMENT, BAYER shall inform CVT on the
progress of the project under this Agreement, at 6 (six) months intervals
(Summaries, only).
4. PAYMENTS
For the rights granted to BAYER according to Article 2, BAYER will
compensate CVT by the following payments at the following events under the
following conditions:
4.1 DOWN PAYMENT
BAYER shall transfer to CVT a downpayment of [
] due on [ ].
4.2 DOWN PAYMENT
11.
<PAGE>
If and when the [ ] (CTX) producing cell line is successfully
established at BAYER's labs, [
] and [ ]
efficacy is confirmed by Bayer as being sufficient and qualified for [
] Bayer shall transfer to CVT [
].
4.3 Milestone Payments according to the progress of the first COMPOUND
or PRODUCT to be developed, as follows:
4.3.1 As soon as [
] BAYER shall transfer
to CVT [ ].
4.3.2 At the [
] BAYER shall transfer
to CVT [ ].
4.3.3 At the [
Bayer shall furnish to CVT [
].
12.
<PAGE>
4.3.4 At the [
] BAYER will furnish to CVT
[ ].
4.3.5 At the [
BAYER shall furnish to CVT
[ ].
It is understood that all payments identified in Article 4.3 will only
become due [
].
4.4 ROYALTIES
4.4.1 On the NET SALES of each of BAYER's PRODUCTS [
] in the TERRITORY of up to [
]
-accrued during [ ] BAYER shall [
] of [
] for the period according to Art. 10.1.
4.4.2 On the NET SALES of each of BAYER's PRODUCTS [
] in the TERRITORY of more than [
]
- accrued during [ ] BAYER shall [
]
of [ ] for the period according to Art. 10.1.
13.
<PAGE>
4.4.3 On the NET SALES of each of BAYER's PRODUCT [
] or [ ] - accrued during [ ] BAYER shall [
]
of [ ] of that identified in Art. 4.4.1 and 4.4.2, respectively, for the
period according to Art. 10.1.
4.5 MARKET EXCLUSIVITY
On a country by country basis, BAYER will pay the royalty rates according
to Art. 4.4 only and as long as the [
] Under all other
circumstances, BAYER will [
] according to Art. 4.4.1
through 4.4.3.
4.6 OFFSET FOR THIRD PARTY ROYALTIES
BAYER may offset, against any amounts owed to CVT as royalties hereunder
the following expenses to the extent incurred in the year for which such royalty
amounts accrued:
(a) [ ] of THIRD PARTY ROYALTIES with respect
to technology acquired and due under Section 2.2.3 to the extent provided
hereunder and as defined and limited according to Section 2.2.3 and,
(b) any amounts paid and/or allocated to be paid by BAYER
pursuant to Art. 8.3 and 8.4.
14.
<PAGE>
5. MANNER OF PAYMENTS
5.1 BAYER shall effect each milestone payment under Section 4.3 within
60 (sixty) days after they become due. BAYER shall effect all royalty payments
under Section 4.4 within 90 (ninety) days after each calendar quarter Payment
shall be made to an account designated in writing by CVT.
5.2 BLOCKED CURRENCY
In each country where the local currency is blocked and cannot be removed
from the country, at the election of BAYER, royalties accrued in that country
shall be paid to CVT in the country in local currency by deposit in a local bank
designated in writing by the CVT.
5.3 FOREIGN EXCHANGE
Royalties on U.S. sales shall be calculated and paid in U.S. Dollars.
Royalties on all other sales shall be calculated in local currency and converted
to the US Dollar at the end of each calendar quarter. The exchange rate used
shall be the exchange rate for the US dollar and the currency of the country of
sale as quoted by the Wall Street Journal, or a comparable publication
acceptable to both parties, if the Wall Street Journal ceases to exist, on the
last day of the quarter for which royalties on net sales have been calculated.
15.
<PAGE>
5.4 RECORDS
BAYER shall keep or cause to be kept such records as are required to
determine in a manner consistent with generally accepted accounting principles
the sum of royalties due under this Agreement and the sales figures of each
first PRODUCT according to Art. 4.4. At the request (and expense) of CVT, BAYER
and its sublicensees shall permit an independent certified public accountant
appointed by CVT and reasonably acceptable to BAYER, at reasonable times and
upon reasonable notice, to examine those records as may be necessary to:
(a) determine, with respect to any calendar year ending not more than
three years prior to CVT's request, the correctness of any report or payment
made under this Agreement; or
(b) obtain information as to the royalty payable for any calendar year.
Any such examination shall be subject to Article 9. Results of any such
examination shall be made available to both PARTIES. If CVT requests an audit,
CVT shall bear the full cost of the performance of any such audit, unless such
audit discloses a variance of more than [
] from the amount of the original report, royalty or payment calculation. In
such case, BAYER shall bear the full cost of the performance of such audit.
16.
<PAGE>
6. DILIGENCE
6.1 DEVELOPMENT
BAYER shall use reasonable diligence in developing and marketing PRODUCTS
and shall endeavor to maximize the economic value of the PRODUCTS.
6.2 COMMERCIAL SUPPLY
BAYER shall be responsible for optimization, scale-up and commercial supply
of PRODUCTS for worldwide sale, directly or through AFFILIATES of BAYER or
through THIRD PARTIES, at BAYER's discretion. BAYER shall manufacture, or have
manufactured, all PRODUCTS for worldwide commercial sales in conformance with
the specifications set forth in the respective applications for REGULATORY
APPROVAL and any amendments or supplements thereto, and any substitutes.
7. TAXES
7.1 CVT shall pay any and all taxes levied on account of the royalties
it receives under this Agreement. If laws or regulations require that taxes be
withheld, BAYER will
(a) deduct those taxes from the remittable royalty,
(b) timely pay the taxes to the proper taxing authorities, and
17.
<PAGE>
(c) send proof of payment to CVT within 90 (ninety) days
following that payment.
The PARTIES agree to cooperate to obtain the benefit of any tax treaty with
respect to such royalty payments.
8. OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
8.1 PATENT PROSECUTION
The PARTIES intend to establish broad patent protection for CTX arid other
patentable inventions developed by or achieved at CVT and CVT's collaboration
partners according to Art. 2.2.2 and other patentable inventions. CVT shall
supervise and direct patenting of all CVT PATENTS. CVT shall file and prosecute
all patent applications covering such CVT PATENTS and collaboration partners'
inventions. For such prosecution, CVT will engage counsel reasonably acceptable
to BAYER, at CVT's expense. CVT shall give BAYER copies of all such
applications and related correspondence, in sufficient time to allow BAYER
reasonably to comment thereon. CVT will seriously consider BAYER's comments.
CVT shall maintain all CVT PATENTS that issue on such applications.
8.2 CONFIDENTIAL TREATMENT
All information disclosed under Sections 8.1 shall be treated as
confidential pursuant to Article 9.
18.
<PAGE>
8.3 INFRINGEMENT BY THIRD PARTIES OF CVT PATENT.
If any CVT PATENT is infringed by a THIRD PARTY in any country of the
TERRITORY, regarding the development, manufacture, use, sale, offer for sale or
import of COMPOUND or any PRODUCT in such country, the PARTY first having
knowledge of such infringement shall promptly notify the other in writing. The
notice shall set forth the facts of that infringement in reasonable detail. CVT
shall have the obligation to institute, prosecute, and control any action or
proceeding with respect to such infringement, by counsel of its own choice, and
BAYER shall have the right, at its own expense, to be represented in any action
by counsel of its own choice. If CVT fails to bring an action or proceeding
within a period of ninety (90) days after having knowledge of infringement of a
CVT PATENT, BAYER shall have the right to bring and control any such action by
counsel of its own choice, and CVT shall have the right to be represented in any
such action by counsel of its own choice at its own expense. If one PARTY
brings any such action or proceeding, the other PARTY agrees to be joined as a
party plaintiff if necessary to prosecute the action and to give the first PARTY
reasonable assistance and authority to file and prosecute the suit. No
settlement or consent judgment or other voluntary disposition of a suit brought
by a PARTY under this section may be entered into without the written consent of
the other PARTY if such settlement would adversely affect the other PARTY's
interests, which consent shall not be unreasonably withheld.
[ ]
19.
<PAGE>
[ ].
8.4 THIRD PARTY CLAIMS AGAINST CVT PATENTS
If a THIRD PARTY asserts that a patent or other right owned by it is
infringed by the use of CVT KNOW HOW or by the manufacture, use, sale, offer for
sale or import of COMPOUND and/or PRODUCT, the PARTY first obtaining knowledge
of such a claim shall immediately provide the other PARTY notice of such claim
and the related facts in reasonable detail. CVT shall have the primary right
and obligation to control the defense of such claims. BAYER will cooperate in
defending all such actions and shall have the right to be represented separately
by counsel of its own choice. If CVT fails to bring an action or proceeding
within a period of ninety (90) days after having knowledge of infringement of a
CVT PATENT, BAYER shall have the right to bring and control any such action by
counsel of its own choice, and CVT shall have the right to be represented in any
such action by counsel of its own choice at its own expense. If one PARTY
brings any such action or proceeding, the other PARTY agrees to be joined as a
party plaintiff if necessary to prosecute the action and to give the first PARTY
reasonable assistance and authority to file and prosecute the suit. No
settlement or consent judgment or other voluntary disposition of a suit under
this section may be entered into without the written consent of the other PARTY
if such settlement would adversely affect the other PARTY's interests, which
consent shall not be unreasonably withheld.
20.
<PAGE>
[
]
9. CONFIDENTIALITY
9.1 CONFIDENTIALITY; EXCEPTIONS.
(a) Except to the extent expressly authorized by this Agreement
or otherwise agreed in writing, the PARTIES agree that, during the term of this
Agreement and five (5) years, thereafter, the receiving PARTY shall keep
confidential and shall not publish or otherwise disclose or use for any purpose,
other than as provided for in this Agreement, any CONFIDENTIAL INFORMATION
furnished to it by the other PARTY.
(b) The restrictions shall not apply to the extent that it can
be established by the receiving PARTY that such CONFIDENTIAL INFORMATION:
(i) was already known to the receiving PARTY, other than under
an obligation of confidentiality, at the time of disclosure by the other PARTY;
(ii) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving PARTY;
21.
<PAGE>
(iii) became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving PARTY in breach of this Agreement; or
(iv) was disclosed to the receiving PARTY, other than under
an obligation of confidentiality, by a THIRD PARTY who had no obligation to the
disclosing PARTY not to disclose such information to others.
9.2 AUTHORIZED DISCLOSURE
Each PARTY may disclose CONFIDENTIAL INFORMATION hereunder to the extent
such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or conducting preclinical or clinical trials, provided
that if a PARTY is required by law or regulation to make any such disclosure of
the other PARTY's CONFIDENTIAL INFORMATION it will, except where impracticable
for necessary disclosures, (for example, in the event of medical emergency),
give reasonable advance notice to the other PARTY of such disclosure requirement
and, except to the extent inappropriate in the case of PATENT applications, will
use its reasonable efforts to secure confidential treatment of such CONFIDENTIAL
INFORMATION required to be disclosed and to minimize the extent of such
disclosure. Each PARTY also may disclose to its collaborators according to Art.
2.4, under confidentiality obligations, CONFIDENTIAL INFORMATION developed by
such PARTY during the course of this collaboration.
22.
<PAGE>
9.3 PUBLICATIONS BY CVT
Contrary to Art. 9.1 and 9.2, CVT may publish the results developed earlier
than the enforcement of this Agreement so long as such publication will not
disclose confidential information regarding this Agreement. CVT will provide
BAYER with a draft of any intended publication 90 days in advance of such
publication to allow BAYER to identify any such confidential information and
will delete from any proposed publication such relevant confidential:
information as may be identified by BAYER.
If BAYER identifies a strategic interest, not to publish certain results or
the intended publication in total, BAYER will have the right to refuse such
publication, which BAYER confirms not to request unreasonably.
BAYER will be free to publish all results and information it deems
necessary to support the project and to provide COMPOUNDS and PRODUCT.
10. TERM AND TERMINATION
10.1 TERM OF AGREEMENT
This Agreement shall commence as of the EFFECTIVE DATE and, unless sooner
terminated as provided herein, shall continue in effect until the expiration of
the last to expire CVT PATENT licensed under this Agreement or after [
] marketing of the first PRODUCT [ ] according to Art. 4.4,
whichever is later.
23.
<PAGE>
10.2 TERMINATION AT BAYER'S DISCRETION
Giving [ ] written notice to CVT, BAYER may [
] according
to Article 4.5 and/or [ ]
BAYER may [ ] to [
] and to [ ].
Upon termination of the activities [
]. Terms for this would be [
]. Any such [
] under this
Agreement which may [ ].
24.
<PAGE>
10.3 TERMINATION OF BREACH
10.3.1 BREACH BY CVT
If CVT materially breaches this Agreement at any time, and has not cured
such breach within [ ] after written notice thereof from BAYER, or,
if such breach is not curable within such ninety day period, CVT fails to use
diligent and continuing efforts to cure such breach, then [
].
10.3.2 BREACH BY BAYER
If BAYER materially breaches this Agreement at any time, and has not cured
such breach within [ ] after written notice thereof from CVT, or,
if such breach is not curable within such [ ] period, BAYER fails to use
diligent and continuing efforts to cure such breach, then (a) [
] and (b) [
].
25.
<PAGE>
10.3.3 The breaching PARTY hereby authorizes, transfers and assigns
to the non-breaching PARTY the right to prosecute, maintain and defend all
PATENTS licensed hereunder in the event of such uncured breach. The breaching
PARTY shall be liable for any damages resulting from its breach, costs and
attorney's fees, and the non-breaching PARTY shall be relieved from its
obligations under this Agreement except as provided in Art. 10.5.
