<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-25544
PDT, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 77-0222872
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7408 Hollister Avenue, Santa Barbara, California 93117
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
(805) 685-9880
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at October 31, 1996
----- -------------------------------
Common Stock, $.01 par value 12,463,769
<PAGE>
PDT, INC.
Form 10-Q
TABLE OF CONTENTS
PAGE NO.
--------
TABLE OF CONTENTS .................................................... 2
PART I FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated balance sheets as of September 30, 1996 and
December 31, 1995 ...................................... 3
Consolidated statements of operations for the three months
ended September 30, 1996 and 1995, and for the nine
months ended September 30, 1996 and 1995 ................ 4
Consolidated statements of cash flows for the nine months
ended September 30, 1996 and 1995 ....................... 5
Notes to consolidated financial statements ................... 6
ITEM 2. Management's discussion and analysis of financial
condition and results of operations ................ 7
PART II. OTHER INFORMATION
ITEM 4 Submission of matters to a vote of security
holders ............................................ 12
ITEM 6. Exhibits and reports on Form 8-K ................... 12
SIGNATURES ............................................................ 13
<PAGE>
<TABLE>
<CAPTION>
Part 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PDT, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
---------------- ----------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................. $ 40,816,000 $ 8,886,000
Investments in short term marketable securities ............ 20,100,000 --
Accounts receivable ........................................ 1,884,000 11,000
Inventory-finished goods ................................... 15,000 10,000
Prepaid expenses and other current assets .................. 533,000 385,000
------------- -------------
Total current assets .......................................... 63,348,000 9,292,000
Property, plant & equipment:
Vehicles ................................................... 28,000
Furniture and fixtures ..................................... 552,000 336,000
Equipment .................................................. 2,194,000 1,630,000
Leasehold improvements ..................................... 1,111,000 666,000
Capital lease equipment .................................... 184,000 184,000
------------- -------------
4,069,000 2,816,000
Accumulated depreciation and amortization .................. (1,609,000) (1,210,000)
------------- -------------
2,460,000 1,606,000
Patents and other assets ...................................... 278,000 361,000
------------- -------------
Total assets .................................................. 66,086,000 11,259,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................... 2,049,000 2,468,000
Accrued payroll and expenses ............................... 416,000 331,000
Current portion of long term obligations ................... 51,000 51,000
Current portion of capital lease obligations ............... 38,000 39,000
------------- -------------
Total current liabilities ..................................... 2,554,000 2,889,000
Long term obligations, less current portion ................... 17,000 47,000
Capital lease obligations, less current portion ............... 31,000 63,000
Convertible notes payable ..................................... -- 93,000
Shareholders' equity:
Common stock, 50,000,000 shares authorized; 12,447,144 and
10,401,358 shares issued and outstanding at September 30,
1996 and December 31, 1995, respectively ................ 112,550,000 50,188,000
Deferred compensation ...................................... (1,924,000) (7,518,000)
Accumulated deficit ........................................ (47,142,000) (34,503,000)
------------- -------------
Total shareholders' equity .................................... 63,484,000 8,167,000
------------- -------------
Total liabilities and shareholders' equity ................... $ 66,086,000 $ 11,259,000
============= =============
SEE ACCOMPANYING NOTES.
</TABLE>
<PAGE>
PDT, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1996 1995 1996 1995
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Product sales .............................. $ 1,000 $ 14,000 $ 5,000 $ 26,000
Grants, licensing, and royalty income ...... 844,000 129,000 2,225,000 309,000
--------------- -------------- --------------- --------------
845,000 143,000 2,230,000 335,000
Costs and expenses:
Cost of goods sold ......................... 1,000 22,000 5,000 55,000
Research and development ................... 4,002,000 1,910,000 12,052,000 4,698,000
Selling, general and administrative ........ 1,844,000 945,000 4,351,000 2,403,000
--------------- -------------- --------------- --------------
Total costs and expenses ...................... 5,847,000 2,877,000 16,408,000 7,156,000
Loss from operations .......................... (5,002,000) (2,734,000) (14,178,000) (6,821,000)
Other income (expense):
Interest income ............................ 856,000 106,000 1,566,000 134,000
Interest expense ........................... (9,000) (40,000) (27,000) (139,000)
--------------- -------------- --------------- --------------
Total other income (expense) .................. 847,000 66,000 1,539,000 (5,000)
Net loss ...................................... $ (4,155,000) $ (2,668,000) $ (12,639,000) $ (6,826,000)
============== ============== =============== ==============
Net loss per share ............................ $ (0.33) $ (0.26) $ (1.10) $ (0.71)
============== ============== =============== ==============
Shares used in computing net loss per share ... 12,438,069 10,283,104 11,519,785 9,679,164
============== ============== =============== ==============
SEE ACCOMPANYING NOTES.
</TABLE>
<PAGE>
PDT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
--------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ........................................................... $ (12,639,000) $ (6,826,000)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation and amortization ................................... 412,000 428,000
Amortization of deferred compensation ........................... 1,961,000 1,026,000
Changes in operating assets and liabilities:
Accounts receivable .......................................... (1,873,000) (63,000)
Inventories .................................................. (5,000) 12,000
Prepaid expenses and other assets ............................ (78,000) 60,000
Accounts payable and accrued payroll and expenses ............ (334,000) (71,000)
--------------- --------------
Net cash used in operating activities .............................. (12,556,000) (5,434,000)
INVESTING ACTIVITIES:
Purchases and maturities of short term marketable securities, net .. (20,100,000) -
Purchases of property, plant, and equipment ........................ (1,253,000) (503,000)
--------------- --------------
Net cash used in investing activities .............................. (21,353,000) (503,000)
FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock, less issuance costs ........ 66,152,000 16,886,000
Purchase of Treasury Stock ......................................... (250,000) -
Proceeds from notes payable ........................................ - 1,230,000
Payments of notes payable .......................................... - (1,230,000)
Payments of long term obligations .................................. (30,000) (35,000)
Payments of capital lease obligations .............................. (33,000) (29,000)
Proceeds from line of credit ....................................... - 3,600,000
Payments of line of credit ......................................... - ( 4,600,000)
--------------- --------------
Net cash provided by financing activities .......................... 65,839,000 15,822,000
Net increase (decrease) in cash and cash equivalents ............... 31,930,000 9,885,000
Cash and cash equivalents at beginning of period ................... 8,886,000 1,483,000
--------------- --------------
Cash and cash equivalents at end of period ......................... $ 40,816,000 $ 11,368,000
=============== ===============
SUPPLEMENTAL DISCLOSURES:
State taxes paid ................................................... $ 12,000 $ 8,000
=============== ===============
Interest paid ...................................................... $ 27,000 $ 203,000
=============== ===============
SEE ACCOMPANYING NOTES.
</TABLE>
<PAGE>
PDT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
1. Basis of Presentation
The information contained herein has been prepared in accordance with Rule
10-01of Regulation S-X. The information at September 30, 1996, and for the
three month and nine month periods ended September 30, 1996 and 1995, is
unaudited. In the opinion of management, the information reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. All such adjustments are of a
normal recurring nature. Interim results are not necessarily indicative of
results for a full year. For a presentation including all disclosures
required by generally accepted accounting principles, these financial
statements should be read in conjunction with the audited consolidated
financial statements for the year ended December 31, 1995 included in the
PDT, Inc. Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
2. Per Share Data
Net loss per share is computed using the weighted average number of shares
outstanding during the periods, as adjusted pursuant to the rules of the
Securities and Exchange Commission for certain matters for which
adjustments would not be required to be presented under APB Opinion 15, for
the periods prior to the Company's public offerings. All stock, warrant,
and option data included in the consolidated financial statements and
footnotes reflect the effect of the three-for-two stock split for all
periods presented.
3. Marketable Securities
Marketable securities are classified as available-for-sale and are carried
at market value. Unrealized gains and losses are reported in shareholders'
equity. Realized gains and losses on investment transactions are recognized
when realized based on settlement dates and recorded as interest income.
Interest and dividends on securities are recognized when earned. There was
no unrealized gain or loss recorded as of September 30, 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. This Quarterly Report on
Form 10-Q may be deemed to include forward looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risk and uncertainty, including financial,
clinical, business environment and trend projections. Although the Company
believes that its expectations are based on reasonable assumptions, it can give
no assurance that its goals will be achieved. The important factors that could
cause actual results to differ materially from those in the forward looking
statements herein include, without limitation, the early stage of development of
both the Company and its products, the timing and uncertainty of results of both
research and regulatory processes, the extensive government regulation
applicable to the Company's business, the unproven safety and efficacy of the
Company's drug and device products, the Company's significant additional
financing requirements, the uncertainty of future capital funding, the highly
competitive environment of the international pharmaceuticals and medical device
industries and the presence of a number of competitors with significantly
greater financial, technical and other resources and extensive operating
histories, the Company's potential exposure to product liability or recall,
uncertainties relating to patents and other intellectual property, including
whether the Company will obtain sufficient protection or competitive advantage
therefrom, and the Company's dependence upon a limited number of key personnel
and consultants and its significant reliance upon its collaborative partners for
achieving its goals.
GENERAL
Since its inception, PDT, Inc. ("the Company") has been principally
engaged in the research and development of drugs and medical device products for
use in photodynamic therapy. The Company has been unprofitable since its
founding and has incurred a cumulative net loss of approximately $47.1 million
as of September 30, 1996. The Company expects to continue to incur substantial
and increasing operating losses for the next several years due to continued and
increased spending on research and development programs, the funding of
preclinical and clinical testing and regulatory activities and the costs of
manufacturing and administrative activities.
The Company's revenues primarily reflect income earned from licensing
agreements, contracts, grants and device product sales,. Product sales represent
limited sales of photodynamic therapy devices (e.g., light producing devices and
light delivery and measurement devices), sold both domestically and
internationally, to researchers and an OEM distributor. To date, the Company has
received no revenue from the sale of drug products, and the Company is not
permitted to engage in commercial sales of drugs or devices until such time, if
ever, as the Company receives requisite regulatory approvals. As a result, the
Company does not expect to record significant product sales until such approvals
are received.
Until the Company commercializes its product(s), the Company expects
revenues to continue to be attributed to licensing agreements, contracts, grants
and device product sales for research use. The Company anticipates that future
revenues and results of operations will continue to fluctuate significantly
depending on, among other factors, the timing and outcome of applications for
regulatory approvals, the Company's ability to successfully manufacture, market
and distribute its drug products and device products and/or the establishment of
collaborative arrangements for the manufacturing, marketing and distribution of
some of its products.
The Company has initiated Phase III clinical trials using its drug
SnET2 for AIDS-related Kaposi's sarcoma, basal cell carcinoma and cutaneous
metastatic breast cancer. In May 1996, the Company began Phase I/II clinical
studies in ophthalmology, using SnET2 to treat complications of advanced
age-related macular degeneration (AMD), a leading cause of blindness. The
Company has submitted an Investigational New Drug application with the FDA to
start clinical trials with SnET2 for Benign Prostatic Hyperplasia, a common
urologic condition in men. The Company is also in various stages of preclinical
testing of SnET2 and other photoreactive drugs for the treatment of other
cancers, certain cardiovascular conditions, urologic, gynecologic and
dermatologic conditions and eye disorders.
The Company has awarded stock options that vest upon the achievement
of certain milestones. Under Accounting Principles Board Opinion No. 25, such
options are accounted for as variable stock options. As such, until the
milestone is achieved (but only after it is determined to be probable), deferred
compensation is recorded in an amount equal to the difference between the fair
market value of the Common Stock on the date of determination less the option
exercise price and is adjusted from period to period to reflect changes in the
market value of the Common Stock. Deferred compensation, as it relates to a
particular milestone, is amortized over the period between when achievement of
the milestone becomes probable and when the milestone is estimated to be
achieved. Amortization of deferred compensation could result in significant
additional compensation expense being recorded in future periods based on the
market value of the Common Stock from period to period.
Effective June 21, 1996, the Compensation Committee of the Board of
Directors adjusted the future vesting periods of the variable stock options
covering 400,000 shares of Common Stock. These variable stock options were
adjusted to change the vesting periods to specific dates as opposed to the
original vesting periods which were based upon the achievement of milestones; no
change was made to the exercise prices of these variable stock options. This
change in the vesting periods provides for the options to be accounted for as
non-variable options and therefore alleviates the impact of deferred
compensation expense fluctuating in future periods based on the changes in the
per share market value period to period. As of September 30, 1996, options
covering 177,500 shares with an exercise price of $34.75 per share have vested
and 50,000 shares are expected to vest during the remainder of 1996. The
remaining unvested shares will vest in the years 1997 through 2000.
RESULTS OF OPERATIONS
The following table provides a summary of the Company's revenues for
the three and nine months ended September 30, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
CONSOLIDATED REVENUES 1996 1995 1996 1995
- --------------------- ------------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
Product sales ......... $ 1,000 $ 14,000 $ 5,000 $ 26,000
Grants and contracts .. 206,000 129,000 462,000 270,000
Royalties ............. 24,000 -- 28,000 39,000
License ............... 614,000 -- 1,735,000 --
------------ ------------ ------------- -----------
Total revenue ......... $ 845,000 $ 143,000 $ 2,230,000 $ 335,000
============ ============ ============== ===========
</TABLE>
REVENUES. For the three months ended September 30, 1996, revenues
increased to $845,000 from $143,000 in the three months ended September 30,
1995. Total revenues for the nine months ended September 30, 1996 increased to
$2.23 million from $335,000 in the first nine months of 1995. The increase for
the three months ended September 30, 1996 relates to the increase in license
income which was $614,000 in 1996 compared to no license income for the same
period of the prior year. Additionally, license income for the nine months ended
September 30, 1996 was $1.74 million compared to no license income for the same
period in 1995. The increases in license income are due to the commencement in
1996 of the billing for the reimbursement of clinical costs related to the
Pharmacia & Upjohn, Inc. ("Pharmacia & Upjohn") license agreement. For the three
months ended September 30, 1996, grant income increased to $206,000 from
$129,000 in the three months ended September 30, 1995. Grant income for the nine
months ended September 30, 1996 increased to $462,000 from $270,000 for the
comparable period of the prior year.
COST OF GOODS SOLD. Cost of goods sold for the three months ended
September 30, 1996 decreased to $1,000 from $22,000 for the three months ended
September 30, 1995. For the nine months ended September 30, 1996, cost of goods
sold decreased to $5,000 from $55,000 in the first nine months of 1995. The
decreases are due to the decrease in product sales during 1996 based on the
Company's decision to allocate its manufacturing resources to supporting it
preclinical and clinical testing..
RESEARCH AND DEVELOPMENT. The Company's research and development
expenses for the three months ended September 30, 1996 increased to $4.0 million
from $1.91 million in the three months ended September 30, 1995. Research and
development expenses for the nine months ended September 30, 1996 increased to
$12.05 million from $4.7 million for the nine months ended September 30, 1995.
The increase in expense for the three and nine month periods ended September 30,
1996 compared to the same periods in 1995 relate primarily to the significant
increase in costs associated with the development of drug formulation, an
increase in the purchase of raw materials and supplies used in the production of
clinical devices and drug product in connection with clinical trials and an
increase in payroll costs due to the growth of research and development
personnel and increased clinical trial costs. The Company anticipates that
future research and development expenses, as well as other expenses, will
increase significantly during the remainder of 1996 and beyond as the Company
expands its research and development programs, which include the hiring of
personnel and the continued expansion of preclinical and clinical testing.
SELLING, GENERAL AND ADMINISTRATIVE. The Company's selling, general
and administrative expenses for the three months ended September 30, 1996
increased to $1.84 million from $945,000 in the three months ended September 30,
1995. Total selling, general and administrative expenses for the nine months
ended September 30, 1996 increased to $4.35 million from $2.4 million for the
nine months ended September 30, 1995. These increases are due to increased costs
associated with professional services consisting of financial consultants,
attorneys and public and media relations and the increase in payroll costs due
to the addition of personnel. The Company expects future selling, general and
administrative expenses to increase in the remainder of 1996 and beyond due to
the increased support required for research and development activities,
continuing corporate development and professional services, and general
corporate activities.
INTEREST INCOME. For the three months ended September 30, 1996,
interest income increased to $856,000 compared to interest income of $106,000
for the three months ended September 30, 1995. Interest income for the nine
months ended September 30, 1996 increased to $1.57 million from $134,000 in the
same period of the prior year. The increases in interest income result from the
investment of proceeds received from the Company's secondary public offering in
April 1996, as well as the continued interest income from the proceeds from the
Company's initial public offering and the Pharmacia & Upjohn investment in the
Company's Common Stock.
INTEREST EXPENSE. Interest expense for the three months ended
September 30, 1996 decreased to $9,000 compared to interest expense of $40,000
for the three months ended September 30, 1995. For the nine months ended
September 30, 1996, interest expense decreased to $27,000 from $139,000 in the
comparable period of the prior year. The decreases result primarily from the
conversion of the Company's convertible notes to Common Stock (approximately 79%
were converted in December 1994, 18% were converted during 1995 and the
remaining 3% have been converted during 1996).
The Company does not believe that inflation has had a material impact
on its results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Since inception through September 30, 1996, the Company has
accumulated a deficit of approximately $47.1 million and expects to continue to
incur substantial and increasing operating losses for the next several years.
The Company has financed its operations primarily through a secondary public
offering in April 1996, Pharmacia & Upjohn's purchase of Common Stock, its
initial public offering and private placements of common and preferred stock,
and private placements of convertible notes and short term notes. As of
September 30, 1996, the Company had received net proceeds from the sale of
equity securities and convertible notes of approximately $110.7 million. In
addition, the Company has financed a substantial portion of its leasehold
improvements and certain equipment through capital lease obligations, a
leasehold improvement loan and a bank line of credit. The Company has available
a $1.0 million bank line of credit which has a variable rate of interest based
on the bank's lending rate (7.8% as of September 30, 1996), which expires on
January 31, 1997, and is collateralized by the Company's cash balances. The
credit agreement subjects the Company to certain customary restrictions,
including a prohibition on the payment of dividends. The Company presently has
no outstanding borrowings under the bank line of credit.
In April 1996, the Company completed a secondary public offering of
1,500,000 shares of Common Stock which provided net proceeds to the Company of
approximately $65.4 million. These proceeds are anticipated to be used to fund
preclinical and clinical testing, research and development and the balance for
general corporate activities. Pending such uses, the Company has invested the
net proceeds in short-term, interest-bearing obligations which may primarily
consist of those issued by the U.S. Government, its agencies and
instrumentalities.
In July 1996, the Company's Board of Directors authorized the
purchase of up to 600,000 shares of the Company's Common Stock. During the
quarter ended September 30, 1996, the Company repurchased 7,500 shares at a cost
of $250,000 under this repurchase program.
In connection with the licensing agreement with Pharmacia & Upjohn,
the Company has recorded as license income for the reimbursement of clinical
costs of $614,000 in the third quarter of 1996, and $1.71 million for the nine
months ended September 30, 1996. The Company anticipates recording license
income for the reimbursement of clinical costs throughout the remainder of 1996
and beyond.
For the first nine months of 1996, the Company required cash for
operations of approximately $12.6 million compared to $5.4 million for the same
period in 1995. The increase in cash used in operations was primarily due to an
increase in operating activities associated with the continued expansion of
preclinical and clinical testing, the increase in research and development
activities, the growth of research and development and support personnel and the
increase in general corporate activities. For the first nine months of 1996, the
Company received net cash from its financing activities of approximately $65.8
million as compared to $15.8 million for the same period in 1995. The increase
results from the sale of Common Stock in the Company's secondary public offering
which closed in April 1996.
The Company invested a total of $1.3 million in property, plant and
equipment during the first nine months of 1996 as compared to $503,000 during
the same period in 1995. The Company expects to purchase property, plant and
equipment during the remainder of 1996 as the Company expands its preclinical,
clinical and research and development activities. In June 1996, the Company
entered into an agreement for the leasing of an additional facility which
commenced in September 1996. The move to this facility will require additional
expenditures for the construction of the laboratories and office space and
purchases of equipment. Since inception, the Company has entered into capital
lease agreements for approximately $184,000 of equipment, consisting primarily
of laboratory equipment. The Company expects to continue to lease equipment from
time to time as needed.
The Company's capital requirements will depend on numerous factors,
including the progress and magnitude of the Company's research and development
programs and preclinical and clinical testing, the time involved in obtaining
regulatory approvals, the cost involved in filing and maintaining patent claims,
technological advances, competitor and market conditions, the ability of the
Company to establish and maintain collaborative arrangements, the cost of
manufacturing scale-up and the cost and effectiveness of commercialization
activities and arrangements.