10.4 TERMINATION FOR OTHER REASONS
In the event either PARTY shall:
(a) become insolvent or bankrupt;
(b) make an assignment for the benefit of its creditors;
(c) appoint a trustee or receiver for itself for all or a
substantial part of its property;
(d) have any case of proceeding commenced or other action taken
by or against itself in bankruptcy;
(e) seek liquidation, dissolution, a winding-up arrangement,
composition or readjustment of its debts;
(f) seek any other relief under any bankruptcy, insolvency,
reorganization or other similar or law of any jurisdiction, now or hereafter in
effect; or
26.
<PAGE>
(g) have issued against itself a warrant of attachment,
execution, distraint or similar process against any substantial part of its
property of the other PARTY;
then within sixty (60) days of the event, the other PARTY may, at its sole
option, either
(i) terminate this Agreement upon thirty (30) days written
notice to the other PARTY; or
(ii) continue the performance of this Agreement thereafter.
10.5 SURVIVING RIGHTS
The following provisions of this Agreement shall survive termination of
this Agreement, in addition to any provisions which survive by their terms:
Articles 1, 8, 9, 13, 14.
10.6 ACCRUED RIGHTS: SURVIVING OBLIGATIONS
Termination, relinquishment or expiration of the Agreement for any reason
shall be without prejudice to any rights which shall have accrued to the benefit
of either PARTY prior to such termination, relinquishment or expiration,
including damages arising from any breach hereunder. Such termination,
relinquishment or expiration shall not relieve either PARTY from obligations
27.
<PAGE>
which are expressly indicated to survive termination or expiration of the
Agreement.
11. DISPUTE RESOLUTION
11.1 DISPUTES
The PARTIES recognize that disputes as to certain matters may from time to
time arise during the term of this Agreement which relate to either PARTY's
rights and/or obligations hereunder. The PARTIES shall follow the procedures
set forth in this Article 11.1 to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and to attempt
to avoid litigation between the PARTIES.
In the event the PARTIES are not able to resolve such dispute within such
60-day period, either PARTY may then invoke any other remedies available to it
in law or equity. Any dispute or controversy arising out of or related to this
Agreement which is not resolved between the PARTIES shall be submitted to a
United States federal court located in the County of Santa Clara, California.
The PARTIES hereby consent to the jurisdiction of the State of California.
28.
<PAGE>
12. REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY
12.1 REPRESENTATIONS AND WARRANTIES
Each PARTY hereby represents and warrants to the other that this Agreement
is a legal and valid obligation binding upon such PARTY and enforceable in
accordance with its terms. The execution, delivery and performance of and the
rights granted under this Agreement by such PARTY does not conflict with any
agreement, instrument or understanding, written or oral, to which it is a PARTY
or by which it is bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
12.2 PERFORMANCE BY AFFILIATES
The PARTIES recognize that each may perform some or all of its obligations
under this Agreement through AFFILIATES, provided, however, that each PARTY
shall remain responsible and be guarantor of the performance by such AFFILIATES
and shall cause such AFFILIATES to comply with the provisions of this Agreement
in connection with such performance. Each PARTY waives any obligation on the
other PARTY to seek performance by such PARTY's AFFILIATE before the other PARTY
may enforce the foregoing guaranty.
29.
<PAGE>
13. PRODUCTS LIABILITY AND INDEMNIFICATION
13.1 INDEMNIFICATION FOR SALES OF PRODUCTS
With respect to PRODUCTS, BAYER hereby agrees to defend, indemnify, and
hold harmless CVT and its directors, officers, employees, and agents from and
against any and all suits, claims, actions, demands, liabilities, damages,
costs, expenses and/or loss, including reasonable legal expenses and attorney's
fees ("Losses"), resulting directly or indirectly from the manufacture, use,
handling, storage, sale or other disposition of such PRODUCTS by BAYER, or its
agents or sublicensees. In the event that CVT seeks indemnification under this
Section 13.1, it shall inform BAYER of such claim as soon as practicable after
it receives notice of the claim, shall permit BAYER to assume direction and
control of the defense of the claim (including the right to settle the claim
solely for monetary consideration), and shall cooperate as requested in the
defense of the claim.
13.2 INDEMNIFICATION FOR NEGLIGENCE
Each PARTY hereby agrees to defend, indemnify, and hold harmless the other
PARTY and its directors, officers, employees, and agents from and against any
and all losses resulting directly or indirectly from the indemnifying PARTY's
negligence.
30.
<PAGE>
14. MISCELLANEOUS
14.1 ASSIGNMENT.
(a) Either PARTY may assign any of its rights or obligations
under this Agreement to any AFFILIATES; provided, however, that such assignment
shall not relieve the assigning PARTY of its responsibilities for performance of
its obligations under this Agreement.
(b) CVT may not assign its rights or obligations under this
Agreement or its ownership interest in CVT PATENTS to a non-AFFILIATE without
the prior written consent of BAYER, which consent shall not be unreasonably
withheld, except that CVT may assign this Agreement and its interests in CVT
PATENTS in connection with any merger, consolidation, or sale of all or
substantially all of its assets.
(c) This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the PARTIES. Any assignment
not in accordance with this Agreement shall be void.
14.2 CHANGE IN CONTROL OF CVT.
(a) In the event that (i) CVT is acquired by another entity by
reason of merger, consolidation or sale of all or substantially all of its
assets (except for a reorganization transaction in which the persons who held
majority ownership of CVT prior to the transaction continue to hold
31.
<PAGE>
majority ownership of CVT, directly or through a parent company, after the
transaction) or (ii) a single entity other than BAYER or an AFFILIATE of BAYER
acquires ownership of a majority of the outstanding voting stock of CVT, this
Agreement shall survive. A change in control shall not be deemed to be an
assignment under Section 14.1.
14.3 CONSENTS NOT UNREASONABLY WITHHELD
Whenever provision is made in this Agreement for either PARTY to secure the
consent or approval of the other, that consent or approval shall not
unreasonably be withheld or delayed, and whenever in this Agreement provision is
made for one PARTY to object to or disapprove a matter, such objection or
disapproval shall not unreasonably be exercised.
14.4 TERMINATION OF PRIOR AGREEMENT
This Agreement supersedes all previous confidentiality agreements between
the PARTIES and their respective AFFILIATES. All confidential information
exchanged between the PARTIES and their respective AFFILIATES under such
agreements shall be deemed CONFIDENTIAL INFORMATION and shall be subject to the
terms of Article 9.
32.
<PAGE>
14.5 FORCE MAJEURE
Neither PARTY shall use any rights hereunder or be liable to the other
PARTY for damages or losses on account of failure of performance by the
defaulting PARTY if the failure is occasioned by government action, war, fire,
explosion, flood, strike, lockout, embargo, act of God, or any other similar
cause beyond the control of the defaulting PARTY, provided that the PARTY
claiming force majeure has exerted all reasonable efforts to avoid or remedy
such force majeure; provided, however, that in no event shall a PARTY be
required to settle any labor dispute or disturbance.
14.6 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.
14.7 NOTICES
All notices hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission (receipt verified), telexed,
mailed by registered or certified mail (return receipt requested), postage
prepaid, or sent by express courier service, to the PARTIES at the following
addresses (or at such other address for a PARTY as shall be specified by like
notice; provided, that notices of a change of address shall be effective only
upon receipt thereof):
33.
<PAGE>
If to CVT, addressed to:
CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Attention: Chief Executive Officer
Telephone: (415) 812-9540
Telecopy: (415) 858-0388
With copy to:
COOLEY GODWARD CASTRO HUDDLESON & TATUM
Five Palo Alto Square, 4th Floor
Palo Alto, CA 94306
Attention: Deborah A. Marshall, Esq.
Telephone: (415) 843-5000
Telecopy: (415) 857-0663
If to BAYER, addressed to:
regarding research aspects
34.
<PAGE>
Bayer AG
PH-R, Cardiovascular
D-42096 Wuppertal
Federal Republic of Germany
[
]
regarding contractual aspects
Bayer AG
Licensing and Technical Cooperation
D-51368 Leverkusen
Federal Republic of Germany
[
]
and
Bayer AG
Pharma-Business Planning
and Administration
International Cooperation and Licensing
D-51368 Leverkusen
Federal Republic of Germany
[
]
35.
<PAGE>
14.8 WAIVER
Except as specifically provided for herein, the waiver from time to time by
either of the PARTIES of any of their rights or their failure to exercise any
remedy shall not operate or be construed as a continuing waiver of same or of
any other of such PARTY's fights or remedies provided in this Agreement.
14.9 SEVERABILITY
If any term, covenant or condition of this Agreement or the application
thereof to any PARTY or circumstance shall, to any extent, be held to be invalid
or unenforceable, then
(i) the remainder of this Agreement, or the application of such term,
covenant or condition to PARTIES or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Agreement shall be valid and be enforced to
the fullest extent permitted by law; and
(ii) the PARTIES hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the PARTIES that the basic purposes of this Agreement are to be effectuated.
36.
<PAGE>
14.10 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14.11 PRESS RELEASES
The PARTIES agree that the specific material economic and specific material
terms of the transaction and the principle shall be kept confidential and shall
not be disclosed without the prior written consent of both PARTIES, subject to
standard exceptions for disclosure of CONFIDENTIAL INFORMATION set forth in the
Agreement and except: (i) as required in financial statements to comply with
generally accepted accounting principles (as determined by the disclosing
PARTY's independent auditors), (ii) by CVT to potential investors in connection
with public and private financing of CVT, and (iii) as mutually agreed.
37.
<PAGE>
14.12 ENTIRE AGREEMENT
This Agreement sets forth all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the PARTIES
hereto and supersedes and terminates all prior agreements and understanding
between the PARTIES. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the PARTIES other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the PARTIES hereto unless reduced to writing and signed by the respective
authorized officers of the PARTIES.
14.13 GOVERNING LAW
Resolution of all disputes arising out of or related to this Agreement or
the performance, enforcement, breach or termination of this Agreement and any
remedies relating thereto, shall be governed by and construed under the
substantive laws of the State of California, as applied to Agreements executed
and performed entirely in the State of California by residents of the State of
California, without regard to conflicts of law rules and excluding the United
Nations Convention on Sale of Goods.
38.
<PAGE>
IN WITNESS WHEREOF, the PARTIES have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.
Palo Alto Leverkusen
Date: 5/2/96 Date: 14.05.1996
CVT Therapeutics, Inc. BAYER AG
/s/ Louis G. Lange /s/
[
]
39.
<PAGE>
Annex 1
[ ]
This protocol reviews the methodology for generating a novel cell line
capable of
[ ]
[
]
40.
<PAGE>
[ ]
41.
<PAGE>
[ ]
42.
<PAGE>
Annex 2
[ ]
43.
<PAGE>
LEASE AGREEMENT
THIS LEASE, made this 6th day of August, 1993 between MATADERO CREEK, a
sole proprietorship, hereinafter called Landlord, and C.V. THERAPEUTICS, INC., a
Delaware Corporation, hereinafter called Tenant.
WITNESSETH:
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the "Premises") outlined in red on Exhibit "A",
attached hereto and incorporated herein by this reference thereto more
particularly described as follows: Approximately 46,374 gross square feet
consisting of the second floor of Buildings A and B and the first floor of
Building B, collectively known as Matadero Creek and located at 3172 Porter
Drive, Palo Alto, County of Santa Clara, California.
As used herein the Complex shall mean and include all of the land outlined
in red and described in Exhibit "B", attached hereto, and all of the buildings,
improvements, fixtures and equipment now or hereafter situated on said land.
Landlord and/or Tenant Contractor as provided in paragraph 49 agrees to
construct such improvements as are set forth in paragraph 55.
Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
1. USE. Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations and ordinances for the purpose of general office,
bio-medical research and development, sales and other legal uses related thereto
as approved by the City of Palo Alto and Stanford University and for no other
purpose. Tenant shall not do or permit to be done in or about the Premises or
the Complex nor bring or keep or permit to be brought or kept in or about the
Premises or the Complex anything which is prohibited by or will in any way
increase the existing rate of (or otherwise affect) fire or any insurance
covering the Complex or any part thereof, or any of its contents, or will cause
cancellation of any insurance covering the Complex or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in, on or
about the Premises or the Complex which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Complex or injure or annoy
them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises or the Complex. No sale by auction
shall be permitted on the Premises. Tenant shall not place any loads upon the
floors, walls, or ceiling, which endanger the structure, or place any
1.
<PAGE>
harmful fluids or other materials in the drainage system of the building, or
overload existing electrical or other mechanical systems. No waste materials or
refuse shall be dumped upon or permitted to remain upon any part of the Premises
or outside of the building in which the Premises are a part, except in trash
containers placed inside exterior enclosures designated by Landlord for that
purpose or inside of the building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises or on any portion of common area of the Complex. No
loudspeaker or other device, system or apparatus which can be heard outside the
Premises shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises. Tenant shall indemnify, defend and hold Landlord harmless
against any loss, expense, damage, attorneys' fees, or liability arising out of
failure of Tenant to comply with any applicable law. Tenant shall comply with
any covenant, condition, or restriction ("CC&R's") affecting the Premises,
Landlord shall advise Tenant of CC&R's affecting the property if any exist. The
provisions of this paragraph are for the benefit of Landlord only and shall not
be construed to be for the benefit of any tenant or occupant of the Complex.
2. TERM.
The term of this Lease shall be for a period of eight years and two months
(8 yrs., 2 mo.) (unless sooner terminated as hereinafter provided) and, subject
to Paragraphs 2(B) and 3, shall commence on the 1st day of January, 1994 and end
on the 28th day of February, 2002.
3. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of said Premises to Tenant at the commencement of the said term, as
hereinbefore specified, this Lease shall not be void or voidable; no obligation
of Tenant shall be affected thereby; nor shall Landlord or Landlord's agents be
liable to Tenant for any loss or damage resulting therefrom; but in that event
the commencement and termination dates of the Lease, and all other dates
affected thereby shall be revised to conform to the date of Landlord's delivery
of possession, as specified in Paragraph 2(b), above. The above is, however,
subject to the provision that the period of delay of delivery of the Premises
shall not exceed 90 days from the commencement date herein (except those delays
caused by Acts of God, strikes, war utilities, governmental bodies, weather,
unavailable materials, and delays beyond Landlord's control shall be excluded in
calculating such period) in which instance Tenant, at its option, may, by
written notice to Landlord, terminate this Lease.
2.
<PAGE>
4. RENT.
A. BASIC RENT. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees except as Basic Rent for the leased Premises the total sum of
Six Million Four Hundred Sixty-Six Thousand Two Hundred Eighty-Nine Dollars and
Ten Cents ($6,466,289.10) Dollars in lawful money of the United States of
America, payable as follows: See paragraph 45 of the Addendum to Lease for the
schedule of monthly payments due.
B. TIME FOR PAYMENT. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30). In the event that the term of this Lease
for any reason ends on a date other than the last day of a calendar month, on
the first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).
C. LATE CHARGE. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rent as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten (10)
days. Said late charge shall equal ten (10%) percent of each rental payment so
in default.
D. ADDITIONAL RENT. Beginning with the commencement date of the term of
this Lease, Tenant shall pay to Landlord in addition to the Basic Rent and as
Additional Rent the following:
(1) Tenant's proportionate share of all utilities relating to the
Complex as set forth in Paragraph 11, and
(2) Tenant's proportionate share of all Taxes relating to the Complex
as set forth in Paragraph 12, and
(3) Tenant's proportionate share of all insurance premiums relating
to the Complex, as set forth in Paragraph 15, and
(4) Tenant's proportionate share of expenses for the operation,
management, maintenance and repair of the Building (including common areas of
the
3.
<PAGE>
Building) and Common Areas of the Complex in which the Premises are located
as set forth in Paragraph 7, and
(5) All charges, costs and expenses, which Tenant is required to pay
hereunder, together with all interest and penalties, costs and expenses
including attorneys' fees and legal expenses, that may accrue thereto in the
event of Tenant's failure to pay such amounts, and all damages, reasonable costs
and expenses which Landlord may incur by reason of default of Tenant or failure
on Tenant's part to comply with the terms of this Lease. In the event of
nonpayment by Tenant of Additional Rent, Landlord shall have all the rights and
remedies with respect thereto as Landlord has for nonpayment of rent.
Tenant shall pay to Landlord monthly, in advance, Tenant's prorata share of an
amount estimated by Landlord to be Landlord's approximate average monthly
expenditure for such Additional Rent items, which estimated amount shall be
reconciled at the end of each calendar year as compared to Landlord's actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord refunding to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of this
Lease) any amount of estimated payments made by Tenant in excess of Landlord's
actual expenditures for said Additional Rent items.
Tenant's payment for such Additional Rent as of the commencement of the
term of this lease shall be Sixteen Thousand Seven Hundred Dollars and 00/100
($16,700.00) Dollars per month. Any payments required to be made by Tenant for
Additional Rent shall be made by check or instrument separate from that check or
instrument used by Tenant to make any payments for Basic Rent, pursuant to
paragraph 4A.
The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
E. PLACE OF PAYMENT OF RENT AND ADDITIONAL RENT. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at 400 Lambert Avenue, Palo Alto, California
94306 or to such other person or to such other place as Landlord may from time
to time designate in writing.
F. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum of Seventy-Eight Thousand Eight
Hundred
4.
<PAGE>
Thirty-Five Dollars and 00/100 ($78,835.80) Dollars. Said sum shall be held by
Landlord as a Security Deposit for the faithful performance by Tenant of all of
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of rent and any of the monetary sums due herewith, Landlord may (but
shall not be required to) use, apply or retain all or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
Deposit is so sued or applied, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in the amount sufficient to restore
the Security Deposit to its original amount. Tenant's failure to do so shall be
a material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such Deposit. If Tenant full and faithfully performs
every provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or at Landlord's option, to the
last assignee of tenant's interest hereunder) at the expiration of the Lease
term and after Tenant has vacated the Premises. In the event of termination of
Landlord's interest in this Lease, Landlord shall transfer said Deposit to
Landlord's successor in interest whereupon Tenant agrees to release Landlord
from liability for the return of such Deposit or the accounting therefor.
5. RULES AND REGULATIONS AND COMMON AREA. Subject to the terms and conditions
of this Lease and such Rules and Regulations as Landlord may from time to time
prescribe, Tenant and Tenant's employees, invitees and customers shall, in
common with other occupants of the Complex in which the Premises are located,
and their respective employees, invitees and customers, and others entitled to
the use thereof, have the non-exclusive right to use the access roads, parking
areas, and facilities provided and designated by Landlord for the general use
and convenience of the occupants of the Complex in which the Premises are
located, which areas and facilities are referred to herein as "Common Area".
This right shall terminate upon the termination of this Lease. Landlord
reserves the right from time to time to make changes in the shape, size,
location, amount and extent of Common Area. Landlord further reserves the right
to promulgate such reasonable rules and regulations relating to the use of the
Common Area, and any part or parts thereof, as Landlord may deem appropriate for
the best interests of the occupants of the Complex. The Rules and Regulations
shall be binding upon Tenant upon delivery of a copy of them to Tenant, and
Tenant shall abide by them and cooperate in their observance. Such Rules and
Regulations may be amended by Landlord from time to time, with or without
advance notice, and all amendments shall be effective upon delivery of a copy to
Tenant. Landlord shall be responsible to Tenant for the non-performance by any
other tenant or occupant of the Complex of any said Rules and Regulations.
Landlord shall not reduce allocated number of parking spaces as shown in
paragraph 6 of the Lease.
5.
<PAGE>
Landlord shall operate, manage and maintain the Common Area. The manner in
which the Common Area shall be maintained and the expenditures for such
maintenance shall be at the discretion of Landlord and in accordance with
paragraph 7.
6. PARKING. Tenant shall have the right to use with other tenants or
occupants of the Complex 150 parking spaces in the common parking areas of the
Complex. Tenant agrees that Tenant, Tenant's employees, agents, representatives
and/or invitees shall not use parking spaces in excess of said 150 spaces
allocated to Tenant hereunder. Landlord shall have the right, at Landlord's
sole discretion, to specifically designate the location of Tenant's parking
spaces within the common parking areas of the Complex in the event of a dispute
among the tenants occupying the building and/or Complex referred to herein, in
which event Tenant agrees that Tenant, Tenant's employees, agents,
representatives and/or invitees shall not use any parking spaces other than
those parking spaces specifically designated by Landlord for Tenant's use. Said
parking spaces, if specifically designated by Landlord to Tenant, may be
relocated by Landlord at any time, and from time to time. Landlord reserves the
right, at Landlord's sole discretion, to rescind any specific designation of
parking spaces, thereby returning Tenant's parking spaces to the common parking
area. Landlord shall give Tenant written notice of any change in Tenant's
parking spaces. Tenant shall not, at any time, park, or permit to be parked,
any trucks or vehicles adjacent to the loading areas so as to interfere in any
way with the use of such areas, nor shall Tenant at any time park, or permit the
parking of Tenant's trucks or other vehicles or the trucks and vehicles of
Tenant's suppliers or others, in any portion of the common area not designated
by Landlord for such use by Tenant. Tenant shall not park nor permit to be
parked, any inoperative vehicles or equipment on any portion of the common
parking area or other common areas of the Complex. Tenant agrees to assume
responsibility for compliance by its employees with the parking provision
contained herein. If Tenant or its employees park in other than such designated
parking areas, then Landlord may charge Tenant, as an additional charge, and
Tenant agrees to pay, ten ($10.00) Dollars per day for each day or partial day
each such vehicle is parked in any area other than that designated. Tenant
hereby authorizes Landlord at Tenant's sole expense to tow away from the Complex
any vehicle belong to Tenant, Landlord may also, at Tenant's expense, tow
vehicles belonging to Tenant's employees parked in violation of these provisions
following appropriate notice parked in violation of these provisions, or to
attach violation stickers or notices to such vehicles. Tenant shall use the
parking areas for vehicle parking only, and shall not use the parking areas for
storage. Landlord shall maintain adequate visitor parking adjacent to the main
entrance lobby to the Premises.
7. EXPENSES OF OPERATION, MANAGEMENT AND MAINTENANCE OF THE COMMON AREAS OF
THE COMPLEX, PREMISES AND BUILDING IN WHICH THE PREMISES ARE LOCATED. As
Additional Rent and in accordance with Paragraph 4 D of this Lease, Tenant shall
pay to Landlord Tenant's proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of all expenses or
6.
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operation, management, maintenance and repair of the Common Areas of the Complex
including, but not limited to, license, permit and inspection fees; security;
utility charges associated with exterior landscaping and lighting (including
water and sewer charges); all charges incurred in the maintenance of landscaped
areas, lakes, parking lots, sidewalks, driveways; maintenance, repair and
replacement of all fixtures and electrical, mechanical and plumbing systems;
structural elements and exterior surfaces of the buildings; salaries and
employee benefits of personnel and payroll taxes applicable thereto; supplies,
materials, equipment and tools; the cost of capital expenditures which have the
effect of reducing operating expenses, provided, however, that in the event
Landlord makes such capital improvements, Landlord may amortize its investment
in said improvements (together with interest at the rate of fifteen (15%)
percent per annum on the unamortized balance) as an operating expense in
accordance with standard accounting practices, provided, that such amortization
is not at a rate grater than the anticipated savings in the operating expenses.
As Additional Rent and in accordance with paragraph 4 D of this Lease,
Tenant shall pay its proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of the cost of operation
(including common utilities), management, maintenance and repair of the Premises
and the building (including common areas such as lobbies, restrooms, janitor's
closets, hallways, elevators, mechanical and telephone rooms, stairwells,
entrances, spaces above the ceilings) in which the Premises are located. The
maintenance items herein referred to include, but are not limited to,
janitorization, electrical systems (such as outlets, lighting fixtures, lamps,
bulbs, tubes, ballasts), heating and airconditioning controls (such as mixing
boxes, thermostats, time clocks, supply and return grills), all interior
improvements within the Premises including but not limited to: wall coverings,
window coverings, acoustical ceilings, vinyl tile, carpeting, partitioning,
doors (both interior and exterior, including closing mechanisms, latches,
locks), and all other interior improvements of any nature whatsoever, all
windows, window frames, plate glass, glazing, truck doors, main plumbing systems
of the building (such as water and drain lines, sinks, toilets, faucets, drains,
showers and water fountains), main electrical systems (such as panels and
conduits), heating and airconditioning systems (such as compressors, fans, air
handlers, ducts, boilers, heaters), store fronts, roofs, downspouts, building
common area interior (such as wall coverings, window coverings, floor coverings
and partitioning), ceilings, building exterior doors, skylights (if any),
automatic fire extinguishing systems and elevators; license, permit, and
inspection fees; security; salaries and employee benefits of personnel and
payroll taxes applicable thereto; supplies, materials, equipment and tools; the
cost of capital expenditures which have the effect of reducing operating
expenses, provided, however, that in the event Landlord makes such capital
improvements, Landlord may amortize its investment in said improvements
(together with interest at the rate of fifteen (15%) percent per annum on the
unamortized balance) as an operating
7.
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expense in accordance with standard accounting practices, provided, that such
amortization is not at a rate greater than the anticipated savings in the
operating expenses. Tenant hereby waives all rights under, and benefits of,
subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil
Code and under any similar law, statute or ordinance now or hereafter in effect.
Tenant agrees to provide carpet shields under all rolling chairs or to otherwise
be responsible for wear and tear of the carpet caused by such rolling chairs if
such wear and tear exceeds that caused by normal foot traffic in surrounding
areas. Areas of excessive wear shall be replaced at Tenant's sole expense upon
Lease termination.
"Additional Rent" as used herein shall not include Landlord's debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partitioning or any other tenant improvements; cost of attracting tenants;
depreciation; interest, or executive salaries.
Landlord agrees to provide five-day janitorial service for the lease
Premises and to maintain the Complex in a first-class manner.
8. ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire or normal
wear and tear excepted), with all interior walls painted, or cleaned so that
they appear freshly painted, and repaired and replaced, if damages; all floors
cleaned and waxed; all carpets cleaned and shampooed; the airconditioning and
heating equipment serviced by a reputable and licensed service firm and in good
operating condition (provided the maintenance of such equipment has been
Tenant's responsibility during the term of this Lease) together with all
alterations, additions and improvements which may have been made in, to, or on
the Premises (except movable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within thirty (30) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration as
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant's sole cost and expense. Tenant, on or before the end
of the term or sooner termination of this Lease, shall remove all of Tenant's
personal property and trade fixtures from the Premises, and all property not so
removed on or before the end of the term or sooner termination of this Lease
shall be
8.
<PAGE>
deemed abandoned by Tenant and title to same shall thereupon pass to Landlord
without compensation to Tenant, Landlord may, upon termination of this Lease,
remove all moveable furniture and equipment so abandoned by Tenant, at Tenant's
sole cost, and repair any damage caused by such removal at Tenant's sole cost.
If the Premises be not surrendered at the end of the term or sooner termination
of this Lease, Tenant shall indemnify Landlord against loss or liability
resulting from the delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay. Nothing contained herein shall be construed as an extension of the term
hereof or as a consent of Landlord to any holding over by Tenant. The voluntary
or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies. This paragraph 8 shall be subject to the provisions of paragraph
48 and 55.
9. ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises, or any part thereof, without the
written consent of Landlord first had and obtained by Tenant, but at the cost of
Tenant, and any addition to, or alteration of, the Premises, except moveable
furniture and trade fixtures, shall at once become a part of the Premises and
belong to Landlord. If Landlord consents to the making of any alteration,
addition, or improvement to or of the Premises by Tenant, the same shall be made
by Landlord at Tenant's sole cost and expense. Any modification to the building
or building systems required by governmental code or otherwise as a result of
Tenant's alterations, additions or improvements shall be made at Tenant's sole
cost and expense. Tenant shall retain title to all moveable furniture and trade
fixtures placed in the premises. All heating, lighting, electrical,
airconditioning, partitioning, drapery, carpeting and floor installations made
by Tenant, together with all property that has become an integral part of the
Premises, shall not be deemed trade fixtures. Tenant agrees that it will not
proceed to make any alterations or additions, without having obtained consent
from Landlord to do so, and until five (5) days from the receipt of such
consent, in order that Landlord may post appropriate notices to avoid any
liability to contractors or material suppliers for payment for Tenant's
improvements. Tenant will at all times permit such notices to be posted and to
remain posted until the completion of work. Tenant shall, if required by
Landlord, secure at Tenant's own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for such work. Tenant further
covenants and agrees that any mechanic's lien filed against the Premises or
against the Complex for work claimed to have been done for, or materials claimed
to have been furnished to Tenant, will be discharged by Tenant, by bond or
otherwise, within the (10) days after the filing thereof, at the cost and
expense of Tenant. Any exceptions to the foregoing must be made in writing and
executed by both Landlord and Tenant. This paragraph 9 shall be subject to the
provisions of paragraph 55.
9.
<PAGE>
10. BUILDING PLANNING. In the event Landlord requires the Premises for use in
conjunction with another suite or for other reasons connected with the building
planning program, Landlord, upon notifying Tenant in writing, shall have the
right to move Tenant to space in the Complex of which the Premises form a part,
at Landlord's sole cost and expense, and the terms and conditions of the
original lease shall remain in full force and effect, save and excepting that
the Premises shall be in a new location. However, if the new space does not
meet with Tenant's approval, Tenant shall have the right to cancel said Lease
upon giving Landlord thirty (30) days written notice within ten (10) days of
receipt of Landlord's notification.
11. UTILITIES OF THE BUILDING, IN WHICH THE PREMISES ARE LOCATED. As
Additional Rent and in accordance with paragraph 4 D of this lease, Tenant shall
pay its proportionate share (calculated on a square footage or other equitable
basis as calculated by Landlord) or the cost of all utility charges such as
water, gas, electricity, telephone, telex and other electronic communications
service, sewer service, waste pick up and any other utilities, materials or
services furnished directly to the building in which the Premises are located,
including, without limitation, any temporary or permanent utility surcharge of
other exactions whether or not hereinafter imposed.
Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, strikes, lockouts or other labor disturbances or
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
Provided that Tenant is not in default in the performance or observance of
any of the terms, covenants or conditions of this case to be performed or
observed by it, Landlord shall furnish to the Premises between the hours of 8:00
AM and 6:00 PM, Mondays through Fridays (holidays excepted) and subject to the
rules and regulations of the Complex hereinbefore referred to, reasonable
quantities of water, gas and electricity suitable for the intended use of the
Premises and heat and regulations of the Complex hereinbefore referred to,
reasonable quantities of water, gas and electricity suitable fore the intended
use of the Premises and heat and air conditioning required in Landlord's
judgment for the comfortable use and occupation of the Premises for such
purposes. Tenant agrees that at all times it will cooperate fully with Landlord
and abide by all regulations and requirements that Landlord may prescribe for
the proper functioning and protection of the building cooperate fully with
Landlord and abide by all regulations and requirements that Landlord may
prescribe for the proper functioning and protection of the building heating,
ventilating and air conditioning systems. Whenever heat generating machines,
equipment, or any other devices (including exhaust fans) are used in the
Premises by Tenant which affect the temperature or otherwise maintained by the
air conditioning system, Landlord shall have the right to install supplementary
air
10.
<PAGE>
conditioning units in the Premises and the costs thereof, including the cost of
installation and the cost of operation and maintenance thereof, shall be paid by
Tenant to Landlord upon demand by Landlord. Tenant will not, without the
written consent of Landlord, use any apparatus or device in the Premises
(including, without limitation), electronic data processing machines or machines
using current in excess of 110 Volts which will in any way increase the amount
of electricity, gas, water or air conditioning usually furnished or supplied to
premises being used as general office space, or connect with electric current
(except through existing electrical outlets in the Premises), or with gas or
water pipes any apparatus or device for the purposes of using electronic
current, gas or water. if Tenant shall require water, gas or electric current
in excess of that usually furnished or supplied to premises being used as
general office space, Tenant shall first obtain the written consent of Landlord,
which consent shall not be unreasonably withheld and Landlord may cause an
electric current, gas or water meter to be installed in the Premises in order to
measure the amount of electric current, gas or water consumed for such excess
use. The cost of any such meter and the installation, maintenance and repair
thereof, all charges for such excess water, gas and electric current consumed
(as shown by such meters and at the rates then charges by the furnishing public
utility); and any additional expense incurred by Landlord in keeping account of
electric current, gas or water so consumed shall be paid by Tenant, and Tenant
agrees to pay Landlord therefor promptly upon demand by Landlord.
12. TAXES.
A. As Additional Rent and in accordance with Paragraph 4 D of this Lease,
Tenant shall pay to Landlord Tenant's proportionate share of all Real Property
Taxes, which pro rata share shall be allocated to the leased Premises by square
footage or other equitable basis, as calculated by Landlord. The term "Real
Property Taxes", as used herein, shall mean (i) all taxes, assessments, levies
and other charges of any kind or nature whatsoever, general and special,
foreseen and unforeseen (including all installments of principal and interest
required to pay any general or special assessments for public improvements now
or hereafter imposed by any governmental or quasi-governmental authority or
special district having the direct or indirect power to tax or levy assessments,
which are levied or assessed against, or with respect to the value, occupancy or
use of, all or any portion of the Complex (as now constructed or as may at any
time hereafter be constructed, altered, or otherwise changed) or Landlord's
interest therein; any improvements located within the Complex (regardless of
ownership); the fixtures, equipment and other property of Landlord, real or
personal, that are an integral part of and located in the Complex; or parking
areas, public utilities, or energy within the Complex; (ii) all charges, levies
or fees imposed by reason of environmental regulation or other governmental
control of the Complex; and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If at any time during the
11.
<PAGE>
term of this Lease the taxation or assessment of the Complex prevailing as of
the commencement date of this Lease shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Complex or
Landlord's interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Complex, on Landlord's business of leasing the Complex, or
computed in any manner with respect to the operation of the Complex, then any
such tax or charge, however, implemented, shall be included within the meaning
of the term "Real Property Taxes" for purposes of this Lease. If any Real
Property Tax is based upon property or rents unrelated to the Complex, then only
that part of such Real Property Tax that is fairly allocable to the Complex
shall be included within the meaning of the term "Real Property Taxes".
Notwithstanding the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, gift or franchise taxes of Landlord or the federal or state
net income tax imposed on Landlord's income from all sources. Tenant shall not
be held liable for increases in Real Property Taxes due solely to a change of
ownership of the premises or complex during the original lease term.
B. TAXES ON TENANT'S PROPERTY
(1) Tenant shall be liable for and shall pay ten days before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, but only under proper protest if requested by Tenant, Tenant shall upon
demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event Tenant shall have the right, in the
name of Landlord and with Landlord's full cooperation, to bring suit in any
court of competent jurisdiction to recover the amount of any such taxes so paid
under protest, and any amount so recovered shall belong to Tenant.
(2) If the Tenant improvements in the Premises, whether installed,
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for Real Property Tax
purposes a valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed, then the Real Property
Taxes and assessments levied against Landlord or the Complex by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the
12.
<PAGE>
provisions of 12A(i), above. If the records of the County Assessor are
available and sufficiently detailed to serve as a basis for determining whether
said Tenant improvements are assessed at a higher valuation than standard office
improvements in other space in the Complex, such records shall be binding on
both the Landlord and the Tenant. If the records of the County Assessor are not
available or sufficiently detailed to serve as a basis for making said
determination, the actual cost of construction shall be used.
13. LIABILITY INSURANCE. Tenant, at Tenant's expense, agrees to keep in force
during the term of this lease a policy of comprehensive public liability
insurance with limits in the amount of $500,000/$1,000,000 for injuries to or
death of persons occurring in, on or about the Premises or the Complex, and
property damage insurance with limits of $500,000. The policy or policies
affecting such insurance, certificates of which shall be furnished to Landlord,
shall name Landlord as additional insureds, and shall insure any liability of
Landlord, contingent or otherwise, as respects acts or omissions of Tenant, its
agents, employees or invitees or otherwise by any conduct or transaction of any
of said persons in or about or concerning the Premises, including any failure of
Tenant to observe or perform any of its obligations hereunder; shall be issued
by an insurance company admitted to transact business in the State of
California; and shall provide that the insurance effected thereby shall not be
canceled, except upon thirty (30) days' prior written notice to Landlord. If,
during the term of this Lease, in the considered opinion of Landlord's Lender,
insurance advisor or counsel, the amount of insurance described in this
paragraph 13 is not adequate, Tenant agrees to increase said coverage to such
reasonable amount as Landlord's Lender, insurance advisor or counsel shall deem
adequate.
14. TENANT'S PERSONAL PROPERTY INSURANCE AND WORKER'S COMPENSATION INSURANCE.
Tenant shall maintain a policy or policies of fire and property damage insurance
in "all risk" form with a sprinkler leakage endorsement insuring the personal
property, inventory, trade fixtures and leasehold improvements within the leased
Premises for the full replacement value thereof. The proceeds from any of such
policies shall be used for the repair or replacement of such items so insured.
Tenant shall also maintain a policy or policies of worker's compensation
insurance and any other employee benefit insurance sufficient to comply with all
laws.
15. PROPERTY INSURANCE. Landlord shall purchase and keep in force and, as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord Tenant's proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of the cost of policy or
policies of insurance covering loss or damage to the Premises and Complex in the
amount of the full replacement value thereof, providing protection against those
perils included within the classification of "all
13.
<PAGE>
risks" insurance and flood and/or earthquake insurance, if available, plus a
policy of rental income insurance in the amount of one hundred (100%) percent of
twelve (12) months Basic Rent, plus sums paid as Additional Rent. If such
insurance cost is increased due to Tenant's use of the Premises or the Complex,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for the Complex.
Landlord and Tenant do each hereby respectively release the other, to the
extent of insurance coverage of the releasing party, from any liability for loss
or damage caused by fire or any of the extended coverage casualties included in
the releasing party's insurance policies, irrespective of the cause of such fire
and casualty; provided, however, that if the insurance policy of either
releasing party prohibits such waiver, then this waiver shall not take effect
until consent to such waiver is obtained. If such waiver is so prohibited, the
insured party affected shall promptly notify the other party thereof.
16. INDEMNIFICATION. Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury to or death of any person or
damage to or destruction of property in or about the Premises or the Complex by
or from any cause whatsoever, including, without limitation, gas, heat, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises or the Complex but excluding, however, the negligence of
Landlord, as agents, servants, employees, invitees, or contractors of which
negligence Landlord has knowledge and reasonable time to correct. Except as to
injury to person or damage to property the principal cause of which is the
negligence of Landlord, Tenant shall hold Landlord harmless from and defend
Landlord against any and all expenses, including reasonable attorneys' fees, in
connection therewith, arising out of any injury to or death of any person or
damage to or destruction of property occurring in, on or about the Premises, or
any part thereof, from any cause whatsoever.
17. COMPLIANCE. Tenant, as its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, except as provided
in paragraph 55 regulations or requirements now or hereafter in effect; with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted; and with any direction or occupancy certificate issued
pursuant to law by any public officer; provided, however, that no such failure
shall be deemed a breach of the provisions if Tenant, immediately upon
notification, commences to remedy or rectify said failure. The judgment of any
court of competent jurisdiction or the admission of Tenant in any action against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such law, statute, ordinance or governmental rule, regulation, requirement,
direction or provision, shall be conclusive of that fact as between Landlord and
Tenant. This paragraph shall not be interpreted as requiring Tenant to make
structural changes or improvements, except to the extent such changes or
improvements are required as a result
14.
<PAGE>
of Tenant's use of the Premises. Tenant shall, at its sole cost and expense,
comply with any and all requirements pertaining to said Premises, of any
insurance organization or company, necessary for the maintenance of reasonable
fire and public liability insurance covering the Premises.
18. LIENS. Tenant shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligation incurred by
Tenant. In the event that Tenant shall not, within ten (10) days following the
imposition of such lien, cause the same to be released of record, Landlord shall
have, in addition to all other remedies provided herein and by law, the right,
but no obligation, to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All sums
paid by Landlord for such purpose, and all expenses incurred by it in connection
therewith, shall be payable to Landlord by Tenant on demand with interest at the
prime rate of interest as quoted by the Bank of America.
19. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, transfer or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord which consent will not be unreasonably withheld. Tenant
agrees to pay to Landlord, as additional rent, 50% of all rents or additional
consideration received by Tenant from its assignees, transferees or subtenants
in excess of the rent payable by Tenant to Landlord hereunder and after Tenant
has recovered the cost of reasonable leasing commission and tenant improvement
costs specific to and required for the subletting or assignment in question.
Tenant shall, by one hundred twenty (120) days' written notice, advise Landlord
of its intent to assign or transfer Tenant's interest in the Lease or sublet the
Premises or any portion thereof for any part of the term hereof. In the event
Tenant is allowed to assign, transfer or sublet the whole or any part of the
Premises, with the prior written consent of Landlord, no assignee, transferee or
subtenant shall assign or transfer this Lease, either in whole or in part, or
sublet the whole or any part of the Premises, without also having obtained the
prior written consent of Landlord. A consent of Landlord to one assignment,
transfer, hypothecation, subletting, occupation or use by any other person shall
not release Tenant from any of Tenant's obligations hereunder or be deemed to be
a consent to any subsequent similar or dissimilar assignment, transfer,
hypothecation, subletting, occupation or use by any other person. Any such
assignment, transfer, hypothecation, subletting, occupation or use without such
consent shall be void and shall constitute a breach of this Lease by Tenant and
shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor
shall any interest therein, be assignable for any purpose by operation of law
without the written consent of Landlord. As a condition to its consent,
Landlord may require Tenant to pay all expenses in connection with the
assignment, and Landlord may require
15.
<PAGE>
Tenant's assignee or transferee (or other assignees or transferees) to assume in
writing all of the obligations under this Lease and for Tenant to remain liable
to Landlord under the Lease.
20. SUBORDINATION AND MORTGAGES. In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as "Lender") to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender's deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Tenant hereby irrevocably appoints Landlord the attorney in fact of
Tenant to execute, deliver and record any such instrument or instruments for and
in the name and on behalf of Tenant. Notwithstanding any such subordination,
Tenant's possession under this Lease shall not be disturbed if Tenant is not in
default and so long as Tenant shall pay all rent and observe and perform all of
the provisions set forth in this Lease. Tenant agrees to send to any mortgagees
and/or deed of trust holders, by registered mail, a copy of any notice of
default served by Tenant upon the Landlord, provided that prior to such notice,
Tenant has been notified, in writing (by way of notice of assignment of rents or
otherwise) of the addresses of such mortgagees and/or deed of trust holders.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, any such mortgagees and/or deed of
trust holders shall have an additional thirty (30) days within which to cure
such default, or if such default is not reasonably susceptible of cure within
that time, then such additional time as may be reasonably necessary if within
such (30) days, any mortgagee and/or deed of trust holder has commenced and is
diligently pursuing the remedies necessary to cure such default, (including but
not limited to commencement of foreclosure proceedings), in which event this
Lease shall not be terminated when such remedies are being diligently pursued.
Landlord warrants that Lender's deed of trust shall be subordinate to the rights
of Tenant under this Lease.
21. ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable times
have, the right to enter the Premises to inspect them; to perform any services
to be provided by Landlord hereunder; to submit the Premises to prospective
purchasers, mortgagers or tenants; to post notices of nonresponsibility; and to
alter, improve or repair the Premises and any portion of the Complex, all
without abatement of rent; and may erect scaffolding and other necessary
structures in or through the Premises where reasonably required by the character
of the work to be performed; provided, however, that the business of Tenant
shall be interfered with to the least extent that is reasonably practical. For
each of the foregoing purposes, Landlord shall at all times have and retain a
key with which to unlock all of the doors in an emergency in order to obtain
entry to the Premises, and any entry to the Premises obtained by Landlord by any
of said means, or otherwise, shall not under
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any circumstances be construed or deemed to be a forcible or unlawful entry into
or a detainer of the Premises or an eviction, actual or constructive, of Tenant
form the Premises or any portion thereof. Landlord shall also have the right at
any time to change the arrangement or location of entrances or passageways,
doors and doorways, and corridors, elevators, stairs, toilets or other public
parts of the Complex and to change the name, number or designation by which the
Complex is commonly known, and none of the foregoing shall be deemed an actual
or constructive eviction of Tenant, or shall entitle Tenant to any reduction of
rent hereunder. Landlord shall give Tenant 24 hour notice of Landlord performed
construction or other activity which would disturb Tenant's laboratories or
otherwise significantly interrupt Tenant's business.
22. BANKRUPTCY AND DEFAULT. The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord's option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy, liquidation, reorganization, insolvency
or similar action elects to reject Tenant's unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty (30)
days after an order for relief in a liquidation action or within thirty (30)
days after the commencement of any action.
Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold
estate under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.
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The failure to perform or honor any covenant, condition or representation
made under this Lease shall constitute a default hereunder by Tenant upon
expiration of the appropriate grace period hereinafter provided. Tenant shall
have a period of five (5) days from the date of written notice from Landlord
within which to cure any default in the payment of rental or adjustment thereto.
Tenant shall have a period of ten (10) days from the date of written notice from
Landlord within which to cure any other default under this Lease, where Tenant's
default concerns a non-monetary issue requiring more than 10 days to cure, then
Tenant shall not be in default if Tenant commences performance within such 10
day period and thereafter diligently prosecutes the same to completion. Upon an
uncured default of this Lease, Landlord shall have the following rights and
remedies in addition to any other rights or remedies available to Landlord at
law or in equity:
a. The rights and remedies provided for by California Civil
Code Section 1951.2, including but not limited to, recovery of the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves would be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2. Any proof by Tenant under subparagraphs
(2) and (3) of Section 1951.2 of the California Civil Code of the amount of
rental loss that could be reasonably avoided shall be made in the following
manner: Landlord and Tenant shall each select a licensed real estate broker in
the business of renting property of the same type and use as the Premises and in
the same geographic vicinity. Such two real estate brokers shall select a third
licensed real estate broker, and the three licensed real estate brokers so
selected shall determine the amount of the rental loss that could be reasonably
avoided from the balance of the term of this Lease after the time of award. The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto.
b. The rights and remedies provided by California Civil Code
which allows Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant's right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord's initiative to protect its
interest under this Lease shall not constitute a termination of Tenant's right
to possession.
c. The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law.
d. The right and power, as attorney in fact for Tenant, to
enter the Premises and remove therefrom all persons and property, to store such
property in a public warehouse or elsewhere at the cost of and for the account
of Tenant and to sell such property and apply such proceeds therefrom pursuant
to applicable California law.
18.
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Landlord, as attorney-in-fact for Tenant, may from time to time sublet the
Premises or any part thereof for such term or terms (which may extend beyond the
term of this Lease) and at such rent and such other terms as Landlord in its
sole discretion may deem advisable, with the right to make alterations and
repairs to the Premises. Upon each subletting, (i) Tenant shall be immediately
liable to pay Landlord, in addition to indebtedness other than rent due
hereunder, the cost of such subletting, including, but not limited to,
reasonable attorneys' fees, and any real estate commissions actually paid, and
the cost of such alterations and repairs incurred by Landlord and the amount, if
any, by which the rent hereunder for the period of such subletting (to the
extent such period does not exceed the term hereof) exceeds the amount to be
paid as rent for the Premises for such period or (ii) at the option of Landlord,
rents received from such subletting shall be applied first to payment of
indebtedness other than rent due to unpaid hereunder; from Tenant to Landlord;
second, to the payment of any costs of such subletting and of such alterations
and repairs; third to payment of rent due to unpaid hereunder; and the residue,
if any, shall be held by Landlord and applied in payment of future rent as the
same becomes due hereunder. If Tenant has been credited with any rent to be
received by such subletting under option (i) and such rent shall not be promptly
paid to Landlord by the subtenant(s), or if such rentals received from such
subletting under option (ii) during any month be less than that to be paid
during that month by Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. For all
purposes set forth in this subparagraph (d), Landlord is hereby irrevocably
appointed attorney-in-fact for Tenant, with power of substitution. No taking
possession of the Premises by Landlord, as attorney in fact for Tenant, shall be
construed as an election on its part to terminate this Lease uncles a written
notice of such intention be given to Tenant. Notwithstanding any such
subletting without termination, Landlord may at any time hereafter elect to
terminate this Lease for such previous breach.
e. The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord as attorney-in fact for Tenant pursuant to subparagraph (d)
above.
23. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by the process of law, or otherwise, any
personal property belonging to Tenant and left on the Premises shall be deemed
to be abandoned at the option of Landlord, except such property as may be
mortgaged to Landlord. Notwithstanding this paragraph 23, Tenant may
temporarily vacate the Premises if all payments, maintenance, and other Lease
obligations continue to be met.
24. DESTRUCTION. In the event the Premises are destroyed in whole or in part
from any cause, Landlord may, at its option:
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a. Rebuild or restore the Premises to their condition prior to
the damage or destruction, or
b. Terminate this Lease if the building is more than 33%
destroyed.
If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent
while such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises.
If Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargoes, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or subcontractors, or delay of the contractors or
subcontractors due to such causes or other contingencies beyond the control of
Landlord), then Tenant shall have the right to terminate this Lease by giving
fifteen (15) days prior written notice to Landlord. Notwithstanding anything
herein to the contrary, Landlord's obligation to rebuild or restore shall be
limited to the building and interior improvements constructed by Landlord as
they existed as of the commencement date of the Lease and shall not include
restoration of Tenant's trade fixtures, equipment, merchandise or any
improvements, alterations or additions made by Tenant to the Premises, which
Tenant shall forthwith replace or fully repair at Tenant's sole cost and expense
provide this Lease is not cancelled according to the provisions above.
Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4 of
the California Civil Code.
In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay the deductible portion of Landlord's insurance
proceeds. (continued in paragraph 57)
25. EMINENT DOMAIN. If all or any part of the Premises shall be taken by any
public of quasi-public authority under the power of eminent domain or conveyance
in lieu
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thereof, this Lease shall terminate as to any portion of the Premises so taken
or conveyed on the date when title vests in the condemnor, and Landlord shall be
entitled to any and all payment, income, rent, award or any interest therein
whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.
If (i) any action or proceeding is commenced for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of condemnation of its intention to condemn
the Premises or any portion thereof, or (ii) any of the foregoing events occur
with respect to the taking of any space in the Complex not leased hereby, or if
any such spaces so taken or conveyed in lieu of such taking and Landlord shall
decide to discontinue the use and operation of the Complex, or decide to
demolish, alter or rebuild the Complex, then, in any of such events Landlord
shall have the right to terminate this Lease by giving Tenant written notice
thereof within sixty (60) days of the date of receipt of said written advice, or
commencement of said action or proceeding, or taking conveyance, which
termination shall take place as of the first to occur of the last day of the
calendar month next following the month in which such notice is given or the
date on which title to the Premises shall vest in the condemnor.
In the event of such a partial taking of conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking of conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking.
26. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance of
the Complex or any interest therein, by any owner of the reversion then
constituting Landlord, the transferor shall thereby be released from any further
liability upon any of
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the terms, covenants or conditions (express or implied) herein contained in
favor of Tenant, and in such event, insofar as such transfer is concerned.
Tenant agrees to look solely to the responsibility of the successor in interest
of such transferor in and to the Complex and this Lease. This Lease shall not
be affected by any such sale or conveyance, and Tenant agrees to attorn to the
successor in interest of such transferor.
27. ATTORNMENT TO LENDER OR THIRD PARTY. In the event of Landlord in the land
and buildings in which the leased Premises are located (whether such interest of
Landlord is a fee title interest or a leasehold interest) is encumbered by deed
of trust, and such interest is acquired by the lender or any third party through
judicial foreclosure or by exercise of a power of sale at private trustee's
foreclosure sale, Tenant hereby agrees to attorn to the purchaser at any such
foreclosure sale and to recognize such purchaser as the Landlord under this
Lease. In the event the lien of the deed of trust securing the loan from a
Lender to Landlord is prior and paramount to the lease, this Lease shall
nonetheless continue in full force and effect for the remainder of the unexpired
term hereof, at the same rental herein reserved and upon all the other terms,
conditions and covenants herein contained.
28. HOLDING OVER. Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered by Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in the Lease. Any holding over after the expiration or other termination of the
term of this lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month on the same terms and conditions herein specified
insofar as applicable except that the monthly basic Rent shall be increased to
an amount equal to one hundred fifty (150) percent of the monthly Basic Rent
required during the last month of the lease term.
29. CERTIFICATE OF ESTOPPEL. Tenant shall at any time upon not less than ten
(10) days' prior written notice from Landlord execute, acknowledge and deliver
to Landlord a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledgement that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any, are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrances of the Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and effect, without modification
exception as may be represented by Landlord; that there are no uncured defaults
in Landlord's performance; and that not m roe than one month's rent has been
paid in advance.
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30. CONSTRUCTION CHANGES. It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord's architect determines to
be desirable in the course of construction of the Premises, and no such changes,
or any changes in plans for any other portions of the Complex shall affect this
Lease or entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant. Landlord does not guarantee the accuracy of
any drawings supplied to Tenant and verification of the accuracy of such
drawings rests with Tenants.
31. RIGHT OF LANDLORD TO PERFORM. All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant and Tenant's sole costs and expense and without any reduction of rent.
If Tenant shall fail to pay any sum of money, or other rent, required to be paid
by it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord, Landlord, without waiving or releasing
Tenant form any obligation of Tenant hereunder, may, but shall not be obligated
to, make any such payment or perform any such other term or convent on Tenant's
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of American from the date
of such payment of performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in case of failure by Tenant in
the payment of rent hereunder.