The Company has raised funds in the past through public and private
placement offerings.. The Company believes that these funds should satisfy its
capital requirements for the next few years. The Company may contemplate raising
funds in the future through public or private financings, collaborative
arrangements or from other sources. The success of such efforts in the future
will depend in large part upon continuing developments in the Company's
preclinical and clinical testing and the success of photodynamic therapy in
general. The Company is also in discussion with other companies regarding the
potential for license agreements, equity investments, collaborative
arrangements, or development or other funding programs in exchange for
marketing, distribution or other rights to products developed by the Company.
However, there can be no assurance that discussions with other companies will
result in any investments, collaborative arrangements, agreements or funding.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
On July 17, 1996, the Company held its Annual Meeting of Stockholders. The
following individuals were elected to the Board of Directors:
Votes
Votes For Withheld
--------- --------
Daniel R. Dorion, Ph.D 9,984,406 40,775
Michael D. Farney 9,984,406 40,775
Charles T. Foscue 9,979,454 45,727
Gary S. Kledzik, Ph.D. 9,984,406 40,775
David E. Mai. 9,978,554 46,627
Donald K. McGhan. 9,983,338 41,843
Raul E. Perez, M.D. 9,983,728 90,453
The following proposals were approved at the Company's Annual Meeting:
<TABLE>
<CAPTION>
Votes Broker
Votes For Against Abstained Non-Votes
---------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
1. Proposal to amend Article II, Section 2 of the
Company's Bylaws to increase the number of directors
to no more than nine (9) and no less than five (5). 9,138,589 195,664 15,620 675,308
2. Proposal to adopt the PDT, Inc. Stock Compensation Plan. 9,287,628 272,839 18,130 446,584
3. Proposal to ratify the selection of the Company's
independent auditors. 10,009,438 9,723 6,020 0
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits.
See Exhibit Index on page 14.
(B) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
PDT, INC.
Date: November 12, 1996 By: /s/ John M. Philpott
--------------------
John M. Philpott
Chief Financial Officer and Controller
(on behalf of the Company and as
Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Incorporating
Exhibit Reference
Number Description (if applicable)
- ------ ----------- ---------------
<S> <C> <C>
3.1 Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant [C][3.11]
filed with the Delaware Secretary of State on July 24, 1995.
3.2 Restated Certificate of Incorporation of the Registrant filed with the Delaware Secretary [B][3.1]
of State on December 14, 1994.
3.3 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.2]
the Delaware Secretary of State on March 17, 1994.
3.4 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.3]
the Delaware Secretary of State on October 7, 1992.
3.5 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.4]
the Delaware Secretary of State on November 21, 1991.
3.6 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.5]
the Delaware Secretary of State on September 27, 1991.
3.7 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.6]
the Delaware Secretary of State on December 20, 1989.
3.8 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.7]
the Delaware Secretary of State on August 11, 1989.
3.9 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.8]
the Delaware Secretary of State on July 13, 1989.
3.10 Certificate of Incorporation of the Registrant filed with the Delaware Secretary of State [A][3.9]
on June 16, 1989.
3.11 Amended and Restated Bylaws of the Registrant.
4.1 Specimen Certificate of Common Stock. [B][4.1]
4.2 Form of Convertible Promissory Note. [A][4.3]
4.3 Form of Indenture. [A][4.4]
4.4 Special Registration Rights Undertaking. [A][4.5]
4.5 Undertaking Agreement dated August 31, 1994. [A][4.6]
4.6 Letter Agreement dated March 10, 1994. [A][4.7]
4.7 Form of $10,000,000 Common Stock and Warrants Offering Investment Agreement. [A][4.8]
10.1 PDT, Inc. Stock Compensation Plan.* [D]
10.2+ Ophthalmology Amendment to Development and License Agreement between Registrant and
Pharmacia & Upjohn S.p.A. and Pharmacia & Upjohn AB.
10.3 Forms of Loan Program including Loan Program Agreement Employee, Loan Promissory Note and
Loan Program Summary Description.
10.4 Form of Amendment No. 3 to 1989 Stock Option Agreement.*
11.1 Statement regarding computation of net loss per share.
27.1 Financial Data Schedule.
- -------------------
[A] Incorporated by reference from the exhibit referred to in brackets contained in the
Registrant's Registration Statement on Form S-1 (File No. 33-87138).
[B] Incorporated by reference from the exhibit referred to in brackets contained in Amendment
No. 2 to the Registrant's Registration Statement on Form S-1 (File No. 33-87138).
[C] Incorporated by reference from the exhibit referred to in brackets contained in the
Registrant's Form 10-Q for the quarter ended June 30, 1995, as amended on Form 10-Q/A dated
December 6, 1995 (File No.0-25544).
[D] Incorporated by reference from the Registrant's 1996 Definitive Proxy Statement filed June 18, 1996.
+ Filed subject to confidential treatment. Confidential portions of this exhibit have been
omitted (by redacting-out such material).
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE>
Exhibi 3.11
AMENDED AND RESTATED
BYLAWS OF
PDT, INC.,
A DELAWARE CORPORATION
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings.
All meetings of the shareholders of this corporation ("Corporation") shall
be held at the principal executive office of the Corporation in the State of
Delaware, or such other place within or without the State as may be designated
from time to time by the Board of Directors or as may be consented to in writing
by all of the persons entitled to vote thereat and not present at the meeting.
Section 2. Annual Meeting.
The annual meeting of the shareholders shall be held within one hundred
fifty (150) days after the closing of the accounting year, at which time the
shareholders shall elect a Board of Directors, consider reports of the affairs
of the Corporation, and transact such other business as may properly be brought
before the meeting. In the event the annual meeting of shareholders is not held
within the time above specified, the Board of Directors shall cause a meeting in
lieu thereof to be held as soon thereafter as is convenient, and any business
transacted or election held at such meeting shall be as valid as if the meeting
had been held on the date above specified.
Section 3. Special Meetings.
Special meetings of the shareholders, for the purpose of taking any action
permitted to be taken by the shareholders under the Delaware General Corporation
Law and the Certificate of Incorporation, may be called at any time by the
Chairman of the Board, the President, the Board of Directors, or by any two or
more members thereof, or by one or more shareholders holding not less than ten
percent (10%) of the voting power of the Corporation.
Section 4. Notice of Meetings.
Notice of meetings, annual or special, shall be given in writing to each
shareholder entitled to vote at that meeting by the Secretary or Assistant
Secretary, or, if there be no such officers, by the Chairman of the Board or the
President, or in the case of neglect or refusal, by any person or persons
entitled to call a meeting, not less than ten (10) nor more than sixty (60) days
before such meeting.
Such written notice shall be given either personally or by other means of
written communication, addressed to the shareholder at the address of the
shareholder appearing on the books of the Corporation or given by the
shareholder to the Corporation for the purpose of notice; or if no such address
appears or is given, at the place where the principal office of the Corporation
is located or by publication at least once in a newspaper of general circulation
in the county in which the principal executive office is located. The giving of
notice as provided by these Bylaws may be omitted only to the extent and in the
manner expressly permitted by the Delaware General Corporation Law.
Section 5. Notice of Adjournment.
When a meeting is adjourned for more than forty-five (45) 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 as in the case of an original meeting.
Except as stated above, it shall not be necessary to give any notice of the
adjourned meeting, other than by announcement of the time and place thereof at
the meeting at which such adjournment is taken, and the Corporation may transact
at the adjourned meeting any business which might have been transacted at the
original meeting.
Section 6. Contents of Notice.
Notice of any meeting of shareholders shall specify:
a. The place, the date and the time of the meeting;
b. Those matters which the Board, at the time of the mailing of the
notice, intends to present for action by the shareholders;
c. If directors are to be elected, the names of nominees intended at the
time of the notice to be presented by management for election;
d. The general nature of any proposal to take action with respect to the
approval of (i) a contract or other transaction with an interested
director, (ii) an amendment of the Certificate of Incorporation, (iii)
the reorganization of the Corporation within the meaning of the
Delaware General Corporation Law, (iv) the voluntary dissolution of
the Corporation, or (v) a distribution in dissolution other than in
accordance with the rights of any outstanding preferred shares; and
e. Such other matters, if any, as may be expressly required by statute.
Section 7. Consent to Shareholder's Meeting.
The transactions of any meeting of shareholders, however called and
noticed, shall be valid as those had at a meeting duly held after regular call
and notice, if a quorum is present either in person or by proxy, and if, either
before or after the meeting, each of the persons entitled to vote, not present
in person or by proxy, signs a written waiver of notice or a consent to the
holding of the meeting or an approval of the minutes of the meeting. All such
waivers, consents and approvals shall be filed with the corporate records or
made a part of the minutes of the meeting. A waiver of notice or a consent to
the holding of any meeting of shareholders need not specify the business
transacted at or the purpose of any regular or special meeting, other than any
proposal approved or to be approved at such meeting, the general nature of which
was required by Section 6.d. of these Bylaws to be stated in the notice of the
meeting.
Section 8. Action Without a Meeting.
Unless otherwise provided in the Certificate of Incorporation, any action
which may be taken at any annual or special meeting of the shareholders, other
than the election of directors, may be taken without a meeting and without prior
notice, if a consent in writing, setting forth the action so taken shall be
signed by the holders of outstanding shares having not less than the minimum
number of votes necessary to authorize or take such action at a meeting at which
all shareholders entitled to vote were present and voted.
Unless the consents of all shareholders entitled to vote have been
solicited in writing, prompt notice shall be given of the taking of any
corporate action approved by shareholders without a meeting by less than
unanimous written consent to those shareholders entitled to vote who have not
consented in writing, and, as to any action with respect to (i) a contract or
other transaction with an interested director, (ii) the indemnification of any
present or former agent of the Corporation within the meaning of Section 145 of
the Delaware General Corporation Law, (iii) any reorganization within the
meaning of the Delaware General Corporation Law, or (iv) a distribution in
dissolution other than in accordance with the rights of any outstanding
preferred shares, such notice shall be given at least ten (10) days before the
consummation of such action.
A director may be elected at any time to fill a vacancy not filled by the
Board by the written consent of persons holding a majority of the outstanding
shares entitled to vote for the election of directors, and any required notice
of any such election shall promptly be given as provided above. Directors may
not otherwise be elected without a meeting unless a consent in writing, setting
forth the action so taken, is signed by all of the persons who would be entitled
to vote for the election of directors.
Section 9. Quorum; Adjournment.