32. ATTORNEYS' FEE
A. In the event that Landlord should bring suit for the possession of the
Premises, for the recovery of any sum due under this Lease, or because of the
breach of any provision of this Lease, or for any other relief against Tenant
hereunder, then all costs and expenses, including reasonable attorneys' fees,
incurred by the prevailing party therein shall be paid by the other party, which
obligation on the part of the other party shall be deemed to have accrued on the
date of the commencement of such action and shall be enforceable whether or not
the action is prosecuted to judgment.
B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder, Tenant
shall pay to Landlord its reasonable costs and expenses incurred in such suit,
including a reasonably attorney's fee. Should Tenant be named as a defendant in
any suit brought against Landlord arising out of Landlord's ownership or
operation of the Complex,
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Landlord shall pay to Tenant Tenant's reasonable costs and expenses incurred in
such suit, including a reasonable attorney's fee.
33. WAIVER. The waiver by either party of the other party's failure to perform
or observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent failure of the party failing to
perform or observe the same or any other such term, covenant or condition
therein contained, and no custom or practice which may develop between the
parties hereto during the term hereof shall be deemed a waiver of, or in any way
affect, the right of either party to insist upon performance and observance by
the other party in strict accordance with the terms hereof.
34. NOTICES. All notices, demands, requests, advices or designations which may
be or are required to be given by either party to the other hereunder shall be
in writing. All notices, demands, requests, advices or designations by Landlord
to Tenant shall be sufficiently given, made or delivered if personally served on
Tenant by leaving the same at the Premises or if sent by United States certified
or registered mail, postage prepaid, addressed to Tenant at the Premises. All
notices, demands, requests, advices or designations by Tenant to landlord shall
be sent by United States certified or registered mail, postage prepaid,
addressed to Landlord at its offices at 400 Lambert Avenue, Palo Alto,
California 94306. Each notice, request, demand, advice or designation referred
to in this paragraph shall be deemed received on the date of the personal
service or mailing thereof in the manner herein provided, as the case may be.
Prior to March 1, 1994, Tenant's address for notice as requested in paragraph 34
shall be 1615 Plymouth Street, Mountain View, California 94043.
35. EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant. Landlord and Tenant mutually intend
that neither shall have any binding contractual obligations to the other with
respect to the matters referred to herein unless and until this instrument has a
been fully executed by both parties.
36. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event earlier than thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have heretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord's obligations is such that
more than thirty (30 days are required for performance, then Landlord shall not
be in default if Landlord commences performances with such thirty (30 day period
and thereafter diligently prosecutes the same to completion.
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37. CORPORATE AUTHORITY. If Tenant is a corporation (or a partnership) each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said corporation (or partnership) in accordance with the by-
laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or partnership)
in accordance with its terms. If Tenant is a corporation, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease.
38. [DELETED.]
39. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord
and Landlord's assets;
(ii) no partner of Landlord shall be sued or named as a
party in any suit or action (except as may be necessary to secure jurisdiction
of the partnership);
(iii) no service of process shall be made against any
partner of Landlord (except as may be necessary to secure jurisdiction of the
partnership);
(iv) no partner of Landlord shall be required to answer or
otherwise plead to any service of process;
(v) no judgment shall be taken against any partner of
Landlord;
(vi) any judgment taken against any partner of Landlord may
be vacated and set aside at any time without hearing;
(vii) no writ of execution will ever be levied against
the assets of any partner of Landlord;
(viii) these covenants and agreements are enforceable
both by Landlord and also by any partner of Landlord.
(ix) the term, "Landlord," as used in this section, shall
mean only the owner or owners from the time of the fee title or the tenant's
interest under a ground lease of the land described in Exhibit "B," and in the
event of any transfer of
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such title or interest, Landlord herein named (and in case of any subsequent
transfers the then grantor) shall be relieved from and after the date of such
transfer of all liability as respects Landlord's obligations thereafter to be
performed, provided that any funds in the hands of Landlord or the then grantor
at the time of such transfer, in which Tenant has an interest, shall be
delivered to the grantee. Similarly, the obligations contained in this Lease to
be performed by Landlord shall be binding on Landlord's successors and assigns
only during their respective periods of ownership. Tenants agree that each of
the foregoing covenants and agreements shall be applicable to any covenant or
agreement either expressly contained in this Lease or imposed by statute or at
common law.
40. BROKERS. Tenant warrants that it had dealing with only the following real
estate brokers or agents in connection with the negotiation of this Lease:
Cornish & Carey Commercial and that it knows of no other real estate broker or
agent who is entitled to a commission in connection with this Lease.
41. SIGNS. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any art of the outside of the
Premises or any exterior windows of the Premises without the written consent of
Landlord first had and obtained and Landlord shall have the right to remove any
such sign, placard, picture, advertisement, name or notice without notice to and
at the expense of Tenant. If Tenant is allowed to print or affix or in any way
place a sign in, on, or about the Premises, then upon expiration or other sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved of by
Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
42. FINANCIAL STATEMENTS. In the event Tenant tenders to Landlord any
information on the financial stability, creditworthiness or ability of the
Tenant to pay the rent due and owing under the Lease, then Landlord shall be
entitled to rely upon the information provided in determining whether or not to
enter into this Lease Agreement with Tenant and Tenant hereby represents and
warrants to Landlord the following: (i) That all documents provided by Tenant to
Landlord are true and correct copies of the original; and (ii) Tenant has not
withheld any information from Landlord which is material to Tenant's
creditworthiness, financial condition or ability to pay the rent; and (iii) all
information supplied by Tenant to Landlord is true, correct and accurate; and
(iv)
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no part of the information supplied by Tenant to Landlord contains misleading or
fraudulent statements.
A default under this paragraph shall be a non-curable default on behalf of
Tenant and Landlord shall be entitled to pursue any right or remedy available to
Landlord under the terms of this Lease or available to Landlord under the laws
of the State of California.
43. HAZARDOUS MATERIALS
A. As used herein, the term "Hazardous Material" shall mean any substance
or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property including all of those materials and substances designated or
defined as "hazardous" or "toxic" by (i) the Environmental Protection Agency,
the California Water Quality Control Board, the Department of Labor, the
California Department of Industrial Relations, the Department of Transportation,
the Department of Agriculture, the Consumer Product Safety Commission, the
Department of Health and Human Services, the Food and Drug Agency or any other
governmental agency now or hereafter authorized to regulate materials and
substances in the environment, or by (ii) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq., as
amended; the Hazardous Material Transportation Act, 49 U.S.C. 1801, et seq., as
amended; the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq. as
amended; the Hazardous Waste Control Law, California Health & Safety Code 25100
et seq., as amended; Sections 66680 through 66685 of Title 22 of the California
Administration Code, Division 4, Chapter 30, as amended; and in the regulations
adopted and publications promulgated pursuant to said laws.
B. Tenant shall not cause or permit any Hazardous Material to be
improperly or illegally used, stored, discharged, released or disposed of in,
from under or about the Premises or the Complex, or any other land or
improvements in the vicinity of the Premises or the Complex. Without limiting
the generality of the foregoing, Tenant, at its sole cost, shall comply with all
laws relating to Tenant's use, storage, and disposal of Hazardous Material. If
the presence of Hazardous Materials on the Premises or the Complex caused or
permitted by Tenant results in contamination of the Premises or the Complex or
any soil in or about the Premises or the Complex, Tenant, at its expense shall
promptly take all actions necessary to return the Premises or the Complex to the
condition existing prior to the appearance of such Hazardous Material. The
termination of this Lease shall not terminate or reduce the liability or
obligations of Tenant under this Section, or as may be required by law, to clean
up, monitor or remove any Hazardous Materials from the Premises or the Complex.
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Tenant shall defend, hold harmless and indemnify Landlord and its agents
and employees with respect to all claims, damages and liabilities arising out of
or in connection with any Hazardous Material used, stored, discharged, released
or disposed of in, form under or about the Premises or the Complex, where said
Hazardous Materials or was attributable to the activities of Tenant, its agents
or contractors during the Lease term and whether or not Tenant had knowledge of
such Hazardous Material, including, without limitation, any cost of monitoring
or removal, any reduction in the fair market value or fair rental value of the
Premises or the Complex and any loss, claim or demand by any third person or
entity relating to bodily injury or damage to real or personal property.
Tenant shall not suffer any lien to be recorded against the Premises or the
Complex as a consequence of a Hazardous Material, including any so called state,
federal or local "super fund" lien related to the "clean up" of a Hazardous
Material in or about the Premises, where said Hazardous Material is or was
attributable to the activities of Tenant.
C. In the event Hazardous Materials are discovered in or about the
Premises or the Complex, and Landlord has substantial reason to believe that
Tenant was responsible for the presence of the Hazardous Material, then Landlord
shall have the right to appoint a consultant at Tenant's expense, to conduct an
investigation to determine whether Hazardous Materials are located in or about
the Premises or the Complex and to determine the corrective measures, if any,
required to remove such Hazardous Materials. Tenant, at its expense, shall
comply with all recommendations of the consultant, as required by law. To the
extent it is determined that Tenant was not responsible for the presence of the
Hazardous Materials, then Landlord shall reimburse Tenant for any costs incurred
by Landlord and paid by Tenant under the terms of this paragraph 45.C.
Tenant shall immediately notify Landlord of any inquiry, test,
investigation or enforcement proceeding by or against Tenant or the Premises or
the Complex concerning a Hazardous Material. Tenant acknowledges that Landlord,
as the owner of the Property, at its election, shall have the sole right, at
Tenant's expense, to negotiate, defend, approve and appeal any action taken or
order issued with regard to a Hazardous Material by an applicable governmental
authority. Provided Tenant is not a default under the terms of this Lease,
Tenant shall likewise have the right to participate in any negotiation,
approvals or appeals of any actions taken or orders issued with regard to the
Hazardous Material and Landlord shall not have the right to bind Tenant in said
actions or orders.
D. It shall not be unreasonable for Landlord to withhold its consent to
any proposed assignment or subletting if (i) the proposed assignee's or
subtenant's anticipated use of the Premises involves the storage, use or
disposal of Hazardous Material; (ii) if the proposed assignee or subtenant has
been required by any prior Landlord, lender or governmental authority to "clean
up" Hazardous Materials; (iii) if the proposed assignee
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is subject to investigation or enforcement order or proceeding by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material.
E. Tenant shall surrender the Premises to Landlord, upon the expiration
or earlier termination of the Lease, free of Hazardous Materials which are or
were attributable to Tenant. If Tenant fails to so surrender the Premises,
Tenant shall indemnify and hold landlord harmless from all damages resulting
from Tenant's failure to surrender the Premises as required by this paragraph,
including, without limitation, any claims or damages in connection with the
condition of the Premises including, without limitation, damages occasioned by
the inability to relet the Premises or a reduction in the fair market and/or
rental value of the Premises or the Complex by reason of the existence of any
Hazardous Materials, which are or were attributable to the activities of Tenant,
in or around the Premises or the Complex.
Notwithstanding any provisions to the contrary in this Lease, if any action
is required to be taken by a governmental authority to clean-up, monitor or
remove any Hazardous Materials, which are or were attributable to the activities
of Tenant, from the Premises or the Complex and such action is not completed
prior to the expiration or earlier termination of the Lease, then at Landlord's
election (i) this Lease shall be deemed renewed for a term commencing on the
expiration date of this Lease and ending on the date the clean-up, monitoring or
removal procedure is completed (provided, however, that the total term of this
Lease shall not be longer than 14 years and 11 months); or (ii) Tenant shall be
deemed to have impermissibly held over and Landlord shall be entitled to all
damages directly or indirectly incurred in connection with such holding over,
including without l imitation damages occasioned by the inability to relet the
Premise's or a reduction in the fair market and/or fair rental value of the
Premises or the Complex by reason of the existence of the Hazardous Material.
F. Upon Lease Commencement Date, Tenant shall provide to Landlord a
complete list of all chemicals, toxic waste or Hazardous Materials employed by
Tenant within the Premises. Throughout the term of the Lease, Tenant shall
continue to update the list of chemicals, contaminants and Hazardous Materials.
G. Notwithstanding anything to the contrary contained in the Paragraph
43, Tenant shall not be held liable for the presence, clean-up, or removal of
any asbestos, existing in the Premises prior to Tenant's occupancy or possession
of the Premises, nor shall Tenant be held liable for other toxic contamination
existing in the Complex prior to Tenant's occupancy or possession. Landlord
shall indemnify Tenant against acts by Landlord's contractors or vendors under
the direction of Landlord.
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44. MISCELLANEOUS AND GENERAL PROVISIONS
A. Tenant shall not, without the written consent of Landlord, use the
name of the building for any purpose other than as the address of the business
conducted by Tenant in the Premises.
B. This Lease shall in all respects be governed by and construed in
accordance with the laws of the State of California. If any provisions of this
Lease shall be invalid, unenforceable or ineffective for any reason whatsoever,
all other provisions hereof shall be and remain in full force and effect.
C. The term "Premises" includes the space leased hereby and any
improvements now and hereafter installed therein or attached thereto. The term
"Landlord" or any pronoun used in place thereof includes the plural as well as
the singular and the successors and assigns of Landlord. The term "Tenant" or
any pronoun used in place thereof includes the plural as well as the singular
and individuals, firms, associations, partnerships and corporations, and heir
and each of their respective heirs, executors, administrators, successors and
permitted assigns, according to the context hereof, and the provision of this
Lease shall inure to the benefit of and bind such heirs, executors,
administrators, successors and permitted assigns.
The term "person" includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings
of this Lease are for convenience of reference only and shall have no effect
upon the construction of any provision hereof.
D. Time is of the essence of this Lease and of each and all of its
provisions.