The holders of a majority of the shares entitled to vote, represented in
person or by proxy, shall be required and shall constitute a quorum at all
meetings of the shareholders for the transaction of business, except as
otherwise provided by the Certificate of Incorporation. The shareholders present
at a duly called or held meeting at which a quorum is present may continue to do
business until adjournment notwithstanding the withdrawal of enough shareholders
to leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
If a quorum shall not be present or represented at any meeting of the
shareholders, the meeting may be adjourned from time to time by majority vote of
the shares entitled to vote at the meeting who are present in person or
represented by proxy, until the requisite number of voting shares shall be
present.
Section 10. Voting Rights; Cumulative Voting.
Subject to the provisions of Sections 212 through 218, inclusive, of the
Delaware General Corporation Law, only persons in whose names shares entitled to
vote stand on the stock records of the Corporation on the record date shall be
entitled to vote at meetings of the shareholders. Every shareholder entitled to
vote shall be entitled to one vote for each of such shares, and the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on any matter shall be the act of the shareholders, unless the vote of a greater
number or voting by classes is required by the Delaware General Corporation Law
or by the Certificate of Incorporation.
Every shareholder entitled to vote at any election of directors shall have
the right to cumulate his votes to the extent and in the manner provided by
Section 214 of the Delaware General Corporation Law.
Section ll. Proxies.
Every shareholder entitled to vote or to execute consents may do so either
in person or by written proxy executed in accordance with the provisions of the
Delaware General Corporation Law and filed with the Secretary or Assistant
Secretary of the Corporation.
Section 12. Inspectors of Election.
Before any meeting of shareholders, the Board of Directors may appoint any
persons other than nominees for office to act as Inspectors of Election at such
meeting or any adjournment thereof. If no Inspectors of Election are appointed,
or if an appointment is vacated by an Inspector who fails to appear or fails or
refuses to act, the Chairman of any such meeting may, and on the request of any
shareholder or his proxy shall, make such appointment or fill such vacancy at
the meeting.
ARTICLE II
DIRECTORS
Section 1. Powers.
Subject to the limitations of the Certificate of Incorporation, the Bylaws,
and of the Delaware General Corporation Law as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
controlled by, the Board of Directors.
Section 2. Number and Qualification of Directors.
The authorized number of directors of this Corporation will be not less
than five nor more than nine (9), and the exact number of directors will be
seven (7) until changed, within the limits specified above, by a resolution
amending such exact number, duly adopted by the Board of Directors or by the
stockholders. Subject to the provisions of the Certificate of Incorporation, the
minimum and maximum number of directors may be changed, or a definite number may
be fixed without provision for an indefinite number, by a duly adopted amendment
to the Certificate of Incorporation or by an amendment to this ByLaw duly
adopted by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote; provided, however, that no decrease will
shorten the term of any incumbent director unless such director is specifically
removed pursuant to Section 5 of this Article II of these ByLaws at the time of
such decrease. (Section 2 was amended in its entirety at the July 17, 1996
Annual Meeting of Stockholders.)
Section 3. Election of Directors.
The directors shall be elected by ballot at the annual meeting of the
shareholders to hold office until the next annual meeting and until their
successors are elected and qualified. Their term of office shall begin
immediately after election.
Section 4. Vacancies.
A vacancy in the Board of Directors shall be deemed to exist in the case of
the death, resignation or removal of any director, if a director has been
declared of unsound mind by order of Court or convicted of a felony, if the
authorized number of directors is increased, or if the shareholders shall fail,
either at a meeting at which an increase in the number of directors is
authorized, or at an adjournment thereof, or at any other time, to elect the
full number of authorized directors.
Vacancies in the Board of Directors, except for a vacancy created by the
removal of a director, may be filled by a majority of the remaining directors,
and each director so elected shall hold office until his successor is elected at
an annual or special meeting of the shareholders. A vacancy created by the
removal of a director may be filled only by a vote of the majority of the shares
entitled to vote at a duly held meeting of the shareholders, or by the written
consent of the holders of a majority of the outstanding shares.
The shareholders may at any time elect a director or directors to fill any
vacancies not filled by the directors.
If any director tenders his resignation to the Board of Directors to take
effect at a future time, the Board or the shareholders shall have the power to
elect a successor to take office at such time as the resignation shall become
effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. Removal of Directors.
The entire Board of Directors, or any individual director, may be removed
from office in the manner provided by the Delaware General Corporation Law.
Section 6. Place of Meeting.
Meetings of the Board of Directors shall be held at the principal executive
office of the Corporation, or as designated from time to time by resolution of
the Board of Directors or written consent of all of the members of the Board.
Any meeting shall be valid wherever held if held with the written consent of all
members of the Board of Directors, given either before or after the meeting and
filed with the Secretary or Assistant Secretary of the Corporation.
Section 7. Annual Meeting.
A regular annual meeting of the Board of Directors shall be held without
notice at the place of the annual meeting of shareholders immediately following
the adjournment thereof, for the purpose of organization, election of officers,
and the transaction of such other business as may properly come before the
meeting.
Section 8. Other Regular Meetings.
Other regular meetings of the Board of Directors shall be held on the last
Thursday of each calendar quarter.
Section 9. Special Meetings; Notices.
Written notice of the time and place of special meetings shall be delivered
or communicated personally to each director by telephone, or by telecopy or
mail, charges prepaid, addressed to him at his address as it is shown upon the
records of the Corporation, or if such address is not readily ascertainable, at
the place in which the meetings of the directors are regularly held. If such
notice is mailed or telecopied, it shall be deposited in the United States mail
or delivered at least forty-eight (48) hours prior to the time of the holding of
the meeting. In case such notice is delivered personally or by telephone, it
shall be so delivered at least twenty-four (24) hours prior to the time of
holding the meeting. Such mailing, telecopying or delivery, personally or by
telephone, as above provided shall be due, legal and personal notice to such
director.
Section 10. Waiver of Notice.
The transactions of any meeting of the Board of Directors, however called
and noticed or wherever held, are as valid as though had at a meeting regularly
called and noticed if all the directors are present and sign a consent to the
holding of the meeting on the records of the meeting, or if a majority of the
directors are present and each of those not present, either before or after the
meeting, signs a written waiver of notice, or a consent to holding the meeting,
or an approval of the minutes of the meeting. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section ll. Action of Directors Without Meeting.
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board, and shall have
the same force and effect as a unanimous vote of the directors.
Section 12. Action at a Meeting; Quorum.
A majority of the authorized number of directors shall be necessary to
constitute a quorum for the transaction of business, and the action of a
majority of the directors present at a meeting duly held at which a quorum is
present, when duly assembled, is valid as a corporate act unless a greater
number is required by the Certificate of Incorporation, these Bylaws, or the
Delaware General Corporation Law. Directors may participate in a meeting through
the use of conference telephone or similar communications equipment as long as
all members participating in the meeting can hear one another, and such
participation shall constitute the presence in person at the meeting.
Section 13. Adjournment.
A majority of the directors present, whether or not a quorum, may adjourn
from time to time by fixing a new time and place prior to taking adjournment,
but if any meeting is adjourned for more than twenty-four (24) hours, notice of
any adjournment to another time or place shall be given prior to the time of the
adjourned meeting to any directors not present at the time the adjournment was
taken.
Section 14. Committees.
The Board of Directors may, by resolutions adopted by a majority of the
authorized number of directors, establish one or more committees, including an
Executive Committee, each consisting of two or more directors, to serve at the
pleasure of the Board. The Board of Directors may delegate to any such committee
any of the powers and authority of the Board of Directors in the business and
affairs of the Corporation, except those powers specifically reserved to the
Board of Directors by the provisions of Section 141 of the Delaware General
Corporation Law. The Board shall prescribe the manner in which the proceedings
of the Executive Committee or any other Committee shall be conducted, and may
designate one or more alternate directors to replace any absent committee
members at any meeting of the Committee.
ARTICLE III
OFFICERS
Section l. Officers.
The officers of the Corporation shall be elected by and shall hold office
at the pleasure of the Board of Directors. These officers shall include a
President, one or more Vice Presidents, a Secretary and a Chief Financial
Officer, and may include a Chairman of the Board of Directors.
Section 2. Election.
After their election, the Board of Directors shall meet and organize by
electing a President, one or more Vice Presidents, a Secretary and a Chief
Financial Officer, who may be, but need not be, members of the Board of
Directors, and such additional officers provided by these Bylaws as the Board of
Directors shall determine to be appropriate. Any two or more offices may be held
by the same person.
Section 3. Compensation and Tenure of Office.
The compensation and tenure of office of all of the officers of the
Corporation shall be fixed by the Board of Directors.
Section 4. Removal and Resignation.
Any officer may be removed, either with or without cause, by a majority of
the directors at the time in office, at any regular or special meeting of the
Board, or except in the case of an officer chosen by the Board of Directors, by
any officer upon whom such power of removal may be conferred by the Board of
Directors, subject in each case, however, to any rights of an officer under any
contract of employment.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the President, or to the Secretary or an Assistant Secretary of
the Corporation without prejudice, however, to any rights of the Corporation
under any contract to which such officer is a party.
Any such resignation shall take effect at the date of receipt of such
notice or at any later time specified in the notice; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 5. Vacancies.
Any vacancy in an office occurring because of death, resignation, removal,
disqualification or any other cause may be filled by the Board of Directors at
any regular or special meeting of the Board, or in such manner as may otherwise
be prescribed in the Bylaws for appointment to such office.
Section 6. Chairman of the Board.
The Chairman of the Board, if there be one, shall, when present, preside at
all meetings of the shareholders and of the Board of Directors, and shall have
such other powers and duties as from time to time shall be prescribed by the
Board of Directors.
Section 7. President.
The President shall be the general manager of the Corporation and, subject
to the control of the Board of Directors, shall be chief executive officer of
the Corporation and shall have general supervision, direction and control of the
business and affairs of the Corporation. If the Corporation has no Chairman of
the Board, the President shall also have the duties prescribed above for the
Chairman of the Board.
Section 8. Vice Presidents.
In the absence or the disability of the President, the Vice Presidents, in
order of their rank as fixed by the Board of Directors, or if not ranked, the
Vice President designated by the directors, or if no such designation is made by
the Board of Directors, the Vice President designated by the President, shall
perform the duties and exercise the powers of the President, and shall perform
such other duties and have such other powers as the Board of Directors shall
prescribe.
Section 9. Secretary.
The Secretary shall keep, or cause to be kept, a book of Minutes at the
principal executive office or such other place as the Board of Directors may
order, of all the proceedings of its shareholders and the Board of Directors and
Committees of the Board, with the time and place of holding of meetings, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present at directors' meetings, the number of shares present
or represented at shareholders' meetings, and the proceedings of these meetings.
The Secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's transfer agent, a share register or
a duplicate share register, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
Section 10. Assistant Secretary.
The Assistant Secretary, if there is one, shall have all the same rights,
duties, powers and privileges as the Secretary and may act in his place and
stead whenever necessary or desirable.
Section ll. Chief Financial Officer.
The Chief Financial Officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct accounts of the properties and business
transactions of the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. The books
of account shall at all reasonable times be open to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they so request, an account of all his
transactions as Chief Financial Officer and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the Bylaws.
Section 12. Subordinate Officers.
Subordinate Officers, including but not limited to, Assistant Secretaries,
Treasurers and Assistant Treasurers, or agents, as the business of the
Corporation may require, may from time to time be appointed by the Board of
Directors, the President, or by any officer empowered to do so by the Board of
Directors, and shall have such authority and shall perform such duties as are
provided in the Bylaws or as the Board of Directors may from time to time
determine.
ARTICLE IV
CORPORATE RECORDS, INSPECTION, VOTING SHARES
IN NAME OF CORPORATION
Section l. Records.
The Corporation shall maintain adequate and correct books and records of
account of its business and properties. All of such accounts, books and records
shall be kept at its principal business office, or at such other location as may
be fixed by the Board of Directors from time to time.
Section 2. Inspection.
The accounting books and records and Minutes of the proceedings of the
shareholders and the Board of Directors and its Committees shall be open to
inspection by the shareholders from time to time and in the manner provided in
Section 220 of the Delaware General Corporation Law, and every director shall
have the right to inspect and copy all books, records and documents of the
Corporation, and to inspect its properties, in the manner provided by Section
220 of the Delaware General Corporation Law.
Section 3. Voting Shares in Name of Corporation.
Shares standing in the name of this Corporation may be voted or represented
and all rights incident to those shares may be exercised on behalf of the
Corporation by the President, or if he is unable or refuses to act, by a Vice
President or by such other person as the Board of Directors may determine.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
Section l. Certificates for Shares.
Every holder of shares in the Corporation shall be entitled to have a
certificate, in such form and device as the Board of Directors may designate,
certifying the number of shares and the classes or series of shares owned by the
shareholder, and containing a statement setting forth the office or agency of
the Corporation from which the shareholder may obtain, upon request and without
charge, a copy of the statement of any rights, preferences, privileges, and
restrictions granted to or imposed upon each class or series of shares
authorized to be issued and upon the holders of those shares, and any other
legend or statement as may be required under the Delaware General Corporation
Law and federal and state corporate securities laws.
Every certificate for shares shall be signed in the name of the Corporation
by the President or Vice President and the Secretary or an Assistant Secretary.
Any signature on the certificate may be by facsimile, provided that at least one
signature, which may but need not be that of the Corporation's registrar or
transfer agent, if any, shall be manually signed.
Section 2. Transfer on the Books.
Upon surrender to the Secretary or Assistant Secretary or to the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. Lost or Destroyed Certificates.
A new certificate may be issued without the surrender and cancellation of
an old certificate that is lost, apparently destroyed or wrongfully taken when:
(a) the request for the issuance of a new certificate is made within a
reasonable time after the owner of the old certificate has notice of its loss,
destruction or theft; and (b) such request is received by the Corporation prior
to its receipt of notice that the old certificate has been acquired by a bona
fide purchaser; and (c) the owner of the old certificate gives an indemnity bond
or other adequate security sufficient in the judgment of the Corporation to
indemnify it against any claim, expense or liability resulting from the issuance
of a new certificate. In the event of the issuance of a new certificate, the
rights and liabilities of the Corporation, and of the holders of the old and new
certificates, shall be governed by the provisions of the Delaware General
Corporation Law.
Section 4. Transfer Agents and Registrars.
The Board of Directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, which shall be banks or trust companies,
either domestic or foreign, at such times and places as the requirements of the
Corporation may necessitate and the Board of Directors may designate.
Section 5. Record Date.
The Board of Directors may fix, in advance, a record date for the purpose
of determining shareholders entitled to notice of and to vote at any meeting of
shareholders, to consent to corporate action in writing without a meeting, to
receive any report, to receive any dividend or other distribution or allotment
of any right or to exercise rights with respect to any change, conversion or
exchange of shares. The record date so fixed shall not be more than sixty (60)
days prior to any event for the purpose for which it is fixed, and shall not be
less than ten (10) days prior to the date of any meeting of the shareholders. If
no such record date is fixed by the Board of Directors, then the record date
shall be that date prescribed by Section 213 of the Delaware General Corporation
Law.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of its incorporation, and the
words "INCORPORATED DELAWARE.
ARTICLE VII
AMENDMENTS
Section l. By Shareholders.
The Bylaws may be repealed or amended, or new Bylaws may be adopted, by the
affirmative vote of a majority of the outstanding shares entitled to vote or by
the written consent of shareholders entitled to vote such shares, except as
otherwise provided by the Delaware General Corporation Law or by the Certificate
of Incorporation.
Section 2. By Directors.
Subject to the right of shareholders as provided in Section l of this
Article VII to adopt, amend or repeal Bylaws, the Board of Directors may adopt,
amend or repeal Bylaws; provided, however, that no Bylaw or amendment changing
the number of directors of the Corporation shall be adopted other than in the
manner provided by Section 2 of Article II of these Bylaws.
Section 3. Records of Amendments.
Any amendment or new Bylaw adopted by the shareholders or Board of
Directors shall be copied in the appropriate place in the Minute book with the
original Bylaws, and the repeal of any Bylaw shall be entered on the original
Bylaws together with the date and manner of such repeal. The original or a copy
of the Bylaws as amended to date shall be open to inspection by the shareholders
at the Corporation's principal executive office at all reasonable times during
office hours.
ARTICLE VIII
WAIVER OF ANNUAL REPORT
The requirement that this Corporation send an annual report to its
shareholders is hereby expressly waived.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, AND AGENTS
Section 1. Definitions.
For the purposes of this Article IX the following definitions shall apply:
a. "Agent" means any person who (a) is or was a director, officer,
employee or other agent of the Corporation, or (b) is or was serving
at the request of the Corporation as a director, officer, employee or
agent of another foreign or domestic corporation, joint venture, trust
or other enterprise, or (c) was a director, officer, employee or agent
of a foreign or domestic corporation which was a predecessor
corporation of the Corporation or of another enterprise at the request
of such predecessor corporation.
b. "Proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative.
c. "Expenses" includes without limitation attorneys' fees and any
expenses of establishing a right to indemnification under Section 5 of
this Article IX below.
d. "Independent Legal Counsel" means an attorney mutually agreeable to
the Corporation and the agent seeking indemnification, with such
attorney to be designated within ten (10) days after notice by one
party to the other. If the Corporation and the agent seeking indemnity
cannot agree upon the selection of such attorney within such ten (10)
day period, an attorney shall be selected by the Corporation from
among five (5) attorneys designated in a writing by the agent
delivered to the Corporation within five (5) days after the end of the
ten (10) day period; provided, however, that the attorneys so
designated have a minimum of ten (10) years experience in corporate
law, and are each full partners (or the equivalent) in a law firm with
at least five (5) attorneys. If the Corporation and the agent cannot
agree upon the selection of the attorney, and if the agent fails to
designate his selection of five (5) attorneys within the five (5) day
period, the Corporation alone shall choose the attorney.
Section 2. Proceedings Other than By or In the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Corporation to procure a judgment in its favor) by reason of
the fact that such person is or was an agent of the Corporation against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interest of the Corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful. 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 the
person reasonably believed to be in the best interests of the Corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
Section 3. Proceedings By or In the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action by
or in the right of the Corporation to procure a judgment in its favor by reason
of the fact that such person is or was an agent of the Corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such action if such person acted in good faith, in a
manner such person reasonably believed to be in the best interest of the
Corporation and its shareholders.
Section 4. Determination of Right to Indemnification.
To the extent that a person who is or was an agent of the Corporation has
been successful on the merits in defense of any proceeding referred to in
Section 2 or 3 of this Article IX above or in the defense of any claim, issue or
matter therein, such person shall be indemnified against expenses actually and
reasonably incurred by such person in connection therewith.
Except as provided in the first paragraph of this Section 4 above, any
indemnification under Section 2 or 3 of this Article IX above shall be made by
the Corporation only if authorized in the specific case, upon a determination
that indemnification of the agent is proper in the circumstances because the
agent has met the applicable standard of conduct set forth in Section 2 or 3 of
this Article IX above, by any of the following: (a) a majority vote of a quorum
consisting of directors who are not parties to such action or proceeding; (b) if
such a quorum of directors is not obtainable, by independent legal counsel in a
written opinion; (c) approval or ratification by the affirmative vote of a
majority of the shares represented and voting at a duly held meeting at which a
quorum is present (which shares voting affirmatively also constitute at least a
majority of the required quorum); (d) written consent of the shareholders under
Section 228 of the Delaware General Corporation Law; (e) the affirmative vote or
written consent of such greater proportion (including all) of the shares of any
class or series as may be provided in the Certificate of Incorporation or in the
Delaware General Corporation Law, for all or any specified shareholder action;
or (f) the court in which such proceeding is or was pending upon application
made by the Corporation or the agent or the attorney or other person rendering
service in connection with the defense, whether or not such application by the
agent, attorney or other person is opposed by the Corporation.
The shares owned by the person to be indemnified shall not be entitled to
vote on any written consent or affirmative vote set forth in the second
paragraph of Section 4 of this Article IX above.
Section 5. Indemnity for Expenses of Establishing Right to Indemnification.
To the extent that a person who is or was an agent of the Corporation has
been successful on the merits in defense of any proceeding referred to in
Section 2 or 3 of this Article IX above, or in defense of any claim, issue or
matter therein, such person shall also be indemnified against expenses of
establishing a right to indemnification actually and reasonably incurred by such
person in connection therewith.
If authorized in the specific case, upon a determination that
indemnification of such person is proper in the circumstances because such
person has met the applicable standard of conduct set forth in Section 2 or 3 of
this Article IX above, by any of the following: (a) approval or ratification by
the affirmative vote of a majority of the shares represented and voting at a
duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum); (b)
written consent of the shareholders under Section 228 of the Delaware General
Corporation Law, or (c) the affirmative vote or written consent of such greater
proportion (including all) of the shares of any class or series as may be
provided in the Certificate of Incorporation or in the Delaware General
Corporation Law, for all or any specified shareholder action; such person shall
also be indemnified against any expenses of establishing a right to
indemnification actually and reasonably incurred therewith.
The shares owned by the person to be indemnified shall not be entitled to
vote on any written consent or affirmative vote set forth in the second
paragraph of Section 5 of this Article IX above.
Section 6. Procedure for Indemnification.
Any indemnification under Section 2, 3, or 5 of this Article IX above, or
advance under Section 7 of this Article IX below, shall be made promptly, and in
any event within sixty (60) days, upon the written request of the agent. The
right to indemnification or advances as granted by this Article IX shall be
enforceable by the agent in any court of competent jurisdiction, if the
Corporation denies such request in whole or in part or if no disposition thereof
is made within sixty (60) days. It shall be a defense to any such action that
the agent has not met the standard of conduct set forth in Section 2, 3, or 5 of
this Article IX above, or regarding a claim for advances the agent has not
delivered the required undertaking under Section 7 of this Article IX below, but
the burden of proving the defense is on the Corporation.
Section 7. Advances.
Expenses incurred in defending any proceeding shall be advanced by the
Corporation prior to the final disposition of such proceeding upon receipt of
any undertaking by or on behalf of the person claiming a right to be indemnified
under this Article IX to repay such amount if it shall be determined ultimately
that the agent is not entitled to be indemnified as authorized in this Article
IX.
Section 8. Other Rights and Continuation of Rights to Indemnification.
The indemnification provided by this Article IX shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, approval of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in any other capacity while holding such office, to the extent such
additional rights to indemnification are authorized in the Certificate of
Incorporation. The rights to indemnity hereunder shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors, and administrators of the person. Nothing
contained in this Article IX shall affect any right to indemnification to which
persons other than such directors and officers may be entitled by contract or
otherwise.
Section 9. Insurance.
This Corporation may purchase and maintain insurance on behalf of any agent
of the Corporation against any liability asserted or incurred by the agent in
such capacity or arising out of the agent's status as such whether or not the
Corporation would have the power to indemnify the agent against such liability
under the provisions of this Article IX. The fact that the Corporation owns all
or a portion of the shares of the company issuing a policy of insurance shall
not render this Section 9 inapplicable if either of the following conditions are
satisfied: (a) if authorized in the Certificate of Incorporation, any policy
issued is limited to the extent not in conflict with the Delaware General
Corporation Law, or (b) the company issuing the insurance policy is organized,
licensed, and operated in a manner that complies with the insurance laws and
regulations applicable to its jurisdiction of organization, the company issuing
the policy provides procedures for processing claims that do not permit that
company to be subject to the direct control of the Corporation that purchased
that policy, and the policy issued provides for some manner of risk sharing
between the issuer and purchaser or the policy, on one hand, and some
unaffiliated person or persons, on the other, such as by providing that a
portion of the coverage furnished will be obtained from some unaffiliated
insurer or reinsurer.
Section 10. Savings Clause.
If this Article IX or any portion hereof shall be invalidated on any ground
by any court of competent jurisdiction, then the Corporation shall nevertheless
indemnify each person as to any expenses, judgments, fines, settlements and
other amounts incurred by such person in connection with any proceeding, to the
fullest extent permissible under applicable law.
Section 11. Subsequent Amendment.
If the Delaware General Corporation Law or any other applicable law is
amended after approval by the shareholders of this Article IX to further expand
the indemnification permitted to directors, officers and agents of the
Corporation, then the Corporation shall indemnify such person to the fullest
extent permissible under the Delaware General Corporation Law or other
applicable law, as so amended.
Section 12. Contract.
The rights to indemnification conferred in this Article shall be deemed to
be a contract between the Corporation and each person who serves in the
capacities described above at any time while this Article is in effect. Any
repeal or modification of this Article shall not in any way diminish any rights
to indemnification of such person or the obligations of the Corporation arising
hereunder.
Section 13. Indemnity Agreements.
The Corporation may from time to time enter into indemnity agreements with
the persons who are members of its Board of Directors and with such officers or
other agents of the Corporation as the Board may designate, such indemnity
agreements to provide in substance that the Corporation will indemnify such
persons to the fullest extent permitted by the provisions of this Articles IX
and the Certificate of Incorporation.
<PAGE>
Exhibit 10.2
Amendment 10 July 96
July 10, 1996
Re: Development and License Agreement between Pharmacia S.p.A.
("Pharmacia") and PDT, Inc. ("PDTI") dated July 1st, 1995, amended July 25,
1995, September 11, 1995, and March 20, 1996 ("License Agreement")
Pharmacia and PDTI have entered into the License Agreement with respect to the
fields of Oncology, Urology and Dermatology, and now wish to amend the License
Agreement with respect to the field of Ophthalmology.
Pharmacia and PDTI agree to amend the License Agreement according to the
following terms and conditions:
Section 1.06.01 shall be inserted:
"1.06.01 Ophthalmology Effective Date. The term "Ophthalmology
Effective Date" as used herein shall mean ___ of _________ , 1996."
Section 1.08 shall be deleted and replaced by:
"1.08 Fields. The term "Fields" as used herein shall mean the fields
of Oncology, Urology, Dermatology and Ophthalmology, unless otherwise
indicated."
Section 1.24 shall be inserted as follows:
"1.24 Other Indications. The term "Other Indications" as used herein
shall mean the indications in the Fields as set forth in Schedule
1.24. The parties will agree on additional Other Indications through
the Operating Committee, based on criteria including, but not limited
to, *****, ***** and ***** ."
The numbering on the remainder of Article I shall be amended accordingly.
Section 1.35 shall be deleted and replaced by:
"1.35 Schedules. The Schedules which are attached to this Agreement
and which are herein incorporated, are as follows: Schedule
Description
1.17 Major Indications
1.18 Minor Indications
1.24 Other Indications
3.04 Key Countries
The following shall be added at the end of Section 3.01:
"Pharmacia intends to sublicense its rights in the Field of
Ophthalmology to its affiliate, Pharmacia & Upjohn AB. In respect to
such Field, the parties intend for such affiliate to make all royalty
and other payments, exercise all rights and perform all obligations
directly to PDT."
Section 3.04.01 shall be inserted as follows:
"3.04.01 Ophthalmology Milestones. Notwithstanding anything herein to
the contrary, for Ophthalmology Major and Minor Indications Pharmacia
shall pay PDTI only the following sums upon achievement of the stated
milestones:
(i) if, after conducting ***** for any Ophthalmology Major and Minor
Indication, the Ophthalmology Operating Committee decides to proceed with *****
for such indication, Pharmacia shall pay PDTI: ***** for each Major Indication;
and ***** for each Minor Indication; or in the event ***** are not required for
any indication and the Operating Committee decides to proceed with *****,
Pharmacia shall not owe PDTI a ***** milestone payment for each such indication;
and
(ii) for each Major and Minor Indication, at the ***** in one or more of
the Key Countries as specified by Schedule 3.04, Pharmacia shall pay PDTI *****
for each Major Indication so approved, and ***** for each Minor Indication so
approved.
(iii) Pharmacia shall not owe PDTI any milestone payments for Other
Indications in Ophthalmology."
*****Confidential Treatment Requested
<PAGE>
Section 3.05.01 shall be inserted as follows:
"3.05.01 Ophthalmology Royalties. Notwithstanding anything herein to
the contrary, for Ophthalmology, Pharmacia or Pharmacia & Upjohn AB
shall, for the term of the license specified by Section 3.02, pay PDT
royalties on Net Sales of Product to third parties at the rate of
***** on total Net Sales of Product of *****, per calendar year and a
royalty of ***** on the part of total Net Sales of Product ***** per
calendar year, *****.
Section 3.12 shall be inserted as follows:
"3.12 Reimbursement. Within fifteen (15) business days following the
Ophthalmology Effective Date, Pharmacia shall pay to PDTI the sum of
Five Hundred Thousand US Dollars ($500,000), as reimbursement for
prior expenses incurred by PDTI in the development of SnET2 for
Ophthalmology."
Section 4.01.01 shall be inserted as follows:
"4.01.01 Ophthalmology Strategic Plan. Notwithstanding anything
herein to the contrary, for Ophthalmology, the Strategic Plan shall
be governed by the following provision: Unless otherwise agreed to by
the parties, within one hundred twenty (120) days following the
Ophthalmology Effective Date, the parties shall mutually develop a
written plan, the format and content as set forth in Section 4.01,
with respect to Ophthalmology. This plan shall be called the
"Ophthalmology Strategic Plan". References to the Strategic Plan in
the remainder of the Agreement shall also apply to the Ophthalmology
Strategic Plan, unless otherwise indicated."
Section 4.02.01 shall be inserted as follows:
"4.02.01 Ophthalmology Steering Committee. Notwithstanding anything
herein to the contrary, for Ophthalmology, there shall be no Steering
Committee. References to the Steering Committee in the remainder of
the Agreement shall apply to the Ophthalmology Operating Committee as
defined in Section 4.03.01, unless otherwise indicated."
Section 4.03.01 shall be inserted as follows:
"4.03.01 Ophthalmology Operating Committee. Notwithstanding anything
herein to the contrary, for Ophthalmology, the Operating Committee
shall be governed by the following provision: Unless otherwise agreed
to by the parties, within thirty (30) days following the
Ophthalmology Effective Date, the parties shall appoint an
"Ophthalmology Operating Committee", having the membership and
purpose as set forth in Section 4.03, with respect to the
Ophthalmology Strategic Plan. References to the Operating Committee
in the remainder of the Agreement shall also apply to the
Ophthalmology Operating Committee, unless otherwise indicated."
Section 4.09.01 shall be inserted as follows:
"4.09.01 SnET2 for Ophthalmology. Notwithstanding anything herein to
the contrary, for Ophthalmology, unless otherwise determined by the
Ophthalmology Operating Committee, PDTI shall be responsible for
conducting all necessary Preclinical Tests and Phase I and Phase II
Clinical Tests for SnET2 to be used in any Ophthalmology indications
within the Fields. The Out-of-Pocket Expenses associated with
Preclinical Tests, Phase I and Phase II Clinical Tests being conducted
by PDT on the Ophthalmology Effective Date, or conducted by PDT
thereafter, shall be refunded by Pharmacia, provided that these
studies have been conducted in agreement with the Ophthalmology
Operating Committee. Pharmacia shall be responsible for conducting and
shall bear all costs associated with Phase III Clinical Tests of SnET2
to be used in all Ophthalmology indications, as well as for all
post-NDA approval studies which may be necessary; provided, however,
that the Ophthalmology Operating Committee has the right to determine,
in its reasonable judgment, whether to proceed to Phase III Clinical
Tests as to any Ophthalmology indication. PDTI shall supply to
Pharmacia SnET2 and Light Devices to enable Pharmacia to carry out
Phase III Clinical Tests required to support an NDA for SnET2. The
actual costs of SnET2 and Light Devices for all Clinical Test phases
shall be shared equally by the parties hereto."