E. At the expiration or earlier termination of this Lease, Tenant shall
execute, acknowledge and deliver to Landlord, within ten (10) days after written
demand from Landlord to Tenant, any quitclaim deed or other document required by
any reputable title company, licensed to operate in the State of California, to
remove the cloud or encumbrance created by this Lease from the real property of
which Tenant's Premises are a part.
F. This instrument along with any exhibits and attachments hereto
constitutes the entire agreement between Landlord and Tenant relative to the
Premises and this agreement and the exhibits and attachments may be altered,
amended or revoked only by an instrument in writing signed by both Landlord and
Tenant. Landlord and Tenant hereby agree that all prior or contemporaneous oral
agreements between and among themselves and their agents or representatives
relative to the leasing of the Premises are
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merged in or revoked by this agreement. In the event of a conflict between a
language of the Lease and language in the Addendum, the Addendum shall govern
and control
G. Neither Landlord nor Tenant shall record this Lease or a short form
memorandum hereof without the consent of the other.
H. Tenant further agrees to execute any amendments required by a lender
to enable Landlord to obtain financing, so long as Tenant's rights hereunder are
not substantially affected.
I. Paragraph(s) 45 through 57 are/is added hereto and are/is included as
part of this Lease.
J. Clauses, pats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.
K. Tenant covenants and agrees that no diminution or shutting off of
light, air or view by any structure which may be hereafter erected (whether or
not by Landlord) shall in any way affect this Lease, entitle Tenant to any
reduction of rent hereunder or result in any liability of Landlord to Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.
LANDLORD: TENANT:
MATADERO CREEK C.V. THERAPEUTICS, INC.
a sole Proprietorship a Delaware Corporation
By /s/ J. Robert S. Wheatley By /s/ Jay Shukert
--------------------------------- -------------------------------------
Title Manager Title Vice President, Finance
------------------------------ ----------------------------------
Name (Printed) J. Robert S. Wheatley Name (Printed) Jay Shukert
----------------------- -------------------------
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ADDENDUM TO LEASE AGREEMENT
DATED JULY 12, 1993
BETWEEN MATADERO CREEK AS LANDLORD
AND CV THERAPEUTICS INC. AN TENANT
45. BASIC RENT SCHEDULE. Basic Rent, the total sum of which is specified in
paragraph 4A of the Lease, shall be paid in monthly installments as follows:
No Basic Rent shall be due and payable for the first and second months.
$39,471.25 shall be due and payable on or before the first day of the third
month through the fourteenth month.
$45,786.65 shall be due and payable on or before the first day of the
fifteenth month through the twentieth month.
$67,242.30 shall be due and payable on or before the first day of the
twenty-first month through the thirty-eighth month.
$71,879.70 shall be due and payable on or before the first day of the
thirty-ninth month through the sixty-second month.
$76,517.10 shall be due and payable on or before the first day of the sixty-
third month through the eighty-sixth month.
$78,835.80 shall be due and payable on or before the first day of the
eighty-seventh month through the ninety-eighth month.
46. ADDITIONAL RENT. (4D continued) In order to simplify Tenant's expenses
during the anticipated early occupancy period, Tenant shall pay, for any months
of occupancy or possession prior to January 1, 1994, Additional Rent expenses at
a rate determined as follows: 1) Tenant's cost for all Additional Rent expense
items other than electric, janitorial, and refuse collection services shall be
$2,850.00 per month, 2) Tenant's cost for electrical service shall be $1,500.00
per month, 3) Janitorial and refuse services shall be billed at cost as ordered
by Tenant. From January 1,1994 through February 28, 1994, Tenant shall pay
Additional Rent as set forth in paragraph 4D of the Lease, except that Tenant's
square footage basis for this time period through February 28, 1994 shall be
15,000 square feet. As of March 1, 1994, Tenant shall pay Additional Rent as set
forth in paragraph 4D of the Lease and Tenant's basis shall be the entire
Premises as defined herein.
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47. UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED (11 cont.)
A. From the point in time of Tenant's first possession or occupancy of
any part of the Premises prior to the commencement date of the Lease and through
December 31, 1993, the definition of Tenant's proportionate share of the cost of
providing electricity to the premises shall be $0.10 per square foot per month
based on 15,000 square feet. As of January 1, 1994 and thereafter (except as
hereinafter provided) the definition of Tenant's proportionate share of the cost
of providing electricity to the premises shall be the entire cost of providing
electricity to the building in which the premises are located, except as
provided in paragraph 47b.
B. If Landlord leases the remainder of the building to others, then
Tenant's cost of electrical service shall be reduced by the product of
multiplying the square footage of the remainder of the building so leased by
$0.15 (or other more equitable basis as calculated by Landlord). Should space be
sublet by Landlord within Tenant's space during the phase-in period (as more
specifically described in paragraph 51 of this Addendum to Lease), Tenant's cost
of electrical service shall be reduced by the product of multiplying the square
footage of the space so sublet by 90.15 (or other more equitable basis as
calculated by Landlord).
48. BUILDING RESTORATION. At the termination of Tenant's Lease in the Premises
Tenant shall not be required restore to office use or to remove laboratories
constructed by Tenant and approved as to generic laboratory utility by Landlord.
49. CONTRACTORS. Landlord reserves the right to perform construction required
of Landlord or by Tenant within the Premises. However, Tenant shall have the
right to select licensed "biotechnology experienced" general contractors
acceptable to Landlord for the construction of laboratories and specific biotech
applications.
50. LANDLORD LEASE-LINE WAIVER. Landlord understands that Tenant intends to
seek lease-line financing for some of the improvements to be installed and paid
for by Tenant. Tenant has asked Landlord to be willing to sign lease-line
waivers upon request by Tenant. Landlord shall not unreasonably withhold such
signing of lease-line waivers upon the following conditions: 1) No lease-line
company shall at any time have the right to place a lien of any kind on the
Premises or upon the building or Complex in which the Premises are located and
if such a lien should arise, Tenant shall immediately discharge such lien either
through payment of the lien or by the posting of a bond sufficient to discharge
the lien, 2) No lease-line company shall have the right to enter the Premises or
the building in which the Premises. are Located to remove equipment or materials
supplied to Tenant without the prior written consent of Landlord. Except for
non-attached, portable counter-top equipment, Landlord shall be under no
obligation to provide permission for the removal of such equipment or materials,
3) In the case of a
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default by Tenant in its terms with the lease-line company, and assuming that
possession of the premises has reverted to Landlord, Landlord shall, i) use its
best efforts to release the Premises, ii) after first pursuing recovery of
rental income, Landlord shall use its best efforts to have the new tenant
continue use and payment for existing lease-line equipment or materials in the
Premises which are in good working order, ill) if the Premises in which the
equipment or materials are found is leased to a new tenant and this tenant does
not use or require the equipment or materials installed under the lease-line in
question, said lease-line company shall, upon its request or upon the
requirement of Landlord remove said equipment and repair in a manner
satisfactory to Landlord the damage caused to the Premises or left by its
removal, iv) the lease-line company shall be solely responsible for the cost of
maintenance of said equipment if Tenant does not bear such costs.
51. EARLY OCCUPANCY. Landlord shall use its best efforts to secure for the use
of Tenant, as of November 1, 1993 through December 31, 1993, approximately
15,000 square feet or one floor of one wing of the Premises from the current
tenant (Hewlett-Packard Company). Tenant shall have the right to occupy said
space (approximately 15,000 square feet) upon completion of the following 1)
This lease has been fully executed and a security deposit of $78,835.80 and a
first month's rent in the amount of $39,471.25 have been delivered upon
execution, 2) Hewlett-Packard Company has allowed such early occupancy of a
portion of their premises, 3) Tenant has not defaulted upon any of the terms
hereunder.
52. FIRST RIGHT OF OFFER. Provided that Tenant is not in default of the terms
of the Lease, Tenant shall have a Right of First Offer ("RFO") on such space as
may become available at 3174 Porter Drive (referred to as 'Building C" on the
Matadero Creek site and outlined in red on Exhibit "E"). This RFO shall not
apply to renewals or extensions of existing Tenants at 3174 Porter Drive.
Landlord shall give Tenant written notice of the availability of such space and
the terms upon which it is offered. Tenant shall have ten (10) business days
from the date of said notice to accept or reject Landlord's offer and, should
Tenant fall to respond, said offer shall be deemed rejected. Upon rejection of
Landlord's offer, expressly or by lapse of the ten business day period, Landlord
may rent said space to others upon substantially the same rents and other terms
as offered to Tenant, or at a higher rent. This RFO may be exercised only by
Tenant for its sole use of the Premises and may not be transferred or assigned
to any other party.
53. FIRST RIGHT OF REFUSAL. Provided that Tenant is not in default of the
terms of the Lease, Tenant shall have a Right of First Refusal ("RFR") on the
remaining space within the building in which the Premises are located (outlined
in red on Exhibit "F'). It is acknowledged that the remainder of the building,
at the commencement of the Lease, will be 14,679 square feet. This RFR shall not
apply to renewals or extensions of existing Tenants, if any, within the
building. Landlord shall give Tenant written notice of the terms upon which
Landlord intends to lease the space to another tenant. Tenant shall
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have five (5) business days from the date of said notice to accept or reject
Landlord's offer and, should Tenant fall to respond, said offer shall be deemed
rejected. Upon rejection of Landlord's offer, expressly or by lapse of the ten
working day period, Landlord may proceed to rent said space. This RFR may be
exercised only by Tenant for its sole use of the Premises and may not be
transferred or assigned to any other party.
54. OPTION TO RENEW. Tenant shall have the option to renew the Lease for one
five (5) year period beginning March 1, 2002, upon the same terms and conditions
as the current Lease except that Basic Rent shall be at the then prevailing
market rate for space without specialized laboratory improvements, but in no
case less than the rate in effect for the last year of the original lease term.
This renewal shall apply equally to expansion space which Tenant may lease
during the course of the lease term. Tenant must exercise this option by giving
Landlord written notice not less than one year prior to the expiration of the
original Lease term; if said written notice has not been received by Landlord,
this option will expire without further action by either party.
55. TENANT IMPROVEMENTS.
A. Landlord shall cause to be constructed, at the sole cost and expense
of Landlord the following improvements: i) seismic upgrades as mutually agreed
between CV Therapeutics and Matadero Creek and ii) Americans with Disabilities
Act required upgrades as necessary in the rest rooms or access ramps to the
building.
B. In addition to the work to be performed above, Landlord shall provide
$231,870.00 to be used for building improvements including but not limited to
structural, roofing, building core, life safety, interior partitions, generic
tenant build-out items or other similar standard improvements as agreed between
CV Therapeutics and Matadero Creek. Matadero Creek shall agree as to a schedule
for improvement of the Premises. CV Therapeutics may submit notices o
completion or invoices to Landlord to draw down the $231,870.00 referred to in
this paragraph.
C. Matadero Creek warrants that all HVAC, plumbing, electrical shall be
in good working order upon possession of the Premises. Landlord further warrants
the condition of the roof against any roof leaks during the first 90 days of
occupancy.
D. Identified trade fixtures as agreed between CV Therapeutics and
Matadero Creek and installed by Tenant in the Premises at Tenant's expense,
provided that Tenant is not in default at the expiration of the Lease, shall
remain the property of Tenant upon expiration of the Lease, provided that Tenant
removes said trade fixtures and repairs any damage to the Premises caused by the
removal of such trade fixtures prior to the expiration of the Lease.
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56. LANDLORD' SUBLET RIGHT. Landlord shall have the right to sublet
approximately 14,797 square feet on the second floor of building "A" (outlined
in red in Exhibit "G") ("Landlord Sublet Space" or "LSS") from January 1, 1994
until August 31, 1995 and Tenant hereby agrees that Landlord shall be solely
entitled to the proceeds of such subletting. Notwithstanding Landlord's right to
sublet as described in this paragraph 56 of the Addendum to Lease, such
subletting of the Landlord Sublet Space shall be done in accordance with the
following provisions:
(1) Before entering into the sublet contract, Landlord shall first
give Tenant written notice of Landlord's intent to sublet the LSS and the terms
upon which said sublet is offered. Tenant shall then have five (s) business days
within which to respond to Landlord. If Tenant does not submit written notice to
Landlord within five (5) business days stating Tenant's intent to occupy the
LSS, then Landlord may proceed to sublet the LSS without further action or
notice. If Tenant responds with written notice to Landlord as required above
stating that Tenant will occupy the LSS within the proposed sublet period, then
Tenant shall pay to Landlord, in addition to the rents specified in paragraph 4A
and 45 of the Lease, rents as detailed in the proposed sublet agreement in lieu
of Landlord's right to sublet.
(2) Landlord shall make no sublet of the LSS with a fixed term longer
than twelve (12) months although the sublessee may occupy the LSS longer than 12
months on a month-to-month basis up until August 31, 1995 unless i) Tenant has
given written notice to Landlord not less than six (6) months prior to the date
upon which Tenant requires possession of the LSS to be returned to Tenant and
ii) Tenant agrees to pay to Landlord the equivalent of the potential sublet rent
forgone between the date when possession be Tenant of the LSS is required and
August 31, 1995.
(3) Should Landlord successfully sublet the LSS, Tenant shall be
released from Additional Rent payments as required in paragraph 4D of the lease
on the portion of the building so sublet by Landlord.
57. DESTRUCTION. (continued) In the case where repair of damage to the
Premises has been determined to require a period of time longer than 180 days
(exclusive of Tenant delays or other circumstances beyond Landlord's control as
provided above in paragraph 24), Tenant shall have the right, after said
determination is made, to terminate the Lease.