Article XVI "Ophthalmology Negotiation" shall be deleted.
*****Confidential Treatment Requested
<PAGE>
Schedule 1.17 shall be deleted and replaced by:
"SCHEDULE 1.17 Major Indications.
*****
Schedule 1.18 shall be deleted and replaced by:
"SCHEDULE 1.18 Minor Indications.
*****
Schedule 1.24 shall be inserted as follows:
"SCHEDULE 1.24 Other Indications.
*****
The parties shall revise the SnET2 Device Supply and Product Supply Agreements,
dated July 1st, 1995, to reflect the field of Ophthalmology as appropriate.
IN WITNESS WHEREOF, the parties hereto have caused this Development
and License Agreement to be executed in duplicate by their respective officers
duly authorized as of the date first above written.
PDT, INC.
By
Name:
Title:
PHARMACIA S.p.A.
By
Name:
Title:
PHARMACIA & UPJOHN AB
By:
Name:
Title:
*****Confidential Treatment Requested
<PAGE>
Exhibit 10.3
EMPLOYEE LOAN PROGRAM AGREEMENT
The undersigned (the "Employee") is the holder of the Employee Stock
Option(s) (the "Option(s)") issued by PDT, Inc., a Delaware corporation (the
"Company") described in Exhibit B.
The Employee has requested to borrow the Loan Amount identified
below, but not exceeding $25,000.00 in the aggregate, from the Company and the
Employee has agreed to execute and deliver the Employee Loan Promissory Note
(the "Note") in the form attached hereto as Exhibit A.
The Employee has reviewed the terms of the Note and agrees to be
bound by the terms thereof.
The Employee grants a security interest in the Option(s) to the
Company to secure the obligations under the Note and will deliver to the Company
the Employee's original copy of the Option(s) with such instrument of transfer
as the Company shall request. By its acceptance of the Option(s), the Company
consents to such transfer of the Option(s). The Employee also agrees that the
Option(s) constitute a "security" and (i) in the event of a default by the
Employee under the terms of the Note, the Company may set off and utilize the
Option(s) or the shares underlying the Option(s) for the purpose of paying the
principal and interest due pursuant to the Note, (ii) the Company shall be
entitled to receive from the proceeds of the sale of any stock underlying any
Company stock option funds sufficient to repay this Note and (iii) any such sale
proceeds shall be remitted by any selling broker directly to the Company. The
Employee further represents that the proceeds of the loan under the Employee
Loan Program are not for the purpose of purchasing or carrying margin stock
within the meaning of Regulation G promulgated by the Federal Reserve Board and
the Employee agrees to execute and deliver prior to funding such statement of
purpose as shall be required under such regulation.
The Employee hereby acknowledges, ratifies and affirms all of the
remaining terms and conditions of the Option(s).
In Witness Whereof the undersigned have duly executed this Agreement
on the respective dates indicated.
PDT, INC.
By:
- -------------------------- --------------------------------------------
Date Title: Chief Financial Officer
Employee
- ------------------------- --------------------------------------------
Date
<PAGE>
Exhibit A
Employee Loan Promissory Note
<PAGE>
EMPLOYEE LOAN PROMISSORY NOTE
$25,000 Santa Barbara, CA
Date:
FOR VALUE RECEIVED, _____________________, (the "Employee"),
unconditionally promises to pay to the order of PDT, INC. (the "Company"), whose
address is 7408 Hollister Avenue, Santa Barbara, California 93117, in the manner
and at the place hereinafter provided, the principal amount of Twenty Five
Thousand and 00/100ths Dollars ($25,000.00) (or such lesser amount as shall
equal the aggregate unpaid principal amount of the loans made by the Company to
the Employee under the Company's Employee Loan Program), together with interest
at the rate established from time to time by the Department of the Treasury and
defined as the annual Applicable Federal Rate, which shall accrue and be payable
together with the principal amount hereof upon the earlier of: (i) termination
of Employee's employment with Company, (ii) Employee's election to exercise of
any Company stock option held by Employee, or (iii) the earliest expiration of
the employee stock option(s) described in Paragraph 7 below (the "Maturity
Date").
The Employee also promises to pay on the Maturity Date interest on the
unpaid principal amount hereof as it exists from time to time from the date
hereof until paid in full. All computations of interest shall be made by the
Company on the basis of a 360-day year and the actual number of days elapsed in
the relevant period. In no event shall the interest rate payable on this Note
exceed the maximum rate of interest permitted to be charged under applicable
law.
The date and amount of each loan made by the Company to the Employee, and
each payment made on account of the principal of such loan(s), shall be recorded
by the Company on its books and, prior to any transfer of this Note, endorsed by
the Company on the schedule attached to this Note or any continuation of such
schedule, provided that the failure of the Company to make any such recordation
or endorsement shall not affect the obligations of the Employee to make a
payment when due of any amount owing under the Employee Loan Program or under
this Note in respect of the loans made by the Company.
This Note is the Employee Loan Promissory Note referred to in the Employee
Loan Program Agreement (as modified and supplemented and in effect from time to
time, the "Loan Agreement") between the Company and the Employee and evidences
loans made by the Company under the Loan Agreement.
1. PAYMENTS. All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America to the Company at
the address specified by the Company, or at such other place as shall be
designated in a written notice delivered to the Employee. Whenever any payment
on this Note shall be stated to be due on a day that is not a business day, such
payment shall instead be made on the next succeeding business day. Each payment
made hereunder shall be credited first to interest then due and the remainder of
such payment shall be credited to principal, and interest shall thereupon cease
to accrue upon the principal portion so credited.
2. LATE PAYMENT CHARGES. A late payment charge of five percent (5%) will be
payable by the Employee to the Company for any payment not made within ten (10)
days of its due date (including the Maturity Date).
3. COVENANT. The Employee covenants and agrees that until this Note is paid
in full, they will promptly, after the occurrence of an Event of Default (as
hereinafter defined) or an event, act or condition which, with notice or lapse
of time or both, would constitute an Event of Default, provide the Company with
a certificate specifying the nature thereof and the Employee's proposed response
thereto.
4. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) failure of the Employee to pay any principal, interest or other amount
due under this Note when due, whether at the due date, the Maturity
Date, by acceleration, or otherwise;
(b) sale, conveyance or transfer of any option(s) which secure this Note;
(c) the Employee shall die or shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due;
(d) (i) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Employee in an involuntary case
under Title 11 of the United States Code entitled "Bankruptcy" (as now
and hereinafter in effect, or any successor thereto, the "Bankruptcy
Code") or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable federal
or state law; or (ii) an involuntary case shall be commenced against
the Employee under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; or
(e) an order for relief shall be entered with respect to the Employee or
the Employee shall commence a voluntary case under the Bankruptcy Code
or any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or the
Employee shall make an assignment for the benefit of creditors; or the
Employee shall be unable or fail, or shall admit in writing their
inability to pay its debts as such debts become due.
5. REMEDIES. Upon the occurrence of any Event of Default specified in
Paragraph 4 above, the principal amount of this Note, together with
accrued interest thereon, shall become immediately due and payable,
without presentment, demand, notice, protest or other requirements of
any kind (all of which are hereby expressly waived by the Employee),
and upon the occurrence and during the continuance of any other Event
of Default, the Company may, by written notice to the Employee,
declare the principal amount of this Note, together with accrued
interest thereon to be due and payable, and the principal amount of
this Note, together with such interest, shall thereupon immediately
become due and payable without presentment, further notice, protest or
other requirements of any kind (all of which are hereby expressly
waived by the Employee). Upon any such acceleration of the amounts due
under this Note or upon the Maturity Date, the Company may withhold
from, exercise or setoff against any security for this Note, including
the employee stock option(s) securing this Note, amounts necessary to
repay this Note. The Employee further agrees that (i) the Company
shall be entitled to receive from the proceeds of the sale of any
stock underlying any Company stock option funds sufficient to repay
this Note and (ii) any such sale proceeds shall be remitted by any
selling broker directly to the Company.
6. MISCELLANEOUS.
(a) All notices and other communications provided for hereunder shall be
in writing (including telecopier communication) and mailed, telecopied
or delivered as follows: if to the Employee, (i) at their address
specified opposite their signature below or (ii) at their inter-office
mail box; and if to the Company, at the address for payment set forth
in Section 1 above; in each case at such other address as shall be
designated by the Company or the Employee in a written notice to the
other. All such notices and communications shall, when mailed,
telecopied or sent by overnight courier, be effective when deposited
in the mails, delivered to the overnight courier, or sent by
telecopier and, when hand delivered or deposited in the Employee's
inter-office mail box, be effective when deposited in such mail box.
(b) The Employee agrees to indemnify the Company against any losses,
claims, damages and liabilities and related expenses, including
counsel fees and expenses, incurred by the Company arising out of or
in connection with or as a result of the transactions contemplated by
this Note. In particular, the Employee promises to pay all costs and
expenses, including reasonable attorneys' fees, incurred in connection
with the collection and enforcement of this Note.
(c) No failure or delay on the part of the Company or any other holder of
this Note to exercise any right, power or privilege under this Note
and no course of dealing between the Employee and the Company shall
impair such right, power or privilege or operate as a waiver of any
default or an acquiescence therein, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are
cumulative to, and not exclusive of, any rights or remedies which the
Company would otherwise have. No notice to or demand on the Employee
in any case shall entitle the Employee to any other or further notice
or demand in similar or other circumstances or constitute a waiver of
the right of the Company to any other or further action in any
circumstances without notice or demand.
(d) The Employee and any endorser of this Note hereby consent to renewals
and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand and
notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand
hereunder.
(e) THIS NOTE, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER,
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA.
(f) THE TERMS OF THIS NOTE CONTAIN A BALLOON PAYMENT.
(g) This Note may be prepaid without penalty.
7. SECURITY. This Note is secured by a pledge of the required employee
stock option(s) and shares underlying such option(s) as described in the
Employee Loan Program Agreement executed by the Employee.
IN WITNESS WHEREOF, the Employee has caused this Note to be executed and
delivered as of the day and year and at the place first above written.
EMPLOYEE:
-----------------------------------------
Signature
Address:
<PAGE>
SCHEDULE OF LOANS
This Note evidences loans made under the Loan Agreement to the Employee, on
the dates and in the principal amounts set forth below, subject to the payments
and prepayments of principal set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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of Loan or Prepaid Principal Amount Made By
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</TABLE>
<PAGE>
PDT, INC.
EMPLOYEE LOAN PROGRAM
SUMMARY DESCRIPTION
General:
Under the PDT, Inc. Employee Loan Program (the "Loan Program"), Employees may
borrow from PDT, Inc. (the "Company") an amount up to a maximum of $25,000.00,
which will be due and payable at a specified period in the future. Interest will
accrue quarterly and will be due and payable upon the loan due date. To secure
the loan, employees will be required to pledge their vested stock options which
will be adjusted in the future based on the fair market value.
Loan Details:
Loan Limit: The loan will be the lesser of 25% of the employee's vested gain
value in their unexercised options pledged to secure the loan or $25,000.00. The
$25,000.00 represents a lifetime maximum that can be borrowed by an employee
under the Loan Program.
Vested Gain Value: The vested gain will be determined based on the average per
share closing price of the Company's stock as quoted on Nasdaq for the preceding
month of the enrollment period less the option exercise price times the number
of vested shares. An increase in the vested gain value of pledged options allows
an employee to borrow additional funds, up to the plan maximums, and a decrease
in the vested gain value may require a pledge of additional options.
Dates and Amounts of Loans: Subsequent to the initial enrollment period, an
employee who has not reached the maximum of $25,000.00 in loans may have an
opportunity to receive additional loans during subsequent enrollment periods.
This may occur if the employee, (i) vests additional options, or (ii) the vested
gain value increases. The employee must complete the Enrollment Application to
request the additional loan amounts.
Security Interest: The employee agrees to give the Company a security interest
in their unexercised vested options and will deliver to the Company their
original copy of those Option Agreements as determined by the Company required
to secure the loan. As the number of shares required to secure the loan will
fluctuate from time to time based on the market price per share, and because
accrued interest will be accumulating over the term of the loan, additional
Option Agreements may be requested to be provided to the Company and those
Option Agreements requested and delivered will be retained by the Company until
such time as the outstanding principal loan and interest amount is repaid.
Loan Due Date: The loan due date will be the earlier of: (i) termination of
employment with the Company, (ii) the date of any election to exercise a Company
option held by the employee or (iii) the earliest option expiration date. On the
loan due date the outstanding loan amount, including cumulative accrued
interest, will be due.
Interest: Interest will be accrued and compounded quarterly at the
Applicable Federal Rate. The cumulative accrued interest will be due and payable
at the loan due date.
Payment of Loan: Upon the loan due date, payment shall be made to the Company
for the principal loan amount and the accrued interest. If the employee does not
have the funds to repay the loan, the Company may offset and utilize the Options
or shares underlying the Options for the purpose of paying the principal and
interest due. The number of shares needed for such offset will be determined
based on the total loan amount and cumulative accrued interest divided by the
per share price of the stock as quoted on Nasdaq as of the close of business for
the preceding day of the period being measured. If an employee chooses to
exercise and sell their options, the employee agrees that the principle loan
amount and accrued interest will be paid out of the sale proceeds and remitted
by the broker to the Company on the employee's behalf. A late payment charge may
be applied to the outstanding amount and accrued interest.
Loan Enrollment: An employee will be able to apply for a loan from the Company
four times a calendar year. The enrollment periods will last approximately one
week during dates announced by the company.
Tax Impact: Upon repayment of the cumulative accrued interest, the employee will
receive notification of the amount paid to be used for possible tax purposes. If
all or a portion of the loan is considered to be forgiven, then that portion
which is forgiven will be considered compensation to the employee and the
related employment taxes may be due from the employee.
Eligibility:
Loan eligibility is determined based on salary level, employment length,
employee reviews (need satisfactory review on latest review), employee's number
of vested unexercised options, the expiration date of the employee's option and
the employee's unexercised vested option value. Additionally, the employee will
not have exercised any of their options since the commencement of the loan
program. Notwithstanding the above, any loan made under the Loan Program will be
at the Company's discretion.
Termination:
The Loan Program may be suspended or terminated at any time by the Company. Upon
and during any suspension or termination, the Company will not fund further
loans under the Loan Program, including loans in respect of applications
received by the Company but as to which the Company has not yet funded. Existing
loans will continue to be governed by the terms of the Employee Loan Agreement.
<TABLE>
<CAPTION>
Examples:
Initial Loan Date
- -----------------
<S> <C>
Number of Shares underlying the Option........ 5,000
Number of Vested Shares....................... 2,000
Exercise Price per Share...................... $10.00
Average Nasdaq Closing Price per Share........ $30.00
Gain Value per Share.......................... $20.00 (FMV per share less per share exercise price)
Vested Gain Value............................. $40,000 (2,000 share times 20.00($30.00 - $10.00))
Loan Amount................................... $10,000 ($40,000*25%) not to exceed $25,000
Vested Options Shares Pledged as of Loan Date. 500 ($10,000/$20.00 per share)
Six Months Later
- ----------------
Average Nasdaq Closing per Share.............. $60.00
Gain Value per Share.......................... $50.00
Vested Gain Value............................. $100,000 ($50.00 per share * 2,000 shares)
Maximum Loan Amount........................... $25,000
Less: Previously Loaned Amount................ $10,000
Additional Available Loan Amount.............. $15,000
Total loan Amount............................. $25,000
Total Vested Option Shares Pledged............ 500 ($25,000/$50.00 per share)
</TABLE>
<PAGE>
Exhibit 10.4
================================================================================
PDT, INC.
================================================================================
================================================================================
AMENDMENT NO. 3 TO
================================================================================
================================================================================
1989 STOCK OPTION AGREEMENT
================================================================================
THIS AMENDMENT NO. 3 TO PDT, INC. NONSTATUATORY STOCK OPTION AGREEMENT (the
"Amendment") is made and entered into at Santa Barbara, California, on the date
hereinafter set forth by and between PDT, Inc., a Delaware corporation
(hereinafter, the "Company") and the undersigned (hereinafter, the "Optionee").
WHEREAS:
A. The Company and the Optionee are parties to a Nonstatuatory Stock Option
Agreement No. ___ dated ____ and Amendments 1 and 2 thereto (the "Agreement";
and
B. The Company and the Optionee hereby wish to extend the expiration date
of the Option Agreement.
NOW, THEREFORE, in consideration of the premises and the promises and
representations hereinafter contained, it is agreed as follows:
1. Section 3 (b) of the Agreement is hereby amended to read in its
entirety:
3. (b) Expiration Date. Except as otherwise provided herein, the Option
shall expire at 5:00 p.m., Los Angeles, California time on or before ten (10)
years from the date of grant of this Option. Notwithstanding the foregoing, if
Participant ceases to be an Employee for any reason other than death or
permanent disability within the meaning of Section 105(d) (4) of the Code, this
Option shall: (i) expire 30 days after the first day Participant is no longer an
Employee, if the shares issuable under the 1989 Plan have been registered by the
Company with the Securities and Exchange Commission (SEC) on an appropriate
registration statement, but in no event later than the expiration date specified
under this subparagraph (b); or (ii) expire one year after the first day
Participant is no longer an Employee, if the shares issuable under the 1989 Plan
have not been registered by the Company with the SEC, but in no event later than
the expiration date specified under this subparagraph (b); or (iii) expire 30
days after the shares issuable under the 1989 Plan have been registered by the
Company with the SEC on an appropriate registration statement if the Participant
is no longer an Employee at the time of the SEC registration and contingent upon
written notice to the Participant by the Company of such SEC registration, but
in no event later than the expiration date specified under this subparagraph
(b).
If Participant dies while an Employee or ceases to be an Employee because
of his or her permanent disability as defined above, this Option may be
exercised by the personal representative of the estate of Participant (or, if
Participant's estate has been closed, by his or her successors by bequest or
inheritance) or by the Participant, respectively, for a period of six (6) months
after Participant ceases to be an Employee, but in no event later than the
expiration date specified under this subparagraph (b). If this Option remains
exercisable pursuant to this subparagraph (b) after termination of Participant's
employment, the Option may be exercised only to the extent Participant could
have exercised the Option pursuant to subparagraph (c) on the date Participant
ceased to be an Employee.
2. Except as amended above, the Agreement is hereby ratified, confirmed and
approved in its entirety and in all other respects.
3. The Effective Date of this Amendment is July 31, 1996.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to be
effective on the date written above.
"PDT" The "Optionee"
PDT, Inc., NAME
a Delaware Corporation
By: _______________________________ _________________________________
Gary S. Kledzik, Ph.D.
C.E.O. and Chairman
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11.1
COMPUTATION OF NET LOSS PER SHARE
(Unaudited))
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------- ----------------------------------
1996 1995 1996 1995
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
PRIMARY
Net loss .................................... $ (4,155,000) $ (2,668,000) $ (12,639,000) $ (6,826,000)
=============== =============== ================ ===============
Weighted average common shares outstanding .. 12,438,069 10,283,104 11,519,785 9,679,164
--------------- --------------- ---------------- ---------------
Net loss per share .......................... $ (0.33) $ (0.26) $ (1.10) $ (0.71)
=============== =============== ================ ===============
FULLY DILUTED
Net loss .................................... $ (4,155,000) $ (2,668,000) $ (12,639,000) $ (6,826,000)
=============== =============== ================ ===============
Weighted average common shares outstanding .. 12,438,069 10,283,104 11,519,785 9,679,164
--------------- --------------- ---------------- ---------------
Net loss per share .......................... $ (0.33) $ (0.26) $ (1.10) $ (0.71)
=============== =============== ================ ===============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDING SEPTEMBER 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 40,816
<SECURITIES> 20,100
<RECEIVABLES> 1,884
<ALLOWANCES> 0
<INVENTORY> 15
<CURRENT-ASSETS> 63,348
<PP&E> 4,069
<DEPRECIATION> (1,609)
<TOTAL-ASSETS> 66,086
<CURRENT-LIABILITIES> 2,554
<BONDS> 48
0
0
<COMMON> 112,550
<OTHER-SE> 49,066
<TOTAL-LIABILITY-AND-EQUITY> 66,086
<SALES> 5
<TOTAL-REVENUES> 2,230
<CGS> 5
<TOTAL-COSTS> 16,408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> (12,639)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,639)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,639)
<EPS-PRIMARY> (1.10)
<EPS-DILUTED> (1.10)
</TABLE>