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LANDLORD:
MATADERO CREEK,
a sole proprietorship
By: /s/ J. Robert S. Wheatley
------------------------------------
TENANT:
CV THERAPEUTICS INC.,
a Delaware Corporation
By: /s/ Jay Shukert
------------------------------------
37.
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EXHIBIT "A"
OVERVIEW ILLUSTRATION
OF
BUILDING "A" SECOND FLOOR ONLY
AND
BUILDING "B" FIRST AND SECOND FLOORS
OF
MATADERO CREEK COMPLEX
<PAGE>
EXHIBIT "B"
OVERVIEW ILLUSTRATION OF ENTIRE
MATADERO CREEK COMPLEX
<PAGE>
EXHIBIT "C"
<PAGE>
EXHIBIT "D"
<PAGE>
EXHIBIT "E"
OVERVIEW ILLUSTRATION OF BUILDING C
OF
MATADERO CREEK COMPLEX
<PAGE>
EXHIBIT "F"
OVERVIEW ILLUSTRATION OF
BUILDING "A"
FIRST FLOOR ONLY
OF
MATADERO CREEK COMPLEX
<PAGE>
EXHIBIT "G"
OVERVIEW ILLUSTRATION OF
BUILDING "A"
SECOND FLOOR ONLY
OF
MATADERO CREEK COMPLEX
<PAGE>
RULES AND REGULATIONS OF THE BUILDING
1
No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice to
and at the expense of Tenant.
All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved of by
Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
2
Tenant shall not occupy or permit any portion of the Premises to be
occupied for the manufacture or sale of liquor, narcotics or tobacco in any
form.
3
The bulletin board or directory of the Premises will be provided for the
display of the number and location of Tenant, and Landlord will provide
directory service to a reasonable extent for Tenant at initial occupancy.
Changes thereafter shall be at Tenant's expense.
4
The sidewalks, passages, exits, entrances, elevators and stairways shall
not be obstructed by Tenant or use by it for any purpose other than ingress to
and egress from its Premises. The passages, exits, entrances, stairways,
balconies and roof are not for the use of the general public and Landlord shall
in all cases retain the right to control and prevent access thereto by all
persons whose presence in the judgment of Landlord shall be prejudicial to the
safety, character, reputation and interests of the Premises and its tenants,
provided that nothing herein contained shall be construed to prevent such access
to persons with whom Tenant normally deals in the ordinary course of Tenant's
business unless such persons are engaged in illegal activities. Tenant,
employees or invitees of Tenant shall not go upon the roof of the Premises.
1.
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5
The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant who, or whose employees or invitees shall have caused it.
6
Tenant shall not overload the floor of the Premises or in any way deface
the Premises or any part thereof.
7
Landlord shall have the right to prescribe the weight, size and position of
all safes and other heavy equipment brought into the Premises and also the times
and manner of moving the same in and out of the Premises. Safes or other heavy
objects shall, if considered necessary by Landlord, stand on wood strips of such
thickness as is necessary to properly distribute the weight. Landlord will not
be responsible for loss of or damage to any such safe or property from any cause
and all damages done to the Premises by moving or maintaining any such safe or
other property shall be repaired at the expense of Tenant.
8
Tenant shall not employ any person or persons other than the janitor of
Landlord or Tenant's personnel for the purpose of cleaning the Premises unless
otherwise agreed to by Landlord. Tenant shall not cause any unnecessary labor
by reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness.
9
Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Premises by reason of noise, odors, and/or vibrations,
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds with the exception of Dog Guides for the blind, be
brought in or kept about the Premises.
2.
<PAGE>
10
No cooking shall be done or permitted by Tenant on the Premises, nor shall
the Premises be used for the storage of merchandise for washing clothes, for
lodging, or for any improper, objectionable or immoral purposes.
11
Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires will be
allowed without the consent of Landlord. The location of telephones, call boxes
and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.
12
Tenant upon the termination of the tenancy, shall deliver to Landlord the
keys of offices, rooms and toilet rooms which have been furnished the Tenant or
which Tenant shall have had made, and in the event of loss of any keys so
furnished, shall pay Landlord therefor.
13
Tenant shall see that the doors of the Premises are closed and securely
locked before leaving the Premises and must observed strict care and caution
that all water faucets or water apparatus within the Premises are entirely shut
off before Tenant or Tenant's employees leave the Premises, and that all
electricity shall likewise be carefully cut off, so as to prevent waste or
damage.
14
Landlord reserves the right to exclude or expel from the Premises any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Premises.
15
The requirements of Tenant will be attended to only upon application to
Landlord at 755 Page Mill Road, Palo Alto, California 94304. Employees of
Landlord shall not perform any work or do anything outside of the regular duties
unless under special instructions from Landlord.
3.
<PAGE>
16
Landlord shall have the right, exerciseable without notice and without
liability to Tenant, to change the name and the street address of the Premises
and/or the Complex.
17
Tenant shall not disturb, solicit, or canvass any occupant of the Premises
and shall cooperate to prevent the same.
18
Tenant and its employees shall park their vehicles only in those portions
of the parking areas so designated by Landlord. Tenant shall furnish Landlord
with a list of its and its employees' vehicle license numbers within fifteen
(15) days after taking possession of the Premises and Tenant shall thereafter
notify Landlord of any changes in such list within five (5) days after such
change occurs. Tenant agrees to assume responsibility for compliance by its
employees with the parking provision contained herein. If Tenant or its
employees park in other than such designated parking areas then Landlord may
charge Tenant, as an additional charge, and Tenant agrees to pay, Ten Dollars
($10.00) per day for each day or partial day each such vehicle is parked in any
area other than that designated. Tenant hereby authorizes Landlord at Tenant's
sole expense to tow away from the Complex any vehicle belonging to Tenant or
Tenant's employees parked in violation of these provisions, or to attach
violation stickers or notices to such vehicle. Tenant shall use the parking
areas for vehicle parking only, and shall not use the parking areas for storage.
LANDLORD'S INITIALS TENANT'S INITIALS
/s/ JRSW /s/ JS
- ----------------------------------- ---------------------------------------
4.
<PAGE>
June 30, 1994
J. Robert Wheatley
Robert Wheatley Properties
400 Lambert Avenue
Palo Alto, CA 94306
RE: LEASE AGREEMENT ("LEASE"), DATED AUGUST 6, 1993, BETWEEN MATADERO CREEK, AS
LANDLORD, AND CV THERAPEUTICS, INC., AS TENANT, COVERING PREMISES ("PREMISES")
LOCATED AT 3172 PORTER DRIVE, PALO ALTO
Dear Robert:
This letter agreement will constitute Amendment No. 1 to the Lease (paragraph
numbers below correspond to the paragraph numbers of the Lease):
24. In the event the Premises are destroyed in whole or in part under
circumstances where the lease is not terminated, Tenant, at its cost and
expense, agrees to repair and restore those damaged or destroyed alterations and
improvements installed by Tenant in the Premises which are included as
collateral in Landlord's Waiver (Leasehold Improvements), have become part of
the Premises and belong or will belong to the Landlord, provided that Tenant's
obligation to repair and restore shall not exceed the amount of insurance
proceeds received by Tenant on account of such damage or destruction.
50. Landlord agrees to execute and deliver to Imperial Bank the Landlord's
Waiver (Portable Equipment Items) and Landlord's Waiver (Leasehold
Improvements).
Except as set forth above, the Lease continues in full force and effect
according to its terms.
Please evidence your agreements to the foregoing in the space provided below on
both duplicates and return one to me.
Yours very truly,
CV THERAPEUTICS, INC.
A DELAWARE CORPORATION
By: /s/ Jay Shukert
--------------------------------
Jay Shukert
Vice President, Finance
Understood and Agreed
Matadero Creek,
a sole proprietorship
By: /s/ J. Robert Wheatley,
--------------------------------
J. Robert Wheatley,
sole proprietor
<PAGE>
SECOND AMENDMENT OF LEASE
THIS SECOND AMENDMENT OF LEASE is made and entered into this 30th day of
June, 1994, by and between Matadero Creek, a sole proprietorship, hereinafter
called Landlord and CV Therapeutics, Inc., a Delaware corporation, hereinafter
called Tenant.
RECITALS
WHEREAS Landlord and Tenant entered into a Lease dated August 6th, 1993,
for approximately 46,374 square feet of space located in the building at 3172
Porter Drive, Palo Alto, County of Santa Clara, California.
AND WHEREAS Lessor and Tenant desire to amend the terms and conditions of
said Lease.
NOW, THEREFORE, each of the parties intending to be legally bound do hereby
agree as follows:
1. Tenant hereby agrees to lease and hire from landlord and Landlord
agrees to lease to Tenant an additional 14,707 approximate gross square feet of
space (including tenant's prorata share of building common areas) in the
building located at 3172 Porter Drive, Palo Alto, Santa Clara County,
California, as outlined in red on EXHIBIT A attached hereto (Expansion Space).
Although some areas of the building are currently occupied by other tenants
through various sublease arrangements as allowed under paragraph 56 of the
Lease, it is recognized herein that Tenant has now leased from landlord the
entire building known as 3172 Porter Drive, Palo Alto, California containing
approximately 61,081 square feet.
2. This Second Amendment of Lease shall be effective (Effective Date) as
of July 1, 1994.
3. The amount of total Basic Rent payable over the term of the lease and
stated in paragraph 4.A. of the Lease shall be increased from $6,466,289.10 to
$8,839,998.90 and the schedule for payment of Basic Rent as found in paragraph
45 shall be amended as of the Effective Date as follows:
$59,325.70 shall be due and payable on or before the first day of August,
1994 and each succeeding month through February, 1995.
$67,847.15 shall be due and payable on or before the first day of March,
1995 and each succeeding month through August, 1995.
1.
<PAGE>
$89,302.80 shall be due and payable on or before the first day of September,
1995 and each succeeding month through February, 1996.
$91,508.85 shall be due and payable on or before the first day of March,
1996 and each succeeding month through February, 1997.
$97,616.95 shall be due and payable on or before the first day of March,
1997 and each succeeding month through February, 1998.
$99,832.00 shall be due and payable on or before the first day of March,
1998 and each succeeding month through February, 1999.
$104,460.40 shall be due and payable on or before the first day of March,
1999 and each succeeding month through February, 2001.
$107,514.45 shall be due and payable on or before the first day of March,
2001 and each succeeding month through February, 2002.
6. Commencing on the Effective Date, Paragraph 4.D. of the Lease shall be
amended to provide for the monthly payment of Additional Rent in the amount of
$22,000.00. Tenant shall pay said sum until the Additional Rent is adjusted in
accordance with Paragraph 4.D. of the Lease. Tenant's payment of Additional
Rent shall continue to be adjusted as provided for in paragraph 47.b. for space
sublet by Landlord under paragraph 56 of the Lease through August 31, 1995.
7. Landlord agrees to provide $73,535.00 to improve the Expansion Space
for Tenant's occupancy. Landlord shall perform such improvement work and pay
Landlord's contribution as herein noted as expenses are incurred. Tenant shall
pay for all improvement costs and expenses over $73,535.00.
Except as herein modified and amended, the Lease, dated August 6, 1993,
shall remain in full force and effect.
2.
<PAGE>
IN WITNESS WHEREOF, LESSOR AND LESSEE have executed this Second Amendment of
Lease.
LANDLORD: TENANT:
MATADERO CREEK CV THERAPEUTICS, INC.
A Sole Proprietorship A Delaware Corporation
By: /s/ By: /s/
-------------------------------- ------------------------------------
Name:J. Robert S. Wheatley Name:J. Shukert
------------------------------ ----------------------------------
(printed) (printed)
Title: Manager Title: Vice President, Finance
----------------------------- ---------------------------------
3.
<PAGE>
EXHIBIT 11.1
CV THERAPEUTICS, INC.
COMPUTATION OF NET LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
Historical:
Weighted average common stock outstanding:................. 235 248 335 291 376
Shares related to Staff Accounting Bulletins Nos. 55, 64
and 83:
Stock Options.......................................... 242 242 242 242 242
Warrants............................................... 796 796 796 796 796
--------- --------- --------- --------- ---------
Total shares used in calculating net loss per share.......... 1,273 1,286 1,373 1,329 1,414
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net loss..................................................... $ (5,517) $ (11,367) $ (16,724) $ (8,447) $ (5,396)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net loss per share........................................... $ (4.33) $ (8.84) $ (12.18) $ (6.36) $ (3.82)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Pro forma:
Shares used in calculating net loss per share (per above).. 1,373 1,329 1,414
Preferred Stock if-converted:.............................. 2,221 2,155 2,905
--------- --------- ---------
Total shares used in calculating pro forma net loss
per share................................................... 3,594 3,484 4,319
--------- --------- ---------
--------- --------- ---------
Net loss..................................................... $ (16,724) $ (8,447) $ (5,396)
--------- --------- ---------
--------- --------- ---------
Pro forma net loss per share................................. $ (4.65) $ (2.42) $ (1.25)
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000921506
<NAME> CV THERAPEUTICS, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 10,484,000
<SECURITIES> 2,023,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,962,000
<PP&E> 6,029,000
<DEPRECIATION> 2,438,000
<TOTAL-ASSETS> 18,208,000
<CURRENT-LIABILITIES> 5,560,000
<BONDS> 0
0
50,130,000
<COMMON> 469,000
<OTHER-SE> (40,271,000)
<TOTAL-LIABILITY-AND-EQUITY> 18,208,000
<SALES> 0
<TOTAL-REVENUES> 250,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,417,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 448,000
<INCOME-PRETAX> (5,396,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,396,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,396,000)
<EPS-PRIMARY> (1.25)
<EPS-DILUTED> 0
</TABLE>
